Headline Verdana Bold AASB 15 Revenue from Contracts with Customers What this means for business – Katelyn Bonato, Deloitte
UNDERSTAND WHAT THIS MEANS FOR YOUR BUSINESS DO NOT UNDERESTIMATE THE MAGNITUDE OF THIS TRANSITION TO BUSINESS AS A WHOLE KEY DECISIONS TO BE MADE 2
WHY? 3
ELIMINATE INCONSISTENCIES AND WEAKNESSES 4
ELIMINATE INCONSISTENCIES AND WEAKNESSES MORE PRESCRIPTIVE GUIDANCE 5
ELIMINATE INCONSISTENCIES AND WEAKNESSES MORE PRESCRIPTIVE GUIDANCE IMPROVE COMPARABILITY 6
ELIMINATE INCONSISTENCIES AND WEAKNESSES MORE PRESCRIPTIVE GUIDANCE IMPROVE IMPROVE DISCLOSURES COMPARABILITY 7
Recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services
THE FIVE STEP APPROACH 9
IDENTIFY THE CONTRACT WITH THE CUSTOMER 10
IDENTIFY THE CONTRACT WITH THE CUSTOMER IDENTIFY SEPARATE PERFORMANCE OBLIGATIONS IN THE CONTRACT 11
IDENTIFY THE CONTRACT WITH THE CUSTOMER IDENTIFY SEPARATE PERFORMANCE OBLIGATIONS IN THE CONTRACT DETERMINE THE TRANSACTION PRICE 12
IDENTIFY THE CONTRACT WITH THE CUSTOMER IDENTIFY SEPARATE PERFORMANCE OBLIGATIONS IN THE CONTRACT DETERMINE THE TRANSACTION PRICE ALLOCATE THE TRANSACTION PRICE TO SEPARATE PERFORMANCE OBLIGATIONS 13
IDENTIFY THE CONTRACT WITH THE CUSTOMER IDENTIFY SEPARATE PERFORMANCE OBLIGATIONS IN THE CONTRACT DETERMINE THE TRANSACTION PRICE ALLOCATE THE TRANSACTION PRICE TO SEPARATE PERFORMANCE OBLIGATIONS RECOGNISE REVENUE WHEN EACH PERFORMANCE OBLIGATION IS SATISFIED 14
CONTRACT COSTS 15
DISCLOSURES 16
Significant judgements Significant judgments applied Transaction price Allocation methods and assumptions 17
Contracts with customers Disaggregation of revenue Contract balances (including reconciliation) Information about performance obligations Remaining performance obligations Practical expedients 18
Others Policy decisions Cost to obtain a contract Costs to fulfil a contract 19
TRANSITION APPROACH – CONSIDER THE OPTIONS 20
1 Retrospective Approach (with/without practical expedients) 2 Modified Approach 21
DUAL RECORDS 22
Year ended Year ended Year ended 30 June 2017 30 June 2018 30 June 2019 Dual Records Retrospective Approach AASB 111/AASB 118 AASB 15 Dual Records Modified Approach AASB 111/AASB 118 AASB 15 = Cut-off analysis required to be performed on open contracts 23
PRACTICAL ISSUES 24
SUBSCRIPTION REVENUE CONSIDERATIONS 25
BREAK DOWN AND ANALYSE Monitor UNBUNDLE ‘STAND - READY’ Low Volume Of Contracts SUBSCRIPTION REVENUE CONSIDERATIONS ALLOCATE STAND ALONE SELLING PRICE TRANSACTION PRICE SERIES OF DISTINCT PERFORMANCE OBLIGATIONS Provision Of Service Or License 26
REVIEW OF PRODUCTS & CONTRACTS Product pricing more transparent Assess: Accounting for contracts in scope Update: Terms and Conditions Impact: Long term contract negotiation 27
EMPLOYEES Remuneration Schemes (KPI / Bonus Structures) Training Project Management 28
SYSTEM CHANGES Update: IT Systems, Business Models, Company Practices, Accounting Policies, Internal Process and Controls 29
MANAGING STAKEHOLDERS • Shareholders (expectation / outlook) • Financiers (loan covenants) • Regulators (disclosures) 30
OUR IMPLEMENTATION APPROACH 31
OUR SUGGESTED APPROACH INCLUDES FIVE PHASES AIMED AT SUCCESSFUL IMPLEMENTATION 01 02 03 04 05 IMPACT DETAILED GAP DEFINE DESIGN AND IMPLEMENT ASSESSMENT ANALYSIS SOLUTIONS DEVELOP AND DELIVER Understand revenue Perform detailed Define new Design, develop and Delivery of • • • • • streams and contract reviews accounting policies test system and implementation plan product lines most Assessment of Finalise approach to process solution Plan and execute • • • likely impacted current process and address data and Test and migrate final cut-over and • Understand which data gaps system gaps pilot data go-live process • step of AASB 15 Preliminary analysis Define training and Design controls and Monitor ongoing • • • • model could have of transition communication determine compliance and material impact method and approach operational KPIs performance portfolio approach 32
01 IMPACT ASSESSMENT Understand revenue streams and product lines most likely impacted • Understand which step of AASB 15 model could have material impact • 33
02 DETAILED GAP ANALYSIS Perform detailed contract reviews • Assessment of current process and data gaps • Preliminary analysis of transition method and portfolio approach • 34
03 DEFINE SOLUTIONS Define new accounting policies • Finalise approach to address data and system gaps • Define training and communication approach • 35
04 DESIGN AND DEVELOP Design, develop and test system and process solution • Test and migrate pilot data • Design controls and determine operational KPIs • 36
05 IMPLEMENT AND DELIVER Delivery of implementation plan • Plan and execute final cut-over and go-live process • Monitor ongoing compliance and performance • 37
OUR SUGGESTED APPROACH INCLUDES FIVE PHASES AIMED AT SUCCESSFUL IMPLEMENTATION 01 02 03 04 05 IMPACT DETAILED GAP DEFINE DESIGN AND IMPLEMENT ASSESSMENT ANALYSIS SOLUTIONS DEVELOP AND DELIVER Understand revenue Perform detailed Define new Design, develop and Delivery of • • • • • streams and contract reviews accounting policies test system and implementation plan product lines most Assessment of Finalise approach to process solution Plan and execute • • • likely impacted current process and address data and Test and migrate final cut-over and • Understand which data gaps system gaps pilot data go-live process • step of AASB 15 Preliminary analysis Define training and Design controls and Monitor ongoing • • • • model could have of transition communication determine compliance and material impact method and approach operational KPIs performance portfolio approach 38
ANTICIPATE THE COMMON ROAD BLOCKS 39
UNDERSTAND WHAT THIS MEANS FOR YOUR BUSINESS DO NOT UNDERESTIMATE THE MAGNITUDE OF THIS TRANSITION TO BUSINESS AS A WHOLE KEY DECISIONS TO BE MADE 40
https://www2.deloitte.com/au KATELYN BONATO – kbonato@deloitte.com.au For copy of these slides: https://www2.deloitte.com/au and search AASB 15
Recommend
More recommend
