IFRS 15 Revenue Recognition Disclosure Quality Slated by FRC
The review by FRC was particular with the ways in which companies are submitting reports under the latest IFRS, International Financial Reporting Standards. After the reviews of the 1st year of operating, it was revealed that there was much space for improving the value of disclosures.
It was stated by the regulator that the application of the Financial Instruments of IFRS and the IFRS 15 Revenue, represented noteworthy trial and adjustment for businesses, followed by a time of stability of financial recording.
The evaluation of the application of the IFRS 15 disclosure spotted that organizations need to improve their explanations of policies related to accounting like the nature of presentation requirements. Furthermore, they need to elaborate on whether the company is an agent of providing services and goods.
The connection between information and policies in the reports like strategic and segmental reports, were sometimes unclear, while data related to important judgments of revenue were variable.
Moreover, quantitative disclosure, like ranges of predictable outcomes or sensitivities were missing for judgments like estimation uncertainty.
Furthermore, the FRC assessment of the IFRS 9 instruments application showed instances of good practice across some companies, with a high amount of quality disclosure.
However, it was also recognized that there is still space for improvement for disclosures by assessing the value of receivables via nonbanking businesses and by giving information on signs of a surge in credit related risk.
Regarding reports about damage of non-monetary possessions, the review spotted that better results across all angles of disclosures. It further identified several common disclosure opportunities and omissions to enhance and clarify disclosures.
The FRC has been specifically encouraging businesses to pay more thoughtfulness to provide important information about key assumptions and judgments. They should further try to elaborate on the delicacy to variations, where significant alterations could increase the impairment of generosity and material other adjustments to impaired assets.