PFRS 15 Work Program

SOC Land Development Corporation
Revenue Recognition Workprogram

December 31, 2018
Conduct meeting regarding the requirements of PFRS 15

Provide observations and feedback on the key revenue streams
Review representative contracts under the new standard to understand the impact on all identified key revenue streams and
technical accounting memoranda related to implementing PFRS 15
Provide observations and feedback on anticipated differences/gaps between existing accounting and reporting requirement
Data extraction and cleansing
Preparation of illustrative calculation of adjustments
Provide insights and observations on the illustrative calculations prepared by management
Quantification of adjustments as of identified cut-off
Provide insights and observations on cut-off adjustments
Disclosures development
Provide insights and observations on the disclosures prepared by management
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Revenue streams and possible impact
December 31, 2018
Note: For management's review of contract, we suggest to have one representative sample reviewed for each revenue
Revenue stream heat map
PFRS 15 Impact
Revenue type
Step 1 Step 2 Step 3 Step 4 Step 5
Condominium
- Bank finance Medium Low Medium* Low High
- In-house finance Medium Low High Low High
House and lot
- Bank finance Medium Low Medium* Low High
Lot
- Bank finance Medium Low Medium Low High
Parking Medium Low High Low Low
*High impact if the performance obligation is not 100% completed.
Remarks:
Step 1: Identify the contract
Par. 9 enumerates the following criteria:

1. Parties to the contract have approved the contract and are committed to perform their obligation (enforceable)
2. The entity can identify each party's rights regarding the goods or services to be transferred (transfer of goods)
3. The entity can identify the payment terms for the goods or services to be transferred (transaction price)
4. Contract has commercial substance (avoid artificial inflation of revenue)
5. It is probable that the entity will collect the consideration
Article 1403(2)(e) of the Civil Code of the Philippines requires that sale of real property or of an interest therein to be in
Meaning, for a contract to sell be enforceable, it must be approved.
Step 2: Identify performance obligation
Horizontal development
CTS serviced lot only - there is only one performance obligation under the CTS.
CTS services lot and house - there is only one performance obligation under the CTS. The developr has the obligation
Vertical development
There is only one performance obligation in the contract to sell a condominium unit. The developer has the obligatoin to
Step 3: Determine transaction price
Higher payment
When series of regular payments are made by the buyer which are ahead of the percentage of completion and the diffe
obligation is more than one year, there is significant financing component. Seller to recognize an interest expense beca
satisfied performance obligation.
Lower payment
When the percentage of completion is ahead of the regular payments made by the buyer and the difference between th
one year, there is significant financing component. Seller to recognize interest income because the seller is 'as if' financ
Discount rate to be used should be consistent with a rate that would be reflected in a separate financing transaction bet
the financing component – may be the borrowing rate of the seller or customer.
Step 4: Allocate the transaction price
Assessment depends on the results of Step 2.
Step 5: Recognize revenue (measurement of progress)
The assessment on how the following elements are treated in the measurement of progress follow:
- land > excluded
- connection fees > excluded
- borrowing cost > excluded
- materials delivered on-site but not yet installed > excluded
- common amenities / area > included
Below is the analysis on how certain cost items incurred by the real estate developer are treated in the measurement of
Land Excluded in the measure of progress, but the entity needs to assess if it can r
Accounted for as fulfillment cost in accordance with par. 95 of PFRS 15 and w
be the measure of progress used for the performance obigation (POC)
Connection fees Excluded in the measure of progress and customer is not expected to obtain
thus par. B19(b)(ii) is not met.
Borrowing costs Excluded in measure of progress, whether or not capitalized in accordance w
Materials delivered on site but not Excluded in the measure of progress and customer is not expected to obtain
yet installed thus par. B19(b)(ii) is not met.
Common amenities/area Part of the promised performance obligation to the customer and accomplishm
goods and services to the customer.
Par. B19(b) of PFRS 15 state that:
"When a cost incurre dis not proportionate to the entity's progress in satisfying the performance obligation, an adjustme
depiction of the entity's performance may be to adjust the input method t orecognize revenue only to the extent of that c
revenue at an amount equal to the cost of a good used to satisfy a performance obligation if the entity expects at contra
(i) good is not distinct;
(ii) customer is expected to obtain control of the good significantly before receiving services related to the good;
(iii) cost of the transferred goods is significant relative to the total expected costs to completely satisfy the performanc
(iv) entity procures the good from a third party and is not significantly involved in designing and manufacturing the go
wed for each revenue stream
Contract costs
High
High
High
High
High
High
Low
ation (enforceable)
transfer of goods)
erest therein to be in writing and subscribed by the party charged, or by his agent.
pr has the obligation to deliver the house duly constructed in specific lot.
r has the obligatoin to deliver the specific unit with common service area and facilities available.
mpletion and the difference between the timing of payment and the satisfactionn of the performance
nterest expense because the buyer is 'as if' financing the seller by paying more than the amount of
difference between the timing of payment and the satisfaction of the performance obligation is more than
e seller is 'as if' financing the buyer.
ancing transaction between the entity and its customer. Interest to be used depends on who benefits from
n the measurement of progress:

ds to assess if it can recognize revenue to the extent of the cost of the land. PFRS 15.B19(b)(ii)
95 of PFRS 15 and would be amotized over the period of performance. A rational basis of allocation would
bigation (POC)
ot expected to obtain control of the good significantly before receiving the services related to the goods and
95 of PFRS 15 and would be amotized over the period of performance.

ized in accordance with PAS 23.
ot expected to obtain control of the good significantly before receiving the services related to the goods and
95 of PFRS 15 and would be amotized over the period of performance.

omer and accomplishment on these contribute to the entity's performance of transferring the control of
bligation, an adjustment to the measure of progress may be required. In those circumstances, the best
to the extent of that cost incurred. A faithful depiction of an entity's performance might be to recognize
ntity expects at contract inception that all of the following conditions would be met
ated to the good;

satisfy the performance obligation; and
manufacturing the good
Contract analysis template
December 31, 2018
Note: Client should accomplish this template for each representative contract reviewed
Tool step Question

General contract information Customer name
Legal entity (seller)
Contract identification #
Local currency
Contract inception date
Revenue stream
Contract analysis prepared by
Division
Contract analysis reviewed by
Date contract analysis reviewed
Record identification #
Date contract analysis updated
Brief description
Background and summary of current accounting
Documents reviewed
1.1 Scope Is the arrangement with a customer and within the scope of the
standard?
1.1.1 Repurchase provisions: Does the arrangement contain any repurchase provisions?
scope
Do any of the repurchase provisions cause the arrangement to
be out-of-scope?
1.2 Definition of a contract Does the arrangement represent a contract with a customer that
meets the following criteria?
- The parties to the contract have approved the contract and are
committed to perform their respective obligations
- The entity can identify each party's rights regarding the goods
or services to be transferred
- The entity can identify the payment terms for the goods or
services to be transferred
- The contract has commercial substance
- It is probable that the entity will collect the consideration to
which it will be entitled in exchange for the goods or services
that will be transferred to the customer
1.3 Combining contracts Was the contract entered into at or near the same time as other
contracts with the same customer or its related parties?
1.3.1 Contract combination Do the contracts meet one or more of the following criteria?
criteria
-The contracts are negotiated as a package with a single
commercial objective
-The amount of consideration to be paid in one contract
depends on the price or performance of the other contract
-The goods and services promised in the contracts (or some
goods or services promised in each of the contracts) are a
single performance obligation (refer to Step 2 of this tool for
requirements for identifying separate performance obligations)
1.4 Contract modifications Has the contract been modified since it was entered into or
commenced?
A contract modification is a change in the scope or price (or

both) of a contract that is approved by the parties to the
contract. Updates in estimates of variable consideration and
changes that do not affect scope or price are not considered
modifications. For estimates of variable consideration, refer to
Step 3.2; for changes in those estimates, refer to Step 3.6.
1.4.1 Separate revenue Did the modification increase the scope of the contract due to
arrangements the addition of promised goods or services that are distinct and
are priced at an amount that reflects the stand-alone selling
price for the additional goods or services?
For discussion of distinct goods or services, refer to Step 2.1;

for discussion of stand-alone selling price, refer to Step 4.2.
1.4.2 Treatment of modified Are the remaining goods or services in the modified contract
contract
(i) Distinct from the goods or services transferred on or before
the date of the contract modification and not priced at stand-
alone selling price?
(ii) Part of a single performance obligation that is partially
satisfied at the date of the contract modification?
Contracts modifications may meet both of these factors when

there are multiple performance obligations.
Consider the factors above separately for each performance

obligation in the modified contract. For example, if one
performance obligation is distinct and the remaining promises
are part of a single performance obligation that is partially
satisfied at the date of the modification, answer yes to both
questions.
Refer to Step 2.1 for the requirements for identifying distinct

goods or services.
2.1 Performance obligations What are the performance obligations in the contract?
2.2 Principal versus agent Is another party involved in providing goods or services to the
customer?
2.2.1 Principal versus agent When another party is involved in providing goods or services to
assessment a customer, the entity needs to determine whether a principal-
agent analysis is required.
If a principal-agent analysis is required, has the entity

determined whether it controls each specified good or service
before that good or service is transferred to the customer and,
therefore, whether the entity is acting in the capacity as a
principal or an agent?
2.3 Service-type warranties Could any of the promised services be considered warranties
that are sold separately or that provide a service in addition to
assurance that the related product complies with agreed-upon
specifications?
2.3 Service-type warranties Could any of the promised services be considered warranties
that are sold separately or that provide a service in addition to
assurance that the related product complies with agreed-upon
specifications?
2.4 Options granting material Does the contract contain any options for the customer to
rights acquire additional goods or services for free or at a discount (for
example, sales incentives, customer award credits (or points),
contract renewal options, or other discounts on future goods or
services) that provide a material right to the customer that it
3.1 Base transaction price Is there an amount of the transaction price in the contract that is
not variable?
3.2 Variable consideration Is any of the consideration in the contract variable or uncertain?
3.2.1 Estimating variable Has the entity determined whether the 'expected value' or the
consideration 'most likely amount' method better predicts the amount to which
it will be entitled for each source of variable consideration?
3.2.2 Constraint on revenue Has the entity determined the amount of the estimate of
recognised variable consideration that is constrained?
3.3 Significant financing Does the timing of payments agreed to by the parties to the
component contract (either explicitly or implicitly) provide the customer or
the entity with a significant benefit of financing the transfer of
goods or services to the customer such that the contract
contains a significant financing component?
3.4 Non-cash consideration Is the entity entitled to any non-cash consideration?
3.5 Consideration payable to the Is there any amount of consideration that is paid or payable to
customer the customer that is not provided in exchange for a distinct good
or service?
3.6 Changes in transaction price Has the transaction price changed since contract inception?
4.1 Allocating attributable Is any variable consideration in the contract attributable to either
variable consideration one or more, but not all, performance obligations in the contract
or one or more, but not all, distinct goods or services promised
in a series of distinct goods or services that forms a part of a
single performance obligation?
4.2 Stand-alone selling price Has the entity determined the stand-alone selling price for each
performance obligation?
4.3 Allocating attributable Is the discount in the contract attributable to one or more, but
discount not all, performance obligations?
5.1 Transfer of control Does the performance obligation meet any of the following
criteria resulting in transfer of control over time?
The customer simultaneously receives and consumes the
benefits provided by the entity's performance as the entity
performs (Note that a licence that provides a customer with a
right to access the entity's intellectual property throughout the
licence period, as opposed to a right to use the entity's
intellectual property as it exists at the point in time at which the
licence is granted, would meet this criterion in accordance with
IFRS 15.60)
The entity's performance creates or enhances an asset that the

customer controls as the asset is created or enhanced
The entity's performance does not create an asset with an
alternative use to the entity and the entity has an enforceable
right to payment for performance completed to date.
5.2 Repurchase provisions Does the contract contain a repurchase provision related to the
same or similar goods in the original agreement?
5.2.1 Call option Does the contract specify that the seller has an unconditional
obligation or right to repurchase the asset?
5.2.2 Put option Does the customer in this contract have the ability to require the
entity to repurchase the asset?
5.3 Bill-and-hold arrangements Could the contract be considered a bill-and-hold arrangement?
5.3.1 Bill-and-hold transfer of In addition to applying the point-in-time requirements, have the
control criteria following criteria been met?
- The reason for the bill-and-hold arrangement must be

substantive
- The product must be identified separately as the customer's
- The product currently must be ready for physical transfer to
the customer
- The entity cannot have the ability to use the product or to
direct it to another customer
5.4 Consignment arrangements Could the contract be considered a consignment arrangement?
5.4.1 Consignment transfer of Has control of the good transferred to the dealer or end-
control criteria customer?
5.5 Customer acceptance If the contract contains customer acceptance provisions, has
the seller objectively determined that control of a good or
service has been transferred to the customer in accordance with
the agreed-upon specifications in the contract?
5.6 Revenue recognition pattern When does the customer obtain control of the promised goods
or services transferred?
For performance obligations transferred over time, has the
entity determined which measure of progress best depicts the
transfer of control of goods or services to the customer?
For performance obligations transferred at a point in time, has
the entity determined when the customer obtains control of the
promised asset?
C.1 Costs to obtain a contract Has the entity incurred any incremental costs of obtaining the
contract that the entity expects to recover?
C.1.1 Sources of costs to obtain Has the entity determined the amount of incremental costs of
a contract obtaining the contract to be capitalised?
C.2 Costs to fulfil a contract Has the entity incurred any costs to fulfil the contract that are
not within the scope of another standard and meet the following
criteria?
- The costs relate directly to the contract or to an anticipated

contract that the entity can specifically identify
- The costs generate or enhance resources of the entity that will
be used in satisfying (or in continuing to satisfy) performance
obligations in the future
- The costs are expected to be recovered
C.2.1 Sources of costs to fulfil a Has the entity determined the amount of costs to fulfil the
contract contract to be capitalised?
C.3 Amortisation of contract For the capitalised contract costs, has the entity determined the
costs systematic basis for amortisation that is consistent with the
transfer to the customer of the goods or services to which the
capitalised contract costs relate?
C.4 Impairment of contract costs Does the carrying amount of the capitalised contract cost
exceed:
- The remaining amount of consideration that the entity expects
to receive in exchange for the goods or services to which the
asset relates, less
- The costs that relate directly to providing those goods and
services and that have not been recognised as expenses
Presentation and disclosure Entities should consider the presentation and disclosure
impacts of the new standard. This template does not contain
any questions related to presentation and disclosure. As you
determine the presentation and disclosure impacts of the new
standard, please consider the relevant guidance in this section
from IFRS 15 Revenue from Contracts with Customers, from
the Basis for Conclusions of IFRS 15 Revenue from Contracts
with Customers, EY’s Applying IFRS: A closer look at the new
revenue recognition standard publication and EY’s IFRS
Disclosure Checklist (IFRS 15).
Note:
1. References to the Applying IFRS publication are to EY's Applying IFRS: A closer look at the new revenue recognition sta
Response
k at the new revenue recognition standard (Updated September 2016), which is available on www.ey.com/IFRS
Notes
Note that lease contracts, insurance contracts, financial instruments and non-
monetary exchanges between entities in the same line of business to facilitate
sales to customers are out of scope.
Consider whether the counterparty is a customer.
Consider whether a portion of the contract is within the scope of other standards.
If the answer to both questions is yes, the repurchase provision is out-of-scope –

look to other relevant requirements.
If the answer is no, the arrangement does not meet the definition of a contract –
apply the requirements in IFRS 15.14-16.
If the answer is yes, proceed to Step 1.3.1.
If the answer is no, proceed to Step 1.4.

If the answer is yes, combine the contracts and consider them together
throughout the rest of the 5-step analysis.
If the answer is no, evaluate each contract separately.

If the answer is yes, the modification results in a new contract that needs to be
separately analysed starting with Step 1. The original contract needs to still be
analysed according to the original terms. proceed to Step 2.1.
If the answer is no, proceed to Step 1.4.2.
Refer to Step 2.1 for the requirements for identifying distinct goods or services.
If the answers to both questions are yes, the remaining consideration is allocated
to the remaining performance obligations and the measures of progress for
partially unsatisfied performance obligations are updated with revenue
recognised on a cumulative catch-up basis.
If the answer to the first question is yes and the answer to the second question is
no, the contract modification is accounted for as if it were a termination of the
existing contract and the creation of a new contract. The remaining goods or
services and remaining consideration not yet recognised as revenue are
analysed as a new contract.
If the answer to the first question is no and the answer to the second question is
yes, the contract modification is accounted for as if it were part of the existing
contract. The transaction prices and measures of progress are updated with
revenue recognised on a cumulative catch-up basis.
There should not be any situations where the answers to both questions are no.
See the 'Goods and services' table in Column I-M for a worksheet to help
determine whether goods and services represent performance obligations. After
completing that tab, list the performance obligations determined in Column C.
Note that contracts with customers may include promises that are implied by an
entity's customary business practices, published policies, or specific statements
if, at the time of entering into the contract, those promises create a valid
expectation of the customer that the entity will transfer a good or service to the

Note the results of any principal-agent analysis in the comments in Column E.
The entity is a principal when the nature of its promise is a performance

obligation to provide the specified goods or services itself and an agent when its
promise is to arrange for those goods or services to be provided by another
party.
If the answer is yes, enter any service-type warranties in Column C (rather than
simply 'yes').

If the answer is yes, enter any service-type warranties in Column C (rather than
simply 'yes').

If the answer is yes, enter any options granting material rights in Column C
(rather than simply 'yes').

If the answer is yes, enter the base transaction price in Column E.
The transaction price is the amount of consideration to which an entity expects to

be entitled in exchange for transferring promised goods or services to a
customer, excluding amounts collected on behalf of third parties, such as sales
taxes
Examples of variable consideration include discounts, rebates, refunds, credits,

price concessions, incentives, performance bonuses, penalties or other similar
items.
Note that an amount of consideration would be variable if an entity's entitlement

to the consideration is contingent on the occurrence or non-occurrence of a
future event. For example, if a product was sold with a right of return or a fixed
amount is promised as a performance bonus on achievement of a specified
milestone.
For sales-based or usage-based royalties promised in exchange for a licence of

intellectual property, refer to the exception to the general variable consideration
requirements in IFRS 15.B63.
If the answer is yes, discuss the sources of variable consideration in Column E

and proceed to Step 3.2.1.
If the answer is yes, enter the estimation method in Column E and proceed to
Step 3.2.2.
If the answer is no, determine the appropriate estimation method before

proceeding to Step 3.2.2.
An estimate of variable consideration is constrained to the extent that it is not

highly probable that a significant revenue reversal in the amount of cumulative
revenue recognised will not occur when the uncertainty associated with the
variable consideration is subsequently resolved.
If the answer is yes, adjust the promised amount of consideration for the effects
of the time value of money.
An entity needs to determine whether it will apply the practical expedient allowing
the entity not to consider the effects of a significant financing component if the
time between payment and performance is one year or less.
If the entity is receiving financing, the time value of money impact will increase
the transaction price. If the entity is providing financing, the time value of money
impact will decrease the transaction price.
If the answer is yes, the entity should include the fair value (measured at contract
inception) of the non-cash consideration received in the transaction price.
If the answer is yes, the amount of consideration that is not provided in exchange
for a distinct good or service or that exceeds the fair value of any distinct good or
service received will reduce the transaction price.
If the answer is yes, these changes will be incorporated into the transaction
price.
Changes to the transaction price include resolution of uncertain events or other

changes in circumstances that change the amount of consideration to which an
entity expectsistoyes,
If the answer be entitled in may
the entity exchange fortothe
be able promised
allocate thatgoods or consideration
variable services.
entirely to the performance obligation or distinct good or service that forms part
of a single performance obligation.
If the answer is yes, note the estimation method and the impact on the allocation
of the transaction price in Column E.
This stand-alone selling price should be adjusted to exclude the effect of variable
consideration attributed to a performance obligation in Step 4.1.
Note that this may result in entering a stand-alone selling price of 0 if the variable
consideration attributed in Step 4.1 represents the total amount to which the
entity expects to be entitled for that performance obligation.
All variable consideration not specifically attributed in Step 4.1 would be

allocated on a relative stand-alone selling price basis.
If the answer is yes, the entity may be able to allocate that discount entirely to
one or more, but not all, performance obligations.
If the answer to any of the questions is yes for a performance obligation, that
performance obligation is satisfied over time.
Performance obligations that do not meet any of these criteria are satisfied at a
point in time.
If applicable, note how each criterion applies to each relevant performance

obligation in Column E.
When a performance obligation includes a licence of IP and one or more other

promised goods or services, consider the nature of the combined performance
obligation (including the licences application guidance when the licence is the
predominant item in the combined performance obligation) when: (1) determining
whether the overall promise is satisfied over time or at a point in time; and (2)
selecting an appropriate method for measuring progress of that performance
obligation if it is satisfied over time.

If the answer is yes, note how the call option impacts the transfer of control in
Column E for all applicable performance obligations.
Control does not transfer before the repurchase option expires unexercised.
If the answer is yes, note how the put option impacts the transfer of control in
For repurchase provisions within the scope of IFRS 15, an entity accounts for the
transaction as a sale with the right of return (i.e., variable consideration subject to
the constraint).
For repurchase provisions that are initially accounted for as financing or leases,
control does not transfer before the repurchase option expires unexercised.

Note how the bill-and-hold criteria impact the assessment of transfer of control in

Note how the consignment arrangement impacts the assessment of transfer of
control in Column E for all applicable performance obligations.
Note how any customer acceptance provisions impact the assessment of transfer
of control in Column E for all applicable performance obligations.
In Column E, note the appropriate measure of progress for any performance

obligations satisfied over time.
In Column E, note the assessment of transfer of control for any performance

obligations satisfied at a point in time.
An entity needs to determine whether it will apply the practical expedient allowing
the entity to recognise incremental costs of obtaining a contract as expenses
when incurred if the amortisation period of the asset would have been one year
or less.
If the answer is yes, proceed to C.1.1.
If the answer is no, proceed to C.2.

If the answer is yes, note the amount and how it was determined in Column E
and proceed to Step C.2.
If the answer is no, determine the amount before proceeding to Step C.2.
If the answer is yes, proceed to C.2.1.
If the answer is no, proceed to C.3.
If the answer is yes, note the amount and how it was determined in Column E
and proceed to Step C.3.
If the answer is no, determine the amount before proceeding to Step C.3.
In Column E, note the appropriate amortisation expense and the amortisation

method for the capitalised amounts.
If the answer is yes, the contract cost asset is impaired.
Note any presentation or disclosure observations in Column E.
pdated September 2016), which is available on www.ey.com/IFRS

Comments
Applying IFRS reference1
Applying IFRS
Chapter 2 (all)
Additional sections
Use of the portfolio approach: Section 3.3.1
Applying IFRS
Section 7.3
Applying IFRS
Section 3 (chapter introduction), Section 3.1, Section 3.2 and
Section 3.5
Additional sections
Reassessing the contract criteria upon a modification: Question
3-8 (in section 3.4)
Accounting for activities before meeting the contract criteria:

Question 7-10 (in section 7.1.4)
Applying IFRS
Section 3.3
Applying IFRS
Section 3.3
Applying IFRS
Section 3.4 (chapter introduction)
Additional sections
Partial terminations treated as modifications: Question 3-6 (in
section 3.2)
Accounting for the exercise of a material right: Question 4-14 (in

section 4.6)
Modifications and renewals of licences: Question 8-1 (in section

8.1.4) and Section 8.4
Applying IFRS
Section 3.4.1
Applying IFRS
Section 3.4.2
Applying IFRS
Section 4 (chapter introduction), Section 4.1, Section 4.2, Section
4.3
Additional sections
Rights of return do not represent performance obligations:
Section 4.7
Applying IFRS
Section 4.4
Applying IFRS
Section 4.4
Applying IFRS
Section 9.1
Applying IFRS
Section 9.1
Applying IFRS
Section 4.6, Section 7.8
Additional sections
Determining whether non-refundable upfront fees indicate the
Applying IFRS
Section 5 (chapter introduction)
Additional sections
Non-refundable upfront fees should be included in the
transaction price and allocated to the performance obligations:
Section 5.8
Amounts billed to customers: Question 4-7 and the FASB

differences box in section 4.4.4
Applying IFRS
Section 5.2 (chapter introduction), Section 5.2.1, Question 5-7 (in
section 5.2.3), Section 5.4
Additional sections
Determining the difference between collectability and implicit
price concessions: Section 3.1.5
Rights of return are estimated as variable consideration: Section

4.7
Sales-based or usage-based royalties on licences of intellectual

property are not estimated: Section 8.5
Estimating gross revenue as a principal: Question 4-7 (in section

4.4.4) and FASB differences box
Distinguishing between optional purchases and variable

consideration: Question 4-10, Question 4-12 (in section 4.6)
Timing of recognition for variable consideration payable to a

customer: Section 5.7.3
Distinguishing between a right of return and an assurance-type

warranty: Question 9-3 (in section 9.1.1)
Applying IFRS
Section 5.2.2
Additional sections
Example of estimating variable consideration using the expected
value method: Section 5.2.3
Measurement of refund liability in relation to estimation of

variable consideration: Section 5.3
Considering the constraint when estimating variable

consideration: Question 5-8
Applying IFRS
Section 5.2.3
Applying IFRS
Section 5.5
Applying IFRS
Section 5.6
Applying IFRS
Section 5.7
Applying IFRS
Section 5.2.4, Section 5.9, Section 6.5
Applying IFRS
Section 6.3
Additional sections
Allocation of a variable discount: Question 6-5
Applying IFRS
Section 6 (chapter introduction), Section 6.1, Section 6.2
Additional sections
Allocation of transaction price to elements outside the scope of
the standard: Section 6.6
Interaction between the application guidance on breakage and

allocation of transaction price: Section 7.9
Applying IFRS
Section 6.4
Applying IFRS
Section 7.1 (chapter introduction), Section 7.1.1, Section 7.1.2,
Section 7.1.3
Additional sections
Determining whether a licence is transferred over time: Section
7.6, Section 8 (chapter introduction), Section 8.2, Section 8.3
Applying IFRS
Section 7.3 (chapter introduction with extract)
Applying IFRS
Section 7.3.1
Applying IFRS
Section 7.3.2, Section 7.3.3
Applying IFRS
Section 7.5
Applying IFRS
Section 7.5
Applying IFRS
Applying IFRS
Applying IFRS
Section 7.2.1
Applying IFRS
Section 7 (chapter introduction), Section 7.1.4, Section 7.2
Additional sections
Timing of revenue for sales-and usage-based royalties on
licences of intellectual property: Section 5.4.2, Section 8.5
Timing of revenue with a right of return: Section 7.7

Applying IFRS
Section 9.3 (chapter introduction), Section 9.3.1
Applying IFRS
Applying IFRS
Applying IFRS
Applying IFRS
Section 9.3.3
Applying IFRS
Section 9.3.4
Applying IFRS
Chapter 10 (all), Appendix A
IFRS 15 technical requirement reference IFRS 15 Basis for Conclusions
IFRS 15.1-7 BC28-BC30, BC52-BC66, BC69-BC70
IFRS 15.34, B64 – B76, IE314 – IE321 BC422 – BC433
IFRS 15.9–16, IE2-IE17 BC1A, BC27A-BC27H, BC31-BC51, BC67-

BC68, BC259-BC265
IFRS 15.17 BC71-BC75
IFRS 15.17 BC71-BC75

IFRS 15.18-19, 90, C5(c), C7A, IE18-IE43 BC1A, BC27A-BC27H, BC76, BC81-BC83,
BC445A, BC445O-BC445R
IFRS 15.20, 90, IE19-IE21 BC77, BC414S–BC414U
IFRS 15.21, 90, IE19, IE22-IE43 BC78-BC83
IFRS 15.22-30, B22, B48-B56, B62, B82, B84, IE33-IE41, BC1A, BC27A-BC27H, BC84-BC116U,
IE44-IE65A, IE222-IE229, IE254-IE256, IE271-IE274, IE278- BC363-BC367, BC371-BC373 , BC406-
IE302,IE322-IE327 BC407, BC414A-BC414B, BC414O-
BC414Y, BC470-BC472
IFRS 15.B34-B38 BC385E
IFRS 15.B34-B38, IE230-IE248F BC1A, BC27A-BC27H, BC379-BC385Z
IFRS 15.B27-B33, IE222-IE229, IE234-IE238 BC368-BC378

IFRS 15.B39-B43, B48-B51, IE249-IE274 BC386-BC401
IFRS 15.47-49, B48-B51, IE271-IE274 BC1A, BC27A-BC27H, BC181-BC188D,

BC259-BC265
IFRS 15.50-52, B20-B27, B63-B63B, B72, B74, IE7-IE17, BC189-BC194, BC363-BC367, BC385X-
IE101-IE133 BC385Z, BC414A-BC414B, BC415-BC421J,
BC477-BC478
IFRS 15.53-55, IE105-IE108 BC195-BC202, BC479
IFRS 15.56-59, IE37-IE41, IE109-IE140 BC203-BC223, BC480

IFRS 15.60-65, IE134-IE154 BC229-BC247
IFRS 15.66-69, IE155-IE158 BC1A, BC27A-BC27H, BC248-BC254H
IFRS 15.26-30, 70-72, IE159-IE162 BC255-BC258
IFRS 15.59, 87-90, B23-B24, IE19, IE22-IE32, IE37-IE41, BC82-BC83, BC224-BC228, BC286
IE124-IE133
IFRS 15.75, 84-86, IE129-IE133, IE178-IE187, IE289-IE296 BC284-BC285
IFRS 15.73-80, B42-B43, IE163-IE187, IE250-IE253, IE267- BC266-BC280, BC287-BC293, BC389-

IE270, IE289-IE296 BC401, BC473-BC476
IFRS 15.81-83, IE167-IE177 BC281-BC283
IFRS 15.35-37, B2-B13, B55-B62, IE49-IE58 IE66-IE90, BC1A, BC27A-BC27H, BC124-BC147,

IE275-IE313 BC149-BC152, BC402-BC405, BC407-
BC414Y, BC464-BC469
IFRS 15.34, B64-B65 BC422-BC423, BC432-BC433
IFRS 15.B66-B69, IE314-IE318 BC424-BC427, BC432-BC433
IFRS 15.B79-B80, IE322-IE327 No related Basis for Conclusions
IFRS 15.B81-B82, IE322-IE327 No related Basis for Conclusions
IFRS 15.B77-B78 No related Basis for Conclusions
IFRS 15.B77 No related Basis for Conclusions
IFRS 15.B83-B86 No related Basis for Conclusions
IFRS 15.31-34, 38-46, B14-B19, B44-B51, B55, B60-B61, BC117-BC123, BC148, BC153-BC180,
B63-B63B, IE14-IE17, IE37-IE41, IE91-IE100, IE178-IE182, BC219, BC396-BC401, BC413-421J,
IE297-IE302, IE307-IE313 BC464-BC469
IFRS 15.8, 91–94, IE189–IE193 BC297–BC303

IFRS 15.8, 91–94, IE189–IE193 BC297–BC303
IFRS 15.8, 95-98, IE192, IE194-IE196 BC304-BC308, BC312-BC316
IFRS 15.8, 95-98, IE192, IE194-IE196 BC304-BC308, BC312-BC316
IFRS 15.99 – 100, IE192 – IE193 BC309
IFRS 15.101-104 BC310-BC311
IFRS 15.105-129, B87-B89, IE197-IE221 BC327-BC361

Capable of being Distinct within the
Goods and/or services distinct context of the contract
What is the
performance
obligation? Comments
SIGNIFICANT FINANCING COMPONENT CALCULATION
Illustrative Example (PIC 2018-12)
For purposes of this illustration, assume the following:

Contract inception 1
January 1, 2017 4,000,000
Completion Date December 31, 2021 -
Payment Options 5
P5,000,000 in installment -
5
P4,000,000 at the inception of the contract -
Milestones
Year 3
Expected Milestones
For the Year Cumulative
2017 20.00% 20.00%
2018 15.00% 35.00%
2019 25.00% 60.00%
2020 30.00% 90.00%
2021 10.00% 100.00%
Total 100.00%
Calculation of implicit interest rate

Principal 4,000,000
Borrowing Rate 2 5.33%
Payments under
Year Principal, Beg Interest Income
Installment Plan
2017 4,000,000 213,170 625,000.00
2018 3,588,170 191,223 125,000.00
2019 3,654,393 194,752 125,000.00
2020 3,724,146 198,469 125,000.00
2021 3,797,615 202,385 4,000,000.00
Total 1,000,000 5,000,000
Assumptions:
1. Unless otherwise stated, the entity concludes that the contract contains a significant financing component because of the
when the customer pays for the asset and when the entity transfers the asset to the customer, as well as the prevailing inter
2. The lending rate is 5.33 % which is judged to be consistent with a rate that would be reflected in a seperate financ
the entity and its customer. The entity shall use the rate that would reflect the credit characteristics of the party receiving
well as any collateral or security provided by the customer or the entity, including assets transferred in the contract as prescr
3. The expected milestone of the entity is used as basis of determining the transaction price at the inception of the contract.
Transaction price 4,651,699

Lending Rate 2 5.33%
Expected revenue
based on expected
Year milestones Collection Interest
2017 930,340 625,000 -

2018 697,755 125,000 16,272
2019 1,162,925 125,000 47,663
2020 1,395,510 125,000 105,517
2021 465,170 4,000,000 178,849
Total 4,651,699 5,000,000 348,301
Note: Transaction price is the PV of the installment payment discounted to the date the entity expects to satisfy its performa
on the expected milestones). No interest on the first year as payment is made at the end of the year and the assumption is r
the end of the year.
Calculation of POC Revenue based on Actual Milestones
Year POC Revenue

2017 1,023,374
2018 651,238
2019 1,162,925
2020 1,069,891
2021 744,272
Total 4,651,699
Revised amortization table at the end of Year 1

Lending Rate 5.33%
Expected revenue
based on revised
expected milestones
Year below Collection Interest income
2017 1,023,374 625,000 -

2018 651,238 125,000 88,549
2019 1,255,959 125,000 53,994
2020 1,348,993 125,000 117,143
2021 372,136 4,100,000 188,616
Total 4,651,699 5,100,000 448,301
Assume expected milestones are revised as follows:

2017 (actual) 22.00%
2018 14.00%
2019 27.00%
2020 29.00%
2021 8.00%
Total 100.00%
Note: Amortization table has to be revised since the expected milestone at the start of the contract was not realized. As the
was based on those expected milestones, the ending outstanding balance will no longer zero out if the table is not updated.
the initial interest rate should not be changed. This means that there has to be a catch-up adjustment in Year 2 in order to p
rate and intial interest income as required by IFRS 15.
Revised amortization table in Year 2

Lending Rate 5.33%
Expected revenue
based on revised
expected milestones
Year below Collection Interest income
2017 1,023,374 625,000 -

2018 651,238 125,000 2,972
2019 1,255,959 125,000 49,433
2020 1,348,993 125,000 112,340
2021 372,136 4,000,000 183,556
Total 4,651,699 5,000,000 348,301

2017 (actual) 22.00%
2018 (actual) 14.00%
2019 27.00%
2020 29.00%
2021 8.00%
Total 100.00%
Expected revenue
based on revised
expected milestones
below Collection Interest income
2017 1,023,374 625,000 -

2018 651,238 125,000 2,972
2019 1,162,925 125,000 69,782
2020 1,116,408 125,000 108,466
2021 697,755 4,000,000 167,081
Total 4,651,699 5,000,000 348,301

2017 (actual) 22.00%
2018 (actual) 14.00%
2019 (actual) 25.00%
2020 24.00%
2021 15.00%
Total 100.00%
Expected revenue
based on revised
expected milestones
2017 1,023,374 625,000 -

2018 651,238 125,000 2,972
2019 1,162,925 125,000 69,782
2020 1,069,891 125,000 110,820
2021 744,272 4,000,000 164,728
Total 4,651,699 5,000,000 348,301

2017 (actual) 22.00%
2018 (actual) 14.00%
2019 (actual) 25.00%
2020 (actual) 23.00%
2021 16.00%
Total 100.00%
Expected revenue
based on revised
expected milestones
2017 1,023,374 625,000 -

2018 651,238 125,000 2,972
2019 1,162,925 125,000 69,782
2020 1,069,891 125,000 110,820
2021 744,272 4,000,000 164,728
Total 4,651,699 5,000,000 348,301
2017 (actual) 22.00%
2018 (actual) 14.00%
2019 (actual) 25.00%
2020 (actual) 23.00%
2021 (actual) 16.00%
Total 100.00%
Sample Pro-forma Journal Entries

Nature Cash Contract Asset
2017
To record revenue 1,023,374
To record collection 625,000 (625,000)
Total at December 31, 2017 625,000 398,374
2018
To record revenue 651,238
To record interest - 2,972
Total at December 31, 2018 750,000 927,584
2019
To record revenue - 1,162,925
Total at December 31, 2019 875,000 2,035,291
2020
To record revenue - 1,069,891
Total at December 31, 2020 1,000,000 3,091,001
2021
To record revenue - 744,272
To record collection 4,000,000 (4,000,000)
Total at December 31, 2021 5,000,000 -
Total 5,000,000 -
Actual Miletstones
For the Year Cumulative
22.00% 22.00%
14.00% 36.00%
25.00% 61.00%
23.00% 84.00%
16.00% 100.00%
100.00%
Principal ,End
3,588,170
3,654,393
3,724,146
3,797,615
-
ficant financing component because of the length of time between

he customer, as well as the prevailing interest rates in the market.
at would be reflected in a seperate financing transaction between

credit characteristics of the party receiving financing in the contract as
assets transferred in the contract as prescribed in PFRS 15:64.
ction price at the inception of the contract.
Oustanding Balance
305,340
894,367
1,979,955
3,355,981
-
te the entity expects to satisfy its performance obligation (ie. Based

he end of the year and the assumption is revenue is only earned at
Oustanding Balance
398,374
1,013,160
2,198,113
3,539,248
-
art of the contract was not realized. As the previous amortization table
longer zero out if the table is not updated. Note that under IFRS 15,
catch-up adjustment in Year 2 in order to preserve the initial interest
Oustanding Balance
398,374
927,584
2,107,976
3,444,308
-
Oustanding Balance
398,374
927,584
2,035,291
3,135,164
0
Oustanding Balance
398,374
927,584
2,035,291
3,091,001
0
Oustanding Balance
398,374
927,584
2,035,291
3,091,001
0
Contract Revenue Interest

Income
(1,023,374) -
-
(1,023,374) -
(651,238) -
- (2,972)
-
(651,238) (2,972)
(1,162,925) -
- (69,782)
-
(1,162,925) (69,782)
(1,069,891) -
- (110,820)
-
(1,069,891) (110,820)
(744,272) -
- (164,728)
- -
(744,272) (164,728)
(4,651,699) (348,301)
Revenue recognition (IFRS 15) Implementation audit program
The objective of this audit work program is to design and execute sufficient appropriate audit procedures related to the entity’s a
Revenue recognition (IFRS 15) Audit roadmap and may be used in connection with that tool.
Resources
• Revenue recognition (IFRS 15) Audit FAQs
• Applying IFRS: A closer look at the new revenue recognition standard
• Auditing the adoption of IFRS 15 Revenue from Contracts with Customers
• Revenue recognition scoping questionnaire
• IFRS 15 Illustrative risk and control matrix
• Guide to auditing IFRS 15 Revenue from Contracts with Customers
• Excel-based IFRS Contract Analysis Enabler
Overview of the Revenue Recognition Audit Roadmap
Auditing the adoption

1. Obtain 2. ID risk of 3. Develop
understanding material preliminary
misstatement audit strategy
Auditing prospective periods

9. Update 10.Review new 11.Perform
revenue disclosures audit
SCOT procedures
Period Roadmap step

Auditing periods related to
adoption
(YE IAS 8 and, for US SEC
registrants, SAB 74)

adoption
2

adoption


adoption (YE IAS 8 and, for
4
US SEC registrants, SAB
74)
adoption (YE IAS 8 and, for
4
US SEC registrants, SAB
74)

(4a)
adoption
Revenue stream
identification and
scoping controls
(if an integrated audit

or rely on controls
strategy)
Information for coaches:

All entities will need to perform a scoping process to make sure that all revenue and types of contracts with customers are anal
change in accounting under the new standard. An entity will identify these changes by disaggregating revenue into revenue stre
new accounting framework first at a high level during the scoping phase and then in more detail during the contract analysis ph
contract analysis.

(4b)
adoption
(YE IAS 8 and, for US SEC Contract analysis

registrants, SAB 74) controls
or rely on controls
strategy)

adoption

(4c) Accounting policy

controls (if an
integrated audit or rely
on controls strategy)

(4d)
adoption
(YE IAS 8 and, for US SEC Amounts disclosed in

registrants, SAB 74) the FS controls

or rely on controls
strategy)
adoption

adoption

registrants, SAB 74) (5a) — Completeness

(5b)
adoption

Inputs
(5c)
IPE
adoption

registrants, SAB 74) (5d) Homogenous
population

(5e)
adoption
Evaluate the
application of the
accounting framework
overall and at the
contract level
5(e.1)
5(e.2)
5(e.3)
5(e.4)

(5f)
adoption

Key items

adoption
5(g) Representative
sampling
(YE IAS 8 and, for US SEC 5(g) Representative
registrants, SAB 74) sampling

5(h)
adoption

Evaluate testing

5(i)
adoption
(YE IAS 8 and, for US SEC Test tax effects of

registrants, SAB 74) transition adjustments

adoption
registrants, SAB 74) 6

adoption (cumulative
7
catch-up and prior
periods)
8a
catch-up and prior
periods)

8b
catch-up and prior
periods)

9
catch-up and prior
periods)
10a
10b
Applicable only for

Integrated Audits
RS 15) Implementation audit program
s to design and execute sufficient appropriate audit procedures related to the entity’s adoption of the revenue recognition standard, includin
dmap and may be used in connection with that tool.
15) Audit FAQs

k at the new revenue recognition standard
S 15 Revenue from Contracts with Customers
g questionnaire
control matrix
Revenue from Contracts with Customers
Analysis Enabler
Overview of the Revenue Recognition Audit Roadmap
Auditing the adoption

3. Develop 4. Evaluate 5. Perform 6. Audit 7. Update
preliminary design & test substantive committee risk
audit strategy controls testing update assessment
e periods
11.Perform
audit
procedures
Description
Obtain and document our understanding of the entity’s process for

implementing IFRS 15 Revenue from Contracts with Customers,
including the cost requirements
Identify and assess risks of material misstatement related to adoption
• Develop preliminary adoption audit strategy for both controls (if

applicable) and substantive procedures; this work will support both
the qualitative and quantitative disclosures (IAS 8 and, for US SEC
registrants SAB 74) and the amounts that are disclosed in the first
period of adoption (cumulative catch-up adjustment and
retrospective revisions under the modified or full retrospective
methods)
• Review the audit strategy documentation with executives on the
audit team
• Evaluate the design and test the operating effectiveness of

adoption controls that address the risks (if an integrated audit or rely
on controls strategy), including controls related to:
a. Revenue stream identification and scoping
b. Contract analysis
c. Accounting policies (for all revenue streams even if no
transition effect)
d. Amounts disclosed in the financial statements
• Review the results of our control testing, if applicable, and
related documentation with executives on the audit team.
Revenue stream identification and scoping controls (if an integrated

audit or rely on controls strategy) — key steps include:
• Obtain an understanding of entity’s scoping
• If applicable, test controls over completeness of the revenue

streams based on the transition method
• If applicable, test controls over grouping of contracts within

revenue streams where a sampling approach was used for contract
analysis to make sure that they have the same contractual terms
and conditions
process to make sure that all revenue and types of contracts with customers are analyzed. Entities will need to make sure they have identi
dard. An entity will identify these changes by disaggregating revenue into revenue streams and grouping contracts into these streams base
level during the scoping phase and then in more detail during the contract analysis phase. The objective of this is to identify the potential “u
Contract analysis controls (if an integrated audit or rely on controls

strategy) — key steps include:
• Obtain an understanding of entity’s contract review process; our

audit procedures over the entity’s contract reviews will be driven by
the nature and composition of the entity’s business and volume/type
of transactions
• If applicable, test controls over nature and extent of entity’s
contract analysis, whether contract analysis is comprehensive
enough to identify all potential contractual terms that could result in
different accounting, typically for each revenue stream
• If applicable, test controls for each revenue stream over
application of the accounting framework, typically for each revenue
stream
Accounting policy controls, if an integrated audit or rely on controls

strategy, (for all revenue streams even if no transition effect) — key
steps include:
• Obtain an understanding of entity’s accounting policy process
• If applicable, test controls over the development and approval of

the policy
• Read final accounting white papers and policy and determine

whether we agree with application of the accounting framework
Amounts disclosed in the financial statements — key steps include:
• Obtain an understanding of entity’s process for computing the

adjustments
• If applicable, test controls over the computation of the transition

adjustments (in IAS 8 and, for US SEC registrants, SAB 74 and Q1
2018)
• Application of the accounting policy to the contracts
• IPE risks, including new data elements

Perform substantive testing related to the amounts disclosed, including:
• Estimated cumulative catch-up
• Anticipated retrospective revisions
• Prospective accounting changes

Review the results of any substantive testing (or planned substantive
testing if the calculations from the entity are not complete or final) and
related documentation with executives on the audit team.
Test the completeness of the population of contracts included in the

transition adjustments (cumulative catch-up and comparative periods, if
applicable) by selecting a sample of contracts from outside of the
revenue stream population defined by management. For example,
select contracts that comprise a historical backlog, deferred revenue or
list of open contracts.
Test the inputs to the calculations of the transition adjustments

(cumulative catch-up and comparative periods, if applicable) (1) inputs
for calculations under legacy IFRS (likely already tested as part of the
audit of current year revenue) and (2) new inputs for calculations under
IFRS 15. In an integrated audit or if we adopt a controls reliance
approach, for the new inputs under IFRS 15, we will need to test the
accuracy of these inputs through our substantive testing, if not already
performed as part of controls.
Evaluate and test IPE risks, if not already performed as part of controls
(if an integrated audit or rely on controls strategy) refer to example
scenarios that outline IPE testing for substantive purposes.
If management used a sampling approach for contract analysis, test
whether all contracts within the stream have the same terms that result
in an accounting consequence. This may have already been tested as
part of controls work. This test could be performed as part of control
testing as a dual purpose test (if an integrated audit or rely on controls
strategy) or as an attribute test as part of substantive testing, or as a full
contract review and document our testing in the substantive
workpapers.
Read final accounting white papers and policy and determine whether
we agree with application of the accounting framework.
Perform substantive testing related to the application of the five-step

model and cost requirements in the accounting standard. For revenue
streams that do not have an accounting change, we would typically
expect that the team consider selecting a judgmental sample of
contracts to independently verify the entity’s application of the
accounting framework at the contract level in order to evaluate the
entity’s conclusion. For revenue streams that have an accounting
change, select a sample of contracts for each revenue stream and
perform the following (refer to next box for extent of testing):
• Test a sample of arrangements with customers to determine

whether the arrangement meet the definition of a contract with a
customer.
• Test a sample of contracts entered into at or near the same
time with the same customer (or related parties of the customer) to
determine whether they meet the criteria to be combined and
accounted for as a single contract.
• Test a sample of contracts to determine whether the entity has
appropriately accounted for contract modifications, or applied the
practical expedient appropriately during the transition period.
• Test a sample of contracts to determine whether all performance
obligations within contracts with customers have been appropriately
identified.
• Test a sample of contracts to determine whether management
properly identified and estimated all components of the transaction
price, including variable consideration and the application of the
constraint, or whether management appropriately applied the
practical expedient related to estimating the transaction price, if
using the full retrospective method of adoption.
• Test a sample of contracts to determine whether the allocation of
the transaction price to the performance obligations is appropriate.
• Test management’s estimate and underlying assumptions of the
standalone selling price for each performance obligation included
within a sample of contracts. Determine whether management
considered all reasonably available information (including market
conditions, entity-specific factors and information about the customer
or class of customer) when determining the standalone selling price
• Test a sample of contracts to determine whether the timing of
revenue recognition is appropriate based on when performance
occurs and control of the related goods or services is transferred to
the customer.
• Test the application of the portfolio approach, including
management’s quantitative and qualitative analysis that supports
their conclusion that the accounting result is not materially different
than if the standard was applied to individual contracts.
• If a practical expedient is used, test the use of the expedient by
the entity.
• Test a sample of contracts to determine whether they contain
licenses of intellectual property and if so, if the license is accounted
for appropriately in accordance with IFRS 15.
• Test a sample of contracts to determine whether the costs to
obtain and fulfill contracts should be capitalized.
• Test a sample of contracts to determine whether the amortization
method for costs to obtain or fulfill a contract that are capitalized is
performed on a systematic basis that is consistent with the transfer
to the customer of the goods or services to which the asset relates.
• Test a sample of contracts to determine whether the amortization
period for costs to obtain or fulfill a contract that are capitalized is
over the expected period of benefit.
If we determine that tests of details over an account are necessary, we
must first consider whether there are any key items that should be
tested separately. Key items are items that are individually significant to
a significant class of transactions (SCOT) or significant account
balance. Key items can be significant because of their size — that is,
there is a risk of material misstatement simply because these items are
so large — or due to qualitative risk factors. Because key items are not
representative of the population as a whole, the results of our testing of
these items cannot be projected to the rest of the population. It is
important to consider and document our consideration of both types of
key items when designing our procedures and why we believe these
items are not representative of the population. Guidance on key items
can be found in SUBSTANTIVE TOD 2.1.
For revenue streams that have an accounting change, we would
typically expect that key items are identified and tested.
If additional evidence is necessary, consider selecting a representative

sample for revenue streams with an accounting change and perform
contract reviews to test the application of the accounting framework at
the contract level and the accuracy of management's computed
adjustments for that revenue stream. MicroSTART is an appropriate tool
to use to determine the sample size. Consider using some samples that
were tested during control testing as dual purpose tests.
If additional evidence is necessary, consider selecting a representative
sample for revenue streams with an accounting change and perform
contract reviews to test the application of the accounting framework at
the contract level and the accuracy of management's computed
adjustments for that revenue stream. MicroSTART is an appropriate tool
to use to determine the sample size. Consider using some samples that
were tested during control testing as dual purpose tests.
Based on the above testing, evaluate if the balance sheet accounts

were sufficiently tested through the completeness and valuation
procedures outlined above or if additional or direct testing of these
accounts is necessary, e.g., testing contract assets to make sure they
are appropriately classified, performing cut-off procedures for the
retrospective periods, testing changes in the balance sheet across
periods where contract assets become receivables and then cash.
Perform controls (if an integrated audit or rely on controls strategy) and

substantive testing related to the tax amounts disclosed (or tax
adjustments presented net) related to the adoption.
This evaluation should include procedures related to the following:

• Management’s computation of tax accounting adjustments for all
periods presented, including how the revised amounts were
computed, reviewed and approved and the relevant IPE
considerations
• Communicate with the audit committee

• Discuss the status of management’s implementation and our
views with the audit committee
• Use the benchmark timeline that corresponds to the risk rating of
the entity (normal or lower) and discuss with the audit committee
each period our evaluation of management’s status.
Update our assessment of the risks of material misstatement related to

adoption that was previously performed over the entity’s IAS 8 and, for
US SEC registrants, SAB 74 disclosures
Update the work performed over the IAS 8 and, for US SEC registrants,
SAB 74 disclosures and finalize our evaluation of the design and testing
of the operating effectiveness of adoption controls that address the
risks (if an integrated audit or rely on controls strategy), including
controls related to revenue stream identification and scoping, contract
analysis, accounting policies (for all revenue streams even if no
transition effect) and amounts disclosed in the financial statements
Update from the work performed over the IAS 8 and, for US SEC
registrants, SAB 74 disclosures and finalize our substantive testing
related to the amounts in the financial statements, including the final
cumulative catch-up and retrospective revisions if applying the modified
or full retrospective method
Obtain and document our understanding of the entity’s process for

accounting for contracts after the adoption date under IFRS 15,
including the new cost requirements.
If a significant change is identified in the process and control from the

prior audit period, we extend our procedures to obtain an understanding
of the change and its effect, if any, on the financial information subject
to our review procedures. We also consider the need to perform
walkthroughs of transactions in affected SCOTs to help us formulate our
understanding of any changes. If an entity makes a significant change
in ICFR when it adopts the new revenue recognition standard, we
would expect our teams to perform walkthroughs of transactions in
affected SCOTs in connection with the first quarterly, interim review
and/or annual audit after adoption, as applicable.
Review disclosures related to the prospective accounting for material
modifications from legacy IFRS
Review Section 302 ICFR disclosures for material modifications or

omissions
o the entity’s adoption of the revenue recognition standard, including the cost requirements. The steps in this work program correspond to th
7. Update 8. Update
risk testing
assessment
Example evidence from the entity

• Presentations, minutes from steering committee and working
groups
• Documentation/organizational chart outlining the governance
structure
• Project plan, including timeline
• Narrative or implementation approach memo
• If applicable, risk control matrix, or equivalent documentation

• Updated risk assessment that includes considerations related to
rev rec (for 2017 and 2018)
• Evidence of controls at the entity level that are relevant under
the requirements of the respective internal controls framework under
the year of adoption. Under COSO 2013 framework , such controls
could include:
• Control environment: evidence to support the entity’s
training program related to the new standard to train all
affected business functions, including accounting, finance,
legal, tax and sales
• Risk assessment: evidence of the entity’s revised risk
assessments, including reassessing any financial reporting
risks in the revenue process and the planned modifications to
controls that are necessary to address these new risks (both
adoption and prospective periods)
• Control activities: evidence and results of an assessment
which should be made to determine whether transaction-level
controls over revenue from contracts with customers and the
related costs to obtain and fulfill these contracts have been
designed to properly mitigate new risks to an appropriate level,
including IT general control activities over any new or revised
technology
• Information and communication: evidence and results of
the evaluation whether modifications are needed to internal
and external reporting systems to reflect the new accounting
while maintaining the quality and integrity of the information
• Monitoring: evidence of the plan developed to monitor new
or modified controls arising from the adoption of the standard
and the prospective accounting under the new standard
• Draft revenue stream and cost scoping documentation
(memorandum) summarizing all revenue streams and sampling
approach with the entity’s approach to identifying and scoping
revenue streams, including questions and items identified for follow
up by the reviewer and documentation of how these items were
ultimately resolved.
• Completed Revenue recognition scoping questionnaire or
equivalent documentation (e.g., summary of survey responses by
revenue stream, business leader/legal certifications) that illustrates
that management identified all revenue streams and contractual
terms that could have a potential accounting consequence. Also,
meeting minutes, follow up emails and other evidence of items
identified for follow up by the reviewer and documentation of how
these items were ultimately resolved and evidence of approval.
• A sample of representative contracts.
• A summary of contractual terms for each revenue stream.
• Final revenue stream and cost scoping documentation with

evidence of approval.
mers are analyzed. Entities will need to make sure they have identified all contracts with customers and all possible contractual terms that m
o revenue streams and grouping contracts into these streams based on their contractual terms. These contractual terms will then be evalua
ct analysis phase. The objective of this is to identify the potential “universe” of different contract terms and conditions so that they can be an
• GOAL: For the entity to gather evidence sufficient to conclude

that the universe of terms that are relevant for development of the
accounting policy is adequate for them to reduce the risk that a term
is not identified that could have a material accounting consequence
to an acceptable level
• Draft contract analysis documentation (e.g., excel-based

contract analysis enabler, whitepapers) documenting contract review
and accounting conclusions for a revenue stream, including
questions and items identified for follow up by the reviewer and
documentation of how these items were ultimately resolved
• Final contract analysis documentation (e.g., excel-based
contract analysis enabler, whitepapers) documenting contract review
with evidence of approval
• Draft whitepapers documenting contract review and accounting

conclusions for a revenue stream, including questions and items
these items were ultimately resolved
• Final whitepapers documenting contract review and accounting
conclusions for a revenue stream
• Final accounting policy with evidence of approval
• Evidence of how the amounts in the financial statements were

derived by revenue stream, including the completeness and
accuracy of these amounts and how the accounting policy was
applied to the contracts in order to compute the amounts in the
disclosure
• Draft disclosures, notes from review, disclosure committee
meeting notes, emails documenting questions asked and how follow
up items may have been resolved
• Final disclosures with evidence of approval

• Contract analysis, whitepapers
• Accounting policy
• Reconciliation between existing revenue and revenue under
IFRS 15
• Calculations of the amounts that will be disclosed in the financial
statements by revenue stream
• Final amounts disclosed in financial statements

IFRS 15
• Calculations of amounts

IFRS 15

IFRS 15
IFRS 15 Calculations of amounts

IFRS 15
IFRS 15

IFRS 15
IFRS 15
• Draft tax questionnaires, methods or differences identifier tools
and calculations documenting the tax review and tax accounting
conclusions for each revenue stream, including questions and items
these items were ultimately resolved
• Final tax calculations documenting tax methods and accounting
conclusions for each revenue stream with evidence of approval
• Final implementation approach memo with evidence of approval


IFRS 15
• Calculations of final adoption amounts
• Updated narrative or flowchart documenting the new revenue

recognition and cost capitalization processes from initiation to
reporting by significant class of transaction (SCOT)
• Updated risk and control matrix (if an integrated audit or rely on

controls strategy)
• Discussion about how the amounts in the financial statements
were derived by revenue stream, including the completeness and
accuracy of these amounts and how the accounting policy was
applied to the contracts in order to compute the amounts in the
disclosure
• Completed International GAAP® Disclosure Checklist

• Final quarterly, interim and/or annual disclosures, as applicable
• Updated narrative or flowchart documenting the new revenue

recognition and cost capitalization processes from initiation to
reporting by significant class of transaction (SCOT)
• Updated risk and control matrix

• Final quarterly, interim and/or annual disclosures, as applicable
cost requirements. The steps in this work program correspond to the steps in the
EY documentation
• Describe our procedures for obtaining an understanding of the
process
• Describe the entity’s implementation plan, including the following
components:
• The entity’s governance structure
• Project plan, including timeline
• Plan for revenue stream identification and scoping
• Plan for nature and extent of entity’s contract analysis
• Plan for review and approval of the entity’s final accounting
policy (for all revenue streams even if no transition effect)
EY Deliverables:
• Form 275GL Revenue recognition (IFRS 15) implementation
audit form
• Narrative or flow chart
Timing: By 30 September 2017
• Summarize the team’s risk assessment process for the entity’s
implementation
• Identify higher inherent risks and factors that drove the
higher inherent risk
• Identify information used to make the assessment beyond
inquiry of management
• Identify significant or fraud risks
• Evaluation of the nature and extent of the entity’s planned

scoping approach and contract analysis for both revenue and
costs
• If applicable, test entity-level controls related to the

implementation of the new accounting framework
EY Deliverables:

audit form
• Document the audit strategy
• Describe our plan to evaluate the design and test the operating
effectiveness of controls (if applicable):
• Revenue stream and cost identification and scoping
• Contract reviews
• Accounting policy (for all revenue streams even if no
transition effect)
• Cumulative catch-up adjustments and transition
adjustments
• Describe our substantive audit plan for the cumulative catch-up
adjustment and retrospective revisions under the modified or full
retrospective methods
• Describe our plan to test the income tax accounting
considerations
• Describe how our audit procedures are designed to be
responsive to the risks identified, including incremental procedures
to address significant and fraud risks
EY Deliverables:
audit form
• Document our confirmation of our understanding of the entity’s
implementation process and walkthrough of the evaluation of design
effectiveness of controls over adoption
• If applicable, test the operating effectiveness of controls over
adoption
EY Deliverables:
• Implementation walkthrough and related test of controls
workbooks (Form 280GL) OR
• Accounting estimates form (Form 201GL or Form 202GL)
Timing: 31 October 2017 (except lower risk entities, for which timing is
31 December 2017)

effectiveness of controls over adoption, including revenue
stream/cost scoping

scoping (revenue and costs)
• If applicable, obtain evidence from the entity about the review

procedures performed over revenue stream and cost scoping, IPE
considerations and evidence of precision (how the reviewer
developed expectations prior to performing the review, identified
items requiring follow up and how those items were ultimately
resolved)
EY Deliverables:

Timing: By 31 October 2017 (except lower risk entities, for which timing
is 31 December 2017)
contracts with customers and all possible contractual terms that may result in a
heir contractual terms. These contractual terms will then be evaluated under the
e” of different contract terms and conditions so that they can be analyzed during

effectiveness of controls over adoption, including revenue
stream/cost scoping

scoping (revenue and costs)
effectiveness of controls over adoption, including contract analysis

contract analysis (revenue and costs)
procedures performed over contract analysis, IPE considerations
and evidence of precision (how the reviewer developed expectations
prior to performing the review, identified items requiring follow up
and how those items were ultimately resolved)
EY Deliverables:
Timing: 31 October 2017 (except lower risk entities, for which timing is
31 December 2017)
effectiveness of controls over adoption, including the accounting
policy
• If applicable, test the operating effectiveness of controls over the
accounting policy (revenue and costs)
procedures performed over the accounting policy and evidence of
precision (how the reviewer developed expectations prior to
performing the review, identified items requiring follow up and how
those items were ultimately resolved)
EY Deliverables:

Timing: By 31 October 2017 (except lower risk entities, for which timing
is 31 December 2017)

effectiveness of controls over adoption, including FS amounts
• If applicable, test the operating effectiveness of controls over the

FS amounts (revenue and costs)
procedures performed over the amounts in the financial statements,
IPE considerations and evidence of precision (how the reviewer
developed expectations prior to performing the review, identified
items requiring follow up and how those items were ultimately
resolved)
EY Deliverables:
Timing: By 30 September 2017 (except lower risk entities, for which
timing is 31 December 2017)
• Document our substantive testing of the amounts and the results
of those tests
EY Deliverables:
• Excel-based IFRS Contract Analysis Enabler review
• Substantive audit workpapers
• Document results in Accounting estimates form (Form 201GL or

Form 202GL) or Form 275GL Revenue recognition (IFRS 15)
implementation audit form
Timing: By 31 December 2017

• Document our procedures for the completeness of the revenue
stream population used to perform the revenue adjustments based
on the transition method. This test could be performed as part of
control testing as a dual purpose test (if an integrated audit or rely
on controls strategy) or as an attribute test as part of substantive
testing, or as a full contract review.
EY Deliverables:
• Document our procedures to test the inputs used to perform the
calculations used in the revenue adjustments. This test could be
performed as part of control testing as a dual purpose test (if an
integrated audit or rely on controls strategy) or as an attribute test as
part of substantive testing, or as a full contract review.
EY Deliverables:
• Document our testing of how we addressed IPE risks
EY Deliverables:
• Documents our selection of a sample of contracts within the
revenue stream population not tested by management and verify
that the terms and conditions that drive the accounting conclusions
are the same. This test could be performed as part of control testing
as a dual purpose test (if an integrated audit or rely on controls
strategy) or as an attribute test as part of substantive testing, or as a
full contract review.
EY Deliverables:

• Document results in Accounting estimates Form (Form 201GL or
• Documents our analysis of the application of the accounting
framework overall. For the contract level analysis, document the
execution of our testing of the application of the accounting
framework at the contract level.
EY Deliverables:

• Document our key items criteria and selections and perform
contract reviews to test the application of the accounting framework
at the contract level and the accuracy of management's computed
adjustments for that revenue stream
EY Deliverables:

audit form
• Document our selection criteria and perform contract reviews to

test the application of the accounting framework at the contract level
and the accuracy of management's computed adjustments for that
revenue stream
EY Deliverables:

audit form
• Document our selection criteria and perform contract reviews to
test the application of the accounting framework at the contract level
and the accuracy of management's computed adjustments for that
revenue stream
EY Deliverables:

audit form
• Document our procedures to evaluate the design and operating

effectiveness of tax accounting controls, including evidence of
precision (if an integrated audit or rely on controls strategy), and our
substantive procedures to test the tax effects by revenue stream of
the adoption
EY Deliverables:


audit form
• Tax workbooks and related substantive testing workpapers
EY Deliverables:
• Audit committee revenue recognition supplement template
Timing: Quarterly and/or annual, as applicable.
• Finalize documentation related to our testing of adoption

EY Deliverables:
audit form (update)
workbooks (Form 280GL) (update)
(update)
Timing: By 31 March 2018
• Finalize documentation to confirm our understanding of the
entity’s implementation process and walkthrough of the evaluation of
design effectiveness of controls over adoption (if an integrated audit
or rely on controls strategy); this may largely be complete and may
be carried forward from the prior year with little to no updating, since
the controls generally support both the IAS 8 and, for US SEC
registrants, SAB 74 disclosures and the financial statement amounts
in the period of adoption
EY Deliverables:
audit form (update)
• Document results in Form 280GL, Form 201GL or Form 202GL
• Finalize documentation of our substantive testing of the amounts
and the results of those tests; although we may leverage the
procedures we performed in the prior year, unless the entity included
all of the transition adjustments in the IAS 8 and, for US SEC
registrants, SAB 74 note, we will likely need to update and finalize
our procedures to test the financial statement amounts in the period
of adoption; work performed related to IAS 8 and, for US SEC
registrants, SAB 74 disclosures may be carried forward, as
applicable
EY Deliverables:

audit form (update)
• Excel-based IFRS Contract Analysis Enabler review reports
• Document results in Form 201GL or Form 202GL or substantive
testing memorandum
Timing: Before the issuance of interim financial statements, under IAS
34, and or the annual financial statements, as applicable.
For FPIs that furnish interim financial information using the 6-K form,
before the 6-K filing.
• Document the entity’s new revenue recognition and cost
capitalization processes (by SCOT) and confirm our understanding
of these processes by walking through one transaction for each
affected SCOT
EY Deliverables:
• Revenue SCOT walkthrough and related exhibits (Form 280GL)

OR
• Document our procedures to review the disclosures in the notes
to the financial statements, including inquiries of management,
comparison of disclosure to the requirements in legacy IFRS, review
of the International GAAP® disclosure checklist completed by
management, consideration of our understanding of the application
of the accounting framework to contracts with customers and
comparison of management’s disclosures in the notes to the annual
financial statements
EY Deliverables:
• Quarterly, interim review and/or annual audit SRM, as applicable
34, and/ or the annual financial statements, as applicable.
For FPIs that furnish interim financial information using the 6-K form,
before the 6-K filing.
• Document our procedures to review the disclosures related to

changes in controls, including inquiries of management, comparison
of the disclosure to our understanding of the changes in the control
environment based on our inquiries regarding the updated flow of
transactions and changes to key controls
EY Deliverables:
• Quarterly, interim review and/or annual audit SRM, as applicable
34, and/ or the annual financial statements, as applicable.
For FPIs, before Form 10-Q filing, or 6-K filing for FPIs that furnish
interim financial information.
IFRS 15, Revenue from contracts with customers, is now effective beginning January 1, 2018. Many companies are still beh
Given the current status of our client’s implementation of IFRS 15 and our audit of calendar yearend 2018 is fast approachin
In performing these tasks, teams should set up two separate SCOTs for Revenue in EY Canvas – IFRS 15 Transition and 2
Tasks
Planning and risk identification:
1.1 Read the revenue recognition implementation audit work program

1.2 Document our understanding of the entity’s process for implementing the new revenue
standard
1.3 Identify and understand the SCOT linked to Revenue or FSCP for the entity’s
implementation. Create a new SCOT called “Rev Rec Standard Implementation”
1.4 Identify and assess risks of material misstatement (WCGWs) related to adoption and
the controls that address those WCGWs. Determine the effect of the implementation on the
CRA of the account assertions to which the implementation work is mapped.
1.5 Discuss the status of management’s implementation and our views with audit
committee/those charged with governance
Audit strategy and execution:
2.1 Document the audit strategy for both controls (if applicable) and substantive
procedures.
2.2 Confirm our understanding (including performing a walkthrough) of the entity’s process
for implementing the new revenue standard, including the four key phases.
2.3 If taking a controls reliance strategy over revenue, evaluate the design and test the
operating effectiveness and review results of controls over the four key phases.
2.4 Perform and review results substantive testing related to the amounts disclosed,
including the estimated cumulative catch-up and anticipated retrospective revisions and the
related tax effects
Disclosures:
Assess the adequacy of the entity’s financial statement disclosures relative to the new revenue
standard
*Note: Transition refers to audit steps to be performed to address client’s assessment of IFRS 15 impact. Recurring refers t
These tasks are effective for audits of yearend on or after December 31, 2018. For available enablers to assist engagemen
2018. Many companies are still behind schedule in implementing this new standard, despite it being effective at the beginning of the ye
dar yearend 2018 is fast approaching, the timeline to meet client and regulatory deadlines might be challenging. The anticipated audit w
Canvas – IFRS 15 Transition and 2018 Revenue SCOTs. Teams should also add these tasks in EY Canvas manually.
Transition or
Milestone dates
recurring*
31-Jul Transition
31-Jul Transition
31-Jul Transition
31-Jul Transition
30-Sep Transition
31-Jul Recurring
31-Jul Recurring
31-Aug Recurring
Transition
Recurring for
30-Sep substantive tests
except cumulative
catch-up and
retrospective
revisions
30-Sep Recurring
IFRS 15 impact. Recurring refers to audit steps that will be performed on both the implementation period and current period.
able enablers to assist engagement team in performing these tasks, refer to IFRS Revenue Recognition Enablers. For additional quest
effective at the beginning of the year.
hallenging. The anticipated audit work on the implementation is expected have a significant impact on our audit plans. To assist audit te
anvas manually.
riod and current period.
on Enablers. For additional questions or clarifications, contact your AQ Champions.

our audit plans. To assist audit team in managing our audit risk related to the new standard, we are sending out the following milestone
nding out the following milestone tasks and target for engagement team’s reference. These milestones are designed to ensure that our
are designed to ensure that our audit of the transition impact would not coincide with our regular audit timeline.

PFRS 15 Work Program

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PFRS 15 Work Program

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Revenue Recognition Workprogram

Conduct meeting regarding the requirements of PFRS 15

Revenue stream heat map

*High impact if the performance obligation is not 100% completed.

Par. 9 enumerates the following criteria:

Step 2: Identify performance obligation

Step 3: Determine transaction price

Step 4: Allocate the transaction price

Assessment depends on the results of Step 2.

Step 5: Recognize revenue (measurement of progress)

Par. B19(b) of PFRS 15 state that:

n the measurement of progress:

95 of PFRS 15 and would be amotized over the period of performance.

95 of PFRS 15 and would be amotized over the period of performance.

ated to the good;

Tool step Question

A contract modification is a change in the scope or price (or

For discussion of distinct goods or services, refer to Step 2.1;

Contracts modifications may meet both of these factors when

Consider the factors above separately for each performance

Refer to Step 2.1 for the requirements for identifying distinct

If a principal-agent analysis is required, has the entity

3.4 Non-cash consideration Is the entity entitled to any non-cash consideration?

The entity's performance creates or enhances an asset that the

5.3 Bill-and-hold arrangements Could the contract be considered a bill-and-hold arrangement?

- The reason for the bill-and-hold arrangement must be

5.4 Consignment arrangements Could the contract be considered a consignment arrangement?

- The costs relate directly to the contract or to an anticipated

Consider whether the counterparty is a customer.

If the answer to both questions is yes, the repurchase provision is out-of-scope –

If the answer is yes, proceed to Step 1.3.1.

If the answer is no, proceed to Step 1.4.

If the answer is no, evaluate each contract separately.

If the answer is no, proceed to Step 2.1.

If the answer is no, proceed to Step 1.4.2.

If the answer is no, proceed to Step 2.3.

The entity is a principal when the nature of its promise is a performance

If the answer is no, proceed to Step 2.4.

If the answer is no, proceed to Step 2.4.

If the answer is no, proceed to Step 3.1.

The transaction price is the amount of consideration to which an entity expects to

Examples of variable consideration include discounts, rebates, refunds, credits,

Note that an amount of consideration would be variable if an entity's entitlement

For sales-based or usage-based royalties promised in exchange for a licence of

If the answer is yes, discuss the sources of variable consideration in Column E

If the answer is no, proceed to Step 3.3.

If the answer is no, determine the appropriate estimation method before

An estimate of variable consideration is constrained to the extent that it is not

Changes to the transaction price include resolution of uncertain events or other

All variable consideration not specifically attributed in Step 4.1 would be

If applicable, note how each criterion applies to each relevant performance

When a performance obligation includes a licence of IP and one or more other

If the answer is no, proceed to Step 5.3.

If the answer is yes, proceed to Step 5.3.1.

If the answer is no, proceed to Step 5.4.

If the answer is yes, proceed to Step 5.4.1.

If the answer is no, proceed to Step 5.5.

In Column E, note the appropriate measure of progress for any performance

In Column E, note the assessment of transfer of control for any performance

If the answer is yes, proceed to C.1.1.

If the answer is no, proceed to C.2.

If the answer is yes, proceed to C.2.1.

If the answer is no, proceed to C.3.