Background

On 28 April 2015, the International Accounting Standards Board (IASB) had voted to publish an exposure draft (ED) proposing a   one-year deferral of the effective date of IFRS 15, Revenue from Contracts with Customers to 1 January 2018.
 
New development

On 19 May 2015, the IASB published an ED of proposed amendments to IFRS 15 to change the effective date of IFRS 15. It proposes that IFRS 15 would apply for annual reporting periods beginning on or after 1 January 2018. Earlier application would continue to be permitted. Entities would also continue to be permitted to choose between applying the standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application.
 
The IASB and FASB Joint Transition Resource Group have discussed a number of application issues. In light of those issues, the IASB has tentatively decided to propose amendments to IFRS 15 which are expected to clarify, instead of change, the requirements of the standard. These amendments are expected to be included in an ED which is slated to be published later in 2015. These amendments are expected to include:

• Clarification to the guidance on licences
• Addition of examples illustrating the guidance on identifying performance obligations and
• Clarifications to the guidance on principal vs agent considerations.

 In the light of the above proposed amendments, the IASB discussed whether it should propose to defer the effective date of IFRS 15.   The Financial Accounting Standards Board (FASB), however, has issued an ED on deferral of the effective date of Topic 606, Revenue from Contracts with Customers (equivalent to IFRS 15) on 29 April 2015 with comments due by 29 May 2015.
 
The IASB also received a number of unsolicited comment letters from stakeholders, e.g. telecommunication and software industries, supporting a deferral of the effective date of IFRS 15. In their view, a one-year deferral would improve the quality of implementation, particularly in the light of the availability (or lack thereof) of information technology systems.
 
Therefore, the IASB holds a view that a one-year deferral would be sufficient in terms of providing additional time to implement IFRS 15.
 
Feedback on the ED is required by 3 July 2015.
Accordingly, the IASB would also consider the comments it receives on the proposal and would plan to decide whether to proceed with an amendment to IFRS 15 regarding the effective date at its July 2015 meeting.

Impact on Ind AS road map

We note that the proposal of the IASB for a one-year deferral of the effective date of the revenue standard does not automatically mean deferral of the Ind AS 115, Revenue from Contracts with Customers issued by the Ministry of Corporate Affairs. Ind AS 115 is aligned to IFRS 15.