ifrs notes: the iasb issues a formal proposal to defer the effective date
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Barboza, Melvin
Sent: Friday, May 22, 2015 1:08 PMSubject: IFRS Notes
The IASB issues a formal proposal to defer the effective date of the new revenue standard Background
On 28 April 2015, the International Accounting Standards Board
(IASB) had voted to publish an exposure draft (ED) proposing
a one-year deferral of the effective date of IFRS 15, Revenue from
Contracts with Customers to 1 January 2018.
New development
On 19 May 2015, the IASB published an ED of proposed
amendments to IFRS 15 to change the effective date of IFRS 15. It
proposes that IFRS 15 would apply for annual reporting periods
beginning on or after 1 January 2018. Earlier application would
continue to be permitted. Entities would also continue to be
permitted to choose between applying the standard either
retrospectively to each prior reporting period presented or
retrospectively with the cumulative effect of initially applying the
standard recognised at the date of initial application.
The IASB and FASB Joint Transition Resource Group have
discussed a number of application issues. In light of those issues,
the IASB has tentatively decided to propose amendments to IFRS
15 which are expected to clarify, instead of change, the
requirements of the standard. These amendments are expected to
be included in an ED which is slated to be published later in 2015.
These amendments are expected to include:
Clarification to the guidance on licences
Addition of examples illustrating the guidance on identifying
performance obligations and
Clarifications to the guidance on principal vs agent
considerations.
In the light of the above proposed amendments, the IASB discussed
whether it should propose to defer the effective date of IFRS
15. The Financial Accounting Standards Board (FASB), however,
has issued an ED on deferral of the effective date of Topic 606,
Revenue from Contracts with Customers (equivalent to IFRS 15) on
29 April 2015 with comments due by 29 May 2015.
The IASB also received a number of unsolicited comment letters
from stakeholders, e.g. telecommunication and software industries,
supporting a deferral of the effective date of IFRS 15. In their view, a
one-year deferral would improve the quality of implementation,
particularly in the light of the availability (or lack thereof) of
information technology systems.
Therefore, the IASB holds a view that a one-year deferral would be
sufficient in terms of providing additional time to implement IFRS 15.
Feedback on the ED is required by 3 July 2015.
Accordingly, the IASB would also consider the comments it receives
on the proposal and would plan to decide whether to proceed with
an amendment to IFRS 15 regarding the effective date at its July
2015 meeting.
Impact on Ind AS road map
We note that the proposal of the IASB for a one-year deferral of the
effective date of the revenue standard does not automatically mean
deferral of the Ind AS 115, Revenue from Contracts with Customers
issued by the Ministry of Corporate Affairs. Ind AS 115 is aligned to
IFRS 15.
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Jamil Khatri Head of Audit, KPMG in India
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Sai Venkateshwaran Partner and Head, Accounting Advisory Services, KPMG in India