With the International Accounting Standards Board (IASB) yet to confirm plans to defer by a year the effective date of the revenue standard, IFRS 15, Revenue from Contracts with Customers, research from a survey of over 300 UK CFOs, FDs and senior finance professionals shows that a only a third have begun to review the requirements which were originally due to be brought in on 1 January 2017
Despite the changes initially scheduled to come into effect in less than 18 months, the survey conducted by finance and accountancy job site GAAPweb, in association with recruiters Cedar, found that over a third (36%) of respondents were unaware of any change to the way revenue will be recognised.
Of those, 73% did not expect the change would have a significant impact on their business, despite a radical overhaul to revenue recognition reporting under the new IFRS 15 rules.
The survey identified telecoms, property and technology companies as most at risk of non-compliance, following recent guidance from the IASB and the US Financial Accounting Standards Board (FASB) about the impact the new standard could have in these sectors due to their complex goods bundles.
Over half of those surveyed (52%) had made no preparations for the change, whilst only a third (35%) had only just started to review the new requirements. The majority (86%) expected existing finance teams to absorb the additional workload caused by the new standard.
Howard Bentwood, managing partner at Cedar, said: ‘The results of this report further highlight the need for companies to better understand the enormity of the impact that IFRS 15 will have on their finance functions.’
‘As a business we have noticed a spike in demand for skilled senior finance professionals with experience in system development and implementation. Many of Cedar’s clients in the telco/telecoms and property sectors are acutely aware of the impact that IFRS 15 will have on their business and have already started to recruit to bolster their teams. Cedar is currently partnering with these organisations to assist with their IFRS 15 recruitment strategies.’
Survey respondents included BT, BBC, Visa and AstraZeneca.
IASB’s consultation on whether to follow FASB in deferring the introduction of IFRS 15 by a year closes early next month and the standards body has said it plans to decide on whether to change the effective start date at its July meeting.
The revenue standard was issued jointly with FASB in May 2014, with an effective date of 1 January 2017.
Earlier this year FASB announced it would delay implementation after US companies argued they needed to develop accounting policies, update IT systems, change processes and internal controls, train employees and educate investors. They also said they needed additional time to hire external consultants to assist in implementing the new standard.
The IFRS Foundation subsequently said that because IFRS 15 is a converged standard with US GAAP it would be 'less confusing for the market if both IFRS and US GAAP preparers apply the new Standard at the same time.'
IASB said that the main reason for the proposed deferral of the effective date is that it plans to issue an exposure draft of targeted amendments to the standard, which will include clarifying some of its requirements and adding illustrative examples to aid implementation. These are the result of discussions by the joint Transition Resource Group (TRG), established in conjunction with the FASB to support the implementation of the standard.
