ifrs - impact on india businesses and sap solution_malolan patanki, sap consulting

42
IFRS – Impact on Indian Business and SAP Solution Malolan Pathanki SAP India Consulting

Upload: atuldm

Post on 22-Nov-2014

235 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

IFRS – Impact on IndianBusiness and SAP Solution

Malolan PathankiSAP India Consulting

Page 2: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

1. A brief overview of IFRS and its implications2. A few comments from SAP regarding IFRS3. SAP ERP and IFRS adoption overview4. SAP BusinessObjects and IFRS adoption overview5. Wrap-up

Agenda

Page 3: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

What is IFRS?

International Financial Accounting StandardsGlobal wide standard for financial accounting and reportingCurr`ently in use in most of the world– Europe, Japan, Australia, China, etc.– Other countries are in the process of changing from local GAAP to International Financial Reporting

Standards (IFRS)How it affects you — Key deadlines

ICAI has “proposed” a deadline of 2011Dual Reporting begins in 2010Requires re-statement of opening 2010 Balance Sheet to IFRS standardsIFRS cutover from Local GAAP to IFRS is 2011– Local GAAP reporting requirements will not go away– Some industries will still require Local GAAP reporting

– Utilities, Oil and Gas — FERC reports remain US GAAP

Other key points to considerThe IFRS “answer” will be specific to your company, industry, and country– “One size fits all” does not apply for IFRSPrior planning including your consulting/audit partner and SAP is essential for success

Key Points — IFRS Adoption

Page 4: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Are There Any Benefits to IFRS?

Improved quality of reporting –A globally accepted set of principles-based standards may offer opportunities to consistently applyaccounting standards

Improved transparency and investor confidence –As use of IFRS becomes more widespread, the new standards will increase comparability forinvestment analysis and performance measurement

Reduced accounting complexity –US GAAP accounting rules are viewed as complex and difficult to applyIFRS is based on “principles” not rules which will provide the opportunity for more clearrepresentation of financial results

Potential process and cost efficiencies –The same financial reporting standards across the world will provide opportunities to simplify andcentralize financial reporting processes and functions

Cost of capital –A single global financial reporting standard will enhance the efficiency of capital allocation andshould reduce the cost of capital

Process and technology optimization –Converting to IFRS may provide an opportunity to improve and streamline key components of thecurrent SAP landscapes

SAP and our Partners see these benefits

Page 5: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Key IFRS Challenges

IFRS implementation is not only a reporting project. There aresignificant impacts on:

Company organization — Both corporate and subsidiary levelsValuation of individual business transactionsTransactional systems — May need software and hardware upgrades

Approaching key deadlinesEarly project planning and analysis leads to successful project

Parallel reportingNeed to run parallel reporting to enable prior year comparisons between the Local Accounting Standardand IFRS during the transition periodsNeed the ability to easily compare, reconcile, and explain the differences / changes between the LocalAccounting Standards and IFRS

Broad implicationsImplementation requires cross-functional team — Financial accounting, management accounting, tax, IT,Consulting Partners, and SAP ServicesNew closing process required to include additional new IFRS-specific information without increasing closingcycles

Transaction changesTop-side adjustments at a consolidation level may not always be sufficient to meet all IFRS requirements— Some changes may be appropriate at the SAP ERP / transactional levelNeed to capture additional data / information to meet extensive disclosure requirements

Page 6: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Potential Impact of IFRS on an SAP LandscapeFrom Ernst and Young

FI - Financial

CO - Controlling

AC – Asset Accounting

PS – Project Systems

HR – Human Resources

PP – Production Planning

MM – MaterialManagement

PM – Plant Maintenance

QM - Quality Management

SD – Sale andDistribution

Possible ImpactNeed to investigate to determine magnitude

SAP modules Process Areas

Manufacturing industry example

Purchasing Depreciation Sales Tracking

Make to Order Plant Shut Down Third Party Billing

GeneralLedger Book Close Accounts

ReceivableAccountsPayable Tax Consolidations SPL

Cost Element Cost Center Profit Centers Internal Orders ABC Costing Product Costing

Requisitions Purchase Orders Good Receipts InventoryManagement Bill Of Materials Master raw

materials

Employment History Payroll Training Career Management

Labor Material Down time and outages

Capacity Planning Material requirementsplanning Shop Floor

Planning Executions Inspections Certificates

RFQ Sales Orders Pricing Picking Packing Shipping

Masterproduction scheduling

Slide from Ernst & Young

Page 7: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

IFRS Impacts to Our Clients – Industry InsightsFrom Accenture

OG Industry Level ofImpact Key Drivers

Products

CGS H Inventory, PP&E, Raw Material Hedges

Airline M Extensive use of leases, fuel hedges, PP&E

IndustrialEquipment M Revenue recognition – project accounting, LIFO reserves, PP&E

Retail H Leases, Asset Impairment (Store closures), PP&E, Inventory, Revenue Recognition, Taxes

Travel M PP&E, Advertising, Leases

HLS H Business Combinations, Intangibles (R&D), Asset Impairment, Inventories, PP&E, Contingencies andProvisions (Product Liability)

Automotive H Intangibles (R&D), Inventories, Asset Impairment, Restructuring, Contingencies and Provisions (LossContracts and Restructuring)

FinancialServices

Banking H Financial Instruments, derivatives, Asset-backed Securities

Capital Markets M Financial instruments, Derivatives, Advertising, Customer Loyalty Programs

Insurance H Insurance Contracts, Financial Instruments, Revenue Recognition, Financial Disclosure Reporting

More research is required but our hypothesis is that certain industries will beimpacted more than others due to IFRS.

Slide from Accenture

Page 8: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

IFRS Impacts to Our Clients – Industry InsightsFrom Accenture (cont.)

OG Industry Level ofImpact

Key Drivers

Resources

Forest Products L LIFO, PP&E, Real Estate, Leases

Freight-Logistics L PP&E, Leases

Metals L PP&E, LIFO

Mining M PP&E, LIFO, Leases, Revenue Recognition – project accounting, real estate

Utilities H PP&E, Intangibles, Asset Impairments, Derivatives (hedges), Leases, Provisions, Taxes, BorrowingCosts

Chemicals M PP&E, R&D, Environmental Provisions, Impairment Testing, Joint ventures LIFO reserves

Energy H PP&E, Depletion Accounting, Joint Ventures, Business Combinations, Intangibles (R&D), Reserves,Revenue, Taxation, Environmental Liabilities, Derivatives

Building Materials L LIFO, PP&E, hedges

CHT

Media andEntertainment

L Intangible Assets – impairment testing, Revenue Recognition – multiple element arrangements,PP&E

Communications M PP&E, Leases, Impairment Testing, Revenue Recognition, R&D, Advertising, Customer LoyaltyPrograms

Aerospace and Defense M PP&E, Impairment Testing, LIFO, R&D, Derivatives, Revenue Recognition – project accounting

Electronics and HighTech

H R&D, Revenue Recognition – multiple element arrangements, Asset Impairment

Slide from Accenture

Page 9: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

1. A brief overview of IFRS and its implications2. A few comments from SAP regarding IFRS3. SAP ERP and IFRS adoption overview4. SAP BusinessObjects and IFRS adoption overview5. Wrap-up

Agenda

Page 10: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Why Is SAP the Best Choice for IFRS?

SAP Business Suite solutions are fully IFRS capable and have been for many years4,000+ IFRS implementations in EMEA including 100+ US GAAP to IFRS conversions

SAP ERP 6.0 offers customers a best-in-class IFRS capable leading ledgerIntegrated SAP Business Suite is more flexible for upcoming IFRS changes

SAP BusinessObjects enterprise performance management (EPM) and SAP BusinessObjectsgovernance, risk, and compliance (GRC) solutions play a key role in helping organizationstransition to IFRS

Already available as standard in our applicationsStarter kits speed and smooth the transition processComprehensive complianceOpen to heterogeneous environments

Bottom line is SAP offers the most complete solution to support IFRS

There is NO simple long term solution to the IFRS reporting requirementIFRS adoption will likely require changes across the entire installed SAP Landscape

Page 11: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

SAP and IFRS ComplianceSolutions and Services

Local Close/Transaction SAP ERP LayerSAP General Ledger– Parallel Account with multi-ledgersAsset Accounting– Multi-Asset Valuation AreasEtc.

Group Close/Reporting/Consolidation LayerSAP BusinessObjects– SAP BusinessObjects Planning and ConsolidationXBRL Publishing applicationEtc.

SAP ServicesSAP Field ServicesSAP General Ledger Migration support serviceSAP Service Landscape Optimization (SLO)Upgrade Support and Service

Partner AlliancesStrong relationship with our Partner Organization

Standard SAP Applications, SAP Services, and our Partners can providethe necessary support for your IFRS Project

Page 12: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

SAP Solution Portfolio for IFRS

SAP BusinessObjectsSAP BusinessObjects EPM and GRCSolutionsSAP BusinessObjects

SAP BusinessObjects Planning andConsolidation + IFRS Starter KitSAP BusinessObjects FinancialInformation ManagementSAP BusinessObjects XBRL Publishing byUBmatrix

SAP Business Suite:SAP Business Suite 7

SAP ERP 6.0 –– SAP ERP Financials– SAP General Ledger

– Parallel Ledgers– Asset Accounting– Etc.

SAP Business Suite solutions are already IFRS capableSAP BusinessObjects solutions can also play a key role in helping organizations

transition to IFRSWith the combination of SAP ERP and SAP BusinessObjects solutions —

SAP offers the most complete solution to support IFRS

Page 13: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

For Example SAP’s own IFRS ProjectLooked like this …

Adoptionof IFRS

@

Provides guidance and trainingProvides posting infrastructurePerforms certain reconciliationpostings for all company codes

Share-based payments and relatedhedge entries

Collects data for disclosures (viaexpanded reporting package)Supports identification of IFRS/US GAAP differencesDecides accounting for major openitems

Provides guidance and trainingProvides posting infrastructurePerforms certain reconciliationpostings for all company codes

Share-based payments and relatedhedge entries

Collects data for disclosures (viaexpanded reporting package)Supports identification of IFRS/US GAAP differencesDecides accounting for major openitems

Corporate Financial ReportingCorporate Financial Reporting

Identify reconciling items (i.e.,differences IFRS/US GAAP)Perform all reconciliation postingsexcept those performed by CFRBring open issues to the attention ofregional IFRS SpecialistComplete expanded reportingpackage and provide certification onaccuracy and completeness ofreconciling entries and disclosuresSupport KPMG‘s audit

Identify reconciling items (i.e.,differences IFRS/US GAAP)Perform all reconciliation postingsexcept those performed by CFRBring open issues to the attention ofregional IFRS SpecialistComplete expanded reportingpackage and provide certification onaccuracy and completeness ofreconciling entries and disclosuresSupport KPMG‘s audit

Collect all ambiguous issues fromindividual entities in the respectiveregionProvide guidance to solveambiguous issuesDiscuss complex issues with CFR(single point of contact in CFR foreach IFRS Specialist)

Collect all ambiguous issues fromindividual entities in the respectiveregionProvide guidance to solveambiguous issuesDiscuss complex issues with CFR(single point of contact in CFR foreach IFRS Specialist)

AuditIFRS opening balance sheetIFRS reconciliation 2006IFRS reconciliation 2007 andbeyondIFRS consolidated financialstatements 2007 and beyond

AuditIFRS opening balance sheetIFRS reconciliation 2006IFRS reconciliation 2007 andbeyondIFRS consolidated financialstatements 2007 and beyond

OrganizationPersonnel

ProcessesTechnology

Local SAP EntitiesLocal SAP Entities

Regional IFRS SpecialistsRegional IFRS Specialists Consulting Partner (KPMG)Consulting Partner (KPMG)

Page 14: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

2009 2010 2010 2011

Begin IFRS Project Planning and LocalImpact to Determine SAP Landscape

Solution Required

Prepare OpeningBalance Sheetunder IFRS rules

Dual ReportingPeriod Ends

IFRS Go-LiveDate

2013

Begin configurationLandscape for IFRSa. Transaction Layerb. Reporting Layer

SAP GeneralLedger MigrationCompleted 1st

Qtr 2010SAP GeneralLedgerValidation Periodcompleted byYear End

2010

UpgradeProject to SAPERP 6.0CompletedSAP GeneralLedgerMigrationProject

Dual Reporting Period Go-Live IFRSPossible SystemLandscapeOptimization (SLO)Projects to clearLocal GAAPIssues

SAP Field Services + Customer – SAP ERP Layer

Begin IFRSProject

Consulting/Audit Partner, Customer + SAP Field Services

Go-Live with IFRSas primary groupreporting standard

Perform consolidationreporting in both the localaccounting standard andthe IFRS systems

ReviewExistingconsolidationsand XBRLcapabilities

Adapt the currentor deploy a newconsolidationapplication forgroup reporting

Go-Live with newor updatedconsolidationcapabilities

SAP Field Services + Customer – Reporting/Analytical Layer

IFRS: Implementation Timeline –Overview Recommendations (IN Timeline)

Page 15: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Typical Questions

Does SAP consider the implementation of IFRS a significant project?Yes, we do

The complexity of your project will be driven by your industry, company, and evencountry

Your current landscape status will also play a role in the complexity of your specific projectSystem upgradesSAP General Ledger migration projectsSLO projects

Your IFRS project will require input and guidance fromYour consulting/audit partnerSAP ServicesYou own internal experts

Is there a single best solution for IFRS?No, sorry

The best solution for your company will be the result of a thorough review of yourcurrent status and the overall impact on your company when adapting to IFRS

Some Frequently Asked QuestionsSAP’s View of IFRS

Page 16: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Some Frequently Asked QuestionsSAP’s View of IFRS (cont.)

Typical Questions

What type of support can I expect from SAP during this project?SAP will provide application support for our products

Basically we can help with basic configuration/consolidations and reporting helpFor correct interpretation of the IFRS rules and guidelines it is best you work with yourconsulting partner

What is the first step I should take to begin this IFRS project?SAP would suggest you contact both your consulting/audit partner and SAP for guidanceand preliminary planning

Page 17: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

1. A brief overview of IFRS and its implications2. A few comments from SAP regarding IFRS3. SAP ERP and IFRS adoption overview4. SAP BusinessObjects and IFRS adoption overview5. Wrap-up

Agenda

Page 18: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

2009 2010 2010 2011

Begin IFRS Project Planning and LocalImpact to Determine SAP Landscape

Solution Required

Prepare OpeningBalance Sheetunder IFRS rules

Dual ReportingPeriod Ends

IFRS Go-LiveDate

2013

Begin configurationLandscape for IFRSa. Transaction Layerb. Reporting Layer

SAP GeneralLedger MigrationCompleted 1st

Qtr 2010SAP GeneralLedgerValidation Periodcompleted byYear End

2010

UpgradeProject to SAPERP 6.0CompletedSAP GeneralLedgerMigrationProject

Dual Reporting Period Go-Live IFRSPossible SystemLandscapeOptimization (SLO)Projects to clearLocal GAAPIssues

SAP Field Services + Customer – SAP ERP Layer

Begin IFRSProject

Consulting/Audit Partner, Customer + SAP Field Services

Go-Live with IFRSas primary groupreporting standard

Perform consolidationreporting in both the localaccounting standard andthe IFRS systems

ReviewExistingconsolidationsand XBRLcapabilities

Adapt the currentor deploy a newconsolidationapplication forgroup reporting

Go-Live with newor updatedconsolidationcapabilities

SAP Field Services + Customer – Reporting/Analytical Layer

IFRS: Implementation Timeline –Overview Recommendations (IN Timeline)

Page 19: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Options for SAP Solution Configuration

Approaches available for multi-GAAP valuation within SAP ERP Financials

Approach Classic SAP GeneralLedger

Account Based Easiest to implementCan lead to a less than efficientChart of Accounts

Parallel Company Codes No additional functionalityplanned by SAPNot a Recommend Solution formost companies

Parallel Ledger Most transparent approachIndependent set of booksFuture IFRS requirements moreeasily accommodated

Special Ledger No additional functionalityplanned by SAPNot a recommend solution formost companies

Current recommended configuration approaches for SAP General Ledger

Page 20: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Parallel Ledger Approach – Scenario 1Applies to SAP General Ledger only

Why it WorksProvides IFRS and Local Accounting Standard reporting from multi-ledgers

Can be configured to meet both reporting requirements from the first go-live dateUtilizes the best features of the SAP General Ledger

Document SplittingSegment ReportingEtc.

Recommended option of complex installationsLarge differences between IFRS reporting standards and the current legal reportingstandard

Feeds properly formatted IFRS data directly into the Reporting and Analyticslayer

Simplifies reporting and requires little manual adjustment after consolidationsImplementation from the beginning of fiscal year

Matches IFRS time line

Parallel Ledger Configuration is recommended whereSegment reporting is requiredIncreased number of Ledger accounts is not desirableComplete set of separate legal reporting books is preferredDifferent fiscal year is needed for different legal sets of books

Page 21: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Account Based Approach – Scenario 2Can Be Used Across All GL Versions

Common

Accounts

Pure IFRS

Accounts

PureLocal GAAP

Accounts

Account Solution is recommended whereRelatively few valuation differences exist between IFRS and local GAAPNo issue with an increased number of general ledger accountsStandard reporting is usedDifferent fiscal years not required

How it worksUses single ledger for all posting

Could be the Leading Ledger for SAP General Ledger

Accounts are “grouped” according to legal reporting requirementsExample

– 300000 to 400000 Operational Chart– 500000 to 550000 IFRS– 600000 to 650000 Local GAAP

Each group of accounts must be in balanceRequires extra care to ensure correct account determinationAnd the establishment of a coding handbook.

IFRS Financial Statements report using common accounts and“pure” IFRS accounts together

Red Oval in diagram

Single Ledger

Page 22: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Parallel Company Codes and Special LedgerApproaches

Neither approach is the recommended solution for today’s environmentsThese approach options were recommended prior to the availabilityof the SAP General Ledger and the capabilities added by SAP BusinessObjects

In some cases these options may still be workable in special cases, but onlyafter a through review of the other recommended options with yourconsulting partner and SAP

Parallel Company Codes

Special Ledgers

Page 23: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Typical Questions

Do I have to upgrade to SAP ERP 6.0 and install the SAP General Ledger to meetthe IFRS requirement?

No, you can meet the IFRS requirements without an upgrade or the installation of the SAPGeneral Ledger

However, the adoption of IFRS would be much easier in most cases with the mostcurrent software release installed

I have just upgraded and installed the SAP General Ledger and my LeadingLedger and Asset Valuation area are set to Local GAAP. How can I make theswitch to IFRS?

In this instance we would suggest using Parallel Ledgers within the SAP General LedgerA combination of the Leading Ledger and Non-Leading Ledgers would be used toreport both Local GAAP and IFRS

SAP has several services that will help make the switch from Local GAAP to IFRS withinthe Leading Ledger and Asset Valuation area.

For the SAP General Ledger, a new migration scenario (7) is under developmentFor the Asset Valuation area, an SLO service will be required

Some Frequently Asked QuestionsSAP ERP Financials

Page 24: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Typical Questions

What is the difference between the Account Based approach and the ParallelLedger approach?

The Account Based approach holds all legal reporting data in a single ledgerIs suggested for smaller sized installations with minimal differences between LocalGAAP and IFRS requirementsWill add additional account numbers to the Chart of Accounts

The Parallel Ledger approach distributes legal reporting data to separate parallel ledgersIs suggested for larger installations with significant differences between Local GAAPand IFRS reportingMay require a separate table groups for separate ledgers

If I plan to upgrade to SAP ERP 6.0 and migrate to the SAP General Ledger whenshould I start planning the project?

In this example the time is NOW!Overall we see an upgrade followed by a migration project to take at least a year.Followed by the reporting validation period after the migration weekend and the IFRSplanning project would take another year.Which will take 2 years for the upgrade/migration and first phase of the IFRS project

Some Frequently Asked QuestionsSAP ERP Financials (cont.)

Page 25: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

1. A brief overview of IFRS and its implications2. A few comments from SAP regarding IFRS3. SAP ERP and IFRS adoption overview4. SAP BusinessObjects and IFRS adoption overview5. Wrap-up

Agenda

Page 26: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

SAP BusinessObjects solutions support IFRS

SAP BusinessObjects solutions are fully IFRS capable and have been for many years800+ successful IFRS implementations in EMEA

Key functionality to support the IFRS transition is available as standardDual/parallel reportingTop-side adjustmentsSupport for IFRS rules including IAS 7, IAS 16 etc.

Starter kits speed and smooth the transition processProvide pre-configured IFRS compliant content

Comprehensive complianceDocumentation, automated testing and reporting of internal controls in accordance with SOX404 and 302

Deep integration into underlying transactional and general ledger (GL) systemsIncluding SAP ERP, SAP Business Suite, and SAP NetWeaver BWApplications remain heterogeneous and open to non-SAP environments

Page 27: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Key requirements of consolidation and reportingapplications for a successful IFRS transition

Dual / parallel reportingData should all be held in a single database with minimal or no duplicationSufficient dimensionality, hierarchical views, structures, and currencies to categorize the informationComprehensive built-in audit trail

Top-side adjustmentsAbility to perform complex calculations, to perform and store multiple consolidations, and to report indifferent formatsHold the data in local GAAP with journal entries to produce the required reports for IFRS (or vice versa)Automate the calculation and storage of as many of adjustments as possible

Ease of report writingNeed to produce reports in more than one format during the transition phase - especially since the transitionwill likely require several years of running IFRS parallel with local GAAPPrescribed formats for IFRS reporting are different from those in local GAAP

IAS 7 (Cash Flow Statements) does not require reconciliation of net cash flow to movement in net debtFlexible and powerful end-user reporting capabilities that enable the head office consolidation team tocreate and change their own reports

Multiple labels for accountsAbility to assign different names to a single accountIAS 1 requires different balance sheet headings to those currently used under local GAAP

Stock = InventoriesFixed Assets = Property, Plant, and Equipment

Page 28: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Familiar and easy to useEnables rapid adoption by leveraging nativeMicrosoft Office tools (e.g. Excel)Consolidations business rules are configuredby finance users (no scripting required)User owned and managed

Process-centricCustomizable business process flows ensureconsistency and minimize trainingEnforce policies and procedures - track processstatus and completionStep-by-step guidance for users

Unified planning and consolidationSingle, integrated application reducesmaintenance, improves data integritySimplified deployment while enabling flexibleconsolidation and planning functions

SAP BusinessObjects Planning andConsolidation, version for the Microsoft platform

Streamlined planning, budgeting, forecasting, and fast closeStreamlined planning, budgeting, forecasting, and fast close

Page 29: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Rapid implementationPre-packaged content reduces implementationtimes by up to 80%Dynamic configuration enables easycustomization to specific requirementsComplete, generic reference implementation

Rapid and trusted legal complianceEmbedded expertise in meeting financialregulations including best practice in financialconsolidations and internal controlsDetailed process guidance for business users

Comprehensive scopeIFRS specific chart of accountsPre-configured IFRS consolidation rules,controls, and calculationsIFRS ready publishable financial statements

Starter kits for IFRS

Faster legal compliance – reduce implementation timesFaster legal compliance – reduce implementation times

Page 30: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Ease of use for finance usersBusiness users maintain sophisticated mappingsand launch loading tasks

Secure access to dimensional metadata, intelligentchecking and filtering of data

Simple to use and easy to deploy

Compliance, trust, and reliabilityFully automated and easily accessible audit trail

Drill-back allows tracing of consolidated resultsback to the original sources

Comprehensive validations ensure error prone datais loaded right-first-time

Connectivity to SAP and non-SAPsourcesApplication connectivity removes the need forintermediate flat files or manual re-keying of data

Database connectivity ensures almost any sourcecan be integrated with a full audit trail

Rapid Marts speed implementation

SAP BusinessObjectsFinancial Information Management

Powerful connectivity, mapping, and loading designed for business usersPowerful connectivity, mapping, and loading designed for business users

Page 31: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Implement operational controls toimprove business process management

Unify control environment across the enterprise

Manage by exception and perform timely remediation

Enforce accountability with hierarchical review,certification and sign-off process

Reduce cost without compromisingcompliance

Automate controls with “out-of-the-box” control scripts

Simplify integration across process andapplication boundaries

Streamline manual testing and assessments

Shrink audit cycles with rigorous compliance process

Enable lines of business to effectivelymitigate risks

Integration with other applications for effective mitigationof enterprise business risks

Role-based dashboards to monitor control activity status

End to End, Cross Enterprise Business Process ControlEnd to End, Cross Enterprise Business Process Control

SAP BusinessObjects Process Control

Page 32: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

The role of eXtensible Business ReportingLanguage (XBRL) in the transition to IFRS

Mandate for public companies operatingin the U.S. to begin filing their financialreports using XBRL

Three-year timetableLargest 500 filers for fiscal periodsending on or after June 15th, 2009All other large accelerated filers in 2010All remaining companies in 2011

XBRL publishing will be an importantfacet of the IFRS transition process

Considering XBRL publishingrequirements from the outset will makethe IFRS transition process easier andreduce maintenance once the transitionis complete

Page 33: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

SpeedQuickly navigate taxonomies and map dataEasy to use drag-and-drop mapping environmentFast, thorough validation of generated XBRLdocuments

SimplicityWorks with EPM solutions and SAP Business SuiteLink to and import disclosures stored in Microsoft WordInsulates users from dealing with complex XBRL syntax

FlexibilityEasily extend published XBRL taxonomiesComplies with the XBRL 2.1 specificationSupports basic and block text footnotes, dimensions,and business rules

SAP BusinessObjects XBRL Publishing byUBmatrix

Streamlining XBRL publishing for business usersStreamlining XBRL publishing for business users

SAP BusinessObjectsXBRL Publishing by UBmatrix

Excel WorkbookExcel Workbook

ReportBuilder

Supplement,Tag, Validate,

Publish

ReportBuilder

Supplement,Tag, Validate,

Publish

PreparedFinancial

Statements

PreparedFinancial

Statements

TaxonomyDesigner

Extend /Customize

Taxonomies

TaxonomyDesigner

Extend /Customize

Taxonomies

XBRL InstanceDocument

RegulatorsUS SECUK HMRCJapan FSAetc.

SAP Business Suite SoftwareSAP BusinessObjects EPM Solutions

Page 34: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

The journal entries generated by the rules-based SAP BusinessObjects applicationprovide an exact audit trail as we reconcile the data for both Canadian reportingpurposes and IFRS standards. It makes it much easier to show both auditors andcompany management exactly what we’ve done…”

Neil Thompson, Manager of Financial Systems, Standard Life

The journal entries generated by the rules-based SAP BusinessObjects applicationprovide an exact audit trail as we reconcile the data for both Canadian reportingpurposes and IFRS standards. It makes it much easier to show both auditors andcompany management exactly what we’ve done…”

Neil Thompson, Manager of Financial Systems, Standard Life

SAP BusinessObjects customers have alreadytransitioned to IFRS

SAP BusinessObjects software has helped more than800 customers successfully transition from local GAAPto IFRS reporting

In parallel, our consolidation applications have alsohelped customers significantly reduce closing cycles

Diageo went from 12 days to 5 days after replacingHyperion EnterpriseReporting time reduced from 20 to 5 workdays at Rochewith HQ consolidation time cut from 12 to 2 daysRecticel reduced reporting time from 20 days to 15 days

Page 35: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Implementation optionsFinancial consolidation and reporting

2009 2010 2011

Prepare OpeningBalance Sheetunder IFRS rules

IFRS “go-live”Date (dualreporting ends)

20132010

Dual Reporting Period

Option 1: Parallel consolidation under both existing GAAP and IFRS during dual reporting phase (separate consolidation)

Note: The length of the dual reporting period is dependent on the number of years for which comparative reporting to be provided. During the dualreporting period the company will still file in accordance with current GAAP requirements but from IFRS “go-live” must disclose comparative resultsfor the entire dual reporting period in accordance with IFRS - therefore creating a requirement for reporting results under both standards.

Option 2: Primary consolidation in accordance with one “leading” GAAP with posting of adjustments to obtain ‘non-leading’GAAP “during” dual reporting phase

Option 3: Continue to consolidate under existing GAAP until IFRS go live date. Just prior to IFRS go live fully re-consolidatehistory for dual reporting period in accordance with IFRS (full / separate consolidation)

Option 4: Continue to consolidate under existing GAAP until IFRS go live date. Just prior to IFRS go live books “adjustments” tore-state consolidated history for dual reporting period in accordance with IFRS

Page 36: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

What action should I take now?

Check whether your existing financial consolidation and reporting systems arecapable of taking on the challenge of IFRS in parallel to your current GAAP reporting

Can changes be made easily, quickly and cost effectively?Can they hold different sets of adjustments for current GAAP and IFRS as well as multipleconsolidations?Can they support the various reporting requirements including creation of different reportsfrom the same data?How have existing local GAAP rules been configured - have they been hard-coded?Can they be loosely coupled to the transaction systems through middleware, so that changeselsewhere in the systems environment do not disrupt financial reporting?Do they offer an accelerated approach or toolset for building IFRS financial statements?Are the people that designed and configured the system still with the organization?How easy will it be to roll out updated systems to the reporting units?Do they unify planning and consolidation?How easy will the system be to maintain?Can the transition be achieved without adding unnecessary risk or introducing complianceissues?

Page 37: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

1. A brief overview of IFRS and its implications2. A few comments from SAP regarding IFRS3. SAP ERP and IFRS adoption overview4. SAP BusinessObjects and IFRS adoption overview5. Wrap-up

Agenda

Page 38: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

SAP Resources

You will find further information about our Partners and SAP’s approach to IFRS at:

SDN Community Websitehttps://www.sdn.sap.com/irj/sdn/nw-scheduling

Customer Value Network Site devoted to IFRShttps://www.sdn.sap.com/irj/bpx/ifrs

Page 39: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

7 Key Points to Take Home

You should consider IFRS as a major projectAs with any project, early planning and the complete understanding of the requirements will lead

to a successful outcomeBegin planning now!! 2013 is not that far awayYour IFRS project will require engagement with you Consulting Partners, SAP, and your own in

house expertsThere is no “sliver bullet” or single standard solution for IFRS adoptionThe IFRS adoption provides an opportunity to update and modernize your current landscape

and releaseIFRS adoption within your SAP landscape will most likely require changes to both the SAP ERP

and the Analytical and Reporting systems

Page 40: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

How to Contact me?

Malolan [email protected]

Page 41: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Thank you!

Page 42: IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

Copyright 2008 SAP AGAll Rights ReservedNo part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changedwithout prior notice.Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.SAP, R/3, xApps, xApp, SAP NetWeaver, Duet, SAP Business ByDesign, ByDesign, PartnerEdge and other SAP products and services mentioned herein as well as their respective logos aretrademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world.Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius and other Business Objects products and servicesmentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in several other countries. Business Objects isan SAP Company. All other product and service names mentioned and associated logos displayed are the trademarks of their respective companies. Data contained in this document servesinformational purposes only. National product specifications may vary.The information in this document is proprietary to SAP. No part of this document may be reproduced, copied, or transmitted in any form or for any purpose without the express prior writtenpermission of SAP AG. This document is a preliminary version and not subject to your license agreement or any other agreement with SAP. This document contains only intended strategies,developments, and functionalities of the SAP® product and is not intended to be binding upon SAP to any particular course of business, product strategy, and/or development. Please notethat this document is subject to change and may be changed by SAP at any time without notice. SAP assumes no responsibility for errors or omissions in this document. SAP does not warrantthe accuracy or completeness of the information, text, graphics, links, or other items contained within this material. This document is provided without a warranty of any kind, either express orimplied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose, or non-infringement.

SAP shall have no liability for damages of any kind including without limitation direct, special, indirect, or consequential damages that may result from the use of these materials. This limitationshall not apply in cases of intent or gross negligence.The statutory liability for personal injury and defective products is not affected. SAP has no control over the information that you may access through the use of hot links contained in thesematerials and does not endorse your use of third-party Web pages nor provide any warranty whatsoever relating to third-party Web pages.

Weitergabe und Vervielfältigung dieser Publikation oder von Teilen daraus sind, zu welchem Zweck und in welcher Form auch immer, ohne die ausdrückliche schriftliche Genehmigung durchSAP AG nicht gestattet. In dieser Publikation enthaltene Informationen können ohne vorherige Ankündigung geändert werden.Einige von der SAP AG und deren Vertriebspartnern vertriebene Softwareprodukte können Softwarekomponenten umfassen, die Eigentum anderer Softwarehersteller sind.SAP, R/3, xApps, xApp, SAP NetWeaver, Duet, SAP Business ByDesign, ByDesign, PartnerEdge und andere in diesem Dokument erwähnte SAP-Produkte und Services sowie diedazugehörigen Logos sind Marken oder eingetragene Marken der SAP AG in Deutschland und in mehreren anderen Ländern weltweit. Business Objects und das Business-Objects-Logo,BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius und andere im Text erwähnte Business-Objects-Produkte und -Dienstleistungen sowie die entsprechendenLogos sind Marken oder eingetragene Marken der Business Objects S. A. in den USA und anderen Ländern weltweit. Business Objects ist ein Unternehmen der SAP. Alle anderen in diesemDokument erwähnten Namen von Produkten und Services sowie die damit verbundenen Firmenlogos sind Marken der jeweiligen Unternehmen. Die Angaben im Text sind unverbindlich unddienen lediglich zu Informationszwecken. Produkte können länderspezifische Unterschiede aufweisen.Die in dieser Publikation enthaltene Information ist Eigentum der SAP. Weitergabe und Vervielfältigung dieser Publikation oder von Teilen daraus sind, zu welchem Zweck und in welcher Formauch immer, nur mit ausdrücklicher schriftlicher Genehmigung durch SAP AG gestattet. Bei dieser Publikation handelt es sich um eine vorläufige Version, die nicht Ihrem gültigenLizenzvertrag oder anderen Vereinbarungen mit SAP unterliegt. Diese Publikation enthält nur vorgesehene Strategien, Entwicklungen und Funktionen des SAP®-Produkts. SAP entsteht ausdieser Publikation keine Verpflichtung zu einer bestimmten Geschäfts- oder Produktstrategie und/oder bestimmten Entwicklungen. Diese Publikation kann von SAP jederzeit ohne vorherigeAnkündigung geändert werden.SAP übernimmt keine Haftung für Fehler oder Auslassungen in dieser Publikation. Des Weiteren übernimmt SAP keine Garantie für die Exaktheit oder Vollständigkeit der Informationen,Texte, Grafiken, Links und sonstigen in dieser Publikation enthaltenen Elementen. Diese Publikation wird ohne jegliche Gewähr, weder ausdrücklich noch stillschweigend, bereitgestellt. Diesgilt u. a., aber nicht ausschließlich, hinsichtlich der Gewährleistung der Marktgängigkeit und der Eignung für einen bestimmten Zweck sowie für die Gewährleistung der Nichtverletzunggeltenden Rechts. SAP haftet nicht für entstandene Schäden. Dies gilt u. a. und uneingeschränkt für konkrete, besondere und mittelbare Schäden oder Folgeschäden, die aus der Nutzungdieser Materialien entstehen können. Diese Einschränkung gilt nicht bei Vorsatz oder grober Fahrlässigkeit.Die gesetzliche Haftung bei Personenschäden oder Produkthaftung bleibt unberührt. Die Informationen, auf die Sie möglicherweise über die in diesem Material enthaltenen Hotlinks zugreifen,unterliegen nicht dem Einfluss von SAP, und SAP unterstützt nicht die Nutzung von Internetseiten Dritter durch Sie und gibt keinerlei Gewährleistungen oder Zusagen über InternetseitenDritter ab.Alle Rechte vorbehalten.