Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s guest host, and I’m here today with Ryan Istre, an audit director and a member of the PKF Texas SEC team. Ryan, welcome back to the Playbook.
Ryan: Thanks for having me here, Jen.
Jen: So, I know there’s new revenue recognition rules coming. What are the SEC’s views on this for registrants?
Ryan: That’s a very good question, Jen. The new revenue recognition rules – or ASC 606 – are going to be effective for most registrants beginning January 1st of 2018.
Jen: So, this year?
Ryan: This year, that’s correct. What this is intended to do is bring into congruence the SEC’s rules with the new revenue recognition standards. Some of the topics that are being discussed are the potentially outdated Regulation SX rules. Other topics, which may be of a little more importance, are the effect of what happens with retrospective application of these new pronouncements when there are predecessor financial statements followed alongside successive financial statements.
Jen: What’s our role in advising clients on this?
Ryan: Our role in advising clients on this would be to really take into consideration SAB 74. SAB 74 goes into the details of what registrants should be disclosing right now in their current 10-Ks that they’re going to be filing within the next few months. SAB 74 requires certain disclosures about what effect the new revenue recognition standards are going to have on their company. So, if I would have to say anything is of most importance, that SAB 74 is top of mind right now.
Jen: Sounds good. Well, we’ll get you back to talk more, because I know the SEC is coming out with a slew of more pronouncements and people need advice about it.
Ryan: Absolutely. Thanks, Jen.
Jen: Perfect, thanks for being here. For more about this topic, visit our SEC desk at PKFTexas.com. This has been another Thought Leader production brought to you by PKF Texas The Entrepreneur’s Playbook.