The standard, along with subsequent amendments and clarifications made by the AFSB, will impact all professional services firms and are likely to have a significant impact on their financial reporting and internal control systems. There are four implementation phases that professional services companies can perform to support the introduction of the standard. Determining a stand-alone selling price can be simple if the company regularly sells the product or service on a stand-alone basis. However, when a company does not sell a particular performance bond itself, it must estimate the stand-alone selling price using one of the three methods described in the chart below. These methods are described in detail on page 23 of our guide to achieving turnover. A contract based on a set amount in dollars is an agreement with a fixed fee. For professional services firms, it is important to begin the implementation process by taking stock of their different types of contracts and determining the revenue streams that require a technical assessment. When you complete this step, you can define the scope of the project and focus on the contracts that require the most attention. As a result, professional services firms now have to exercise considerable judgment in determining the date and amount of revenue realization in their contracts with customers. Lisa Swartos has been active in public accounting since 2005. She specializes in supporting professional services companies at all stages of audits, audits and other assurance contracts. It can be obtained at (206) 302-6394 or lisa.swartos@mossadams.com.

Where a contract includes a third party that provides goods or services to a customer, it is a principal agent contract. Revenue should be broken down into categories that constitute the nature, amount and date of the transfer of goods or services. All companies must also disclose key decisions made when applying the CSA Topic 606 guidelines, including judgments on the date of performance of performance obligations, the determination of the transaction price and the allocation of amounts to performance obligations. In accordance with CSA Topic 606, an entity should record revenue when it transfers goods or services to a customer in which it is likely to be authorized to receive from the customer. Below is an overview of the most common types of contracts used by professional services firms and how the new guidelines can be accounted for in associated revenue accounting. . . .