The announcement that IFRS 15 effective date will be deferred to match ASC 606 has been widely anticipated, and may seem from the outside to gives telecom providers a little breathing room.
However, in reality, for many large telcos the new effective date simply makes the deadline achievable and - with confirmed dates - allows them to kick-off their revenue recognition projects in earnest.
IFRS 15 project timelines
Most progressive companies will apply and capture the results of the new IFRS 15 rules at least a year (if not two years) in advance of the 1 January 2018 deadline, leaving them just 18 months (or less) to complete what is widely acknowledged as the biggest accounting change since the introduction of IFRS. The standard has a major impact on how finance gathers contract level data and reconciles the new accounts against their existing billing and cash based accounting.
The extra year highlights the complexity of applying IFRS 15 principles within a real business environment in which a wide variety of unique contracts, policies, and IT limitations exist. One particularly prominent challenge is sourcing all of the granular, performance obligation-level data and engineering the processing engine to generate the new accounting with acceptable performance.
The deferral also highlights that telecoms providers can’t afford to wait for the mega-vendors to present an IT solution or decide whether to enter the market.
Telecommunications providers' revenue recognition projects
Our experience with customers across North America & EMEA shows that there are 100s of unique recognition scenarios that each require the sourcing of performance obligation data and a platform on which to apply internal accounting policy at depth and scale. Existing finance infrastructure does not offer the flexibility to address each companies’ unique combinations of product and service offerings nor does it cater for the ever increasing rate of change of marketing “innovation” to differentiate from each other.
Leaders have concluded that there is significant value to be gained from the new data sets, including new financial insights and better forecasting. The investment in IFRS 15 is no longer just about compliance but also about differentiation and commercial advantage.
Aptitude Software IFRS 15 (ASC 606) solution
Aptitude Software is proud to have the first and only proven product on the market. We have been working with a number of leading operators that are gearing their revenue recognition projects to not only achieve compliance but unlock business insights, transform management reporting and improve their finance team’s strategic capabilities – adding real value to their IFRS 15 investment.
Yesterday's announcements underscores the complexity of IFRS 15 projects, the current lack of announced solutions from existing ERP systems to solve the requirements and the need for a flexible rules-based revenue recognition engine on which accounting policies and underlying data can be managed as part of a deeper, richer revenue management platform.
For more information please contact us at email@example.com.