Revenue Recognition

Deloitte’s AI-Driven Revenue Recognition Solution can transform the complex and manual process of revenue recognition into an automated, accurate, and compliant workflow. The solution begins by scanning and categorizing customer contracts—including amendments and side agreements—to identify those requiring revenue assessment. AI agents then parse contract terms to identify and separate distinct performance obligations, determining that all deliverables and service components are properly accounted for. Transaction price determination is automated, with AI calculating total contract value, factoring in discounts, rebates, contingencies, and applying probability-weighted estimates for variable consideration. The solution allocates transaction prices to each performance obligation using the relative standalone selling price method, leveraging observable prices and cost-plus margins where available. Revenue timing is assessed by consistently applying recognition criteria—such as control transfer, input/output methods, and customer acceptance—across all contracts. For obligations recognized over time, AI tracks progress using multiple measurement methods and validates the reasonableness of inputs like costs incurred, milestones, and time elapsed. Contract modifications are automatically identified, and the revenue impact is recalculated in real time, facilitating ongoing accuracy. Variable consideration estimates are continuously updated based on actual performance and changing probabilities, reducing the risk of revenue misstatements. The solution generates detailed revenue journal entries, including support and roll-forwards, and prepares required disclosure tables and narratives for financial reporting. Comprehensive cutoff testing is performed across all revenue streams to help ensure revenue is recognized in the correct period, while ongoing compliance monitoring tracks policy updates, standard changes, and implementation issues, alerting teams to any deviations. By automating and orchestrating the revenue recognition process, Deloitte’s solution can enhance efficiency, accuracy, and compliance, enabling finance teams to focus on strategic analysis and decision-making. This professional service utilizes Amazon Bedrock, Bedrock Agents, Strands Agents, Lambda and OpenSearch.