ASC 606 Rev Rec Standard Impacts Manufacturing Industry

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Your friends at Embark love movies. While space adventures, historical dramas and sci-fi mind benders are some of our favorites, a good thriller featuring a detective with an eye for minutiae and a cranky disposition just might be our top choice.

asc606-manu-1.jpgYou're already familiar with the type of film were talking about — a mystery that can only be solved with a meticulous eye for detail, the very same details that turn out to be small but crucial facts needed to crack the case.

At Embark, as revenue recognition requirements change and create varying ripple effects throughout industry, we pride ourselves in being the gumshoe detective our partners need to not only comply with the changes but make sure their internal controls are effective and auditors are kept happy.

Manufacturers Are a Particular Type of Case

Every case taken on by Embark’s elite accounting sleuths requires a particular skill set and insight. Manufacturing, for example, might not be drastically different than many other industries scrambling to comply with ASC 606 but certainly demands a specific approach to make sure nothing is missed.

Embark recently worked with a consumer products manufacturer on the new requirements and, with a slight aside for blatant but well-earned self-promotion, proved to be instrumental with our eye for details that can often be missed.

Given the nature of the industry, rebates, discounts, warranties and returns were all important components to revenue streams but needed to be analyzed with care to ensure compliance. Wading through the advice to figure out when these items should be recorded, how much should be recorded and how they are treated were all important components to the process.

Furthermore, although roughly 95 percent of the revenue streams were clearly defined and rather obvious, ancillary streams of income that could easily be lost in the fray needed to be uncovered and included in order to establish full ASC 606 compliance.

For instance, this particular manufacturer had a small stream of income stemming from sublease payments on unneeded storage space. Since this subtle source of income is both obscure and irregular, firms that exclusively look for only the most obvious evidence in their own detective work would likely miss this small but important detail.

Download eBook: Quick Guide to Changes in Rev Rec ASC 606

 

Focus on the Big Picture but Don't Forget the Details

ASC 606 is an inevitability, so hiding under the covers and pretending it's not there just simply won't work. While every industry will be impacted in a different way, manufacturing requires a specific touch to make sure companies are fully compliant.

Embark works hand in hand with our clients and can do as deep a dive as warranted, given a company's specific needs. We will always ask our clients how thorough they need us to be and will take the appropriate exhaustive approach.

Ranging from the identification of revenue streams to financial statements, internal controls and auditor satisfaction, Embark’s comprehensive process to revenue recognition makes sure all evidence is discovered and each case is solved.

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