SYSTEMS & CONTROLS

Systems and controls work hand in hand to bring you into compliance and keep you in compliance. 

They also mitigate risks throughout your company, and an effective control environment can limit the fees of your external auditor.

Systems

  1. Evaluate and document the accounting system requirements for the new revenue process
  2. Create a flowchart documenting the new revenue recognition process for each revenue stream
  3. Evaluate where and how the accounting system(s) needs to change 
  4. Work with the designated IT team to develop a plan and timeline to implement system changes 

20.3.4 System Modifications

As discussed in Section 20.2.3.2, adoption of the new revenue standard could have a pervasive impact on an entity’s IT systems. Entities should consider early on whether existing systems (e.g., ERP, billing, general ledger) are sufficient to capture the data and perform the calculations required under the new revenue standard. If an entity determines that its current systems are insufficient, it should decide whether to (1) perform certain revenue adjustment calculations outside of those systems if such changes are minor (e.g., in Microsoft Excel), (2) modify the current systems to meet the needs of the new revenue standard, or (3) implement a new system designed to comply with the new revenue standard.

If an entity chooses to implement a new system, the entity should consider (1) whether the new system is on the same platform as the entity’s existing systems and (2) whether the new system can be customized or tailored to meet the entity’s specific needs. Because system implementations can often take more than a year to complete, entities should get started as soon as possible to ensure that there is adequate time in which to make any system changes.

Controls

  1. Evaluate and document the internal controls requirements for the new revenue process
  2. Create a flowchart documenting the new revenue recognition process for each revenue stream
  3. Determine if there are any gaps in internal controls including any new Information Used in the Control (IUC)

Systems & Controls

  1. Develop training materials and train all staff on new accounting processes and controls 
  2. Execute the plan and test the results by 12/31/2017 to maximize effectiveness and return on investment
     
*Excerpt from Deloitte's Revenue Recognition Guide, found here.
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