Presentation: Lease Accounting Standards
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Transcript of Presentation: Lease Accounting Standards
© 2015 Nakisa Inc. All rights reserved.
Upcoming changes in lease accounting standards: How technology can help with costs savings today and regulatory compliance tomorrow
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© 2015 Nakisa Inc. All rights reserved.
@NakisaInc#NakisaFIN
Providing solutions since 2001
Headquartered in Canada
Leader in HCM and Financial Solutions
700+ enterprise customers
subscribers4M+
Available in
languages18
Active users located in
125
Caters to
24+ industries
countries
© 2015 Nakisa Inc. All rights reserved. 3
Update on lease accounting regulations
Market trends
Recommended compliance action plan
How technology can help you be compliant
SAP® Lease Administration by Nakisa®
Key takeaways
Agenda
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Missed the webinar?
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Update on lease accounting regulations
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Pending regulatory changes for leases affecting all lease contracts
New IFRS/GAAP standards for Lease AccountingCurrent reporting of operating leases• Reported off balance sheet• Disclosed in notes of financial statements
Upcoming changes• Required to capitalize many of these
operating leases• Record in balance sheet as assets and
liabilities
“The IASB plans to issue the new Leases Standard before the end of 2015.”IFRS Leases Project Update: Practical implications of the new Leases Standard. March 2015
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Business pain points Lease administration
• Geographically and departmentally dispersed lease contract information, requiring manual processes for data management.
• Lack of visibility into lease data, due to large volume of equipment and property lease contracts.
• No ability to conform to the upcoming lease accounting standards.
• No ability to efficiently manage leases now or for the long term, resulting in unnecessary costs.
• No ability to conduct what-if scenarios or impact analysis, for sound lease-versus-buy decisions.
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Webinar pollDo you expect the leasing regulation will have an impact on your financial ratios?
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Expected impact of lease accounting standard
Source: Deloitte. Lease accounting survey. Preparing for implementation. 2014
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Industry impact
RetailLeased assets:• Real estate• Equipment
Challenges:• Lack of awareness of the impact• High amount of individual and
dispersed lease contracts• Currently no IT systems to manage
contracts
TelecomLeased assets:• Real estate• Equipment
Challenges:• Reassess operating leases vs.
service contracts• 2 new accounting standards that
will impact accounting processes and require contract data abstraction
• IT systems for data capture and reporting required
Cargo & TransportationLeased assets:• Real estate• Equipment
Challenges:• High amount of operating leases
currently not reported on balance sheet
• Lack of awareness of the impact• IT systems for data capture and
reporting
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Market trendsA closer look at leasing and industry trends
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Leasing market 2015
Volume of equipment to be leased in 2015 expected to increase
Market conditions are positive and new opportunities are emerging
Upcoming change in lease accounting regulations
Investment in equipment to replace aging assets and aid in expansion
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Webinar pollApproximately how many leased assets do you have in your organization
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Recommended compliance action plan
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© 2015 Nakisa Inc. All rights reserved.Source: Deloitte. Lease accounting survey. Preparing for implementation. 2014
Compliance will require companies to undertake a variety of activities in such areas as lease data collection, reporting, IT systems, technical accounting, and training, as well as overall program management of the implementation process.
“#NakisaFIN
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Compliance action planPl
anni
ng &
as
sess
men
tTe
am
Educ
ation
IT sy
stem
s &
requ
irem
ents
Syst
em
requ
irem
ent
ERP/
softw
are
vend
ors
Syst
em
impl
emen
tatio
n
Cont
ract
dat
a ab
stra
ction
16© 2015 Nakisa Inc. All rights reserved.#NakisaFIN
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Webinar pollWhat stage of the compliance action plan are you currently at?
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How technology can help you be compliant
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19© 2015 Nakisa Inc. All rights reserved. 19© 2015 Nakisa Inc. All rights reserved.
What to look for in lease administration software?
1. Unified database for all lease operations
2. Collaboration during the process of data collection
3. Strategic insight for sound decision-making
4. User-friendly interface with minimum training required
5. A solution that adapts to your business
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Solution capabilities for abstraction of lease contractsSAP® Lease Administration by Nakisa®
Increased visibility
Collection and Unification
Validation and
Traceability
Collaboration
Collection & unification Designed to provide visibility into your lease and revenue contract
exposure
Automated and effective data collection
Unification of data in one single repository
Collaboration Open collaboration framework to engage and align business decision-
makers
Simulation capabilities to analyze best response to business changes
Efficiently evaluate lease vs. buy scenarios
Validation & traceability Validated true and useful data Efficient traceability for compliance Readiness for reporting requirements
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SAP® Lease Administration by Nakisa®Overview
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Leasing Administration requirements overviewFive major use cases
Lessor
Lessee
Available today
SAP Real Estate Management
SAP Leasing
No standard solution
SAP Lease Administration by Nakisa
Leasing Property Non-Property
1 2
3 4
5
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Leasing Administration requirements overviewFive major use cases
Lessor
Lessee
Planned innovations
SAP Real Estate Management
SAP Leasing
SAP Lease Administration by Nakisa
SAP Lease Administration by Nakisa
Leasing Property Non-Property
1 2
3 4
5
Lab preview
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Accounting and financial close process
Reporting and Analysis
Entity Close Management
Disclosure Management
Notes Management
ConsolidationIntercompany Reconciliation
General Ledger
Sub-Ledger
Revenue Recognition
Leasing
Financial Accounting Entity Close Corporate Close Reporting &
Disclosure
Internal Controls
Master Data Governance for FinancialsFinancial Close
Governance
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Solution focus areas for lessee administrationSAP® Lease Administration by Nakisa®
I. Document Management and User InteractionII. Payment Processing and Invoice ReconciliationIII. Asset Accounting: Creation, Update, Retirement
IV. Management Reporting and Analysis
Lab preview
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Dashboard componentLab preview
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Lease administration system
• Enter and administer leases
• Track lease changes (modifications, activations, terminations)
• Approvals of financing terms
• Manage events during operation of a lease
Lab preview
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Key benefits1. Integrated with SAP ERP Financials2. Prepare for upcoming Lease Accounting regulations3. Costs and time savings through greater visibility and
improved decision making4. Centralizes the administration of Capital and Operating
leases5. Addresses lease administration concerns:
• Casualties• Refinancing• Services charges• Asset info updates• Invoice reconciliation• Payment alerts • Approval processes
Lab preview
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Co-innovation model Phase 1: Engage Phase 2: Prototype Phase 3: Deliver
• Meetings with SME
• Documentation of processes
• Documentation of requirements
• Unification of requirements
• Functional & technical validation
Customers
• Feedback• Solution design• Sign off to next
stage (agree to keep going)
• Use cases/ user stories
• Solution design
Multiple customer feedback consolidation
• Functional validation• Roadmap & partner endorsement • Expertise
• Prototype/mockups• Documentation• Testing platform• Organize
testing/review
• Prototype validation• Feedback/re-validation
• Prototype improvement
• Engineering preparation
• Solution architecture• Technology leadership
• Development• QA• Documentation
• Execute POC• Run use cases• Feedback
Evaluate feedback
Product on SMP
Prototype construction TestingRequirements
gatheringRequirements
validation Engineering PoC Product on SMP
Estimated duration
6 – 12+ months1 – 3+ months1 - 3+ months
NDA
Pre-requisites
Nakisa Solutions
SAP engaged where applicable
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Key takeawaysBe prepared
Lease Accounting standards are expected to be announced in 2015
Ensure readiness for compliance, including reviewing your parallel reporting strategy
Collect and centralize your lease contracts Supports on-premise and cloud deployment
(HANA Cloud Platform)
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32© 2015 Nakisa Inc. All rights reserved.
Missed the webinar?
Listen to the full on-demand webinar
Watch now >
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33© 2015 Nakisa Inc. All rights reserved.
Next steps
WHITEPAPERGetting smart about revenue recognition and lease accountingwww.nakisa.com/whitepapers-revenue-recognition-lease-accounting
WEBINARNew revenue recognition standards: What the rule changes mean for your businesswww.nakisa.com/webinar-revenue-recognition-standards
Contact us: [email protected]
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34© 2015 Nakisa Inc. All rights reserved.
© 2015 Nakisa Inc. All rights reserved.
The information in this presentation is confidential & proprietary to Nakisa, & may not be disclosed without the permission of Nakisa. This presentation is not subject to your license agreement or any other service or subscription agreement with Nakisa. Nakisa have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop, release or implement any functionality mentioned therein. This document, or any related presentation & Nakisa’s strategy & possible future developments, products & or platforms directions & functionality are all subject to change & may be changed by Nakisa at any time for any reason without notice. The information in this document is not a commitment, promise or legal obligation to deliver any material, code or functionality. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. This document is for informational purposes & may not be incorporated into a contract. Nakisa assume no responsibility for errors or omissions in this document, except if such damages were caused by Nakisa intentionally or grossly negligent.
All forward-looking statements are subject to various risks & uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, & they should not be relied upon in making purchasing decisions.
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