Solution brief: New Revenue Recognition and Lease Accounting Standards: Compliance Done Right

SAP Solution Brief
Solution Extensions
SAP Lease Administration by Nakisa
New Revenue Recognition and
Lease Accounting Standards:
Compliance Done Right
BenefitsSolutionObjectives Quick Facts
©2015SAPSEoranSAPaffiliatecompany.Allrightsreserved.

2 / 9 © 2015 SAP SE or an SAP affiliate company. All rights reserved.
Objectives
Embrace new accounting for lease
and revenue recognition
With new regulatory changes already approved for revenue recognition,
and other changes being finalized for lease accounting, smart companies
are modifying processes and systems today to ensure compliance and
uninterrupted operations tomorrow. Is your company moving forward?
The SAP® Lease Administration application by Nakisa can help.
The Financial Accounting Standards Board
(FASB) and the International Accounting
Standards Board (IASB) are working together
to bring consistency and uniformity to account-
ing practices governing revenue recognition
and lease contracts. For revenue recognition,
changes mean that organizations must recog-
nize revenue as specific performance obliga-
tions within a contract. For lease accounting,
organizations will need to capitalize operating
leases greater than 12 months in duration and
record them in balance sheets as assets and
obligations – rather than reporting leases off
balance sheets and disclosing them in the notes
of financial statements.
Unfortunately, information from revenue and
lease contracts is often dispersed throughout
the organization in disconnected systems.This
makes obtaining comprehensive information
for revenue and lease contract portfolios almost
impossible – putting many companies at risk
of regulatory noncompliance.
Embrace new accounting for lease and
revenue recognition
Benefits Quick FactsSolution

Prepare for new revenue contract
regulations today
The new standards specify a five-step pro-
cess for recognizing revenue. Organizations
now need to:
1. Identify the contract with the customer
2. Identify the separate performance
obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the separate
performance obligations in the contract
5. Recognize revenue when (or as) the
business satisfies a performance obligation
The question is, can your contract informa-
tion management systems accommodate
this process? SAP Lease Administration can
help with functionality for abstracting, analyz-
ing, and assessing revenue contract data in
a compliant manner.
The application helps you aggregate data into
a single point of access for all contract infor-
mation.An adaptable data model also enables
you to capture custom attributes – giving you
a 360-degree view of contract obligations. To
perform technical accounting assessments,
simply compare these obligations with the actual
status of current delivery against the contract.
The application also helps simplify and stan-
dardize data entry for any type of contract.
The result is a global view of revenue contract
data in digital format, with all the insight you
need to quickly identify the impact on financial
statements.
Prepare for new revenue contract regulations
today
Enhance visibility into your global lease portfolio
Quickly collect and centralize contract data
Collaborate and build an audit trail
Solution BenefitsObjectives Quick Facts

Enhance visibility into your global
lease portfolio
To prepare for compliance with the upcoming
regulations for lease accounting – and to drive
more efficient cost controls – your company
needs clear visibility into its corporate lease
portfolio. Key areas of concern include:
•• Lease composition
•• Key dates and cash-flow effects such as
payments or casualties
•• Fair value of leased assets
•• Lease-dependent business units
Aswithrevenuerecognition,insightrequiresa uni-
fied set of lease data. SAP Lease Administration
helps you achieve this objective with a central-
ized repository of all lease assets across your
company. Use the application to capture lease
contract information and generate reports to
comply with new accounting standards. The
application also provides visibility into lease
exposure. This helps you optimize your global
portfolio of leased assets and make better
business decisions.
A unified view of company-wide lease data
can help you optimize your lease portfolio.
today

Quickly collect and centralize
contract data
SAP Lease Administration helps you central-
ize contract information with functionality for
mass data importing across multiple contract
sources. This enables you to create an accu-
rate, centralized data repository for new, past,
and future revenue and lease contracts.
For unique or industry-specific business require-
ments, the application includes an adaptable
data model that allows you to capture custom-
ized lease and revenue contract attributes.And
to maximize flexibility and efficiency, SAP Lease
Administration also helps simplify and standard-
ize data entry for any type of lease operation,
either for the lessor or the lessee. The same is
true for various revenue transaction types, such
as performance-based incentive fees, licenses
of intellectual property, future upgrades and
additional vendor obligations, and more.
today
Collaborate and build an audit trail Get your house in
order for efficient,
cost-effective
compliance with the
latest accounting
standards.

SAP Lease Administration includes tools that
empower teams to work together. Key stake-
holders have access to a user-friendly interface
that facilitates the efficient and transparent
management of lease and revenue contract
information – all with minimal training, even
for inexperienced users. These stakeholders
can send messages, receive alerts, validate
data accuracy, and quickly approve decisions
throughout the lifecycle of a contract.The result
is improved data accuracy and lower risk of
noncompliance through the consistent review
of information by legal advisors, accountants,
government bodies, consultants, and other rele-
vant stakeholders.(See figure on the next page.)
SAP Lease Administration also tracks any
changes made to the lease or revenue contract
data from start to finish, and it identifies who
made which changes. This helps you estab-
lish and maintain an audit trail of actions and
decisions made throughout the data collec-
tion process for full traceability, compliance,
and reporting.
Speed up approvals with collaboration tools
that bring all stakeholders into the loop.
today

today
Figure: Collaboration across the enterprise for accurate and validated contract data
Start
collaboration
Receive
request
Receive
request
Upload content
Review contract
summary
Review contract
(dashboard)
Classify and
collect data
Validate data
Discuss and
approve for
business
Share for
validation
Share for
approval
Finalize process
Tom Reilly
Contract analyst
Sara Lopes
Senior accountant
John Miller
Financial executive

Compliance, visibility, and better
decision-making processes
Use SAP Lease Administration for:
•• More effective compliance with new
rules – Access lease and revenue contract
data company-wide, with visibility and
traceability to comply with new regulations
(including the proposed five-step model for
revenue recognition)
•• Better visibility into risk exposure –Visualize
lease assets, including key dates, value of
leased assets, and responsible organizational
units; and analyze revenue contracts by
transaction types and terms
•• Centralized contract data – Quickly import
and integrate data for thousands of contracts
from various sources into a single repository
•• Improved end-of-term and renewal lease
processes – Gain insight into the lease life-
cycle and obligations associated with each
revenue contract
•• Faster approvals – Collaborate with
stakeholders to quickly assess, validate,
and approve decisions associated with the
legal, financial, and accounting aspects of
contracts
•• Better analysis to support business
decisions – Analyze and visualize various
scenarios to drive better decision making,
and speed up reviews and audits by generating
contract summaries
Compliance, visibility, and better
decision-making processes

9 / 9
Summary
Providing a single point of entry to collect
and validate lease and revenue contract data,
the SAP® Lease Administration application
by Nakisa enables compliance with the new
revenue-recognition guidance and coming
lease accounting rules. Use the application
to optimize portfolio management of global
assets and support regulatory compliance.
Objectives
•• Prepare for new accounting standards and
adopt the right tools for reporting compliance
•• Unify all lease and revenue contract data
into a single repository
•• Obtain required legal, financial, and business
validations quickly and efficiently
•• Gain visibility into lease exposure and
revenue-related data for better strategic
planning and decision making
Solution
•• Centralized information management for all
lease and revenue contracts
•• Highly flexible and extendable forms to collect
industry- or business-specific attributes
•• Collaboration throughout the data collection
process
•• Complete visibility into changes and decisions
made during data collection
Benefits
•• Streamlined, more cost-effective compliance
•• Greater visibility into lease and revenue
data company-wide
•• Improved decision making with collaboration
and simulation tools
•• Reduced business and financial risks
•• Improved bottom line with better control
mechanisms
Learn more
To find out more, call your SAP representative
today or visit us online.
www.sap.com Quick FactsBenefitsSolutionObjectives
Studio SAP | 29928enUS (15/04)
© 2015 SAP SE or an SAP affiliate company. All rights reserved.

© 2015 SAP SE or an SAP affiliate company. All rights reserved.
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