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Significant Accounting Policies (Policies)
9 Months Ended
Oct. 31, 2017
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
Basis of Presentation
 
In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements fairly present the financial information contained therein. These statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form
10
-Q and Article
10
of Regulation S-
X.
In management
’s opinion, all necessary adjustments, consisting of normal, recurring and non-recurring adjustments, have been included in the accompanying Condensed Consolidated Financial Statements to present fairly the financial position and operating results of QAD Inc. (“QAD” or the “Company”). The Condensed Consolidated Financial Statements do
not
include all disclosures required by accounting principles generally accepted in the United States of America for annual financial statements and should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form
10
-K for the year ended
January 31, 2017.
The Condensed Consolidated Financial Statements include the results of the Company and its wholly owned subsidiaries. The results of operations for the
three
and
nine
months ended
October 31, 2017
are
not
necessarily indicative of the results to be expected for the year ending
January 31, 2018.
New Accounting Pronouncements, Policy [Policy Text Block]
Recent Accounting Pronouncements
 
With the exception of those discussed below, there have been
no
recent changes in accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) or adopted by the Company during the
 
nine
months ended 
October 31, 2017,
that are of significance, or potential significance, to the Company.
 
In
May 2014,
the FASB issued ASU
2014
-
09,
 
Revenue from Contracts with Customers
. The standard was issued to provide a single framework that replaces existing industry and transaction specific U.S. GAAP with a
five
-step analysis of transactions to determine when and how revenue is recognized. The accounting standard update will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In
August 2015,
the FASB issued ASU
2015
-
14,
 
Revenue from Contracts with Customers (Topic
606
): Deferral of the Effective Date
, to defer the effective date of ASU
2014
-
09
by
one
year. Therefore, ASU
2014
-
09
will become effective for the Company beginning in fiscal year
2019.
The Company expects to adopt the requirements of the new standard in the
first
quarter of fiscal
2019,
utilizing the modified retrospective method of transition.
 
The Company anticipates this standard will have a material impact on its consolidated financial statements. Due to the complexity of some contracts, the actual revenue recognition treatment required under the new standard for these arrangement
s
may
be dependent on contract-specific terms and vary in some instances. The Company has assigned internal resources and has hired
third
party consultants to assist in the evaluation of that impact. While the assessment of all potential revenue impacts of the standard is on-going, the Company currently believes the most significant revenue impact relates to accounting for software license revenue. The requirement to have vendor specific objective evidence (“VSOE”) for undelivered elements to enable the separation of revenue for the delivered software licenses is eliminated under the new standard. In addition, removal of current limitations on contingent revenue
may
result in revenue being recognized earlier for some contracts. The Company does
not
expect a material revenue impact related to subscription, maintenance and professional services and is still in the process of evaluating the impact of the new standard on these arrangements.
 
The Company is evaluating the impact of the standard on recognition of
costs related to obtaining customer contracts, primarily with respect to sales commissions, sales bonuses and sales agent fees. The Company is anticipating it will record a material adjustment related to the accounting of costs to fulfill a contract because the commission and sales bonuses accounting under the new standard is significantly different than the Company's current policy of expensing commissions and sales bonuses upfront. The new standard will require the Company to defer direct and incremental commission costs to obtain new subscription and maintenance contracts and amortize those costs over the expected period of benefit. We are still evaluating the period of benefit but expect it to be approximately
five
years
.
 
While the Company continues to assess the potential impacts and disclosure requirements of the new standard, the Company cannot reasonably estimate quantitative information related to the impact of the new standard on the financial statements.
 
In
February 2016,
the FASB issued ASU
2016
-
02,
 
Leases (Topic
842
). 
 ASU
2016
-
02
requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. ASU
2016
-
02
is effective for the Company in its
first
quarter of fiscal
2020
on a modified retrospective basis and earlier adoption is permitted. The Company is currently evaluating the impact of the pending adoption of ASU
2016
-
02
on its consolidated financial statements and expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption of ASU
2016
-
02.
 
In
October 2016,
the FASB issued ASU
2016
-
16,
 
Income Taxes: Intra-Entity Transfers of Assets Other than Inventory
which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU
2016
-
16
will be effective for the Company's fiscal year beginning
February 1, 2018.
The standard requires application on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the accounting, transition, and disclosure requirements of the standard
 
In
January 2017,
the FASB issued ASU
2017
-
04,
 
Intangibles—Goodwill and Other (Topic
350
): Simplifying the Test for Goodwill Impairment,
 which simplifies the subsequent measurement of goodwill to eliminate Step
2
from the goodwill impairment test. In addition, it eliminates the requirements for any reporting unit with a
zero
or negative carrying amount to perform a qualitative assessment and, if that fails that qualitative test, to perform Step
2
of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. The amendments will be effective for the Company’s fiscal year beginning
February 1, 2020.
Early adoption is permitted. The new guidance is required to be applied on a prospective basis. The Company does
not
believe adoption of ASU
2017
-
04
will have a material impact on its consolidated financial statements.
 
In
January 2017,
the FASB issued ASU
2017
-
01,
 
Business Combinations: Clarifying the Definition of a Business, 
which provides a more robust framework to use in determining when a set of assets and activities is a business. The amendment will be effective for the Company’s fiscal year beginning
February 1, 2018.
Early adoption is permitted. The new guidance is required to be applied on a prospective basis. The effect of adoption of ASU
2017
-
01
will depend upon the nature of the Company's future acquisitions, if any.