Financial Institutions Revenue Recognition Resources
With private companies in the home stretch of implementing the new revenue guidance in Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, FASB posted an Implementation Q&A on its website that incorporates all previously issued FASB staff and Transition Resource Group memos and other educational materials into a single document with a user-friendly, question-and-answer format.
BKD Industry Resources
Community banks and credit unions are less affected by these changes than other industries because the new rules exclude revenue streams that are addressed by other standards such as “core” interest income, periodic/annual cardholder fees and fees associated with mortgage servicing rights. However, other noninterest income will fall under the new standard’s scope and may or may not require some changes to revenue recognition practices.
For asset management entities, this new standard may affect how revenue should be recognized, which brings in more judgment and analysis. Asset managers also should review the new disclosure requirements to help ensure completeness.
The effect on each insurer will vary depending on existing income sources, customer base and accounting elections. The new guidance could lead to a change in the recognition of revenue and costs from services other than insurance contracts. In addition, insurers will have to redraft accounting policies under the new principles and update internal controls for any increases in management’s judgments.
BKD has prepared a library of BKD Thoughtware® on revenue recognition issues, including the following articles.
The adoption of ASC 606 will be complex and likely will require significant hours to implement correctly. BKD can help educate your team, provide implementation tools and assist with analysis and documentation. If you would like assistance complying with the new revenue recognition standard, contact your BKD Trusted Advisor™.