Compliance Game

General

100

We have contracts combined every month which create sales in SAP, going forward does the contract combination template have to be approved by the CFM supervisor every month before the sale can be booked?

The contract combination template does NOT need to be approved by the CFM supervisor. As a best practice we are recommending to have this documented at the time of the booking to ensure the appropriate review has been completed and that the accounting is accurate at the time of booking. This will help to eliminate the need to go back and fix any errors identified through the completion of the template.

200

Does every single contract we signed during a quarter have to be compared for combination against all the open contracts?

Yes, all contracts should be considered for contract combination analysis regardless of size. The documentation of the review is required for all that  contracts >$500K, regardless of whether or not it should be combined. The term extension, SOW, change order, amendment, contract, etc. is at times used interchangeably. All of these contracting mechanisms should be reviewed for contract combination – it is just sometimes more obvious with a contract extension that it should be combined.

300

I have a PoC deal over the EUC Thresholds. It is time & materials (calculated by MME), no expenses, no direct costs calculations offline, no PC adj this month. Is this scenario required EUC Testing?

No. If there is no Excel spreadsheet where data would be calculated outside of standard closed architecture tools such as MME, there is nothing to be EUC tested. You just need to complete the EUC section of the CDL IC Checklist if the contract is in scope of IC Execution threshold ($10M/FY) and select that you use only MME and no other tool.

400

My POC segment (PoC revenue = $17M in current fiscal year) is over EUC threshold, but using MME therefore no need to do EUC. However, my As Earned portion that does not meet the threshold for EUC (As Earned revenue = $9M/current fiscal year) reports PPR adjustments. Should we still need to perform EUC on the As Earned portion?

EUC testing is required for those offline calculations that relate to the revenue recognition segment that is over the EUC thresholds (POC in this example). PPR adjustments related to your As Earned segment does not need to be EUC tested as the As Earned segment is NOT over the As Earned EUC Thresholds.  You need to complete the EUC section (9b. EUC Tool) of the CDL IC Checklist and select that you use only MME and no other tool (meaning on the PoC section that is over the EUC threshold).

500

My contract is in  scope of EUC Threshold ($16M/FY). Do I need to document the EUC Logic Inspection Log for accruals?

Accruals do not  need to be EUC tested unless the accruals are above $25M (assessed per a  journal entry).

Checklist Overview

100

We have incorrectly set up a WBS element that was created/released and immediately closed and CDL IC Checklist highlights that WBS element as a WBS element with potential issues. What do I need to document for the internal controls for that WBS element?

• If a     WBS element was incorrectly created and had to be closed, so it was never     actively used, therefore no charges hit the WBS element (no revenue and     costs), then no documentation is needed for the internal controls. If the     contract is in scope for the startup/contract modification phase, as a     best practice please provide a short explanation within the commentary     section of the CDL IC Checklist so that is clear why no Offline WBS Setup Approval was required for that WBS     element.
•  
• If     revenue was recognized on the WBS element by mistake or some costs hit the     WBS element and corrections were needed before the closure of the WBS     element, the Offline WBS Setup Approval is not required either,     however, if the contract is selected for IC testing, evaluators will     require a supporting documentation for the corrections made.

200

I have a brand new contract over $7M signed at the end of the quarter with $1M revenue to be recognized in in the current fiscal year. What do I need to document for the internal controls?

• At the point of sale (in the booking month) there is a need to prepare the D-ATM.
• 
  
  • D-ATM is required for contracts over $3M in contracted backlog.
  • If based on answers to the D-ATM Screening Questions, it is identified that your contract is complex, you will be required to complete also GCT, VCT, RFV sections if applicable, etc. Instructions for PoS documents can be found in Point of Sale Documentation Requirements.
  • In the booking month the D-ATM needs to be drafted. The approval of the full D-ATM is due by the end of the second month of the contract signing month.
  • If the sale relates to uncontracted work per Policy 200:
  • 
    
    • If the entire amount of sale is MSA only (no contracted work) and the sale is ≥ $10M , complete Uncontracted Work Memo.
    • If the total sale booking is ≥ $10M, but the contract does not meet criteria for Full D-ATM, complete Uncontracted Work Memo (it is a Word template that can be found in the Supporting Documentation section of Policy 1303) for the MSA portion of your contract.
    • For other scenarios and which ATM document is needed for uncontracted work, please review instructions here.
• Please review the ATM Approval Deadlines.
• Ensure correct GCT values for all Level 1 WBS elements are entered in CJ20N by Day +1 of the quarter end based on the GCT Analysis made in D-ATM.
• If the contract is in scope for Quarterly Updates (required only for contracted work), i.e., it has a variable fee and VCT tool (Full D-ATM) is required, or has more than 1 accounting segment and failed RFV Screening Test and Full RFV Calculation is required, there is a need to document the Quarterly Update section in the D-ATM and have it approved by Day +2 of the quarter end by CFM Specialist (CL 9) at least.
• 
  
  • NOTE: If the contract stays within Screening Questions in the D-ATM, Quarterly Update does not need to be documented (not even offline).
• Complete the Startup phase of the current CDL IC Checklist as the contract was signed in the current quarter and initial booking (incl. MSA) is ≥ $5M.
• As the contract is in the startup phase, the approval of EACs is required from Contract Accenture Leader (Career Level 1-5). If the contract is signed late in the quarter and MME is not ready for Contract Accenture Leader’s EAC approval, obtain an offline EAC approval by email using the EAC/EUC Contract Accenture Leader Approval inside the 3 Way Tie Out template.
• 
  
  • You can find the instructions for the offline EAC approval from Contract Accenture Leader here - scenario #1.
• Execution phase would be required as well if revenue to be recognized on the contract in the current fiscal year is ≥  $10M.
• If you are converting from a pre-contract to regular WBS element and the changes in CJ20N are NOT done by a CFM Specialist or above, please make sure that you document an Offline WBS Element Approval including screenshots from CJ20N.
• 
  
  • You can use Offline WBS Approval Macro to take screenshots from CJ13/CJ20N. Attach the file to the email you send to your CFM Supervisor (Specialist at least) for approval.

300

We booked a brand new contract that is 100% MSA with no contracted work yet. Do I need to document anything for the internal controls?

ATM

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  1. If the entire amount of sale is 100% MSA uncontracted        (no contracted work) and the sale is ≥ $10M, complete Uncontracted        Work Memo. The D-ATM is not required.
  2.    
     • Uncontracted Work Memo is a Word template that can be found in the         Supporting Documentation section of Policy 1303. Please note that it is a         different document to a Sale Booking Memo.
     •     
     • The Uncontracted Work Memo does not have to necessary be         complete in the month of booking, but it needs to be approved by         appropriate level within the ATM Approval Deadlines.
     •     
     • The requirements for approvers of Uncontracted Work Memo are         the same as for the D-ATM and can be found in the ATM         Approval Requirements file that can be found in the Supporting         Documentation section of Policy 1303.
  3.    
  4. If        the MSA sale booking is < $10M, no ATM document for        uncontracted work is needed.

Startup Controls

• 
  
  • Complete the Startup        phase of the        CDL IC Checklist in the quarter when the Uncontracted Work is signed        and the initial booking including MSA is ≥ $5M.
  •    
  • There is no need to document an EAC Approval from Contract Accenture Leader        (Career Level 1-5) for contracts with 100% MSA sales, however, please        ensure that you have a documented evidence which shows that Contract        Accenture Leader was informed of the amount that was booked as        uncontracted.
  •    
  • WBS Setup: If a MSA WBS element was released/approved by the        same person who created the WBSE, or the MSA WBSE was not        approved/released by CFM who is a Specialist (CL 9) or above, ensure offline WBS Element        Approval        (including CJ20N screenshots) is documented.

GCT & MSA Flag

Ensure that WBS  elements that hold MSA sales (uncontracted work) have ZACTL RA Key and MSA Flag  checked in CJ20N and with that GCT will  be automatically default to "Y".

Execution Phase

• 
  
  • No Execution phase is        required as the IC Execution threshold of $10M and more applies only to        deals with contracted work.

Quarterly Update

• 
  
  • No Quarterly Update        approval is required as QU documentation applies only to contracted        work.

400

We assigned a contract modification with the client. What do I need to  document for the internal controls?

Contract Modification Phase of CDL IC Checklist:

• f any of the below     requirements is met, ensure to document the Contract Modification Phase of CDL IC Checklist in the quarter when the contract     modification was signed.
• 
  
  1. The contract is expecting to recognize $10M or more of revenue in the current        fiscal year (i.e., contract is subject to IC Execution        controls) and has a contract modification of any value.
  2.    
  3. The contract reached total contracted backlog equal to or greater than $5M in the current quarter for the first time.
  4.    
  5. The contract has total contracted backlog equal to or greater than $5M in the current quarter and contract modification creates        a change in the accounting treatment, including, but not limited to,        changes to any of the following accounting conclusions:
  6.    
     • Segmentation analysis
     •     
     • Relative Fair Value analysis
     •     
     • Variable Fee assessment
     •     
     • Timing or Method/Measure of Progress of         Revenue Recognition
     •     
     • Other accounting changes (including changes         in embedded lease arrangements, embedded derivatives, Policy 45         guarantees, new capitalized costs, sales incentives, etc.

RFV: if your contract has 2 and more accounting segments, assess the materiality of the contract modification. If the contract modification is deemed material, RFV Screening Test needs to be recalculated.

ATM: 

• Update and re-approve of D-ATM is needed if any of the following criteria per Policy 1303 is met.
• 
  
  1. The modification results in changes to the accounting treatment, including, but not limited to, changes to any of the following accounting conclusions:
  2. 
     
     • Combination and segmentation analysis 
     • Relative Fair Value analysis
     • Variable Fee assessment
     • Timing or Method/Measure of Progress of Revenue Recognition; or
     • Other (including changes in embedded lease arrangements, embedded derivatives, Policy 45 guarantees, new capitalized costs, sales incentives, etc.).
  3. The modification results in a change in Contracted Backlog (either positive or negative) of US $10 million or greater, OR,
  4. The modification increases Contracted Backlog to greater than US $3 million, US $5 million, or US $10 million when it was not previously greater than those amounts.

Quarterly Update: 

• If the deadline for Full D-ATM     approval is due after the end of the quarter when the contract     modification was signed, make sure the changes brought to the contract by     the modification are included in the D-ATM for the Quarterly Update     approval.

500

What do I need to document for the internal controls if we need to change RA Key on one of our accounting segments?

The steps below should be followed (assuming that the contract is in scope of the IC Execution threshold of $10M per current fiscal year).

• The     RA Key change and reason(s) for the change needs to be explained in the commentary section     of MME Approve/Submit tab as evidence that Contract Accenture Leader (CL     1-5) was informed.
•  
• Document     for the internal controls any email discussion regarding the RA Key     changes if you have it for audit trail.
•  
• If RA Key change causes a CCI variance over +/-$1M, standard EAC     Change Approval process needs to be followed and documented (EAC Change     Approval template/approvals, etc.) following rules in Policy 201.
•  
• Update     and re-approval of existing D-ATM is needed to reflect the change in revenue     recognition method.
•  
• If     the RA Key change has not been performed in system by CFM Specialist+     (Career Level 9 and above) who is different to the person who created the     WBS element, then CFM needs to document Offline WBS Setup Approval via email including SAP CJ20N     screenshots of the updated parameters to ensure that SAP shows correct key     parameters. Please note that the Offline WBS Setup Approval is required also for changes from a pre-contract     WBS element to a regular     chargeable WBS element.

GCT

100

When does the GAAP contract term need to be assessed?

It needs to be assessed at contract inception and re-assessed at material contract modification. Determining the materiality of a modification is discussed within Policy 200 – Accounting for Customer Contracts (Policy 200)

200

Which accounting segments require a calculation utilizing the GCT Tool?

a. A GCT calculation is required for a recurring services accounting segment if the contract backlog is $10M or more. (Note – If the contract is less than $10M, a recurring services accounting segment GCT isthe termination notice period.) b. A GCT calculation is NOT required for any accounting segments that are NOT recurring services, such as deliverables-based consulting accounting segments (e.g., accounting segments utilizing PoC, PoW, or point in time revenue recognition methods). For accounting segments that are not recurring services, the GAAP contract term always equals the stated contract term. An accounting segment that is NOT a recurring service may have termination fees allocated to it and may also have a termination notice period per the contract; however, the GCT should always be equal to the stated contract term

300

. Do I need to get the GCT tool approved by anyone?

The GCT approval is documented as part of MME Approval from the Contract Accenture Leader via the Approval Certifications

400

When might an accounting segment have a declining GCT term and what does that mean?

A declining GCT term is common for recurring services accounting segments when the client has a non-cancellable period or termination fees exceed 10% of billings for a period of time.
b. Segments with a declining GCT term require an update to SAP every quarter to align with the GCT tool. i. Ex. #1 – Client cannot terminate for 12 months and has a 3-month notice period

500

What does “Doesthe accounting segment have termination for convenience protection in excess of feesfor our work completed to date?” mean?

It may be the case, particularly for capacity service or staff augmentation accounting segments, that termination protection is limited to payment for work performed to date but not yet billed. That is, there are no other termination fees or penalties incurred by the customer in the event of termination for convenience except to pay for work performed to date. If this is the case, the response to this question should be “NO”. If there are termination fees, the response to this question should be “YES”.

PPR

100

When PPR should not be reported?

POC/POW SEGMENTS: PPR will be captured automatically by the system. 

PRE-LBA ARRANGEMENTS OR PRE-CONTRACTED WORK: PPR reporting only applies to work that MEETS the contracted criteria. PPR reporting is NOT required for the revenue true-up recorded at the point when the work becomes contracted.

200

MC Contract (executed August 2020)
• Fees include an annual bonus of $1M assessed in August.
 • The annual bonus is constrained at contract inception.
• CDTS/CFM concluded the deliverable is satisfied Over Time; revenue is recognized As Earned Over Time (time elapsed – as series and stand ready obligation). 

Should CDTS/CFM indicate PPR reporting may be required for this contract within the ATM?

Yes - The deliverable meets the over time revenue recognition criteria and has a constrained variable fee with a measurement period outside one Accenture fiscal quarter. Therefore, a revenue true-up will be recorded when the constrained fee becomes unconstrained, and a portion of that true-up will relate to work Accenture performed for the client during the prior quarters/year.

300

When PPR is required?

• Contracted Backlog at Inception/Modification less than $25M USD has constrained variable fees. 

• Contract modification that results in a contract to date true-up/true-down for contracts with contracted backlog greater than or equal to $25M USD. 

• PC Revenue adjustments above +/- 2.5M USD – PPR should be assessed and reported in the PC revenue journal entry template.

400

Name at least 2 scenario which would typically require PPR Reporting

Segments with monthly estimated variable fees (e.g., T&M, # of transactions, SLA Holdback) 

Segments where constrained revenues become unconstrained 

Contract Modifications or EAC changes that include a change in fees relating to work performed/revenue recognized in a prior quarter/year

500

PPR Reporting might require offline tracking of the calculation of PPR?

• Offline tracker will be subject to IC EUC threshold for As-Earned
• PPR is part of a new control documented in the ALCO and included in the MME approval certification popup required over the approval of the forecast.

Forecast Approval

100

Do we need to document Contract Accenture Leader’s confirmation in MME for processing or deferring a negative EAC change on a contract that is not in scope of IC Execution threshold and has Cumulative Full Contract Life CCI variance < -$1M?

All Contracts: 

For processing a negative EAC change of any amount, where Cumulative Full Life CCI$ variance to ODE is < -$1M (Non-POC/POW) or CTD CCI Impact is < -$1M (POC/POW), Contract Accenture Leader’s confirmation (CL 1-5) in MME is required. If the confirmation is not documented in MME, please ensure that you have the confirmation from Contract Accenture Leader (CL 1-5) for processing the negative EAC change documented via email. Contracts in IC Execution threshold require approval of EACs from Contract Accenture Leader (CL 1-5) at quarter end.

Contracts that are not in scope of IC Execution threshold: 

For deferring negative EAC changes of any amount, where Cumulative Full Life CCI$ variance to ODE is < -$1M (Non-POC/POW) or CTD CCI Impact is < -$1M (POC/POW), Contract Accenture Leader’s confirmation (CL 1-5) in any form is required but does not need to be documented for IC. It’s best to include a comment in MME why the EAC change is not estimable and probable.

200

Do we need to document Contract Accenture Leader’s confirmation in MME for processing or deferring a positive EAC change on a contract that is not in scope of IC Execution threshold?

It is not expected that we are deferring positive EAC changes that are probable and estimable. However, for processing or deferring positive EAC changes of any amount on contracts that are NOT in IC Execution scope, there is no documented confirmation required for IC.

300

As Earned contract obtained Market Unit confirmation for a Cumulative Full Life CCI variance to ODE of negative $1.2M in April 2021. Currently MME EAC CCI variance to ODE CCI shows negative $1.5M USD. It is just extra $300k USD which can CAL approve and we do not need to go for Market Unit call unless we reach a variance between MME EAC CCI and ODE CCI of -$2M. Is that correct?

It is not correct.  In this case the incremental threshold approach with the negative $ million threshold cannot be used as it applies only to contracts that obtained Market Unit/Market confirmation since June 2021 which is the month when the new P201 thresholds were implemented. Market Unit/Market confirmations obtained prior to June 2021 do not count for the next $ million tier approach.

If a contract has a Non-POW/POW Full Contract Life CCI$ variance to ODE ≥ -$1M that was NOT previously confirmed at Market/Market Unit Monthly EAC change call since June 2021, an additional negative EAC change of any amount to be processed requires a confirmation at Market Unit/Market level. In your example once you obtain the Market Unit confirmation for the Cumulative CCI variance to ODE of -$1.5M, you can start using the $ million tier approach, so you will not need to go back to the monthly EAC change call and Contract Accenture Leader’s confirmation will be sufficient until you reach next $2M tier threshold.

400

Contract processed a negative EAC change in January 2022 with As Earned Cumulative CCI variance to ODE of -$3M and it was approved at Market Unit Monthly Call. We have an additional negative EAC change of -$0.8M that will not be processed but deferred. Do I need to seek Market Unit CFO's approval for the deferral?

No, Contract Accenture Leader's (CL 1-5) approval for the deferral will be sufficient in this case as with the additional negative EAC change of -$0.8M the contract has Cumulative Full Contract Life CCI variance to ODE of -$3.8M which remains within the same $ million tier of -$3M that was already approved at the Market Unit Monthly Call in January 2022. Market Unit CFO's approval for the deferral would be required only if the additional negative EAC change caused that the Cumulative Full Life negative EAC CCI$ change to ODE reached the next $ million tier (i.e., -$4M tier or above).

500

If a negative EAC change that exceeds the threshold of -$1M for Market Unit EAC change call (meaning the contract has never approved an EAC change at Market Unit/Market Monthly call in the past) is deferred in Q1 and the deferral is approved by MU CFO, is the deferral approval valid only for that Quarter? Meaning in Q2 the approval to defer or process is required again?

Yes, until the negative EAC change over $1M is approved at Market Unit/Market EAC change call and processed, the incremental $ million tier approach cannot be applied and there is a need to seek for MU CFO approval to defer on a quarterly basis.