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Solution Brief: Aptitude Revenue Recognition EngineRevenue Recognition EngineAchieve full FASB ASC 606 compliance whiledelivering additional business valueThe highperformanceAptitude RevenueRecognition Engineis empoweringleadingorganizations,worldwideproviders toaddress the depthof change, risksand costsassociated withASC 606.SUPPORTS THE FASB 5-STEP PROCESSRULES-DRIVEN DATA PREPARATION LAYERMODEL CONTRACTS AND PERFORMANCE OBLIGATIONSCALCULATE AND ALLOCATE FAIR VALUE PRICINGCONTRACT, PORTFOLIO & HYBRID METHODS SUPPORTEDGENERATES JOURNAL ENTRIES OR DELTA OUTPUTSINTEGRATES WITH EXISTING FINANCE INFRASTRUCTURE

Solution Brief: Aptitude Revenue Recognition EngineSolution Brief: Aptitude Revenue Recognition EngineAptitude addresses FASB five-step recognition processASC 606 processAptitude RRE HighlightThe Aptitude Revenue Recognition Engine (ARRE) is designed toempower companies to comply with FASB ASC 606. The productoffers a full range of out of the box functionality, from datapreparation to controlling accounting rules, connecting accountingoutputs and existing finance systems. This approach enablescustomers to implement a fit for purpose ASC 606 solution,addressing the 5 step process while achieving value beyondcompliance and simplifying their finance systems architecture.STEP 1Identify the contracts with customersData preparation layer integrates and validates information from sourcesystems. Rules-based environment for contract identification, modificationand managementSTEP 2Identify the seperate performanceobligationsConnect contract components and product reference data to determineapplicable performance obligations and associated recognition patternsSTEP 3Determine the transaction priceModels contractual revenue coupled with direct and indirect costs foraccurate allocations, as well as calculating & maintaining stand-aloneselling prices and fair valuesAll of this is controlled and monitored with a transparent graphical userinterface designed to empower finance users.STEP 4Allocate the transaction priceto the performance obligationsCombine determined prices with variable contract events to allocaterevenue to component level performance obligationsSTEP 5Recognize the allocated revenue whenthe performance obligation is satisfiedAn event-driven process model able to store and generate current andfuture recognition events, recognizing revenue when performanceobligations are satisfied, with lifecycle management for automationof the revenue recognition processFEATURES Integrate with all existing billing and operational systemsDATAPREPARATION Enrich, validate, standardize and transform data Rules-based integration layer enabling finance to control data collection and preparation Data model covering all revenue, cost and commissions dataProven to support globalscenarios Define, apply and control revenue recognition rules with intuitive business user interfaces Full suite of product lifecycles and ASC 606 accounting events available 'out of the box' forREVENUERECOGNITIONENGINEAptitude Software has worked closely with the big fouradvisors and leading companies (across NA and EMEA) toincorporate the full range of revenue recognitionscenarios into Aptitude RRE.telecoms companies, with more in development. Ability to combine accounting events to support contract components as material rights,terminations or others Support for accruals, deferrals and write-offs Users can control the specific posting pattern to ensure the correct journals are generated Process millions of calculations per hour, giving users visibility into impact of recognition policySELECTED SCENARIOS INCLUDE:and revenue forecastsFigure 1: Managing contracts and related performance obligationsCONTRACTMANAGEMENT Support for contract-by-contract or portfolio/aggregation approaches Collectability risk and provisions Link disparate performance obligations to assemble whole single contracts Timing differences (income recognition vs. billing) Calculate stand-alone selling prices and integrate fair value data Overlap with estimated billing accruals/deferrals Transaction prices can be absolute amounts or parameter based such as customer usage Guarantee liabilities for financing Advance or arrears billing Easily connect with existing finance infrastructure, including SAP & Oracle ERPs, general ledgers Bundles and unbundlingor accounting middle ware Output delta figures or debit/creditsINTEGRATION Income suppression and bad debt write-offs Variable pricing and corporate discounting Maintain detailed balances in a granular accounting subledger Delayed discounts (which represent material rights) Traceability: full drill down from accounting outputs to underlying transactions Upgrade options (which represent material rights) Option to apply adjustments to existing cash accounting or implement broader accounting B2B enterprise arrangementssolution for improved management reporting Integrate transaction and reference data from all operational and billing systemsFigure 2: Reporting period revenue for individual contract partsFor more information, visit: www.aptitudesoftware.comFor detailed explanations of 100 scenarios,contact us via the email below.Request a demonstration from info@aptitudesoftware.com

Solution Brief: Aptitude Revenue Recognition EngineSolution Brief: Aptitude Revenue Recognition EngineTHE BROADER CHALLENGEBenefits of the Aptitude Software approachWhichever way you choose to apply new revenuerecognition policies, there will be wider implications foryour finance operations. Gain control over revenue recognition rules with intuitive business user interfacesRaw input data must be collected at a contract by contract level of granularity, regardlessof a contract or portfolio approach. Justifying new accounting outputs will require detailedtraceability throughout the finance environment and therefore absolute data integrity fromsource to post. Processing the sheer number of calculations required needs a fast engineand near instant access to underlying information.These needs impact how you integrate an ASC 606 solution within your finance ng CRM& ContractFulfillmentManuallyCreated‘Event’ filesCommissionSystemsOther ardizeTransformFINANCEDATAWAREHOUSEBI PlatformStatutory &UserReportingSub-LedgerFigure 4: Revenue recognition project requirements extend beyond applying new policyAptitude Software offers a modular approach, letting customers choose to implement just arevenue recognition engine to calculate adjustments or implement components thatautomate data collection and finance operations/processes. Aptitude delivers componentsthat enable finance teams to collect & validate transaction-level data, control accountingrules & processes and store granular finance-accurate data in an accounting sub-ledger.The challenge of ASC 606 is not simply to define new rules toreport revenue correctly, but to ensure that your finance system isrobust enough to cope with an increasing amount of accountingchange while delivering transparency to all stakeholders.For more information, visit: www.aptitudesoftware.com Faster FASB compliance with a proven & packaged product Streamline financial data management processes with a data preparation layer Agility to address future statutory reporting requirements and to address new business models Rapidly process massive transaction volumes Unlock business insights from transactional data with the repository of granular, finance-accurate dataBecome empowered to address a full range of challengesContract LifecycleEventsASC 606Business and FinanceProcesses Revenue allocation Modification Billing cycles Revenue recognition- Tariff changes Contract assetaccounting- Addition/subtraction ofindividual services Income suppression andbad debt write-offs Cost recognition- Addition/subtraction ofequipment Revenue allocationgroups Returns (device returnswithin allotted period) Prospective andretrospectivecalculations Partial-terminations Terminations Determining standalone selling prices(SASP)- Early termination- Maturity Region specificequipment pricing Storing stand aloneselling prices (SASP) risk and Collectabilityprovisions Timing differences(income recognition vs.billing) Overlap with estimatedbilling accruals/deferrals Financing/time value ofmoney (TVM)Example ContractOptions Advance or arrearsbilling Discounts fees Commission (expenses) Bundles and unbundling Material rights Variable pricing andcorporate discounting Shared plans (withmultiple handsets) Termination fees Extensions Guarantee liabilities forfinancing 1 month rollingcontracts Delayed equipmentdelivery Direct versus Indirectchannels Upgrade options Delayed discounts Long term contracts fornetworking sideValue beyond complianceFINANCIAL CONTROLFINANCIAL TRANSPARENCY Gain a single point of control overglobal accounting rules Integrate highly validated contractlevel and customer data Increase agility for future businessinitiatives or regulatory changes Review, substantiate and adjustmonthly figures before posting toERP/GL Reduce month end close cyclesFINANCIAL INSIGHT Unlock analytical insights e.g. the customer/contract profitability Align finance and data warehouse reportingFigure 6: Gearing FASB projects to improve finance’s capabilitiesRequest a demonstration from info@aptitudesoftware.com

Solution Brief: Aptitude Revenue Recognition EngineCASE STUDY: ONE OF OUR LEADING NORTHAMERICAN TELECOM OPERATOR CUSTOMERS CHOSETHE APTITUDE REVENUE RECOGNITION ENGINECustomer turns to Aptitude Software to addressASC 606 requirements and to streamline corefinancial accounting processesAptitude Software is working with one of the US’s leading telecom providers to achieve &FASB ASC 606 compliance, while streamlining core financial processes. The customer’starget architecture provides a range of benefits including enhanced financial control, theability to unlock insights from data, and the agility to apply accounting for new businessmodels or future statutory reporting requirements.Project highlightsInstalling ARRE to calculate revenue and performance obligations Run through clear web-based business user interfacesStores and executes revenue recognition business rulesAllocates revenue to performance obligationsCalculates contract assets for a given month and amortization scheduleIncludes a data preparation layer for all transactional data from a variety of source systems Service revenue from billing systemsEquipment revenue from customer’s ERPPre- and post-paid service & equipment data from disparate financial data repositoriesCommissions data for employees & dealersAdding the Aptitude Accounting Hub to validate and process all accounting events Posts aggregated financial details to individual GL accounts Stores calculated variables in a repository for audit, financial, tax, and operational reporting purposes Enables straightforward manipulation of new or existing accounting rulesDelivering outputs to existing General Ledger Post aggregated financial details to individual GL accounts Store calculated variables in a repository for audit, financial, tax, and operational reporting purposesAbout Aptitude SoftwareAptitude Software has been delivering business critical financeapplications for some of the world’s largest brands for the past15 years.Our heritage is in serving CFOs and controllers to superchargefinancial reporting, uncover profit drivers and comply withregulations.The Revenue Recognition Engine has been developed after yearsof experience with contract level accounting in large financialservices companies.Aptitude Software finance products and customized solutionshave been implemented in some of the world’s largest banks,global media suppliers, telecoms companies and more.For more information, visit: www.aptitudesoftware.comRequest a demonstration from info@aptitudesoftware.com