I’m sure many people breathed a sigh of relief last month when the FASB agreed to postpone the effective date of ASC 606 by one year for both public and private companies. It was becoming increasing clear that the scope of the change was going to require more time for companies to implement, both big and small, public and private.
Some of the main reasons cited for the delay were:
* A lack of available IT resources for the new standard. Many IT vendors were waiting until the clarifying changes were made before making major changes or developing new software.
* Logistical issues with the requirement to review contracts that may number in the millions and have durations of 10 years or more
* The time needed to not just implement the new standard, but build new internal controls and educate staff across the organization.
While the delay may be welcomed by most, it does point out that the work involved to get your organization ready is not trivial and that any efforts that have already begun to get ready should continue. For companies that had not done much of anything the time is still now to get started.
At Tensoft we are still working as before to make sure not only our software but our staff is prepared to handle the change – nothing has been put on hold. The benefit is that we now have more time to fine tune, find bugs, find process issues, revaluate staffing levels, etc. We see this as an opportunity for more testing and education which will not only make our product better but also better prepare our employees, and create less stress, when the change does happen.
This delay was not an invitation to put off starting your preparations, but more time to get comfortable with the impending change. If you have not started preparing you may have gotten a little lucky this time but is that something you want to bet on again? The time is still now to start analyzing your contracts and transactions to determine whether or not they will fit into the new standard, as well as make sure your sales and accounting processes and systems are ready for the change.
The proposed changes will present many challenges for many companies. Stay tuned for more information about this from Tensoft, as well as actionable information that can help you ensure that your systems and processes are ready to meet this challenge. And be sure to sign up to be notified about upcoming CPE-eligible webcasts hosted by Tensoft.
By: Dan Berube, Controller, Tensoft Inc.