Autodesk 2016 Annual Report Download - page 101

2016 Form 10-K 29
Changes in existing financial accounting standards or practices, or taxation rules or practices may adversely affect our
results of operations.
Changes in existing accounting or taxation rules or practices, new accounting pronouncements or taxation rules, or
varying interpretations of current accounting pronouncements or taxation practice could have a significant adverse effect
on our results of operations or the manner in which we conduct our business. Further, such changes could potentially
affect our reporting of transactions completed before such changes are effective.
For example, the U.S.-based Financial Accounting Standards Board (“FASB”) is currently working together with
the International Accounting Standards Board (“IASB”) on several projects to further align accounting principles and
facilitate more comparable financial reporting between companies who are required to follow U.S. Generally Accepted
Accounting Principles (“GAAP”) under SEC regulations and those who are required to follow International Financial
Reporting Standards ("IFRS") outside of the U.S. These efforts by the FASB and IASB may result in different accounting
principles under GAAP that may result in materially different financial results for us in areas including, but not limited to
principles for recognizing revenue and lease accounting.
It is not clear if or when these potential changes in accounting principles may become effective, whether we have
the proper systems and controls in place to accommodate such changes and the impact that any such changes may have on
our consolidated financial position, results of operations and cash flows. In addition, as we evolve and change our
business and sales models, we are currently unable to determine how these potential changes may impact our new models,
particularly in the area of revenue recognition.
We are investing in resources to update and improve our information technology systems. Should our investments not
succeed, or if delays or other issues with new or existing internal technology systems disrupt our operations, our business
model transition could be compromised and our business could be harmed.
We rely on our network and data center infrastructure, technology systems and our websites for our development,
marketing, operational, support, sales, accounting and financial reporting activities. We continually invest resources to
update and improve these systems and environments in order to meet the growing and evolving requirements of our
business and customers. In particular, our transition to cloud-based products and a subscription only business model
requires considerable investment in the development of technologies, and back office systems for technical, financial,
compliance and sales resources to enable a scalable organization.
Such improvements are often complex, costly and time consuming. In addition, such improvements can be
challenging to integrate with our existing technology systems, or uncover problems with our existing technology systems.
Unsuccessful implementation of hardware or software updates and improvements could result in disruption in our
business operations, loss of revenue, errors in our accounting and financial reporting or damage to our reputation and
compromise our business model transition.
In preparing our financial statements we make certain assumptions, judgments and estimates that affect amounts reported
in our consolidated financial statements, which, if not accurate, may significantly impact our financial results.
We make assumptions, judgments and estimates for a number of items, including the fair value of financial
instruments, goodwill, long-lived assets and other intangible assets, the realizability of deferred tax assets and the fair
value of stock awards. We also make assumptions, judgments and estimates in determining the accruals for employee
related liabilities including commissions, bonuses, and sabbaticals; and in determining the accruals for uncertain tax
positions, partner incentive programs, product returns reserves, allowances for doubtful accounts, asset retirement
obligations and legal contingencies. These assumptions, judgments and estimates are drawn from historical experience
and various other factors that we believe are reasonable under the circumstances as of the date of the consolidated
financial statements. Actual results could differ materially from our estimates, and such differences could significantly
impact our financial results.
Our financial results could be negatively impacted if our tax positions are overturned by tax authorities.
We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Our
effective tax rate is primarily based on our expected geographic mix of earnings, statutory rates, intercompany transfer
pricing, and enacted tax rules. Significant judgment is required in determining our effective tax rate and in evaluating our
tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer pricing policies, are
2016 Annual Report