IFRS 15 & SAP S/4HANA FINANCE

IFRS 15
Revenue from Contracts with SAP S/4HANA
Customers FINANCE
International Financial Reporting Standards (IFRS)

KELECHI KELLY ADIELE

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International Financial Reporting Standard (IFRS) & SAP S/4HANA

What is an IFRS?
IFRS means International Financial Reporting Standard standard while IAS means International Accounting
standards. Just like every other profession, the accounting profession has laws and standards that guides
how accountants or anyone practicing accounting report financial activities.
SAP has also ensured SAP S/4HANA is IAS and IFRS compliant through the parallel accounting and
accounting principles functionality, the introduction on the universal journals (ACDOCA)- The Single source
of truth, OLTP & OLAP, Compatibility and Simplification views, the concept of Business partners, reporting
and analytics etc.
These functionalities will be discussed later in this presentation. Also, these functionalities ensure that
companies across the global can have a unified financial reporting structure, improve speed, accuracy and
fairness in reporting financial operations and preparing financial statements for management and external
users.
NOTE: The focus of the paper will be on IFRS 15- Revenue from Contracts with Customers

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About IFRS 15- Revenue from Contracts with Customers

IFRS 15 basically spells out the principles business should adopt or adhere to when
reporting financial transactions of contract it entered with its customers/clients.

Many large organization or businesses enter into contracts with their customer's to
provide goods or services and when the terms of the contract are fulfilled, the business is
expected to be paid. IFRS 15 reports the information about nature, terms, timing,
revenue and cash flow of the contract.

SAP S/4HANA modules like Finance, Sales and Sourcing and procurement, have
functionalities that can enhance the reporting of financial information about revenue
from contracts with customers in terms of the nature, timing, revenue and cash flow
activities. We will discuss some of these functionalities in the next page.
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The 5-Step Model for recognizing revenue from contracts with
customers in IFRS 15
Here, we summarise the following five steps of revenue
recognition and illustrative practical application for the Recognize revenue when
most common scenarios: a performance obligation
is satisfied by transferring
a promised good or
Allocate the service to a customer
transaction price to
each performance
obligation.
Determine the
transaction price
Identify the
performance
obligations in the
Identify the contract.
contract(s) with a
customer

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SAP S/4HANA and the 5-Step Model for recognizing revenue in IFRS 15
To recognize revenue under IFRS 15, an entity applies the following five steps when using SAP S/4HANA:

IFRS 15 SAP S/4HANA

1. Identify the contract(s) with a customer Fiori App > Manage Sales
Contract or T code: TK41

Implementation Consideration for Sales Contracts in SAP

S/4HANA Fiori> Sales Contract
Fulfillment Rates App

Master Contracts Service Contracts

Fiori> Manage Customer
Down Payment Requests App
Quantity Contracts Value Contracts
Fiori> Create sales order or
T.code- VA01
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SAP S/4HANA and the 5-Step Model for recognizing revenue in IFRS 15

IFRS 15 SAP S/4HANA

2. Identify the performance SAP Fiori App: Create Sales Order or

obligations in the contract. T.code : VA01

SAP Fiori App: Display and Change Sales

Orders ( VA02, VA03)

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SAP S/4HANA and the 5-Step Model for recognizing revenue in IFRS 15

IFRS 15 SAP S/4HANA

3. Determine the transaction price Document Pricing Procedure:

Sales Document Type (T.code VOV8)
/ Billing Type (T.code VOFA)

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SAP S/4HANA and the 5-Step Model for recognizing revenue in IFRS 15

IFRS 15 SAP S/4HANA

4. Allocate the transaction price to Document Pricing Procedure: Sales

each performance obligation. Document Type (T.code VOV8) / Billing
Type (T.code VOFA)- SD
SAP Fiori App: Create Sales Order or
T.code : VA01
GUI> T.code: MM01 (Create Materials)

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SAP S/4HANA and the 5-Step Model for recognizing revenue in IFRS 15

IFRS 15 SAP S/4HANA

5. Recognize revenue when a

performance obligation is satisfied Document Pricing Procedure: Sales
by transferring a promised good Document Type (T.code VOV8) / Billing
or service to a customer Type (T.code VOFA)- SD

Sales order creation:

Transaction code – VA01
T.code: MM01 (Create Materials)

Delivery: Transaction code – VL01N

Payment from customer: Transaction

Invoice: Transaction code – VF01
code – F-28

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 The financial Statement Version(FSV) and IFRS 15
A financial statement version (FSV) is a hierarchical arrangement of G/L accounts which produces the general
purpose financial statements as prescribed by IAS 1.
The accounts can be arranged in accordance with the legal regulations used to generate your financial
statements like IAS, IFRS, GAAP etc.
The accounts in the financial statement version can also be arranged in accordance with the business
requirements and IAS 1.
The financial statement should provide information about: Assets, Liabilities, Equity, Income and Expenses,
including gains and losses, Owners contributions and entitlements and Notes to the account prepared
explaining certain transactions

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 Access the Financial Statement version
To access financial statements in SAP S/4HANA, follow the menu path or use the transaction code:
S_ALR_87012284.

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