The Financial Accounting Standards Board and the International Accounting Standards Board have delayed the effective date of their converged revenue recognition standard for a year, but companies are going to need the extra time to get their systems adjusted.

PricewaterhouseCoopers recently issued a report on the technology and process implications of the new standard.

“Our first piece of advice is to start early,” said PwC risk assurance emerging solutions leader Shawn Panson. “The point of the paper is that we really believe this is not just an accounting exercise. It goes beyond accounting into the processes and some other core business functions, such as legal. We think the implementation of the standard has a lot more depth than some people are acknowledging.”

Among the problem areas are data. “There are many new and different uses of data sources,” Panson noted. “That’s one part of the assessment—understanding your data, understanding what data you’re going to need to use under the new revenue recognition model and then making sure the data is coming from systems that you can rely on, particularly SOX 404-compliant systems.”

On top of the data perspective is looking at revenue recognition from a systems perspective. “There will need to be either upgrades to revenue or order-to-cash systems or implementation of some niche revenue software providers,” said Panson.”They have software that helps you do what today is called ‘multi-element accounting,’ and in the future will be determining your deliverables and figuring out standalone selling prices. We’re definitely seeing in-house systems for where you’re getting your data from and then the potential need to upgrade accounting and revenue-related systems to comply with the new standard.”

PwC is helping its business clients with vendor analysis and vendor selection, but none of the systems appear to be completely ready to handle the new and still-evolving standard.

“I think many of the major ERP providers as well as some of the niche revenue software providers are still in development stage,” said Panson. “We see some early modules coming out, but I think that’s one of the continuing challenges—really understanding the full depth and capabilities of these systems that are coming out. It is a challenge because I’d say they’re not at full availability today. That’s another challenge in assessing what the right system may be for each company.”

Besides pushing back the effective date for the new standard, FASB and the IASB set up a joint Transition Advisory Group that has been asking for additional guidance and amendments to help companies implement the new standard. In response, the two standard-setting boards are still tinkering with the standard, which was supposedly finalized over a year ago.

Vendors are planning to release their software in time for companies’ fiscal year 2016. “We do see a lot of expected releases in fiscal ’16,” said Panson. “There should be enough time, but we’re advising companies not to start their vendor selection at that point. The vendors are talking about what the capabilities will be, and I think it’s important for companies to do that assessment now, understanding that implementation won’t happen until maybe ’16.”

One aspect of the standard is it requires companies to have some historical data on hand to compare their revenue, using either a full retrospective method or a modified retrospective method of adoption.

“It’s important for companies to do the analysis now and make the decision on which method they want to go with,” said Panson. “From a systems consideration they will be essentially running two systems at the same time for a period of time because they’ll need to report under old GAAP as well as have the data and be able to report upon adoption under new GAAP. There will be overlapping periods where they’re going to essentially need to be running dual systems to track under both forms of GAAP. When people think about waiting until the year of implementation, that would be a major challenge because both methods of adoption require you to have historical data. It’s just a matter of how much and how far back it goes. There’s a lot of work to be done.”

PwC is also recommending that companies use project management to handle the transition.

“We continue to preach that as vital for companies’ success, having a really experienced project management office in getting this done,” said Panson. “If it were just purely the accountants, I don’t think that would be as necessary, but the intersection with the order-to-cash folks and legal—with so many different departments and every business unit—it really requires detailed project management.”

To help with the transition, PwC has developed a set of tools called GAAP Accelerator 2.0 that companies can use for project management. “It’s got an integrated survey tool,” said Panson. “It’s not an accounting system, but it’s a suite of tools that help companies with the implementation and the assessment phases.”

The main message from PwC is that companies shouldn’t wait to get started on the transition. “It’s bigger than a lot of people believe, and I think those who have gotten started have found that out in a meaningful way,” said Panson. “We’re advising companies to get going and really get into the details of the assessment because it’s a far-reaching standard.”