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

Timeline 

In June 2023, the IASB published Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers . Our response to the IASB was submitted on 26 October 2023.

On 30 September 2024, the IASB published Project Summary and Feedback Statement to conclude its post-implementation review. The IASB concluded that:

• there are no fundamental questions (fatal flaws) about the clarity or suitability of the core objectives or principles in the requirements;
• the benefits to users of financial statements from the information arising from applying the requirements in IFRS 15 are not significantly lower than was expected; and
• the costs of applying the requirements and auditing and enforcing their application are not significantly greater than was expected.

Nonetheless, the IASB identified several matters for further consideration. The IASB will consider in its next agenda consultation matters related to:

• reporting consideration payable to a customer;
• assessing control over services and intangible assets to determine whether an entity acts as a principal or an agent; and
• applying IFRS 15 with other IFRS Accounting Standards—specifically with IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRIC 12 Service Concession Arrangements.

The IASB will also gather further evidence on matters related to how an entity assesses whether the transfer of an asset is a sale in a sale and leaseback transaction in the Post-implementation Review of IFRS 16 Leases.

The IASB decided to take no further action on the other matters identified in the Post-implementation Review of IFRS 15.

Background 

In May 2014 the IASB issued IFRS 15. In April 2016 the IASB issued clarifications to IFRS 15 which became effective at the same time as the rest of the standard.

IFRS 15 Revenue from Contracts with Customers replaced:

• IAS 11 Construction Contracts;
• IAS 18 Revenue;
• IFRIC 13 Customer Loyalty Programmes;
• IFRIC 15 Agreements for the Construction of Real Estate;
• IFRIC 18 Transfers of Assets from Customers; and
• SIC-31 Revenue—Barter Transactions Involving Advertising Services.

The standard was effective for annual periods commencing on or after 1 January 2018. 

Under its due process the IASB is required to conduct a post-implementation review (PIR)^[1] of the all new IFRS standards and major amendments.  The objective of a PIR is to assess whether the effects of applying the new requirements on users of financial statements, preparers, auditors and regulators are as intended when the IASB developed those new requirements. 

In November 2021 the IASB decided to begin the PIR of IFRS 15 in the second half of 2022. In September 2022 the IASB discussed the plan for phase 1 of the PIR (identification of matters to be examined).

For the PIR of IFRS 15 the IASB has decided to consider whether:

1. there are fundamental questions (i.e. ‘fatal flaws’) about the clarity and suitability of the core principle and the five-step revenue recognition model in IFRS 15;
2. the benefits to users of financial statements of the information arising from applying the IFRS 15 requirements are broadly as expected (or whether, for example, there is significant diversity in application); and
3. the costs of applying some or all of the IFRS 15 requirements and auditing and enforcing their application are broadly as expected (or whether there is a significant market development since IFRS 15 was issued for which it is costly to apply its requirements consistently).  

Outreach

Our outreach on this project included discussions with stakeholders and public consultation on our draft comment letter. Thank you to all who participated in this project. All responses received to our Draft Comment Letter were considered when finalising the Comment Letter.

Final Comment Letter

The UKEB Final Comment Letter identifies no “fatal flaws” but sets out areas of potential enhancement to the IFRS 15 requirements, should the IASB plan to make amendments resulting from other feedback received in the Request for Information.

The UKEB Final Comment Letter was published on 26 October 2023. An accompanying Feedback Statement, describing how feedback received from stakeholders was addressed, was also published on the same date.

The following relevant documents are available at the foot of this page:

1. Draft Comment Letter and Invitation to Comment
2. Responses from stakeholders
3. Final Comment Letter
4. Feedback Statement
5. Due Process Compliance Statement

^[1] For further information on this project visit the IFRS webpage here, and for more information on the IASB post-implementation reviews refer to the IFRS website here.

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UKEB Meetings

• February 2024 IASB General Update: Appendix A includes a summary of the IASB’s January 2024 meeting, including overall feedback on the PIR of IFRS 15, and a plan for the next phase of the project.
• March 2024 IASB General Update: Appendix G includes a summary of the IASB’s tentative decisions at its February 2024 meeting on some aspects of the project, including identifying performance obligations in a contract, principal versus agent considerations, and licensing.  
• April 2024 IASB General Update: Appendix F includes a summary of the IASB’s tentative decisions at its March 2024 meeting on some aspects of the project, including determining the transaction price, determining when to recognise revenue, and disclosure requirements. 
• May 2024 IASB General Update: Appendix C includes a summary of the IASB’s tentative decisions at its April 2024 meeting on some aspects of the project, including applying IFRS 15 with other IFRS Accounting Standards, and the requirements in IFRS 15 on determining a transaction price (specifically, on consideration payable to a customer, which had started to be discussed by the IASB in March 2024, and on a significant financing component).
• June 2024 IASB General Update: Appendix G includes an update on the May 2024 IASB discussions in relation to the final question in the RFI (Other  matters) and an updated academic literature review. An Annex provides a summary of the IASB tentative decisions made to date.
• October 2024 IASB General Update: Appendix D provides an update on the IASB activities in June 2024, its final decisions in July 2024 (overall decisions on whether to take actions and the priority of those actions), plus an overview of the IASB project summary and feedback statement published in September 2024.