Workshop Overview

This workshop provides a practical guide to navigating the complexities of FRS 115 – Revenue from Contracts with Customers. We will demystify the standard's 5-step model, transforming it into actionable strategies for accurately recognizing revenue. Through real-world examples, you will learn to tackle common challenges such as identifying distinct performance obligations, determining transaction prices with variable elements, and applying the correct timing and measurement methods for revenue recognition.

Moving beyond the fundamentals, the session delves into advanced application areas including contract modifications, principal-agent considerations, and the nuances of long-term contracts. Attendees will leave equipped to justify accounting judgments, avoid common financial reporting pitfalls, and implement robust revenue recognition policies tailored to their industry, ensuring both compliance and clarity in financial reporting.

Event Outline

1. Grasping the Core Framework & Scope of FRS 115

· Defining the boundary: Which revenue streams are excluded (e.g., leases, dividends)?

· Identifying revenue streams with specific guidance (e.g., warranties, licensing)

2. Identifying Distinct Performance Obligations

· Applying the "distinct" criteria to goods and services

· Assessing separability in bundled contracts and offerings

· Case Study: Deconstructing a bundled software and service contract

3. Determining the Transaction Price

· Estimating and constraining variable consideration (discounts, rebates, bonuses)

· Valuing non-cash consideration at fair value

· Adjusting for the time value of money (significant financing components)

4. Allocating Price & Recognizing Revenue

· Allocating the transaction price to performance obligations

· Point-in-time vs. over-time recognition: Identifying the key indicators

· Selecting and applying measurement methods: Output vs. Input

5. Navigating Contract Modifications and Terminations

· Accounting for changes in scope, price, and both

· Distinguishing between a modification and a new contract

· Adjusting revenue recognition post-modification

6. Tackling Advanced & Complex Scenarios

· Principal vs. Agent considerations: Gross vs. Net revenue reporting

· The impact of third-party costs and supplier arrangements on revenue

· Implementation pitfalls and how to avoid them

Key Takeaways

By the end of this workshop, participants will be able to:

✔ Systematically apply the 5-step model of FRS 115 to any customer contract.

✔ Confidently identify distinct performance obligations and accurately allocate transaction prices.

✔ Determine and apply the correct revenue recognition timing (point-in-time or over-time) and measurement method.

✔ Navigate complex scenarios including variable pricing, contract modifications, and non-cash considerations.

✔ Mitigate financial reporting risk by avoiding common pitfalls related to principal-agent relationships and bundled contracts.

Who Should Attend?

This workshop is essential for professionals involved in financial reporting, auditing, and contract management, including:

· Financial Controllers & CFOs responsible for the integrity of revenue reporting.

· Accountants & Finance Managers preparing financial statements under FRS 115.

· Internal & External Auditors assessing the compliance of revenue recognition practices.

· Business Owners & Sales Executives seeking to understand the financial impact of contract terms.

· Financial Analysts interpreting the revenue performance of companies applying the standard.