Kira for Revenue Recognition (IFRS 15 and ASC 606)
Kira helps accounting firms and their clients adapt to changes in accounting standards, including IFRS 15 and ASC 606, which establish standards for recognizing revenue from contracts with customers (“Revenue Standards”).
Kira’s state-of-the-art machine learning technology automatically identifies and extracts information from contracts and comes with 33 built-in smart fields for the Revenue Standards. Using Kira’s intuitive user interface, accounting firms gain an immediate high-level understanding of contractual provisions relevant to the application of the Revenue Standards. If the review requires identification of additional, unusual or industry-specific information, Kira Quick Study can be used to identify virtually any desired clause.
Avoid potentially significant misstatement issues with fast and accurate contract reviews
The Revenue Standards require organizations reporting under IFRS or U.S. GAAP to consider, among other things, the terms of their customer contracts when recognizing revenue for financial accounting purposes. Specifically, the Revenue Standards prescribe the following 5-step methodology: (1) Identify the Contract, (2) Identify the Performance Obligations, (3) Determine the Transaction Price, (4) Allocate the Transaction Price to Performance Obligations and (5) Recognize Revenue. Steps 2 and 3 in particular require detailed consideration of various contractual terms to ensure that the correct amount of revenue is being recognized at the appropriate time.
The complexity introduced by the Revenue Standards increases the possibility that organizations may apply these standards incorrectly. Accounting firms can add value to their clients’ business by advising on solutions for ensuring these standards are applied accurately.
Furthermore, in their role as auditors, accounting firms are responsible for providing assurance to shareholders and other stakeholders of organizations that the revenue these organizations report in their financial statements complies with the Revenue Standards and is free from material misstatement. Firms must therefore consider an organization’s customer contracts when evaluating the application of these standards in the course of an audit engagement. Reviewing these contracts is not just time consuming, it also exposes accounting firms to potential liability if a material misstatement is not identified because relevant contractual terms were missed during the audit.
Kira can quickly review commercial contracts and highlight relevant provisions for the purposes of the Revenue Standards. This helps accounting firms advise clients on the application of these standards and also conduct contract reviews more efficiently during audit engagements.
Accounting firms can use the built-in Revenue Standards smart fields to locate specific concepts in commercial contracts relevant to these standards, including (without limitation):
How does it work?
Kira processes contracts in dozens of formats and automatically converts them to machine readable text. It includes workflow tools for your team to validate the results prior to them being exported into reports in Excel, Word or PDF.
Kira is the leader in machine learning contract data extraction
Kira has been used on thousands of concurrent projects, helping hundreds of organizations gain greater visibility into their contracts. Our users include many of the world’s leading professional service firms and companies, in over 40 countries. We are among the most used and trusted AI solutions for professionals anywhere. There’s a reason why.