Does AASB 15 affect the way your business records its Contract Revenue streams?
AASB 15 “Revenue from Contracts with Customers” was released on 12 December 2014, incorporating IFRS 15 [harmonising our Accounting Standards with International Standards] and including specific disclosure requirements for entities applying Accounting Standards – Reduced Disclosure Requirements. This new Accounting Standard supercedes AASB 111 Construction Contracts and AASB 118 Revenue. The Standard comes into force on your first reporting date after 31 December 2017.
Although the purpose of the Standards is to align with International Standards, it is not just for the large Corporate businesses. The reduced disclosure regime (RDR) allows non publicly accountable (Tier 2) reporting entities prepare less complex financial statements by providing them with certain exemptions from the disclosure that are contained in the existing AASB standards.
Examples of Tier 2 entities that produce general purpose financial statements include :-
~ unlisted public companies
~ large proprietary companies.
Large proprietary company – ASIC definition.
A proprietary company is defined as large for a financial year if it satisfies at least two of the following paragraphs:
- the consolidated revenue for the financial year of the company and any entities it controls is $25 million or more
- the value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $12.5 million or more, and
- the company and any entities it controls have 50 or more employees at the end of the financial year.
In general, AASB 15 now applies the same principles across all industries when dealing with Contract revenue from customers.
It is particularly important that manufacturers and the construction industry are aware, and prepare for the changes as their revenue recording methods are very likely to change. The impact and change to systems and processes should not be underestimated.
Please contact us for more information if you fall into the above Large Proprietary Company category.
Kristina Brown – Accountant