1 Introduction to IFRS 15 and SAP Revenue Accounting and Reporting

15

1.1 Global Accounting Standards

16

1.1.1 New Accounting Guidelines

16

1.1.2 Business Challenges

17

1.2 IFRS 15

18

1.2.1 Five-Step Framework for Revenue Recognition

19

1.2.2 Impact of the New Standards

22

1.2.3 Existing Tools and Vendor Analysis Matrix

25

1.2.4 How SAP Is Addressing the New Requirements

27

1.2.5 Functionality Overview

28

1.2.6 Licensing Options

39

1.2.7 Architecture and Landscape

39

1.2.8 Integration with Existing Revenue Applications

45

1.3 Summary

50

2 Project Execution Approach

53

2.1 Project Management

53

2.1.1 Agile Methodologies

53

2.1.2 Traditional SAP Implementations (ASAP Methodology)

55

2.2 Project Preparation and Scope

57

2.2.1 Project Preparation

57

2.2.2 Defining the Scope

58

2.2.3 Project Organization

59

2.2.4 Project Timelines

61

2.2.5 Change Management Considerations

63

2.3 Project Blueprinting

64

2.3.1 Plan and Collect or Develop Use Cases

64

2.3.2 Organize Business Requirements Workshops

66

2.3.3 Create Business Requirements Document

67

2.3.4 Validate and Get BRD Sign-Off from Business

68

2.4 Project Design and Build

69

2.4.1 Prototype Use Case Solution

69

2.4.2 Identify Solution Gaps

71

2.4.3 Identify Master Data, Integration, Change Management, and Migration Requirements

72

2.4.4 Key Design Decisions

74

2.5 Project Testing and Go-Live

75

2.5.1 Test Strategy and Execution

75

2.5.2 Outline Best Practices, Challenges, and Risk-Mitigation Strategy

78

2.5.3 Cutover Planning

80

2.5.4 Go-Live and Post-Go-Live Considerations

81

2.6 Summary

82

3 Configuring SAP Revenue Accounting and Reporting

83

3.1 Understanding Your Configuration Options

83

3.2 Application Installation Process

85

3.2.1 System Requirements

85

3.2.2 Installing SAP RAR

86

3.2.3 Setting Up Item Classes

89

3.2.4 Setting Up SAP Business Client

89

3.2.5 Integrating with SAP Business Warehouse

90

3.3 Configuration

94

3.4 Step-By-Step Configuration Guide

96

3.4.1 Inbound Processing

97

3.4.2 Revenue Accounting Contracts

105

3.4.3 Revenue Accounting Postings

131

3.4.4 Integration with SD and Non-SD Applications

136

3.4.5 Configure UI/Web Dynpro

137

3.4.6 Postconfiguration Requirements

141

3.4.7 Best Practices for Configuration and Technical Settings

142

3.5 BRF+ Integration

142

3.5.1 Architecture and Features

143

3.5.2 BRF+ Applications

145

3.5.3 BRF+ Decision Tables

146

3.5.4 Account Determination in BRF+

146

3.5.5 Version and Transport BRF+ Applications

148

3.6 Summary

149

4 Processing Revenue Accounting Contracts

151

4.1 Revenue Accounting Items

151

4.1.1 Generating RAIs from SD and Non-SD Applications

151

4.1.2 Stages or Status of RAI Processing

153

4.1.3 Processing RAIs through the Adapter Reuse Layer

158

4.1.4 Customizing and Enhancing RAI Items

159

4.2 Revenue Accounting Contracts

160

4.2.1 Contract Processing: Navigation, Revenue Schedule, Amortization, and POBs

160

4.2.2 Price Allocation: Prorations, Standard Options, and More

171

4.2.3 Contract Combinations

175

4.2.4 Contract Fulfillment

178

4.2.5 Invoices in Revenue Accounting Contracts

182

4.2.6 Contract Asset/Liability Postings

184

4.2.7 Revenue Recognition Process and Postings to FI

188

4.2.8 Reporting and Disclosures

199

4.2.9 Archiving Revenue Contracts

203

4.3 Best Practices

203

4.4 Version 1.3 Functionality

204

4.4.1 Foreign Currency Exchange Processing

205

4.4.2 Simplifications for High Volume Invoice Processing

209

4.4.3 End to End Consistency Checks

211

4.5 Summary

213

5 Migrating Current IFRS Contracts to IFRS 15 Using SAP RAR

215

5.1 Migration Strategy and Planning

215

5.1.1 Migration Strategy

216

5.1.2 Migration Plan

220

5.1.3 Migration Challenges

222

5.1.4 Migration Timelines

223

5.1.5 Migration Scenarios

224

5.1.6 Migration Risks and Plans for Contingencies

225

5.2 Migration Process

227

5.2.1 Migration Configuration

227

5.2.2 Migrating SD-Based In-Process Contracts

232

5.2.3 Test Strategy and Considerations for Migration Process

248

5.2.4 Reconcile Migrated Contracts

250

5.2.5 Migration in Cutover Process

250

5.2.6 Error Handling during Migration

251

5.3 Best Practices in Migration

252

5.4 Summary

253

6 Transition Strategy and Options

255

6.1 Possible Effects during Transition

257

6.1.1 The Black Hole Effect

257

6.1.2 Recycling of Revenues

260

6.1.3 Capitalization of Contract Costs

263

6.2 Full Retrospective Transition Approach

266

6.3 Modified Retrospective or Cumulative Catch-up Transition Approach

271

6.4 Modified Retrospective Transition Approach with Retrospective Pro Forma (Hybrid Transition Method 1)

273

6.5 Modified Retrospective Transition Approach with Prospective Pro Forma (Hybrid Transition Method 2)

274

6.6 Parallel Accounting

278

6.6.1 Account-Based Solution

278

6.6.2 Ledger-Based Solution

280

6.6.3 Dual Reporting

282

6.7 Transitioning Example (End-to-End Flow)

283

6.7.1 Current Postings under IFRS (IAS 11/IAS 18)

284

6.7.2 Transition Steps

284

6.8 Transactions Overview

294

6.9 Best Practices

296

6.10 Summary

297

7 Business Cases: Telecom and High-Tech

299

7.1 Telecom Industry Business Case

300

7.1.1 Use Case Overview

300

7.1.2 Impact of IFRS 15 on the Telecom Industry

300

7.1.3 Challenges for Many Telecom Companies

302

7.1.4 Implementing SAP RAR in the Telecom Industry

306

7.1.5 Best Practices and Lessons Learned

324

7.2 High-Tech Industry Business Case

325

7.2.1 Use Case Overview

325

7.2.2 Impact of IFRS 15 on the High-Tech Industry

326

7.2.3 Challenges for High-Tech Companies

327

7.2.4 Implementing SAP RAR in the High-Tech Industry

328

7.2.5 Best Practices and Lessons Learned

341

7.3 Summary

341

8 Conclusion

343

8.1 Don’t Take IFRS 15 Projects Lightly

343

8.1.1 Implementation Date

344

8.1.2 Requirements

344

8.1.3 Internalizing the Five-Step Model

345

8.2 Choose the Right Transition Method

345

8.2.1 Hybrid Model-I

346

8.2.2 Migration Scenarios

347

8.2.3 Third-Party Systems

348

8.3 Good Project Management Makes for Successful Implementation

348

8.3.1 Scope and Milestones

348

8.3.2 Big Bang versus Agile

349

8.3.3 Resources

349

8.3.4 Prototyping

350

8.3.5 Focus

350

8.3.6 Roles and Responsibilities in an IFRS 15 Project

350

8.4 Choose the Best Design for Reporting

352

8.4.1 Considering Both GAAPs

353

8.4.2 Ledger versus Account Approach

353

8.4.3 Meeting Disclosure Reporting

354

8.4.4 Reconciliation

354

8.5 Overcome Technology Challenges

355

8.5.1 Special Landscaping Requirements

356

8.5.2 Testing

358

8.6 Links and Additional Information

359

Appendices

361

A SAP RAR Application FAQs

361

B The Authors

369

Index

371