Three-quarters of companies that have made the accounting changes required by the new revenue recognition standard have seen their costs increase, and most of them are using manual workarounds, according to a new survey by Ernst Young.

EY’s poll found that 75 percent of companies reported that total costs since their revenue recognition program was initiated have increased, while more than 80 percent of the survey respondents said they will use or have used manual workarounds in their reporting.

However, the survey also found some benefits to the new accounting standard, with most CFOs and CIOs saying that over the long term, implementing the changes in the revenue recognition standard will deliver a return exceeding the investment their companies will make.

Public companies are supposed to be well on the way to implementing the rev rec standard. The Financial Accounting Standards Board approved the standard in 2014 in conjunction with the International Accounting Standards Board. They later deferred the effective date of the standard, giving companies and their accountants an extra year to implement it. Public companies were supposed to begin implementing it at the end of 2017, while private companies were supposed to start using it at the end of last year.

For the survey, EY polled 300 CFOs and CIOs from U.S.-based public and private companies in multiple industries last October and November to identify the main challenges they were facing. The survey found that 71 percent of the CFOs and CIOs polled at public companies said they have made changes to their disclosures since first reporting under the new standard. Meanwhile, 36 percent of the private companies surveyed said they were still designing solutions, such as establishing information technology systems or business process requirements, at the time they were polled; 27 percent were in the diagnostic assessment stage; and only 26 percent were in the implementation stage. Nevertheless, most of the companies indicated they’re optimistic about post-implementation outcomes, especially in terms of improved data quality and enhanced risk, control and compliance.

Overall, 43 percent of the organizations polled, both public and private, anticipate they will continue to make significant process changes after the effective date of the standard. That’s even more pronounced for private companies (54 percent), whose effective date was a year later, compared with public companies (38 percent).

The amount of the budget devoted to the revenue recognition standard has turned out to be much larger than originally anticipated. The majority of companies (75 percent) reported that total costs since their revenue recognition program was initiated have increased. On average, public and private companies are estimating $3.3 million in total costs. In an earlier 2017 EY survey of finance and IT professionals, more than half of them (55 percent) expected it would cost $1 million or less to implement the changes.

“There is no question that implementing the new revenue recognition standard has already presented a significant financial, technological and operational challenge – and a bigger one than many companies anticipated, as the survey results demonstrate,” said Éloïse Wagner, EY Americas accounting change leader for revenue recognition, in a statement. “And just because the implementation date has passed for public companies does not mean revenue recognition implementation is complete. Transitioning short-term manual workarounds to long-term technology solutions and adapting programs to reflect comments received from regulators, auditors and other stakeholders means significant work is still ahead. It’s likely private companies will also be dealing with many of the same issues over the next year or more.”

Eighty-eight percent of all the organizations, both public and private, surveyed by EY this time around found that getting the required data for the new financial disclosures was challenging. Nearly half (46 percent) of the CFOs and CIOs polled by EY said they have experienced or expect they will experience implementation difficulties with systems challenges, followed by problems allocating resources due to competing priorities (41 percent) and collecting sufficient required data (38 percent). When they were asked about which specific program elements would be a challenge, 55 percent indicated they have found or expect that developing new accounting policies and procedures will be a challenge, followed by designing new process changes (54 percent) and developing new controls (47 percent). That’s down from last year’s survey, however, when 63 percent of the CFOs polled, and 66 percent of the CIOs surveyed, indicated difficulty with these items.

EY’s survey did show some good news about the new standard. Nearly all (94 percent) CFOs and CIOs agreed that, over the long term, implementing the changes dictated by the new standard would provide a value return exceeding the investment they will make, up from 62 percent last year. Many organizations are already experiencing some positive outcomes from implementing the rev rec standard, including improving data quality and data-driven insights into business performance (42 percent), enhancing risk, control and compliance (39 percent), transforming systems and driving greater process automations (38 percent) and identifying strategic cost reduction opportunities (38%).

In addition, nearly every CFO and CIO polled (96 percent) said they believe this has been or will be an opportunity to position their functions at the forefront of business change and transformation, up from 51 percent last year.

“There is a light at the end of the tunnel,” said John McGaw, EY Americas accounting change leader, in a statement, “Organizations ultimately see the value and promise in these changes. By taking a strategic approach, they can actually drive improvements across their systems, processes, controls and operating models. The journey has become more than a task to be completed; it is now an opportunity to drive business transformation.”