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A global survey of 2,800 businesses conducted by Grant Thornton has found that only 40% of South African businesses were aware of coming global changes in accounting standards relating to the way they recognised and reported revenue.
The proposed changes are the result of a joint effort by the US Financial Accounting Standards Board (FASB) and the UK-based International Accounting Standards Foundation (IASF).
In 2005 South Africa adopted the IASF’s international financial reporting standards, however, there are major differences between this and the FASB’s generally accepted accounting standards – hence the problem. The key objective of this change is to eliminate the differences and improve the revenue reporting standards.
"The majority of local businesses are not educated about these very important changes. Those that are, do not believe they are necessary. And yet, these changes will most likely have a significant impact on them," said David Reuben, head of assurance at Grant Thornton Johannesburg.
How revenue is accounted for is extremely important. It is almost always the largest dollar amount reported in any set of financial statements and for many listed companies it is the first number that gets reported by the media.
The revised revenue recognition standards could result in significant changes in the key financial performance measures of companies. Depending on your type of business and industry, it could entail significant changes to the IT system configurations in order to capture the relevant information and data needed to measure and recognize revenues. In addition it will impact on the controls that support the revenue recognition process and result in changes to tax planning strategies.
How will your company respond to the proposed changes in revenue recognition? Do you have the necessary financial staff to assist you through this transition? Contact Communicate Personnel we are a specialist financial recruitment agency.
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