"Impact of New Revenue Recognition Standards on Public Companies" from Intelligize takes a deep dive into the 548 revenue recognition comment letters the SEC issued over the past 15 months with instructive insights and takeaways for practitioners. Notably, the Pharma and Prepackaged Software companies combined made up nearly 17% of all comment letters during that timeframe, as shown here:
Intelligize indicates that these industries (Pharma and Prepackaged Software) have the types of contracts most scrutinized by the SEC, including license and collaboration agreements with more complicated payment structures such as milestone, royalty or sales-based. Among the S&P 500 (approximately 20% of the total letters), the firm's analysis indicates that the SEC focused on the identification of performance obligations, variable consideration, and royalties, and that questions/comments were generally consistent within industries.
The report includes comment letter excerpts and insights by industry, as well as successful changes to disclosures made by early adopters, and more.
See Intelligize's release, and additional information & resources on our Financial Reporting page under Revenue Recognition. This post first appeared in the weekly Society Alert!