Revenue Recognition

A high-tech multibillion company redesigned their sales-processes. As a result several activities have been transferred to shared service centers around the world.

Due to the sales process redesign, the company had some major challenges with the accurate and timely recognition of quarterly sales. Since the company is SEC-listed, management identified revenue recognition procedures as highly sensitive within the overall financial statement closing procedures. The auditor of the company is a big-four audit firm which also identified revenue recognition as a audit sensitive process within year end and quarterly audit/review procedures.

Global Forward Approach
Global Forward was commissioned to support the coordination of the substantive (cut-off) procedures as a part of companies quarterly financial statement closing procedures. The overall sales-process, including financial accounting, consists of several actions steps within several departments (e.g. sales, logistics and controlling).  Based on our experience, both given from a business and audit perspective, we have chosen a pro-active, preventive approach with ongoing communication with companies management and the auditors.

Implementing centralized coordination procedures regarding revenue recognition improved the accuracy and timing of internal sales recognition procedures. As a result management was able to  provide group management with a reliable sales figure within companies tighten reporting schedules. Together with the auditors we improved the effectives and efficiency of quarterly and year end review and audit procedures. We shared our knowledge and the company operates independently now.