Carillion plc Monitor

Carillion plc Annual Report 2016
CR Monitor Issue: 
Company covered: 
Carillion plc
Period End: 
31 December, 2016
Report issued on 18 July 2017 covered the following practice issues:
Finalisation of business acquisition fair values including contingent consideration leads to change in goodwill.
Revenue recognition under licensing agreements identified as a risk of material misstatement by the auditors.
Introduction of discussion on alternative performance measures.
Non-recurring items including restructuring costs highlighted separately.
Improved discussion on new standards covering leases, revenue from contracts with customers and financial instruments.
Brexit identified as new risk factor within tabular disclosure of principal risks.

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.

The classification of acquisition transaction costs, an emerging issue under IFRS

This report focuses on companies’ presentation of acquisition-related costs both in the income and cash flow statements. More specifically it considers where such costs are reflected in the income statement and whether they are identified as operating or investing in nature within the cash flow statement.