IFRS 15 / ASC 606
Definition
The converged international (IFRS 15) and US (ASC 606) standards that replaced predecessor revenue rules from 2018. Both apply a five-step model: identify the contract, identify performance obligations, determine the transaction price, allocate the price across obligations, and recognise revenue when each obligation is satisfied. Fraud attacks these steps by fabricating contracts, suppressing obligations, or claiming satisfaction prematurely.
Related terms
- Bill-and-hold
- An arrangement where title passes and revenue is recorded even though the seller retains physical possession of the goods at the buyer's...
- Bill-and-hold arrangement
- A transaction in which a seller invoices a customer for goods that remain physically on the seller's premises at the customer's request....
- Channel stuffing
- A scheme in which a company ships excess inventory to distributors or retailers near a reporting period's end to record revenue, knowing...
- Days sales outstanding (DSO)
- A ratio measuring how long, on average, a company takes to collect payment after a sale: (accounts receivable / revenue) x 365....
- Fictitious revenue
- Revenue recorded for a transaction that did not occur at all, or that involved a related party cycling funds to simulate customer...
- Performance obligation
- Under IFRS 15 and ASC 606, the distinct promise to transfer a good or service to a customer. Revenue can only be...
- Premature revenue recognition
- Recording revenue in an earlier period than the standards permit, typically by treating an uncompleted performance obligation as satisfied. The transaction is...
- Round-tripping
- A circular transaction in which cash or assets flow between two or more related parties so that each records revenue without any...
- Side letter
- An informal or undisclosed written agreement between a buyer and seller that modifies the terms of the primary contract. Side letters are...
Explained in
- Revenue Recognition Fraud: Detection and IndicatorsThe converged international (IFRS 15) and US (ASC 606) standards that replaced predecessor revenue rules from 2018. Both apply a five-step model: identify the...