Designed to improve how companies across industries report revenue generated from contracts with customers, ASC 606—the new accounting standard issued by the Financial Accounting Standards Board (FASB)—goes into effect in January 2019 for private companies. As the compliance date quickly approaches, privately held companies must take action now to ensure they are ready to meet this challenge. While public companies have had to be compliant since the start of 2018, there may also be a number that are looking for more automated solutions.
The challenges of revenue recognition under ASC 606
Depending on your company’s business model and historic revenue recognition practices, the new revenue recognition standard can result in substantial changes to how your company’s revenue is measured, the timing of when it is recognized, and the information disclosed in your financial statements. This, in turn, can significantly impact your business in many ways. For example, you may have to rethink key performance measures, amend debt covenants, and modify terms and conditions within your customer contracts. In addition, companies need to consider changes to IT systems, processes, and internal controls in order to meet the requirements of the new revenue recognition rules in an efficient and controlled manner.
Far from being a mere accounting change, ASC 606 affects leaders across the company:
The alliance between KPMG LLP and Aptitude Software provides capabilities to address these changes to your accounting, business processes, and supporting systems. Whether your company is in need of a revenue recognition solution to support your adoption of the new standard or you want to optimize your current revenue recognition processes via automation, KPMG and Aptitude Software can help you to:
The managed service couples KPMG’s accounting experience and system implementation services with Aptitude Software’s cloud-based RevStream solution. Combining leading services and tested technology, KPMG and Aptitude Software provide a managed service you can be confident in to achieve ASC 606 compliance and help drive the business into the future.
KPMG: Blending accounting and technology
With an integrated team of accounting and technology professionals, KPMG can help your company understand the impact of new accounting and regulatory requirements and implement required changes to your financial processes and systems.
For the new ASC 606 revenue recognition standard, KPMG’s holistic approach covers the full implementation—from assessment to requirements and design to implementation. Accounting professionals experienced with the new standard provide practical advice on the accounting impacts, accounting policy, and disclosure strategy, while technology professionals translate the accounting impacts into requirements for the design and implementation of the revenue management solution. KPMG’s integrated team provides a coordinated delivery model to support a smooth transition to the new ASC 606 standard. In addition, KPMG’s project management can help you accelerate your implementation, ultimately reducing implementation and investment risk.
Aptitude Software: Automating revenue recognition
Aptitude Software delivers innovative software applications for finance, enabling enterprise CFOs and finance teams to efficiently deploy systems that streamline complex processes and provide a competitive edge. Aptitude Software has a range of solutions solving regulatory challenges such as Revenue Recognition (ASC606/IFRS15), Lease Accounting (ASC842/IFRS16), and Insurance Contracts (IFRS17) as well as accounting engines and subledger solutions to support financial transformational journeys across a range of sectors.
Aptitude Software’s RevStream product suite helps manage revenue recognition compliance, insights, and reporting. It eliminates the bottlenecks, inaccuracies, and risks of manual revenue management to accelerate period close activities.
Importantly, RevStream offers the reporting capabilities and flexibility to address ASC 606 through improved revenue accounting automation. Based on a powerful, secure, cloud-based platform, RevStream is built upon industry-leading standards for connectivity and access security to provide high levels of authentication, data encryption, and role-based access control. With it, your finance organizations can forecast more accurately, making smart decisions about customer contracts, and product pricing while managing liabilities such as deferred revenue.
Managed services: Let us take care of things
Combining KPMG’s accounting experience and technical skills with Aptitude Software’s RevStream revenue management software results in a holistic implementation for private companies filing under U.S. GAAP rules. The managed service features:
KPMG’s integrated team—with as-needed assistance from Aptitude Software’s architects—lead the engagement from assessment and solution design through implementation. For ongoing system operations, KPMG provides day-to-day support for technical and functional issues and manages requests for additional enhancements. KPMG also provides on-call accounting support for policy questions, disclosure queries, and advice for customized contracts. The Aptitude RevStream software will be hosted by Aptitude Software, and Aptitude Software will provide maintenance and day-to-day monitoring of its technical infrastructure. Aptitude Software and KPMG will jointly manage software maintenance, patching, testing, and customer migrations.
Auditor independence KPMG complies with the auditor independence rules of the AICPA, SEC, PCAOB and DOL. As a result, certain alliance-based solutions cannot be offered by KPMG to our audit clients. KPMG audit clients should check with their respective lead audit partner for more information.