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

Transcription

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

2 Craig Davied Director, Technology Solutions Kansas City, MO Executive summary Craig is a Director with Grant Thornton in the Technology Solutions practice. He has over 18 years of consulting experience, across a diverse set of companies and industries. Craig's experiences include planning and program management of multi-faceted implementation projects, hands on management and implementation of ERP software packages, business process reengineering and system architecture design. Prior to Grant Thornton, Craig was a founding member of MarketSphere s JD Edwards practice in 2002 and was responsible for managing and delivering projects, practice development, solution design and staff management. He has deep experience with the processes and configuration of the JDE Finance and Distribution modules, specifically with the General Ledger, Accounts Payable, Accounts Receivable, Job Cost, Contract Billing, Procurement / Subcontracts, Sales, Inventory, and Advanced Pricing. Craig also has experience with multiple releases of the software. Prior to joining Grant Thornton Consulting from MarketSphere, Craig was an experienced consultant in a Big 5 consulting organization and has over 18 years of professional experience. Industries Consumer Products Retail Metals and Mining Mineral Exploration Drilling Construction Water Management Aggregates Pet Food/Manufacturing Textiles Public Utilities Inbound / Outbound Transportation Education Bachelor of Science in Business Administration / Finance, Kansas State University 2

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4 Technology Solutions Creating business harmony in the cloud

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7 About Grant Thornton JD Edwards Practice 80+ dedicated professionals Specialized functional resources PM and functional expertise Project management office Implementations Upgrades Mobile applications Third party integration architecture Business process reengineering Managed services (functional) Distribution Manufacturing HR / Payroll CAM Project advisory THOUGHT LEADERSHIP Leading presenter at COLLABORATE, INFOCUS and OpenWorld conferences with dozens of education sessions spanning a broad range of topics ERP governance and data governance white papers and thought leadership series Featured in PROFIT magazine JD Edwards Special Issue 2015 User materials and training Financials EXPERIENCE AND RECOGNITION CNC Development Technical Workflow Managed services (technical) Security management Private cloud Technical management Database management Trusted business advisor Infrastructure / hosting Disaster recovery Security Development (FRICE) Gap assessment Data governance Transformation Master data management Industry point of view Reporting strategy Proven methodology Process excellence Benchmarking ERP governance Change management Cloud roadmap / strategy FASB planning Chart of accounts optimization More than 200 JD Edwards implementations and upgrades Oracle JD Edwards recognized Grant Thornton with its 2015 JD Edwards Partner Excellence Award for Outstanding Upgrades and 2016 JD Edwards Partner Excellence Award for Vertical Industries

8 Program Agenda Objectives Business Problem The New Standard Overview of Functionality Accounts Receivable a) Setup b) Examples 6. Sales Order a) Setup b) Examples 7. Revenue Recognition Audit 8. Summary

9 Objectives

10 Objectives Briefly discuss the business problem at hand & how we arrived here today Discuss the new functionality in JD Edwards EnterpriseOne in the Accounts Receivable and Sales Order Processing modules Show examples to demonstrate the new functionality

11 Business Problem

12 Business Problem Business process requirements to recognize revenue separate from invoicing New Revenue Recognition Standard to be in effect for Fiscal Year 2018 for Public companies with early adoption in 2017 Convergence of IFRS and US GAAP revenue recognition standards Created via a collaboration between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) Replaces all existing revenue recognition standards All Industries and Countries Exceptions are the Insurance and Lease Vendor industries New Revenue Recognition Standard to be in effect for Fiscal Year 2019 for Private companies with early adoption in 2018 Updates to Project Costing, Accounts Receivable and Sales Order Processing added additional flexibility to recognize revenue.

13 The New Standard

14 The New Standard Why did this change occur? The Financial Accounting Standards Board and the International Accounting Standards Board initiated a joint project to clarify the principles to recognize revenue and develop a common revenue standard for U.S. GAAP and IFRS that would: Remove inconsistencies and weaknesses in revenue requirements. Provide a more robust framework for addressing revenue issues. Standardize revenue recognition practices across entities, industries, jurisdictions, and capital markets. Provide more useful information to users of financial statements through improved disclosure requirements. Simplify the preparation of financial statements by reducing the number of guidelines to which an entity must refer.

15 The New Standard What should I do next? 1. Discuss the new standards with your auditors or other trusted advisors 2. Review publications from audit companies and other sources 3. Analyze your company's revenue related transactions against the standard 4. Study how the current JD Edwards software and enhancements will enable this change

16 Overview of Functionality

17 Overview of Functionality New features in Accounts Receivable and Sales Order Processing for Revenue Recognition Place selected invoices into a Revenue Recognition process Performance Liability Accounting for invoices going into the process Recognition of revenue and cost of goods sold after the performance obligation is satisfied Performance Liability Accounting for invoices during recognition Performance Liability and COGS adjustment accounts

18 Overview of Functionality Benefits Comply with Revenue Recognition Accounting Standards and Business Processes Identify and track your contracts and performance obligations Recognize revenue only when the performance obligation is complete Accurately reflect performance liabilities and revenue on your Balance Sheet and Income Statement Minimize Impact to Current Business Process The system determines which invoices need to go through revenue recognition versus your staff Transparent to users that process invoices or sales orders Provided in all JD Edwards EnterpriseOne processes that create or update invoices Flexible Setup Flexible setup to identify those invoices that need to go the process based upon your companies business process Choose which companies use the functionality based upon your business needs Track performance obligations on contracts and change orders more easily

19 Overview of Functionality Revenue Recognition Process Key Features: Configure which invoices will go through the Revenue Recognition Process A/R Invoices Sales Order Invoices Contract Billing Invoices Services Billing invoices Performance Liability Accounting entries at invoice creation Recognize Revenue and Cost of Goods Sold separate from invoicing with appropriate G/L entries

20 Overview of Functionality Revenue Recognition Process Flow Invoice Entered Source of invoice: A/R Invoice Sales Order Contract Billing Service Billing Invoice to Revenue Recognition Process Only invoices that need to go through the process will be based upon trigger processing from source of invoice entry Performance Liability Booked in G/L AAIs determine the Performance Liability Accounts Performance Obligation Complete Determined by customer s business process Revenue and COGS Recognized Performance Liabilities Cleared from G/L Revenue Booked in G/L Cost of Goods Sold Booked in G/L

21 Overview of Functionality Performance Liability Accounting at Recognition 1st Create Invoice Triggered to Revenue Recognition Revenue Performance Liability $ COGS Performance Liability Cost of Goods Sold $ nd Recognize Revenue of Invoice Revenue $ Performance Liability $ $ COGS Performance Liability $ $ Cost of Goods Sold $175.00

22 Accounts Receivable: Setup

23 Accounts Receivable: Setup Company Constants Setup Company Constants Turn the feature on or off by company

24 Accounts Receivable: Setup Trigger Hierarchy Setup 1.) Trigger Setup Invoice Trigger Hierarchy Hierarchy determined by company and by system Validation based on chronology of hierarchy After chronology then blanks based on which is listed first Can use UDC 01/01-01/30 2.) Trigger Setup Invoice Trigger Date Calculation From Date: Specify the date that the system uses to calculate the eligible for recognition date. Values are Invoice or GL Date Specify the date that the system compares with the eligible for recognition date to determine if the dates are in the same period Values are Invoice or GL Date

25 Accounts Receivable: Setup Trigger Hierarchy Setup 3.) Trigger Setup Configuration Trigger Configuration Specify which triggers to determine invoice inclusion You must check the Revenue Recognition Inclusion box to include the invoice in the revenue recognition process

26 Accounts Receivable: Examples

27 Accounts Receivable: Examples How Invoices Enter Revenue Recognition Process At Invoice Creation Using Trigger Processing Standard and Speed Invoice Entry Batch Invoice Processor Invoices created in A/R only at this time Manual process Row exit from the Customer Ledger Inquiry application Invoices created in A/R only at this time

28 Accounts Receivable: Examples Recognition of Revenue Recognition via multiple methods: Interactive P03B116 By Invoice Recognize all Revenue and Cost of Goods Sold By Pay Item Recognize all of the Revenue amounts Recognize all, more, or less of the Cost of Goods Sold amounts Batch process R03B116 By Invoice Recognize all Revenue and Cost of Goods Sold Select Invoices via Data Selection

29 Accounts Receivable: Examples Recognition of Revenue New features in JDE Accounts Receivable for Revenue Recognition: Blind Use blind recognition to recognize revenue and COGS for the entire invoice. During blind recognition, you enter a G/L date and reason code for all of the summarized invoices that you select. Guided Use guided recognition to review the invoice prior to revenue recognition. During guided recognition, you enter a G/L date and reason code for each invoice you select.

30 Accounts Receivable: Examples Recognition of Revenue New features in JDE Accounts Receivable for Revenue Recognition: Scheduled To recognize revenue for invoice that have a schedule attached to them, you run the Revenue Recognition for Schedule program (R03B1151). This program processes all records that are eligible for recognition during the period specified in the processing options. Once the record is processed, it no longer appears in the schedule for that invoice. Once all schedule records for an invoice have been processed, the schedule is no longer attached to the invoice.

31 Accounts Receivable: Examples Example #1: Standard Invoice Entry in A/R Invoice created for Non-Stock for Sale Account

32 Accounts Receivable: Examples Example #1: Standard Invoice Entry in A/R Posted to Performance Liability due to Triggers Setup RPAAI Performance Liability Account (OBJ=4041) Days From Configured Date Trigger Invoice date and GL date were more than 1 day apart and in the same period

33 Accounts Receivable: Examples Example #1: Standard Invoice Entry in A/R New Revenue Recognition Application P03B116 Search by customer, company or document number Can view all invoices, only recognized, or not recognized

34 Accounts Receivable: Examples Example #1: Standard Invoice Entry in A/R Recognize Full Amount of Revenue

35 Accounts Receivable: Examples Example #1:Standard Invoice Entry in A/R Revenue Recognized through application and Batch posted Opens same batch the Invoice started in Moves Revenue from Performance Liability to Non-Stock for Sale

36 Accounts Receivable: Examples Example #2: Partially Recognized A/R Invoice Through the Revenue Recognition Application an A/R Invoice can be partially recognized.

37 Accounts Receivable: Examples Example #2: Partially Recognized A/R Invoice Recognized amount moved to Revenue account Amount not recognized adjusted out to (AAI for Performance Liability adjustment)

38 PA56 PA58 Accounts Receivable: Examples Example #3: Manually Move A/R Invoice to Rev Rec Through the Customer Ledger Inquiry you can manually move an invoice that didn't meet the triggers to Revenue Recognition via a Row Exit Manually moving invoices to Revenue Recognition is only allowed on invoices that were created in the A/R module. You can manually move multiple A/R Invoices at one time

39 Slide 38 PA56 show example with writting off with adjustment Palmisano, Anthony, 8/9/2017 PA58 write off hits expense. the revenue is untouched. write is offset to AR trade account Palmisano, Anthony, 8/10/2017

40 Sales Order: Setup

41 Sales Order: Setup Company Constants Setup Company Constants (P03B216) Turn the feature on or off by company

42 Sales Order: Setup Revenue Recognition Setup There are three forms that need to be set up: Hierarchy Specify which fields are significant for each company and the order in which the system evaluates the values in the fields Uses the sales order header company, not the detail line's company Date Eligible for recognition date calculated based on the values in this setup Period comparison date for the invoice based on this setup Configuration Records Matches specific data from each transaction against the values Checks the Days From Configured Date field to calculate eligible for recognition date

43 Sales Order: Setup Revenue Recognition Setup Trigger Setup Invoice Trigger Hierarchy Hierarchy determined by company and by system Used to sort the configuration records when comparing values of the sales order lines Validation based on chronology of hierarchy After chronology then blanks based on which is listed first Trigger Setup Invoice Trigger Date Calculation From Date: Specify the date that the system uses to calculate the eligible for recognition date. Values are Ship Date, Invoice Date or GL Date Period Comparison Date: Specify the date that the system compares with the eligible for recognition date to determine if the dates are in the same period Values are Invoice or GL Date

44 Sales Order: Setup Revenue Recognition Setup Trigger Setup Configuration Specify which triggers to determine invoice inclusion You must check the Revenue Recognition Inclusion box to include the invoice in the revenue recognition process Used to maintain the lines that the system reviews when determining if the sales order line needs to go to the revenue recognition process If "Days from Configured Date" is set to 0 then all invoices for that trigger will go to Revenue Recognition process

45 Sales Order: Examples

46 Sales Order: Examples Revenue Recognition Process Flow Trigger Configuration Searched Uses sequencing from the hierarchy & values on the invoice search for most specific trigger configuration If no record is found searches company Check Revenue Recognition Inclusion Field If field is set to not include, do not send the record to revenue recognition Verify Same Period Inclusion Compared to eligible recognition date Same Period Inclusion Include all pay items in revenue recognition Same Period Exclusion Include all pay items in recognition if the eligible for recognition date is not in the same period as the value in the Comparison From Date field If in different periods, exclude from revenue recognition

47 Sales Order: Examples Example #1: Ineligible Due to Hierarchy Setup Based on the previous setup this order will NOT go through revenue recognition because neither the Sold To or Ship To match those in the setup

48 Sales Order: Examples Example #2: Revenue Recognition Eligible Based on the previous setup this order WILL go through revenue recognition because the Sold To and Ship To match those in the setup

49 Sales Order: Examples Example #2: Revenue Recognition Eligible The processing of the sales order is the same as usual until after the order is completed Revenue Recognition Record is created in the new Revenue Recognition Application upon sales update This is the same Revenue Recognition application used when processing Accounts Receivable transactions

50 Sales Order: Examples Example #2: Sales Update Journal Entry The journal created by the sales update reflects the revenue recognition accounts Invoice must be posted before Revenue Recognition can be processed

51 Sales Order: Examples Example #2: Recognizing Revenue P03B116 Work with Invoice Revenue Recognition Same recognition application as Accounts Receivable uses There are three ways of recognizing revenue: Recognize less revenue and leave the remainder open Recognize less revenue and close the remainder Recognize all revenue

52 Sales Order: Examples Example #2: Revenue Recognition GL Post

53 Sales Order: Examples Data Flow Setup Invoice / Revenue Processing Sales Order Setup / Processing Sales Update & Revenue Recognition Processing F03B421 Sales Order Trigger Hierarchy F4201 Sales Order Header F03B11 Customer Ledger F03B11T - Customer Ledger Tag F03B422 Sales Order Trigger Date F4211 Sales Order Detail F0911 Account Ledger F03B116 Revenue Recognition Invoice F4111 Item Ledger F42109 / F42119 S.O. History Files F03B117 - Revenue Recognition G/L Information F03B423 Sales Order Configuration

54 Revenue Recognition Audit

55 Revenue Recognition Audit Revenue Recognition Invoice Audit Application Review audit records from the Revenue Recognition Invoice Audit and the Customer Ledger tables Use QBE to search Allows ease of analysis on history of transactions Multiple lines for each change on the invoice

56 Revenue Recognition Audit Revenue Recognition G/L Audit Application Review audit records from the Revenue Recognition Information Audit and the Account Ledger tables Use QBE to search Allows ease of analysis on history of transactions Multiple lines for each change in G/L impact

57 Summary

58 Summary AAIs for Performance Liability and COGS accounts to be set up Triggers for Sales Order invoices determine if an invoice created Sales is sent to Revenue Recognition program Triggers compare GL dates and invoice dates to determine revenue recognition qualification New Revenue Recognition program allows fully or partial recognition of revenue and COGS Only invoices created in A/R module can be manually moved to Revenue Recognition program Audit programs allow detailed information regarding revenue transactions Voided invoices will reverse all recognized revenue and performance liability

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61 Q&A Q U E S T I O N S A N S W E R S Prepared by: Craig Davied Director of JDE Practice Grant Thornton craig.davied@us.gt.com /