Fees
| In MME Forecasting process, how I should proceed with a Constrained Variable Fee that is not longer Constrained? |
| Variable fees that are constrained will be included in the Constrained Variable Revenue Planning Element (400200) and should only be moved to the Service Revenue Planning Element (400000) when it is no longer constrained. |
| When a VCT should be approved? |
| The VCT must be updated and approved each Quarter. |
| How we should recognize transition billings if the series guidance and stand-ready obligation criteria are not met? |
| If the series guidance and stand-ready obligation criteria are not met, transition billings are recognized using the same revenue recognition method applied to the run deliverable. |
| Case: We received a deal for a total US$1.2M with two segments: Consulting part has a RFV of US$800,000 and Outsotucing deliverable has a RFV of US$400,000. Why Accounting segmentation is/is not applicable for this contract? |
| This contract would not be segmented as the RFV of the second deliverable falls under the US$500,000 threshold for segmentation. |
| Case: Accenture signs a BPO deal with Supermercados Toledo through which the client transfers Order to Cash process to Accenture. Is the Deliverable Satisfied Over Time or at a Point in Time? Which criteria is met? |
| OT#1: The customer receives the benefits of our services as we perform |
| There are three types of Fees. Which type of fees is COLA? Why? |
| Variable Fees - Outcome Driven: Fees that a customer is obligated to pay or Accenture becomes obligated to refund upon the occurrence or non-occurrence of a future event. |
| Which Contracts must complete the Contract Assessment Template in FY18? |
| Contracts with $5M or more in Backlog |
| Case: Accenture signs a 6 months consulting deal through which designs and implements a software for Calu Chips Company. The system will allow to track the payments and the IP rights will resides in the Client enviroment. How we should recognize the revenue? |
| PoC: System Integration Build Projects 1. Finite, discrete project focused on design, development and implementation of a custom or packaged software solution for a customer. AND 2. Results in a deliverable (i.e. a system or IP rights) that resides in the client’s environment. |
| Case: Accenture executed a 15 years BPO deal where the services are processing monthly claims Should this contract be considered as a Serie? |
| Yes, it is a Serie. The deliverable provide a repetitive service in the same manner each period such that the same metric is used to measure progress each period. |
| Case: Accenture executes a SI integration contract where the developed system will reside in the client enviroment. Is the Deliverable Satisfied Over Time or at a Point in Time? Which criteria is met? |
| OT#2: Our performance creates or enhances an asset (a) that resides in the customer’s environment or (b) that the customer has rights to if terminated prior to completion |
| When Variable Fees are not constrained and constrained? |
| Variable fees are not constrained if it is probable that we will not reverse a significant amount of cumulative revenue recognized once the uncertainty is resolved at a future date. |
| If my contract met New Revenue Standard Threshold but it does not report revenues higher than $5M in the current FY, should I complete Q3 IC checklist? |
| All contracts meeting New Revenue Standard threshold will be required to complete the New Revenue Standard, Contract Details and Variable Fee (if applicable) tabs in the Q3 IC Checklist (even if your contract does not fall in IC). MSA only contract too |
| Case: Accenture is working on BPO Contract for 5 years We are providing repetitive BPO services. Each day of service represents progress towards completion of a monthly deliverable. Quantity of FTEs/transactions is not specified. How the revenue should be recognized? |
| If an accounting deliverable meets the series guidance and is a stand-ready obligation, revenue would be recognized as earned over time, applying a time/measurement period-based measure of progress. |
| Case: - Accenture executed a 7 years outsourcing contract - Deliverable is provide monthly claims processing services - Contract specified where accenture resources will be allocated - Contract does not specified the number of transactions per month. Should this contract be considered as a SRO? |
| Yes, SRO: Accenture providing an unspecified amount of services (i.e. are we making services available for clients to use when and as needed) |
| If the deliverables are satisfied over time, which are the four Revenue Recognition methods that can be applicable? |
| Under the new standard, deliverables that are satisfied over time will be recognized using one of 4 methodologies: “PoC” (no change to current policy), “PoW” (change to current policy), “Straight-Line recognition” (no change to current policy), OR “As earned over time recognition” (change to current policy – no longer As Earned Based on the Ability to Bill). |
| There are three types of Fees. Which type of fees is FX? Why? |
| FX are not in the scope of New Revenue Standard and should follow the current guidance. |
| Case: - A MSA has committed spend of $100M and defines payment terms - SoWs will be executed to define specific projects and related fees - Client has a AA credit rating - Only one SoW for $10M has been executed. Is the full amount of the sale ($100M) contracted? Why? |
| Amounts included in a sales booking, must meet all 3 criteria to be considered “contracted”: 1. The contract clearly states each party's rights and obligations regarding deliverables 2. The contract includes payment terms 3. Collection is probable for the contracted deliverables Full amount of the sale doesn't meet criteria; only the amount under executed SoW ($10M) is contracted |
| Case: Accenture agree with Client for a SI arrengment that will be separately contracted in two phases: design and build. The result will be a deliverable that will reside in Client enviroment. The interim agreement is signed in May 2018 and it is expected that the build phase is signed in November 2018. How we should recognize the Interim agreement deal? |
| Under the new standard, if SI build work is anticipated on a project but will be contracted separately in phases (plan/analyze, design, build), all phases of the contract should use PoC accounting (assuming the contracts will be combined). This is different from current policy which requires phases be recognized As Earned prior to contracting for the build. |
| Case: We have 3 WBS Level 1 distributed as follow: 1) BPO - Run 2) BPO - Transition 3) MC At the time of the booking, it met all the criterias in AP 200 - Inc2B. Considering the above, how many account deliverables should be included in CAT? |
| Segmentation (e.g. accounting deliverables) is determined by applying guidance in Policy 200 and is not driven by Level 1 WBSEs, Service Group reporting, or billing streams. |
| Case: Accenture signs a Consulting contract with fees due upon delivery of a report that only applies for Pizza King Client. Termination provisions cover work completed to date (based on rate card inclusive of margin). Is the Deliverable Satisfied Over Time or at a Point in Time? Which criteria is met? |
| OT#3: Our performance creates an asset that does not have an alternative use to Accenture, and we have termination for convenience protection that covers our work completed to date, inclusive of a profit margin. |
| There are three types of Fees. Which type of fees is FTE? Why? |
| Variable Fees - Volume Driven: Fees vary based on the amount of underlying costs, output, resources or comparable drivers. |
| Case: - Accenture executed a contract for consulting work performed on a T&M basis for 2 years. - Payment terms are 30 days; Client credit rating is AA - Client and Accenture can terminate without penalty with 30 days notice after the first year. Which fees are considered contracted? |
| Amounts included in a sales booking, must meet all 3 criteria to be considered “contracted”: 1. The contract clearly states each party's rights and obligations regarding deliverables 2. The contract includes payment terms 3. Collection is probable for the contracted deliverables Only fees related to the non cancelable portion (first year) are considered “contracted” |
| Case: - Accenture executes a consulting contract to create a report to the client but after several discussion leadership realizes that this report does not have an alternative use to accenture. - Engagement team ask Contract Management to review the MSA and they found out that we have termination for convenience protection that covers our work completed to date - CFM analize the financials and we can terminate the deal inclusive of a profit margin. How should we recognize the revenue? |
| PoW: Typically Consulting Non-SI Build Projects 1. Our performance creates an asset that does not have an alternative use to Accenture AND 2. We have termination for convenience protection that covers our work completed to date, inclusive of a profit margin. |
| Case: We have 3 WBS Level 1 distributed as follow: 1) BPO - Run 2) BPO - Transition 3) MC At the time of the booking, it met all the criterias in AP 200 - Inc2A. Considering the above, how many account deliverables should be included in CAT? |
| Segmentation (e.g. accounting deliverables) is determined by applying guidance in Policy 200 and is not driven by Level 1 WBSEs, Service Group reporting, or billing streams. |
| Case: After a deeper review of the contract, CFM determinate that the following criterias are not met: - The customer receives the benefits of our services as we perform. - Our performance creates or enhances an asset (a) that resides in the customer’s environment or (b) that the customer has rights to if terminated prior to completion - Our performance creates an asset that does not have an alternative use to Accenture, and we have termination for convenience protection that covers our work completed to date, inclusive of a profit margin. Is the Deliverable Satisfied Over Time or at a Point in Time? Which criteria is met? |
| Point in Time: Deliverable is satisfied at a Point in Time (PT) if NONE of the OT criteria are met |