EFRAG does not support IFRIC D20
30 Nov 2006
The European Financial Reporting Advisory Group (EFRAG) has written to the International Financial Reporting Interpretations Committee expressing reservations about the proposals in IFRIC Draft Interpretation D20 Customer Loyalty Programmes.
We do not support the consensus proposed by the Draft Interpretation. In particular, we do not support the adoption of a deferred revenue approach. Instead, we favour adoption in D20 of the so-called cost/provision approach and believe that this approach will, in most instances, result in the most appropriate accounting treatment. We believe that the lack of a clear set of guidelines on segmentation of revenue transactions will lead to inconsistent accounting practices and, generally we doubt whether a consistent and comparable approach will be achieved if the measurement model being proposed is adopted. For those reasons, and until further research is undertaken, we believe that the cost/provision approach will provide the most suitable level of comparability of information in the financial statements. |