Client Profile
Industry: | Retail | Annual Revenue: | ~$500 million | Geographic Footprint: | National | Ownership Structure: | Private Equity Owned | |
Issue
A retailer undergoing an enterprise resource planning (ERP) system upgrade needed to know
the impact of adopting the new revenue recognition standard. The accounting standard
update affects nearly every contract with a customer, and the retailer wanted to understand
the potential system changes that would be involved.
Solution
Our team discovered that applying the new revenue recognition standard resulted in a change
in the retailer’s revenue recognition patterns from point-in-time recognition to over-time
recognition. The switch to over-time recognition resulted in an acceleration of revenue on the
company’s books.
Over-time recognition also presented a challenge because the company did not have
the systems in place to track its progress toward satisfying the contract’s performance
obligation(s) in an over-time model. We worked with the company to devise a practical
solution that supported compliance with the over-time revenue recognition model without
incurring significant IT redesign costs.
Outcome
By evaluating the impact of the revenue recognition standard before its adoption date,
the retailer had time to implement internal changes to ensure compliance with its new
requirements. The retailer also had ample time to create an acceptable, cost-effective
methodology for its new revenue recognition patterns.
Published on April 25, 2019 © Copyright CBIZ, Inc. and MHM. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.
CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ). MHM (Mayer Hoffman McCann P.C.) is an independent CPA firm that provides audit, review and attest services, and works closely with CBIZ, a business consulting, tax and financial services provider. CBIZ and MHM are members of Kreston International Limited, a global network of independent accounting firms. This publication is protected by U.S. and international copyright laws and treaties. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.