More Related Content Similar to Preparing for ASC 606 (20) Preparing for ASC 6062. 2
Webinar Mechanics
• Submit text questions.
• Q&A addressed at the end of the
session. Answers will be posted within
two weeks on our new LinkedIn Group,
EBS Answers:
http://www.linkedin.com/groups/EBS-
Answers-4683349/about
• Everyone will receive an email with a link
to view a recorded version of today’s
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• Polling questions will be presented
during the session. If you want CPE
credit for this webinar, you must answer
all of the polling questions.
©2018 eprentise. All rights reserved.
3. 3
Learning Objectives
After completion of this presentation you will be able to:
Objective 1: Discover how ASC 606 will transform the way all
companies recognize revenue, and how this will impact
businesses using EBS.
Objective 2: Define areas of concern with the adoption of
ASC 606, and what your organization should know to
minimize financial reporting risks.
Objective 3: Examine the recommended approaches to
satisfy ASC 606 performance tracking obligations and their
impact, specifically for companies doing contract-based work
in EBS.
©2018 eprentise. All rights reserved.
4. 4
Panelists
Seamus Moran
Senior Director - Oracle Financials Development, Oracle
Hari Mundhra
Sr. Manager, Technology - Oracle Cloud, Deloitte
Consulting LLP
Gourav Rathi
Manager, Deloitte Consulting LLP
Tom Buechler
Product Development Manager, eprentise
©2018 eprentise. All rights reserved.
5. 5
Companies Need to Change Their Oracle®
E-Business Suite Without Reimplementing
eprentise Can…
Consolidate Multiple EBS Instances
Change Underlying Structures and
Configurations
Chart of Accounts, Other Flexfields
Merge or Split Ledgers or Sets of Books,
Operating Units, Legal Entities,
Inventory Organizations
Calendars, Currency, Costing Methods
Asset Revaluation, Inventory Valuation
Separate Data for a Divestiture
…So Our Customers Can:
Avoid a Reimplementation
Reduce Operating Costs and Increase
Efficiencies
Adapt to Change
Reduce Complexity and Control Risk
Improve Business Continuity, Service Quality
and Compliance
Streamline Operations with Visibility to All
Parts of the Business
Establish Data Quality Standards and a Single
Source of Truth
Finished But Not Done®
Presenter: Tom Buechler | Product Development Manager, eprentise
22+ years experience with Oracle EBS in SCM, Manufacturing and Cost
Management in delivery and support roles
8+ years prior experience in Cost Accounting and financial reporting
Multiple Oracle Project Manufacturing (PJM) projects
Oracle User Group Presentations: Consigned Inventory Management
and Demantra
©2018 eprentise. All rights reserved.
6. 6
Exclusive testing
partner for Oracle
Cloud business
Ranked No.1
NA Systems
Integrator
Cloud
applications
ramp-up
HCM Cloud
application QA
testing
HCM Cloud Early
Adopter Program
Marquee HCM
Cloud partner
Ranked #1 Cloud
Partner by Oracle
Oracle’s first
Global Cloud Elite
Partner
Awarded Global
System Integrator
of the Year
2007 2008 2009 2010 2011 2012 2013 2014 2015
10 YEARS EXPERIENCE WORKING WITH ORACLE CLOUD APPLICATIONS
Oracle ERP
Cloud Release 13
co-development
with Oracle
2016
#1 In referenceable
Cloud clients
#1 NA SaaS Partner of the Year
Global Cloud Transformation Partner of the Year
Global SaaS Partner of the Year
Certified experience in over 30
Oracle specializations
Over 120 Oracle
HCM Cloud and
40 Oracle ERP
Cloud clients
2017
Deloitte’s Oracle ERP Cloud Leadership
Copyright © 2018 Deloitte Development LLC. All rights reserved.
7. 7
The Oracle Cloud offers complete SaaS application suites for ERP, HCM and
CX, plus best-in-class database Platform as a Service (PaaS) and
Infrastructure as a Service (IaaS) from data centers throughout the Americas,
Europe and Asia. For more information about Oracle (NYSE:ORCL), please
visit us at oracle.com.
Seamus Moran
Public in London [Public Trainee]
25 years in international controllership in the Europe & the USA
External Reporting at an NYSE Silicon Valley semiconductor corporation
At Oracle since 1995
Accounting Domain for Development – monitors US GAAP, IFRS with product in
mind
Member of the IASB’s IT Company Committee during “convergence” and
“revenue” projects
Currently Strategist & Domain responsibility for Oracle Revenue Management
Cloud Service
Oracle
Copyright © 2018 Oracle and/or its affiliates. All rights reserved.
8. 8
What is the Problem?
ASC 606 Fast Facts
Ties Revenue Recognition from Customers with the
satisfaction of contractual performance obligations
Released May 2014, amendments in 2015-2016
Aligns standard for US GAAP with IASB (IFRS15)
Effective Jan 1, 2018 for public companies and Jan 1, 2019
for private companies (2017 early adoption permitted)
Applies to all contracts with customers except:
Lease contracts
Insurance contracts
Financial instruments
Certain guarantees (other than product warranties)
Certain nonmonetary exchanges
©2018 eprentise. All rights reserved.
9. 9
ASC 606 Basics
Step 1
• Identify contract(s) with customer
Step 2
• Identify performance obligations
Step 3
• Determine transaction price
Step 4
• Allocate transaction price to contract obligations
Step 5
• Recognize revenue when (or as) performance obligation is satisfied
©2018 eprentise. All rights reserved.
10. 10
SCENARIOS / BUSINESS REQUIREMENTS
Before embarking on a system journey, the following areas need careful
consideration:
• Use case scenario analysis
• Data needs and uses
• Business requirement document
• Data dictionary
DESIGN & IMPLEMENTATION
At the final stage, an organization will look at the software solution
and implement. Key stages are:
• Fit gap analysis
• System & process design
• Configure and test
ACCOUNTING ASSESSMENT
As a foundation, Interpret the new rules and establish a policy
direction:
• Timeline to become compliant – FY starting after Dec 15, 2017
• Full retrospective vs. modified retrospective transition
• Transactional level analysis vs. category level analysis
• Policy election and development
Implement
3
2
Prepare
1
Understand
Deloitte’s Approach to Revenue TransformationHow Are Companies Addressing the Problem:
Approach to Revenue Transformation
Copyright © 2018 Deloitte Development LLC. All rights reserved.
11. 11
Brute Force
Uses spreadsheets & estimates
Based on analyses of
differences between old and
new principles
Error prone and risky
Post Trial Balance Application
Analyses old rules data as posted to
the General Ledger and tries to
correct it
Macro level
During the close
Calculator
Takes aggregated data and
executes algorithms on it
Can be a good “quick fix”
Doesn’t provide drill down
Subledger
Contract asset and contract
liability sub-ledgers
Accounting contract by
transactions
Drill down, et cetera
(Oracle RMCS, PPM, and EBS PA, &
Peoplesoft, JDE)
What is the Impact of Each of the Different IT Approaches?
Spectrum of IT Approaches to ASC 606 / IFRS 15
Copyright © 2018 Oracle and/or its affiliates. All rights reserved.
13. 13
Adopting ASC 606 – Challenges and Complexities
Major Challenges
• Underestimation of the
standard
• New and unfamiliar
guidance –
judgements, estimates,
disclosures etc.
• Data & system
challenges
• Reporting
Complexity Drivers
• Organization size and
industry
• Current system
landscape
• Contract/order
orchestration and
complexity
• Data sources and
mapping
Leading Practices
• Understand, educate
& plan
• Assess & design
• Manage change –
finance, process,
organization &
systems
• Develop operating
model and future
COE
Copyright © 2018 Deloitte Development LLC. All rights reserved.
14. 14
Embrace the Standard
Set your 606 / 15 Policy
• Performance Obligations
• Initial & Revenue Events
• Stand Alone Pricing
Finalize your GRC
• Reconcile to Def. Rev.
• Validate with CPA firm
• Redo rules if required
Post to Adoption Ledger
• Work history to have
enough Perf Obs to
post your revenue in
Quarter 1
Cut-over day
• Supports opening
balance sheet
• Re-pointed to Corp.
Ledger
Go Live on ASC 606 or
IFRS 15 with RMCS
Set up Revenue
Management
• Data from Oracle
• Data from elsewhere
• Test & discard, do over
These 4 Processes
ADOPT 606/15
Establish your
Governance, Risk
Management &
Internal Control
(GRC) for ASC 606 or
IFRS 15
New concepts
New processes
New data & sources
These 5 Processes
Set up RMCS
Test Data
Validate GRC
Check Results
Build up
Opening Balances
To Support
Retrospective B.S.
Find the relevant data in
your IT Landscape
• Review at inception
• Promise Unit of Measure
• Estimate & correct
Copyright © 2018 Oracle and/or its affiliates. All rights reserved.
15. 15
Review At Inception
Step 1:
Contract ID # x
Customer
Facing Price
(Transaction)
Standalone SP
Or ESP
Basis for Alloc.
Relativity Math Revenue
& PO
Value
Discount
(allocation)
Nets to Zero
OT
PIT
Devlvd
Either
Party
Acts
Revenue
Recog-
nized
Bill
Plan
Step 2:
Perf. Obligation 1 50
Step 4:
60 105% * 60 = 63 13 PIT Sign Delivery
Each
30
days
arrearsPerf. Obligation 2 55 40 105% * 40 = 42 (13) OT Day 1 Monthly
Step 3:
Transaction Price 105
Transaction Price =
Expected Consideration = 105 0
Stand Alone Price & Relativity 100 105/100=105% relativity
Values used for
accounting: the liability,
asset and revenueASC 606-10-25-14 | IFRS 15-22
Tabulation like this during adoption or with new orders, with more columns, helps to figure:
• Your promises rather than just your product codes, understand “promises” versus “promise details”
• Transaction attributes: PIT, OT, Devolved/Series. Add columns for Billing, Either Party Acts, Revenue Events
• Which data you need to import and where it might be in your IT landscape
• What the accounting will look like and what data needed to derive the account numbers
• You’d like to see when contracts are modified or estimates revised
Copyright © 2018 Oracle and/or its affiliates. All rights reserved.
16. 16
Overview of eprentise Reorganization
Inventory Organizations
Project Accounting and Project Manufacturing
NOT ENABLED
E-Business Suite – Current State
Supply Chain and Manufacturing Modules
Historical Data
Open Transaction Data
Setup new Project
Accounting and
Project Manufacturing
ENABLED Inventory
Organizations
Repoint Old Inventory Organization Configurations
(non-PJM) with New Inventory Organization
Configurations (PJM)
Enable Project/Task References on On-hand
Inventory Balances
Transformation Engine
Enable Project/Task References on Open
Transactions
Contracts Projects
Project Accounting and Project Manufacturing
Enablement
E-Business Suite – Future State
Execution and Planning
Discrete Work Orders, Flow Schedules
Earned Value Analysis, Progress Billing,
and Revenue Recognition as per
Performance Obligations
Collects Direct and Indirect Actual Costs
Billing and Revenue Management
Inventory Organizations
Project Accounting and Project Manufacturing
ENABLED
Supply Chain and Manufacturing Modules
Historical Data
Open Transaction Data
Feeds data to
©2018 eprentise. All rights reserved.
17. 17
Revenue Management Cloud Service
ERP CLOUD
ASC 606 and IFRS 15 Compliance Automation
The Standard’s Five Steps to Revenue
Third party and
On Premise/ EBS
Sales Cycle Data
Cloud Service
order, billing,
& fulfillment
data
Revenue Management Cloud Service
Cloud Service
General Ledger
EBS General
Ledger
Copyright © 2018 Oracle and/or its affiliates. All rights reserved.
18. 18
Illustrative Revenue Recognition Roadmap
The following presents the types of activities that are expected to be required in the implementation of the revenue
recognition standard requirements:
Deloitte is one-stop shop for your overall solution
Copyright © 2018 Deloitte Development LLC. All rights reserved.
19. 19
Accelerate Revenue Transformation with
Deloitte’s RevenuePrintTM
Our world class implementation methodology for Oracle Cloud combined with Revenue Print helps accelerate the implementation.
Enterprise Value Delivery for Oracle Cloud What RevenuePrint Offers
• A Preconfigured Oracle Cloud Revenue Management solution
• End-to-end solution architecture covering complex scenarios
• List of major functional components required to implement Revenue
Recognition solution
• Identified repository of reports enabling organizations to be revenue
compliant quickly and efficiently
Technology accelerators
• Prior implementation accelerators, including repository of accounting
scenarios for multiple industries
• Identified list of data elements required to support ASC606
• Conversion of accounting scenario documentation into business
requirements and comprehensive data dictionary
Accounting & Business accelerators
Quick
compliance
Dual
reporting
Reduced time
to implement
Benefits
Efficient
scenario
development
Copyright © 2018 Deloitte Development LLC. All rights reserved.
20. 20
Deployment Strategy and Rollout Options
Evaluating the risks and tradeoffs that will be encountered with the various deployment strategies
BIG BANG GEOGRAPHIC ROLLOUT FUNCTIONAL/PROCESS ORGANIZATIONAL
Risks
• High risk
• Operational disruptions
• Cost to implement • Agility in hyper-care support
• Maintenance of dual processes
• Ability to get in front of disruptive
technologies
Trade-offs
• Agility for process improvement • Slower realization in global value • Slower realization in end-to- end
value stream
• Lack of focus
• Slower realization in global &
end-to-end value stream
• Higher cost
Benefits
• Lower cost of execution &
support
• Connected value stream
• Speed
• Low risk
• Geographical functional agility
• Regional alignment
• Steady performance
• Low risk
• Core functionality enables future
capability
• Low risk
• Targeted operational impacts
Examples
• Leading semiconductor
company
• Fast-growing life sciences
company
• Large insurance provider
• Large distribution company • Large electric utilities company
• E-commerce company
• Global auto manufacturer
• Large chemical distribution
company
TYPICAL DEPLOYMENT STRATEGIES
Deploy full functionality in all locations
simultaneously
Deploy full functionality by region
with similar scope and size go-lives
Deploy core functionality for all
locations, then deploy other functionality
in successive waves
Deploy core functionality for all
locations in one organizational unit
Copyright © 2018 Deloitte Development LLC. All rights reserved.
22. 22
Opening Balance Sheet
1. Deferred Revenue Accounting
(Old Rules)
End of Year: 2013 2014
Balance Sheet / Profit & Loss B.S. P&L B.S. P&L
AR or Cash $4M_ $4M_
Deferred Revenue Liability <$4M> $0M_
Contract Liability
Equity <$0M> <$4M>
Revenue $0M_ $4M_
Sum of both years revenue $4M_
2. Performance Obligation
(New Rules)
End of Year: 2013 2014
Balance Sheet / Profit & Loss B.S. P&L B.S. P&L
AR or Cash $4M_ $4M_
Deferred Revenue Liability
Contract Liability <$1M> $0M_
Equity <$3M> <$4M>
Revenue $3M_ $1M_
Sum of both years revenue $4M_
3. Transition Rules
(Both Old and New Rules)
End of Year: 2013 (old) Rev ‘13
B.S.
2014 (new)
Balance Sheet / Profit & Loss B.S. P&L B.S. P&L
AR or Cash $4M_ $4M_ $4M_
Deferred Revenue Liability <$4M> $0M_
Contract Liability <$1M> <$0M>
Equity <$0M> <$3M> <$4M>
Revenue $0M_ $1M_
Sum of both years revenue $1M_
Old Rules: Deferred $4M of software in year -1
Recognized $4M the year +1
New Rules: Recognized $3M of software in year -1
Recognized $1M the year +1
Transition Rules
• Deferred $4M of software
year before adoption
• Recognized $1M the year
after adoption
• Remaining $3M to equity
Transition Impact
• $3M Deferred Revenue
replaced by
• $1M Performance Obligation
Liability
Copyright © 2018 Oracle and/or its affiliates. All rights reserved.
24. 24
Thank You!
Questions and responses will be posted on EBS Answers:
http://www.linkedin.com/groups/EBS-Answers-4683349/about
Seamus Moran
Oracle
seamus.moran@oracle.com
www.oracle.com
Gourav Rathi
Deloitte Consulting LLP
gorathi@deloitte.com
www.deloitte.com
Hari Mundhra
Deloitte Consulting LLP
hamundhra@deloitte.com
www.deloitte.com
Tom Buechler
eprentise
tbuechler@eprentise.com
www.eprentise.com
©2018 eprentise. All rights reserved.
25. 25
© 2018 eprentise, LLC. All rights reserved.
eprentise® is a registered trademark of eprentise, LLC.
Oracle, Oracle Applications, and E-Business Suite are registered trademarks of Oracle Corporation.
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see
www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available
to attest clients under the rules and regulations of public accounting.
All other company or product names are used for identification only and may be trademarks of their respective
owners.
Editor's Notes [Countdown 15, 10, 5, 2 min] Thank you for joining today’s webinar. We will begin the presentation in X minutes.]. You will notice a poll question currently on your screen. If you would like to receive CPE credit for today’s web event, please respond to this poll question. More details will be available at the start of the presentation.
[RECORD]
Thank you for joining today’s presentation entitled, “Preparing for ASC 606.” This is an exclusive panel hosted by eprentise that will also feature experts from Oracle and Deloitte. We are really excited for this event, and because of the format of the panel, we are kicking off the presentation with the first of our polling questions, which you’ll currently notice on the screen. We will be offering CPE credits for today’s webinar, and as such, we will be presenting polling questions throughout the session, starting with this one. I’ll be wrapping up this poll shortly, so please get your answers in, and let me know if you are having any technical details.
For anyone who hasn’t joined us before, please note that when we make a poll available, you will simply click on your preferred answer and click Submit. If you would like to receive CPE credit for today’s webinar, you must respond to all our polling questions. The CPE certificate will be emailed to you within 1 week.
I will now close the poll, and will give back presenter controls so that I can go into a few housekeeping items on slide 3 to let you know how you can participate in today’s web event.
On this slide, we’re looking at an example of the Webex Attendee Interface. We are currently sharing this presentation with you in full-screen mode, so you should notice a Viewing toolbar displayed at the top of your screen. From that toolbar, you have access to resources like the Chat pane, which you can use to send us messages for any issues you are having or to share any comments you’d like to make with me as your moderator. There is also a Questions pane, which is where I will ask you to send questions related to the presentation content itself and that will be addressed by our speakers. To ask a question, simply click on the Q&A button in your viewing toolbar, type in your question and click send. Please make sure to send any message from the chat pane and especially any questions in the Q&A pane to all hosts and panelists so that we can ensure it is received and answered. If you send it to only one person, it may not be seen. Although we will not have time for live Q&A today, we will make sure to address your questions after the webinar.
Due to the format of today’s panel, we will post all of the questions from our moderator and answers from our panelists on the LinkedIn group, EBS Answers, within 2 weeks. A lot of you are members already, but if you haven’t joined this interactive group yet, we invite you to do so to see the Q&A, ask follow up questions or even provide your own answers, comments or discussions. The link to that group page was in your webinar invitation email and will also be included in your follow up email.
As a final reminder, today’s Webinar is being recorded, and everyone will receive an email with a link to view a recording of today’s event.
Finally, let’s get into the learning objectives.
[Read Objectives]
Now, to begin today’s panel, I’d like to welcome our moderator, eprentise CEO Helene Abrams. Helene was Oracle’s first apps consultant in 1988, and founded our company eprentise, which she incorporated in 2007. She has prepared questions for our panelists that will address the above learning objectives, and will help us all better prepare for ASC 606. Our panelists have prepared responses and content in relation to those questions. Helene, I’ll now turn the floor over to you. 1 minute
Gourav Intro,
Hari Intro
Hari Slide
Speaker