By Marc Weintraub on Feb 04, 2015
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 ContractAdditive
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 PageMay 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 PageAdditional 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.