Impact of the proposed amendments to revenue recognition on selected telecommunications companies

Abstract

Purpose - The study investigates the criticisms made on IAS 18 and the need for a new revenue standard, assesses telecoms' current revenue recognition under IAS 18 and evaluates the impact of the proposed amendments to revenue recognition on the local telecoms. Design - An in-depth qualitative study was carried out to achieve the research objectives. For this purpose, 12 semi-structured interviews were carried out with 5 Maltese telecoms, 6 auditors and the Regulator, to obtain their views on the impact of the proposed amendments to revenue recognition on the local telecoms. Findings - The study shows that the proposed revenue model will impact some local telecoms. Most telecoms will not experience a significant impact as they would mainly retain their existing systems or may require minor modifications. Furthermore, it might be challenging for telecoms to group and extract information for disclosure requirements and retrospectively apply the proposals. The proposed standard will eventually help telecoms and auditors reduce any doubts they might currently have had on revenue recognition. Conclusions - Based on the results, the proposed revenue standard might have an impact on some Maltese telecoms. It can be concluded that the implementation of the proposed standard would not be an easy task for telecoms. However, since the final standard has not yet been issued, the final impact on telecoms is still to be determined. Value - This study is related to local telecoms. The findings provide extensive information regarding the implications of the proposed revenue standard. This will help telecoms to plan ahead to handle the necessary changes in the best way possible. This is also the first study to assess the potential impact of the proposed revenue model in Maltese telecoms.