Post-Implementation Review of IFRS 15 Revenue from Contracts with Customers

Timeline 

The IASB published Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers on 29 June 2023.

Background 

In May 2014 the IASB issued IFRS 15. In April 2016 the IASB issued clarifications to IFRS 15 which became effective at the same time as the rest of the standard.

IFRS 15 Revenue from Contracts with Customers replaced:

• IAS 11 Construction Contracts;
• IAS 18 Revenue;
• IFRIC 13 Customer Loyalty Programmes;
• IFRIC 15 Agreements for the Construction of Real Estate;
• IFRIC 18 Transfers of Assets from Customers; and
• SIC-31 Revenue—Barter Transactions Involving Advertising Services.

The standard was effective for annual periods commencing on or after 1 January 2018. 

Under its due process the IASB is required to conduct a post-implementation review (PIR)^[1] of the all new IFRS standards and major amendments.  The objective of a PIR is to assess whether the effects of applying the new requirements on users of financial statements, preparers, auditors and regulators are as intended when the IASB developed those new requirements. 

In November 2021 the IASB decided to begin the PIR of IFRS 15 in the second half of 2022. In September 2022 the IASB discussed the plan for phase 1 of the PIR (identification of matters to be examined).

For the PIR of IFRS 15 the IASB has decided to consider whether:

1. there are fundamental questions (i.e. ‘fatal flaws’) about the clarity and suitability of the core principle and the five-step revenue recognition model in IFRS 15;
2. the benefits to users of financial statements of the information arising from applying the IFRS 15 requirements are broadly as expected (or whether, for example, there is significant diversity in application); and
3. the costs of applying some or all of the IFRS 15 requirements and auditing and enforcing their application are broadly as expected (or whether there is a significant market development since IFRS 15 was issued for which it is costly to apply its requirements consistently).  

Outreach

We would like to hear the perspectives of UK stakeholders from a variety of backgrounds, including users, preparers, academics, auditors and regulators.

For further updates on UKEB projects you can subscribe to our newsletters and alerts by emailing contact@endorsement-board.uk and putting SUBSCRIBE in the Subject.

Draft Comment Letter

The UKEB published a draft comment letter on 27 July, 2023 – attached below. UK stakeholder comments are welcome until 5 October via email or via the formal Invitation to Comment template – also attached below.

The UKEB draft comment letter considers that IFRS 15 has achieved its objective and is working well, though some operational challenges remain. The draft comment letter highlights some areas where improvement, including potential standard setting activity, is required, without causing significant cost and disruption to entities already applying the standard.

If you would like to comment, please complete the ‘Your Details’ form and provide feedback using the ‘Invitation to Comment’ template. Responses providing views on individual questions, as well as comprehensive responses to all questions, are welcome.

For more information, please contact UKEndorsementBoard@endorsement-board.uk if you would like further information.

^[1] For further information on the IASB post-implementation reviews refer to the IFRS website here.