Published: September, 2022
This online webinar by Lynn Fountain is part two in a two-segment series that will deal with Revenue Recognition for Software and Technology companies. It is designed to provide insight related to the new revenue recognition standard as it applies to software and technology processes.
In May 2014, FASB and IASB issued largely converged revenue recognition standards. This new guidance replaces virtually all current revenue recognition guidance, including software revenue recognition guidance in ASC 985-605. The accounting change will be especially notable for software/technology companies and may require modification to systems, processes, controls, and documentation to meet the new requirements.
With the updated revenue recognition standards, recognition for software and technology is expected to continue to present challenges for financial statement preparers. Ways of doing business continue to evolve as do the views of the standard setters and regulators. It is imperative that any company required to apply the software revenue recognition standards be thoroughly knowledgeable of the guidance.
Most companies in the software industry will be significantly affected. The level of modification to current revenue recognition practices will depend on the nature of the company’s revenues. Those companies with software license revenue will be the most affected. There will be a lesser impact on the recognition of software-as-a-service (SaaS) revenue.
Software companies’ arrangements with customers often include multiple components wrapped into one contract. These could include:
The new guidance will change how software entities are recognizing revenue for these contracts in a few notable ways.
ASC 606 provides a more defined structure for assessing all revenue transactions and consists of five elements:
Join this CPE Accounting course to get insight related to the new revenue recognition standard as it applies to software and technology processes.
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Owner, Lynn Fountain Consulting and Training
Lynn Fountain has over 39 years of experience spanning public accounting, corporate accounting and consulting. 20 years of her experience has been working in the areas of internal and external auditing and risk management. She is a subject matter expert in multiple fields including internal audit, ethics, fraud evaluations, Sarbanes-Oxley, enterprise risk management, governance, financial management and compliance. Lynn has held two Chief Audit Executive (CAE) positions for international companies. In one of her roles as CAE, she assisted in the investigation of a multi-million-dollar fraud scheme perpetrated by a vendor that spanned 7 years and implicated 20 employees. The fraud was formally investigation by the FBI and resulted in 5 indictments estimating a $13M fraud loss.
Ms. Fountain is currently engaged in her own consulting and training practice. She has successfully executed on several consulting assignments spanning areas of accounting, risk, ERM and internal audit. She is a highly sought-after trainer and international speaker and has produced hundreds of courses delivered through seminars, conferences and on-demand training. She is the author of three separate technical books.
Fountain obtained her BSBA from Pittsburg State University and her MBA from
Washburn University in Kansas. She has her CPA, CGMA, CRMA credentials.
Ms. Fountain has become known as an international trainer on topics of Leadership, Internal Audit, Accounting, Finance, Ethics, Business Processes, Bookkeeping, Cybersecurity and Business Issues. She has over 150 training topics that can be tailored to meet your needs.
Sep 22nd, 2022
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