Revenue Recognition Challenges and Financial Statement Reporting
Revenue is the life wire of every business and a company.s results will vary considerably, depending on when it chooses to recognize revenue. This article therefore examines the concept and the emerging issues relating to revenue recognition. The methodology adopted is that of library research because of the expository nature of the study. The study revealed that IAS Nos. 11 and 18 were not robust enough in framework regarding the observance of standards in revenue recognition even though it had laid the necessary foundations. The study revealed also the existence of a proposed new standards on revenue recognition which will be effective by the end of 2012 or early 2013. It was also revealed in this study that the financial reporting objectives of an enterprise will determine the choice of revenue recognition policy to be taken. The study equally revealed some subtle manipulations that can vitiate the true position of financial statements hence the revenue to be recognised by a business enterprise can be adversely affected if not effectively checked. It was recommended that the Financial Reporting Council of Nigeria should step up its oversight functions through external auditors on the activities of business organisations in Nigeria regarding their published financial statements. Secondly, it was recommended that auditor.s independence could be enhanced by granting social security and insurance to the external auditors.