Meet Current Standards While Transitioning to the New GAAP Standard
The new revenue recognition requirements will standardize financial statement presentation and improve disclosures through five key steps. Through these key steps, the standards will simplify the volumes of revenue recognition rules that must be referenced today, while also eliminating some industry-specific guidelines.
Revenue Recognition Within Workday
Developed in concert with market experts and companies evaluating the new standards, Workday revenue recognition offers the flexibility to handle different products and services, and supports subscription, usage, project time, and expense. You can easily record revenue events, complete fair value analysis, link contracts, and allocate and recognize revenue for simple and multielement arrangements, as well as track revenue recognition milestones and percent complete. Billing is also independent from revenue recognition to ensure appropriate adherence to both billing and revenue guidelines.
Workday’s “always on” audit approach fully documents all changes and adjustments throughout the contract lifecycle as they happen—including contract events and amendments, changes to revenue recognition, and more. Auditor dashboards and reporting make it easy to monitor your business and aggregate audit information for both internal and external auditors, saving you the time and resources needed to pull this information together. Not only does Workday offer comprehensive functionality for revenue recognition, it also provides a clear path to transition that makes it simple to take on new requirements such as the revenue standards.
Implications and challenges of the new standards include:
- More than revenue, the new standards have a full P&L impact, so it’s important to consider broader financial management implications
- The new standards are principle-based rather than prescriptive, making companies even more dependent on the underlying data
- To meet rigorous reporting and disclosure requirements, companies will need to report on two different methods of revenue recognition, which will be extremely time-consuming and challenging for those companies using disparate systems or Excel