20100316 Ifrs Webinar March 25 v7

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Nick Difazio, PartnerDeloitte & Touche LLP

John Steele, Sr. ManagerDeloitte Consulting LLP

Philip Mugglestone, DirectorSAP

Pete Graham, DirectorSAP Labs LLC

March 25, 2010

SAP EcoHub on IFRSSignificant IFRS Reporting Shift GetsCloser


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Copyright 2010 Deloitte Development LLC. All rights reserved.

As used in this document, Deloitte means Deloitte & Touche LLP and Deloitte Consulting LLP, which are subsidiaries of Deloi tte LLP. Please see www.deloitte.com/us/about

for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

This presentation contains general information only and Deloitte is not, by means of this presentation,rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.This presentation is not a substitute for such professional advice or services, nor should it be used as abasis for any decision or action that may affect your business. Before making any decision or taking anyaction that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation.

SAP 2010 / Page 2


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Agenda

Introductions

Session objectives

Impact of recent SEC statement

IFRS conversion approach

How SAP solutions support IFRS

Q&A

SAP 2010 / Page 3


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Session objectives

Provide a critical strategic update on what the recent SEC statement means forSAP customers

Offer the latest insights and recommendations on converting to IFRS

Describe how SAP solutions can help customers transition to IFRS successfully

Provide an opportunity for Q&A

SAP 2010 / Page 4


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Agenda

Introductions

Session objectives




Q&A

SAP 2010 / Page 5


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SEC Statement on Convergence andGlobal Standards

Summary SEC Statement on Convergence and Global StandardsOverview of the SEC (the Commission) statement

Reviews Commissions IFRS activities to date

Summarizes public feedback on the IFRS roadmap Outlines an approach going forward

Includes a Work Plan setting forth specific areas and factors for consideration beforepotentially transitioning to IFRS

Withdraws the proposal on early use; although does not rule out an ability to early adopt in

the futureExecution of the Work Plan, combined with the completion of the convergence efforts,could position the Commission to make an informed decision on an IFRS mandate in 2011

Future rulemaking would be required to implement a mandate likely effective inapproximately 2015 or 2016

On February 24, 2010, the SEC issued a statement expressing its continued support for thedevelopment of a single set of high-quality globally accepted accounting standards and recognizedIFRS as being best positioned to serve that role.

SAP 2010 / Page 6


7/32Copyright 2010 Deloitte Development LLC. All rights reserved.

Possible timeline for IFRS adoption

U.S. GAAP Reporting

First IFRS Financial Statements

1/1/2013 Transition DateOpening statement of financial

position

12/31/2015 Reporting Date3 years of financial statements

The SEC anticipates providing four to five years for IFRS adoption

20152014201320122011

Potential IFRS Early Adoption

2016

SAP 2010 / 7



Refer to the table below regarding select current major FASB / IASB convergence projects asnoted per the IASB website.

Accounting Topic 2008 2009 2010 2011

Leases Discussion

PaperExposure Draft New Standard

Financial statement presentation Discussion Paper Exposure Draft New Standard

Provisions Exposure Draft

New Standard

Post-employment benefits (includingpensions)

Discussion Paper Exposure Draft New Standard

Consolidation Exposure Draft New Standard

Revenue recognition Discussion Paper Exposure Draft New Standard

Fair value measurement Exposure Draft New Standard

Financial instruments (measurement andrecognition)

Exposure Draft Exposure DraftNew Standard

Financial instruments derecognition Exposure Draft New Standard

Financial instruments with characteristics ofequity

Discussion Paper Exposure Draft New Standard

Note: At their joint meeting in October 2009 the IASB and the FASB considered a summary of the comments received by the IASB in response to the proposals for arevised Income Taxes standard exposed by the IASB in early 2009. The Boards indicated that they would consider undertaking a fundamental review of accounting for

income taxes at some time in the future. In the meantime, the IASB will consider in the first half of 2010 whether to propose more limited amendments.

Overview IFRS and U.S. GAAP convergencedevelopments

SAP 2010 / 8



Role of convergence

SEC statement reinforces support for the convergence activities ofthe FASB and IASB

SEC statement emphasizes completion by June 30, 2011

Convergenceconsiderations

Convergence does not necessarily mean identicalstandards; focus is on converging general principles,not every detail

Convergence only covers a defined group of projects

Several of the most time consuming areas of IFRSconversion deal with areas not subject to convergence

Convergence will not result in a conversion to IFRS byU.S. issuers in and of itself

SAP 2010 / 9


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Agenda

Introductions

Session objectives


IFRS assessment approach


Q&A

SAP 2010 / Page 10



Key Elements of the IFRS Framework

The following summarize three typical areas of focus and concern in an IFRS assessment/ conversion effort:

Meet EvolvingRequirements

Plan and achieve conversion in a cost effective manner

Identify key sub-ledger impacts and develop appropriate processes

Understand and prepare for key new disclosure requirements

Meet the necessary tax, IT and other requirements on timely basis

Use IFRS to EnableGreater AccountingSimplification

Evaluate opportunities

Use IFRS to improve consistency of accounting policies company-wide

Reduce need to reconcile between multiple statutory GAAPs

Manage Risk

Identify in-flight system projects to facilitate compatibility with IFRS

Evaluate other finance improvement initiatives in processes

Critical look by management at aggressiveness of chosen policies

Manage roadmap of multiple initiatives

Address other organizational impacts

Evaluate and address impacts on contracts

SAP 2010 / Page 11



Assessmentworkstreams

Proposed IFRS Assessment Process

Based on our knowledge and experience, the following is a high level summary of a typical IFRSassessment process:

Primary areas ofimpact (illustrative)

ImplementationRoadmap

PP&EcomponentizationAsset impairment

Share-basedpaymentsIncome taxesProvisionsInventoryLeasesRevenuerecognitionDevelopmentcostsPensions

2010Plananddesign Solution development

Implementation and parallel reporting

2011 2012 2013 2014 2015Cutoverto IFRSBegin U.S. GAAP and

IFRS Parallel Rptg.

2009

Technicalaccounting

Statutoryreporting

Programmanagement

Tax

Process andcontrols

Systems

Organizationand change

DevelopStructure

Model IFRS chart ofaccounts

Create global IFRS policies

Develop reporting package

Gathersystemrequirements

Design, build, and test changes toERP and othersystems Deploy systems

Evaluate dependencies on otherCompany Initiatives

Obtain IFRStax assess

Assess processand control

impactsRedesign processes and controls

Assessorganization

impacts

Prepare IFRS compliant financial statements

Identify Impacts on otherinternal and external stakeholders

IFRS conversionby Country

Implement organizational changes

Conduct usertraining

Assist business units inadopting IFRS

Assist Company to run U.S. GAAP and IFRS in parallel Identify and addressreporting gaps

Identify/address process and control gaps

Identify and addresssystem gaps

Identify and address org and people gapsDevelopusertraining

Identify otherinitiatives

Ongoing program management, change management, and communication

Obtain IFRSTech Acctgassessment

Identify tax implications of globalIFRS policies

Set Conv.Sequence

Evaluate taxalternatives

Determinehand-offs

Align with operating model

Develop communicationplan/infrastructure

Transitionphases

Accounting and financial reportingU.S. GAAP/IFRS differencesIFRS policy and presentation optionsFirst-time adoption elections

Statutory reportingIFRS reporting surveyIFRS statutory opportunities

TaxTax accounting differencesTax impact of accounting changesGlobal tax planning risks/opportunitiesincluding impact of future initiatives

System, process and controlimplications

System footprint and impactsDual reporting option evaluationPlanned system implementationconsiderationsProcess and control implications

Organizational impactsTraining planCommunication strategyLegal contract impacts includingfinancing arrangements, compensationagreements, joint ventures, etc.Evaluation of other organizationalinitiatives

SAP 2010 / Page 12


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Our experience with IFRS conversions hasprovided valuable insights

Selected Success Factors Issues

Issue Prioritization is Critical Frequently a handful of issues will drive the vast majority of the work, so it is important to gain abroad understanding and consensus on these items early

It is particularly important to separately evaluate simple accounting adjustments vs.items with subledger or deep process impacts

Clearly Defined and Communicated SystemRequirements

Gaps typically exist between documentation of accounting conclusions and theinformation Finance Technology needs to evaluate, plan for and budget system needs

Limited experience with managing this type of communication found in manyorganizations

Effective Communication, Training andChange Management

Communication needs regarding IFRS are frequently under-scoped, leading to ad-hocquestions and concerns by business unit personnel

Concerns often focus on key metrics or required changes to business processes; suchconcerns can often be unfounded, but distract project attention from key milestones

Important to avoid parallel competing initiatives

Granular Implementation Planning Implementation roadmaps often are not sufficiently detailed from a process and systemstandpoint to be actionable, and to identify key resource requirements andinterdependencies this lack of detail can result in inefficiencies and rework

Disciplined Project Management Should beApplied to Accounting Policy Selection

Downstream process and system analyses are frequently dependent on accountingpolicy selection; if project management discipline is not applied to the process ofevaluating accounting policy options, the project could stall

Consider U.S. GAAP Convergence as Wellas IFRS

IFRS is driving significant changes to U.S. GAAP through the convergence agenda, in somecases on a more accelerated timeline

The two step implication to these changes, and the implication of this on the conversion

roadmap is critical

The following table highlights selected observations based on our knowledge and experience with IFRS conversions

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Agenda

Introductions

Session objectives




Q&A

SAP 2010 / Page 15


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SAP Solutions for IFRS

SAP offers the most complete IFRS solution, addressing all facetsIFRS is more than an accounting issue - it impacts people, processes, and technology

SAP provides a single technology stack with support for all major architecturesA smooth phased transition to IFRS must leverage technology as an enabler

SAP provides market leading, integrated ledger and consolidation applicationsImpacted systems include financial consolidation and reporting applications,general ledger, and sub-ledgers

Proven install base of customers already reporting according to IFRS1,500+ financial consolidation and reporting implementations4,000+ general ledger implementations (includes 100+ US GAAP to IFRS conversions)

Agile solutions and content offer quickest wins for customers adopting IFRS

Phased Transition to IFRSFinancial Consolidation and ReportingGeneral LedgerSub-ledgers

Technology

People

Process SAP 2010 / Page 16
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SAP and IFRS Compliance Solutions andServices

Standard SAP applications, SAP services, and our partners canprovide the necessary support for your IFRS project

Local close/transaction SAP ERP layerSAP General Ledger ERP 6.0 Financials GL

Parallel Account with multi-ledgersAsset Accounting

Multi-Asset Valuation Areas

SAP Financial Closing cockpit (FCc)SAP Central Process Scheduling (CPS) by RedwoodUpgrade/migration to ERP 6.0 Financials GLOlder versions of ERP IFRS-specific configurations

Group Close/Reporting/Consolidation LayerSAP BusinessObjects Financial Consolidation (incl. IFRS starter kit)SAP BusinessObjects Planning and Consolidation (incl. IFRS starter kit)SAP BusinessObjects Financial Information ManagementSAP BusinessObjects XBRL Publishing by UBmatrixSAP BusinessObjects Process ControlSAP BusinessObjects Intercompany

SAP 2010 / Page 17


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The Solution: IFRS Assessment

Using a proven approach, the SAP IFRS Assessment service will assist you toidentify the system implications, qualify the process changes, and define theresources you need to complete an IFRS adoption to your SAP applications.The SAP IFRS Assessment takes the guess work out of the adoption process byusing a review methodology to analyze your specific IFRS conversionrequirements and clearly identify the system changes and configuration updatesthat are available to meet these requirements.

This service will:Assess current state situationSolution Design Assessment

Technical/Architectural AssessmentFunctional AssessmentOrganizational Alignment Assessment

SAP 2010 / Page 18


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North American SAP EducationLearning Options to Support IFRS (1)

Source: NA SAP Education(http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=%5b%5bFIN_NEWGL_IFRS_NA%5d%5d%7c )

SAP 2010 / Page 19
http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=[[FIN_NEWGL_IFRS_NA]]|http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=[[FIN_NEWGL_IFRS_NA]]|http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=[[FIN_NEWGL_IFRS_NA]]|http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=[[FIN_NEWGL_IFRS_NA]]|http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=[[FIN_NEWGL_IFRS_NA]]|http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=[[FIN_NEWGL_IFRS_NA]]|http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=[[FIN_NEWGL_IFRS_NA]]|http://www.sap.com/usa/services/education/catalog/financials/curriculum.epx?context=[[FIN_NEWGL_IFRS_NA]]|


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Options for SAP Solution Configuration

Approach Classic SAP GeneralLedger

Account-Based Easiest to implementCan lead to a less thanefficient Chart ofAccounts

Parallel Ledger Most transparentapproachIndependent set of booksFuture IFRS requirementsmore easilyaccommodated

Approaches available for multi-GAAP valuation within SAP ERP Financials

C Current recommended configuration approaches for multi-GAAP valuation

Use of Special Purpose Ledgers and Company Codes for multi-GAAP valuation isnot generally recommended, please contact SAP Consulting to properly assess SAP 2010 / Page 20


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SAP Financial Closing CockpitAutomation and Collaboration for the Local Close

Monitor and Control

Multiple Local Closes, Continuous Improvement Optimized Task Scheduling

SAP Central ProcessScheduling by Redwood

Task Execution

AccountantController

SAP 2010 / 21


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SAP BusinessObjects solutions support IFRS

Financial consolidation and reporting solutions from SAP

BusinessObjects are fully IFRS capableThousands of successful IFRS implementations in EMEA

Key functionality to support IFRS is available today:Parallel reportingTop-side adjustmentsRules-based environment

Disclosures and commentaryFlexible and powerful reportingXBRL publishing

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

Comprehensive complianceDocumentation, automated testing and reporting of internal controls inaccordance with SOX 404 and 302

Deep integration into underlying transactional and GL systemsIncluding SAP ERP, SAP Business Suite, and SAP NetWeaver BWApplications remain heterogeneous and open to non-SAPenvironments

SAP 2010 / Page 22


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Business Process Flows

Data collection

Preparing and running the consolidation

Reports and analysis

IFRS Data Input & Control

CoA based on final IFRS Taxonomy 2009

Input schedules for data entry or data import

Control reports for validation of collected data

Consolidation ProcessingFull, proportionate and equity method

Extensive set of automatic business rules

Scope changes and rate variations

SAP BusinessObjects Planning and ConsolidationStarter Kit for IFRS

Data collection, control and data processing

SAP 2010 / Page 23


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Analysis & Audit Trail

Dynamically formatted accounting and analysisreports leverage native drill down

Audit IDs for tracking data origin

Publishable Financial Statements following therequirements of IAS 1

Balance Sheet (current/non-current format)

Income Statement (by function)

Statement of Comprehensive Income

Statement of Cash Flows

Statement of Changes in Equity

XBRL Templates

Excel templates pre-mapped with IFRStaxonomy

SAP BusinessObjects Planning and ConsolidationStarter Kit for IFRS

Analysis, audit trail and publishing of financial statements

SAP 2010 / Page 24


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Recommendations From SAP

Engage early and begin planning for an IFRS transition

Form a cross-functional team both with internal groups and external partners

Prepare major systems for IFRS

Take full advantage of all possible IFRS benefits

Use the transition to IFRS to improve core processes, not just minimumcompliance

SAP 2010 / Page 25


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Agenda

Introductions

Session objectives

Recent SEC statement and its impact



Q&A

SAP 2010 / Page 26


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Contact information

Nick Difazio, PartnerDeloitte & Touche [email protected]

John Steele, Senior ManagerDeloitte Consulting [email protected]

Philip MugglestoneDirector Solution MarketingEnterprise Performance Management

SAP

E [email protected]

Pete GrahamDirector Solution Management

SAP Labs LLC

E [email protected]

SAP 2010 / Page 27
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Additional Resources

Check out SAP IFRS Resource Center

White papersWebcastsDemos

Join the Business Process Expert (BPX) Community for IFRS :IFRS on SAP knowledge from SAP community

Blogs and Forums to discuss issuesContribute to IFRS wiki on SAP Ideas, Best Practices, Tips and Tricks

Listen to the IFRS Webinars and Other Resources from SAP Ecohubhttp://ecohub.sdn.sap.com/irj/ecohub/ifrs

SAP 2010 / Page 28
http://bit.ly/d32kL3http://bit.ly/a4PUuohttps://wiki.sdn.sap.com/wiki/display/IFRS/IFRS+on+SAP+-+Best+Practiceshttp://ecohub.sdn.sap.com/irj/ecohub/ifrshttp://ecohub.sdn.sap.com/irj/ecohub/ifrshttps://wiki.sdn.sap.com/wiki/display/IFRS/IFRS+on+SAP+-+Best+Practiceshttp://bit.ly/a4PUuohttp://bit.ly/d32kL3


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IFRS on SAP Community:sdn.sap.com/irj/bpx/ifrs

Get your questionsanswered on the

IFRS Forum

at

https://www.sdn.sap.com/irj/scn/forum?foru

mID=400

Have an idea?

Write a blog

SAP 2010 / Page 29
https://www.sdn.sap.com/irj/bpx/ifrshttps://www.sdn.sap.com/irj/scn/forum?forumID=400https://www.sdn.sap.com/irj/scn/forum?forumID=400https://www.sdn.sap.com/irj/scn/forum?forumID=400https://www.sdn.sap.com/irj/scn/forum?forumID=400https://www.sdn.sap.com/irj/scn/forum?forumID=400https://www.sdn.sap.com/irj/scn/forum?forumID=400https://www.sdn.sap.com/irj/bpx/ifrs


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Thank you!

SAP 2010 / Page 30


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Copyright 2010 SAP AGAll Rights Reserved

No 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 changed without 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 are trademarks or registered trademarks of SAP AG in Germanyand in several other countries all over the world. All other product and service names mentioned and associated logos display ed are the trademarks of their respective companies. Data contained in this document serves informational 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 written permission of SAP AG. This document is a preliminary versionand 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 ofbusiness, product strategy, and/or development. Please note that 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 d ocument is provided without a warranty of any kind, either express or implied, including but not limited to the implied warranties ofmerchantability, 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 limitation shall 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 these materials and does not endorse your use of third -party Webpages nor provide any warranty whatsoever relating to third-party Web pages.

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20100316 Ifrs Webinar March 25 v7

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