Transcription
Why TELUS Chose SAP HANAfor Implementing SAP Revenue AccountingDoug McRory, Finance Systems Lead, TELUSRichard Kachur, Architecture Lead, TELUS
Agenda About TELUS Challenge Summary IFRS Revenue Recognition – Impact to Telcos Key Considerations
About TELUSOne of Canada’s largest Telecom Providers 12 billion CDN annual revenue8.1 million wireless subscribers3.2 million network access lines1.5 million internet subscribers 900 thousand TV subscribers National wireless coverage Wireline coverage in western Canada and QuebecCustomer3
Challenge SummaryBusiness Drivers Compliance requirements – new internationalstandard for reporting revenue in corporatefinancials and pre-requisite for being listed oninternational market exchanges Urgency – effective January 1, 2018 the quarterlyand annual financial statements must comply withthe international standard. In addition, 2017 and insome cases 2016 must be restated retroactivelyDesired Business OutcomesAssess the financial impact of the IFRS 15accounting standard Ability to prepare the market, external stakeholders andinternal customers for impacts of IFRS 15Operate in compliancy with regulations by January1, 2017 Support dual reporting for transition year – posting underboth sets of standards Dual reporting required for transition year Opening balances need to be generated for start oftransition yearSupport planning and budgeting under new standardsgoing forward Support IFRS reporting post January 1, 2018Customer4
IFRS Revenue RecognitionImpact for TelcosIFRS Revenue RecognitionTelco scope considerations Large number of small contracts Accounting for multiple performanceobligations within each contract Uncertain or variable consideration /determining the transaction price from manysources Allocation of the transaction price andestablishing stand-alone selling prices Contract costs / customer acquisition costThe complex regulations and the newcalculation schemes require a softwaresolution, which fully complies with thenew accounting standards, providesflexibility and supports an end-to-endaudit trail.Example*: Customer closes 24 month contract Monthly fee: 40 Activation fee: 30 Phone: 0 (100% subsidized) Phone stand alone selling price: 300 Phone purchase price: 290 ContractstartMonth1Month2Month3Σ 1,4231,4231,42659,74990Current IFRS: Accounting matches cash and billing flowNew IFRS: Match revenue to performance of obligations –does not match cash or billing flowNeed to shift timing of recognition of revenue* Source: IRZ, 2013, p. 17 (Patrick Lüpold, PWC AG)Customer5
Key ConsiderationsRequires end-to-end solution strategy1.-Data Sourcing Data Hub SAP Revenue Accounting Analytics for reporting and impact analysisThink beyond meeting the compliance requirements2.-How can you leverage the investment to enhance your Financial Analytical capabilitiesNot Just an “IT Project”3.-Requires significant planning and collaboration with the businessRequires Collaboration an support across your vendor ecosystem4.-Internal, Auditors, System Integrators, SAP Consulting, other software vendorsCustomer6
Phone stand alone selling price: 300 Phone purchase price: 290 Current IFRS: Accounting matches cash and billing flow New IFRS: Match revenue to performance of obligations – does not match cash or billing flow Need to shift timing of recognition of revenue Contract start Month 1 Month 2 Month 3 ΣMonth 4-24 Total Current IFRS
