Build price evidence for a SaaS bundle before allocating its revenue

Give the accounting reviewer a complete description of the bundle: subscription term, service level, training sessions, implementation outputs and any future options. The reviewer first needs to determine what is being accounted for. Creating a spreadsheet with one row per invoice line does not establish that those lines represent separate accounting promises.

Under NZ IFRS 15, the published New Zealand equivalent of IFRS 15, allocation generally uses relative standalone selling prices, subject to specified exceptions. Its guidance also explains that a list price is not automatically a standalone selling price. Confirm the applicable framework and approved method before using the evidence described here.

Gather actual separate sales where available and keep the underlying order references. Include the sale date, term, quantity, customer category, service scope and concessions. A training session for a small team may not be comparable with a customized program across several offices. The evidence file should explain the differences rather than averaging unrelated transactions into a reassuring number.

Retain the population from which the examples were selected. If the team excludes unusual deals, record the reason and approver. A list containing only full-price sales can conceal the discounts routinely accepted in practice. Ask sales operations to identify any linked renewal, reseller arrangement or package incentive that makes an apparently standalone sale part of a larger agreement.

As a simplified illustration, suppose an accountant has approved two separate promises and standalone values of $18,000 and $6,000. If a $20,000 transaction price is allocated proportionally with no applicable exception, the relative shares are 75% and 25%, producing $15,000 and $5,000. Those calculations are straightforward; establishing the promises, values and applicable method requires the actual facts.

Keep input evidence, judgment and arithmetic in separate parts of the workpaper. That makes it possible to correct a sales-data error without silently changing the policy. A reviewer should see which numbers came from observed transactions, which required estimation and why the chosen information was relevant to the contract at inception.

A new service may have no standalone sales. Tell the accountant exactly what is available: delivery budgets, commercial proposals, customer research or other support. Do not manufacture a separate sale or treat a proposed catalog price as observed evidence. Ask the reviewer to select and document an appropriate estimation approach under the relevant standard.

Give assumptions an owner and a date. For a cost estimate, identify whose delivery plan supports the hours and what work it includes. For market information, preserve the relevant terms instead of a headline price alone. The accountant can then assess comparability and limitations rather than reverse engineering an unexplained value.

Store the approved price evidence with the allocation and revenue schedule. Later catalog changes should be identifiable as later changes, not overwrite the evidence used for an earlier deal. Ask accounting how modifications will be evaluated and which changes require a fresh review.

At the next close, test one contract from signed terms through the allocation to the recognized and remaining balances. The useful deliverable is an understandable chain of evidence. If an outside provider supplies only a final journal entry, request the supporting assessment so the business can maintain it when products, bundles or personnel change.