IFRS 15 has a mandatory effective date for annual periods beginning on or after 1 January 2018, with earlier application permitted.
Plan for change
A single, global converged revenue recognition model is effective soon and companies should not underestimate the level of preparation required in advance of the effective date. It replaces most existing revenue recognition standards with a single, principles-based standard. This new standard requires more judgment and attention to the documentation supporting those judgments.
The changes to revenue recognition will force:
- companies to develop, deploy and monitor a management structure to ensure effective implementation of changes to a multitude of accounting and reporting processes and procedures;
- companies to review their contracts, including whether contracting practices should change and understand the impact of the standards on current and future contracts; and
- virtually all companies to experience some level of change - controls and processes will change even if reported numbers do not.