AASB 15 Revenue from Contracts with Customers What this means for - - PowerPoint PPT Presentation

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AASB 15 Revenue from Contracts with Customers What this means for - - PowerPoint PPT Presentation

Mar 03, 2024 271 likes •691 views

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

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Headline Verdana Bold

AASB 15 Revenue from Contracts with Customers

What this means for business – Katelyn Bonato, Deloitte

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UNDERSTAND WHAT THIS MEANS FOR YOUR BUSINESS KEY DECISIONS TO BE MADE DO NOT UNDERESTIMATE THE MAGNITUDE OF THIS TRANSITION TO BUSINESS AS A WHOLE

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WHY?

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ELIMINATE INCONSISTENCIES AND WEAKNESSES

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MORE PRESCRIPTIVE GUIDANCE ELIMINATE INCONSISTENCIES AND WEAKNESSES

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IMPROVE COMPARABILITY ELIMINATE INCONSISTENCIES AND WEAKNESSES MORE PRESCRIPTIVE GUIDANCE

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MORE PRESCRIPTIVE GUIDANCE ELIMINATE INCONSISTENCIES AND WEAKNESSES IMPROVE DISCLOSURES IMPROVE COMPARABILITY

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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

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THE FIVE STEP APPROACH

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IDENTIFY THE CONTRACT WITH THE CUSTOMER

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

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

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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

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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

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CONTRACT COSTS

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DISCLOSURES

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Significant judgments applied Transaction price Allocation methods and assumptions

Significant judgements

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

Contracts with customers

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

Others

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TRANSITION APPROACH – CONSIDER THE OPTIONS

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1

Retrospective Approach (with/without practical expedients)

2

Modified Approach

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DUAL RECORDS

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Year ended 30 June 2017 Year ended 30 June 2018 Year ended 30 June 2019 Retrospective Approach Dual Records Modified Approach AASB 15 Dual Records = Cut-off analysis required to be performed on open contracts AASB 111/AASB 118 AASB 111/AASB 118 AASB 15

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PRACTICAL ISSUES

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SUBSCRIPTION REVENUE CONSIDERATIONS

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BREAK DOWN AND ANALYSE

UNBUNDLE

ALLOCATE TRANSACTION PRICE

‘STAND-READY’

STAND ALONE SELLING PRICE Low Volume Of Contracts

Monitor

SERIES OF DISTINCT PERFORMANCE OBLIGATIONS

Provision Of Service Or License

SUBSCRIPTION REVENUE CONSIDERATIONS

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Product pricing more transparent Assess: Accounting for contracts in scope Update: Terms and Conditions Impact: Long term contract negotiation

REVIEW OF PRODUCTS & CONTRACTS

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Remuneration Schemes (KPI / Bonus Structures) Training Project Management

EMPLOYEES

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

SYSTEM CHANGES

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  • Shareholders (expectation / outlook)
  • Financiers (loan covenants)
  • Regulators (disclosures)

MANAGING STAKEHOLDERS

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OUR IMPLEMENTATION APPROACH

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05 IMPLEMENT AND DELIVER

  • Delivery of

implementation plan

  • Plan and execute

final cut-over and go-live process

  • Monitor ongoing

compliance and performance

04 DESIGN AND DEVELOP

  • Design, develop and

test system and process solution

  • Test and migrate

pilot data

  • Design controls and

determine

  • perational KPIs

03 DEFINE SOLUTIONS

  • Define new

accounting policies

  • Finalise approach to

address data and system gaps

  • Define training and

communication approach

02 DETAILED GAP ANALYSIS

  • Perform detailed

contract reviews

  • Assessment of

current process and data gaps

  • Preliminary analysis
  • f transition

method and portfolio approach

01 IMPACT ASSESSMENT

  • Understand revenue

streams and product lines most likely impacted

  • Understand which

step of AASB 15 model could have material impact

OUR SUGGESTED APPROACH INCLUDES FIVE PHASES AIMED AT SUCCESSFUL IMPLEMENTATION

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01 IMPACT ASSESSMENT

  • Understand revenue streams and product lines most likely impacted
  • Understand which step of AASB 15 model could have material impact
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02 DETAILED GAP ANALYSIS

  • Perform detailed contract reviews
  • Assessment of current process and data gaps
  • Preliminary analysis of transition method and portfolio approach
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03 DEFINE SOLUTIONS

  • Define new accounting policies
  • Finalise approach to address data and system gaps
  • Define training and communication approach
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04 DESIGN AND DEVELOP

  • Design, develop and test system and process solution
  • Test and migrate pilot data
  • Design controls and determine operational KPIs
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05 IMPLEMENT AND DELIVER

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

  • Delivery of

implementation plan

  • Plan and execute

final cut-over and go-live process

  • Monitor ongoing

compliance and performance

04 DESIGN AND DEVELOP

  • Design, develop and

test system and process solution

  • Test and migrate

pilot data

  • Design controls and

determine

  • perational KPIs

03 DEFINE SOLUTIONS

  • Define new

accounting policies

  • Finalise approach to

address data and system gaps

  • Define training and

communication approach

02 DETAILED GAP ANALYSIS

  • Perform detailed

contract reviews

  • Assessment of

current process and data gaps

  • Preliminary analysis
  • f transition

method and portfolio approach

01 IMPACT ASSESSMENT

  • Understand revenue

streams and product lines most likely impacted

  • Understand which

step of AASB 15 model could have material impact

OUR SUGGESTED APPROACH INCLUDES FIVE PHASES AIMED AT SUCCESSFUL IMPLEMENTATION

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ANTICIPATE THE COMMON ROAD BLOCKS

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UNDERSTAND WHAT THIS MEANS FOR YOUR BUSINESS KEY DECISIONS TO BE MADE DO NOT UNDERESTIMATE THE MAGNITUDE OF THIS TRANSITION TO BUSINESS AS A WHOLE

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For copy of these slides: https://www2.deloitte.com/au and search AASB 15

https://www2.deloitte.com/au

KATELYN BONATO – kbonato@deloitte.com.au