On July 21st, 2015, my colleague and I were in Walldorf at SAP’s World Headquarters for the announcement of version 1.1 of the Revenue Accounting and Reporting (RAR) solution.
It’s a joint effort – Part 2 - Stakeholders
Part 1 of this blog series outlined the key elements for success with the new SAP Revenue Accounting and Reporting Application. This post focuses on the importance of bringing together all of the stakeholders.
The multitude of projects our consultants at Bramasol have been working on in the area of SAP revenue recognition have made it very clear to us that projects run only well if all major stakeholders are engaged and work together.
The new guidelines are mandatory for all entities reporting under them – so they are all facing the same deadline. Still, we have discussions with customers where it becomes obvious that in some cases, only a single interested party in an organization seems to really drive the project - with others abstaining or worse yet, impeding progress.
We also have discussions where it is clear that the whole organization has realized the importance of close coordination between all stakeholders – these projects sometimes bring together managers and specialists for the first time, but they pull together as one. The difference is not whether a project will be completed – it has to, there is no alternative -, the difference lies in how painful the process will be, what time and effort it will have cost to complete.
More and more customers are realizing that they do not have to work with interfaced, outside, non-integrated 3rd party revenue recognition software anymore. Instead they can implement and take advantage of SAP’s new Revenue Accounting and Reporting Solution, now that it has been officially released.
The new software is a module in ECC, and also works with the Business Suite on HANA. It is separate from SD, and allows information from outside systems to be processed. The approach SAP has taken is that sales and fulfillment operations should not have to be changed in order for a complete and correct revenue accounting treatment in line with the new Accounting Guidelines by the IFRS.
In those cases where extensive customizations were used for revenue recognition purposes, in SD or outside of it, the new module will lead to a simplified approach, as most, if not all, of these custom objects can be removed after the implementation of SAP Revenue Accounting and Reporting. Needless to say, given that it is “state-of-the-art” programming, it also ties in seamlessly with SAP’s approaches to parallel accounting.
Over the next three years, many public companies will have to undergo significant changes in order to comply with the new FASB and IASB revenue recognition standards. The new standards, adopted in 2014 and slated for implementation in 2017/2018, will replace substantially all existing US GAAP and International IFRS literature on revenue recognition.
SAP customers met at the Revenue Recognition Summit at SAP Labs in Silicon Valley (Palo Alto, CA) in November 2014 to learn about the new accounting standards published by the Financial Accounting Standards Board and the International Accounting Standards Board.
Every company needs to track and report revenue and it rarely is an easy process.
But it really doesn't have to be unnecessarily complicated.
The newly released SAP Revenue Accounting and Reporting application now offers a simplied path forward that both meets the specific mandates in the new FASB and IASB accounting standards and provides enhanced management capabilities for generic or company-specific revenue recognition across various accounting principles.
SAP Revenue Accounting and Reporting was developed closely with customers and co-innovators like Bramasol, as well as SAP’s internal accounting department, by analyzing the standard and assessing how best to design an integrated solution to cover the new requirements.
When January 1, 2017 arrives, companies across all industries that follow US GAAP and IFRS rules will be required to comply with the new five-step model for revenue recognition. On May 28, 2014, the FASB and the International Accounting Standards Board (IASB) issued converged guidance on recognizing revenue in contracts with customers. The process calls for implementation during 2016 and “go live” reporting under the new standards in 2017.
Unlike the previous revenue accounting standard that was industry-specific and transaction-specific, the goal of the FASB and the IASB in the new standard is to introduce uniformity and predictability to revenue recognition practices. Among the industries that are likely to experience significant changes are aerospace, asset management, construction, real estate, software and telecommunications. Changes won’t be limited to these industries, therefore all companies need to develop an implementation plan.
When it comes to revenue recognition?, the new standards require good judgement for accuracy. This article covers 6 key areas that you should know about. Moving from a variety of industry standards to a universal model may seem like a daunting task for preparers to undertake, but ?Bramasol?'s expertise in ?revenue recognition can alleviate the confusion to ensure you take the right steps.
