Professor Beatriz García Osma, Universidad Carlos III de Madrid, Professor Jacobo Gomez-Conde, Universidad Autónoma de Madrid, and Professor Araceli Mora, Universidad de Valencia

Research carried out among finance professionals – including ACCA members – into the impact of IFRS 15, Revenue from Contracts with Customers, has found that more than half of the preparers surveyed have had to change or update their IT systems to deal with the new requirements.

The report, which focuses on the effect on management control systems (MCS) and the internal production and use of information – including costs, decision-making and organisational behaviour – reveals that preparers found that implementation of the standard had a significant impact on disclosures, although the recognition and measurement of amounts in the income statement and the balance sheet have had low-to-moderate impact.

One-off impacts

The main one-off effects of implementing IFRS 15 were found to be on performance indicators and the changes in IT systems that were needed in order to provide detailed information in the notes to the financial statements.

Ongoing impacts

The most significant ongoing impacts were identified as changes in performance indicators and staff training.

Impact on IT and systems

The main impacts on IT and MCS came from providing disclosures and recognising revenue over time. For the most affected industries (telecoms, construction, public administration and defence, aerospace, and engineering and industrial), most items have caused higher than moderate impacts.

Impact on decision-making

The most prominent impacts on decision-making as a consequence of the changes to IT and MCS relate to product pricing (eg reconfiguring or simplifying commercial offers, contracting and pricing discipline across divisions) and the homogenisation of procedures in information systems.

For the most affected industries, changes to IT and MCS have caused more than moderate impacts to decisions about products, allocation of resources among products, centralisation of information and involvement of the finance function in the design of contracts.

Respondents didn’t report any potential benefits for internal control and corporate decision-making arising from the implementation of IFRS 15. However, they did perceive the changes to IT and MCS to have a positive impact on economic and financial variables, in particular on annual profits and return on assets.

‘The cost burden of IFRS 15 compared to other standards needs to be interpreted with caution,’ the report concludes, ‘as these costly changes in MCS alter some decision-making and organisational aspects which might have other consequences benefits (or costs) in terms of performance or efficiency. Identifying these potential consequences may influence the speed and quality of an organisation’s reporting following the introduction of a new accounting standard.’ 

About the research

The study is sponsored by EFRAG to inform its comment letter to the International Accounting Standards Board as part of the post-implementation review of IFRS 15, Revenue from Contracts with Customers. It comprised a survey and interviews with preparers of financial statements including ACCA members, resulting in 196 full responses.