At the May 2007 meeting the IFRIC asked the staff to analyse existing guidance on this issue to determine whether such guidance was consistent and could be used to help to assess the level of diversity in practice.

The IFRIC was nearly equally split between two views.

View A:

The project should be removed from the IFRIC agenda on the basis that:

• Existing guidance, including that issued by some international audit firms, is consistent with this guidance being mainly based on EITF 99-19 (US GAAP) and FRS 5 (UK GAAP)
• Determining whether a seller is an agent or principal requires judgement and will depend on the particular facts and circumstances of each arrangement and that this would not change as a result of any guidance
• Under the 'GAAP hierarchy' in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, an IFRS preparer may wish (although it is not obliged to do so) to consider other guidance
• Any guidance in this area is more in the nature of implementation guidance and should not be issued by the IFRIC.

View B:

The IFRIC should proceed with its work on this project on the basis that:

• The issue is widespread and has practical relevance
• Whereas the guidance in US GAAP and UK GAAP is useful outside of their respective jurisdiction, it is likely that some preparers around the world may not be aware of it
• An Interpretation should be issued based on this existing guidance and it should not be difficult for the IFRIC to reach a consensus on this issue on a timely basis.

Finally the IFRIC came to the conclusion that 'there should be something in the IFRS book' in order to avoid being required to look at the guidance of other standard setter.

The IFRIC reached a tentative decision that this matter should be addressed by the IASB by adding an example to the appendix of IAS 18 Revenue and should not be added to the IFRIC agenda. The staff was asked to prepare a proposal for such an example whereby the example should be based on indicators.

The IFRIC will return to this issue at a subsequent meeting.