What it is
Deferred revenue is where premature revenue recognition hides: billings arrive before service, and a faulty release to revenue shows up as a shrinking liability. The audit rolls the balance, ties it to the ledger and recomputes the release for ratable contracts.
This workbook rolls beginning deferred revenue through billings, revenue recognized and other changes for up to 50 customers or streams, ties to the sub-ledger and GL, and recomputes revenue and deferred revenue for up to 50 fixed-fee ratable contracts by days. It also splits the remaining performance obligation into within and after 12 months.
When to use it
- Auditing a subscription, maintenance, membership or tuition business.
- Testing the contract liability and the revenue released from it.
- Preparing the contract balances and remaining performance obligation disclosure.
What’s inside
- Rollforward by customer or stream with sub-ledger tie-out and a share of the opening balance recognized
- Ratable recompute by days for expected revenue, deferred revenue and unbilled amounts
- Remaining obligation within 12 months and after
- Footing checks and differences highlighted by formula
Standard cited
This template follows ASC 606 / AU-C 240. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 240 explained.
Questions
How is a ratable contract recomputed?
Days elapsed from the start date to the balance sheet date, divided by days in the contract, times the contract value, gives expected revenue to date. Compare it with the client’s revenue and compare billings less expected revenue with the deferred balance. This fits fixed-fee stand-ready obligations only.
What if revenue exceeds billings?
The excess is an unbilled receivable or contract asset. The recompute tab shows it as a negative deferred amount, and contract assets and liabilities are netted per contract, not across contracts.
What does ASC 606 require to be disclosed?
Opening and closing contract balances, revenue recognized in the period that was in the opening contract liability, and information on remaining performance obligations, unless an exemption applies (ASC 606-10-50). The 12-month split here is a starting point.
Related templates
- Audit Program: SaaS and Software Company
- Audit Program: Accounts Receivable and Revenue
- Disclosure Checklist: Leases (ASC 842) and Revenue (ASC 606), Short Form
- Cutoff Testing Workpaper (Sales, Purchases, Inventory)
Last updated 11/05/2026. All free templates.