This presentation discusses the focus for Office of Finance (Accounting, Finance Planning and Analysis, Internal Controls, Taxation and Risk Management) for 2017.

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© 2014 IBM Corporation
Reporting Challenges for Accounting and
Finance
by: Paul Young, CPA, CGA – OOF/Risk Analytics
Proven Practice Adviser
Date: November 19,2016

2. © 2012 IBM Corporation
Author / Bio
September 9,
2014
• Paul Young, CPA, CGA
• SME – Financial Performance Management (TM1, Cognos Controller and
Cognos Disclosure Management, OpenPages, Algorithmics, Cognos
Integrated Server, Cognos Command Center and Datawath
• Industry Experience
• 15+ years in Corporate Reporting, Budget & Forecasting, Costing,
Business Process Management, Internal Audit and Controls, Risk
Management, Financial Analysis, Costing
• 8+ years teaching Advance Finance, Advance Accounting, Public
Finance and Advance Management Information Systems
• Blogger in areas like Finance Analysis, Government policies, market
segment

3. © 2012 IBM Corporation
Agenda
September 9,
2014
• Reporting Areas for Business
• Internal Audit
• Reporting Trends
• Accounting Standards
• FASB
• IASB
• BEPS
• Risk Management

4. © 2012 IBM Corporation
Internal Audit
September 9,
2014

5. © 2012 IBM Corporation
Internal Audits – IT Focus
September 9,
2014
Source - https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/financial-
services/deloitte-uk-it-internal-audit-2016.pdf

6. © 2012 IBM Corporation6
Overview
• Internal Audit functions in house
• External Audit costs
• Need to have better control of
audit control process
• New areas of focus
• IoT
• Big Data
• Cybersecurity

7. © 2012 IBM Corporation7
Issues Business
• High Cost of Compliance
• Operation Risk
• Supply Chain
• Retail and Distribution Channel
• Ongoing audit triggers
• Quicker trigger on events
• Ability to modify audit programs on the fly
part of the overall risk assessment

8. © 2012 IBM CorporationSeptember 9,
2014

9. © 2012 IBM CorporationSeptember 9,
2014

10. © 2012 IBM Corporation
Reporting focus 2017 – Office of the Finance
September 9,
2014
http://ww2.cfo.com/analytics/2016/11/cfos-
top-goal-2017-better-analysis-reporting/
httSoup://ww2.cfo.com/analytics/2016/11/cfos-top-goal-2017-better-analysis-report
• Key quote “Modern CFOs are transforming from backroom accountants into boardroom advisers
and say improving reporting and analysis functions in 2017 is a top improvement goal, according
to a new survey by the consulting firm Kaufman Hall. More than 70% of over 380 finance
executives polled say supporting decision-making is their number-one goal for 2017, a divergence
from the more traditional finance and accounting roles. Over 90% say they need to do more with
the financial and operations data at hand to help top management make critical decisions.”
Source - http://ww2.cfo.com/analytics/2016/11/cfos-top-goal-2017-better-analysis-
reporting/
• FOPM/FPM solutions
• Costing Model
• Predictability with Cash Flow
• Market Trends Analysis
• Tax planning and reporting
• New Product Launch
• Operational Risk (Supply Chain Management)
• More and more companies are going eCommerce -
http://www.slideshare.net/paulyoungcga/retail-sales-united-states-october-2016

11. © 2012 IBM Corporation
FASB / Projects
September 9,
2014
Restricted Cash
(ASU 2016-18 issued 11/17/16)
Consolidation: Interests Held through Related Parties that Are under Common Control
(ASU 2016-17 issued 10/26/16)
Accounting for Income Taxes: Intra-Entity Asset Transfers
(ASU 2016-16 issued 10/24/16. Last updated June 22, 2016.)
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
(ASU 2016-15 issued August 26, 2016. Updated September 1, 2016)
Financial Statements of Not-for-Profit Entities
(ASU 2016-14 issued 08/18/16)
Accounting for Financial Instruments—Credit Losses
(ASU 2016-13 issued 06/16/16)
Improving the Equity Method of Accounting
(Project removed from agenda 05/11/16. Updated May 11, 2016)
Revenue Recognition—Narrow-Scope Improvements and Practical Expedients
(ASU 2016-12 issued 05/09/16. Updated May 20, 2016)
Revenue Recognition—Identifying Performance Obligations and Licenses
(ASU 2016-10 issued 04/14/16. Updated May 20, 2016)

12. © 2012 IBM Corporation
FASB
September 9,
2014
Employee Share-Based Payment Accounting Improvements
(ASU 2016-09 issued 03/30/16. Updated April 4, 2016)
Revenue Recognition—Principal versus Agent (reporting revenue gross versus
net)
(ASU 2016-08 issued 03/17/16. Updated March 2, 2016)
Simplifying the Transition to the Equity Method of Accounting
(ASU 2016-07 issued 03/15/16. Updated March 17, 2016)
Contingent Put and Call Options in Debt Instruments
(ASU 2016-06 issued 03/14/16. Updated February 8, 2016)
Effect of Derivative Contract Novations on Existing Hedge Accounting
Relationships
(ASU 2016-05 issued 03/10/16. Updated February 8, 2016)
Recognition of Breakage for Prepaid Stored-Value Products
(ASU 2016-04 issued 03/08/16. Updated February 8, 2016)
PCC Issue No. 2015-01, Effective Date and Transition
(ASU 2016-03 issued 03/07/16)
Leases
(ASU 2016-02 issued 02/25/16emoved from Research Agenda 02/03/16)
Accounting for Financial Instruments—Classification and Measurement
(ASU 2016-01 issued 01/05/16)

13. © 2012 IBM Corporation
IASB (International Accounting Standards Board) – Current projects
September 9,
2014

14. © 2012 IBM Corporation
IASB (International Accounting Standards Board) – Completed
September 9,
2014

15. © 2012 IBM Corporation
IASB (International Accounting Standards Board) – Completed
September 9,
2014

16. © 2012 IBM Corporation
Key Standards
September 9,
2014

17. © 2012 IBM Corporation
New – Revenue Recognition Standard (Effective Date 2018)
September 9,
2014
• The new guidance will affect almost every entity that recognizes revenue from
contracts with customers, so financial executives will need to determine how to apply
the new standard. Source - http://daily.financialexecutives.org/5-steps-to-the-new-
revenue-recognition-standard/
• While the majority of companies have started analyzing the impact of the new
standard, few have taken the next steps toward implementation. For those that have
not yet started or completed their initial assessment – including private companies tha
have an extra year to comply – the time to act is now. Revenue recognition is a critica
and often complex accounting area that companies can't afford to get wrong. Many
boards and investors will want to know what to expect. Regulators will be looking
for increased disclosures in 2016 10-Ks and during 2017 as adoption draws closer. In
our experience, the first movers have been companies in highly impacted industries,
including technology and software. Certain of these companies are reaping benefits
from an early start by approaching the required changes in a way that will
help improve their operations beyond financial reporting. Source -
http://www.pwc.com/us/en/audit-assurance-services/accounting-advisory/revenue-
recognition-survey.html
• FOPM/FPM
• Opportunities to help with restatements and/or budget process as part of
building revenue new models.

18. © 2012 IBM Corporation
New – Leases (effective Date 2019)
September 9,
2014
• When the Financial Accounting Standards Board (FASB) and the International
Accounting Standards Board (IASB) issued their new lease-accounting standard in
early 2016, the clock started ticking on a sweeping set of changes that companies
are going to have to implement in the next two years. But the adjustments will be
needed beyond the accounting department because the new rules will impact any
department that deals with leases—including procurement and corporate real
estate—and virtually all of the systems and processes that companies use in
managing their lease data. At this still-early stage, companies’ main concern does
not lie principally in understanding the new rules, which, from a technical accounting
perspective, are straightforward enough. In fact, in a June 2016 survey by PwC and
CBRE, less than half of all companies said they thought the accounting policy itself
would be hard to implement.1 More companies said they expected the difficulties to
come from the systems they’ll have to put in place to meet the new requirement and
from their resource constraints. Source - http://www.pwc.com/us/en/audit-
assurance-services/accounting-advisory/leasing-change-impact-systems-data-
processes.html
• FOPM/FPM
• Opportunities to build new leasing models. The leasing models could be
a good opportunity to produced a pre-built solution for leases

19. © 2012 IBM Corporation
BEPS
September 9,
2014
t
• What is BEPS
• Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit
gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.
Under the inclusive framework, over 100 countries and jurisdictions are collaborating to
implement the BEPS measures and tackle BEPS.
• BEPS Requirement
• Mandate to reporting profit by country – Source:
https://www.oecd.org/ctp/beps-action-13-guidance-implementation-tp-
documentation-cbc-reporting.pdf

20. © 2012 IBM Corporation
Risk Management
September 9,
2014
• Risk Management
• The total global expenditure on risk IT systems and services by financial institutions
(FIs) will be $70bn during 2016.
• The two biggest areas for investment are in the risk governance and integration field
($22.4bn), which is being driven by compliance demands, stress test reporting
obligations and risk data aggregation requirements, and financial crime risk, which
follows closely behind in terms of growth, as cyber and fraud risks multiply and
converge.
• The Chartis 2016 Global Risk IT Expenditure report aggregates all of the firm’s 2015
research to derive a global risk IT spend. The market sizing exercise by Chartis is
based on a comprehensive bottom up methodology driven by thousands of demand
side data points. Furthermore, the analysis has been validated by top-down data from
hundreds of technology vendors and consulting firms.
The report provides an overview of the risk technology market and forecasts 2016
expenditure for specific risk categories, examining the regulatory, operational and
reputational drivers for different sizes of financial institution (FI) and across different
regions
• Source - http://www.chartis-research.com/research/reports/global-risk-it-
expenditure-in-financial-services-2016

21. © 2012 IBM Corporation
Summary
September 9,
2014
t
• Many challenges face Office of the Finance as part of supporting both
internal and external reporting requirements
• Key standards like leasing, joint venture and revenue recognition/contracts
will drive the need for business to look at their FOPM/FPM solutions
• Risk Management is becoming very important for management as part of
managing issues related to exposure to events. (Supply Chain)
• BEPS will change how tax reporting will be done for many entities as part of
closing loop holes related to profit shifting
• Integrated reporting which includes FP&A along with sustainable reporting
and risk management will grow in terms importance for regulatory
agencies.
• Ability of companies to adjust to market conditions, especially with
eCommerce predicted to grow to about 20% of a retailer’s sales by 2020.

22. © 2012 IBM CorporationSeptember 9,
2014
• Contact information
• Paul Young (email: paul.young@ca.ibm.com)
• IBM Close, Consolidating and Reporting, Risk and Planning Analytics
• http://www.ibm.com/analytics/us/en/business/financial-reporting/
• http://www-03.ibm.com/software/products/en/planning-analytics
• http://www.ibm.com/analytics/us/en/business/governance-risk-
compliance/