AASB 15 Revenue from Contracts with Customers has been saved
AASB 15 Revenue from Contracts with Customers
Revenue but not as you know it
AASB 15 provides a new framework for revenue recognition, measurement and disclosure following a five step approach. The new standard is effective on 1 January 2018, with the application of AASB 15 expected to have a pervasive impact on many organisations that is not limited to their financial statements.
AASB 15 Revenue from Contracts with Customers is effective for annual reporting periods commencing on or after 1 January 2018. The Standard provides a new framework governing the recognition, measurement and disclosure of revenue following a five step approach.
Application of AASB 15 is expected to have varying levels of impact across organisations and industries. In some circumstances, the degree of complexity, judgement and disclosure requirements will require substantial changes to an organisation’s financial reporting systems and processes; while other organisations may benefit from a simpler implementation. In all circumstances, however, those entities preparing general purpose financial statements will at the very least be exposed to increased levels of disclosure, some of which may be commercially sensitive and complex to prepare when compared to current requirements.
For successful implementation, it is critical that organisations do not focus only on apparent differences between current accounting standards and AASB 15. The full impact of AASB 15 can only be understood when contracts are assessed using the new guidance in its entirety.
In addition, organisations need to be mindful of the broader business impacts of any changes identified – systems, processes and areas outside of finance may all be exposed to implementation impacts and full consideration of these will be required to ensure that implementation risks and opportunities are appropriately managed.
Sufficient time to plan, resource and implement an AASB 15 solution appropriately will be critical to implementation success.
Deloitte Australia AASB 15 Resources
The Deloitte Revenue Project Team recently undertook a national survey on AASB 15 Revenue from Contracts with Customers assessing organisations general level of preparedness for the new accounting standard. With nearly 100 participants across Australia, the results are telling.
Some key highlights include:
- The majority of companies surveyed had not yet commenced their impact assessment of AASB 15, despite a nearing effective date and the potential of the standard to have a widespread impact across organisations
- Accounting areas of concern identified by survey participants included: determining the appropriate timing of revenue recognition, increased disclosure requirements, identifying distinct performance obligations and accounting for contract modifications
- Nearly 50% of survey respondents expect that AASB 15 may change the timing of their revenue recognition.
You can access a copy of the survey report here.
How Deloitte can help
Deloitte Australia is part of a global network of dedicated and experienced professionals able to assist you with end-to-end project management and implementation of AASB 15.
For those that have only just begun their AASB 15 journey, Deloitte has developed an interactive diagnostic tool to assist organisations assess the risks and exposures of the new Standard across their business and plan for implementation.
We believe the provision of exceptional technical accounting capability is a must-have for any AASB 15 project, but a world class accounting change program requires more than just technical accounting skills.
Deloitte can offer a specialist and experienced team to work with you across every aspect of your AASB 15 implementation, from performance of the initial impact assessment of the Standard through to systems redesign and commercial risk management.
For more information, please contact one of our team members below.