The IFRS 15 amendments do not change the underlying principles of the standard but detail how those principles should be applied, IASB asserts, although the detailed amendment document runs to 96 pages.

Ian Mackintosh, IASB vice-chairman said: ‘We should clarify that these are just basic clarifications, not changes to the standard. One was in defining performance obligations, the other was whether you are principal or agent, and the third, was to do with licensing.

‘We also did some relief on transition to allow our constituents to transition more easily.

‘When we’d finished the standard we decided to set up a transition resource group and this was the first time we had done this – it is not an authoritative group, it was a discussion group where matters could be brought forward. There were three issues that we thought were worthy of making clarifications to the standard.

‘That is the process that was followed and the reason for the clarifications.’

The changes come following discussions at the Transition Resource Group (TRG), which was set up to help companies complete the transition with minimal disruption to current accounting and reporting arrangements, although the IASB has effectively disbanded the group now as it stresses that its role has been fulfilled and the intention is to make no further amendments to the standard in the run-up to full implementation.

Due to the complexity of the changes to current accounting practice on revenue recognition, the implementation date for the converged standard, which was developed jointly with the US Financial Accounting Standards Board (FASB), has already been delayed by a year from the initial 1 January 2017 effective date to 1 January 2018.

With the standard now in the final iteration, McLeod confirmed that there will be no further TRG meetings for the global board although it will still exist as a group.

‘We have decided not to schedule any further meetings from our TRG for now, although the US will continue to hold meetings with their TRG.

‘We are not ignoring the situation, but we have available on the website ways for constituents to submit issues online. We will take US issues on board when they have their meetings.

‘The TRG has not been disbanded and if necessary can be recalled to discuss matters. Our emphasis is on stability – our constituents really need to get on with implementation and they need a stable platform to do this. At this stage we have no intention to change the standard again.’

The amendments clarify how to:

• identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract;
• determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and
• determine whether the revenue from granting a licence should be recognised at a point in time or over time.

The IASB decided not to amend the rules for collectability and measuring non-cash consideration, although these issues were raised by the TRG following discussion with stakeholders.

In addition, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new standard. These cover transition relief for modified contracts and completed contracts.

The IASB said that the transition relief on accounting for contract modifications came in response to stakeholder feedback. Explaining the rationale for the relief, an IASB spokesperson told Accountancy: 'Some stakeholders thought that applying those requirements to account for past contract modifications when a company first applies IFRS 15 could be complex, and asked the boards [IASB/FASB] to provide a practical expedient. 

'The boards considered and decided to provide an additional practical expedient that would allow a company to reflect the aggregate effect of all past contract modifications when identifying the performance obligations, and determining and allocating the transaction price, instead of accounting for the effects of each contract modification separately.'

In terms of accounting for completed contracts, the IASB amended IFRS 15 to allow a company not to restate contracts that are completed contracts prior to the date of transitioning to IFRS 15.

The amendments issued on 12 April 2016 have the same effective date as IFRS 15 from 1 January 2018.

Further information on the amendments can be found on the IASB Clarifications to IFRS 15 project page