Graham Ellis
Partner
Why you should work with us on IFRS 15 Revenue from Contracts with Customers
Failing to implement IFRS 15 adequately may result in profit warnings, delays in lodging financial statements, qualified audit reports, a loss of investor confidence and sharp falls in share prices.
IFRS 15 may also cause material changes to amounts reported in financial statements with knock-on effects on bonuses or earn-outs linked to revenue or profit, higher finance charges where interest rate margins are linked to key ratios, and breaches of bank covenants. Companies may need to urgently review and change their standard contract terms.
Our expert team will carry out a robust and independent impact assessment of all the possible effects of IFRS 15 on your business. We want you to be confident you are taking all the necessary steps and that your business is ready for IFRS 15.
Our expert team can also provide advice and guidance on any aspects of IFRS 15 that may be of particular concern. Please get in touch to discuss how we can help.
For further details of how BDO can help, visit our financial reporting solutions page.
IFRS 15 information and guidance
Overview of IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers brings a new and detailed approach to accounting for revenue, using a ‘5-step-model’. It will replace existing international accounting standard requirements which are currently set out in a number of different standards and interpretations. It is applicable for periods beginning on or after 1 January 2018, but earlier application is permitted.
IFRS 15 contains specific, and more precise, guidance to be applied meaning that for many entities, the timing and profile of revenue recognition will change. In some areas the changes may be very significant and will require careful planning, both for reporting and the wider commercial effects.
Revenue will now be recognised by a vendor when, or as, control over the goods or services is transferred to the customer. In contrast, IAS 18 based revenue recognition around an analysis of the transfer of risks and rewards; this now forms one of a number of criteria that are assessed in determining whether control has been transferred.
IFRS 15 Guides and publications
The following guides and publications provide useful information and advice on IFRS 15 and its key features:
- A concise introduction to IFRS 15
A brief document providing a high level view of the key impacts and practical considerations required when implementing IFRS 15.
- IFRS at a Glance – IFRS 15 Revenue from Contracts with Customers
A short ‘key facts’ document, setting out the key requirements for each of the 5 steps under IFRS 15, the key application guidance, definitions and the practical expedients available.
- IFRS in Practice - IFRS 15 Revenue from Contracts with Customers
This guidance looks at the each of the 5 steps of IFRS 15 in detail, and the impact of IFRS in practice. It focuses on a range of specific areas such as licencing and sales with right of return including examples on the application of IFRS 15.
- Industry Flyers
A series of flyers summarising the implications of IFRS 15 and highlighting how this may impact on the following industry sectors:
Videos which explore various aspects of IFRSs are available to view on the BDO IFRS YouTube channel.