In a quality of earnings (QoE) review of a SaaS target, revenue quality usually comes down to contracts. This is the contract-level recomputation step for transaction advisory and due diligence teams: re-perform the relative standalone selling price (SSP) allocation and schedule on a sample, compare with the target's ledger, and document each difference with its clause.
Select the sample
Combine coverage and risk: the largest contracts by annual value, plus bundled obligations, non-standard terms, large discounts and signings near period end. Bundles of subscription, implementation and support carry the allocation errors; late-period signings carry the ratable cutoff slips.
Recompute each sampled contract
Confirm the obligations, stated prices, SSP basis and term. Allocate on a relative-SSP basis (ASC 606-10-32-28 to 32-41), build the full-term schedule, and compare revenue by period and deferred revenue at the cutoff date with the target's ledger.
One contract: a $100,000 transaction price, SSPs of $30,000, $30,000 and $120,000.
| Obligation | SSP | Allocated |
|---|---|---|
| Implementation | $30,000 | $16,666.67 |
| Premium support | $30,000 | $16,666.67 |
| Platform subscription | $120,000 | $66,666.66 |
| Total | $180,000 | $100,000.00 |
Rounding each line independently gives $100,000.01; assigning the residual cent by a fixed rule ties the allocation to the price. A $100,000 ratable amount over 36 months schedules as 35 Γ $2,777.77 plus a final month of $2,778.05, exactly $100,000.00, so deferred revenue ends at $0.00.
Document the differences
Each difference goes on an exceptions list with the contract, period, amount and cause, plus the clause evidence: contract page and verbatim excerpt. Common causes: a different SSP basis, an implementation fee recognised up front, a start date that differs from the contract, or an amendment the ledger reflects but the sampled document does not.
Why a hashed export helps
With integer arithmetic and a SHA-256 hash on the export, the same inputs give byte-identical output. Either side can re-run a disputed contract and compare hashes instead of arguing over whose spreadsheet is right.
Scope: a calculation and evidence trail, not a QoE opinion. SSP judgements and normalisation adjustments stay with the deal team; contract modifications are flagged, not accounted for; usage-based fees are not scheduled; extracted contract terms are confirmed by a person.
Re-perform the allocation in the SSP allocation calculator.
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