The Financial Reporting Council (FRC) is expecting 2017/18 annual reports to provide clear disclosures setting out the likely impact and key judgements on adoption of IFRS 15. For listed entities, the adoption of IFRS 15 will require reporting of their 2018/19 interim results under the new revenue standard.
IFRS 15 is effective for periods beginning on or after 1 January 2018.
A comprehensive and well implemented project plan will enable companies to comply with both the IAS 8 disclosure requirements on the impact of new accounting standards and the advice issued by the FRC. IFRS 15 transition is likely to be a key focus area for auditors, particularly in software and technology businesses which are likely to be significantly impacted by the adoption of the new five step revenue model.
IFRS 15 implementation should include the following:
- consideration of the business implications, including the impact on bank covenants, performance related pay and investor communications;
- clear documentation of the impact assessment of transition;
- a review of data, systems and controls, including controls to be applied to ensure revenue is recognised and measured in accordance with IFRS 15; and
- an assessment of whether current accounting systems need to be modified or upgraded.
You can download our IFRS 15 Implementation checklist here.
For further information please speak contact Louise Ward or your usual RSM contact.
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