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Revenue Recognition 2016

Revenue Recognition 2016

AICPA

ISBN: 978-1-943-54688-6

Mar 2017

112 pages

In Stock

$239.00

Description

This publication addresses key accounting implementation issues related to Topic 606, Revenue from Contracts with Customers and related updates through FASB ASU No. 2016-12. At its completion, the guide will include 16 industry-specific chapters that address accounting implementation issues, and provide industry- specific illustrative examples of how to apply the new standard. It will also provide in-depth coverage of audit considerations from risk assessment and planning to execution of the audit.

In light of the material changes resulting from this standard, it will require significant analysis and preparation well in advance of the effective date for all financial reporting based on US GAAP. For that reason, the AICPA is offering two options to quickly deliver finalized implementation issues as quickly as possible. Those options include:

  • an annual online subscription available via our online professional library, or
  • combination print/PDF, which includes completed chapters as of January 2017 in print as well as online PDF access to finalized implementation issues.

Accounting and auditing content of this guide will be updated as implementation issues are finalized, and can be tracked via the link below.

1 General Accounting Considerations .01-.52

Introduction .01-.03

Authoritative Status and Effective Date .04-.12

Transitioning to the New Standard .09-.12

Post-Standard Activity .13-.15

Overview of FASB ASU No2014-09, Revenue from Contracts with Customers .16-.33

Step 1: Identify the Contract with a Customer .18-.20

Step 2: Identify the Performance Obligations in the Contract .21-.24

Step 3: Determine the Transaction Price .25-.26

Step 4: Allocate the Transaction Price to the Performance Obligations in the Contract .27-.29

Step 5: Recognize Revenue When (or as) the Entity Satisfies a Performance Obligation .30-.33

Costs to Obtain or Fulfill a Contract With a Customer .34-.38

Incremental Costs of Obtaining a Contract .34-.35

Costs of Fulfilling a Contract .36-.38

Disclosures .39-.40

Other Topics .41-.52

Presentation of Contract With a Customer .41

Sale With a Right of Return .42

Warranties .43

Principal versus Agent .44

Customer Options for Additional Goods or Service—Material Rights .45

Customer’s Unexercised Rights .46

Nonrefundable Upfront Fees .47

Licensing .48

Repurchase Agreements .49

Consignment Arrangements .50

Bill-and-Hold Arrangements .51

Customer Acceptance .52

2 General Auditing Considerations .01-.206

Introduction .01-.05

Auditing the Five-Step Model of FASB ASC 606 .06-.41

Step 1: Identify the Contract(s) With a Customer .08-.15

Step 2: Identify the Performance Obligations in the Contract .16-.23

Step 3: Determine the Transaction Price .24-.31

Step 4: Allocate the Transaction Price to the Performance Obligations in the Contract .32-.38

Step 5: Recognize Revenue When (or as) the Entity Satisfies a Performance Obligation .39-.41

Auditing Considerations in the Adoption and Transition to FASB ASC 606 .42-.54

General Audit Considerations Over Revenue Recognition .55-.66

Risk Assessment and Fraud Risk Under FASB ASC 606 .67-.100

Audit Planning .68-.69

Assignment of Personnel and Supervision .70-.71

Establishing an Overall Strategy .72

Audit Risk .73-.76

Understanding the Entity and Risk Assessment .77-.84

Inquiry .85-.86

Reading and Understanding Contracts .87

Reviewing Process Narratives and Process

Flow Diagrams .88

Reviewing Internal Control Manuals, Policy Manuals, or Similar Documentation .89-.90

Discussion Among the Audit Team .91

Assessing the Risks of Material Misstatement .92-.93

Identification of Significant Risks .94-.100

Specific Audit Considerations Over Revenue Recognition .101-.111

Side Agreements .101-.102

Channel Stuffing .103

Related-Party Transactions .104-.108

Significant Unusual Transactions .109

Nature of Business and Accounting for Revenue .110-.111

Potential Accounting Misstatements .112-.120

Identify the Contract With the Customer .114-.115

Identify the Performance Obligations in the Contracts .116

Determine the Transaction Price .117

Allocate the Transaction Price to the Performance Obligations .118

Recognize Revenue When (or as) the Entity Satisfies a Performance Obligation .119-.120

Consideration of Fraud as it Relates to Revenue .121-.128

Discussion Among Engagement Personnel Regarding the Risks of Material Misstatement Due to Fraud .126-.127

The Importance of Exercising Professional Skepticism .128

IFRS 15 Versus FASB ASC 606 .129

The Role of Controls Over Financial Reporting in Revenue Recognition .130-.147

Control Environment .132-.137

Risk Assessment .138-.141

2 General Auditing Considerations—continued Control Activities .142-.143

Information and Communication .144-.145

Monitoring .146-.147

Obtaining Audit Evidence .148-.176

Types of Substantive Procedures .151-.158

Potential Issues in Obtaining Audit Evidence .159

Audit Evidence Related to the Five Steps of Revenue Recognition Under FASB ASC 606 .160-.176

Auditing Estimates .177-.181

Potential Area of Focus—Management Bias .180-.181

Management Representations .182-.186

Independence .187-.196

Consultation .189-.191

Situations in Which Auditors Can Assist During Transition .192-.196

Disclosures .197-.198

Smaller Entities .199

Audit Documentation .200-.206

Appendix A Overview of Statements on Quality Control Standards