Becoming ‘Finance Led’: The Challenges and Opportunities of IFRS 15

The objective of IFRS 15 appears straightforward. Deloitte describes it simply as: “Establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.” 

But CFOs and their finance functions are discovering that, while clear in principle, IFRS 15 is anything but that in practice. 

The standard sets out to make the recognising of revenue, and its subsequent reporting, more transparent for investors and other users of financial statements. However, the process of understanding all your products and services and how they are placed into contracts is difficult. The next step is even more challenging: creating structures and systems that will allow revenue to be recognised when a performance obligation is satisfied. 

There are also cultural and organisational changes and considerations to be made. With the standard coming into force for financial periods beginning on or after 1 January 2018, it is time for businesses to put plans into place and prepare for the new regime.