Challenges and Controversies Related to IFRS 15 Implementation

Since September 2002, the new waves of international accounting standards have boosted, having as epicenter the US FASB and UK IASB Norwalk Agreement, on accounting convergence Program to achieve fully compatible standards on clearly and globally articulated financial reporting principles for the public benefit. The topic of Revenue recognition constituted one of the most complex and debated subject of this endeavor. May 2014 was the moment when IFRS 15 Revenues from contracts with customers was published and the mandatory implementation initially was set in 2017 but further delayed to 2018. We consider that despite the quality of elaboration and sharing of the new accounting standard the success of the implementation depends on the firm’s capacity to identify, understand and manage the main issues highlighted by IFRS 15 and the way the entities may carry out business-model’s challenges and controversies related to this subject for the first time. We selected one of the most significant challenging sectors-construction industry- as a research area. In our first action, based upon an analyze of the specific research subject and a comparison of the previous and actual standard’s requirements, conceptual framework, amendments, clarifications and examples, we resume to investigate the most important features of changes related to construction reporting entities business-model. Using a comparison analysis, we seek to identify a specific pattern of challenges and controversies in the construction sector that is very helpful in finding the practical answers on how to apply IFRS 15 and to improve the quality of the financial statement’s disclosure. Second, we evaluate the theoretical pattern of challenges and controversies in the first year of implementation. The main objective was to find the gaps and to improve the process of understanding how to ensure an adequate implementation of IFRS 15 and overcoming the inertia of companies. Our findings originally contribute to accounting research’s lack of studies, to investigate the effectiveness of new accounting standards mandatory implementation from the perspective of actual type of reporting entities’ dichotomy.