AASB 15 Revenue from Contracts with Customers

Transcription

1 Headline Verdana Bold AASB 15 Revenue from Contracts with Customers What this means for business Katelyn Bonato, Deloitte

2 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

3 WHY? 3

4 ELIMINATE INCONSISTENCIES AND WEAKNESSES 4

5 ELIMINATE INCONSISTENCIES AND WEAKNESSES MORE PRESCRIPTIVE GUIDANCE 5

6 ELIMINATE INCONSISTENCIES AND WEAKNESSES MORE PRESCRIPTIVE GUIDANCE IMPROVE COMPARABILITY 6

7 ELIMINATE INCONSISTENCIES AND WEAKNESSES MORE PRESCRIPTIVE GUIDANCE IMPROVE DISCLOSURES IMPROVE COMPARABILITY 7

8 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

9 THE FIVE STEP APPROACH 9

10 IDENTIFY THE CONTRACT WITH THE CUSTOMER 10

11 IDENTIFY THE CONTRACT WITH THE CUSTOMER IDENTIFY SEPARATE PERFORMANCE OBLIGATIONS IN THE CONTRACT 11

12 IDENTIFY THE CONTRACT WITH THE CUSTOMER IDENTIFY SEPARATE PERFORMANCE OBLIGATIONS IN THE CONTRACT DETERMINE THE TRANSACTION PRICE 12

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 OBLIGATIO NS 13

14 IDENTIFY THE CONTRACT WITH THE CUSTOMER IDENTIFY SEPARATE PERFORMANCE OBLIGATIONS IN THE CONTRACT DETERMINE THE TRANSACTION PRICE ALLOCATE THE TRANSACTION PRICE TO SEPARATE PERFORMANCE OBLIGATIO NS RECOGNISE REVENUE WHEN EACH PERFORMANCE OBLIGATION IS SATISFIED 14

15 CONTRACT COSTS 15

16 DISCLOSURES 16

17 Significant judgements Significant judgments applied Transaction price Allocation methods and assumptions 17

18 Contracts with customers Disaggregation of revenue Contract balances (including reconciliation) Information about performance obligations Remaining performance obligations Practical expedients 18

19 Others Policy decisions Cost to obtain a contract Costs to fulfil a contract 19

20 TRANSITION APPROACH CONSIDER THE OPTIONS 20

21 1 Retrospective Approach (with/without practical expedients) 2 Modified Approach 21

22 DUAL RECORDS 22

23 Year ended 30 June 2017 Year ended 30 June 2018 Year ended 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

24 PRACTICAL ISSUES 24

25 SUBSCRIPTION REVENUE CONSIDERATIONS 25

26 BREAK DOWN AND ANALYSE UNBUNDLE Low Volume Of Contracts Monitor STAND-READY SUBSCRIPTION REVENUE CONSIDERATIONS ALLOCATE TRANSACTION PRICE STAND ALONE SELLING PRICE SERIES OF DISTINCT PERFORMANCE OBLIGATIONS Provision Of Service Or License 26

27 REVIEW OF PRODUCTS & CONTRACTS Product pricing more transparent Assess: Accounting for contracts in scope Update: Terms and Conditions Impact: Long term contract negotiation 27

28 EMPLOYEES Remuneration Schemes (KPI / Bonus Structures) Training Project Management 28

29 SYSTEM CHANGES Update: IT Systems, Business Models, Company Practices, Accounting Policies, Internal Process and Controls 29

30 MANAGING STAKEHOLDERS Shareholders (expectation / outlook) Financiers (loan covenants) Regulators (disclosures) 30

31 OUR IMPLEMENTATION APPROACH 31

32 OUR SUGGESTED APPROACH INCLUDES FIVE PHASES AIMED AT SUCCESSFUL IMPLEMENTATION 01 IMPACT ASSESSMENT 02 DETAILED GAP ANALYSIS 03 DEFINE SOLUTIONS 04 DESIGN AND DEVELOP 05 IMPLEMENT 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

33 01 IMPACT ASSESSMENT Understand revenue streams and product lines most likely impacted Understand which step of AASB 15 model could have material impact 33

34 02 DETAILED GAP ANALYSIS Perform detailed contract reviews Assessment of current process and data gaps Preliminary analysis of transition method and portfolio approach 34

35 03 DEFINE SOLUTIONS Define new accounting policies Finalise approach to address data and system gaps Define training and communication approach 35

36 04 DESIGN AND DEVELOP Design, develop and test system and process solution Test and migrate pilot data Design controls and determine operational KPIs 36

37 05 IMPLEMENT AND DELIVER Delivery of implementation plan Plan and execute final cut-over and go-live process Monitor ongoing compliance and performance 37

38 OUR SUGGESTED APPROACH INCLUDES FIVE PHASES AIMED AT SUCCESSFUL IMPLEMENTATION 01 IMPACT ASSESSMENT 02 DETAILED GAP ANALYSIS 03 DEFINE SOLUTIONS 04 DESIGN AND DEVELOP 05 IMPLEMENT 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

39 ANTICIPATE THE COMMON ROAD BLOCKS 39

40 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

41 KATELYN BONATO For copy of these slides: and search AASB 15