2018 Revenue Recognition Survey

Public and private companies still have revenue recognition work to do. Read the survey for more details.

Many companies experience post revenue recognition effective date work

CFOs and CIOs of public companies report that 71% of their organizations have made changes to their revenue recognition disclosures since first reporting under the new standard, as compared to 29% who have not, according to the 2018 Revenue Recognition Survey. On the other hand, private companies still have plenty of work to do, with only 26% in the solution implementation stage. Many private firms (36%) are still designing solutions, such as establishing information technology (IT) systems or business process requirements, while 27% are in the diagnostic assessment stage.

Budgets are greater than were expected. Most companies (75%) report that total costs have increased since their revenue recognition program was initiated. On average, public and private companies are estimating $3.3 million in total costs. In a 2017 EY survey of finance and IT professionals, more than half (55%) anticipated it would cost $1 million or less to implement the changes.

Eighty-eight percent of all organizations surveyed found getting the required data for the new financial disclosures challenging. More than 80% will use or have used manual workarounds in their reporting.

Per the survey results, there is no question that implementing the new revenue recognition standard has presented a significant financial, technological and operational challenge, which is bigger than what most companies anticipated. And just because the implementation date has passed for public companies, it does not mean revenue recognition implementation is complete.

Transitioning short-term manual workarounds to long-term technology solutions and adapting programs to reflect comments received from regulators, auditors and other stakeholders means significant work is still ahead. It’s likely that private companies will also be dealing with many of the same issues over the next year or more.

Despite the work still to come, there is some good news.

Almost all CFOs and CIOs (96%) believe that this has been or will be an opportunity to position their functions at the forefront of business change and transformation, up from 51% last year.

There is light at the end of the tunnel. Organizations are ultimately seeing the value and promise in these changes. By taking a strategic approach, they can actually drive improvements across their systems, processes, controls and operating models. The journey has become more than a task to be completed; it is now an opportunity to drive business transformation.