Revenue Recognition under IFRS 15: A Critical Evaluation of Predefined Purposes and Implications for Improvement

Haggenmüller, Sascha (2019) Revenue Recognition under IFRS 15: A Critical Evaluation of Predefined Purposes and Implications for Improvement. DBA thesis, University of Gloucestershire.

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This study investigates problems and major challenges that may arise during the implementation of IFRS 15 and assesses the likely impact on firms’ profitability and performance. Scientific discussions on IFRS 15 are far from reaching an in-depth understanding of the implementation issues and various interpretations of the new standard as previous research projects were conducted at a point in time that only allowed a preliminary and superficial assessment as companies were not yet prepared to implement the new standard. This study aims to provide a significantly deeper level of detail and profound insights as it was conducted during the time that IFRS 15 became effective. The author applies a qualitative approach. Based on a constructivist paradigm, qualitative data is gathered through 15 semi-structured in-depth interviews in Germany with auditors, mainly certified public accountants with outstanding experience in IFRS 15, and accountants involved or in charge of the implementation of IFRS 15 in their companies. The interview guide was developed based on the implications from other accounting studies, theoretical concepts and knowledge gaps identified in the literature review. A qualitative analysis of the 2017 annual reports of the German DAX 30 companies is conducted to triangulate the results related to the likely impact on firms’ profitability and performance. The results of the study indicate that IFRS 15 is mainly addressing specific industries, which had difficulties in applying previous IFRS revenue recognition requirements due to missing or unspecific guidance forcing them to use standards outside of IFRS. Due to its complexity, however, IFRS 15 also affects companies with simple business models and its implementation may be unexpectedly time-consuming, work-intensive and difficult without leading to material changes. Although no indication is detected that earnings management or manipulation may be related to the adoption of IFRS 15, the standard still requires interpretation and professional judgment that may be subject to erroneous or divergent accounting for transactions. Although IFRS 15 appears to be necessary, it is anticipated that it rather represents a complex combination of various existing standards and consequently fails to help the profession. Therefore, the predefined purposes of IFRS 15 formulated by the IASB are, at minimum, questionable from a practical viewpoint.

Item Type: Thesis (DBA)
Thesis Advisors:
Thesis AdvisorEmailURL
Uncontrolled Keywords: IFRS 15; International Financial Reporting Standard (IFRS); Profitability
Subjects: H Social Sciences > HG Finance > HG4001 Finance management. Business finance
Divisions: Schools and Research Institutes > School of Business, Computing and Social Sciences
Depositing User: Susan Turner
Date Deposited: 28 Aug 2019 13:48
Last Modified: 01 Aug 2023 12:46

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