Software as a service

What is cloud computing and more specific software as a service?

Cloud computing is essentially a model for delivering information technology services in which resources are retrieved from the internet through web-based tools and applications, rather than a direct connection to a server. Data and software packages are stored in servers. Cloud computing structures allow access to information as long as an electronic device has access to the internet.

This type of system allows employees to work remotely. Cloud computing is so named because the information being accessed is found in the ‘clouds’, and does not require a user to be in a specific place to gain access to it. Companies may find that cloud computing allows them to reduce the cost of information management, since they are not required to own their own servers and can use capacity leased from third parties. Additionally, the cloud-like structure allows companies to upgrade software more quickly.

There are various types of cloud computing arrangements. Cloud services usually fall into one of three service models: infrastructure, platform and software. Here the focus is on software as a service (SaaS).

What is SaaS?

SaaS is a software distribution model in which the customer does not take possession of the supplier’s hardware andSoftware as a service application software. Instead, customers accesses the supplier’s hardware and application software from devices over the internet or via a dedicated line. In these types of arrangements, the customer does not manage or control the underlying cloud infrastructure, including the network, servers, operating systems, storage, and even individual application software capabilities, with the possible exception of limited user-specific application software configuration settings, nor is the customer responsible for upgrades to the underlying systems and software.

The key issues

In practice, it is clear that there are various application issues relating to the customer’s accounting in SaaS arrangements. These arrangements may often be bundled with other products and services, such as implementation, data migration, business process mapping, training, and project management.

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Correct presentation of revenue in IFRS 15

Correct presentation of revenue in IFRS 15 provides explicit presentation requirements, which are quite detailed and increase the volume of required disclosures that entities have to include in their interim and annual financial statements. Many of the requirements in IFRS 15 involve information that entities did not previously disclose, all in all the usefulness of information in the financial statements should grow using these presentation requirements.

In practice, the nature and extent of changes to an entity’s financial statements depend on a number of factors, including, but not limited to, the nature of its revenue-generating activities and the level of information it previously disclosed.

Reassessment of old revenue disclosures

As part of their adoption of IFRS 15, entities also need … Read more