Consultation: IASB/RFI/2023/2 Post-implementation Review: IFRS 15 Revenue from Contracts with Customers

ACCA welcomes the opportunity to provide views in response to the IASB’s request for information for the post-implementation review of IFRS 15 Revenue from Contracts with Customers.

This was done with the assistance of ACCA’s Global Forum for Corporate Reporting.

Overall, the five-step revenue recognition model in IFRS 15 (the Standard) is working as intended, though the Standard is complex and implementing the Standard involved a significant learning process for entities. In the initial years, it involved a change in mindset from recognising revenue based on transfer of significant risks and rewards to customers, to a model that transfers control over goods or services to customers.

Consequently, accountants are more frequently consulted, or engaged in business transactions and contract management as the accounting is an integral part of the business transaction. This closer collaboration between the finance and operations may lead to better control over revenue recognition.

Reducing diversity in accounting requirements would ease financial reporting for multinational entities, enable accountants to work between jurisdictions, and improve comparability of financial statements of different reporting entities. Therefore, we support retaining converged requirements in IFRS 15 and Topic 606 in US GAAP.

We support principles-based requirements in IFRS 15 and the ability to use judgements in applying the Standard. This should continue to be the case as they make the Standard suitable for contracts with customers of varying complexity and business terms.

We suggest the IASB clarify the issues that have come to the IASB’s attention, particularly those in Spotlight 3 of the RfI. There’s room to improve consistency such that the same accounting treatment can be applied to the same facts and circumstances.

When transitioning to IFRS 15, the modified retrospective method provides an appropriate balance of useful information to users and managing the initial costs of implementing the Standard. In support of proportionality, the modified retrospective method should continue to exist alongside full retrospective application – i.e., giving some flexibility to accommodate the different resources and complexity of contracts with customers in entities of varying sizes.

The disclosure requirements in IFRS 15 have generally enabled users to better understand an entity’s revenue sources and the significant judgements involved in recognising revenue. However, we have received some concerns about the cost of meeting certain disclosure requirements and the time spent on preparing them.

To read the response in full, please download the response document on this page.