Deutsche Telekom

IFRS 15 impact disclosures - focus on telecommunications

In our last report on IFRS 15, we looked at the disclosure of the expected impact of the standard in a randomly selected group of 20 UK listed company accounts for periods ending 31 December 2017. None of the sample of companies had early adopted IFRS 15 and only 25% of the sample anticipated the adoption to have a material impact on their next set of financial statements. 

When selecting the sample of ten for this report, we included some 31 March 2018 year-end accounts and we have only included companies in the software and mobile telecommunications industry for which the adoption of IFRS 15 is expected to have a greater impact.  The new standard sets out five core principles that preparers should following when judging how to recognise revenue from longer-term contracts. In these two industries, companies often offer customers multi-year service contracts with equipment offered for no or a low fee. Under previous rules, there were a greater number of options available to companies, whereas IFRS 15 is considerably more prescriptive, and requires companies to split the revenue from these contracts based on the performance of the contract.

This report also includes some discussion of Capita Plc, which has early adopted the standard.

 

Deutsche Telekom AG Monitor

Deutsche Telekom AG Annual Report 2017
CR Monitor Issue: 
2018/0520
Company covered: 
Deutsche Telekom AG
Period End: 
31 December, 2017
Report issued on 22 May 2018 covered the following practice issues:
Pronouncements
Disclosure of reconciliation of changes in liabilities arising from financing activities on adoption of amendment to IAS 7.
Pronouncements
Extended disclosure in respect of IFRS 15 “Revenue from contracts with customers”.
Change
Change in segment reporting structure.
Change
Discussion of key audit matters included in audit report.
Change
Change in the presentation of deferred tax information.
Restatement
Restatement of operating lease obligations.

Fair value measurement information under IFRS

IFRS 13 “Fair value measurement” sets out a single consistent framework for measuring fair value within IFRS financial statements and outlines a standardised set of disclosures in respect of fair value measurements. IFRS 13 has been mandatory now for some years, with application being required for annual reporting periods beginning on or after 1 January 2013. This report sets out the results of how requirements of the standard have been put into practice, both in terms of measurement and disclosure, in the consolidated financial statements of 139 large public limited companies with year ends between 31 March 2016 and 1 April 2017. It is not an exhaustive study of all aspects of IFRS 13 application and its conclusions are limited to our findings in respect of the areas analysed within the financial statements reviewed.

Disclosure of the impacts of IFRS 16 "Leases"

IFRS 16 “Leases” will fundamentally change accounting by lessees as it requires assets previously off balance sheet under operating lease arrangements to be brought on balance sheet as is currently the case for finance leased assets. As a result on application companies will recognise both additional assets and additional liabilities. Consequently there will also be knock on effects in the income statement as operating lease charges are replaced by a depreciation charge and a finance expense. This report analyses the financial statements of a range of companies to firstly establish whether there has been any early adoption and secondly to establish what companies are disclosing in respect of IFRS 16 and its future impacts.

Deutsche Telekom AG Monitor

Deutsche Telekom AG Annual Report 2016
CR Monitor Issue: 
2017/0503
Company covered: 
Deutsche Telekom AG
Period End: 
31 December, 2016
Report issued on 2 May 2017 covered the following practice issues:
Change
Change in segment reporting following the reclassification of business customer operations from one segment to another.
Change
Change in income statement format as a result of adoption of "performance-related total cost" method to present the analysis of expenses.
Pronouncements
Auditors introduce to their report a description of key audit matters.

Employment termination benefits: An emerging issue under IFRS

This report covers the accounting treatment of termination benefits in light of additional guidance given by a revised version of IAS 19 “Employee benefits”. It considers changes in classification and recognition of amounts linked to termination benefits and disclosure of the financial impacts arising from related changes in policy.  

Deutsche Telekom AG Monitor

Deutsche Telekom Annual Report 2013
CR Monitor Issue: 
2014/0814
Company covered: 
Deutsche Telekom AG
Period End: 
31 December 2013
Report issued on 26 August 2014 covered the following practice issues:
Pronouncements
Change in accounting for termination benefits impacts pension costs and obligations.
Change
Goodwill recognised on proportionate basis in partial acquisition.
Divergence
Prospective exchange of licenses contributes to both write-down and disclosure of unexplained expected non-cash gain.
Pronouncements
Table of offset of financial assets and liabilities introduced.