Wednesday Oct 01, 2014

Deferred Revenue Replaced by Revenue Performance Obligations

I was talking to Seamus Moran again the other day.

He was saying he had some sympathy for the existing US GAAP folk who had so much to unlearn in respect of the new revenue recognition standard.

He told me that with deferred revenue, you took a sales invoice, and predicted when you’d put that into revenue in the P&L.  You’d add carve-ins and deduct carve-outs and deduct releases to the P&L.

But the new standard takes all of that away.  Instead of accounting for deferred revenue, sales invoices you had to postpone on the sale side, you now have to account for performance obligations, what you owe customers.

It is a big change.  It is not sales invoice-based. The FASB & IASB spelled out the four steps to get a performance obligation value, and they did it so you would get to a performance obligation value, not a delta to a sales invoice.  He said he can recite them: Step 1, ID the contract.  Step 2, ID your promises (assign ID numbers), explicit and implicit, to customers as performance obligations.  Step 3, value the transaction in total, what are you going to get in total.  Step 4, using standalone selling prices (SSP) or estimated selling prices (ESP), allocate the total to the performance obligations. 

At this stage, you now have valued your performance obligations.  No need to go looking at invoices, carvings, or releases. Sure, you may not have all the necessary data, or the quantities aren’t known yet, etc., but this is data you are supposed to book keep, at which you should value revenue, contract liabilities, and contract assets.  Quantity times performance obligation times SSP or ESP.

He says that, actually, embracing the performance obligation idea makes this whole standard much more easy to digest.

Stay tuned for the next in our series of blog posts about the new revenue recognition standard. 

Friday Sep 26, 2014

IOFM AP & Vendor Controls Workshops at Oracle OpenWorld 2014

Oracle is very pleased to announce two Institute of Finance and Management (IOFM) workshops at Oracle OpenWorld 2014: 1) The Top Twenty Internal Controls for Accounts Payable: The Foundation for GRC; and 2) How Your Vendor Master File is Critical to Governance, Risk Management and Compliance.

The Top Twenty workshop will provide the top twenty controls that can be implemented to protect the integrity of your accounts payable process. And the Vendor Master File workshop will highlight how collecting and maintaining accurate vendor information saves money, reduces fraud and helps leverage vendor relationships.

To register for these workshops, please contact Dane Roberts. For a complete listing of all Oracle GRC sessions and meetings at OpenWorld, click here.

Pennsylvania Treasury to Save Millions by Innovating with Oracle GRC Solution

Pennsylvania (PA) Treasury undertook a major financial transformation project to improve audit controls over its payment process, and Oracle GRC is an integral component of the solution. They are using Oracle GRC’s advanced audit algorithms to identify and prevent error, waste, and fraud prior to processing billions of dollars in payments.

PA Treasury’s innovative use of Oracle GRC is expected to help the department increase the average annual savings. “We saw an innovative opportunity to use Oracle GRC in our fiscal review process that, we believe, will help us to improve our pre-transactional auditing capabilities,” said PN Narayanan, chief information officer, Pennsylvania Treasury.

“The Pennsylvania Treasury’s groundbreaking use of Oracle GRC and Oracle’s PeopleSoft to stop financial leakage is paving the way for other organizations to improve profits, strengthen internal controls, and provide a modern platform to meet the recent update to the COSO framework,” said Sid Sinha, senior director, Oracle GRC Product Strategy.

Read the full press release here. To learn more about how Oracle GRC continuously monitors 100% of transactions to help PA Treasury and other organizations achieve their objectives, click here.

Monday Sep 22, 2014

The New Revenue Recognition Standard: Performance Matters

Last week I was talking to Seamus Moran, our resident accountant and we chatted about the new Revenue recognition Standard, Topic 606 and IFRS 15.

He’d just been speaking at a couple of conferences, and noted that the fundamentals of the standard are beginning to click with people.

A few months ago, he said, it wasn’t obvious to people that the core principle, “you should recognize revenue as you transfer goods and services to customers” was a mandate to recognize revenue as you performed.  That is, as you delivered, executed and serviced.  But now, that mandate was being more widely understood: you must recognize revenue as you perform.

One example is a software company that ships a game with some missions or episodes missing.  Under today’s GAAP, they would have to defer all the revenue until the missing episodes were published. Under the new standard, they would have to – not just “could” – recognize the revenue that related to the delivery they had performed, and postpone recognizing the rest of the revenue until they delivered the delayed missions.  A key question is how to identify and value a performance obligation of this nature, especially since this company doesn’t sell missions separately.

But that’s a blog for another day.

Wednesday Jun 11, 2014

Oracle Delivers New Generation Revenue Recognition Solution

 

Revenue is a fundamental yardstick of a company's performance, and one of the most important metrics for investors in the capital markets. So it’s no surprise that the accounting standard boards have devoted significant resources to this topic, with a key goal of ensuring that companies use a consistent method of recognizing revenue.

Due to the myriad of revenue-generating transactions, and the divergent ways organizations recognize revenue today, the IFRS and FASB have been working for 12 years on a common set of accounting standards that apply to all industries in virtually all countries. Through their joint efforts on May 28, 2014 the FASB and IFRS released the IFRS 15 / ASU 2014-9 (Revenue from Contracts with Customers) converged accounting standard.

This standard applies to revenue in all public companies, but heavily impacts organizations in any industry that might have complex sales contracts with multiple distinct deliverables (obligations). For example, an auto dealer who bundles free service with the sale of a car can only recognize the service revenue once the owner of the car brings it in for work. Similarly, high-tech companies that bundle software licenses, consulting, and support services on a sales contract will recognize bundled service revenue once the services are delivered. Now all companies need to review their revenue for hidden bundling and implicit obligations.

Numerous time-consuming and judgmental activities must be performed to properly recognize revenue for complex sales contracts. To illustrate, after the contract is identified, organizations must identify and examine the distinct deliverables, determine the estimated selling price (ESP) for each deliverable, then allocate the total contract price to each deliverable based on the ESPs.

In terms of accounting, organizations must determine whether the goods or services have been delivered or performed to the customer’s satisfaction, then either book revenue in the current period or record a liability for the obligation if revenue will be recognized in a future accounting period.

Oracle Revenue Management Cloud was architected and developed so organizations can simplify and streamline revenue recognition. Among other capabilities, the solution uses business rules to efficiently identify and examine contracts, intelligently calculate and allocate deliverable prices based on prescribed inputs, and accurately recognize revenue for each deliverable based on customer satisfaction.

"Oracle works very closely with our customers, the Big 4 accounting firms, and the accounting standard boards to deliver an adaptive, comprehensive, new generation revenue recognition solution,” said Rondy Ng, Senior Vice President, Applications Development. “With the recently announced IFRS 15 / ASU 2014-9, Oracle is ready to support customer adoption of the new standard with our Revenue Management Cloud,” said Rondy.

Oracle Revenue Management Cloud, an integral part of Oracle Financials Cloud, helps organizations comply with accounting standards, provides them with confidence that reported revenue is materially accurate, and simplifies the accounting process for revenue recognition.

Stay tuned to this blog for regular updates on Oracle Revenue Management Cloud. We also invite you to review our new oracle.com ERP pages @ oracle.com/erp. We will be updating these pages very soon with more information about Oracle Revenue Management Cloud.

Saturday Mar 01, 2014

Are You Ready for Oracle Financials Cloud Release 8?

If you are an existing Oracle Financials Cloud customer, learn what's new in the upcoming Oracle Financials Cloud release by reviewing expanded discussions of each new feature and product, including capability overviews, business benefits, setup considerations, usage tips, and more. And for those of you considering whether the time is right for your organization to to move to the Cloud, get a first-hand look at all that Oracle has to offer.

With over 20 new features such as downloading credit card transactions to your mobile device and manager approvals of expense reports via your iPhone, users can get more work done that works for their schedule.  

Click here for more information.

Thursday Oct 03, 2013

Are you dealing with fragmented feeder systems?

You are not alone. The average organization has more than seven systems that must be integrated with their core accounting application. What if you could have a centralized view across your accounting systems and address the data integration challenges of multiple feeder systems? Listen to the experts at Aberdeen Group and Oracle to learn the latest facts about accounting integration and reporting with Fusion Accounting Hub.  Don't let fragmented systems hold you back.  With many CFOs now playing a crucial role in driving business transformation, Finance and IT have the power to partner together to make things right.

Click here to view the webcast.  

Monday Apr 01, 2013

Gartner TCM Report: Practical Guidance for Transaction Controls Monitoring

 

Gartner has outdone themselves with this excellent report that clearly and concisely explains transaction controls monitoring (TCM) and the related benefits. In Gartner’s “Transaction Controls Monitoring Can Improve Productivity and Financial Governance” report, the Analysis section is particularly effective when it talks about your ERP system controls and that:

“…the existence of these built-in automated controls does not ensure that they are turned on, that they are configured appropriately, and that they are not regularly overridden or bypassed — thus establishing the need for a solution that can monitor these controls.”

If you are in the market for a TCM solution, the report’s Selection Guidelines are particularly effective to help you make effective decisions.

Like much in the technology world, once you get a handle on all the acronyms, you are well under way to becoming a TCM expert!

Click here for access to the full report. As always, we welcome your comments and interesting stories about how you are using TCM solutions.

Monday Dec 17, 2012

Become a Member of our new LinkedIn group - Oracle Office of Finance Solutions

Join our new group on LinkedIn -- Oracle Office of Finance Solutions!  The group will provide finance professionals with the latest highlights on Oracle solutions for the Office of Finance, industry trends, and upcoming events.  Find us on LinkedIn, join our group today, and enjoy the opportunity to network with others.

Monday Dec 10, 2012

Red Robin is Serving Up an Unbridled Experience of Burgers & Fries using Oracle Cloud Solutions

Looking to make investments in the core systems that speak to the heart and soul of their business, Red Robin chose Oracle Cloud Solutions.  Now their team can focus on business transformation, manage food costs more efficiently, and reduce the amount of hours spent on inventory and production planning. Listen to their story here.

Monday Oct 22, 2012

Oracle GRC in Leader’s Quadrant on Gartner’s Magic Quadrant for Enterprise Governance Risk and Compliance Platforms

Once again Gartner has recognized Oracle as a Leader in their Magic Quadrant for Enterprise Governance Risk and Compliance (EGRC) Platforms report, stating that “Oracle remains in the Leader’s quadrant based on overall corporate viability, proven execution against its road map, and advanced capabilities to integrate risk management and performance management.”  In the report, Gartner cited that Oracle clearly understands the GRC challenges faced by a number of verticals, and also the trends toward the integration of risk management and performance management. 

Gartner produces Magic Quadrant reports to provide guidance to their clients on available solutions in specific categories. This Magic Quadrant reports takes a holistic view of EGRC solutions and based on selected criteria, places vendors in one of the four quadrants - leaders, challengers, visionaries and niche. We are proud to be in the leader category! Click here to read the full report.

Congratulations to our product development, strategy, and marketing teams for creating a world-class, market-leading GRC solution!

Oracle GRC: Designed to manage risk, improve controls and reduce costs

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Focusing on solutions for the Office of Finance, this blog will highlight key financial management market trends, events and other news of interest.

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