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Trending this month in corporate finance: Changing accounting standards

Welcome to the “Trending in corporate finance” blog. This month, the topics that caught our attention are all about accounting standards and compliance:

1. The clock is ticking for new revenue recognition standards implementation

New standards on revenue recognition announced by the Financial Accounting Standards Board during 2014 will be in place at the end of this year, but only 29 percent of companies currently have a clear plan to implement the new standard, according to a KPMG LLP survey.

Why should I get started on implementation now?

Complying with the new standard could be a complex implementation for companies with diverse product and service portfolios. So you either throw people and money at the problem or you work smarter with a solution like Anaplan’s Revenue Planning application, which is designed to help you automate, accelerate, and streamline your revenue planning and reporting.

2. IASB issues new leasing standard

January also saw the International Accounting Standards Board publish a new standard that brings most leases on-balance sheet, eliminating the existing distinction between operating and finance leases. This new standard becomes effective for accounting periods beginning on or after January 1, 2019, with earlier adoption permitted if you have already complied with the above revenue recognition ruling.

Why does it matter?
If you are shackled to complex legacy financial systems, you will probably need to budget for a stream of consulting engagements to address this (and other) compliance issues expected in the next few years. But there is another way.

Anaplan’s real-time Financial Consolidation application addresses the comprehensive requirements of complex global enterprises. Its intelligent architecture and simplified self-management allows you to configure the solution in days rather than months—meaning that whenever accounting standards change, you can amend the model yourself without the need for specialist services.

3. New limits on capitalizing the costs of cloud migration

New accounting rules that came into force in December make it harder to capitalize some implementation expenses.

Why does it matter?

It certainly matters to vendors whose solutions require long and expensive implementations, but not to Anaplan customers. As our UK partner Bedford Consulting wrote in their 2015 review, “Our Anaplan business, given the nature of the product, has naturally become the opposite of our [other] business, with short project timelines being the order of the year.” As the pace of cloud migration takes off, self-management and quick time to value really are the critical capabilities to look for.

That’s all for now. Don’t forget to check back for next month’s must-reads. In the meantime, feel free to tweet your recommendations to @Anaplan and share your thoughts on these hot topics in the comments below.

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