Europe Webinar DISTRIBUTION

1
IFRS 15 The State of Europe

• Tom Crawford President, Aptitude Software
• Martin Redington SVP Product Delivery
• Thursday 10th December 1000 GMT

2
(No Transcript)
3
About Aptitude Software

• Our Focus
• Delivering exceptional ROI while enabling Finance
  transformation
• Addressing the difficult 20 of 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

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.
One of the worlds largest global banks generates
multi-GAAP reporting from millions of daily trade
and transaction events.
4
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

5
Aptitude Softwares experience
174
Customer-provided scenarios
37
6

IFRS 15 around the world
7
IFRS 15 in Europe

25
61
8
6
Project Preparation
Solution Selection
Impact analysis
Contracting
Implementation
8
Contract or portfolio level accounting?
Set forget
Auditability
Reconciliation
Materiality
Contract rules
Data volume
Processing power
9
Common Challenges - Accounting
IFRS 15 interpretation
Contract lifecycle events
Business and finance processes
Example contract options

• Revenue Allocation
• Revenue Recognition
• Contract Asset Accounting
• 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)

• Modification
• Tariff change
• Addition/subtraction of individual services
• Addition/subtraction of equipment
• Returns (device returns within allotted period)
• Partial-Termination
• Termination
• Early Termination
• Maturity
• Extension
• Delayed equipment delivery

• Billing Cycles
• Expected Life
• Income Suppression and Bad Debt Write-Offs
• Collectability Risk and Provisions
• Timing Differences (income recognition vs.
  billing)
• Overlap with estimated billing accruals/deferrals
• Financing / Time Value of Money (TVM)
• Guarantee Liabilities for Financing
• Tech Funds
• Direct versus Indirect Channels
• Loyalty programmes
• Long term contracts for networking side

• Advance or Arrears Billing
• Discounts
• Fees
• Commission (Expenses)
• Bundles and Unbundling
• Material Rights
• Variable Pricing and Corporate Discounting
• Shared Plans (with multiple handsets)
• Shared and Individual plans on one contract
• Termination fees
• 1 month rolling contracts
• Delayed Discounts (which represent Material
  Rights)
• Upgrade Options (which represent Material Rights)

10
Revenue Recognition Project challenges
Stand alone selling price
Life Cycle Events
Channel
1. How to construct a Subscriber/Bill Payer
contract
Streaming Service
Market
VoicePlan
Location
Handset Lease
Product
11
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.

12
Journey after Compliance

• 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.

13
Value after compliance in action
1a
1b
2
3
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
14
A major US customer
60m customers
Compliance Control Transparency Speed of close


Objectives
Solution

• 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

Aptitude Revenue Recognition Engine for revenue
adjustments Aptitude Accounting Hub for revenue
sub-ledger, 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
15
Our Revenue Recognition Engine
Visit the website to request a demo
16
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.

17
Thank you for joining
Tom Crawford President of Aptitude Software
Martin Redington SVP of Product and Delivery
email info_at_aptitudesoftware.com
18
(No Transcript)