Breaking Down Revenue Recognition

April 22, 2019

We’re here for you in changing times! A big change with the potential to impact the day-to-day accounting and the way business is executed through contracts for customers in almost every entity is here as a result of the Accounting Standards Update (ASU) 2014-09 Revenue from Contracts with Customers, issued by the Financial Accounting Standard Board (FASB). This standard eliminates the transaction- and industry- specific revenue recognition guidance under extant U.S. GAAP and replaces it with a principle-based approach for determining revenue recognition.

These resources will help walk you through the changes and what your firm needs to know now about revenue recognition to assist in making your firm a revenue recognition go-to for your clients. Start at the beginning to get a breakdown of the standard. Then, in the transition to the new standard, use the tools provided to communicate the standard change with clients and their expected impact.

Learning and Training Resources

Diving into ASU 2014-09: Revenue Recognition Guide
Use this resource to get a high level, plain English look at the changes brought to Revenue Recognition by ASU 2014-09.

Communicate with Clients and Financial Statement Users

Client Communication Tool
This customizable template provides guidance on language to use when informing your clients about expected changes to the services you provide as a result of the standard.

Article Template
Reach out to your clients about the expected changes due to this standard through your regular communications using this article template.

Financial Statement User Communication Tool
Provide insight on the changes to the financial statements due to this standard with this customizable template communication.

We know auditors want to help their clients! These resources will help you stay independent in the process

As clients look to you for guidance in implementing this new standard, it's critical to keep independence considerations in mind. Here are a few resources to look to for maintaining your independence.

CPEA Report: Helping Attest Clients Implement the New Revenue Standard: Complying with the Independence Rules
This special report from the Center for Plain English Accounting (CPEA) will help in understanding independence boundaries when helping clients with the Revenue Recognition standard. Learn more about the CPEA below in Additional Resources.

From the Journal of Accountancy: How auditors can stay independent while advising on revenue recognition
With the Revenue Recognition standard in full effect, it may be an instinct to help clients who still feel left behind. The extent of that assistance could impair the firm's independence. Check out some best practices here to avoid crossing the lines of independence.

Ethically Speaking Podcast
Give your eyes a break from reading and listen to this podcast in the Ethically Speaking series to learn about what your firm can do to maintain independence while still being a valuable resource for your clients in the Revenue Recognition implementation process.

Other Considerations

If GAAP-based financial statements aren’t required for your Small- and Medium- Sized Entity (SMEs) clients, consider checking out the Financial Reporting Framework for Small- and Medium- Sized Entities (FRF for SMEs). Toolkits to help you learn more about this non-GAAP framework and its benefits are available at You’ll also find tips for talking to clients and financial statement users about potentially switching to FRF for SMEs.

Additional Resources

Financial Reporting Center (FRC) – Revenue Recognition
The AICPA’s FRC provides a number of additional references and resources about ASU 2014-09, including links to Industry Task Forces and webcasts and CPE courses available to dive in deeper to the areas you’d like to learn more about.

Center for Plain English Accounting
The CPEA is the AICPA’s national A&A resource center, available exclusively to members of PCPS. The team of experts assists member firms in understanding and implementing accounting, auditing, review, compilation, and quality control standards by sharing technical advice and guidance in a straight-forward manner. CPEA professional staff provide A&A support by describing “how to do” what you “need to do” in implementing the authoritative literature. Public accounting firms that are members of CPEA have access to written response written technical inquiries.