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

Timeline 

In June 2023, the IASB published Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers . Our response to the IASB was submitted on 26 October 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

Our outreach on this project included discussions with stakeholders and public consultation on our draft comment letter. Thank you to all who participated in this project.

Final Comment Letter

The UKEB Final Comment Letter identifies no “fatal flaws” but sets out areas of potential enhancement to the IFRS 15 requirements, should the IASB plan to make amendments resulting from other feedback received in the Request for Information.

[The UKEB Final Comment Letter is attached below].

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

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.

UKEB Meetings

• February 2024 IASB General Update: Appendix A includes a summary of the IASB’s January 2024 meeting, including overall feedback on the PIR of IFRS 15, and a plan for the next phase of the project.
• March 2024 IASB General Update: Appendix G includes a summary of the IASB’s tentative decisions at its February 2024 meeting on some aspects of the project, including identifying performance obligations in a contract, principal versus agent considerations, and licensing.  
• April 2024 IASB General Update: Appendix F includes a summary of the IASB’s tentative decisions at its March 2024 meeting on some aspects of the project, including determining the transaction price, determining when to recognise revenue, and disclosure requirements.