Implementing the new revenue standard, IFRS 15 Revenue from contracts with customers, will be a significant conversion project with significant impact for businesses.

1. Implementing IFRS 15
Revenue from contracts with customers
March 20, 2017
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2. Background
IASB & FASB joint effort at a converged revenue recognition standard
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board
(IASB) have been working towards a single comprehensive revenue recognition standard since the initial
joint project was put together in 2002. The objective of the joint effort was to:
 Remove inconsistences and weaknesses in the existing revenue recognition frameworks
 Provide a more robust framework for addressing revenue issues
 Improve comparability across entities, industries, jurisdictions, and capital markets
 Provide more useful information to financial statement users through enhanced disclosures
 Simplify financial statement preparation by streamlining and reducing the volume of guidance
The joint effort culminated in the issuing of the new revenue standards by both boards in 2014. ASC 606:
Revenue from contracts with customers, issued by FASB and IFRS 15: Revenue from contracts with
customers issued by IASB. The initial standards issued in 2014 have been severally amended and
updated by both boards in response to industry input, with the most recent amendment issued by FASB
in December 2016. While the standards are largely converged, some material differences remain.
Implementing IFRS 15
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3. IFRS 15: The new revenue recognition standard
Objective & Scope of IFRS 15
IASB states that the objective of IFRS 15 is to establish the principles that an entity shall apply
to report useful information to users of financial statements about the nature, amount, timing
and uncertainty of revenue and cash flows arising from a contract with a customer.
IFRS 15 should be applied to all contracts with customers except for:
 Lease arrangements within the scope of IAS 17: Leases
 Financial instruments and other contractual rights or obligations within the scope of IFRS 9:
Financial Instruments, IFRS 10: Consolidated Financial Statements, IFRS 11: Joint
Arrangements, IAS 27: Separate Financial Statements and IAS 28: Investments in Associates
and Joint Ventures
 Non-monetary exchanges between entities in the same line of business to facilitate sales
to customers or potential customers
Implementing IFRS 15
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4. IFRS 15 provides a single
comprehensive framework to be
used by businesses to recognize
revenue with customers. Six current
revenue recognition guidance
including IAS 11: Construction
Contracts and IAS 18: Revenue, will
be superseded by IFRS 15.
Implementing IFRS 15
IFRS 15: A single comprehensive revenue recognition framework
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5. IFRS 15: Five-step model
IFRS 15 moves way from the
“transfer of risk and rewards”
approach and introduces a new
“transfer of control” approach
delivered through the new five-
step model.
Entities are required to recognize revenue
to depict the transfer of promised goods
or services to customers in an amount
that reflects the consideration to which
the entity expects to be entitled in
exchange for those goods or services.
Implementing IFRS 15
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6. IFRS 15: Disclosure requirements
IFRS 15’s significant disclosure
requirements are in line with the
new standard's objective of
providing users of financial
statements with information that
will help them understand the
nature, amount, timing and
uncertainty of revenue and cash
flows arising from the entity’s
contracts with customers.
Implementing IFRS 15
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7. IFRS 15: Impact beyond accounting
Due to the fact that revenue is a
central and critical component of all
business activities, the effects of
IFRS 15 will impact almost all areas
of the business. A multi-disciplinary
conversion team is a prerequisite
for an effective implementation of
the new standard.
Implementing IFRS 15
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8. IFRS 15: Implementation options
Implementing IFRS 15
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9. IFRS 15: Now is the time to act
Implementing IFRS 15
Regardless of which implementation option is selected, businesses will go through some form of parallel
reporting, where accounting records are maintained under both the current standard and the new IFRS 15
standard during some phases of the implementation timeline. This will compound pressure on resources and
systems required to deliver an effective implementation of the new standard.
Implementing the new standard will be a significant project and will require a strong team to see it through.
Most businesses will need to strengthen their internal teams with outside experts to deliver an effective
implementation of the standard. As the effective date of January 1, 2018 gets closer there will be increased
pressure and competing demands for both internal and external IFRS implementation resource. The best
approach is to start now.
How we can help
Our team offers a broad range of experience and deep technical expertise in IFRS implementation and
accounting solutions. Our professionals have been delivering world class IFRS implementations and advisory
services since 2009 in Canada and around the world. We can help your business with planning, analysis,
implementation, and ongoing support related to IFRS 15 and other unique accounting solutions that your
business may need.
Howlite Consulting Inc. www.howliteinc.com info@howliteinc.com +1 587 317 4481
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