New accounting standards for how organizations will recognize revenue (Revenue from Contracts with Customers) under IFRS/US GAAP will be effective in 2017 and force organizations to adapt their accounting technology, processes and policies to the new regulations. Companies will need to analyze the new rules, determine how they impact the business, and then make the changes to processes and systems that will enable them to operate in compliance, while maintaining business efficiency and effectiveness. For a smooth transition, early preparation is not only recommended by experts, but crucial for successful compliance. With this in mind, smart companies are modifying processes and systems today, to ensure compliance and uninterrupted operations tomorrow. In this session find out how: - An SAP and Nakisa solution, built from the ground up for compliance helps you to get ahead of the curve. - Nakisa’s accounting team successfully streamlined the management of a large number of software services contracts by customizing data capture fields based on their contractual terms. - The solution enables you to prepare for the new revenue recognition requirements and conduct forecast and analysis.

1. © 2015 Nakisa Inc. All rights reserved.
New revenue recognition standards:
What the rule changes mean for your
business
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2. © 2015 Nakisa Inc. All rights reserved. 2
The new revenue recognition standards
Your roadmap to compliance
Technical assessment in practice: Nakisa internal use case
Key takeaways
Questions & Answers
Agenda
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3. 3© 2015 Nakisa Inc. All rights reserved.
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The new revenue recognition standards
IFRS 15/ASC 606 are here
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5. 5© 2015 Nakisa Inc. All rights reserved.
New Revenue Recognition accounting & reporting affecting all revenue
contracts with customers (IFRS 15, ASC 606)
• All companies (public and private) required
to prepare their revenue contracts now to
comply with this new regulation by 2018*
• Final standard published:
May 2014
• Effective date latest:
2018* (early adoption possible for IFRS
preparers)
U.S. GAAP IFRS
Public entities
Annual reporting periods beginning
December 15, 2017
Annual reporting periods beginning
January 1, 2018
Nonpublic
entities
Annual reporting periods beginning
December 15, 2018
Annual reporting periods beginning
January 1, 2018
“IFRS 15 sets out the requirements
for recognising revenue that apply
to all contracts with customers.
IASB Project Update, March 2015
*On April 1st, FASB proposed deferral of effective date
*On April 29st, IASB proposed deferral of effective date
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6. 6© 2015 Nakisa Inc. All rights reserved.
New 5-step process for recognizing revenue
(IFRS 15, FAS 2014-09)
Identify the
contract with
the customer
Determine the
transaction
price
Allocate the
transaction
price to the
separate
performance
obligations in
the contract
Recognize
revenue when
(or as) a
performance
obligation is
satisfied.
Identify the
separate
performance
obligations in
the contract
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
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Potential impact
Changes will affect the entire organization
Source: Deloitte. Bringing clarity to an IFRS world. IFRS 15 – Revenue from Contracts with Customers. 2014
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Employees
• Remuneration schemes
• Training
• Project Management
Stakeholders
• Shareholders (expectation/outlook)
• Financiers (loan covenants)
• Regulators (disclosures)
Systems
• Update IT systems, Business models,
Company practices, Accounting policies,
Internal processes and controls
Contracts
• Assess contracts
• Update terms & conditions
• Re-negotiate contracts in the long term

9. 9© 2015 Nakisa Inc. All rights reserved.
Business pain points
Revenue Recognition
• Geographically and departmentally
dispersed revenue contract information,
requiring manual processes for data
management.
• Lack of visibility into sales contract data,
due to large volume of complex contracts
with customers.
• No ability to conform to the upcoming
revenue recognition standards.
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Your roadmap to compliance
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Recommended implementation timeline
May 28, 2014:
Regulation announced
Begin accounting and technical assessment
Prepare opening
balance sheet under
IFRS rules
2014 2015 2016-2017 2018
Dual reporting period
ends IFRS “go-live” date
Smooth
transition &
implementation
Building a
team & a plan Education Analyze
Technical
assessment
IT systems,
applications,
processes
#NakisaFIN

12. 12© 2015 Nakisa Inc. All rights reserved.
Recommended implementation timeline
2015: Accounting & technical assessment
Smooth
transition &
implementation
Building a
team & a plan Education Analyze
Technical
assessment
IT systems,
applications,
processes
May 28, 2014:
Regulation announced
Begin accounting and technical assessment
Prepare opening
balance sheet
under IFRS rules
2014 2015 2016-2017 2018
Dual reporting period
ends IFRS “go-live” date
#NakisaFIN

13. 13© 2015 Nakisa Inc. All rights reserved.
Accounting assessment
Plan, educate, analyze
•Team effort across many
different corporate
functions
•E.g. Finance, Sales, Legal,
IT, Internal Auditors
PLAN
•Review final standard &
implementation
guidance
•Monitor Transition
Resource Group
deliberations & technical
lines
EDUCATE
•Review contracts and
understand effects of the
standard
•Analyze current vs.
proposed standard to
identify changes
ANALYZE
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14. 14© 2015 Nakisa Inc. All rights reserved.
Technical assessment
Objective:
• Understand impact for your
organization
• Prepare for changes
1. Complete up-front or in advance of
implementing the full system
2. Understand new standard and
translate into technical and
business requirements
3. Once requirements are gathered,
redesign and/or optimize
processes, policies and systems
An entity will need to consider
whether its IT systems, data
models and related enterprise
resource planning (ERP) and
legacy system applications are
able to capture, track, compile
and report information in
accordance with the needs of the
standard.
“
Source: Ey: A closer look at the new revenue recognition standard. June 2014
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15. 15© 2015 Nakisa Inc. All rights reserved.
IT system architecture for compliance
Data capture during technical assessment
SAP Lease Administration by
Nakisa
Technical Accounting
Assessment
Sub-set
abstracted
manually
SAP Revenue Accounting
and Reporting Blueprint
Sales
contracts,
Orders, Bills,
Invoices,…
Revenue Accounting
and Reporting
Rules (BRF+)
ERP Financials
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Typically a one-time manual process
Automatic process after implementation of SAP Revenue Accounting and Reporting

16. 16© 2015 Nakisa Inc. All rights reserved.
Recommended implementation timeline
2016 - 2018: Preparing for and reporting under IFRS 15
May 28, 2014:
Regulation announced
Begin accounting and technical assessment
Prepare opening
balance sheet under
IFRS rules
2014 2015 2016-2017 2018
Dual reporting period
ends IFRS “go-live” date
Smooth
transition &
implementation
Building a
team & a plan Education Analyze
Technical
assessment
IT systems,
applications,
processes
#NakisaFIN

17. 17© 2015 Nakisa Inc. All rights reserved.
IT system architecture for compliance
Data capture during technical assessment
Technical Accounting
Assessment
Sub-set
abstracted
manually
SAP Revenue Accounting
and Reporting Blueprint
New sales
contracts,
Orders, Bills,
Invoices,…
Revenue Accounting
and Reporting
Rules (BRF+)
#NakisaFIN
SAP Lease Administration by
Nakisa
ERP Financials
Typically a one-time manual process
Automatic process after implementation of SAP Revenue Accounting and Reporting

18. 18© 2015 Nakisa Inc. All rights reserved.
Abstraction of revenue contracts
Solution capabilities
Increased
visibility
Collection and
Unification
Validation and
Traceability
Collaboration
Collection & unification
 Designed to provide visibility into your lease
and revenue contract exposure
 Automated and effective data collection
 Unification of data in one single repository
Collaboration
 Open collaboration framework to engage and align
business decision-makers
 Simulation capabilities to analyze best response to
business changes
 Efficiently evaluate lease vs. buy scenarios
Validation & traceability
 Validated true and useful data
 Efficient traceability for compliance
 Readiness for reporting requirements
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19. 19© 2015 Nakisa Inc. All rights reserved.
Transition & implementation
Full vs. modified retrospective adoption
• Comparative not restated, but
additional disclosures required
• Recognize the cumulative effect of
initially applying the new standard as an
adjustment to the opening balance of
retained earnings in the year of initial
application
• Entities electing have to calculate
revenues they would have recognized
for any open contract as if they had
always applied IFRS or U.S. GAAP to
determine the cumulative effect of
adopting the new standard
• Restate two comparative years prior to
the implementation date
• Useful to furnish investors a full
understanding of trends and favored by
many companies.
• Systems need to be ready to capture
data to perform dual reporting as early
as the beginning of 2016
Full retrospective adoption Modified retrospective adoption
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20. © 2015 Nakisa Inc. All rights reserved. 20
Key takeaways
Be prepared
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21. 21© 2015 Nakisa Inc. All rights reserved.
Key takeaways
Be prepared
• Revenue Accounting standards are
here
• Ensure readiness for compliance
with Revenue Accounting Standards
• Scalable & Efficient: Collect and
centralize your revenue contracts
• Revenue Accounting will impact
parallel reporting and the financial
close
• Lease Accounting standards
expected in 2015 (Webinar next
week)
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Next steps
WHITEPAPER
Getting smart about revenue recognition and lease
accounting
www.nakisa.com/whitepapers-revenue-recognition-
lease-accounting
WEBINAR
Upcoming changes in lease accounting standards:
How technology can help with costs savings today and
regulatory compliance tomorrow
www.nakisa.com/webinar-lease-accounting-standards
Contact us: nakisa@nakisa.com
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