KPMG Australia: AASB 15 New Revenue Disclosures for Half Year Accounts

This report, sourced from KPMG Australia, provides a detailed analysis of AASB 15, the new revenue standard, focusing on its implications for financial reporting, particularly for half-year accounts. The report examines various aspects of the standard, including revenue recognition and measurement, capitalization of costs, and the crucial area of disclosures. It highlights the importance of considering transition approaches, such as full retrospective, modified retrospective, and cumulative methods, and their impact on financial statements. The report emphasizes the significance of high-quality disclosures in explaining the transition story to users, especially in the context of half-year reporting requirements. It provides insights into the key areas that should be discussed in half-year accounts, including transition impacts, selected transition approaches, new accounting policies, and meaningful disaggregation of revenue. The report also offers guidance on where to find resources, such as example financial statements, and highlights the role of regulatory bodies like ASIC in monitoring these disclosures.

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AASB 15: New revenue disclosures for ha
9 January 2019
AASB 15 Revenue from Contracts with Customers is here for 31 December 2018 year-ends onward.
Have you fully considered all the implementation issues? As part of your implementation project
consideration should be given to a range of different issues around revenue recognition and
measurement, capitalisation of costs, disclosures, transition and flow on impacts to other standards.
This article provides observations on transition approaches and disclosure requirements of the new
standard.

Kim Heng
KPMG Australia
Joe Rinarelli
KPMG Australia
Also on home.kpmg

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AASB 15: Impact on inventory recognition
Have you considered the impact on inventory recognition with the new revenue standard?
AASB 15: Cost accounting tips
Observations on cost accounting under the new revenue standard.

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AASB 15: New quantitative revenue disclosures
Observations on the new quantitative disclosures under the new revenue standard.

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You may have worked hard to ensure revenue transactions are appropriately accounted under the new
standard, but have you considered the transition approach and related disclosures, including for your
31 December 2018 half-year accounts? We are finding that these are often an ‘after thought’ but they
shouldn’t be. Transition approaches will have impacts beyond your first year and high quality
disclosures can help explain your transition story.
Transition approaches
There are three approaches to moving to the new standard:
Full retrospective – restate comparatives as if the new standard had always applied.
Modified retrospective – as with the full retrospective but using practical expedients.
Cumulative – do not restate comparatives.
Most organisations are using the cumulative approach to avoid going back to re-asses impacts on
previous financial periods. But what’s the catch? Well, there’s additional disclosure required with this
approach. You have to disclose in the current year what the accounting would have been under the old
revenue standard – yes that’s right, maintain records under the old standard for another year!
Half-year reporting requirements

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AASB 134 Interim Financial Reporting, rather than the specific transitional disclosures in the new
revenue standard apply in half year accounts and you need to disclose:
explanation of the significant events that change financial position and performance of the entity
description of new accounting policies
disaggregation of revenue (this is not only a year end disclosure).
Regulators and users expect the full revenue story and providing the full transition disclosures in the
half year accounts will likely satisfy this. But if you don’t plan to provide all the transitional disclosures,
then what should you include in your half-year accounts? We think the following areas should be
discussed at the very minimum:
Transition impact
Transition approach selected, practical expedients used and dollar impact begins to tell the transition
story to users. Explaining changes in revenue numbers is a given, but don’t forget the balance sheet.
What if the impact of the new standard isn’t material? Judgments were made to get to this outcome so
consider discussing them: from determination of the number of performance obligations to whether
variable consideration is constrained.
New accounting policies
Depending on the transition approach you may have one or two sets of accounting policies to discuss –
you need to ensure these are clear and specific to your organisation.
Disaggregation of revenue
Meaningful disaggregation of revenue is required this half year. We are seeing most entities use two
types of disaggregation to explain the nature and timing of revenue, usually by product/services lines
and geography. But these categories may not be the most meaningful for your organisation. Would
customer type be more meaningful (e.g. government vs non-government) or contracting type (e.g. fixed
fee vs time and materials). These are important considerations which should also involve your investor
relations team.
Where to next?
As you draft your accounts our example financial statements are available to guide you on how to
provide the transition story. ASIC will be monitoring these disclosures, so get started!
If you would like to discuss the implementations of the new standard on your organisation contact your
usual KPMG contact or the contacts on this page.

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Further reading
Example Public Company Limited: Illustrative disclosures 2018-19 – includes first year of IFRS 15
disclosures
Guide to condensed interim financial statements - Illustrative disclosures 2018-19 – includes first
year of IFRS 15 interim disclosures
IFRS 15 – Illustrative disclosures
AASB 15: Revenue
Understand the impacts of AASB 15: the new revenue standard.

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