B2W Flipbooks

Page | 14 INTERNAL PROCEDURES REQUIRED OF CONTRACTORS TO COMPLY WITH THE NEW STANDARD RELATED TO DETERMINING PERFORMANCE OBLIGATIONS • Contractors should develop fact patterns for certain types of contracts they typically enter into to simplify the determination of performance obligations, but extreme care must be taken to avoid inappropriately determining performance obligations for unique contacts. • Contractors should determine performance obligations initially during the contract writing/acceptance processes, but care must be taken to ensure additional change order and other contract modifi cations do not represent new performance obligations requiring a separate stream for revenue recognition. Project accountants and the fi nance department should work closely with preconstruction and project management to ensure all agree on the various promises within a contract. Internal control points related to the identifi cation of multiple performance obligations. • Adoption of a checklist or decision tree to be completed for each new contract that supports the ultimate conclusions, includ- ing questions such as: - Does the contract include more than one good or service that could be considered distinct? - Are the goods and services part of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer? - Does the contract include signifi - cant service of integrating goods or services to provide a com- bined output contracted for by customer? - Does one or more of the goods or services signifi cantly modify or customize one or more of the other goods or services in the contract? - Are the goods or services highly interdependent or highly interre- lated? - Are you providing a stand-alone benefi t which is distinct (in the eyes of the customer) in the con- text of the contract? The checklist/decision tree should be tailored to specifi c considerations pertinent to a contrac- tor's individual contract types. The preparation and review of the document should be per- formed by competent individuals familiar with the requirements under the new standard. Assessing Multiple Performance Obligations (continued) >

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