The Executive Director of CICPAC, Kathleen J. Baldwin, CPA, CCIFP, has described CICPAC's “Revenue Recognition Implementation Guide -- Guidance for CPAs and Construction Companies," for NASBP and its membership.
NASBP: When did CICPAC release the Guide?
Baldwin: CICPAC released the Guide on March 28, 2018.
NASBP: Why did CICPAC create this Guide?
Baldwin: At the time of the Guide’s release, most articles and material published to date focused solely on the definition of the new FASB revenue recognition standard. CICPAC wanted to compile a document focused on the aspects of the new standard that were most pressing to the construction industry. In addition to breaking down the technical components, we provided implementation examples as well as, suggesting internal controls for the contractor to ensure proper implementation of the standard.
NASBP: Why is this Guide important for the construction industry and for surety professionals?
Baldwin: CICPAC’s Revenue Recognition Implementation Guide is vital because the process of understanding the impact of the new revenue recognition standard (ASC 606) begins now. The standard implementation date for non-public companies is December 31, 2019, the same as year-end financial statements. This means the new standard will apply to those jobs open at December 31, 2018. There are standard components that may materially impact one contractor but not another. We must commit the time now to evaluate the contracts of each contractor so sureties are prepared for changes in revenue recognition and financial statement presentation.
NASBP: What will contractors and surety professionals gain from this Guide?
Baldwin: The Guide was written with contractors in mind. Each section explains the topic in simple terms and provides practical application examples. Also included are sample note disclosures that will either be modified versions of today’s disclosures or new disclosures as a result of the new standard. It is vital for contractors to know what will have to be disclosed; as well as, the sureties must understand the information being communicated in these new disclosures.
Download CICPACs “Revenue Recognition Implementation Guide -- Guidance for CPAs and Construction Companies,"
Baldwin serves on the NASBP CPA Advisory Council as an Ex Officio participant. She can be reached at firstname.lastname@example.org.