PCAOB Releases Revenue Recognition Guidance for Auditors

By:
Chris Gaetano
Published Date:
Oct 6, 2017
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The Public Company Accounting Oversight Board (PCAOB) has released staff guidance for auditors on dealing with the new revenue recognition standards.

The Financial Accounting Standards Board (FASB) approved the standards in 2014 as a major component of its convergence project with the International Accounting Standards Board (IASB). The new measure, which is set to go into effect at the end of this year, replaced the myriad industry-specific guidance in current Generally Accepted Accounting Principles (GAAP) with a singular model based on the identification and fulfillment of performance obligations in customer contracts. 

The PCAOB guidance covers areas in the standards that are relevant to auditors such as: 

(a) auditing management’s transition disclosures in the notes to the financial statements; (b) auditing transition adjustments;
(c) considering internal control over financial reporting;
(d) identifying and assessing fraud risks;
(e) evaluating whether revenue is recognized in conformity with the applicable financial reporting framework; and
(f) evaluating whether the financial statements include the required disclosures regarding revenue.

"We are publishing this alert to help auditors apply relevant PCAOB requirements in upcoming interim reviews and year-end audits," said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards.

"We have been monitoring implementation of this standard, and we've heard from a number of interested parties, including the PCAOB Standing Advisory Group, that guidance on auditing revenue would be helpful," he added.

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