1. Understand the New Standards

• Importance: Familiarity with the new revenue recognition standards is crucial for compliance and accurate financial reporting.
• Strategy: Study the specifics of IFRS 15 and FASB ASC 606, which outline how and when revenue should be recognized.

2. Assess the Impact on Your Business

• Importance: Identifying how the new standards affect current practices helps in understanding and managing changes.
• Strategy: Evaluate the impact on timing and amount of revenue recognized by assessing all contracts and revenue streams.

3. Update Accounting Policies

• Importance: Revised policies ensure alignment with new standards and proper application of revenue recognition principles.
• Strategy: Update policies to reflect the five-step model:
  1. Identify the contract with a customer.
  2. Identify the performance obligations in the contract.
  3. Determine the transaction price.
  4. Allocate the transaction price to the performance obligations.
  5. Recognize revenue when (or as) the entity satisfies a performance obligation.

4. Train Your Staff

• Importance: Proper training ensures that your team understands and applies the new standards correctly.
• Strategy: Provide comprehensive training on the key principles, the five-step model, and any changes to internal processes and systems.

5. Update Internal Controls

• Importance: Internal controls support compliance by ensuring accurate revenue recognition and reporting.
• Strategy: Revise documentation processes, approval workflows, and audit trails to align with the new standards.

6. Revise Contracts

• Importance: Contracts should clearly align with new revenue recognition standards to ensure accurate revenue reporting.
• Strategy: Review and update contracts to define performance obligations, pricing, and other relevant terms.

7. Implement New Systems and Processes

• Importance: Updated systems and software can handle the complexity of the new requirements and ensure accurate financial reporting.
• Strategy: Consider upgrading or implementing new accounting systems that support the new standards.

8. Communicate with Stakeholders

• Importance: Clear communication builds trust and informs stakeholders of changes in revenue recognition practices.
• Strategy: Update investors, board members, and auditors about the changes, their impact on financial statements, and compliance measures.

9. Monitor Compliance

• Importance: Ongoing monitoring ensures that revenue is recognized accurately and in accordance with the standards.
• Strategy: Conduct regular internal audits and reviews to address any discrepancies or issues promptly.

10. Seek Professional Guidance

• Importance: Expert advice can help address complex issues and ensure full compliance.
• Strategy: Consult with accounting professionals or auditors experienced with the new standards.

11. Document Everything

• Importance: Thorough documentation supports transparency and provides a record of compliance efforts.
• Strategy: Maintain detailed records of contract evaluations, policy updates, staff training, and internal control revisions.

12. Stay Updated

• Importance: Keeping up with changes ensures ongoing compliance and accurate reporting.
• Strategy: Regularly review guidance from IFRS, FASB, and other relevant bodies for updates to the standards.