Revenue Recognition Of A Number Of Issues

Revenue usually is the largest single item in financial statements and studies indicate that revenue recognition is the single largest category of financial statement restatements.Consequently, issues involving revenue recognition are among the most important.and the most difficult.that standard setters and accountants face.Recently, early revenue recognition has received the attention of standard setters. For example, former Securities and Exchange Commission (SEC) Chairman Arthur Levitt listed premature recognition of revenue as one of the five areas of earnings management and called for immediate consideration of interpretative accounting guidance on the "do's and don'ts" of revenue recognition. A March 1999 report entitled Fraudulent Financial Reporting: 1987-1997 An Analysis of U.S.Public Companies, sponsored by the Committee of Sponsoring Organizations (COSO) of the Tweadway Commission (the COSO Report), indicated that over half a financial reporting frauds in the study involved the overstatement of revenue. In recent years, FASB, ASB,and IASB undertake projects on revenue recognition, leading to a new comprehensive accounting standard on revenue recognition or amendment to the related guidances on revenue and liabilities in certain of the Concepts Statements or Framework. This dissertation focus on the issues involving revenue recognition, especially some basic aspects, including basic concepts about revenue recognition such as the nature and meaning of revenue, the basis of revenue recognition-accrual basis or cash basis, the basic criterion of revenue recognition, etc. And the issues of several kinds of revenue recognition are also discussed detailedly. Furthermore, there is a specific chapter about the audit issues in revenue recognition in this dissertation. Finally, the development of accounting standard on revenue recognition is discussed according to current international efforts. The dissertation consists of five chapters:Chapter 1 puts forward the main issues of this dissertation and discusses the importance and complexity of revenue recognition.Chapter 2 discusses several basic concepts involving revenue recognition, such as the meaning of recognition, the nature of revenue, the basis of revenue recognition and the basic criterions of revenue recognition. Chapter 3 discusses the practice about several kinds of specific economic business. This chapter summarizes key accounting guidance regarding whether and when revenue should be recognized in accordance with the basic criterion set in chapter 2 especially the transfer of primary risks and rewards of ownership of the product.Chapter 4 discusses audit issues in revenue recognition. This chapter discusses the responsibilities of management, boards of directors, and audit committees for reliable financial reporting, summarizes key aspects of the auditor's responsibility to plan and perform an audit under generally accepted auditing standards, and describes procedures that the auditor may find dffective in limiting audit risk arising from improper revenue recognition. Chapter 5 proves into the development of accounting standard on revenue recognition and focus on the subject of principles-based accounting standards.