Best Practices for Independence in Implementing FASB ASC 606
Independence considerations are crucial when assisting attest clients with FASB ASC 606 implementation. General requirements and dos and don'ts must be followed to maintain independence. Factors to assess independence include client responsibility, training provided, and extent of involvement. Auditing estimates requires utilizing resources like the AICPA for guidance.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
E N D
Presentation Transcript
Independence Considerations in Implementation of FASB ASC 606
Assisting attest clients with implementation of FASB ASC 606 May involve providing additional training and performing nonattest services for clients. Can cross the line into prohibited nonattest services (e.g., SKE, MGT Function) Changes may be difficult for clients to understand and apply. 2
General Requirements A member may perform nonattest services for an attest client provided that all safeguards in the General Requirements for Performing Nonattest Services interpretation (ET sec. 1.295.040) are met. General requirements recap: Client must agree to and accept certain responsibilities. Member may not assume management responsibilities. Establish and document an understanding of the engagement with the client in writing. 3
Consider the following when assessing independence Responsibility of client personnel Extent of the training provided to clients Degree of involvement in assisting client in with implementation efforts If involvement is extensive may need to consider separate service subject to nonattest services requirements (routine activity vs. nonattest service) 4
Dos and donts Member can explain steps to achieve the core principles Would not impair independence Client must accept responsibility for the work performed In order for independence to not be impaired Identifying contracts with customers Identifying obligations within the contracts Determining the transaction price Allocating the transaction price Recognizing revenue Client must perform all management functions 5
Auditing estimates resources There are free resources at aicpa.org/revenuerecognition, including: New Revenue Recognition Accounting Standard Learning and Implementation Plan Roadmap Financial Reporting Brief: Roadmap to Understanding the New Revenue Recognition Standards A&A Guides, webcasts, and much more! 6
