Marriott paper

Submitted By briwendel5624
Words: 5391
Pages: 22

Marriott International, Inc. is a global hotel chain with more than 3,000 properties in 68 countries. The corporation operates about 1,000 of its lodging facilities and obtains most if its revenue through leasing agreements and management fees from their property owners (Renner, 2010). The primarily measure performance among comparable properties through RevPAR (Revenue per Available Room) by dividing total room sales by the total room nights available to guest for that specific period (Renner, 2010). Marriot strives to continue to cut costs and sustain focus on customer and employee satisfaction in order to retain business. This report will discuss areas where the firm is vulnerable to SEC action and assess the integrity and rigor of the firm’s corporate governance structure. This report will also provide any weaknesses found in the firm’s corporate governance structure and recommendations to strengthen the governance policy. Included in this report will also be recommendations for future growth of the company. Revenue recognition is a big area that the SEC takes a look at when reviewing a company’s financial statements. There are many simple ways to manipulate when a company records revenue. The SEC is trying to ensure companies are not incorrectly recording their revenue, whether the company is recognizing the revenue too soon or too late. Just recently a new revenue recognition standard has been implemented that will take effect for reporting periods beginning after Dec. 15, 2016 for U.S. public companies (Tysiac, 2014). The new five step process for revenue recognition is:
1. Identifying the contract with a customer
2. Identify the separate performance obligations in the contract
3. Determine the contract price
4. Allocate the transaction price to the separate performance obligations in the contract
5. Recognize revenue when (or as) the company satisfies a performance obligation (Tysiac, 2014)

With the new standards taking effect, companies will have to choose the appropriate transition method based on how the standard affects the company. Under the full retrospective method, public companies would be required to restate two comparative years prior to the implementation date (Tysiac, 2014). With this method, companies may choose to take advantage of numerous practical expedients, including one that permits them not to restate contracts that begin and end with-in the same annual reporting period for contracts completed before the date of initial application (Tysiac, 2014). Under the alternative method, the new standard would be applied only to contracts that are not completed under legacy IFRS (International Financial Reporting Standards) or U.S. GAAP (Generally Accepted Accounting Principles) at the date of initial application. Under this method, companies would recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of retained earnings in the year of initial application (Tysica, 2014). No comparative year restatements will be necessary. The company will be required to add some detailed disclosures to the financial statements. The full retrospective method is probably the better option to choose. Although the method is more complicated, it will give investors a full understanding of trends (Tysica, 2014). Although having to put more effort into the financial statements, having more transparency will lead to less scrutiny by the SEC when filing the company’s annual report. This will also instill more confidence in investors who currently invest and also the ones that are looking to invest in the company in the near future. With these new standards in place, it could mean that the company will need a substantial over-haul in business process, accounting systems, or both and as well as employee training (Tysica, 2014). Each transition option has pros and cons. The company may want to at least consider both options, and they won’t be able to do that without a