Principal versus agent considerations
Revenue recognition is a key principle in financial reporting, underpinning the integrity and comparability of financial statements across industries and global markets. IFRS 15 ‘Revenue from Contracts with Customers’ was jointly developed by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to harmonise revenue reporting under IFRS and US GAAP. Rather than redefining what constitutes revenue, the Standard focuses on establishing a consistent framework for recognising revenue at the correct point in time and at a reliable amount. The Standard provides comprehensive guidance on accounting for revenue recognition – however, the detailed requirements of IFRS 15 can still be challenging for preparers of financial statements to apply.
