Significant changes to revenue recognition, implemented on 1 January 2018, requires all entities to assess and potentially amend each of their customer contracts.
The new rules under NZ IFRS 15 Revenue from Contracts (NZ IFRS 15), apply to all entities, due to New Zealand’s ‘sector neutral’ standards. The changes require significant judgement involving complex accounting and could disrupt the usual timing of revenue recognition for many entities.
The changes require all stakeholders beyond the finance function to work together to identify the impact of these changes on systems and processes. Teams will need to ensure compliance and reporting has begun at the start of the process, rather than as an after-thought when putting financials together, year-end.
This report outlines the main changes, opportunities and consequences of NZ IFRS 15 Revenue from Contracts (NZ IFRS 15), It also breaks-down the five-step model to recognise revenue earned from a contract (with limited exceptions), regardless of the type of revenue transaction or the industry that the entity operates in.
For more information on revenue recognition and how it effects your entity, seek advice from your local William Buck office.