Many of the areas impacted by ASC 606 have been treated with short-term solutions that are not only inefficient but may conceal key issues. Now is the time to fully assess relevant functions and related processes to identify inefficiencies and opportunities for improvement.
Along with the finance function, it is important to consider how other functional areas and processes may be impacted by, and play a role in, operationalizing ASC 606. To do this, the areas impacted by the adoption of ASC 606 need to be identified and evaluated to develop a risk-based approach for the design and implementation of relevant changes to processes, systems, and roles/responsibilities. These changes may affect various functions such as contracts administration, project controls/estimates at completion (EACs), forecasting, treasury, information technology, government compliance, and human resources. For example, within the contract administration function, as part of the contract briefing and set-up process, there may be opportunities to identify, filter, and tag key contract ASC 606 risk elements. These risk elements can then be used to
- Increase the efficiency and effectiveness of the revenue recognition assessment process performed by the finance function,
- Identify fixed priced and mixed contract line item number (CLIN) contracts (i.e., a single contract including multiple contract types) that may require EACs, and
- Provide other system tags as part of the contract set-up to support further assessment and reporting needs.
Chess Consulting has assisted government contractors with implementation as well as operational reviews of internal processes and procedures over ASC 606, and then uses the knowledge gained to form a comprehensive process design plan that is tailored to each company’s needs. Click below to read our fact sheets on ASC 606:
Public Companies: https://bit.ly/2I7bZIF
- Private Companies: https://bit.ly/3cjTEWr