Exploring Revenue Recognition in the Local Community

Abstract

This thesis studies the extent to which the business community in general, and local community in particular, is ready for the new Section 606 Revenue Recognition accounting standards that come into effect in 2018. This paper first includes a comparison of the old standards and the new standards for revenue recognition. It also identifies improvements to the revenue recognition process because of implementing the new standards. Second, it examines the results of a national survey done by Pricewaterhouse Coopers and the results of an original local survey to determine the preparedness of the national business community and local community, respectively. Finally, this study also identifies the results and impacts of early adopters of Section 606, and identifies implications for the future of the accounting profession. The results of this thesis show that the business community does not appear prepared for the upcoming implementation of Section 606. The PwC survey indicates that many firms are still assessing how they will implement the new standards, and are yet to choose an adoption method. The lack of responses to the local survey may imply that the local business community has not spent sufficient preparing for the new standards. Only a few early-adopters of Section 606 were found, meaning that only a small number of the largest firms in the country have actually implemented the new standards. Overall, the adopting companies and their auditors appear to be severely underprepared for the new standard.