Contract-level judgement memos, allocation workings and disclosure your auditor can follow without asking twice.
And auditors don’t test policies. They pick three contracts and ask you to explain them. The recognition fundamentals are covered separately.
IFRS 15 itself hasn’t changed. It took effect for annual reporting periods beginning on or after 1 January 2018, and the Post-implementation Review closed in 2024 with no active amendment project. For a full view of what has moved across the standards this year, see our roundup of IFRS standards effective 2026.
What’s changed is the contracts. Subscription pricing, bundled services, usage-based fees and multi-year prepayments have spread into businesses that had none of them in 2018.
So the policy written at adoption now describes a business that no longer exists. That gap is what auditors find.
| Step | Decision | Where it goes wrong |
|---|---|---|
| 1. Identify the contract | Is there an enforceable contract, and should several be combined? | Related contracts assessed separately when they should be combined |
| 2. Identify performance obligations | Which promises are distinct? | Bundles treated as one obligation because the invoice is one line |
| 3. Determine the transaction price | Variable consideration, constraint, financing component, non-cash consideration | Variable amounts estimated without applying the constraint |
| 4. Allocate the price | Relative stand-alone selling price | Stand-alone prices never established, so allocation is contractual price |
| 5. Recognise revenue | Over time or at a point in time | Over-time conclusion asserted without testing the criteria |
Step 5 gets the attention. Steps 2 and 4 produce more audit findings.
Where revenue is recognised at a point in time, the question is when control passed. IFRS 15 sets indicators rather than a rule.
| Indicator | What to evidence |
|---|---|
| Present right to payment | Contract terms establishing an enforceable payment right at that date |
| Legal title | When title passes, and whether retention is only protective against non-payment |
| Physical possession | Delivery evidence, and treatment of bill-and-hold or consignment arrangements |
| Significant risks and rewards of ownership | Who bears loss or damage, and from what point |
| Customer acceptance | Whether acceptance is substantive or a formality |
No single indicator decides it. That's the point, and it's why the conclusion needs writing down.
| Judgement | The question | What the file needs |
|---|---|---|
| Principal or agent | Do you control the good or service before transfer? | Analysis of control, inventory risk and pricing discretion. This decides gross versus net, so it moves the top line. |
| Significant financing component | Is there a material timing gap between payment and transfer? | Assessment of the gap and the discount rate, or a documented reason the practical expedient applies. |
| Contract modification | Separate contract, termination and replacement, or catch-up? | Analysis of whether added goods are distinct and priced at stand-alone value. |
| Variable consideration | How much to include, and is it constrained? | Estimation method, expected value or most likely amount, plus the constraint assessment. |
| Excluded | Applicable standard |
|---|---|
| Lease contracts | IFRS 16 |
| Insurance contracts | IFRS 17. An entity may choose to apply IFRS 15 to insurance contracts whose primary purpose is providing services for a fixed fee, under IFRS 17 paragraph 8. |
| Financial instruments and other contractual rights or obligations | IFRS 9, IFRS 10, IFRS 11, IAS 27, IAS 28 |
| Non-monetary exchanges between entities in the same line of business to facilitate sales to customers | Outside IFRS 15 |
Insurance is worth stating plainly, because it’s often assumed the other way round. Insurance contracts sit in IFRS 17 insurance contracts, not IFRS 15. The only crossover is the narrow fixed-fee service election.
Where a contract falls partly inside and partly outside IFRS 15, paragraph 7 requires the other standard’s separation and measurement requirements to be applied first.
IFRS 15 superseded IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC-31.
What teams need: a judgement file that answers the question before it's asked.
How Prima solves it: we write a memo per judgement area, referenced to the contract clauses that drive it.
What teams need: the policy retested against what the business actually sells now.
How Prima solves it: we inventory current contract types and re-run the five steps on each one.
What teams need: modification accounting that reflects what actually changed.
How Prima solves it: we test whether added goods are distinct and priced at stand-alone value, then apply the right treatment.
What teams need: a documented view on whether a significant financing component exists.
How Prima solves it: we assess the timing gap, derive the rate, using the same IFRS 13 fair value measurement discipline we apply elsewhere, or document why the practical expedient applies.
What teams need: a principal versus agent conclusion that survives review.
How Prima solves it: we analyse control, inventory risk and pricing discretion, then document the conclusion.
This one moves the top line, so it draws attention from auditors and investors alike.
What teams need: disaggregation that reflects how the business earns revenue today.
How Prima solves it: we rebuild the disaggregation categories from the contract inventory and redraft the note.
Three tracks. Track A builds the analysis. Track B prepares for audit. Track C runs it for you.
| Service | What it means for your reporting |
|---|---|
| Contract review and inventory | Every contract type identified, with performance obligations and their satisfaction pattern recorded in one register. |
| Judgement memos | Written analysis on principal versus agent, financing components, modifications and variable consideration, referenced to contract clauses. |
| Allocation workings | Stand-alone selling prices established and the allocation shown against worked revenue scenarios, so the split is evidenced rather than assumed. |
| Revenue policy drafting | A policy that matches what the business sells now, not what it sold at adoption. |
| Disclosure drafting | Disaggregation, contract balances and remaining performance obligations, rebuilt from the contract inventory. |
| Service | What it means for your reporting |
|---|---|
| IFRS 15 audit preparation | The file assembled before fieldwork: contract sample, judgement memos, allocation workings and the disclosure trail. |
| Audit procedure response | Technical responses to the specific procedures auditors run on revenue, including cut-off, sampling and estimate challenges. |
| Revenue recognition review | An independent read of your current treatment before your auditor forms a view, going beyond the general IFRS 15 compliance checklist. |
| Internal control assessment | Controls over contract capture and revenue recognition tested and gaps named. |
| Due diligence support | Target revenue policies reviewed pre-transaction, so a recognition problem is priced rather than inherited. |
| Service | What it means for your reporting |
|---|---|
| Contract-by-contract assessment | New contract types assessed as they arise, so the register stays current between year ends. |
| Managed revenue accounting | The recognition workflow run as a service, converting fixed finance headcount into variable spend. |
| Finance team training | Practical sessions on the judgement areas, so the second cycle runs in-house. |
Track C exists because one query in the data asks for exactly this: converting fixed back-office cost to variable spend while keeping revenue recognition accurate.
Five stages, and none of them is the standard's five-step model. This is how the engagement runs.
| Step 1: Inventory |
We collect every contract type currently in use and group them by revenue pattern. | OUTPUT: Contract inventory with counts and values by type. |
| >>> | ||
| Step 2: Assess |
We apply the five-step model to each type and identify where judgement is required. | OUTPUT: Performance obligation register and judgement list. |
| >>> | ||
| Step 3: Document |
We write the memo for each judgement, referenced to contract clauses. | OUTPUT: Judgement memos and allocation workings. |
| >>> | ||
| Step 4: Disclose |
We rebuild disaggregation and draft the note from the inventory. | OUTPUT: Disclosure draft with supporting schedules. |
| >>> | ||
| Step 5: Defend |
We assemble the audit file and stay available through fieldwork. | OUTPUT: Audit response file and issue log. |
Licence versus service, and whether a licence is right-to-use or right-to-access.
Content licensing windows and variable consideration tied to usage.
Over-time recognition, measure of progress, and financing components on advance payments. See our guide to construction revenue under IFRS 15.
Over-time measurement on time-and-materials versus fixed-fee, and unbilled revenue.
Sales-based royalties and the point at which upfront fees are recognised.
Bill-and-hold, shipping terms, and whether freight is a separate obligation.
Bundled handset and airtime allocation, and the stand-alone selling price of each element.
Consignment stock, customer acceptance and bundled maintenance.
Revenue is the first line of the income statement and the first thing an auditor tests. A judgement nobody documented becomes an audit finding, and an audit finding on revenue rarely stays contained to one contract.
The principal versus agent conclusion carries the sharpest exposure. Getting it wrong doesn’t change profit, it changes the top line, and a restated revenue figure is read by investors as something worse than a technical error.
There’s a slower cost too. Where the policy was written in 2018 and never revisited, new contract types get forced into old categories, and the disclosure drifts further from the business every year.
IFRS 15 work isn’t a year-end formality. It’s the record showing that the revenue you reported reflects what you actually promised customers.
Five working days gives you a written view of which judgements would be challenged and what each one needs. Send two or three representative contracts and last year's disclosure.
A written memo for each judgement area, referenced to the contract clauses that drive it, alongside the allocation workings and the disaggregation behind the disclosure note. Auditors pick three contracts and ask you to explain them, so the file is organised by judgement rather than by contract.
A judgement file review runs about five working days. A full contract inventory with policy and disclosure rebuild typically runs four to eight weeks depending on contract variety.
Two or three representative contracts per revenue stream, your current revenue policy, and last year's disclosure note. Where no policy exists, we start from the contracts.
Assemble the file before fieldwork starts. That means a contract inventory, a judgement memo for each significant area, allocation workings showing stand-alone selling prices, and a disclosure trail from the numbers back to the contracts. Auditors sample contracts, so the file has to answer at contract level rather than policy level.
Yes. Our review reads your current treatment against IFRS 15 and flags what an auditor is likely to challenge. This is the most common first engagement for teams who adopted in 2018 and have not revisited the analysis since.
It depends on whether the added goods or services are distinct and priced at their stand-alone selling price. If both hold, the modification is a separate contract. If not, it is either a termination and replacement of the original contract or a cumulative catch-up adjustment, and which one applies turns on whether the remaining goods are distinct.
The test is control: does the entity control the good or service before it transfers to the customer? Indicators include primary responsibility for fulfilment, inventory risk, and discretion over pricing. The conclusion decides gross versus net presentation, so it changes reported revenue without changing profit.
When the timing between payment and transfer gives the customer or the entity a material financing benefit. Assess the gap, the prevailing interest rate, and the reason for the timing. Where the gap is one year or less, the practical expedient can be applied, but the decision to use it should still be documented.
Disaggregated revenue, contract balances and their movements, remaining performance obligations, and the significant judgements applied. Auditors focus hardest on the judgements, because that is where the disclosure meets the analysis.
Over time when the customer simultaneously receives and consumes the benefits, when the entity's work creates or enhances an asset the customer controls, or when the asset has no alternative use and the entity has an enforceable right to payment for work completed. Otherwise revenue is recognised at the point control transfers.
Leases under IFRS 16, insurance contracts under IFRS 17, financial instruments and other contractual rights within IFRS 9, IFRS 10, IFRS 11, IAS 27 and IAS 28, and non-monetary exchanges between entities in the same line of business. An entity may elect to apply IFRS 15 to insurance contracts whose primary purpose is providing services for a fixed fee.
Yes. Our managed track assesses new contract types as they arise and runs the recognition workflow between year ends. Groups converting fixed finance headcount into variable spend usually start here rather than with a one-off review.
IFRS 15 applies to annual reporting periods beginning on or after 1 January 2018, with earlier application permitted. It remains current. The IASB completed its Post-implementation Review in 2024 and no amendment project is active.
Prima delivers IFRS 15 revenue recognition services across Saudi Arabia, the UAE, Pakistan, Ireland and Germany. The standard is identical everywhere. What differs is which auditor tests it.
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