IASB publishes request for information on the post-implementation review of IFRS 15
29 Jun, 2023
The International Accounting Standards Board (IASB) has issued a request for information (RFI) seeking comments from stakeholders to identify whether the requirements in IFRS 15 'Revenue from Contracts with Customers' provide information that is useful to users of financial statements; whether there are requirements that are difficult to implement and may prevent the consistent implementation of the standard; and whether unexpected costs have arisen in connection with applying or enforcing the standard. Comments on the RFI are requested by 27 October 2023.
IFRS 15 specifies how and when an IFRS reporter will recognise revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard provides a single, principles based five-step model to be applied to all contracts with customers.
In the post-implementation review of the standard the IASB wants to assess:
- whether there are fundamental questions (fatal flaws) about the clarity and suitability of the core objectives or principles in the new requirements;
- whether the benefits to users of financial statements of the information arising from applying the new requirements are significantly lower than expected; and
- whether the costs of applying the new requirements and auditing and enforcing their application are significantly greater than expected.
The questions in the RFI now published regard stakeholders’ overall views and experiences relating to IFRS 15, specific areas of IFRS 15, interaction with other standards, the convergence with US GAAP, and possible other matters stakeholders have identified.
Accordingly, the RFI is structured into the following questions:
| Overall assessment |
Asks whether the core principle and the supporting five-step revenue recognition model provide a clear and suitable basis for revenue accounting decisions that result in useful information about an entity’s revenue from contracts with customers, whether further guidance is needed and what the perceived costs and benefits of the standard are. |
| Specific areas — Performance obligations | Asks whether IFRS 15 provides a clear and sufficient basis to identify performance obligations in a contract or whether the requirements are unclear/applied inconsistently, lead to outcomes that do not reflect the underlying economic substance or lead to significant ongoing costs. |
| Specific areas — Transaction price |
Asks whether IFRS 15 provides a clear and sufficient basis to determine the transaction price in a contract, in particular in relation to accounting for consideration payable to a customer. |
| Specific areas — When to recognise revenue |
Asks whether IFRS 15 provides a clear and sufficient basis to determine when to recognise revenue or whether requirements are unclear or are applied inconsistently, in particular in relation to the criteria for recognising revenue over time. |
| Specific areas — Principal versus agent | Asks whether IFRS 15 provides a clear and sufficient basis to determine whether an entity is a principal or an agent or whether requirements are unclear or are applied inconsistently, in particular in relation to the concept of control and related indicators. |
| Specific areas — Licensing | Asks whether IFRS 15 provide a clear and sufficient basis for accounting for contracts involving licences or whether requirements are unclear or are applied inconsistently, in particular in relation to licences that are similar to sales or service provisions, include an obligation to provide goods or services or are renewals. |
| Specific areas — Disclosure | Asks whether the disclosure requirements in IFRS 15 result in entities providing useful information to users of financial statements, whether any disclosure requirements lead to significant ongoing costs or lead to significant variation in the quality of disclosed revenue information. |
| Specific areas — Transition | Asks whether the transition requirements work as intended, whether entities applied the modified retrospective method or the practical expedients, and whether the transition requirements achieved an appropriate balance between reducing costs for preparers and providing useful information to users. |
| Interaction with other standards | Asks whether it is clear how to apply the requirements in IFRS 15 with the requirements in other IFRS, especially in IFRS 3, IFRS 9, IFRS 10, and IFRS 16. |
| Convergence with US GAAP | Asks how important stakeholders believe retaining the current level of convergence between IFRS 15 and US GAAP is. |
| Other matters | Asks whether there any other matters that the Board should examine as part of the PIR of the requirements of IFRS 15. |
Comments on the RFI are requested by 27 October 2023. The request for information and a corresponding press release are available on the IFRS Foundation website. There is also a short video with IASB Board member Patrina Buchanan explaining the RFI. In addition, see Deloitte's Need to know newsletter.
