IFRS 15 The State of Europe

Tom Crawford
Martin Redington

President, Aptitude Software

SVP Product & Delivery

Thursday 10th December 10:00 GMT

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Legal Notice
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and must not, therefore, be disclosed to any third party without the express written
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About Aptitude Software

Our Focus

Delivering exceptional ROI while

enabling Finance transformation

Addressing the difficult 20% of

A leading insurer is building a financial
data foundation to empower them to
compete more effectively in a
competitive market.
A multinational telecoms operator
streamlines, simplifies and automates
finance operations while implementing
a new accounting policy.

functionality that Finance

requires but that is not met by
ERP or other IT systems.

Enabling financial insight,

control and transparency - at
scale, in detail and with speed

Best-in-class technology
platform for the design and
execution of finance
applications

One of the worlds largest global banks

generates multi-GAAP reporting from
millions of daily trade and transaction
events.
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Agenda

IFRS 15 projects in telcos across the world

How European telcos are progressing in their projects
Typical challenges and how they are being addressed
The IFRS 15 journey, from compliance to adding value
The Aptitude Software IFRS 15 Revenue Recognition Engine

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Aptitude Softwares experience

174

Customerprovided
scenarios

proven for

37
17

operators

in
countries
around the
world, in Europe, Asia
and North America

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IFRS 15 around the world

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IFRS 15 in Europe

25%

Impact analysis

61%

Project
Preparation

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6%

8%

Solution
Selection

Contracting

Implementation

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Contract or portfolio level accounting?

Set &
forget

Reconciliation

Data
volume

Materiality

Processing
power

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Auditability

Contract
rules

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Common Challenges - Accounting

IFRS 15
interpretation
Revenue Allocation

Contract lifecycle
events
Modification

Business and
finance processes
Billing Cycles

Advance or Arrears Billing

Revenue Recognition

Tariff change

Expected Life

Discounts

Contract Asset Accounting

Addition/subtraction of
individual services

Income Suppression and

Bad Debt Write-Offs

Fees

Addition/subtraction of
equipment

Collectability Risk and

Provisions

Bundles and Unbundling

Cost Recognition
Revenue Allocation
Groups
Prospective and
retrospective calculations
Determining Stand Alone
Selling Prices (SASP)
Region specific equip.
pricing
Storing Stand Alone
Selling Prices (SASP)

Returns (device returns

within allotted period)
Partial-Termination
Termination
Early Termination
Maturity
Extension
Delayed equipment
delivery

Timing Differences
(income recognition vs.
billing)
Overlap with estimated
billing accruals/deferrals
Financing / Time Value of
Money (TVM)
Guarantee Liabilities for
Financing

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Commission (Expenses)

Material Rights
Variable Pricing and
Corporate Discounting
Shared Plans (with
multiple handsets)
Shared and Individual
plans on one contract
Termination fees

Tech Funds

1 month rolling contracts

Direct versus Indirect

Channels

Delayed Discounts (which

represent Material Rights)

Loyalty programmes

Upgrade Options (which

represent Material Rights)

Long term contracts for

networking side

Example contract
options

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Revenue Recognition
Project challenges
1. How to
construct a
Subscriber/Bill
Payer contract

Stand
alone
selling
price

Life Cycle
Events

Channel

Streaming
Service

Market

Voice
Plan

2. Reconciling
deltas back to the
current Billing
accounting
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Location

Handset
Lease

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Product

3. Resourcing

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Typical telco environment

Multiple billing systems, loan lease systems, sales & store fronts with opaque logic
between systems and general ledgers makes a very complex landscape.
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Journey after Compliance

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Simplifying and automating all

revenue accounting processes
Accruals and deferrals
Manual adjustments
Reconciliations
Ensuring accounting
consistency across multiple
entities
Accounting flexibility
A foundation of contract
accounting (revenue and direct
costs) for profitability analysis.

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Value after compliance in action

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1a

1b

Compliance

Compliance plus
all revenue lines
associated
with contracts

Full Accounting
Engine and
IFRS 15
Compliance

Reporting
& Analysis

Delta journal
generation for the
adjustment of the
existing cash based
accounting for
contract revenue
lines and usage
affected by
IFRS15/ASC606,
based on expected
contract cash flows

Full and Delta journal

generation for the
creation and/or
adjustment of the
existing cash based
accounting for contract
revenue lines and
usage affected by
IFRS15/ASC606,
based on expected
contract cash flows

Centralise all
accounting functions
for all revenue
streams/contracts to
achieve
full Revenue and
Cost accounting.
Revenue accounting
includes support
for IFRS15/ASC606.
Cost accounting
including the matching
of Costs against
Revenues over time

Full segmented
sales margin
reporting & analysis

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A major US customer
Compliance
Control
Transparency
Speed of close

60m customers
Objectives
IFRS 15 & FASB 606 compliance
Value beyond compliance in wider
revenue management processes
Enhanced financial control
eg. accruals process
Financial insights from contract &
financial data in the warehouse
Ability to apply new business rules
for new accounting treatments
for statutory & mgmt reporting

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Solution
Aptitude Revenue Recognition Engine
for revenue adjustments
Aptitude Accounting Hub for revenue subledger, adjustment & close process
Common data preparation layer from
numerous source systems to validate &
identify contract accounting events
Maintains multiple sets of books/GAAPs
(through transition period) and drives
movements for existing general ledger

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Our Revenue Recognition Engine

Visit the website

to request a demo

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How Aptitude Differentiates

Focus and Expertise we are focused on working with operators, SIs and auditors to
understand their challenges and deliver on IFRS 15 requirements.
Mature Product - Product designed and developed over 4 years.
Packaged - Minimise project risk and cost allow finance to own the rules 400+
scenarios.
Configurable - IFRS 15 is policy related so every operator has slightly different
approaches for example to material rights - policy driven not technologically limited.
Proven for Innovation Scenario driven for rapid adoption of new products and services
Rapid Implementation - Project estimated at 6-9 months.
User Friendly Designed to allow Finance users to see, understand and configure.
High Performance - Volume of contracts in consumer and number of modifications in
enterprise.

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Thank you for joining

Tom Crawford
President of Aptitude Software

Martin Redington
SVP of Product and Delivery

email info@aptitudesoftware.com
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CONFIDENTIAL - Copyright Aptitude Software Ltd. 2015