After years of preparing for the arrival of new accounting standards, 2017 is the year that heads of accounting at the world’s large companies need to start taking specific actions and implementing change.
Already this year, a select group of companies has started reporting under the new revenue recognition standard and before the end of the year all public companies must disclose their preferred method for complying and make progress on the transition. Furthermore, The US Securities and Exchange Commission (SEC) has started issuing more comment letters to companies that, in its opinion, have not fully embraced new guidance on the use of non-GAAP measures in financial reporting.
The SEC also expects to see more detailed disclosures on the impact of leases on the balance sheet while the “Big-4” audit firms continue to come under the PCAOB’s spotlight for the quality of the audits they conduct, which has the effect of pushing audit costs up and making what used to be routine auditing processes take much longer.
Such is the amount of change this year, FASB recently released guidance that it would slow down the introduction of new projects until financial statement preparers have had a chance to absorb the recent major guidance.
Having to Wear Too Many Hats
Given the amount of change, it’s not surprising that most heads of accounting feel their roles are getting stretched. It’s no longer sufficient just to be a technical expert; accounting executives can no longer rely on a tried and tested rule book.
The chief accountant must now simultaneously play the role of subject matter expert, project manager (often overseeing simultaneous accounting standard adoption projects), finance technology champion, and talent magnet (attracting and retaining high caliber certified accountants in an increasingly competitive labor market).
And, as well as staying on top of regulatory change, accounting executives must spend just as much attention to building their function’s capabilities to provide the right guidance and advice as the business landscape changes as quickly as the regulatory one.
Six Questions to Get Right
To be successful amidst all this change will require flawless execution against regulatory driven changes while also keeping the function relevant and productive. While there are a number of external factors outside of the control of the head of accounting (or chief accounting officer), leading CAOs will focus on the key decisions that are in their control to get right.
All CAOs should be able to answer these six questions.
- How much information do I need to disclose about my revenue recognition transition?
- Which is the optimal adoption method for revenue recognition given my business’ circumstances?
- Which new lease accounting software capabilities best serve the needs of my business?
- Should I be moving more quickly to change my approach to reporting non-GAAP measures?
- How can my company use robotic technology to make accounting processeses more efficient?
- How can I attract and develop millennial CPAs?