EFRAG continues to support one principle as the foundation of the IASB's revenue recognition standard, but clarity was needed if this was to be achieved. In particular, challenges in certain areas were noted, in particular long-term contracts, service contracts; and in particular industries, including telecommunications and long-term construction activities.
The project staff noted that these themes had already been identified in the outreach activities conducted during the exposure period. In addition, outreach activities would continue as the Board redeliberated the proposals: these activities would include 'workshops' in which prepares would be encouraged to apply the proposals to a sample of transactions. These workshops would be practical exercises, to get to the detail of the proposals, without being full-scale field tests. There were also targeted discussions in certain jurisdictions and industries that had identified serious concerns/ issues with the proposals.
An IASB member noted also that the themes were consistent to those raised at the revenue roundtable discussions and similar constituent meetings. Partly, constituents were simply nervous about abandoning the familiar and adopting a new Standard. Others were concerned about losing the 'accounting for costs' guidance that is embedded in many US GAAP revenue-related pronouncements. The IASB would have to consider how to address these concerns, potentially adding implementation guidance.
There was some discussion of revenue recognition in the telecommunications industry. An IASB member suggested that some in the industry were not applying IFRSs properly at the moment. Others in the meeting noted that analysts following the industry were not unhappy with the information they were receiving. If the users were content and thought current practices were appropriate, where was the necessity for change? In addition, an EFRAG member stressed that legal restrictions/ requirements in a particular jurisdiction might cause difficulties for the Standard and warned that the legal and accounting parameters should not be 'un-aligned'.
The IASB re-iterated that the extended outreach activities were being designed to address these issues.