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According to Compliance Week, RevRec Still Has a Ways to Go

Tue, Oct 16, 2018 @ 05:59 AM / by Bramasol RevRec Team posted in revrec hot-tips, revenue recognition, ASC606

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RevRecReady-HotTip-12-1A recent article in Compliance Week paints a different picture from people who think that adoption of Revenue Recognition per ASC 606 is behind us.  Even though the new standard took effect on January 1, 2018, the issue of compliance as seen by auditors and the SEC is now just ramping up.

Public companies on calendar year accounting have now completed two quarterly filings under the new standards but the first year-end filing under the new standard is still some months away.


Some highlights from the article include:

According to Eric Knachel, a senior partner at Deloitte and Touche, the two most commonly used words appearing in SEC comment letters thus far are "expand and clarify". 

For those companies that implemented RevRec using ad hoc spreadsheets as expedient "shortcuts" the words expand and clarify can be pretty frightening.

Sean Prince, a senior manager in the national office at Crowe, says the general message he’s hearing is that companies need to improve their disclosures, especially around significant judgments under the new standard. Comment letters seem to suggest the SEC staff is not clear on how companies are arriving at their conclusions, he says.

Here again, the lack of an integrated RevRec compliance methodology that leverages flexible analytics capabilities can make it very difficult for companies to "show their work" to help the SEC understand how the conclusions were reached.

SEC staff reported to audit firms via the SEC Regulations Committee at the Center for Audit Quality that they hope to see better disclosures at year-end than they’ve seen so far in first- and second-quarter reports. 

Companies that have already taken advantage of an advanced solution such as SAP Revenue Accounting and Reporting (RAR), will have the agility to adapt and expand their reporting relatively quickly, but those that are using off-line ad hoc methods will not.

Read the full article in Compliance Week here. ComplianceWeek

While the article carries an important message, it doesn't have to be frightening, even if you haven't yet implemented an integrated RevRec solution. 

At Bramasol, we've been leading the industry in adoption of sustainable RevRec solutions that use RAR along with integrated SAP Analytics Cloud functionality to provide agile and adaptable disclosure reporting.  Ranging from extensive custom functionality to very targeted and affordable purpose-built disclosure applications, we span the gamut of requirements.  We've even created targeted solutions for companies that previously took the "spreadsheet shortcut" and now need to get on to a more sustainable compliance path.

Check out the links below for a look at these pre-built offerings.  Don't hesitate to contact us if you need something more or just have questions about how to move forward.

Get Bramasol's RevRec Analytics and Disclosure App Now Available on SAP App Center

Learn about Bramasol's RevRec Ready Rapid Compliance Solution

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Webinar Video : SD RevRec is Dead.  Now What? Join Us to Find Out.

Tue, Sep 4, 2018 @ 07:56 AM / by Bramasol RevRec Team posted in revrec hot-tips, revenue recognition, ASC606, IFRS15

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With the deadline for implementing ASC 606 and IFRS 15 now behind us for most public companies, a lot of CFOs and accounting staff have breathed a sigh of relief. 

However, for those companies running SAP ECC who chose the short-cut of using SD RevRec, there are still some big challenges ahead.

Even some choices that seem safe in the short run can turn out to be dead ends.

Now, as companies that took the SD RevRec "short-cut" look ahead to the future of SAP with S/4 HANA, they are discovering that SD RevRec will no longer be supported. Oops, dead end!

If you’re facing this specific challenge of how to get from SD RevRec in ECC to RAR supported in S/4 HANA, you should watch Bramasol’s recorded webinar.

Titled “SD RevRec is Dead. What Now?” this webinar will provide a roadmap for moving from your soon-to-be-gone SD RevRec implementation to a more sustainable Revenue Accounting and Reporting (RAR) solution that is integrated with S/4 HANA.

Listen as our RevRec Center of Excellence experts talk about the right sequence – RAR first or S/4 first, or is it simultaneous. What are my data considerations and how can I ensure a smooth transition?

Click below to watch recorded webinar on Sep 20,2018.

20-sep-webinar-banner-social-1-watchnow

Note: All other webinar recordings  are made available to all if you were not able to attend the live session check our Resource Center

 

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Watch how Bramasol played a vital role in hard transition from ASC605 to IFRS 15  for a Pioneer in electronic and design automation company

Thu, Aug 16, 2018 @ 06:01 AM / by Bramasol RevRec Team posted in SAP Revenue Accounting and Reporting, revenue recognition, IFRS15, ASC606, Customer Story

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A pioneer in electronic design and automation and with a presence in more than seven countries, our featured customer offers bundles of hardware, software, support & training to industrial customers. The Company was running ECC 6.0 with SD Revenue Recognition and was in the process of implementing SAP RAR 1.3 to support a mandated transition to IFRS 15. The project delivers a "hard" transition from ASC605 to IFRS 15, running RAR 1.3 SP02 for ten company codes around the world. The deployment includes a migration of 26000 in-flight contracts.

 

 

As the clear leaders in design and implementation of Revenue Recognition solutions, Bramasol was the natural choice. Bramasol took this task on "In flight" from another system integrator and provided, A group of assets- a dedicated team including A RAR Project Manager, A Solution Architect, RAR Consultants and Developers to have smooth transition and best solution. One of the challenges was to secure the organization's investment in the prior development work. As there is no ‘one size fits all’ approach to this complex scenario, Bramasol could limit the disruption of the integrator change caused to the customer.

Customer Story World pioneer in Electronic Design and AutomationPlease speak to us if you’re facing any transitional issues or implementation challenges, simply Request a demo. If you have a challenging or complex RevRec undertaking or just need the pioneer in SAP Revenue Accounting, do what the Fortune 500 do… Contact Bramasol

 

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Improving Financial Transparency with Adoption of ASC 606

Tue, Apr 10, 2018 @ 06:15 AM / by Bramasol RevRec Team posted in revrec hot-tips, ASC606

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RevRecReady-HotTip-12-1Now that the adoption deadline for ASC 606 ( IFRS 15 for IFRS filers), revenue recognition for public entities has passed, the readers of companies’ financial statements should expect a much more robust financial reporting over revenue recognition.  

In addition to the new five step model, companies now are required to disclose in a separate footnote, a new set of data points both quantitative and qualitative  about the company’s revenue recognition processes.

The objective of the new standard is to “disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows. Entities can accomplish this by providing qualitative and quantitative information regarding its contracts with customers, the estimates and judgments used to measure its revenue, and the nature of any assets recognized related to the costs of obtaining the contracts.”

How extended payment terms can mask important revenue recognition info in financial statements:

In a recent article published on cfo.com by Vincent Ryan on March 27, 2018, titled “Controller Charged in Revenue Recognition Scheme” he states that the SEC charged a public company controller with fraud by using a number of “improper tactics” including extended payment terms and then goes on to say that the SEC noted in its enforcement order that “The fraud created the misperception that Maxwell’s ultracapacitor growth was far more successful than reality,”  Extended payment terms are very common tactics to entice potential customers into a sale because the customer will get the good or service now but will not have to pay immediately. From a company perspective, this will increase the revenue recognized but a reader of the company’s financial statements will not be able to assess the payments terms and whether there is a significant financing component embedded within the company’s revenue recognition accounting processes.

How ASC 606 new disclosure requirements can bring more transparency to financial reporting:

ASC 606 strives to change that issue by requiring significantly more disclosure regarding that missing piece of information and also will require companies to bifurcate the related interest portion from the revenue portion. It could also cause more questions from the readers of a company’s financial statements knowing that there is a significant financing component disclosure. 

Disclosure of Significant Financing Components:

One of the new disclosure requirements specifically relates to the existence of a significant financing component in a revenue contract. Therefore companies will now be required to disclose to the readers of their financial statements in the new revenue disclosure any effects of financing separately from contracts with customers. The nature of the disclosure will inform the reader about whether there is any significant financing components that are over one year old. This new disclosure will inform the reader that the company is essentially financing the revenue transaction because for some transactions, the receipt of consideration does not match the timing of the transfer of goods or services to the customer (e.g., the consideration is prepaid or is paid after the services are provided). When the customer pays in arrears, the entity is effectively providing financing to the customer. Conversely, when the customer pays in advance, the entity has effectively received financing from the customer.

Relevant ASC 606 Excerpt: (ASC 606-10-32-20 An entity shall present the effects of financing (interest income or interest expense) separately from revenue from contracts with customers in the statement of comprehensive income (statement of activities). Interest income or interest expense is recognized only to the extent that a contract asset (or receivable) or a contract liability is recognized in accounting for a contract with a customer. In accounting for the effects of the time value of money, an entity also shall consider the subsequent measurement guidance in Subtopic 835-30, specifically the guidance in paragraphs 835-30-45-1A through 45-3 on presentation of the discount and premium in the financial statements and the guidance in paragraphs 835-30-55-2 through 55-3 on the application of the interest method.”)

Improving Financial Transparency with Adoption of ASC 606-blog-graphic-10-04-2018

Summary:

The new revenue recognition standard will bring much more visibility to a company’s revenue recognition processes and new data points that will help readers of the company’s financial statements more clarity to make more informed financial analyses.

Click here to learn more about how Bramasol can help with RevRec compliance and optimization.

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Watch how Bramasol helped a Leading Networking Company Automate and Simplify their RevRec Processes and Reporting

Thu, Mar 22, 2018 @ 07:46 AM / by Bramasol RevRec Team posted in SAP Revenue Accounting and Reporting, revenue recognition, Customer Story, Success Story, Networking, ASC606

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This Global Fortune 500 company  is a leader in the manufacture, installation and service of computer, networking and computing systems providing solutions for companies of all sizes around the world. Their highly complex landscape and current global migration project required both a focus on achieving near term compliance while positioning a smooth migration to SAP S/4 HANA. They needed someone with deep, proven expertise and experience in implementing SAP RAR.

As the clear leaders in design and implementation of Revenue Recognition solutions, Bramasol was the natural choice.

 

 

 

Bramasol works closely as an integral part of team and is leading key workstreams and initiatives around:

  • Delivering a flexible, scalable, and ASC 606 compliant Revenue Accounting Solution
  • Leading and driving key workstreams and initiatives supporting and designing key, complex multi-element scenarios
  • Delivering comprehensive Disclosure reports based on the foundation of our pre-built tools and reports
  • Providing both technical and end-user training to improve solution acceptance

Our work was well appreciated by the customer – Bramasol's 'secret sauce' shows they are the RevRec Experts

Bramasol's secret sauce shows they are the RevRec Experts says our value Client-1

Watch Customer Story Video

If you have a challenging or complex RevRec project or just need the pioneer in SAP Revenue Accounting, do what the Fortune 500 do… Contact Bramasol

Request a Demo Now

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