Financial Statements For the year ended
Revenue recognition, including the completeness, existence and accuracy of income recognised
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- Existence and valuation of intangible assets
| Revenue recognition, including the completeness, existence and accuracy of income recognised in the year – ACCA’s main income is derived from subscription income and examination income. A key risk is that recognition of those income streams is incorrect due to timing differences in the key business processing dates and the financial year-end. Following the implementation of IFRS 15 Revenue from Contracts with Customers the Committee has challenged management that proper processes are in place to ensure that income is recognised in the correct period. The Committee has also placed reliance on the historic accuracy of income cutoff and an adjustment to income is made each year which reflects the anticipated value of income reversed due to the removal of members and future members. Due to the impact of Covid-19, the Committee challenged management in relation to IFRS 9 Financial Instruments and the possibility of higher expected credit losses. Under IFRS 9, ACCA has reviewed its expected credit losses in relation to members and future members being unable to pay fees and subscriptions and has recognised further losses to reflect the uncertainty of this. Based on scrutiny of this adjustment by the Committee, it is satisfied that these removals relate mainly to members and future members billed in advance of services being provided. The Committee agrees with management’s representation of income. • Existence and valuation of intangible assets – ACCA capitalises intangible assets where the criteria of IAS 38 are met. Following the introduction of IFRIC in April 2021 on the treatment of Software as a Service (SaaS) arrangements, management analysed previously capitalised intangible assets to assess whether a software asset could still be recognised. That analysis has led to a revision of the accounting policy dealing with intangible assets to recognise that the costs of configuring or customising suppliers application software in a SaaS arrangement are required to be expended in the consolidated income statement. This has resulted in a reclassification of certain intangible assets to either a prepaid asset and/ or as an expense in the financial statements impacting both the current and the prior year as the updated accounting policy had to be applied retrospectively. The Committee is satisfied that management have put appropriate processes in place to only capitalise those items which meet the criteria. Management carryout an annual impairment review of those internally generated intangible assets that are capitalised. That impairment review, which included assessing the impact of Covid-19, identified that there were no intangible assets requiring impairment at the balance sheet date. Management’s view is that this approach to impairment addresses the risk of intangible assets being held at inappropriate carrying values. Third party intangible assets are reviewed for indicators of impairment. The Committee is satisfied with the approach adopted by management Download 0.68 Mb. Share with your friends:
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