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February 5, 2023

Accounting News Roundup: Revenue Recognition and Exxon’s Emission Costs | 06.05.17

revenue recognition exxon emissions

New revenue recognition rules

The new revenue recognition rules go into effect later this year, so everyone is working like mad to get ready for it. Unfortunately, the Wall Street Journal reports that not everyone is going to be ready, which means people’s lives are terrible now. The story cites an EY study that found that “More than a fifth” wouldn’t be ready by the end of the year deadline and would have to rely on “manual workarounds” at the outset

Maybe I’m wrong, but I can’t think of a better way to get artificial intelligence skeptics to reconsider how they feel about the technology than a massive accounting rule change that requires an even more massive technology overhaul. This just sounds awful:

“It starts as an accounting exercise and ends up as an IT project,” said Tony Skiadas, controller for the New-York based company. “It uses up a lot of resources and puts pressure on the team.”

Verizon began the work three years ago, he said. He wouldn’t reveal how much the effort has cost, but employees have already spent thousands of work hours on the project. As the finance staff determined how the accounting needed to change, Verizon’s software programmers wrote new code to transcribe information from the contracts to the financials.

“Doing it all on a spreadsheet is not tenable,” said Mr. Skiadas.

I mean, obviously. But having a computer read a new accounting rule and then asking it to reprogram all the systems based on that accounting rule wouldn’t only be tenable, it’d be ideal! It wouldn’t even ask to take a break. Then you could focus all your time on finding those accountants and programmers other things to do with their time. They’ll likely be bored.

Exxon’s emission costs

One idea for keeping all those accountants and programmers busy would be to help ExxonMobil figure out how to account for all their emission costs. The New York Attorney General isn’t convinced that the company knows what it’s doing or is trying to pull a fast one:

[A]ccording to court filings by the New York State attorney general’s office, there is new evidence that the company has not actually followed that course, potentially overstating the value of its assets and defrauding its shareholders.

According to the filings, made by the state on Friday, “evidence suggests not only that Exxon’s public statements about its risk management practices were false and misleading, but also that Exxon may still be in the midst of perpetrating an ongoing fraudulent scheme on investors and the public.”

It boils down to whether or not Exxon’s unextracted assets are worth as much as they say they are. The company has been using a “proxy-cost of carbon” which “may be a sham” according to one of the AG’s reports.

But if you go back to my original thought — It makes sense for accountants whose jobs are going to be automated to find jobs that aren’t going to be automated. GAAP for emissions, as an example, isn’t really a thing yet, so it’s conceivable that quite a few people could work on that awhile. Unless the machines start writing the accounting rules and implementing them into the software. If that ever happens, then we’ll have to think harder about how to spend our working hours.

Previously, on Going Concern…

I wrote about the new PwC partner class that the firm announced on Friday.

In other news:

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