EFRAG has completed its due process regarding Clarifications to IFRS 15 Revenue from Contracts with Customers and has submitted its Endorsement Advice Letter to the EC.
The objective of the Clarifications is to clarify the IASB’s intentions when developing the requirements in IFRS 15 Revenue from Contracts with Customers. The Clarifications become effective for annual periods beginning on or after 1 January 2018, with earlier application permitted.
EFRAG has assessed the Clarifications and has not identified any technical issues. EFRAG considers that they bring appropriate clarifications of the existing principles in IFRS 15 for accounting for revenues from contracts with customers in specific cases and will reduce the potential for diversity in practice to arise.
EFRAG has concluded that the Clarifications meet the qualitative characteristics of relevance, reliability, comparability and understandability required to support economic decisions and the assessment of stewardship, and lead to prudent accounting. EFRAG has also assessed that the Clarifications do not create any distortion in their interaction with other IFRS and that the existing disclosure requirements in IFRS 15 are appropriate. Therefore EFRAG has concluded that the Clarifications are not contrary to the true and fair view principle.
EFRAG has assessed that the Clarifications would improve financial reporting and would reach an acceptable cost-benefit trade-off. EFRAG has not identified that the Clarifications could have any adverse effect on the European economy, including financial stability and economic growth. Accordingly, EFRAG assesses that adopting the Clarifications is conducive to the European public good.
EFRAG has concluded that the Clarifications meet the qualitative characteristics of relevance, reliability, comparability and understandability required to support economic decisions and the assessment of stewardship, lead to prudent accounting, and that they are not contrary to the true and fair view principle. EFRAG has also concluded that the Clarifications are conducive to the European public good. Therefore, EFRAG recommends the Clarifications for endorsement.
Full endorsement advice letter
© EFRAG - European Financial Reporting Advisory Group
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