Jake Green, National Technical Partner comments on some of the new accounting standards. From some of my own conversations with large corporates, the underlying technical accounting issues are beginning to be appreciated - there are funnies but the issues are becoming more apparent perhaps?
What is not yet sinking in is how will the management of the new requirements be managed operationally. How will companies manage hundreds of contracts or leases? Spreadsheets?
I would hope not - imaging the amount of hours your finance team will be locked up with managing endless spreadsheets assessing contracts with eventual inaccuracies creeping in. (Who's never had a formula error?)
Act sooner rather than later so you have a smooth transition bringing all the right interested parties within in the company such as the IT team, sales team, legal?
Don't leave it till the audit or near reporting deadlines. Act now I say.
IFRS 15 is a new accounting standard applicable to businesses applying IFRS in the financial statements beginning on or after 1 January 2018, many businesses will need to implement new processes and control systems to ensure they are compliant. The standard will potentially have a huge impact on the financial reporting of revenue and applies to all customer contracts with only a few specialist exceptions. A significant change from the previous standards, IFRS 15 adopts a control-based model and much has been published about the accounting for revenue contracts and how this might change, ie the theory of the accounting change. However, focusing on this may be missing the largest implication of many of the subtle accounting changes in the practical implementation of the new standard. Read on for real-life examples demonstrating that the major challenges