SAP Revenue Accounting and Reporting (RAR) was built from the ground up to help customers in their efforts to handle the new revenue recognition regulations announced May 28, 2014 (IFRS 15 & ASC 606) to be effective January 1, 2018 in countries adhering to US GAAP or IFRS. The solution automates many of the revenue recognition and accounting processes and can simplify the tasks of revenue accountants in following these new accounting guidelines. SAP Revenue Accounting and Reporting (RAR) (latest version 1.3) can also assist customers in their efforts to be compliant with current accounting standards like ASC 605 or IAS 18. SAP RAR is complementary to SAP Finance solutions and is compatible with SAP ERP Financials and SAP S/4HANA Finance.
Future and existing SAP RAR customers are constantly asking me to describe the functionality within SAP RAR. So, to help answer these questions, a summary of the features and functionality available in SAP RAR up through version 1.3 is listed below. The SAP RAR summary description is split into four categories: 1) Revenue Accounting and Reporting (RAR) core features, 2) contract modification, 3) connection to operational systems, and 4) migration of revenue documents to SAP Revenue Accounting and Reporting (RAR) including transition. In addition, we have added sections on the roadmap, recently introduced Quality Assurance capabilities (including in-flight and post-flight diagnostics), and recommendations on OSS note application.
SAP Revenue Accounting and Reporting (RAR) Version 1.3 was “Released to Customer” (RTC) in December 2016 and is still part of the
Early Adopter Care program;
Release Notes
Revenue Accounting and Reporting (RAR) Core Features
Support for the 5-step process through business rules and event driven model (Multiple element arrangements supported)
Contracts can be combined manually or automatically via rules if contracts have open items (contract-by-contract processing assumed)
Automatic or manual creation of performance obligations (POBs)
Processing of compound performance obligations (covering requirement for essentiality and distinct POBs)
Automatic setting of stand-alone selling prices (SSPs)
Automatic allocations of the transaction price based on SSPs (Stand Alone Selling Prices) to the performance obligations (POBs) / manual changes possible when needed
Automatic spreading of revenue to time based performance obligations according to individual rules / manual changes possible when needed
Recognition of revenue via events (time based, event based or percentage of completion)
Changes to fulfillment type prior to fulfillment
Revenue presentation according to IFRS 15: Contract liability / asset calculated at contract level.
Revenue presentation according to traditional GAAP: Unbilled receivables / Deferred revenues
Parallel reporting (ledger solution / account solution)
Multiple accounting principles supported
Revenue accounting decoupled from operational systems
Additional flexibility of contract selection for posting, simulation and error handling
Faster period close – integrated in SAP financial closing cockpit, ability to shift erroneous contracts to the next period for catch up posting
Right of return processes
Archiving (of completed Revenue Accounting Contract objects)
Support for S/4HANA Finance
Recognition of revenue – percentage of completion from Results Analysis
Contract combination of already fulfilled or invoiced contracts, cumulative catch-up can be triggered if required. Reporting on historical information still available
Enhancements to automatic rules and manual determination of contract combination
Changes allowed to fulfillment type after posting (e.g. from time based RevRec type to Event based RevRec type)
Finalization of performance obligation (without the need to adapt the operational document)
Enhanced work-list functions – retaining settings for distribution, conflict handling
Distribution of contract liability and asset drill down to performance obligations with customer specific logic
Estimated quantities for consumption based revenue recognition with final true up (no interim true-up)
Cost recognition
Capitalized cost of contract acquisition
Explanation for recognized revenue with associated change history to easily analyze and verify the revenue per period
Selection of different levels of aggregation of revenue postings, parallel postings and additional and customized checks
Foreign Currency Handling According to IAS 21/ASC 830
Different Currencies for Sales Order Items and Invoices
Aggregate G/L Postings by Debit/Credit Indicator
Enhanced Data Sources for Disclosures
Quality Assurance Capabilities
In-flight diagnostics (down ported to v1.2)
Post-flight data validation diagnostics (down ported to v1.2)
Transaction Integrity Assurance (planned for v1.3 SP3 in mid-August 2017)
Service acceptance events can now trigger revenue recognition
Contract Modification
Retrospective change, modification triggers re-allocation and cumulative catch up
Prospective change, allocation of the remaining revenue to the remaining performance obligations
Enhanced Capabilities / Flexibility for Contract Combinations
Automatic Rules/Manual Rules for prospective/retrospective modification
Minor improvements in conjunction with new foreign currency handling capabilities according to IAS 21 (IFRIC 22)/ASC 830
Connection to Operational Systems
SAP sales order, delivery and invoice integration out of the box via the integration component
Processing of bill of materials
Integration to systems for other SAP document types and non-SAP systems through adapter framework
Account determination – reference accounts required from operational applications
Reconciliation of integrated SAP components
CO/PA integration
Account Determination can be derived from any attribute in order item RAIs’ with the Business Rules Framework (BRF+)
Predecessor Documents – an order item can contain a reference to a predecessor document, i.e. return
Reconciliation of operational applications and revenue accounting
BAdi implementation of generic reconciliation framework with non-SAP operational sender systems
Simplified processing of periodic billing plans
ERP SAP hybris billing, invoicing component (formerly SAP Billing Revenue Innovation Management (BRIM)) sends the required revenue accounting data for order items, fulfillments and invoices
Reconciliation of revenue accounting items with contracts at bill of material Item level
Integration with CRM Service Contract (including Package Quotation, service contracts, service order and service confirmation) as stand alone or in combination with ERP SD Billing
Integration with cost object controlling – transfer for percentage of completion from results analysis to revenue accounting, revenue accounting transfers revenue allocation to results analysis.
Enhanced CO account assignments – additional CO account assignments possible in revenue accounting and through to reporting
Performance obligation creation direct from billing items
Simplified Invoice Handling (e.g. for flat rate Telco contracts)
Inbound Processing: Exempt and Restore Revenue Accounting Items
Transfer of Future Billing Data (e.g. from milestone billing plans)
Migration to SAP Revenue Accounting and Reporting (RAR) including Transition
With SAP Revenue Accounting and Reporting (RAR), existing revenue contracts or revenue documents can be moved to RAR for the remainder of their useful accounting lives. Typically, movement of existing revenue documents from another revenue system is frequent among RAR customers. Please note that experience has shown us that the data quality of the underlying revenue documents to be moved has a direct correlation on the effort needed to move them to RAR.
Migration support – transfer all data per company code, existing sales order documents (excluding orders with SAP SD revenue recognition)
Definition of packages of contracts for more granular migration
Define transfer date and status per migration package and company code
Package with latest transfer date can still be in status migration while older packages are already
productive
Operational items have to be assigned distinctly to a package
Transfer of data from SAP Sales and Distribution (SD) revenue recognition functionality
Operational load from SAP Sales and Distribution order items transfers recognized revenue
from SAP SD revenue recognition
Transition Support
General support for full retrospective and modified retrospective transition to ASC 606/IFRS 15
Create new accounting principle as copy of existing principle or new load of data
Calculate cumulative catch up
Comparison reporting (determine equity adjustment)
Switch off an accounting principle after comparison period
Operational load and transition for cost object controlling
Minor improvements in conjunction with new foreign currency handling capabilities according to IAS 21 (IFRIC 22)/ASC 830
Comments on the Roadmap of SAP Revenue Accounting and Reporting (RAR) beyond v1.3
SAP RAR is a flexible rule based and event based system that can be extended through project work or customizations to cover additional requirements beyond its core capabilities. For each new SAP RAR release, we consider many improvements to expand its core capabilities. For more information on the roadmap for SAP RAR, please click
here.
SAP customers wanting to provide feedback on any of these topics can contact their SAP sales representative about joining the SAP Customer Engagement Initiative (CEI) for SAP RAR.
Comments on Quality Assurance and Critical Notes Recommended
The Quality Assurance Capabilities are valuable additions to the RAR solution based on the experience and feedback of our customers. They also demonstrate the commitment of SAP to provide the right visibility to our customers of underlying revenue accounting processes including the data quality of externally sourced documents. SAP takes Quality Assurance seriously, and is essentially a rolling program, being proactive and looking to engage with as many RAR customers as possible to ensure that they are running their projects and programs with the latest software and best practices. With over 150 RAR projects being operated around the world, SAP is constantly receiving feedback and updates from a variety these projects on a daily basis and is always looking for ways to allow our customers to run better.
Current SAP RAR customers are always strongly encouraged to implement the latest support package for RAR 1.3 which can be found here (provide link). Based on customer feedback, we have added new Quality Assurance capabilities, starting with RAR 1.3 SP02, that include a set of diagnostics intended to identify problems usually rooted in poor data quality of feeder systems or accidental oversights by users. The following RAR OSS notes related to Quality Assurance have been recently published:
Note for the post-flight diagnostic
Note to deliver an in-flight diagnostic
Consulting notes to identify the critical notes recommended (one each for
RAR 1.1,
RAR 1.2, and
RAR 1.3)
2459965 - Revenue Accounting and Reporting 1.1: Important Notes Delivered with Support Package 6 and...
2463480 - Revenue Accounting and Reporting 1.2: Important Notes Delivered with Support Package 1 and...
2463528 - Revenue Accounting and Reporting 1.3: Important Notes Delivered with Support Package 1 and...
For more information on SAP RAR, please contact your SAP sales representative or please visit:
