IFRS15: An accounting change with profound changes across all industries, says PwC

Bridgetown, BARBADOS, November 10, 2017 –International Financial Reporting Standard 15 (IFRS15), Revenue from Contracts with Customers, becomes effective from January 1, 2018.

IFRS 15 is based on a transfer of control model, which fundamentally changes the basis of revenue recognition, presentation and disclosure. It outlines a single comprehensive model of accounting for revenue arising from contracts with clients using a five-step approach and replaces the current revenue recognition guidance under IAS 18, Revenue and IAS 11, Construction Contracts.

During her presentation earlier today, at the Annual Conference of the Institute of Chartered Accountants of Barbados (ICAB), Aneica L Boyd, Senior Audit Manager, Assurance & Business Advisory Services for PwC Jamaica explained that, “The core principle of IFRS 15 is recognising revenue when control over goods and services is being transferred as opposed to the use of the risk and rewards criterion, which currently determines when the revenue is recognised.”

“The new standard comes with more extensive disclosures and provides a practical approach to dealing with variable consideration as well as capitalisation of contract costs compared to the existing guidance. With only a few months left to implement the standard, entities may wish to prioritise planning for the new presentation and disclosure requirements as systems and processes may need to be adjusted to support the new information requirements for transition,” she continued.

The new standard was developed to address concerns that existing IFRS guidance provides limited information about complex areas of revenue recognition. The creation of the standard also completed a joint effort by the International Accounting Standards Board (IASB) and the US national standard-setter to improve financial reporting by creating a common revenue recognition standard for IFRS and US GAAP.