The new revenue recognition guidelines set out by FASB and IASB demand a proactive and comprehensive examination of a company’s end-to-end revenue function and a significant commitment in terms of funds and resources for a potential multi-year effort to assess and implement the required modifications to policies, processes, systems and organizational alignment.
The core principle of the new guidance is based on the expected entitlement of consideration in exchange for goods and services. In the Communications industry the impacts may include the elimination of contingent revenue cap, variable consideration in network access contracts and additional performance obligations may exist in the area of activation and installation services in particular. The degree in which companies in the Communications industry are impacted will vary based on the systems the organization currently has in place.
Regulatory compliance is a powerful incentive to commit significant financial and non-financial resources to remain in step with rules and regulations.