Over the years, I’ve seen finance teams treat sales commissions like a footnote. A line item that gets tallied at payout and ignored thereafter. However, when ASC 606 (Revenue Recognition from Contracts with Customers) was introduced, that changed.
Suddenly, commissions weren’t just payouts—they became capitalized costs, amortized assets, and high-risk entries in your revenue accounting process. One error, and you may face scrutiny in funding rounds, lose compliance, and spend hours again correcting everything- It is not worth the hassle.
And that’s when the audit headaches began.
These days, auditors dig deeper. They want to see how you calculated the benefit period, why one rep’s commission was spread over 24 months while another’s wasn’t, and whether you applied ASC 340-40 logic consistently across the board. If the answers aren’t clear and backed by data, you're looking at a major compliance risk.
So, whether you’re preparing for your first audit under ASC 606 or still recovering from the last one, here are five proven tips to help you get audit-ready and still keep some hair on.
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I’ve worked with finance teams where commission records lived across spreadsheets, email threads, Slack messages, and sometimes, this is real, on notepad. You can guess how that audit turned out.
Dispersed data isn’t just inefficient. It creates gaps, mismatches, and worst of all, doubt. The moment an auditor finds inconsistent or incomplete commission records, it raises questions about everything else in the system.
What works instead is a unified source of truth. All your commission data, including plans, calculations, approvals, and adjustments, should live in one place. That system should pull directly from your CRM, reflect updates from HR or payroll, and offer time-stamped logs for every change. This allows for a comprehensive audit trail and easier audits.
When everything is traceable, your audit trail becomes self-evident. No explaining, no scrambling.
This is the part that often trips teams up. Under ASC 606, commissions tied to new or renewal contracts typically need to be capitalized and amortized over the period of benefit. But defining that period and applying the right amortization model isn’t always straightforward.
There’s no one-size-fits-all method.
For high-churn segments, shorter benefit periods might make more sense. For long-term contracts with predictable renewal cycles, a 3–5 year window could be reasonable. You can go straight-line or even use trigger-based schedules if that better reflects how value is transferred.
What matters is consistency and justification. Auditors don’t expect perfection, but they do expect a documented, rational method. I’ve seen teams make the right judgment but fail to document it, which is just as problematic.
That’s why I always recommend automation. A good tool will calculate amortization schedules automatically, adapt to changes in benefit periods, and keep audit-ready logs of every calculation. Visdum, for instance, lets you define the logic once and then handles the rest in real-time.
No second-guessing. No formula errors. Just scalable compliance.
Ask any auditor what they want, and they’ll say two things: numbers and rationale.
Most teams get the numbers part. But it’s the rationale, the “why” behind your decisions, that often gets overlooked. Why was that commission capitalized and not expensed? Why was it amortized over 30 months? What changed from last year?
These questions need answers. And those answers should be written down, not sitting in someone’s head or buried in a calendar reminder from two years ago.
Good documentation includes:
Trust me: when audit season hits, having this in one place is a lifesaver. At Visdum, we built out export features specifically for this reason—finance teams shouldn’t have to compile documentation under pressure.
This is where companies that think they’re compliant often discover they aren’t.
They’ve capitalized commissions, sure. They’ve maybe even amortized them. But they haven’t considered impairment. Or reassessment triggers. Or the distinction between direct vs. incremental costs. And unfortunately, partial compliance isn’t good enough.
A truly audit-ready team looks at every layer:
The key isn’t just checking boxes. It’s treating commissions as evolving financial assets that need ongoing review and adjustment.
Auditors know what to look for. They’ve seen all the corner-cutting methods. You’re better off staying a step ahead.
Manually handling commissions under ASC 606 is a spreadsheet nightmare. I’ve seen files with hundreds of rows, custom amortization tabs, formulas that break if you insert a new rep, and a single missed cell that threw off an entire quarter.
It’s not just inefficient. It’s dangerous.
Automation tools reduce risk by standardizing calculations, storing historical data securely, and generating audit-ready exports on demand. They also reduce the mental load on your finance team, so they can focus on analysis rather than fixing cell errors or triple-checking math.
Some benefits we’ve seen with automation:
With Visdum, we’ve built our entire platform around audit-readiness. Complete automation of sales commission also means you don’t have to worry about accuracy, audits, or documentation.
If you’re building internal processes or looking to improve controls, I would suggest the RAPID model. It’s simple, memorable, and covers everything auditors want to see.
If you're unsure where to begin, start with this checklist. It helps you identify which part of your commission process may need attention.
Want to pass audits with ease? Start here:
Use the RAPID model (Record, Attribute, Present, Interpret, Document) to stay ahead of the curve. Tools like Visdum help finance teams handle ASC 606 compliance and commission amortization without the manual grind. Complete audit trails allow for a much less dreaded audit season.
Audits shouldn’t derail your quarter. They shouldn’t consume your headcount or force all-nighters just to find old commission logs.
With clear systems, the right amortization model, proper documentation, and smart automation, sales commission audits can become just another routine check and not a scramble to prove compliance.
ASC 606 raised the bar. But it also created an opportunity to rethink how we treat commissions: not as expenses to be tracked, but as strategic assets to be managed and accounted for.
If you’re ready to bring that mindset to your organization, tools like Visdum are built to make it easy.
Let Visdum help you automate amortization and ace your ASC 606 compliance.
No, only incremental costs directly tied to acquiring a specific contract must be capitalized. These typically include new business commissions and sometimes renewals, depending on your company’s policy. General performance bonuses or discretionary incentives are usually expensed immediately.
You need to estimate the benefit period, which is the timeframe over which the contract delivers economic value to your company. This could vary based on contract length, average customer lifespan, renewal likelihood, and industry norms. Consistency and documentation are key.
If a customer churns early, downgrades significantly, or if there are changes in expected benefits, you may need to reassess the commission asset. Impairment occurs when the remaining unamortized cost no longer reflects future economic value and must be written down.
You should retain:
Auditors expect a clear paper (or digital) trail for every key assumption and calculation.
Automation reduces manual errors, ensures consistency, maintains detailed audit logs, and generates ready-to-export reports. Tools like Visdum apply ASC 606 logic automatically, helping finance teams stay compliant without wrestling with complex spreadsheets.
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