New revenue recognition rules in Italy
OIC 34 Revenues
OIC 34 in a nutshell
In April 2023, the Italian Accounting Standard Setter OIC approved a new revenue recognition standard, OIC 34, which had been expected for some time and which introduces rules on how revenues should be recognized under local accounting standards in Italy.
The new standard will improve the technical accounting guidance to represent complex transactions, thereby integrating the existing guidance for construction type contracts included in OIC 23 and substituting previous rules included in OIC 15 (receivables).
OIC 34 is effective for annual financial statements starting January 1, 2024.
OIC 34 in detail
The new standard provides a solid, theoretical accounting framework to address the increasing complexity of contracts that companies ordinarily enter into with their clients.
Areas impacted by the new standard:
- bundled offers of goods and services
- complex pricing
- loyalty programs
- Sales with repurchase option
- extended warranties
- complex discounts
- licensing agreements
- payments to customers
- other
OIC 34 impacts
This increasing complexity represents a challenge for high-quality financial reporting, as it requires modifying existing processes within the company and introducing new approaches that extend to areas well beyond finance. These areas include functions such as planning and control, taxation, information technology, human resources for incentive plans, and internal audit.
How can PwC help?
The implementation of OIC 34 presents a real opportunity to update, renew, and improve existing business processes. We can help you seize this opportunity by addressing the following topics:
- Impact Assessment: We will conduct a thorough analysis to understand and estimate the potential impact of adopting OIC 34. This assessment will include quantitative simulations to evaluate the effects on financial reporting and KPIs
- Operational Support: Our team will offer hands-on operational support throughout the implementation process of OIC 34. We will guide your company in updating processes, systems, and procedures to align with the new accounting standard.
- Tax Implications: We will assist in understanding the tax implications resulting from the adoption of OIC 34. Our experts will help you navigate through the changes in deferred taxation, current tax calculations, and other tax-related matters.
- 360-Degree Diagnostic Assessment: Our assessment will comprehensively examine the impact of OIC 34 on your business processes and financial data. This analysis will provide valuable insights into how the new standard will affect different aspects of your organization.
- Priority-Based Work Plan: Based on the diagnostic assessment results, we will work together to develop a structured work plan that outlines the necessary implementations in various areas of your company. The plan will be organized according to priorities to ensure a smooth and efficient implementation of the new revenue recognition standard.
By leveraging our expertise in financial reporting, accounting standards, and business processes, we aim to support your company in successfully adopting OIC 34. We will help you navigate the complexities, seize the opportunities, and ensure compliance with the new accounting guidelines while optimizing your financial reporting and decision-making processes.
