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IFRS 9 and 15: Is your project where it needs to be?

IFRS 9 and 15: Is your project where it needs to be?

How to get where you need to be in your adoption of IFRS 9 and 15.

Nick Chandler


KPMG in the UK


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Looking at recently issued annual reports, it’s probably no surprise who have faced the most significant challenges in this recent wave of IFRS change. Banks are the most affected by the new financial instruments rules and telecoms and those operating longer-term construction and service arrangements face the most significant revenue changes. Many of these organisations have provided detailed disclosures on the impact of transition to the new standards and are now applying those requirements on a day-to-day basis. They have achieved “business as usual”. 

However, others will be less well advanced - perhaps having provided only an indication of the likely impact without any numbers, and are some way off embedding the changes into their systems.

So, if you’re less well advanced, how can you get to where you need to be?

Well, we see the same four key stages in all successful projects. The time and resources required for each stage will depend on relative complexity but we see the same approach applied by organisations large and small.

The high level impact assessment

This first stage, usually led by the finance team, compares the new requirements to current policies for all significant revenue streams. This flushes out areas to investigate further – and typically gives birth to an “issues list” of things to follow up. This will include both questions on how the new rules will apply to specific scenarios and areas where a better understanding of specific commercial arrangements is needed; if you don’t truly understand the commercial arrangements you can’t define the correct accounting outcome.

We found that some began their project thinking that only this first stage would be necessary to reach a “no change” conclusion. All have found that this underestimates how much further work is required.  

Ask the business about the detail

Second is to take that initial assessment to those who understand the operational detail – and start addressing issues raised at the impact assessment stage. But doing this brings different challenges. How many people do you need to involve? And whoever you involve will need educating on the new accounting requirements. Non-finance teams will need a good understanding to help the finance team answer these complex accounting questions. In our experience this stage separates the issues into no change, no material change and expected change. The final part of this stage is to quantify the impacts.

Get leadership’s agreement

You now need the agreement of the ExCo or SteerCo, who have overall responsibility for the project, with the impacts you have identified and your proposed new policies. This includes your proposals on transition options too. In our experience ExCos want to know the pros and cons of each transition option. Might there be worthwhile future benefits to gain by incurring extra cost and inconvenience now? This is not a simple question to answer. And the time needed to debate this should not be underestimated.

External buy-in

And once your internal position is agreed, you also need external buy-in – time to involve the auditor.

At this point you can make the kind of disclosure the FRC is looking for in your annual report. But even then is this business as usual? Perhaps. But maybe not. Many of those finding the greatest impacts are also facing significant changes to their accounting systems. This is particularly the case in financial services. Reaching a clear conclusion on the accounting impacts might be the end of your project.  But it might also signal the beginning of phase two.


If you feel your financial instruments or revenue projects need kickstarting, whether on a specific piece of accounting or as a fresh look at your existing project, we can help. Please contact Nick Chandler.

For up to date news and to join the conversation, follow KPMG's IFRS page on LinkedIn.

Gary Fenton

Senior Manager, Accounting Advisory Services, KPMG

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