Past Meeting: Tuesday, September 13, 2011

Revenue is one of the most closely monitored measures of an entity's growth and market share.  It is one of the key figures that investors, bankers, customers, regulators and others look for in financial statements to gauge the past performance, as well as the future potential, of any company.  But getting it right -- and getting it right the first time -- can be much easier said then done.

Over the last decade, software has become a more critical component of many products and services for many industries, not just software providers.  As this occurs, companies and industries not traditionally in the software world may have to change their revenue recognition policies to those required for software companies.  Many times these rules seem cumbersome.  Being aware of these rules and how they may impact your business allows management a better opportunity to establish realistic expectations for the investor community.

Even more recently, the FASB has issued new guidance on the accounting for "multiple element arrangements".  In principle, these rules seem to give a better economic answer in recognizing revenue then the previous guidance.  But the devil is in the details.  Applying the guidance in practice requires applying much more judgment in establishing, for instance, fair value or best estimate of selling price.  Organizations may have to implement new controls or processing to track new data to help support certain estimates being made.

As if that wasn't enough, the FASB and the International Accounting Standards Board (IASB) are currently in the process of replacing the labyrinth of existing revenue guidance with a new global accounting standard that will apply to all revenue transactions, regardless of industry.  As those of you who have come to our two past FENG meetings on "accounting convergence" know, the convergence talks are moving relentlessly -- if rockily at times -- forward, and will likely result in some ways of looking at revenue that will differ yet again from where revenue recognition theory and practice has been in the past.  Understanding the effect of this change on your business will help you inform your key stakeholders, prepare internally, and limit surprises down the road.

Sara will bring home some of the basic principles of revenue recognition and work through a few examples to help us understand the complexity of both the software revenue recognition rules and the new multiple element arrangement guidance.  Sara will also give an update on the convergence project, specifically on the impact to the world of revenue recognition, as well as the expected timing of the new standards.

As always, we expect the meeting to be highly interactive, so be prepared -- and feel free -- to ask questions relevant to your own company's situation, or anything else you ever wanted to know... but were afraid to ask... about revenue recognition.

Original text:

Our topic for this meeting will be one we've never had before at the San Diego FENG, but one that I'm sure has become near and dear to many of our hearts over the years: Revenue Recognition.  It's a topic that has caused billion-dollar M&A deals to be put on ice when accounting inconsistencies arose.  It's a topic that has led to everything from frustrations to resignations to incarcerations.  And, more prosaically, it's a topic that can cause even the most even-tempered CFO of a small private company to reach for his or her bottle of Tums.  It needn't be that way.  This meeting will help bring a little order to the seeming chaos.
Some important “housekeeping” items for our meeting:

*** Parking: There will be ample free parking in the garage under the PwC offices or in the adjacent parking lot near the Scranton/Mira Mesa Food Court.  Drive through the garage to the second set of elevators, to the East Tower, and head up to Suite 300. ***

*** As usual we will have coffee, bagels and cream cheese for all attendees sponsor this month by Adrian Atilano, President-Executive Risk Division, Intercare Insurance Solutions.

*** Please type your name on both sides of the name tent card template that was attached to the announcement email, print it out on regular paper, and bring it with you to the meeting.

*** Thank you again to our colleague and Speakers Chair, Teddy Feliciano, for her work coordinating the arrangements for the excellent speaker at this and all of our monthly meetings.***

***Important reminder for those members maintaining their professional certifications: we offer the documentation for Continuing Professional Education (CPE) credits for our speaker presentations.  For those members interested in this, you may complete the appropriate forms, which we'll have available at the meeting, for 1.0 hours of CPE credit.***

 

Speaker

Sara Hyzer Senior Manager with PricewaterhouseCoopers (PwC)

About Sara Hyzer

Sara is a Senior Manager for PricewaterhouseCoopers (PwC), the world's second-largest professional services firm and one of the "Big Four" accountancy firms, with offices in 757 cities across 154 countries worldwide.  Sara has over eleven years of auditing, accounting and advisory experience at PwC, supporting both her public and private clients through a range of issues.  While in Boston with PwC, Sara was recognized in 2008 as one of "Boston's Future Leaders".
After spending her first ten years with PwC in the Boston area, she recently joined the San Diego office.  Sara has supported her clients over the years on numerous revenue recognition issues, specifically around software revenue recognition and the accounting for collaboration arrangements in the biotechnology industry.  She has also worked with a wide range of clients, ranging from venture-backed companies to multi-national corporations.  This experience has provided her a unique understanding of the challenges faced by companies across the range of development, from early stage through the mature company phase.
Sara is originally from Colorado, receiving her BS in Business Administration with an emphasis in Accounting from Colorado State University, and subsequently earning her CPA certifications in both Massachusetts and California.