Blackberry post-mortem and future impact of new accounting regulation

.Below is a comment issued on behalf of Tom Crawford, CEO of Aptitude Software.  The company is a global financial software specialist and is working with many of the world’s largest organisations to transform their finance function

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Tom Crawford, CEO, Aptitude Software said: “The IFRS 15/ASC 606 regulations promise international alignment on how companies record revenue.  We’ve seen first-hand that adopting the new standards requires a specialist solution that can account at the contract component level. Whilst the underlying economics of any one business will not be affected, key performance indicators relied upon by investors, are impacted by the new rules.

Blackberry’s annual growth figure was released at 6% less than the previous financial year.  The real problem in this case was Blackberry’s inability to articulate the impact of the new regulations (ASC 606/IFRS 15) to set expectations of their investors.  A lot of companies haven’t used appropriate systems to produce their financial reporting using the new rules, leaving investors unsure about how the results compare to prior periods.

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While Blackberry won’t be alone in their situation, many companies have been able to set investors’ expectations as to how KPIs will be changed and not all companies have taken short-cuts.  Those that have deployed revenue recognition accounting engines to produce the new financial reporting will be armed to provide more detailed, forward-looking financial reporting to their investors.  As the pace of business continues to increase and regulations create added pressure, CFOs must be able to deliver forward-looking, financial transparency for the investment community in order to compete.”

Some additional background on Aptitude Software:

  • This year, Aptitude’s proprietary software supports businesses with combined revenues approaching $1 trillion and over 500 million end customers.
  • 3 of the top 4 telecoms operators in the US use Aptitude Software to support with global accounting change projects.
  • Aptitude Software has publicly announced strategic partnerships with both KPMG and Deloitte.
  • Aptitude’s annual Revenue Recognition Conference brings together finance and business leaders to explore the global aftermath of new accounting regulations that came into effect this year.