The International Accounting Standards Board (IASB) has postponed the effective date for the new revenue standard (IFRS 15: Revenue from Contracts with Customers) by one year.

IFRS 15 was released in May 2014 with an effective date of application for annual periods beginning on or after 1 January 2017. This has now been postponed to 1 January 2018.

Why did they do this…?

The IASB and US Standard Setting Board the Financial Accounting Standards Board (FASB) established the Transition Resource Group (TRG) to assist entities in the implementation of the new revenue standard back in 2014, shortly after the new revenue standard was released. Numerous public consultations have been held, whereby entities have expressed their concerns over the implementation of the standard.

A few key points were raised as concerns which require further clarification from the IASB, without changing the requirements:

• guidance on revenue recognition of licenses;
• adding further examples illustrating the identification of performance obligations; and
• guidance on the principle versus agent considerations (reporting revenue gross versus net).

The effective date was also postponed with the intention of aligning the IASB effective dates of the new revenue standard with that of the FASB’s; interestingly enough this has not been adhered as the FASB also proposed to defer their effective date for all entities.

What’s next…

The formal amendment to the effective date of IFRS 15 is expected to be issued in September 2015.

The IASB will continue to address any concerns received from the public and attempt to amend the standard to clarify any outstanding concerns as indicated above.