Hvordan og hvorfor ændres standarderne for indregning af omsætning, og hvilke problemstillinger skaber og løser ændringerne?

Lone Bøjer Andreasen

Student thesis: Master thesis


The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have made a joint agreement to a convergence project on alignment of the framework and several standards among these the standards for revenue recognition. In December 2008 they finalized a discussion paper on the preliminary views on revenue recognition in contracts with customers. The discussion paper included 13 questions, and the boards received all in all 220 comment letters. In this thesis 33 comment letters have been chosen to form a general view on the opinion of the discussion paper. The boards’ solution was to dispose of the two existing revenue recognition standards IAS 11 and IAS 18, and instead propose a standard with only one principle for the revenue recognition. The reason for this move was two inconsistencies with the definitions of assets and liabilities, a differing of the principles in the existing standards and also the lack of guidance for multiple elements arrangements and for the distinction between goods and services. The two existing standards are old (last revised in 1993) and in the mean time the preferences of accounting theories have changed its course towards the asset and liability approach. The asset and liability approach is incorporated in the new standard by using phrases like contract assets and contract liabilities. Goods and services are both defined to be assets in order to show the alignment with the theory approach. The only argumentation for this switch can be found within the fact that a current exposure draft for the framework is favouring the asset and liability approach more than the existing framework is. Some of the weaknesses in the existing standards are still an issue in the proposed standard, but they might be eliminated in the coming exposure draft. One of the weaknesses that are eliminated is the inconsistency between IAS 11 and IAS 18 although it still exists only in another form. In IAS 11 revenue is recognized based upon the activity even if the customer does not have the control of the item being constructed, and in IAS 18 revenue is recognized when control and the risks and rewards are transferred to the customer. In the proposed standard revenue will be recognized when control is transferred to the customer, by which is meant the transfer of a good to a customer or the promised service is received by the customer. The transfer of control can for instance be achieved by continuous transfer, which according to the discussion paper is a condition that is fulfilled when a customer has the possibility of making special requests to the design of an item. In this situation revenue will still be recognized upon the basis of the activity even though neither the legal nor the physical control may have been transferred to the customer. The paragraphs for this type of recognition will simply be placed at another level than in the previous standards, but the situation of the differing principles has not vanished. The motives for making a new standard should mainly be that it makes it easier for users to apply with and that it simultaneously improves the level of the financial information. Nevertheless neither of these two reasons is adequately fulfilled within the discussion paper according to the main part of the selected comment letters. The respondents have many concerns, but besides the need for useful information, the other major concerns are a) the treatment of contracts within the contractor business basically due to an unclear definition of control that gives rise to insecurities about whether to apply a legal or a physical view, 2) the separation of a contract into performance obligations and 3) the distinction between a good and a service. Although some big hurdles are foreseen the proposed standard seems to be heading in a practical possible direction. In the future the boards should aim to enlighten how the financial information is becoming more useful to users compared to the information provided by the existing standards, since there is no big incentive for users to change the practice just because of an alignment between the IFRS and the SFAS. Any opponents will also emphasize the probable extra cost that hereby will be imposed on the entities.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2010
Number of pages90