SAP has released new enhancements to its revenue accounting platform designed to help CFOs and chief accounting officers comply with the new IFRS 15/ASC 606 standards.
“CFOs are facing a perfect storm of accounting regulation, with three major International Financial Reporting Standard (IFRS) standards converging in rapid succession. Time to implement these new processes is running out,” said Gina McNamara, chief financial officer, SAP Australia and New Zealand.
“It takes approximately 18 months for the average Fortune 1000 company to make a change of this magnitude, and we just passed that point in the countdown to the mandatory effective date of the new standards. Corporate finance departments should act now to ensure that they are prepared for the transition and have the right tools to automate and simplify the process.”
The new IFRS 15, IFRS 16 and IFRS 9 accounting standards will apply to all entities – public, private and not-for-profit – that have contracts with customers and will supersede virtually all current revenue accounting requirements.
The SAP Revenue Accounting and Reporting application is the first in a series of IFRS solutions designed to help finance executives comply.
The IFRS 15 revenue recognition standard eliminates the transaction and industry-specific revenue recognition guidance under current US GAAP and replaces it with a principle-based approach for determining revenue recognition. The rule, which generally takes effect in 2018 for public companies and 2019 for private companies, can affect companies’ reported revenue, how and when they report financial performance, and overall financial decision-making, and will require multiple quarters of testing and preparation.
New features in SAP’s Revenue Accounting and Reporting 1.2 release include cost recognition, capitalised costs integration with project systems and results analysis from SAP, improved contract combination and modification capabilities, and integration with service and billing scenarios in the SAP CRM application, as well as advanced features to assist in the transition to IFRS 15.