Post-implementation Review of IFRS 15 Revenue from Contracts with Customers

The IASB met on 22 March 2023 to discuss findings from Phase 1 of the Post-implementation Review of IFRS 15 Revenue from Contracts with Customers, feedback from stakeholders and a review of academic literature.

The IASB discussed which matters to ask stakeholders about in the request for information it plans to publish to inform the next phase of the Post-implementation Review.

IFRS 15 as a whole and convergence with the US Financial Accounting Standards Board’s Topic 606 (Agenda Paper 6B)

The IASB tentatively decided to ask stakeholders about their views on IFRS 15 as a whole, including:

1. whether IFRS 15 meets its overall objective;
2. the clarity and suitability of the core principle of the Standard and the five-step revenue recognition model for making revenue accounting decisions;
3. their suggestions for specific narrow-scope improvements for the IASB to consider that could improve the understandability of IFRS 15 without causing substantial cost and disruption to entities already applying the Standard;
4. their feedback from the implementation of IFRS 15 for the IASB to consider in improving the understandability and accessibility of future Standards; and
5. the ongoing costs and benefits of applying the requirements in IFRS 15.

The IASB also tentatively decided to ask stakeholders about the importance of retaining convergence between IFRS 15 and the Financial Accounting Standards Board’s Topic 606 Revenue from Contracts with Customers.

All 13 IASB members agreed with these decisions.

The five steps of revenue recognition and related areas (Agenda Papers 6C–6D)

The IASB tentatively decided to ask stakeholders for any fact patterns in relation to which:

1. guidance on identifying performance obligations in a contract:
   1. is applied inconsistently;
   2. leads to outcomes that do not reflect the underlying economic substance; or
   3. leads to significant ongoing costs;
2. guidance on determining the timing of revenue recognition is unclear or may be applied inconsistently—particularly with respect to the criteria for recognising revenue over time;
3. guidance on determining whether an entity is a principal or an agent is unclear or may be applied inconsistently; or
4. guidance on accounting for licensing is unclear or may be applied inconsistently.

All 13 IASB members agreed with these decisions.

The IASB tentatively decided to ask stakeholders about:

1. evidence of diversity in practice in determining the transaction price in a contract, specifically in relation to consideration payable to customers;
2. disclosure requirements, including the costs of meeting those requirements and the benefits of the resulting information to users of financial statements; and
3. transition requirements—specifically:
   1. whether the option to use the modified retrospective method and the practical transition reliefs offered by IFRS 15 were used by preparers of financial statements; and
   2. whether they achieved an appropriate balance between reducing the cost and burden for preparers of financial statements and providing useful information to users of financial statements.

All 13 IASB members agreed with these decisions.

The IASB tentatively decided against asking stakeholders about evidence of diversity in practice in determining the transaction price in a contract in relation to sales-based taxes.

Nine of 13 IASB members agreed with this decision.

Interaction with other IFRS Accounting Standards (Agenda Paper 6E)

The IASB tentatively decided to ask stakeholders about the application of IFRS 15 alongside other IFRS Accounting Standards, focusing on IFRS 3 Business Combinations, IFRS 9 Financial Instruments and IFRS 16 Leases.

Twelve of 13 IASB members agreed with the decisions in relation to IFRS 9 and IFRS 16.
Nine of 13 IASB members agreed with the decision in relation to IFRS 3.

The IASB tentatively decided against asking stakeholders about the application of IFRS 15 alongside IFRS 10 Consolidated Financial Statements but directed the staff to include an explanation of this decision in the request for information.

Twelve of 13 IASB members agreed with this decision.