Revenue Recognition Policy Template
Every contract read for the determinations it forces, every rule matched to the contracts it governs, and a coverage score on the gap.
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Policy Coverage
[Company] — policy scored against [__] signed contracts
The join runs both ways. Down the rows, which determinations have a rule. Down the second block, which rules have contracts. Both directions produce deletions.
| Determination | Contracts where it must be decided | Decided by the policy | Not decided | Rule that decides it | Where the gap sits |
|---|---|---|---|---|---|
| Number of performance obligations | — | — | — | — | — |
| Principal or agent | — | — | — | — | — |
| Over time or point in time | — | — | — | — | — |
| Measure of progress | — | — | — | — | — |
| Enforceable contract term | — | — | — | — | — |
| Material right | — | — | — | — | — |
| Coverage | — | — | — | — |
Three states, and only two of them are visible in a straight read
| Decided by one rule | The policy works here and the preparer needs nobody |
| Decided differently by two rules | Findable by reading the policy, because the two rules contradict |
| Not decided at all | Invisible. Nothing in the document points at the hole |
Only the contracts know about the third state, which is why they get read before the policy does.
A revenue policy fails quietly. It contains no error a reader can point at, only a silence, and the silence sits where the hardest judgement in the contract population lives. Calderwood Systems had a fourteen rule policy that read well. Scored against its 68 signed contracts, it decided 165 of the 250 determinations those agreements force. The other 85 were not wrong. They were absent, and nothing in the document pointed at them.
The count runs both ways. Forward, four of the fourteen rules governed no contract at all, including percentage of completion language in a company that has never had a construction contract. Backward, six resale arrangements had no gross versus net rule of any kind. Those six are billed at 2,140,000 a year against 312,000 retained, so the two answers sit 1,828,000 apart, which is 9.9 percent of reported revenue. The SEC staff asked eBay this exact question about its revenue sharing arrangements.
Coverage came out at 66 percent, with 40 of the 68 contracts carrying at least one open determination and 13,352,000 of revenue behind them. The deferred revenue rollforward prices it: 4,080,000 of the 5,420,000 closing balance moves on an answer nobody has given. Reach the conclusion on one agreement with the ASC 606 contract memo, and run the whole exercise on books closed through the monthly close pack. The same register is what a billing process should invoice against, since a contract term missed by revenue recognition is usually missed at billing too.
What's in the pack
Contract Register sheet
One row per executed contract with the termination clause in its own words, plus the six determinations that agreement forces, each answered or marked not determined. Never blank, because a blank reads as decided.
Policy Coverage sheet
The join run both ways: determinations with no rule, and rules with no contracts. Coverage comes out as a percentage, and both blocks produce a deletion or an open item.
Performance Obligation Mapping sheet
Every promise in the contract including the ones nobody invoices, with the standalone selling price, the observable evidence behind it, the allocation and the difference from what was billed.
Open Determinations sheet
The gaps ranked by the revenue standing behind them, each with the evidence it needs, the person who owns it and the date it closes. First one out is worth 1,828,000.
Deferred Revenue Rollforward sheet
Opening plus billings less revenue by contract group, tied to the balance sheet at both ends, and reported alongside the ARR schedule so the metric and the accounts move together.
How a Policy Is Tested
The six recurring determinations and why coverage is countable, worked against three SEC staff comment letters including one asking Tempus Labs how an obligation is defined and priced.
Revenue Policy
The rewritten policy, organised by determination rather than by the five steps, each section naming the contract groups it governs and the open questions it leaves named as open.
Contract Review Checklist
Fifteen minutes on a standard form and an hour on anything negotiated, with the five clause patterns that stop the review and route it to technical accounting.
Deferred Revenue Note
What the rollforward means once it ties, why a determination can be the largest in the book and leave the balance untouched, and where it meets balance sheet substantiation.
Space rule
Every rule names its contracts. It governs every prompt here, and it is why a rule governing nothing comes out rather than being marked not applicable and left in.
How to use it
- 1
Open in River, or download it
Open the pack in River and let the agent build it from your own agreements, or download the blank Word and CSV files instantly with no account.
- 2
Send the executed contracts
Order forms, master agreements, statements of work and every amendment. Scanned PDFs are fine. A billing export on its own is not, because the terms live in the agreements.
- 3
Register first, policy second
Every contract gets a row and six answers. Revenue subtotals tie to the income statement, which is the only thing proving the register is complete.
- 4
Score, rank and rewrite
Coverage as a percentage, the gaps ranked by revenue with an owner and a date, then the policy rewritten from the register and shorter than the one it replaces.
Frequently asked questions
Is this template free?
Yes, all of it. Word documents and CSV sheets, no signup, no card. Edit with AI is a separate optional route for anyone who would rather hand over a folder of contracts than retype one. Everything else River publishes sits in the template library.
Why score a policy against contracts instead of against the standard?
Because a policy written from the standard is internally consistent and can still be silent on the largest judgement in the book. Scoring against the contracts is the only way to find a determination that has no rule, since nothing in the document itself points at the hole.
What are the six determinations?
Number of performance obligations, principal or agent, over time or point in time, measure of progress for anything over time, the enforceable contract term, and whether a customer option is a material right. The SEC staff put three of the six to MDC Partners in a single comment.
Does this conclude on my contracts?
No. It establishes what has to be decided, what each answer is worth and in what order to reach them. Concluding on a single agreement takes evidence, a preparer and a reviewer, and that belongs in the ASC 606 contract memo instead.
Why does the enforceable term matter more than the stated term?
A thirty-six month order form with a costless exit on ninety days notice is a ninety day contract for measurement, which changes the transaction price and everything allocated from it. Read the termination clause, not the cover page, and copy it into the register verbatim.
What makes an option a material right?
It is a judgement, but the option itself is a fact and gets recorded either way. Renewal discounts are the most commonly missed, because they cost nothing at signature and appear on no invoice. The SEC staff raised this with eBay directly.
What format are the downloaded files?
Four .docx documents covering the test, the rewritten policy, the review checklist and the deferred revenue note, plus five .csv sheets, zipped into one file. They open natively in Word, Pages, Google Docs, Excel, Numbers and Sheets.
Find out what your policy does not decide
Download the blank pack as Word and CSV files, or open this exact pack in River and let the agent score your own policy against your own contracts.
Edit with AI