EFRAG Draft Comment Letter in response to the IASB Request For Information on the Post-implementation Review of IFRS 15 Revenue from Contracts with Customers

​EFRAG has published its Draft Comment Letter in response to the IASB's Request for Information for the Post-implementation Review of IFRS 15 Revenue from Contracts with Customers and seeks constituents’ comments by 11 October 2023.

​On 29 June 2023, the IASB published a Request for Information ('RFI') on the Post-implementation Review (‘PIR’) of IFRS 15 Revenue from Contracts with Customers (‘IFRS 15’ or ‘the Standard’). EFRAG has published its Draft Comment Letter (‘DCL’) in response to the RFI.

In the DCL response, EFRAG notes that the Standard is generally working well in practice and the five-step revenue recognition model and accompanying application guidance are  robust and principles-based requirements suitable for contracts with customers of varying complexity. Findings from an EFRAG-sponsored academic survey (i.e., to preparers and users) included in the DCL show that IFRS 15 improved the relevance and comparability of reported revenue. However, there are some potential areas for targeted improvements of the Standard. Specifically, EFRAG has made suggestions for the IASB to consider in respect of the following application challenges (listed in order of priority):

  • The challenges in determining whether a reporting entity is a principal or an agent which have arisen across a breadth of business models; 

  • The challenges in accounting for contracts involving licences; 

  • The challenges of applying the requirements of IFRS 15 along with the requirements of IFRS 3 Business Combinations, IFRS 16 Leases, IFRS 10 Consolidated Financial Statements, and IFRS 11 Joint Arrangements.

  • The challenge of identifying performance obligations related to contracts with upfront fees, pre-production services, and those involving licences; and 

  • The challenge in determining the transaction price in respect of the requirements for the estimation of variable consideration and the treatment of ‘negative’ revenue. 

EFRAG is seeking constituents’ views on matters in the RFI including the Standard’s overall suitability, its understandability, the cost-benefit  of its implementation, the identified application challenges, and the trends, costs and any improvements of its required disclosures. Views are also sought on the transition methods and convergence with US GAAP.

EFRAG's DCL can be found here with comments requested by 11 October 2023.

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