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Tuesday 22 July 2014

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Revenue Recognition


Due process steps

Stage 5: Current stage

 

Step Required/
Optional
Metrics or
evidence
Protocol for and evidence
provided to DPOC
Actions
Consideration of information gathered during consultation:
IASB posts all comment letters received in relation to the Exposure Draft on the project pages.

Required if request issued

Letters posted on project pages

IASB reports on progress as part of the quarterly report at Trustee meetings, including summary statistics of respondents.

During a 120 day comment period ending on 13 March 2012, the IASB received 359 comment letters. The letters are available through a link on the IASB’s website. A comment letter summary, available on the public website, was presented to the IASB and FASB in May 2012.

Progress was reported at the Trustees meeting in July 2012.

Round tables between external participants and members of the IASB.

Optional

Number of meetings held

DPOC receives a report on outreach activities

The Board held five roundtable meetings including one in Tokyo, Japan; two in London, United Kingdom; and two in Norwalk, Connecticut, USA.

IASB meetings held in public, with papers available for observers. All decisions are made in public session.

Required

Number of meetings held to discuss topic. Project website contains a full description with up to date information on the project.

Meeting papers posted in a timely fashion. Number of meetings with Consultative Group and confirmation that critical issues have been reviewed with Consultative Group .

IASB discusses progress on major projects, in relation to the due process being conducted, with DPOC.

IASB review with DPOC its due process over project life cycle, and how any issues regarding due process have been/are being addressed.

DPOC meets with the Advisory Council to understand perspectives of stakeholders. DPOC reviews and responds to comments on due process as appropriate.

Board meetings
The IASB discussed 41 staff papers on the project at 10 joint Board meetings between May 2012 and May 2013.

Project website
The project website contains a full description of the project objective and history, along with up-to-date information on the project. In addition to posting papers in advance of the board meeting and regular board meeting webcasts of the public discussions, the website also includes a monthly summary of the tentative decisions of the Boards compared with the proposals in the 2011 ED.

The DPOC was regularly updated on the progress of the project.

Consultative groups utilised, if formed

Optional

Number of consultative group meetings, and evidence of substantive involvement in issues Consultative group review of draft exposure draft

DPOC receives report of consultative group activity from IASB

The revenue project started before the establishment of a working group was a formal due process consideration. However, the staff and the Board considered creating a working group, but thought that it would be difficult to create a sensibly sized group from the various industries that would ideally be represented. Given the very different industries covered by the project, the Board thought it would be more productive to utilise existing industry groups when specialist input was needed. The Board also consulted with various appointed bodies, as described in the body of this paper, including the Capital Markets Advisory Group (February, June, October 2012) and the Global Preparers’ Forum (June, November 2012, March 2013). The staff consulted these groups on topics such as the onerous test, collectibility and licenses.

The Board and staff also regularly met with groups representing specific industries, for example UK Constructors, telecommunications companies, European pharmaceutical companies, the European Software Accounting Group and national business associations. These meetings included discussions regarding the clarity and applicability of the proposals.

Email alerts are issued to registered recipients

Optional

DPOC receives a report on outreach activities

Interested parties have been notified when updates to the revenue recognition page are made using the News section of the project page and subscriber email alerts. These alerts were sent out, for example, upon publication of due process documents or to announce a webcast by Board members or staff to discuss the proposals. As of 10 May 2013, there were over 19,000 subscribers to the revenue recognition email alerts.

Outreach meetings to promote debate and hear views on proposals published for public comment

Outreach meetings to promote debate and hear views on proposals published for public comment

Optional

Number of meetings, including efforts aimed at investors

DPOC receives a report on outreach activities.

After the publication of the 2011 ED, IASB members and staff have conducted over 200 meetings with interested parties. These have included:

  • appearing at many public events to exchange views with stakeholders;
  • holding a large number of meetings with individuals and groups of preparers, users, auditors, regulators and others in order to test proposals and to understand concerns raised by affected parties;
  • maintaining a regular and active dialogue with regulators, standard setters and industry representative groups; and
  • obtaining the views of users of financial statements through both targeted meetings on topics such as the effect of the revenue model on the telecommunication sector, the effect of the constraint on revenue recognition, collectibility, disclosures and transition.

 

IASB organise regional discussion forums organised with national standard-setters

Optional

Number of meetings held

DPOC receives a report on outreach activities

The staff participated in discussion forums in Kuala Lumpur and Mexico City that were arranged by the national standard-setters in those jurisdictions. The staff also participated in meetings organised by national standard-setters in Europe, Japan, Canada and Brazil.

The DPOC was informed at its July 2012 meeting of the outreach update provided to the Boards in May 2012.

Finalisation:
Due process steps reviewed by IASB

Required

Summary of all due process steps discussed by the IASB before an IFRS is issued.

DPOC receives summary report on due process steps before an IFRS is issued.

The IASB discussed a summary of the mandatory and non-mandatory due process steps completed in developing the Revenue Recognition Standard in Agenda Paper 7C in May 2013. The IASB concluded that it had met its due process requirements and sufficient consultation and analysis had been undertaken. The IASB agreed that the staff could begin the balloting process. None of the IASB members present at the meeting indicated an intention to dissent from issuing the Revenue Recognition Standard.

Need for re-exposure of standard considered

Required

An analysis of the need to re-expose is considered at a public IASB meeting, using the agreed criteria

IASB discusses its thinking on the issue of re-exposure with the DPOC

The Boards considered the need for re-exposure in Agenda Paper 7C in May 2013 and decided not to re-expose the Revenue Recognition Standard.

IASB sets an effective date for standard, considering the need for effective implementation, generally providing at least a year.

Required

Effective date set, with full consideration of implementation challenges

The IASB discusses any proposed shortening of the period for effective application with the DPOC

Agenda paper 7E at the February 2013 Board meeting considered the effective date of the proposed revenue standard –the Boards decided on an effective date of 1 January 2017. The boards noted that the period of time from the expected issue of the Standard until its effective date is longer than usual. However, in this case the boards decided that a delayed effective date is appropriate because of the unique attributes of the Revenue Recognition project, including the scope of the entities that will be affected and the potentially significant effect that a change in revenue recognition has on other financial statement line items.

Drafting:
Drafting quality assurance steps are adequate

Required

Translations team included in review process

DPOC receives summary report on due process steps followed before an IFRS is issued

To be completed

Drafting quality assurance steps are adequate

Required

XBRL team included in review process

DPOC receives summary report on due process steps followed before an IFRS is issued

The staff met with the XBRL team in 2011 and again in May 2013 to discuss the implications of the final standard on the XBRL taxonomy. The staff will continue to meet with the XBRL team throughout the drafting process.

Drafting quality assurance steps are adequate

Optional

The Editorial team has been included in the review process.

In addition, external reviewers are used to review drafts. Comments are collected and considered by the IASB.

DPOC receives summary report on due process steps followed before an IFRS is issued

The staff have begun discussions with the editorial team about the timing of their review. The staff will continue to liaise with the editorial team and provide drafts for them to review in the finalisation of the standard.

The staff intend to send a draft of the standard to some external parties for fatal flaw review before publication. This process allows the external parties to report back to the staff about the clarity and understandability of the draft, mainly with editorial comments. The fatal flaw review process does not grant external parties the opportunity to question the Board’s technical decisions.

Drafting quality assurance steps are adequate

Optional

Review draft posted on project website

DPOC receives summary report on due process steps followed before an IFRS is issued

The staff have made a draft of the standard available on an internal site accessible by national standard-setters.

Analysis of likely effects of the forthcoming IFRS or major amendment, for example, costs or on-going associated costs.

Required

Publication of effect analysis

IASB reviews with DPOC results of effect analysis and how it has considered such findings in proposed IFRS.

IASB provides a copy of the effect analysis to the DPOC at the point of standard’s publication.

The IASB has met with a number of stakeholders, industry groups and advisory bodies to understand the effect of the proposals, including the costs of implementing the standard, as well as the benefits from the improvement in financial reporting. The staff will include an analysis of likely effects in the Basis for Conclusions to the standard. The IASB will review this effects analysis as part of the drafting process.

Publication:
Standard published

Required

ED has been posted on the IASB website.

The DPOC has been informed of the release of the ED.

To be completed

Press release to announce publication of ED

Required

Press Release has been published.

Media coverage of the release.

The DPOC has been informed of the release of the ED.

To be completed

A Feedback Statement, which provides high level executive summaries of the Standard and explains how the IASB has responded to the comments received, is provided.

Required

Publication of the Feedback Statement.

The IASB has provided a copy of the Feedback Statement to the DPOC at the point of the Standard’s publication.

The IASB has provided a copy of the Feedback Statement to the DPOC at the point of the Standard’s publication. To be completed