Here’s everything you need to know about the profession’s new revenue recognition standard:

It’s big.

Huge, in fact.

It impacts everyone. Including you.

Forget the implementation date. Start preparing now.

OK, it’s a little more complex than that, but that’s the CliffsNotes version, courtesy of the AICPA.

The standard, which was released in May by the Financial Accounting Standards Board and the International Accounting Standards Board, centers on the recognition of revenue from contracts with customers and “is designed to create greater comparability for financial statement users across industries and jurisdictions,” writes Ken Tysiac in the Journal of Accountancy.

Here’s why it’s a big deal:

• It applies to “most transactions and contracts with customers.”
• It “touches every entity (public and private, including not-for-profit entities) that reports under U.S. GAAP.”
• It will “require CPAs to re-examine the underlying economics of large numbers of established business practices.”

In short, Kim Kushmerick writes for the AICPA, the standard “presents the most significant accounting change many veteran CPAs have seen.”

That means the time to start planning is now. Public companies must adopt the standard in 2017, while private companies have until 2018 to comply.

When you look at the issues that must be addressed, though — operational and performance metrics, for instance, along with IT changes and plans for retrospective adoption — that might not be nearly enough time.

“If a public company chooses full retrospective adoption, revenue and the direct effects of change in accounting principle to all contracts must be restated for 2015 and 2016 to show comparative financial statements with a cumulative adjustment as of January 1, 2015,” Kushmerick writes.

She then tacks on the obvious: “You are encouraged to advise clients and employers to begin developing an implementation plan as soon as possible.”

Don’t freak out, though. There are plenty of resources available to help pave the way to adoption. They include these:

Related MACPA programs:

• Oct. 27 webcast: Update for Accountants and Auditors
• Nov. 3: Accounting and Auditing Current Developments
• Nov. 6 webinar: Accounting for Revenue from Contracts with Customers
• Nov. 7 webcast: Update for Accountants and Auditors
• Nov. 19: Revenue Recognition: Overview and Implementation Issues
• Nov. 20 webinar: Accounting for Revenue from Contracts with Customers
• Dec. 3 webcast: Update for Accountants and Auditors
• Dec. 9 webcast: New FASB Developments for Business and Industry

The AICPA’s revenue recognition resource center

The Journal of Accountancy’s archive of revenue recognition articles