Ifrs Compliance

Ensure IFRS Compliance with Tecxed

In May 2014, the International Financial Reporting Standard (IFRS) Board introduced a new revenue recognition standard that changed the way companies recognize revenue for contracts in their financial statements. The new standard is IFRS 15 and it commences on or after 1st January 2018. The new ruling requires an entity to recognize revenue earned on a contract based on when the performance obligation is fulfilled or satisfied. That is, it can recognize the revenue once all the benefits have been received and the receiving entity gains control of the asset and can use the asset. The new standard will apply to all contracts with customers except leases, insurance contracts, financial instruments, guarantees and certain non-monetary exchanges. Industries that are most affected by this new rule are telecommunications, high tech, media, automotive & construction.

SAP launched the SAP Revenue Accounting and Reporting (RAR) application in 2015. It is an add-on solution. If you are using the SAP ERP Financials solution, and have an active maintenance agreement, you can use this application at no extra charge. The add-on solution automates the revenue recognition and accounting process and simplifies the tasks. The minimum release requirements before you can install the RAR solution is ERP 6.05 and above. To enhance the standard billing process, additional integration points were included in the SAP RAR application to retrieve extra data for the calculation of revenue. The additional data was enriched and normalized for processing ensuring audit compliance.

New IFRS16 Accounting Standard Compliance with SAP RE-FX

As early as 2016, the International Accounting Standards Board (IASB) issued IFRS 16, replacing the 2001 adapted IAS 17 Leasing rules (and in this context also IFRIC 4, SIC 15, SIC 27). IFRS 16/ IFRS 16 Compliance is effective for annual reporting periods beginning on or after 1st January 2019, with earlier application permitted (as long as IFRS15 is also applied).

With IFRS 16, it is no longer required to treat financial and operational leases differently from an accounting perspective and therefore this new leasing standard eliminates nearly all “off-balance” sheet accounting for leases. The goal of the new lease accounting rules is to increase transparency and to enable the users of financial statements to assess the impact of their organization’s leases on the financial position and cash flow directly from its balance sheet. To meet that objective, a lessee should recognize assets and liabilities arising from a lease.

With IFRS 17 effective from 1st July 2022, there is only a limited window of opportunity for insurance companies to implement FPSL – an even tighter window considering the requirement to run comparative data ahead of this date. SAP customers in the financial services sector should be looking to commence their implementation projects as early as possible.

SAP FPSL is a multi-GAAP solution containing the Financial Service Data Platform, Smart Accounting for Financial Instruments and Profitability & Performance Management.

SAP FPSL is a centralized hub to manage the data between operational and finance streams. Additionally, FPSL is a multi GAAP compliant solution. SAP FPSL is deployed as an add-on to SAP S/4HANA and is therefore designed with a simplified core for large data volumes. FPSL is delivered to the user via a streamlined SAP Fiori interface.

FPSL is not just for insurance companies, but for the wider financial services industry, including banks, fintech and reinsurance companies. Ensure IFRS 17 Compliance with Tecxed.