CON7314 Managing Your Revenue by IFRS15 ASC606 v104

Managing Your Revenue to
IFRS 15 or ASC 606

Introducing Revenue Management Cloud
Service
Seamus Moran
Tapo Dey
Helle Hennings
Oracle Development
September 21, 2016
Accelerate
your
Adoption of
ASC 606 &
IFRS 15
Copyright 2016, Oracle and/or its affiliates. All rights reserved. |
Safe Harbor Statement

The following is intended to outline our general product direction. It is
intended for information purposes only, and may not be incorporated
into any contract. It is not a commitment to deliver any material, code,
or functionality, and should not be relied upon in making purchasing
decisions. The development, release, and timing of any features or
functionality described for Oracles products remains at the sole
discretion of Oracle.
Agenda
1
News & Update
Overview and Features
Demonstration
Transition
Whats Next
Agenda
1
News & Update
Demonstration
Transition
Whats Next
ERP CLOUD
Cloud
Service
order,
billing, &
fulfillment
data
Third party and

On Premise
Sales Cycle
Data
Cloud
Service
General
Ledger
Revenue
Management
ASC 606 and IFRS 15 Compliance

Automation
The Standards Five Steps to
Revenue
EBS
General
Ledger
Announcement
September 21, 2016
REVENUE MANAGEMENT
CLOUD SERVICE
IS ON YOUR PODS NOW
GENERALLY AVAILABLE FOR USE
Agenda
1
News & Update
Demonstration
Transition
Whats Next
Ensure Compliance with ASC 606 and IFRS 15

Accelerate the
Transition
Modeling & analysis for
adoption, external
reporting.
Understanding the new
game
Gain Real Time

Insight
Revenue, Liability, etc
by Performance
Obligation
Ensure
Compliance
Provides
stakeholders
assurance
What-if modeling
compares iterations and
to your current
accounting. Smooth
transition & cut-over
See and manage your

performance obligation
process from orders
through liabilities to revenue
Rules based
administration of the
accounting standard,
complex revenue
valuation made easy
ASC 606 and IFRS 15: New Revenue Principles

Radical Changes: Replaces ASC 605 & IAS 18
Extends bundle thinking to all industries, moves to expected
consideration value
Replaces 4 tests of GAAP with 7: transfer to customers
Abolishes Deferred Revenue in favor of Debt to customers for
goods & services. Accrue this debt for Performance Obligations (PO),
each distinct promise made to a customer, when either party acts
Value deals at inception; mandated estimates if data not available
Performance Obligations are the Unit of Account
Classify Performance Obligations as Point In Time or Over Time for
P&L
Neither Revenue nor Accrued PO liabilities are dependent on billing
10
Insight to Revenue
Note to: Jack, Sales

Manager:
Why have we not
completed these
performance obligations?
Indeed, not even started
them?
Cheers, Jill, CFO
11
Inputs
Revenue Management Overall Process
Configurati
ons
Automat
ed
Processe
s
Extract, Transform
& Load
Manage Standalone
& Estimated
Selling Prices
Register data sources
Pricing bands, Pricing

Dimensions
(Stratifications)
Selling Price Profiles
Data extract program

File upload to the UCM,
Universal Content Manager
Process Revenue Basis
Lines
Calculate
Standalone Selling Price
Review and fix data import

errors using ADFDi
Establish SSP
Upload ESP using ADFDi
Output
s
Actions
Data
Outputs
Source Documents
Stand Alone &

Estimated Selling
Prices
5-Step Revenue
Recognition
Accounting
Contract & Performance

Obligation Identification
Rules
Satisfaction Rules
SLA Account/Journal Line

Rules
JERS / Accounting Method
Identify & Value

Customer Contracts
& Performance Obligations
Recognize Contract
Liabilities, Assets,
Discount, & Revenue
Exempt Contract/PO,
Discard Contract, Update
Pricing Dimensions,
Discard/Add Satisfaction
Events
Satisfaction Events
BIP/OTBI
BIP/OTBI Reporting
Reporting [OTBI
[OTBI in
in future
future releases]
releases]
Create Accounting
Contract
Accounting Entries
Import Sales Related Data Overview of ETL

(Extract, Transform, Load)
Source
Applications
Transfor
m
EBS
Seede
d
Extrac
t
Views
UCM:
Universal
Content Manager
Code
hooks
Extract Revenue
Basis Data
Create
program
Revenue
Management
Data Export File
Extract
program
Load
Data Files
(Source
headers,
lines &
sublines)
control file
3rd Party
Applicatio
n
Revenue Management Cloud
Interface
Tables
Load Interface File for
Import Job
(automatically
triggered)
RM base
tables
Revenue Management
Daily Job Set
Custom extract
program
Step 1: Register the new 3rd Party source in Revenue

Register the new source
Management
Document Type
Step 2: Extract the data from the 3rd party source
application in predetermined flat file format
Step 3: Use the ERP Integration WebService API to place
the file on the UCM server or manually upload it through
secure file transfer.
13
Identify Performance Obligations and Contracts
Imported order lines: Promise Details

Example: Truck Dealer
Imported
Source Customer
Product
Ordering Fire Service Truck Tractor
Projects
Third
Party
Revenue
Bookkeeping
Performan
Allocati
ce
Amoun
PO &
on
Contra Obligation
t
Revenue Discoun
ct ID
ID
To Bill Amount
t
1000
339654
4,000
Fire Service Special ladder trailer 1000

5,000
Maintenance
Fire Service
1000 327865
Contract
1,000
2,000
Haulage
Ordering Co.
Truck Tractor
1100 317852 3,000 2,800
Haulage
Regular flatbed
(1,000)
1,000
(200)
14
Review Contracts and Allocate Prices at

Inception
Contract ID #
x
Transacti
on
Net
Billing
Sale Price
Standalon
e
Or ESP
Basis for
Alloc.
Perf.
Obligation #1
50
60
105% * 60 =
63
Perf.
Obligation #2
55
40
105% * 40 =
42
(13)
105
Transaction
Sales cycle
Price
105
Relativit
y
Math
Transaction Price = Expected
Revenu Discount
e (allocatio
& PO
n)
Value
Nets to
Zero
13
These
values
are the
values
used for
accounti
ng: the
liability,
asset
and
revenue
order data imported

and analyzed
Consideration
=
Standalone Selling prices generated by our SSP Engine, or imported via
Stand Alone Price
100 105/100=105% relativity
Spreadsheet
You estimate quantities and prices when you do not know them. Later, you
true them up, as with any other accrual
Invoicing & Revenue Recognition need not be related. Invoicing is at a discount
from, or a premium to, revenue; that discount washes to zero over the life of
the deal
We are valuing a debt to customers for goods and services owed, as soon as
you owe it, rather than deferring sales
invoices
15
Recognize Liability, Asset, AR & Revenue when

appropriate
Balance Sheet Assets
Event
Perf
.
Obl.
#
Inv.
Perf
.
Obl.
Dollar Value
Accounts
Receivabl
e
Dr/C
r
Bal
Clearing
Account
Dr/C
r
Bal
Balance Sheet
Liabilities
Income
Ste
Contract
Asset
Contract
Liability
Liability Discount
Revenue
Dr/C
r
Bal
Dr/C
r
Bal
Dr/C
r
Dr/C
r
Bal
Initial Performance
PIT
xx01
$10
0
100
100
(10
0)
(10
0)
OT
xx02
$96
96
196
(96)
(19
6)
100
(96)
(10
0)
(88)
(8)
Billi
Customer
Satisfaction
ng
PIT
$10
0
OT
Inv A
Inv B
$8
xx01
$80
xx-
$11
$10
0
80
$96
116
80
196
(80)
80
(80)
0
(11
(11
(10
0)
96
20
20
No dates! - Your
sequence of
events will vary
At the time of
initial
Bal
performance
(shipping or
billing), accrue
the PO in full.
Offset might be
to Contract
Asset.
At the time of
Revenue Rec.,
recognize PIT
(10
POs in full, OT
0)
POs partially.
(10
8) At the time of
billing, clear any

Contract Asset
applicable;
Difference
between Invoice
and PO goes to16
Discount liability.
Variable Consideration True-up & Contract

Modifications
WHITE
NOISE
Return &
Replace
Negative
Satisfaction
Exit only
RESHI
P
RE-ALLOCATE & RE-ACCOUNT

Variable
Consideration
Corrections
Update Estimates
This Lane
RETHIN
K
Contract
Modifications
Reduced & +NonDistinct
This Lane
REDUCE
TERMINATE
Contract
Modifications
Positive &
Distinct
Exit only
REJOICE
17
Works with EBS too

Pre-built integrations with EBS
UCM
Sales Cycle
Data
Revenue
Management
Cloud
SLA
Feedback
Oracle E-Business Suite
Subledgers
Order Management
Other Sources
Non-Oracle
Systems
Non-Oracle
Systems
Non-Oracle
Spreadsheet
Custom
Performance
Obligation
Valuations
Data
Receivables
SLA
And Others
Oracle Financials Accounting Hub
Oracle EBusiness Suite

General Ledger
Optimized to Manage Content Issues

Focus on revenue
recognition process
exceptions
Pending Review highlights contracts
that exceed material thresholds and
require attention
Pending Allocations lists contracts
missing SSP or ESP values

Pending Revenue Recognition for
contracts awaiting appropriate data to

recognize revenue
19
Dem
o
Revenue Management
Cloud Service in Action
20
Automatically Apply Standard Review at

inception
Ensure consistent and
accurate transactions
Control standard's complexity with rules
that identify contracts from multiple

sources, and groups them into a single
accounting contract
Properly identify distinct and non-distinct
performance obligations, determine if

implicit or explicit, or if exempt
Ensure consistent treatment with rules to
establish satisfaction method as point in

time or over time
Efficiently calculate SSPs based on
imported historical standalone transactions

and configurable rules
Complete first 4 steps by using relative SSP
basis to allocate contract price to

performance obligations
21
Account for Transactions Accrue Liability,

Revenue, Assets
Provide stakeholders
compliance assurance
Accurately account for performance
obligations with rules to record contract

assets and liabilities
Recognize revenue timely when you
satisfy performance obligation

commitments by using point in time or
over time rules
Record sales discounts as liabilities
when contract assets are cleared during

the billing process
Successfully complete revenue
recognition cycle by reclassifying

contract assets to accounts receivables
once customer invoices are generated
22
Effortlessly Record Transactions Exception

Management
Streamline revenue
recognition process
Focus on contracts that exceed material
thresholds and require attention on the

Pending Review tab
Quickly identify contracts missing SSP
or ESP values on the Pending

Allocations tab
Easily identify contracts awaiting
appropriate data to recognize revenue

on the Pending Revenue Recognition
tab
23
Automate Process Identify Contracts &

Performance Obs
Performance Obligations
Contract
Identification
Rule
Performance Obligation
Identification Rule
24
Automate Process SSP Allocation Basis

Promised Details
Pricing (SSP) Stratification:
Customer Region, Sales
Channel, Deal Size
Used in Pricing Dimension

(Extensible Attribute)
Used in Contract Rule

(Extensible Attribute)
25
Automate Process Over Time Satisfaction

plans
Promised Details Satisfaction Period Plan Cloud Subscription
Satisfaction Plan and Start
and End Dates from
imported source line data
Satisfaction Plan
26
Automate Process Over Time Percentage

Recognition
Promised Details Satisfaction Percentage - Consulting
Measurement Model: Percentage
Percentage Satisfaction from Source Document Lines
27
Automate Process Point in Time Recognition

Promised Details Satisfaction Quantity- Education
Measurement Model: Quantity

Models & Methods help identify
Over Time & Point in Time
Quantity Satisfied from imported source document line data
28
Contracts with Customers

Define Contract Identification Rules
Define Rules to Identify Contracts

Contracts captured entirely in one source document are identified
automatically using seeded Contract Identification Rules
Contracts that span across multiple source documents are
identified automatically using Contract Identification Rules
Use rules to specify the document attributes to use to match
across documents e.g. customer purchase order number, quote
number etc.
You can define multiple rules using different sets of attributes
Rules are executed in the order of rule priority
29
Contracts with Customers Managing Contract

Rules
Define Contract Identification Rules
Enter the rule priority. Rules are

executed in ascending order of Priority
For each document type select the

document attribute that identifies
Contract across source documents
30
Contracts with Customers
Define Performance Obligation Identification Rules
Define Rules to Identify Performance Obligations

Performance Obligation (PO) is the unit of account for Revenue
Use PO Identification Rules to specify
The document line attributes for group matched source document lines, that
become PO Details (POD), to form POs
Satisfaction Method, either Allow Partial or Required Complete, to guide Revenue
Recognition
Set Exemption Flag to exclude PO from Contract Transaction Price Allocation
Rules are executed in the order of rule priority
31
Contracts with Customers Managing PO Rules

Rules are executed

in ascending order
of Priority
Allow Partial if revenue can be recognized over

time; otherwise Required Complete
32
Contracts with Customers Identify Distinct POs

Select document attribute(s) that identifies

lines to be grouped into a Performance
Obligation as unit of revenue accounting
33
Agenda
1
News & Update
Demonstration
Transition
Whats Next
34
Accelerate Your Adoption of the Standard

Steps 1 & 2: Revenue Management Cloud
Perform What-If
Import sales cycle
Scenario
Studies
data once, create,
maintain and apply rules, export results to

Essbase or similar tool
Compare results of iterations to each other
in Essbase, and to your current accounting

Post results to secondary ledger to
maintain integrity of accounting under old

rules in the primary
Direct the final accounting rules to your
Import
sales
data once
1. Maintain
Rules
2. Apply
Rules
4. Compare
Results
primary ledger when standard goes into

effect
3. Export
Results
Steps 3 & 4: Essbase, or similar tool

35
Transition Requirements
Retrospective adoption is mandatory!!
Retrospective adoption:
RETROSPECTIVE
Revise opening balance sheet
Option 1
RESTATEMENT
Recalculate your
financial
statements for 2
previous yrs.
Full
Look at all
Relevant
deals
Then
choose
Practical
Look at Year
End deals
Choose
Option 2
DISCLOSURE
Recalculate
revenue for the
subsequent year
as if deferred
Recalculate using Performance Obligations,

then replace Deferred Revenue Liability with
Performance Obligation liability
Increase equity if bringing forward revenue;
decrease equity if delaying revenue
recognition
Restate 2016 & 2017 financial

statements, or disclose in 2018
If restate, either revalue every
relevant transaction (Full), or revalue
just transactions that crossed year
end (Practical)
36
What needs to get done by FY 2019

Calendar Year
201
6
2017
2018
Calendar Quarters
Q4 Q1 Q2 Q3 Q4 Q1
Example Fiscal (Apr-Mar)
FY 17
FY 18
First Regular Adoption Date

Example Adoption Date FY19
Disclose Adoption
Activity/Plans
2b. Or Gather Data for

Disclosure
Q3 Q4
Q1 Q2
FY 19
Q3 Q4
FY 20
ASC 605 / IAS 18 Old Rules

WiP
1. Revise Opening Balance

Sheet
2a. Gather data for
Restatement
Q2
2019
Restatement Data
ASC 606 / IFRS 15 New Rules
Values
Major
Disclosure Data
3. Set Policy for FY 2019

4. Prepare to Budget for
FY 2019
37
Revenue Contract Account Activity (RCAA)

Report
Use RCAA report to pull
the Revenue Contract
accounting data from FRM
and SLA
Report displays all the
Revenue Contract
account activities by:
Revenue Contract #
PO #
Customer
Period
Account
Run by range of periods

and contract accounts
Report generates the
output in Excel
Spreadsheet format
Use in conjunction with
Iterative Modeling & Scenario Analysis

General Ledger Activity and Balances:
the point of commonality and the focus of
reporting
Reporting
Tools, e.g.
ESSBase
FY
2016
FY
2017
FY
2018
Revenue Management Cloud Service
Deferred
Revenue
Existing Revenue
Recognition Process
39
Agenda
1
News & Update
Demonstration
Transition
Whats Next
40
Next Steps
Map your sales processes to ASC 606 or IFRS 15.
Understand how your sales contracts will relate to accounting contracts.

Understand your promises & commitments in terms of performance obligations.
Decide when you are obliged and must accrue these obligations.
Decide when you extinguish the obligation and recognize revenue (transfer to
customers)
Know where your SSPs & ESPs come from
Have a formal estimation process and a formal accrual revision process in place
Ascertain where the data is in your systems.
Think about accruing obligations to customers at expected consideration instead
of deferring at fair value
Refine your proposed business process changes, identify an

implementation partner and plan a project
After OOW, our Sales Consulting can deliver demonstrations and
other collateral
41
SaaS Pricing: $650 / month (Per user, 10 users

min.)
FAST-TRACK
GETTING
READY FOR
THE
STANDARD
OCS Revenue Management Readiness offering:

$65k to $85k, 4 weeks
Oracle partners available to assist with
readiness
Copyright 2016, Oracle and/or its affiliates. All rights reserved.
42
Questions?
?
43
More Information
While you are
here,
check out our
Demonstration:
ERP Showcase
Moscone West Level 3 Lobby
Demo pod number: WEP022
Demo pod name:
Oracle Financials Cloud:
When you return to base:

Landing pad:
https://cloud.oracle.com/e
n_US/revenue-management-cl
oud
Data sheet:
https://cloud.oracle.com/op
c/saas/datasheets/revenue-m
anagement-ds.pdf
44
Meet the Experts, this afternoon
Meet the Experts: Oracle Financials Cloud

Room: Moscone West3001A
09/21/16, 3:00 PM - 3:45 PM
Confidential Oracle Internal/Restricted/Highly

Restricted
45
ERP CLOUD
Cloud
Service
order,
billing, &
fulfillment
data
Third party and

On Premise
Sales Cycle
Data
Cloud
Service
General
Ledger
Revenue
Management
ASC 606 and IFRS 15 Compliance

Automation
The Standards Five Steps to
Revenue
EBS
General
Ledger
47

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Managing Your Revenue to

IFRS 15 or ASC 606

Safe Harbor Statement

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

News & Update

Overview and Features

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

News & Update

Overview and Features

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

Third party and

ASC 606 and IFRS 15 Compliance

News & Update

Overview and Features

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

Ensure Compliance with ASC 606 and IFRS 15

Gain Real Time

See and manage your

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

ASC 606 and IFRS 15: New Revenue Principles

Note to: Jack, Sales

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

Revenue Management Overall Process

Register data sources

Pricing bands, Pricing

Data extract program

Review and fix data import

Stand Alone &

Contract & Performance

SLA Account/Journal Line

Identify & Value

Import Sales Related Data Overview of ETL

Revenue Management Cloud

Step 1: Register the new 3rd Party source in Revenue

Identify Performance Obligations and Contracts

Imported order lines: Promise Details

Fire Service Special ladder trailer 1000

Review Contracts and Allocate Prices at

Transaction Price = Expected

order data imported

Recognize Liability, Asset, AR & Revenue when

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

billing, clear any

Variable Consideration True-up & Contract

RE-ALLOCATE & RE-ACCOUNT

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

Works with EBS too

Oracle Financials Accounting Hub

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

Oracle EBusiness Suite

Optimized to Manage Content Issues

missing SSP or ESP values

contracts awaiting appropriate data to

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

Automatically Apply Standard Review at

that identify contracts from multiple

performance obligations, determine if

establish satisfaction method as point in

imported historical standalone transactions

basis to allocate contract price to

Copyright 2016, Oracle and/or its affiliates. All rights reserved. |

Account for Transactions Accrue Liability,

obligations with rules to record contract