The Complexity Of Revenue Recognition - 1437 Words

similar opinion of the complexity of revenue recognition to come up with its hypothesis, such as, First, â€Å"when revenue recognition is complex, managers are more likely to err when applying standards to transactions, increasing the likelihood of unintentional misreporting due to mistakes† and second, â€Å"complex accounting may allow managers to manipulate financial statements† evident of (p.73) Sherman, Loseman and Cardell (2015) believed that revenue recognition is the focus of SEC enforcement, as well as subject to a high level of risk of fraud and an area which proven for financial reporting misstatements (p.19) Whitehouse (2014b) identified companies that will see big changes are the high-tech sectors, companies selling a product with services attached, companies that generate revenue under licensing agreements (p.57). Whitehouse identified companies that will go through large changes , such as, software package with technical support and upgrades included, cell phone with service and data plans, equipment purchase that includes delivery and installation, new car comes with free maintenance and warranties for specified timeframe (p.57). Yeaton (2015) determined areas where companies would have to make necessary estimates and judgement to comply with the new requirements on realizing or recognizing revenue from contracts with customers (p.52). Stallworth and Degregorio (2004) indicated the role of internal auditors to fully understand the revenue management practice toShow MoreRelatedCeo Duality Causes Conflict Of Interest As Management831 Words   |  4 Pages lack of regulatory control and oversight, as well as political and influential connections and practices (p.1226). The research by Weld et al. (2004) claimed that the analyst and the market pressure to meet revenue expectation, leads managers to engage in fraudulent recognition of revenue practices and cited SEC Chairman, Arthur Levitt concerns that the drive of meeting analyst expectation pressure corporate managers, analysts and auditors override ethical business practice (p.45). NonethelessRead MoreA New World Of Revenue Recognition1128 Words   |  5 PagesWorld of Revenue Recognition† about the discussion of the new revenue recognition standard, jointly issued by FASB and IASB, which is effective after December 15, 2016 for public companies and after December 15, 2017 for private companies and non-profit organizations (p.50). Yeaton identified that the new revenue recognition standard will supersede most, if not all existing revenue standards (p.50). Yeaton summarized the purpose of the GAAP and IFRS converged standards on revenue recognition to provideRead MoreAccrual Basis Of Accoun ting Over Cash Basis1534 Words   |  7 Pagesparticular accounting periods. However, determination of revenues amounts and expenses amounts and reporting them in any given accounting period is rather difficult (Bamber and Parry, 2014). Reporting properly demands comprehensive understanding of the nature of the business of the company. There are two principle guidelines the matching principle and the revenue recognition principle. The revenue recognition principle decrees that recognition of revenue amount must always be done on the accounting periodRead MoreRevenue Recognition Changes Caused Fraud1139 Words   |  5 PagesRevenue Recognition Changes Caused Fraud There were 347 alleged cases of fraud involving public company according to Fraudulent Financial Reporting: 1998-2007 sponsored by Committee of Sponsoring Organizations of the Treadway Commission (COSO, 2010) that were investigated by Securities and Exchange Commission (SEC) on May 2010, which is showing 53 increased in the number of fraud when compared to the 1987-1997 study (p.5). COSO’s result is a sad number in a 10 year period, which averaging close toRead MoreCustomers Contract With An Entity1361 Words   |  6 Pagesgoods/services to customers transpire, an entity then recognizes revenue (AASB 15.46). Correspondingly, performance obligations may be satisfied at a point in time or over time.Thus, for performance obligations satisfied over a period time , an entity recognizes revenue for the measuring the entities progress towards complete satisfaction of the performance obligation (AASB 15.B15). 2. Reason for new standard Diversification of revenue recognition practices have arisen due to AASB 118 and 111 providingRead MoreRevenue Recognition - Fasb801 Words   |  4 Pages1820†100, Revenue Recognition (Topic 605) – Revenue from Contracts with Customers Dear Technical Director: Ameriprise Financial, Inc., one of the nation’s leading financial planning, asset management and insurance companies, appreciates the opportunity to offer comments with respect to the Proposed Accounting Standards Update, Revenue Recognition (Topic 605) – Revenue from Contracts with Customers (the â€Å"Proposed Statement†). We support the FASB’s efforts to develop a single revenue recognitionRead MoreRevenue Value And Liability Recognition Essay781 Words   |  4 PagesRevenue is one of the largest amount in the income statement. This number represents the efficiency of business operations, sales and company’s strategy. Since net income is a part of revenue, investors pay close attention to this element. Top-management of the company may manipulate both sales and receivables in order to produce better financial results. Revenue recognition accounting standards ensure that accurate amount of revenue is recognized in a proper period. Revenue recognition principleRead MoreRevenue Under The Aasb 15, Must Be Recognised In A Style1290 Words   |  6 PagesRevenue under the AASB 15, must be recognised in a style that represents the transfer of goods/services to customers in an amount that ‘reflects the consideration to which the provider expects to be entitled’ AASB 15,2015). The AASB requires the adoption of a 5 step method for this. Step 1: Identify the contract with the customer Step 2: Identify the distinct performance obligations Step 3: Determine the transaction price - The transaction price is the amount of consideration to which a providerRead MoreA Comparison Of Ifrs And Gaap978 Words   |  4 Pagesestablish easier through transitions. Revenue Recognition under IFRS versus GAAP GAAP revenue recognition is based on principles that are defined for individual industries, and different guidelines apply to different types of transactions. This structure has led to many questions about revenue recognition due to emerging industries, but it has been a preferred alternative to the liberal stance the IFRS originally maintained. In May of 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers.Read MoreInternational Financial Reporting Standards And The United States Generally Accepted Accounting Principles942 Words   |  4 Pagesone would notice is the difference of revenue recognition. Under Appendix A and B one can see the difference in presentation as well as the different verbiage used when creating balance sheets under both financial principles. When creating a financial statement under the U.S. GAAP, Generally, the guidance focuses on revenue being either realized or realizable and earned. Revenue recognition is considered to involve an exchange transaction; that is, revenue should not be recognized until an exchange