Lease Accounting Where We Are and What Are We Working On

Size: px

Start display at page:

Download "Lease Accounting Where We Are and What Are We Working On"

Pauline Richard
5 years ago
Views:

Grant Thornton, LLP David.Kratzke@us.gt.

Manager Oracle, JD Edwards Product Management Presented

1 Lease Accounting Where We Are and What Are We Working On JDE David Kratzke Director, Real Estate Advisory Grant Thornton, LLP (407) David Scott Senior Principal Product Manager Oracle, JD Edwards Product Management Presented with August 14, 2017 Copyright 2017,Oracle and/or its affiliates. All rights reserved.

Grant Thornton Real Estate JD Edwards Practice PM and functional expertise Specialized functional resources Project management office Implementations Upgrades Mobile

Real Estate Mgmt Fixed Assets Job Cost User Experience Tools OneView and other reporting THOUGHT LEADERSHIP Leading presenter at COLLABORATE, INFOCUS and OpenWorld

Development Workflow Security management Technical management Database management Infrastructure / hosting Managed services (technical) Private cloud Disaster

Special Issue 2015 EXPERIENCE AND RECOGNITION More than 200 JD Edwards implementations and upgrades Trusted business advisor Gap assessment Transformation Industry

roadmap / strategy FASB planning Chart of accounts optimization Over 80 dedicated JD Edwards professionals Oracle JD Edwards continually recognizes Grant Thornton:

2 Grant Thornton Real Estate JD Edwards Practice PM and functional expertise Specialized functional resources Project management office Implementations Upgrades Mobile applications Third party integration architecture Business process reengineering Managed services (functional) User materials and training Financials Distribution Real Estate Mgmt Fixed Assets Job Cost User Experience Tools OneView and other reporting THOUGHT LEADERSHIP Leading presenter at COLLABORATE, INFOCUS and OpenWorld conferences with dozens of education sessions spanning a broad range of topics Certified to conduct Oracle JD Edwards 100 Day Upgrade workshops Technical CNC Development Workflow Security management Technical management Database management Infrastructure / hosting Managed services (technical) Private cloud Disaster recovery Security SSO / Identity Management ERP governance and data governance white papers and thought leadership series Featured in PROFIT magazine JD Edwards Special Issue 2015 EXPERIENCE AND RECOGNITION More than 200 JD Edwards implementations and upgrades Trusted business advisor Gap assessment Transformation Industry point of view Proven methodology Process excellence Benchmarking ERP governance Data governance Master data management Reporting strategy Change management Cloud roadmap / strategy FASB planning Chart of accounts optimization Over 80 dedicated JD Edwards professionals Oracle JD Edwards continually recognizes Grant Thornton: 2015 JD Edwards Partner Excellence Award for OutstandingUpgrades 2016 JD Edwards Partner Excellence Award for therealestateindustry 2017 JD Edwards Partner Excellence Award for User AdoptionofPersonalizations

3 Safe Harbor Statement The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle s products remains at the sole discretion of Oracle. Copyright 2017,Oracle and/or its affiliates. All rights reserved. 3

4 Lease Accounting - Agenda Overview of Lease Accounting Standard Overview of Revenue Recognition Accounting Standard Enhancements for Revenue Recognition for Real Estate Enhancements for FASB 13 for Real Estate Resources Copyright 2017,Oracle and/or its affiliates. All rights reserved. 4

5 Lease Accounting - Agenda Overview of New Lease Accounting Standard Overview of Revenue Recognition Accounting Standard Enhancements for Revenue Recognition for Real Estate Enhancements for FASB 13 for Real Estate Resources Copyright 2017,Oracle and/or its affiliates. All rights reserved. 5

Lease Accounting Standard FASB ASC 842 and IASB 15 Leases What Lessees and Lessors will recognize leased assets on balance sheet Property and non-property leases Convergence but with slight

6 Lease Accounting Standard FASB ASC 842 and IASB 15 Leases What Lessees and Lessors will recognize leased assets on balance sheet Property and non-property leases Convergence but with slight differences between US GAAP and IFRS For Lessors: Revenue recognition Ł part of standard Why Provides investors and creditors more transparency When Public companies: Fiscal years starting after December 15, 2018 Non-public companies: 2020 Early adoption optional Copyright 2017,Oracle and/or its affiliates. All rights reserved. 6

7 Lease Accounting - Agenda Overview of Lease Accounting Standard Overview of Revenue Recognition Accounting Standard Enhancements for Revenue Recognition for Real Estate Enhancements for FASB 13 for Real Estate Resources Copyright 2017,Oracle and/or its affiliates. All rights reserved. 7

8 Revenue Recognition Accounting Standard High Level The core principle as stated from IFRS is to Recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to exchange for those goods or services. Here are the basic steps outlined related to this new standard: 1. Identify the contract(s) with the customer 2. Identify the separate performance obligations 3. Determine the transaction price 4. Allocate the transaction price 5. Recognize revenue when a performance obligation is satisfied Copyright 2017,Oracle and/or its affiliates. All rights reserved. 8

9 Lease Accounting - Agenda Overview of Lease Accounting Standard Overview of Revenue Recognition Accounting Standard Enhancements for Revenue Recognition for Real Estate Enhancements for FASB 13 for Real Estate Resources Copyright 2017,Oracle and/or its affiliates. All rights reserved. 9

10 JD Edwards Lease Accounting - Details Revenue Recognition for Real Estate Adoption of the FASB/IASB Revenue Recognition accounting standards for lease management companies Enhance EnterpriseOne Revenue Recognition process for release 9.2 Create an additional rev rec trigger for Real Estate Management Provide an automated way of recognizing revenue over time based on a schedule Copyright 2017,Oracle and/or its affiliates. All rights reserved. 10

11 Revenue Recognition Triggers Explained Configurable rules to automatically manage revenue recognition Actual revenue recognition account Performance liability account 5 different sets of triggers Invoices Sales Orders Service Billing Contract Billing Real Estate - new Configurations based on whether or not you think performance obligations will be met at time of invoicing Copyright 2017,Oracle and/or its affiliates. All rights reserved. 11

Triggers Continued Company Constants Turn the feature on or off by company Triggers Company specific or use default company (00000) Hierarchy determined by company and by system Accounts Receivable

12 Triggers Continued Company Constants Turn the feature on or off by company Triggers Company specific or use default company (00000) Hierarchy determined by company and by system Accounts Receivable Sales Order Management Contract Billing Service Billing Real Estate - new Date Setup for Eligible for Recognition date calculation Same period inclusion processing Trigger Configuration Copyright 2017,Oracle and/or its affiliates. All rights reserved. 12

13 Real Estate Trigger - Hierarchy You configure the order in which the rules are read Specify the order for one or more of the fields Different set of fields for each of the 5 triggers Setup at the company level New Copyright 2017,Oracle and/or its affiliates. All rights reserved. 13

Real Estate Date Setup Configure the date the rules use New

Real Estate Trigger Configuration Identify which types of invoices the system will put into revenue recognition process Identify invoices in many ways Specific

15 Real Estate Trigger Configuration Identify which types of invoices the system will put into revenue recognition process Identify invoices in many ways Specific customer Charges to specific account(s) Type of service Many other fields to choose from Date effective New Copyright 2017,Oracle and/or its affiliates. All rights reserved. 15

Real Estate Trigger Configuration (continued) New

Manage Invoices in Revenue Recognition Process Batch process to automatically recognize revenue and COGS Workbench - enhanced Manage by exception Review invoices in revenue recognition process

17 Manage Invoices in Revenue Recognition Process Batch process to automatically recognize revenue and COGS Workbench - enhanced Manage by exception Review invoices in revenue recognition process Manually recognize revenue and COGS (partially or in full) Create/manage a schedule to automatically recognize revenue over time - new Copyright 2017,Oracle and/or its affiliates. All rights reserved. 17

19 Revenue Recognition Schedule Ability to schedule the recognition of revenue for an invoice over time Ability to recognize revenue based upon a schedule Applies to invoices from: Accounts Receivable Service Billing Contract Billing Real Estate New Copyright 2017,Oracle and/or its affiliates. All rights reserved. 19

Real Estate Management and Business Unit Category Codes Expanded access to All 50 Business Unit Category Codes In all applications and UBEs where business unit category

20 Real Estate Management and Business Unit Category Codes Expanded access to All 50 Business Unit Category Codes In all applications and UBEs where business unit category codes are used Added columns to grids Expanded business views Applications UBEs for data selection Bonus New Copyright 2017,Oracle and/or its affiliates. All rights reserved. 20

21 Lease Accounting -Agenda Overview of Lease Accounting Standard Overview of Revenue Recognition Accounting Standard Enhancements for Revenue Recognition for Real Estate Enhancements for FASB 13 for Real Estate Resources 21

22 Flagging a Lease for FASB 13 Prior to enhancement Max of 10 bill codes specified in processing options for R15130 Max of 10 conversion bill codes specified in processing options for R15130 After enhancement (released on 7/25/17 - ESU JN13794) Choose to continue to use the PO to specify bill codes Setup default values of FASB 13 Generation flag in Bill Code Master (P1512) Manage FASB 13 Generation in Recurring Billing (P1502) application by bill code Unlimited number of bill codes and conversion codes per lease for FASB 13 processing 22

23 Handling > 10 Bill Codes New PO on R15130 Choose to continue to use the PO to specify bill codes Or Flag bill codes in Recurring Billing (P1502) application 23

24 Set FASB 13 Defaults in P

25 Defaulted from P1512 Specify > 10 bill codes for FASB 13 processing per lease 25

26 Enhancement to Recurring Billings (P1502) Allow overrides to FASB 13 Generation flag or not 26

27 Manage leases flagged for FASB 13 regeneration Prior to enhancement System sometimes incorrectly set of FASB 13 regeneration flag (GENC) No separation of duties: Lease Administrator vs. Financial Accountant No visibility or control of when/how to set GENC flag After enhancement Eliminated false positives when setting GENC flag in Lease Master (P1501) and recurring billing (P1502) Ability to view and change GENC flag across property portfolio Separation of duties between Lease Administrator and Financial Accountant 27

28 New Entry Point for P1513 (FASB 13 Inquiry) Search across portfolio Drill down System only updates flag when certain fields on lease or recurring billing changes Update GENC manually 28

29 Update GENC Flag At Lease Level 29

30 Drill Down to Each Year 30

31 Turn On/Off GENC Flag As Needed 31

32 Regeneration Options for FASB 13 Prior to enhancement No ability to retain previous FASB 13 generation when lease term is extended Limited options for date or lease version selection No ability to handle holdovers After enhancement Ability to append FASB 13 generation to previous runs Ability to specify user-defined dates that span multiple lease versions Ability to specify user-defined dates to handle holdovers Ability to accurately re-generate FASB 13 for early termination of lease (error no longer occurs when As-Of date is greater than the end date of a lease) 32

Real Estate Management Constants Lease Term Dates Selection Blank: Use the begin date and end date on the lease 1: Use the move-in date and plan-out date for the unit on the lease 2: Use the

33 Real Estate Management Constants Lease Term Dates Selection Blank: Use the begin date and end date on the lease 1: Use the move-in date and plan-out date for the unit on the lease 2: Use the commitment begin date and plan-out date for the unit on the lease 9: Use user-defined lease term dates (using Lease FASB 13 Setup program) Lease Version Date Selection Blank: System Date 1: Latest Version Effective Date 9: User Defined Lease Version Date (using Lease FASB 13 Setup program) 33

34 Append Options for FASB 13 Use Case Example FASB 13 is generated over initial term of lease Lease term is extended Desire to keep/freeze/lock the original FASB 13 generation Append another FASB 13 generation based on the remaining length of the lease 34

35 Append Options for FASB 13 Use Case Example First run of FASB 13 Original term of lease 35

36 Append Options for FASB 13 Use Case Example Lease term is extended FASB 13 regenerated Current functionality Removes previous FASB 13 run Straightline based on remaining lease term 36

37 Append Options for FASB 13 Use Case Example Lease term is extended FASB 13 regenerated Enhanced functionality Keeps previous FASB 13 run Straightline based on remaining lease term 37

38 New Lease FASB 13 Setup Associated with each lease Moved some fields from PO of R15130 Reduce number of versions for R15130 Simplifies maintenance Minimizes time to verify or update settings View settings across leases to ensure consistency 38

39 Regeneration Options for FASB 13 Use Case Example Lease is extended/changed Desire to rerun FASB 13 over entire lease Currently cannot do when using lease versions Desired to specify different dates that span lease versions Desired to blend FASB 13 runs from multiple lease versions 39

40 Regeneration Options for FASB 13 The system will match any recurring billing for a lease that fits in this date range. 40

41 Regeneration Options for FASB 13 Use Case Example 41

42 Regeneration Options for FASB 13 Benefits Conform to FASB 13 accounting requirements Flexibility to regenerate FASB 13 according to how leases change Generate FASB 13 across lease versions Minimize time to manage FASB 13 setup Fields move from PO of R15130 to each lease Reduce number of versions of R15130 Minimize time to regenerate FASB 13 by eliminating manual steps Review FASB 13 setup across leases View FASB 13 Generation option on certain standard reports 42

43 Review FASB 13 Setup Across Portfolio 43

44 Lease Accounting -Agenda Overview of Lease Accounting Standard Overview of Revenue Recognition Accounting Standard Enhancements for Revenue Recognition for Real Estate Enhancements for FASB 13 for Real Estate Resources 44

45 Resources learnjde.com Standards boards FASB.org IASB.org 45

46 Summary What we covered today 1. Overview of Lease Accounting Standard 2. Overview of Revenue Recognition Accounting Standard 3. Enhancements for Revenue Recognition for Real Estate 4. Enhancements for FASB 13 for Real Estate 5. Resources 46

47 47

48 Please complete the session evaluation We appreciate your feedback and insight Session ID# JDE

How to utilize the new JD Edwards Revenue Recognition Functionality in Sales and Accounts Receivable

How to utilize the new JD Edwards Revenue Recognition Functionality in Sales and Accounts Receivable Session ID#: 101210 August 16, 2017 Prepared by: Name: Craig Davied Title: Director Company: Grant Thornton,