Wednesday Feb 04, 2015

Separating Billing and Revenue in Support of the New Revenue Accounting Standard

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued new revenue accounting standards in May 2014 with an effective date of 2017. PeopleSoft FSCM Update Image 10 includes enhancements to PeopleSoft Contracts and Project Costing to support customers in their transition to the new accounting standards.

Separating Billing and Revenue

Enhancements provide customers the option of defining prices for revenue separate from prices used for billing. With new Contracts functionality, customers can identify a total contract price for revenue and for billing and then allocate that price across contract line items. The price assigned to a contract line for revenue recognition may be different than the price of the line item for billing. In Project Costing, new revenue rate sets can identify rates and markups for revenue recognition that are different from the rates and markups used for billing and the related contract line limit for revenue recognition may be different from the billing limit. In addition, new attributes were added to the contract enabling customers to identify prime contracts from subcontracts and at the contract line level a new bundling attribute was added allowing customers to group related contract lines.

Exhibit 1: Separating Billing and Revenue on a Contract


The new revenue pricing functionality is additive. At the contract level, customers define if prices for billing and revenue should be maintained separately. Contracts that do not need separating pricing for revenue can continue using a single amount for both billing and revenue. Other PeopleSoft modules with existing automation to create contracts and recognize revenue, such as Pay/Bill Management and Grants, have the option of using the new functionality in the PeopleSoft Contracts and Projects modules.

Exhibit 2: Contract General Page

May Be Applied to Existing Contracts

After applying new functionality, most existing contracts will be identified as not having separate prices for billing and revenue as this was the case under prior versions. However, we expect customers will be reviewing their existing contract base for impact over a period of time and that some existing contracts will need to separately define revenue while others may not. The new functionality allows customers to update existing contracts to take advantage of new pricing functionality as that analysis occurs. Other contracts that are still being analyzed for impact can continue functioning as they did under prior versions until their review is complete.

Exhibit 3: New Revenue Allocation Page

Additional Information

For additional detail on the project and the enhancements included in PeopleSoft FSCM Update Image 10, customers can review the Oracle PeopleSoft Red Paper ‘Separating Revenue from Billing’ under My Oracle Support.

Monday Aug 18, 2014

PeopleSoft Grants & the Federal Agency Letter of Credit Draw Changes

For decades, most, if not all, US Federal agencies that sponsor research allowed grant recipients to request and receive payments using pooled accounts, commonly known as pooled letter of credit (LOC) draws. This enabled organizations, such as universities and hospitals, fast and efficient access to reimbursement of the expenditures they incurred conducting research across a portfolio of grants. To support this business practice, the PeopleSoft Grants solution has delivered an LOC Draw report to provide the total request amount along with all of the supporting invoice details for reconciliation and audit purposes.

Now, in an attempt to provide greater transparency, eliminate fraud, strengthen accountability for grant-related financial transactions, and simplify grant award closeout, many US Federal sponsors are transitioning from the “pooling” letter of credit draw method to requesting on a “grant-by-grant” basis. The National Science Foundation, the second largest issuer of Federal awards, already transitioned to detailed grant draws in 2013. And, in response to the U.S. Department of Health and Human Services (HHS) directive to HHS-supported Agencies, the largest Federal awards sponsor, the National Institutes of Health (NIH), will fully transition to the new HHS subaccount draw method. This will require NIH award recipients to request payments based on actual expenses incurred on an award-by-award basis. NIH is expected to fully transition to this new draw method by the end of Federal fiscal year 2015.  (The NIH had planned to fully transition to this new method by the end of fiscal 2014; however, the impact to institutions was deemed to be significant enough that a reprieve was recently granted.)

In light of these new Federal draw requirements, we have recently released these new features to aid our customers on both PeopleSoft Grants releases 9.1 and 9.2:
1. Federal Award Identification Number on the Proposal and Award Profile
2. Letter of credit fields on contract lines to support award basis draws and comply with Federal close out mandates
3. Process to produce both pro forma and final LOC Draw Reports in BI Publisher report format
4. Subacccount ID field on the LOC Summary and a new BI Publisher version of the LOC Summary report
5. Added Subaccount Field and contract info to be displayed on the LOC summary page
6. Ability to generate by a variety of dimensions pro forma and invoiced draw listings
7. Queries for generation and manipulation of data to upload into sponsor payment request systems and perform payment matching
8. Contracts LOC Close Out query to quickly review final balances prior to initiating final draws and preparing Federal Financial Reports prior to close

The PeopleSoft Development team actively monitors this and other major Federal changes and continues working closely with the Grants Product Advisory Group of the Higher Education User Group to ensure a clear understanding of what our customers need in order to transition to new approaches for doing business with the Federal government.

For more information regarding the enhancements to the PeopleSoft Grants solution, existing customers can login to My Oracle Support and review the Enhancements to Letter of Credit Process (Doc ID 1912692.1) associated with resolution ID 904830. This enhanced LOC functionality is available in both PeopleSoft FSCM 9.1 Bundle #31 and PeopleSoft FSCM 9.2 Update Image 8.


This blog is dedicated to topics focused on PeopleSoft Applications, including Human Capital Management, Financials, Enterprise Service Automation, Asset Lifecycle Management, Procurement, Supply Chain and Customer Relationship Management.

For information about legislative updates to our PeopleSoft Applications see the PeopleSoft Legislative Updates Blog.

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