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ESMA agrees with the proposed clarifications to IFRS 15 in response to issues arising from the discussions of the Transition Resource Group for Revenue Recognition (TRG). However, ESMA regrets that the IASB and the FASB were not able to maintain convergence between the requirements of IFRS 15 and Topic 606 of the Codification and urges the two boards to maintain their efforts to keep the standards as convergent as possible.
ESMA agrees that the IASB identified the right issues that require clarification from the TRG discussions and that no further clarification on the issues for which amendments are proposed by the FASB is required at this stage. ESMA also supports the IASB’s decision to include a discussion in the Basis for Conclusions to the ED of the potential impacts on convergence for each of the issues where either the IASB or the FASB have decided to propose different amendments to their respective standards. However, ESMA notes that the difference in the amendments proposed by the IASB and FASB might lead to different outcomes even in circumstances when that was not intended by the Boards.
Furthermore, ESMA encourages the IASB to discuss emerging issues together with the FASB in order to retain the current level of convergence, when possible. Should divergence arise, ESMA recommends the IASB to clearly identify and communicate any such differences between IFRS 15 and Topic 606 and update the comparison in Appendix A to the Basis for Conclusions of IFRS 15 as the Boards’ proposals are finalised or new differences emerge.
Regarding any further standard-setting process related to IFRS 15, unless a major flaw of the standard is identified, any remaining minor issues to be identified by the implementation process could be addressed by referring the issue for consideration to the IFRS Interpretation Committee or to the post-implementation review. Indeed, ESMA believes that, at this stage, before the date of mandatory application of IFRS 15, the IASB should only clarify those issues that are strictly necessary for a proper understanding of the standard, in order to ease the implementation and to foster consistent application.
ESMA encourages the IASB to find a way to make easily accessible to all IFRS constituents, the analysis of the issues that were referred to the IASB by the TRG and for which no clarification was provided. This might be even more relevant after the period of first time application of the Standard when the TRG will be no longer active. In this respect, ESMA is of the view that such an analysis could be published as educational material in the framework of the IASB Educational Initiative.