Comments received from constituents - summary analysis

The FASB staff (by video link) presented the summary analysis of comments received prior to 10 July. 211 comments had been received; the majority were from preparers and six from users or user representative organisations. Comments were still being received, but the broad themes in those later letters were consistent with the analysis presented.

Broadly, constituents supported the preliminary views in the Discussion Paper, in particular the ideal of a single revenue recognition model, but there were significant application issues - both industry and activity-specific issues and concerns about how to make the model operational. In particular, the definitions of revenue, customer and contract were criticised by many respondents.

The staff noted that detailed analyses of all issues would be brought to both Boards during redeliberations and development of the exposure draft.

The Board discussed the issues raised in the summary, especially the problems identified in industries such as telecommunications. A Board member suggested that a mechanism was needed to feed experience on applying IFRSs in various industries, gained during the Board and staff outreach activities, to the project team. This would help to identify areas in which application guidance is actually necessary, but the Boards should resist the temptation to provide detailed application guidance.

Project objective and strategy

The Board discussed the objective of the revenue recognition project and the strategy to develop an exposure draft, taking into account the views expressed by constituents.

Board members noted that the project does not have a single model for revenue recognition: it as a model based on an asset and liability approach, with two applications, one for services and one for goods. It was important to distinguish goods and services, and the best place to start would be to address construction and long-term contracts first. Many of the issues in this type of contract were critical and if they could be solved in a rigorous manner, many other decisions would follow more easily.

The Boards discussed whether a roundtable with constituents was necessary. After discussion, the suggestion was refined such that the Boards would see whether it would be possible to conduct meetings with constituents (in various locations) that would be a combination of roundtable and field visit - an opportunity to involve preparers, auditors and industry analysts to discuss specific application issues identified in certain industries/ sectors. However, it was also noted that the Boards' calendars are already pretty full and that it might not be possible to arrange such meetings in the time available to the Boards.

The staff will investigate whether it would be possible to hold such meetings.