IASB concludes its post-implementation review of accounting for revenue
IASB concludes its post-implementation review of accounting for revenue
The International Accounting Standards Board (IASB) has completed its post-implementation review (PIR) of IFRS 15 Revenue from Contracts with Customers.
What is a PIR?
The objective of a PIR is to assess whether the effects of applying the new requirements on users of financial statements, preparers, auditors and regulators are working as intended. A PIR looks at how the following are being addressed in practice:
- Contentious matters identified by the IASB when developing new requirements
- Market developments since the new requirements were issued.
A PIR is not a standard-setting project, and every application issue does not automatically lead to a resolution via standard-setting.
Conclusions
The IASB’s project summary and feedback statement concludes that IFRS 15 is working as intended and provides users with useful information. Notably:
- There are no fundamental questions (fatal flaws) about the clarity or suitability of the core objectives or principles in IFRS 15
- The information arising from applying the requirements in IFRS 15 results in benefits to users of financial statements that are not significantly lower than was expected
- The costs of applying IFRS 15 and auditing and enforcing the standard are not significantly greater than was expected.
Future developments
For its next agenda consultation, the IASB will consider low-priority matters arising from its PIR of IFRS 15. These include:
- The reporting of consideration payable to a customer
- How companies decide if they are acting as principal or an agent in a transaction
- Applying IFRS 15 with IFRIC 12 Service Concession Arrangements (including accounting for contractual obligations to maintain or restore service concession infrastructure).
The IASB will also consider matters previously identified during its PIR of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, and those from its third agenda consultation. These concern:
- IFRS 10 - accounting for transactions in which an entity, as part of its ordinary activities, sells an asset by selling an equity interest in a single-asset entity that is a subsidiary (a ‘corporate wrapper’)
- IFRS 11 - accounting for collaborative arrangements.
The IASB will gather further evidence on the workings of IFRS 15 when it conducts its PIR of IFRS 16 Leases.
No further action will be taken on other matters identified in the PIR.
Summary of feedback
For more information about the IASB’s post-implementation review of IFRS 15, refer to questions asked as part of the IASB’s request for information and the Board’s project summary and feedback statement.
Resources
Please check out our website for extensive resources on applying IFRS 15, including news articles, publications, webinars, links to IFRIC agenda decisions and online training.
Need help?
Navigating the IFRS 15 requirements to account for revenue from contracts with customers can be complicated and require significant judgement. Our IFRS & Corporate Reporting team is here to help. Please contact us today.