EFRAG recommends adoption of IFRS 15 without deferral of the 2017 effective date

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image
  • European Union Image

18 Mar 2015

The European Financial Reporting Advisory Group (EFRAG) has submitted to the European Commission its endorsement advice letter on IFRS 15 'Revenue from Contracts with Customers'. As part of its assessment EFRAG considered whether it would recommend a deferral of the 1 January 2017 effective date included in IFRS 15 but decided against doing so.

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. IFRS 15 was issued in May 2014 and applies to an annual reporting period beginning on or after 1 January 2017.

EFRAG assesses that IFRS 15 meets all technical endorsement criteria of the European IAS Regulation and is conducive to the European public good. It therefore recommends endorsement of IFRS 15.

In assessing whether IFRS 15 can and should be applied at the IASB effective date of 1 January 2017, the EFRAG Board considered the following factors (quoted from Appendix 4 of the endorsement advice letter):

  • Against deferral of the effective date:
    •  A deferral of the effective date would further harm comparability within Europe as some companies would still implement the standard early whilst others would be able to defer for another year.
    • Having different effective dates for IFRS 15 as endorsed in the EU and IFRS 15 as issued by the IASB would affect comparability with companies outside Europe.
    • Many companies have already started their work on implementing the new standard with a 2017 date in mind and very few European companies have raised concerns with EFRAG.
  • For deferral of the effective date:
    • A few European companies have raised concerns with EFRAG about the tight timetable.
    • The IASB may in the short term issue minor amendments to IFRS 15 (or other types of clarifications) to help implementation.

Having taken into account all these different factors, EFRAG has concluded to recommend that IFRS 15 is adopted "with the effective date set by the IASB". This phrase means that if the IASB should at a future point of time decide to delay the effective date, it will also be delayed in Europe.

Click for the following information on the EFRAG website:

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