• Print
  • Share
Comment Letter: IFRS15 Clarifications
Oct 29, 2015

Comment Letter IFRS15 Clarifications 191015

Dear Sir

Exposure DraftProposed clarifications to and transition reliefs for IFRS 15 Revenue from Contracts with Customers


Crowe Horwath International is pleased to respond to the International Accounting Standards Board Exposure Draft Proposed clarifications to and transition reliefs for IFRS 15 Revenue from Contracts with Customers.

In general we welcome the clarifications that are being proposed to IFRS 15 which, we believe resolve a number of areas of uncertainty and will be useful to entities in applying IFRS 15 for the first time. We are, however, concerned that on a number of points of detail the IASB and FASB appear to be reaching different conclusions (such as over shipping and handling activities) or that FASB is issuing amendments without a mirroring amendment being made to IFRS 15.


We are also concerned that additional guidance issued by FASB will be regarded as authoritative for matters where IFRS 15 is silent, for example in respect of non-cash consideration.  Our concern is based on the fact that the IFRS 15 is a converged standard and, therefore, it is appropriate to look to pronouncements by the US standard setter when determining how it should be implemented. Given the potential for divergence noted above such a practice may have unintended consequences.


We welcome the fact that IFRS 15 is a converged standard that will provide direct comparability between companies reporting under US GAAP and those reporting under IFRS; the process of clarifications would appear to be undermining this goal and we urge both standard setters to actively avoid divergence occurring.

Question 1-Identifying performance obligations 

We agree with the proposed amendments to the Illustrative Examples accompanying IFRS 15. 

Question 2- Principal versus agent considerations

In general we agree with the proposed amendments however we do regard paragraph B37 (d) to be unclear. The wording of this section allows for the possibility of the entity both being exposed to credit risk and not being exposed to such as risk; without further clarification it does not therefore give sufficient guidance as to whether the exposure to credit risk indicates the entity controlled the specified good or service.

We also consider that the original wording of paragraph B37 (d) ('the entity's consideration is in the form of a commission') should be retained in some format as this is a common indicator in practice.

Question 3-Licensing

We agree with the proposed amendments regarding licensing though, as noted above, we are concerned with the potential divergence between the IASB and FASB on this point.

Question 4-Practical expedients on transition

We agree with the practical expedients. With respect to the use of hindsight we consider that entities would have found it difficult in practice to apply the standard for the first time without using hindsight in these respects. Overall we consider that both expedients reduce the cost of transition without detracting from the quality of financial information provided.

Question 5- Other topics

As explained above we are concerned with the divergence between the IASB and FASB on this point and we would urge the Boards to remain aligned in respect of revenue recognition.

In particular we consider that the IASB should issue an amendment on non-cash consideration. In coming to this conclusion we note the comment in paragraph BC102 regarding non-cash consideration. When investors are expecting merged standards they may well be less aware of potential differences in interpretation and practice between USGAAP and IFRS, consequently the diversity that is noted will be less visible to investors.  Given this we think it is appropriate for the IASB to clarify the position. In our opinion the approach set out by FASB in paragraph BC101 would appear to be an appropriate position to adopt.


We look forward to seeing the progression of the proposals.

Yours faithfully


David Chitty

International Accounting and Audit Director