Table of Contents

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Foreword
13
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