Internet Explorer is not supported by our website. For a more secure experience, please use Chrome, Safari, Firefox, or Edge.
HR & Finance
Powered by Battery  |  May 21, 2018
Mind the GAAP: Figuring Out the New ASC 606 Revenue-Recognition Standard

When the SEC says jump, you respond “how high?” And so, for tech-company CFOs, changes related to generally accepted accounting principles, or GAAP, are not something to be taken lightly. Revenue recognition specifically deriving from contracts with customers is now in the GAAP spotlight.

In 2014 (and in the most significant accounting change in the US since 1997), new guidance was issued to remove inconsistencies and weaknesses in revenue reporting requirements. Commonly known as ASC 606, the new standard rolled out for public companies reporting financial results for periods after January 1, 2018. Private companies will have an additional year before implementation.

To prepare for the impending regulatory shift, Battery convened a group of CFOs from portfolio companies based on the West Coast for a workshop on ASC 606; a similar event will take place this summer in Boston for East Coast CFOs. The workshop featured expert presenters from RSM, a consulting firm, who gave the audience an overview of what the new standard means for their companies. The event was sponsored by Sage Intacct.

As the speakers stressed, the 606 regulation has implications for teams across an entire organization, not just the finance team, including people, processes and technology. Training must occur at all levels of a company. RSM also recommended involving a company’s auditors throughout the entire implementation process, not just at the tail end. RSM provided a helpful five-step model to guide companies through the analysis, planning and deployment phases of rollout. Battery portfolio CFOs can and should share best practices among each other as they go through the process.

Ultimately, the 606 guidance is designed to improve the state of corporate accounting. The new standard should create a robust framework that enhances comparability of revenue recognition practices and provides more useful information in the form of improved disclosure. The workshop provided companies assistance in navigating these complex changes. For more on Battery’s suite of portfolio services, click here.

This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity. 

The information and data are as of the publication date unless otherwise noted.

Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy or completeness and cannot be guaranteed. Battery Ventures has no obligation to update, modify or amend the content of this post nor notify its readers in the event that any information, opinion, projection, forecast or estimate included, changes or subsequently becomes inaccurate.

The information above may contain projections or other forward-looking statements regarding future events or expectations. Predictions, opinions and other information discussed in this video are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Battery Ventures assumes no duty to and does not undertake to update forward-looking statements.

Back To Blog
TwitterLinkedInFacebookHacker NewsRedditWhatsApp

A monthly newsletter to share new ideas, insights and introductions to help entrepreneurs grow their businesses.