Financial Accounting Blog

Tuesday, December 16, 2003 announced that the SEC was expected to release guidelines for revenue recognition as a result of the proliferation of frauds that involved premature revenue recognition.
"Premature revenue recognition appears to be the recipe of choice for cooking the books." So quipped Walter Schuetze, chief accountant in the Securities and Exchange Commission's Enforcement Division, in a recent speech. Revenue-recognition issues accounted for about 50 percent of fraud cases in a study by the Committee of Sponsoring Organizations of the Treadway Commission of 200 SEC probes. It's no wonder, then, that following its bulletin on materiality (see "Playtime Is Over," September), the SEC is expected to release pointed guidance on properly recognizing revenue.