The International Financial Reporting Standard 15 – better known as IFRS 15 – is the new regulatory standard for revenue recognition and accounting that emerged as the result of ongoing deliberations between the Financial Accounting Standards Board and the International Accounting Standards Board.

The converged new standard takes effect from 1 January 2018 and introduces sweeping changes to revenue accounting regulations with significant impacts to a broad spectrum of companies across many industry sectors. Chief Financial Officers will now need to re-evaluate their current revenue accounting processes and systems to assess what changes are required to maintain compliance with the new regulatory conditions.

Daniel Nwume

S/4 HANA Finance & HR Transformation Delivery Lead

Keeping the wolf at bay

Keytree recently completed one of the first SAP Revenue Accounting and Reporting (RAR) implementations in the UK and although we faced some challenges – we tackled them!

Here are the six silver bullets it took to put it to bed.

Silver Bullet 1 – You need to sign off your transition approach with an Auditor

There are many ways of interpreting the new accounting standard and SAP RAR can be made to fit them all. The important thing is that you agree with your auditor how you are going to interpret the new rules (for your particular company) and how exactly you will transition to them. Sign this off at the outset of the project and work against this through to the end, or you’ll always be trying to hit a moving target.

Silver Bullet 2 – You must have an experienced implementation team

The new SAP RAR module is one of the more complicated bits of SAP functionality out there. It’s a relatively new solution, so very few people understand how to configure it or how to run the transition.

Keytree have some of the most experienced consultants in the country who worked closely with the product ramp up team, and we have had some tough challenges during this first implementation. The high reconfigurability of the product means it’s easy to end up following a blind alley – new implementers beware and get a team that has the experience!

Silver Bullet 3 – Gear up to revisit your SD pricing configuration

With its APIs, RAR can be implemented with any operational sales and billing solution. When implemented with SAP SD, integration is easiest, but there are some challenges. SAP RAR draws heavily on your existing SD pricing setup, and I guarantee that any dead bodies you have buried in this pricing arrangement will come to the surface. You will need some heavyweight SD pricing configuration resource available at key points during the implementation and should plan on running some regression testing on your sales order processing and pricing before you go live.

Silver Bullet 4 – COPA

SAP RAR posts revenue into FI (including dealing with FX adjustments) and importantly can integrate into your COPA module – if you are using one. Bank on needing some serious COPA expertise available to ensure this works smoothly.

Silver Bullet 5 – Excel is King

SAP RAR will need to be reconciled every step of the way through the transition, and the best way of doing this is to mock up the whole IFRS 15 regulation calculation in Excel. At least one dedicated person with PHD level Excel skills on the project team is a must to enable this (you should find one in your Finance Department)!

Silver Bullet 6 – Heavyweight Cutover planning needed

If you want to avoid giving CFO’s fevered brows, you should get a serious Cutover Manager to get the transformation completed and reconciled within a reasonable time window. Keytree have one of the best in the business, and even he described this as “somewhat challenging”.

So there you have it. If you are going to implement SAP RAR, make sure you blow it away with these six silver bullets otherwise it may just eat you for lunch.

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