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New revenue standard – Introducing AASB 15

New revenue standard – Introducing AASB 15

The new accounting standard may change how you do business. AASB 15 Revenue from Contracts with Customers, replaces existing accounting guidance and introduces a comprehensive revenue recognition model aimed at enhancing comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets.

Subhro Bhattacharya

Director, CFO Advisory

KPMG Australia


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IFRS 15 (adopted in Australia as AASB 15) is the result of the IASB’s and the FASB’s joint project to harmonise the financial reporting of revenue under IFRS and US GAAP.

The new standard applies to years commencing on or after 1 January 2018. Comparative information may be required, depending on the transition option chosen – retrospective or cumulative effect.

ASIC has warned companies that AASB 15, together with AASB 16 and AASB 9, represent the most significant change to financial reporting since IFRS adoption in 2005. ASIC released a statement on 16 December 2016 outlining its expectation that companies should disclose the impact of all these standards, including AASB 15, in their upcoming financial reports.

Rowers in a row boat

5 step model

A five-step model is applied to determine when to recognise revenue, and at what amount.

Revenue is recognised when (or as) a company transfers control of goods or services to a customer for the amount to which the company expects to be entitled.

Depending on whether certain criteria are met, revenue is recognised either over time (in a manner that best reflects the company’s performance) or at a point in time (when control of the goods or services is transferred to the customer).

AASB 15 chart - five step model

How may AASB 15 affect your organisation?

The implications of AASB 15 can be pervasive, but the new revenue standard may also present opportunities. In our experience, the true magnitude of the standard’s impact emerges only after a company commences its implementation. Organisations will need to consider impacts which include, but are not limited to, the following:

  • timing of recognition and amount of revenue recognised may change
  • changes to systems, processes and controls may be required
  • extensive new disclosures will be required
  • KPIs and ratios may be affected, which could impact share price and access to capital
  • investors will require education on the change in revenue profile.

Among industries most impacted are telecommunications, construction and engineering, and software development.

Implementation journey

Implementation of the new revenue standard may seem daunting. It is critical to do it in an organised manner to maximise chances for a timely and smooth transition. You may want to adopt our three phase approach outlined below.

Impact assessment phase

During the impact assessment phase, the organisation will set the scope of the implementation project, determine the impact of the new standard on its revenue streams and identify key judgments and estimates it is required to make under the new standard.

Design phase

During the design phase, the organisation will update its accounting policies and manuals, develop functional specifications on the processes which need to be changed and prepare its system implementation plan.

Implementation phase

During the implementation phase, the organisation will build and test IT system or manual solutions.

How KPMG may be able to help


Tasks  How KPMG may be able to help
Gain an awareness of the new standard 
  • Delivery of customised training sessions to finance and non-finance personnel.
Contract review
  • Create an inventory of business lines, locations and revenue streams for impact assessment purposes.
  • Conduct preliminary accounting treatment assessment by representative contract in each revenue stream.
  • Performance of gap analysis – changes that will be required to accounting policy and disclosures compared to existing practice.
Transition option assessment
  • Evaluation of benefits/drawbacks of each transition option.
  • Determination of information requirements for the transition adjustment.
Project management
  • Manage or support your implementation project with our experienced project managers, taking advantage of our global tools and methodologies to support your project needs.
Assess gaps in current finance systems, processes & controls 
  • Create an inventory of affected process flows and systems.
  • Identification of new information required.
  • Evaluation of process gaps.
  • Development of new functional specifications for impacted processes, systems and internal controls.
  • Assistance with selection of technology and manual revenue accounting solutions.
Accounting policy update
  • Assistance with formulation of positions on complex accounting issues demanding significant judgment.
  • Revision of accounting policies, reporting manuals and chart of accounts.
Broader impact assessment 
  • Identification of impact in broader areas such as operations and sales, legal, human resources, and investor relations.
  • Assistance with building and testing of IT solutions.


For a summary of the key requirements of AASB 15 and further guidance of the factors to consider in your implementation project refer to our brochure.

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