Effective May 21, 2023, P&N has joined EisnerAmper. Read the full announcement here.
Construction companies are in the midst of significant changes, including constantly-evolving regulations, tax and tariff changes, technology opportunities and risks, and others. The pace of change has never been greater, and it is critical that construction companies are preparing for these changes. Here are a few hot topics impacting construction companies.
Revenue Recognition is perhaps one of the hottest topics around these days, and for good reason. This standard is a sweeping change with far-reaching implications, and is applicable to all contracts with customers (with a few exceptions*).
For most construction companies, the Revenue Recognition standard will go into effect in 2019. The Core Principle, cited in the standard, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It is a principles-based approach that will require significant judgment.
If you need help understanding the impacts to your construction company, or assistance implementing Revenue Recognition, contact P&N.
*Revenue Recognition does not apply to lease contracts, insurance contracts, financial instruments, guarantees, and non-monetary exchanges in the same line of business to facilitate sales to customers.
On the heels of Revenue Recognition is the New Lease Standard, which will become effective for most construction companies in 2020. The first crucial step in determining applicability is defining and determining whether a contract is considered a lease. It’s much more extensive than previous U.S. GAAP, and the term “lease” does not have to appear in the contract for the standard to apply. The standard requires that if a lease contract exists, the related asset/liability is recorded on the balance sheet at the initial recognition. There are significant business implications to this accounting standard, including collection and storage of data, changes to financial risk and performance metrics, and others.
In 2017, President Trump signed a historic tax reform bill into law. Of the many changes that the law enacted, perhaps one of the most radical changes was the creation of the new section 199A which gives a deduction to pass-through entity owners in the amount of 20% of qualified business income. The IRS recently issued guidance on how the new deduction will be applied. Click here to read our top 10 takeaways from the proposed regulations.
The holiday shopping rush prompts the busiest online shopping period of the year, and your employees are included. With the increase in online activity comes an increase in phishing attempts, and construction companies are not immune. In fact, in a recent P&N poll, roughly one-third of respondents indicated that their company doesn't require periodic cybersecurity training for employees. The result of employees not knowing how to handle cyber risks can be disastrous. For more information on the risks of phishing and the importance of employee education, check out this P&N Cybersecurity Insights article.