You can see all upcoming similar training events here – including other Revenue Recognition Accounting Conferences: Upcoming Training Conferences
Discussion Leader Info:
Pavel Katsiak presented Transition Issues: Systems and Processes on June 2, 2016 at the Revenue Recognition Accounting Conference in Philadelphia
. Pavel Katsiak is a Director at PWC and located in Washington DC.
-Pavel has served PwC audit and non audit clients for over 10 years.
-Pavel specializes in helping clients evaluate the accounting and reporting implications of the new revenue recognition standard.
-His combination of audit background and understanding of technical requirements of the new standard brings a practical perspective to the new revenue recognition implementation.
-Pavel’s clients include companies in industrial products, retail and consumer, technology, entertainment and media and services industries.
Katsiak began his presentation with an explanation that the effects of transition issues extend beyond accounting and continued by discussing an approach to implementation in three phases as listed below.
- Impact Assessment: Assess impact and determine strategy.
- Conversion: Establish policy and prepare initial financial results.
- Embedding: Embed as the primary revenue standard.
The speaker displayed implementation challenges including
- Centralized or dispersed business units
- Cross-functional communication and education
- Diversity of terms and conditions
- Tax implications
The speaker provided data supporting that in the Revenue Recognition Survey of 2015, 30% of respondents said their systems are centralized in one location; 21% said systems are somewhat centralized in a few locations. Of respondents who answered the question, 77% said they expect to make some to significant changes to IT or ERP systems. Furthermore, 84% believe implementing a parallel reporting system will take at least 6 months 59% expect they need a parallel reporting system and 87% of respondents anticipate some change in their internal controls 55% do not expect to make significant changes to their business models.
He discussed some changes that would need to be made as a result of the Revenue Recognition System such as
-New data may be needed from:
Ordering systems, Quoting systems, Contracting systems, Billing and invoicing systems, Cash and treasury processes, Licensing operations, and CRM.
Katsiak’s presentation displayed a list of expected master and transition data sets that will be impacted by topic 606 such as
- Volume licensing offer
- Contract (MPSA, PAR agreement)
- GL posting for revenue adjustments
The speaker spoke on the expected functionality of revenue automation capabilities for Topic 606. The expected functionalities include
- Analysis of historical sales data to determine SSP (stand alone selling price)
- Link related transactions into single contract
- Break out of performance obligations
- Booking of contract asset
- Relative allocation method
- Accounting for contract modifications
- Ability to “turn off” contingent revenue limitation
- Dual reporting
- Reporting based on adjusted revenue
Katsiak concluded his presentation with Build vs. Buy considerations of the Revenue System as listed below.
-In house experience on systems, data, revenue
Transactions and expected results
-Requires in-house specialized revenue accounting
and technical expertise and skillsets to build a
scalable system and continually update to adapt to
changes in a timely manner
-Consider time required to build.
-Solution providers will need to learn client’s systems,
data and requirements, and may not gain full knowledge
-Experienced solution providers are subject matter
experts in technical revenue accounting and
related systems. They are expected to continue
investing in their solutions to improve.
-Consider availability and long term viability of
vendor solutions and their resources to implement
See upcoming training schedule here: 2016 CPE Schedule
Here is a recap of case study topics covered by Sean St. Germain and Ducky Min from Deloitte at the Dec 3-4 Revenue Recognition Accounting Update conference at the Hyatt Santa Clara.
On the first day of the event, PwC covered the new rules and how to implement the five steps detailed in the new standard. KPMG followed in the afternoon with a discussion of transition options and recommendations. An industry panel discussion provided a practical perspective on how others are going through the planning, preparation and implementation of the new rules. E&Y concluded the opening day with a look at SEC Comment Trends relating to revenue recognition.
Sean and Ducky opened up the second day of the conference with a series of case studies and how to account for the various scenarios in light of the new rules. Here are the case study topics that were covered in the 90 minute session:
Modification of a contract
Material-right renewal option
Sales to distributor (2 versions: with estimate of variable consideration constrained/not constrained)
Contract does not meet criteria to apply the new revenue model
Good or service is distinct
Estimating the transaction price
Implicit price concessions
Point in time or over time
A four step technology case study
About the presenters:
Sean St. Germain
Senior Manager, Mergers, Acquisitions, & Divestitures, Deloitte & Touche LLP
Sean is a senior manager specializing in M&A deal management and financial diligence with over 10 years of public accounting experience. He has worked on numerous domestic and cross-border M&A transactions providing services to both private equity and strategic buyers for deal sizes ranging from $20 million to $19 billion. Sean’s experience has been focused primarily in the technology, media, and telecommunications industry.
Sean’s previous experience includes a three-year rotation in Deloitte’s National Office as a technical accounting resource and five years in Deloitte’s audit practice. During Sean’s time in Deloitte’s National Office (2010-2012), he focused a majority of his time leading Deloitte’s efforts related to the joint FASB/IASB revenue recognition project.
Sean holds a C.P.A. license in the State of Minnesota and California and is a member of the AICPA. Sean received a Bachelor’s degreein Finance and Accounting from Bethel University in St. Paul, MN.
Senior Manager, Accounting & Reporting Transformation, Deloitte & Touche LLP
Ducky has over 12 years of experience providing assurance and advisory services around operational and technical accounting. Ducky provides assistance to mostly technology and consumer products companies in; (1) improving close processes; (2) implementing new GAAP; (3) technical accounting review (e.g. revenue recognition, share based payment, etc.); (4) transactional accounting (e.g. acquisition/carve-out/IPOs); and (4) SEC regulatory issues (e.g. IPOs, comment letter responses).
Previously, Ducky served five years in Deloitte’s audit practice; completed two years in M&A practice as part of the Management Development Program and subsequently completed a two year international assignment in Asia.
Ducky holds a C.P.A. license in the State of Virginia and California and is a member of the AICPA. She received a Bachelor of Science in Accounting from Georgetown University.
See upcoming training schedule here: 2016 CPE Schedule