The European Securities and Markets Authority (ESMA) has today published a Public Statement dealing with issues to be considered in implementing IFRS 15 Revenue from Contracts with Customers.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers was issued by the International Accounting Standards Board (IASB) in May 2014. IFRS 15 sets out the requirements for recognising revenue that apply to all contracts with customers (except for contracts that are within the scope of the Standards on leases, insurance contracts and financial instruments). Subject to European Union (EU) endorsement, IFRS 15 is effective from 1 January 2017 with earlier application permitted; the endorsement process of IFRS 15 for use in the EU is substantially completed and its effective date of application in the EU is expected to be 1 January 2018.
IFRS 15 replaces the previous revenue Standards (IAS 18 Revenue and IAS 11 Construction Contracts) and the related Interpretations on revenue recognition (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).
ESMA’s Public Statement
In light of the expected impact and importance of the implementation of IFRS 15, ESMA’s Public Statement highlights the need for consistent and high-quality implementation of IFRS 15 and the need for transparency on its impact to users of financial statements.
ESMA calls on issuers of securities admitted to trading on regulated markets and their auditors to take the ESMA’s Public Statement into consideration in their respective work during the implementation of IFRS 15, notably when disclosing and auditing its [expected] effects in financial statements. In this respect, ESMA expects that, where relevant, the quality of the implementation of IFRS 15 will be closely monitored by Audit Committees.
ESMA expects that its Public Statement will be taken into account and reflected in the 2016 and 2017 annual and 2017 interim financial statements, thereby enhancing the comparability of IFRS financial statements in the EU. ESMA, together with national competent authorities, including IAASA, will monitor the level of disclosure that issuers provide in their financial statements about the implementation of IFRS 15, changes in accounting policies resulting from this implementation and information relevant to assessing its possible impact on the issuers’ financial statements in the period of initial application.
ESMA’s Public Statement may be accessed here.