Extended Implementation of IFRS 15 Integrated Mode

Inzinerine Ekonomika-Engineering Economics, 2022, 33(4), 356–371
Extended Implementation of IFRS 15 Integrated Model in Countries with an

Emerging Economy
Veronica Grosu1, Svetlana Mihaila2, Nicolai Jieri3, Monica-Laura Zlati4, Marian Socoliuc5,
Cristina-Gabriela Cosmulese6
1,3,4,5,6
Ștefan cel Mare University of Suceava
13 Universitatii, 720229, Suceava, Romania
E-mail. [email protected]; [email protected]; [email protected]; [email protected];
6
[email protected]
2
The Academy of Economic Studies of Moldova
59 Banulescu-Bodoni, MD-2005, Chisinau, Moldova
E-mail. [email protected]
http://dx.doi.org/10.5755/j01.ee.33.4.27638
The mandatory implementation of the International Financial Reporting Standard 15 (IFRS 15) Revenue from Contracts
with Customers starting with the 2018 financial year for all those companies using the IFRS has led to a significant change
in approaching the accounting policies on profits, especially those related to their evaluation and identification within the
financial statement. It is a fact that this significant change has had visible effects on the information disclosed by stakeholders
especially given the stressful financial statement when both the costs themselves and the lack of cash flow have amplified
these results. Consequently, the aim of the present study is both to evaluate the real impact of the use of the IFRS 15 in
different fields of activity and to identify those solutions in terms of solving the issues for each and every significant sector
given the stressful financial conditions, especially in those countries with an emergent economy. Thus, the main objectives
of the study itself refer to the identification of the framework of applicability of the IFRS 15 and its matrix transposition in
the form of a scoreboard based on certain cross-panel correlation keys and the design of an extended modelling methodology
for applying the IFRS 15 based on dynamic indicators and indexes. The final results refer to the design of a replicable model
of extended usage of the IFRS 15 which will serve all the analysed fields of activity. This up-to-date topic is the result of the
implementation of the right model in itself as well as an accurate and objective evaluation of the value of those profits
originating from the contracts signed with clients for all those categories of entities using the IFRS irrespective of the type
of activity or the business model.
Keywords: IFRS 15; Evaluation and Recognition Policies; Stakeholders; Business Model.
Introduction Accounting harmonization has become a necessity which
was imposed primarily by the stakeholders’ requirements
The implementation of the International Accounting and needs. Thus, one of the most current and significant
Standards IAS / IFRS in countries with an emerging economy topics, when we talk about companies using the IFRS refers
is a solution and a response offered by the entities which are to the implementation of "Revenue from Contracts with
responsible for applying these rules both to the requirements Customers" IFRS 15. As of November 18, 2016, the (EU)
and needs of the reporting companies and of all categories of Regulation no. 1905/2016 has adopted IFRS 15, companies
stakeholders (Achim &Tiron-Tudor, 2018). The process of are required to apply this standard in their financial
economic globalization and implicitly the internationalization statements of financial years beginning on January 1st, 2018
of companies led to the development of interstate relations or from a later date (Cosmulese, 2021; Grosu & Socoliuc,
from the point of view of the evolution of transnational 2016). Basically, IFRS 15 brings about both accounting and
companies. Consequently, there was a need to switch to a legal changes in terms of signing contracts with clients,
common standardization and to promote and consolidate a namely it forces the entities to specify for every
unitary economic-financial language. In addition to a natural performance duty whether the control is transferred in due
phenomenon in terms of the companies’ alignment with IFRS time or at a certain moment (BDO, 2019).
which is broadcasted in more and more countries in order to This standard has had a rather sophisticated evolution
maintain a sense of competitiveness in the international in itself both in terms of time and processes in terms of
markets. In the emerging countries, there was a need to becoming a model as applicable to companies. IFRS 15’s
improve both the accounting system. The IFRSs were main objective is to establish the principles that the
considered as having the most acceptable referential. We company must use in order to provide the users of financial
consider that as far as the emerging economies are concerned, statements with useful information about the nature,
both the World Bank and the Monetary Fund have had a amount, timing and degree of income uncertainty and cash
strong influence on the IAS/IFRS implementation process. flows coming from the customer contracts. According to
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Veronica Grosu, Svetlana Mihaila, Nicolai Jieri, Monica-Laura Zlati, Marian Socoliuc, Cristina-Gabriela Cosmulese. Extended…
IFRS 15, revenue recognition is based on the transfer of Literature Review

control and does not refer to the transfer of significant risks
and benefits as before. Therefore, the financial position and The need of getting information from the involved
the statement presented in the profit and loss account may parties combined with the improvement of the
be significantly different which will require the reporting of communication with all those who make use of the financial
additional information in the financial statements so that statement has become of utmost importance as a result of
stakeholders have a better grasp of the company’s image the evolution of technology, globalization and the power
(Tulvinschi & Socoliuc, 2008; Ciubotariu et al., 2019). It is gain of the multinationals. The committee for the accounting
very important to be well-prepared for the transition to react international standards (IASB) focuses on harmonizing the
to the challenges promptly as well as to the opportunities existing accounting systems by thus contributing to the
that arise in these situations. creation of a unitary economical language. The
In this context, the present study aims to estimate the actual harmonization is accomplished based on a certain set of
results of the implementation of the IFRS 15 in different sectors IFRS accounting standards which, given their conceptual
of activity and to identify those solutions regarding the issues framework, are meant to provide useful financial
in terms of every field given the financial stress, especially for information for the involved parties in their decision-
those countries with an emergent economy. In contrast to making process. Consequently, this IFRS system served as
developed countries, emerging economy countries have faced the foundation for the IFRS 15, too, which replaces the
more pronounced impediments in implementing IFRS 15 (such former IAS 18 and, thus, significantly changes the
as those related to vocabulary and applicability, insufficient information disclosed by the stakeholders in terms of an
number of trained professionals, misperceptions and entity’s reported profits. The European Union’s regulation
misunderstandings about the purpose of the new standard), no. 1906/2016 required companies to use the IFRS 15
accentuated by financial security conditions exposed to higher standard for those financial statements which were disclosed
financial stress. as of January 1st, 2018 and later on. In the event, an entity
Consequently, the following objectives have been has to use the IFRS 15 from an early period, that particular
established: O1 – to Identify the general applicability situation had to be disclosed in an explanatory note as part
framework of the IFRS 15 and matrix transposition in the of the financial situation. The standards replace many of the
form of a dashboard based on cross-panel correlation keys; GAAP guidelines in the USA with those principles
O2 – to transpose the dashboard on the two-way pyramidal converging partly towards the IFRS, the latter providing
structure to build a working tool for the reporting companies minimal guidance in terms of the acknowledgement of the
in order to facilitate the implementation of the IFRS 15; O3 profits prior to this standard (Peters, 2018). The changes
– to design the methodology for modelling the applicability regarding the way companies identify, measure, organize
of the IFRS 15 within the extended framework based on and disclose their profits (i.e. the accounting effects) may
dynamic indicators and indices. O4 – to design economic have an impact on the image of these companies as such and
models; O5 – to consolidate the models into a unique, viable on their daily activity (i.e. information effects) due to the
and applicable model. fact that they modify the security prices (i.e. capital market
In order to achieve the objectives, the following were effects) and even change the way companies operate
applied as study premises: all IFRS 15 revisions; the most (Napier & Stadler, 2020; Siminica et al., 2020). In many
recent and innovative publications/studies on IFRS 15 and aspects, the 5 steps approach stipulated by the IFRS 15 is
the application of IFRS in emerging economy countries; the considered to bring about not only the acknowledgement of
individual and consolidated treatment in the proposed model the profits in terms of the ones that are mentioned in chapter
of all the steps for measuring revenue from contracts with 606 of the US GAAP, but also takes into account those
customers under IFRS 15. changes in terms of the profits of several industries, too.
To achieve the above-mentioned objectives, the present Many of those 64 illustrative examples from the IFRS 15 are
study focussed on evaluating the standard through a mixed chosen from several industries and refer to identifying
procedure based on making use of a questionnaire to identify profits (Zhou, 2021; van Wyk & Coetsee, 2020; Al-
the issues related to the implementation of the IFRS 15 and of Shatnawi, 2017). This particular standard provides a general
the econometric modelling of the results which were adjusted framework that is used in identifying both a particular
to the impact coefficients based on our methodology. The situation and the value of the profits as such which applies
questionnaire was designed to cover all those issues that the to all contracts with clients from all sectors of activity.
emerging economies had to face when they applied for the Given that the IFRS 15 is a comprehensive standard in itself,
IFRS. At the same time, we consider that the topic is of real it has an impact on all the industries by replacing the
interest for all the public companies around the world since following: the IAS 11 regarding the construction contracts,
their activity arouses the interests of investors regardless of the IAS 18 regarding profits, the IFRIC 15 regarding the
the country of origin. This is the reason why their financial agreements for the real estate sector, the IFRIC 13 regarding
statements are prepared based on the IFRS. the loyal clients, the IFRIC 15 regarding the agreements for
This study is structured in three main parts: the first part the real estate construction, the IFRIC 18 regarding the
includes the empirical aspects related to the study of transfer of assets to clients and the SIC 31 regarding
literature; the second part aims to define the methodological advertising services (Ancuzo & Delle Femmine, 2016).
aspects whereas the third part focuses on interpreting the Moreover, the IFRS 15 focuses on certain weak points and
results by discussing them based on the validation of the the drawbacks of the former standards from the point of
study’s objectives to formulate conclusions. view of their use and the poor disclosure of the information
(Tomi, 2018). Their accurate use and understanding depend
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both on professional judgement and the consistent use of international practices; insufficient control and monitoring
accounting principles (Usurelu & Dutescu, 2021). On the mechanisms of the evaluation activity; complicated red tape
other hand, it is a well-known fact that a company‘s etc. Many of these issues have not been taken into account
management team shares information with the involved seriously so far (Akisik 2020; van Helden & Uddin, 2016)
parties based on the financial reporting which was designed as they still need to be studied in detail, to be made up-to-
according to the requirements stipulated in the IFRS. date by adjusting them to the present-day situation. The
Consequently, they focus on disclosing relevant economical actual accounting reform in the countries with an emerging
and financial information which will influence the involved economy is mainly the result of the need to ensure quality
parties in terms of making positive decisions in terms of the and comparison of the financial reports for accurate
interests of that reporting company (Tawiah & Boolaky, disclosure of the information for the investors, managers
2019; Amidu & Issahaku, 2019; Garrido‐Miralles, Zorio‐ and all those users of accounting information (Masoud,
Grima, & García‐Benau, 2016). Thus, an improvement in 2014; Ghedrovici & Mihaila, 2013).
the quality of the disclosed information on the company‘s Another issue the countries with an emerging economy
profits was necessary to inform stakeholders in an have to face is related to vocabulary and applicability as a
accurately and comprehensively manner (Ionescu et al., result of the insufficient number of trained specialists, certain
2020). One can state based on the consultation of part of the distorted perceptions and erroneous ideas related to the aim
speciality literature that the IFRS 15 has a broad framework of the latest standards. However, the advantages of
of applicability by impacting both all the industries and the implementing the international standards are higher
stakeholders. These particular aspects have served as a basis compared to the transition costs because the type of reporting
for the drafting of the 1st and 2nd objectives. The transition based on international standards will contribute to the
to the IFRS is a very important step in the economic significant reduction of the information’s systematization,
development of each country especially for emerging processing and presentation costs. Consequently, there will
economies where the process of adjusting and reforming the be a common financial reporting set in place and the
financial regulatory framework has been difficult and long economic relationships among countries will be harmonized
(Erhan et al., 2015; Khamis, 2016; Kumar, 2016). One of (Turcanu et al., 2008). Some authors consider all these
the important differences in the countries with an emergent transition challenges as an opportunity for investors which
economy which has an impact on the accounting system will enable them to get to know the business better, to be
refers to the funding resources as the majority of them come more familiar with the quality of the profits as well as with
from the International Monetary Fund (IMF) and the World the relationship between the entity itself and its clients
Bank. This means that the users of the financial information (Napier & Stadler, 2020; Peters, 2018; Fourati & Bougacha,
from these countries differ from the ones in the developed 2021). Thus, based on the speciality literature, the frequent
countries as there are different needs and requirements in issues related to the implementation of the IFRS standards
terms of economic and financial information. This is the in the countries with an emergent economy are due to their
main unique factor which makes a difference for own economic, legal and educational aspects. However, the
stakeholders as the reporting companies will always tend to advantages of transitioning toward the IFRS standards are
satisfy the demands of the creditors at a disadvantage to the many more and the transition itself should take place in a
investors (Bauer & Centorrino, 2017). Even though the shorter period. The present study does a meta-analysis of the
transition to the IFRS standards has led to an improvement speciality literature in terms of the impact of the IFRS
in terms of the quality of the accounting information and a standards and their effects. The meta-analysis is shown in
reduction of the informational asymmetry among countries, Table 1.
they all have a significant impact only in those countries The table shows that in the analysed speciality literature
with efficient judicial systems in using the accounting the findings differ regarding the impact of the IFRS
standards and in protecting the involved parties (Tomi, standards. Many authors have expected to observe a
2018; Jilani & Nefissa, 2020; Akisik, 2020). Moreover, significant impact, yet the results have shown that this has
studies have shown that the use of the IFRS is also related been a minimal one (Piechocka-Kaluzna, 2021; Napier &
to national legislation. The economic entities need to Stadler, 2020; Tomi, 2018). On the other hand, some authors
function within the legal framework and obey the IFRS claim that the implementation of the IFRS standards
standards, too, and this is something hard to achieve. For combined with the rapid transition to them may bring huge
example, in terms of estimating profits, the Romanian benefits to countries with emerging economies (Akisik,
legislation (i.e. Law no. 227/2015 regarding the Fiscal 2020).
Code) requires entities the gross estimation of profits and
not just the one that is expected to make. The expected profit
needs to be considered as compensation, whereas in its
financial statement that particular entity needs to take into
account the provisions of the IFRS 15, too, and deduct that
compensation from the gross income (Paunescu, 2019).
Other issues refer to: the state’s role and its involvement as
such which does not characterize the countries with a
developed market economy; the lack of an efficient system
of personnel continuous training in the field; the poorly
developed methodological framework; the insufficient
methodological and scientific literature in the field of the
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Table 1
Meta-Analysis of the Impact of the IFRS Standards and Their Corresponding Consequences
Author(s), Studied
Purpose Results/Consequences
year phenomenon
The IFRS standards are more satisfactory regulated than the local
The study of the financial statement of ones. However, as far as Poland is concerned, the differences that
Quality of
the companies listed on the stock have emerged as a result of its usage have been smaller because local
Piechocka- Financial
market of Warsaw during 2004–2019 regulations have already been superior. The author takes into account
Kaluzna, Statements &
on the evaluation of the quality of the fact that benefits are a result of a shift in terms of the accounting
2021 Conversion to
information following the imple- quality (i.e. the economic and financial information) and that new
IFRS
mentation of the IFRS standards. approaches should be taken into account, such as the differences that
exist among the accounting standards.
The findings have shown that financial development, the IFRS and
the state of law are important factors which have a direct impact on
Financial The review of the effects as a result foreign investors` decisions. The author claims that both the use of
development, of the financial development, the the IFRS and the state of law raise the direct foreign investments
IFRS & and IFRS and the state of law for 51 (DFI) in relationship with the total investments. In his view, a
Akisik, 2020
rule of LAW developed countries as well as powerful state of law combined with the use of the IFRS would lead
on emerging countries during 1997– to a decrease in the number of asymmetrical information which
investments 2007. would, in their turn, determine investors to proceed to the transition
from the DFI to portfolio investments in the hosting economies. The
findings are regarded as extremely important for emerging countries.
The analysis of the largest European companies has shown the fact
Effects of The study of the effects as a result of that the impact of the IFRS 15 standard has been a small one for the
IFRS 15 & the change or introduction of the majority of the studied companies with few exceptions such as
Napier &
capital latest IFRS standards on the telecommunications. On the whole, transparency has risen and, as far
Stadler, 2020
market and economic entities, capital market as the effects of the information are concerned, there is evidence that
cash flows and cash flow. certain companies have taken advantage of the introduction of the
IFRS 15 to revise their business.
The IFRS 15 does not have a significant influence on the analyst`s
forecasts of the EPS index. The possible changes in terms of
identifying actual profits did not impede the accuracy of those
forecasts. The findings refer to the market’s efficient theory which
IFRS 15 &
The evaluation of the impact of the stipulates that the prices of the shares are established based on the
analysts’
Tomi, 2018 IFRS 15 on the accuracy of the investor’s expectations related to the future performance of an entity
forecast
analyst’s forecasts. and that the change in the accounting practices will not have a
accuracy
significant impact on these expectations. However, the accuracy of
the sales forecasts has diminished. In conclusion, the accuracy of the
analysts has been impacted temporarily and only for certain
indicators.
IFRS & The findings reveal the fact that there is a relationship between the
The study focuses on the causality
Foreign use of the IFRS and the ISD. The author sustains the idea that the
Yousefinejad relationship between the use of the
Direct implementation of the IFRS standards will naturally attract foreign
et. al., 2018 IFRS and the FDI in the ASEAN
Investment investments. Moreover, the degree of conformity with the IFRS
countries during 2001–2016.
(FDI) represents a key factor for foreign investors.
The objective of the study is to
The results of the study provided conclusive evidence that IFRS 15
examine whether the early adoption
have impacted accountability and quality of information reported in
Fluctuations of IFRS 15 which supersedes the
the financial statement for Jordanian mining, construction and
Aladwan, of stock price International Accounting Standards
engineering companies and that there was a significant difference in
2019 and revenue (IAS) 18 concerning revenue
the value of revenue and stock prices before and after the new
& IFRS 15 recognition has affected or not
standard inclusion. Moreover, both revenue and stock prices were
Jordanian company’s revenue levels
found negatively decreased after IFRS 15 inclusion.
and the value of stock prices.
In the analyzed companies, some managers are able to balance
The analytical correlation between
stakeholders’ interests and their expectations that converge with the
the potential impact of IFRS 15 and
company. The ability of these managers is deductible from the fact
Mattei & IFRS 15 & the quantity and quality of the
that disclosures report information about IFRS 15. The disclosures
Paoloni, quantity and information provided in the annual
are a tool to facilitate relations between stakeholders and the
2019 quality report elaborated for the two years
company, more information and higher quality information contained
prior to the adoption of the latest
in the annual reports could be considered a better management
standard.
relationship.
Source: Author’s compilation
However, in the majority of the analyzed studies, the countries with an emergent economy, the present study is
authors believe that the implementation of the standards will based on an analysis of both the challenges and the effects
lead to the reduction of the information asymmetry and a which take place in several industries as a result of the
better comparison of them. Having in view that there are implementation of the IFRS 15 in Romania and the Republic
very different opinions in the speciality literature in terms of of Moldova. Starting from the year 2000, we have all
the effects as a result of the implementation of the IFRS witnessed an update of the former IAS with the latest IFRS
standards and few studies which have focused on the as the development of the worldwide economy and the
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company’s internationalization require their continuous • Step 5 – Income recognition. The recognition of the
improvement (Tomi, 2018; Akisik, 2020), while their incomes and the verification of the expenses are performed in
financial development has determined the replacement of stages depending on the fulfilment of the contractual
the IAS 18 with the IFRS 15 because there were certain obligations. The criteria for honouring the contract require the
visible risks in terms of the stakeholder informational staging of operations and the recognition of revenues
tampering (Mattei & Paoloni, 2019; Aladwan, 2019). following this staging.
The claims which have been presented in the 2nd part of From a methodological point of view, the authors
the literature review are the foundation of the 3rd, 4th and 5th suggested evaluating the implementation of the standard
objectives defining the empirical research. based on a mixed procedure including a questionnaire and
In terms of the actual research in the field, the study econometric modelling of the results of the questionnaire
aims at consolidating these concepts based on an extended which were adjusted to the impact coefficients according to
implementation model of the IFRS 15 thus laying the their methodology.
foundation for necessary premises supporting those The study is based on a 30 questions questionnaire as a
companies using the IFRS reference system and bringing research tool. The questionnaire was submitted online via
together the actual knowledge with the regulating bodies, the Google Forms platform to 30 entities from different
the practitioners and the researchers. sectors of activity such as production, IT services, banking
services, construction and telecommunication. The
Research Methodology selection relies on the most affected sectors by IFRS 15
(Mattei & Paoloni, 2019; Aladwan, 2019; Tomi, 2018; van
The analysis of the implementation of the IFRS 15 in Wyk & Coetsee, 2020; Bauer & Centorrino, 2017). The
the developing economies represents a challenge for the selection of the respondents has been done according to their
decision-makers in the field given the specifics of the willingness to respond to the questionnaire and the
standard that involves the flexibility of the regional company’s field of activity. Consequently, the respondents
regulatory framework for the customs who used to such as the entities’ financial managers, have been tested
experience the expected effects of the success of the beforehand in terms of their willingness of answering a
implementation mission. questionnaire regarding the estimation of the actual effects
The IFRS 15 has as features, among others, the five of the implementation of the IFRS 15 in several sectors of
steps of identifying revenues that ensure the standard matrix activity. They were 30 respondents represented by financial
structure with validation components and valuation of managers of multinationals or of public companies from
variables (in this case the transaction prices) in correlation Romania and the Republic of Moldova who had agreed to
with the specific conditions of the economic activity in the respond to the questionnaire. The reason for choosing these
region. The matrix structure of the standard was transposed countries is related to the common features of the business
by the author into a dashboard as follows: environment, the accounting knowledge, the territory
• Step 1 – Defining elements of the contract vicinity and, last but not least, the availability of the
(identification). Contracts are a source of materialized rights respondents as such.
and obligations which are assumed under their signature. In The questionnaire was designed in order to address the
the case of the contract portfolio, the identification of the issue of the IFRS 15 in its entirety and was used for all those
contract becomes mandatory and is based on its unique entities which were available to respond to the questions and
elements (i.e. number, object, parts, terms). The defined admittedly use the IFRS 15. The countries belonging to the
portfolio of contracts represents an identifier of the provider's group of countries with an emergent economy in Eastern
experience for similar services. Europe (more specifically Romania and the Republic of
• Step 2 – Obligations. The obligations identified by the Moldova). The inclusion criteria of the respondents are as
contract represent the assumption of the transfer of goods and follows: companies either of public interest, or part of those
services to the beneficiary as a result of the provider's activity. international entities, companies which design their
These are generally defined as a package of goods and services financial statements according to the requirements of the
for mixed contracts in which it is performed in addition to the IFRS 15, Romanian companies or companies from the
transfer of goods and the transfer of related services. Republic of Moldova, or those belonging to one of those 6
• Step 3 – Transaction price. The transaction price above-mentioned sectors. The exclusion criteria were as
represents the estimation of the equivalent value of the follows: entities which do not use IFRS 15, entities which
transfer of goods and services. It consists of a variable do not belong to those 6 analysed fields and which haven’t
component whose limitation is imposed by the IFRS 15 only operated for less than 3 years. It is worth mentioning that the
in the case of production or provision of additional goods and present questionnaire was supplied to the financial
services based on the beneficiary's option. The estimation of managers of 30 economic entities from Romania and the
the financially significant component represents a feature of Republic of Moldova in 2019, entities who agreed to
price traceability for which the provider is required to honour complete the questionnaire after reporting their first IFRS
its obligations under the conditions of the amounts paid to the 15 financial statements. The sample has been divided into 6
beneficiary. types of industries such as 6 respondents from the banking
• Step 4 – Allocation of the transaction price. The sector, 6 entities from the IT services, 6 entities from the
allocation of the transaction price on components is construction sector, 6 from the food industry and 6 from the
overwritten by the assumed obligations generated by law by telecommunication services. The questions were formulated
the termination of the contract. The residual method has, in based on the author’s professional knowledge by having in
this case, its applicability within limited circumstances. view the evaluation of the degree of applicability of the
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IFRS 15 within the local economic entities as subjects of the been taken into account both as service and production
IFRS reporting. Consequently, the questions have been sectors which are operational in the short and long term such
organized in 2 sections, the first section comprising a set of as, for example, the construction sector taking into account
10 questions referring to general data on the questioned the fact that the standard’s applicability differs based on
entity (i.e. the field of activity, the type stockmarket it was certain peculiarities of the activity itself. As far as the
listed on) as well as several other questions referring to the answers are concerned, it is worth mentioning the fact that
main financial indicators (i.e. the value of the turnover, the all those 30 entities have all responded and this aspect
value of the company’s assets, its capital, its liabilities, fixed represents one of the main inclusion criteria for all the
receivables, current receivables) which were reported on studied entities.
December 31st, 2018. Section no. 2 comprises 20 questions The development of the “Bitriangular” structure based
which focus on the issue of the use of the IFRS 15 and it has on the 5 steps of IFRS 15 that form the basic framework for
3 subsections such as: contracts (i.e. questions 1-6), tariffs measuring revenue from contracts with customers creates
(i.e. questions 11,12,13,14,15,19 and 20) as well as the matrix network for achieving O 1, 2 and 3.
performance (i.e. questions 7,8,9,10,16,17,18). All these The results of the questionnaire allowed the bitriangular
aspects are part of Appendix no.1 of the questionnaire. structuring of the IFRS 15 implementation as shown in
To have the most comprehensive image of the use of the Figure 1.
IFRS 15 for sectors of activity, the selected industries have
Figure 1. “Bitriangular” Model of the Input-Output Correlation of Resources

Source: Developed by the Author Based on IFRS 15 Revenue from Customer Contracts,
https://www.iasplus.com/en/standards/ifrs/ifrs15
The above-mentioned scheme serves as a basis for 𝐶𝑖  𝑅𝑗 - the regulated vector space of contracts made
defining the theoretical model regarding the extended between the parties.
implementation of the IFRS 15 for the emergent economies By using the normalization under the IFRS based on the
in terms of the estimation of the recovery of financial stress National Standards the equation becomes:
as follows (in this sense the O4 of the paper was achieved): (𝐶𝑖  𝑅𝑗 )𝐼𝐹𝑅𝑆15 = (𝛼 ∗ 𝑇𝑖  𝜑 ∗ 𝐷𝑗 )𝐼𝐹𝑅𝑆15 + (𝛽 ∗
𝐶𝑖 = 𝛼 ∗ 𝑇𝑖 + 𝛽 ∗ 𝑃𝑂𝑖 𝑃𝑂𝑖  𝛿 ∗ 𝐿𝑗 )𝐼𝐹𝑅𝑆15 (3)
{
𝑅𝑗 = 𝜑 ∗ 𝐷𝑗 + 𝛿 ∗ 𝐿𝑗
(1)
(𝐶𝑖  𝑅𝑗 )𝑁𝐺 = (𝛼 ∗ 𝑇𝑖  𝜑 ∗ 𝐷𝑗 ) + (𝛽 ∗ 𝑃𝑂𝑖  𝛿 ∗
𝑁𝐺
The vectorial space in the absence of the influence of the 𝐿𝑗 ) (4)
𝑁𝐺
standards (under the impact of the agreements between the where:
parties) can be defined as follows: (𝐶𝑖  𝑅𝑗 )𝐼𝐹𝑅𝑆15 - the regulated vector space of contracts
where: between parties under IFRS 15;
C = Contracts; T = Tariffs; PO = Performance (𝐶𝑖  𝑅𝑗 )𝑁𝐺 - the regulated vector space of contracts
obligation
made between the parties under national regulations specific
R=Rules; D =Data; L= Ledger;
to the emerging countries analysed;
𝛼, 𝛽, 𝜑, 𝛿 - regression coefficients;
NG = National GAAP.
i – total sampled population (economic agents)
The normalization differences allow the identification
𝐶𝑖  𝑅𝑗 = 𝛼 ∗ 𝑇𝑖  𝜑 ∗ 𝐷𝑗 + 𝛽 ∗ 𝑃𝑂𝑖  𝛿 ∗ 𝐿𝑗 (2) of the following conditional relationship:
where:
(𝐶𝑖  𝑅𝑗 )𝐼𝐹𝑅𝑆15 ≪ (𝐶𝑖  𝑅𝑗 )𝑁𝐺 (5)
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The recovered financial stress can be estimated based on Similarly, the pricing activities were tested based on the
the relationship: matrix grid. A package of 7 questions was selected in order
(𝐶𝑖  𝑅𝑗 )𝐼𝐹𝑅𝑆15 to assess the transaction’s assumed pricing, vulnerability
𝑆𝐹𝑅 = 1 − (6)
(𝐶𝑖  𝑅𝑗 )𝑁𝐺 and risk. The general values resulting from those 7 questions
were more homogeneous with the average of the general
where: subunit representation for all the questions. The grid of
SFR= recovered financial stress. statistical relevance was applied in their case based on the
As anticipated by Duprey & Klus (2021) the financial impact coefficients. The last area in the activity triangle was
indicators that monitor this phenomenon are Real total credit allocated to the performance itself to test the performance
to the private non-financial sector and Real bank credit to the from the point of view of the European perception of the
private sector (excl. banks) Ratio of total credit to the private concept which also includes the issue of sustainability in
non-financial sector to GDP. Although financial stress is a performance. The respondents were asked a set of 7
phenomenon that is difficult to predict, the indicators questions mainly related to the intended benefits of the
mentioned out of the 27 evaluated in the article fall contracting activity and the options of the parties in the
conceptually into the early warning indicator category. The trading process.
authors did not assess the regulatory capacity of the rules in The performance results follow the structure of zone 1
the modelling, which is corrected by the present research. related to the contracts with minimum-maximum variations
The conclusion is that the normalization regulates a for the proactive attitude in relation to the IFRS 15
niche which comprises part of the profits which have been depending on the type of instrument used to increase the
generated by the contracts with clients, especially the long- attractiveness of the contract. The conclusion of the
term ones or those generating several types of profits. Yet, methodology applied to the primary triangulation reflects
the most important aspect refers to the fact that a direct the fact that effectiveness precedes efficiency in developing
causal relationship between the contract defining elements countries. This is a causal aspect related to the level of
(i.e. tariffs and requirements) and the corresponding economic development in the region. The secondary
accounting elements (i.e. data and ledger) thus creating a triangulation refers to the methodological aspects related to
limited vectorial space combined with the size of the the implementation of IFRS 15. The novelty of the
recovered financial stress resulting in the use of the IFRS 15 suggested model is based on the translation of the answers
in those countries with an emergent economy. that satisfy methodological requirements and activity
Financial stress is defined as the force exerted on requirements so as they cover both the studied areas.
economic agents by uncertainty and changing expectations From a normative and contractual point of view, the
of loss in financial markets and institutions (Illing & Liu, changes brought to the structure of the questions on the two
2016; Bordo & Schwartz, 2000). primary and secondary areas target 17 % of the questions.
In terms of the contracting segment (i.e. Area 1 of the This fact confers structural stability to the first area of the
business triangle), there were certain questions regarding two triangles. From the tariff and cryptological point of
the history of using the IFRS 15 within the company. These view, the structure differs by 28 %. It has been reshaped by
issues have been a source of statistical confidence regarding translating some information assimilated to the performance
the implementation of policies. The final result was in the script registration segment. Area 3 (i.e. the
unfavourable as there were questions (in terms of the conceptualization of performance and data consolidation)
retroactive effects of the use of point C3 of IFRS 15) for which is the most important segment within those two
which the overall average assumption was below 20 %. The triangles is the most different structure-wise between the
general results regarding the history of the use of the IFRS two triangles (i.e. primary and secondary). The correlations
15 defined the impact coefficients which were determined which were calculated based on the results of the
based on the principle of the statistical relevance of the questionnaire are presented in Table 2 below:
variables in relation to the general objective.
Table 2
Statistical Correlations as a Result of the Interpretation Based on the Activity Fields of the Answers to the Questionnaire
Banking IT Food
Type of activities General Telecommunications Construction
services Services and solutions production
Pearson Correlation 1 -,104 ,240 -,513 -,327 ,567
Sig. (2-
General ,845 ,647 ,298 ,528 ,240
tailed)
N 6 6 6 6 6 6
Pearson
Correlation
-,104 1 ,894* -,198 -,205 -,477
Telecommunications Sig. (2-
,845 ,016 ,707 ,697 ,339
tailed)
N 6 6 6 6 6 6
Pearson
Correlation
,240 ,894* 1 -,216 -,499 -,367
Banking services Sig. (2-
.647 .016 .682 .313 .474
tailed)
N 6 6 6 6 6 6
Pearson
Construction -.513 -.198 -.216 1 -.196 -.227
Correlation
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Banking IT Food
Type of activities General Telecommunications Construction
services Services and solutions production
Sig. (2-
.298 .707 .682 .710 .665
tailed)
N 6 6 6 6 6 6
Pearson
-.327 -.205 -.499 -.196 1 .475
Correlation
IT services and
Sig. (2-
solutions .528 .697 .313 .710 .341
tailed)
N 6 6 6 6 6 6
Pearson
.567 -.477 -.367 -.227 .475 1
Correlation
Food production Sig. (2-
.240 .339 .474 .665 .341
tailed)
N 6 6 6 6 6 6
* Insignificant correlation at the 0.05 level (2-tailed).
Source: Elaborated with the GRETL statistical software version 2019
The correlation coefficients indicate the fact that from a The symbols that were used are as follows:
statistical point of view the IT and the banking sectors 𝐴∆ - the positive result of the IFRS 15’s implementation
maintain homogeneity of the distribution of the options in on each section of the two primary and secondary triangles;
terms of the IFRS 15’s implementation of the reporting 𝑟𝑖– the share of the affirmative answers of the
companies (i.e. the correlation coefficients are close to 0 companies that use the IFRS 15 out of the total analyzed
valid), while, at the opposite pole, there is the construction companies;
sector whose correlation coefficients tend to 1. The a - the logical coefficient for testing the affirmative
calculation of the representation area of the effects of the answers.
implementation of the IFRS 15 was performed by the The data collected by the questionnaire were modelled
authors according to the formula given below: by using the Curve estimation model in SSPS based on the
∑𝑛
𝑖=1(𝑟𝑖𝑎 ∗𝑛𝑖 )
linear, cubic growth functions which were combined with
𝐴∆ = ∑𝑛
, where r ia >0 <=> a>0 the following descriptive table of the model, achieving the
𝑖=1(𝑛𝑖 )
last objective (O5) of the work (see Table 3):
Table 3
Description of the IFRS 15 Integrated Model Use

Model Name IFRS 15 Integrated Model use
1 Telecommunications
2 Banking services
Dependent Variable 3 Construction
4 IT services and solutions
5 Food production
1 Linear
2 Cubic
Equation
3 Compounds
4 Growth
Independent Variable General
Constant Included
Variable Whose Values Label Observations in Plots Unspecified
Tolerance for Entering Terms in Equations .0001
a
The model requires all non-missing values to be positive.
The tests of statistical significance that positioned the located on statistical levels of significance, which were
banking services sector and the IT sector on levels of higher than 50 % (see Table 4).
medium significance were calculated for the model while The standard regression error is minimal in the case of
the construction and agricultural production sectors were the agricultural production and telecommunications sector.
Table 4
The IFRS 15 Integrated Model Use – Summary
Statistical coefficients
Activity sector
2
R R Adjusted R2 Std. Error
of the Estimate
Telecommunications .104 .011 -.237 .041
Banking services .240 .058 -.178 .152
Construction .513 .264 .079 .065
IT services and solutions .327 .107 -.117 .068
Food production .567 .322 .152 .049
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The ANOVA test performed for the data disseminated by activity sectors is presented in the table below:
Table 5
The ANOVA Test for the Use of the IFRS 15 Integrated Model
Activity sector Variable Sum of Squares df Mean Square F Sig.

Regression .000 1 .000 .043 .845
Telecommunications Residual .007 4 .002
Total .007 5
Regression .006 1 .006 .245 .647
Banking services Residual .092 4 .023
Total .098 5
Regression .006 1 .006 1.431 .298
Construction Residual .017 4 .004
Total .023 5
Regression .002 1 .002 .477 .528
IT services and solutions Residual .018 4 .005
Total .021 5
Regression .004 1 .004 1.899 .240
Food production Residual .009 4 .002
Total .014 5
The value of the regression coefficients (Beta) production sector while for the construction segment the
indicates the fact that the model generates an increasing trend is negative (see Table 6).
trend both in the banking services sector and in the food
Table 6
Correlation Coefficients
Sectors Unstandardized Coefficients Standardized Beta t Sig.
B Std. Error Coefficients
Telecommunications General -.216 1.037 -.104 -.208 .845
(Constant) .502 .426 1.178 .304
Banking services General 1.886 3.811 .240 .495 .647
(Constant) -.476 1.566 -.304 .776
Construction General -1.939 1.621 -.513 -1.196 .298
(Constant) 1.247 .666 1.873 .134
IT services and solutions General -1.178 1.705 -.327 -.691 .528
(Constant) .912 .701 1.302 .263
Food production General 1.679 1.218 .567 1.378 .240
(Constant) -.300 .501 -.598 .582
The general data of the consolidated econometric companies in using the IFRS 15 income measurement tools
models graphically reflect the confidence of the reporting (see Figure 2):
Figure 2. Graphic Representation of the IFRS 15 Integrated Model Used in the Main Fields of Activity
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It is worth mentioning that the banking sector occupies industry. Thus, we have noticed an active implementation
the best position due to the fact that the statistical tests allow of the IFRS 15 based on the answers to the questions
the highest correlations for this sector of activity including formulated in the questionnaire. It is clear that some aspects
the specific information transparency requirements required of the standard do not apply to the companies belonging to
by the IFRS. different industries and business policies. For example, if a
On the other hand, the colours which were highlighted company operates with a relatively short production cycle
for the construction and telecommunications sectors (i.e. 30–180 days), then it will not consider it necessary to
emphasize significant disturbances when using the IFRS implement a new module in its internal practices regarding
requirements in countries with an emerging economy. the involvement of multiple accounting periods for revenue
recognition based on a contract with its customers.
Results and Discussions However, the research has shown that there were
companies, which provided an affirmative answer to the
It is important to note that this questionnaire was used question of whether most of their revenue can be traced out
for a heterogeneous sample of five industries such as the during several accounting periods. We have noticed that
banking sector, the IT services sector, the construction such an approach is representative for those companies in
sector, the food industry and telecommunications services. the construction industry where the carry out of the
The companies participating in the research, whether in the contractual obligation usually takes a little longer and it is
public interest or part of a group of international companies, required that the accounting approach on these types of
all design their financial statements in accordance with the contracts requires a maximum and detailed rigour to avoid
requirements of the International Financial Reporting the risk of being "cut-off".
Standards (IFRS). The questions included in the The questions included in the questionnaire were
questionnaire were based both on the professional reasoning formulated based on the specifics of the existing industries
imposed by these international norms and on the authors’ in the vast majority of the emerging economies. The list of
experience and expertise in order to determine the degree of questions can be used independently by the companies. The
applicability of the IFRS 15 within the companies in most common situations refer to concluding a new contract
emerging economies. with customers when the representatives of the reporting
Given the present-day conditions of the market company can use this list of questions as a “check-list” tool
economy, special importance is given to the universality in order to assess whether the concluded contract falls under
concept which involves the alignment of methods, the IFRS 15 or another approach or accounting policy based
techniques and approaches to business management. on other standards must be used (Mardini & Ammar, 2019).
Financial reporting is one of the key elements of the The use of such a tool would be a solution bringing about
integrated processes in a business given the fact that based tangible advantages that would lead to a visible reduction of
on the indicators of financial position and performance, the costs and have a direct impact on the techniques,
users of financial statements can make certain investments methodologies and internal practices as well as certain
and operational and managerial decisions. Standardization positive effects in terms of increasing the level of the
is one of the levers through which the concept of employees’ professional knowledge and familiarity of the
universality of financial reporting is achieved. As far as a new requirements of the IFRS 15 standard.
company’s revenues are concerned, the regulatory In order to make the use of the instrument more
framework has decided to come up with reform. The basic specifically, it is important to highlight the key elements
premise is the demand from the business environment based on the industry the company is part of (i.e. “Tips on
because the market economy that is constantly evolving the IFRS 15”):
requires other techniques for income identification and a) Banking services. It is important to note that as far as
evaluation. This reform is defined by the advent of IFRS 15 the banking sector is concerned, in addition to the use of
whose requirements have become mandatory since January the IFRS 15, another relatively new standard – the IFRS
1, 2018 for those companies that design financial statements 9 “Financial Instruments” is likely recommended so that
in accordance with the IFRS. the economic reality regarding these two standards for
Our research focuses on the companies’ analysis banks would be defined by the following equation as
belonging to five areas: banking, IT services and solutions, shown in the figure below:
telecommunications, food production and the construction
Total value of the The value under IFRS 15,

contract - The value under IFRS 9
= which can also be 0
Figure 3. The Presentation of the Correlation between the Applicability of the IFRS 9 and the IFRS 15 in the Banking Sector
Source: The IFRS 15 Revenue for the Banking Sector
https://home.kpmg/gr/en/home/insights/2018/03/gr-ifrs-15-revenue-banking.html
Based on the correlation mentioned above, we can the IFRS 9 rather than the IFRS 15 even though a
conclude that banking entities may have many contracts combination of standards may be a more suitable approach.
with customers however, these contracts may be subject to An issue in the sense of combinations of standards within
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the same contract may arise when assessing the distinction of income will be only in regards to the delivery fee which
of goods and/or services if and only they have the ability to represents the net value of the sale price and the purchase
be distinguished and this fact is clearly shown in the price from the principal.
contract. An important specific aspect in terms of the c) Food production. The companies from the food
banking industry refers to the time factor in identifying the industry face similar difficulties as other
income itself based on the IFRS 15 so that the identification companies, but the nature of the significant
can be at a certain time or for a period depending on the problems is more or less different from the ones in
services/products that are delivered. the service industry.
It is important to highlight the fact that in the case of A significant aspect related to the production activity,
those companies with banking activity, the payments in namely the sale of the finished products, is the prices. In
advance are frequently made by customers, while in the such a business, the equation that is used for estimating the
accounting practice they are recorded as debts on advances. transaction price often emerges as the tool to win customers
In this situation, the IFRS 15 comes with a different (i.e. the discounts). From the point of view of the FRS 15,
approach and recommends that the recording of these price reductions are part of the transaction prices that have
payments should be considered as a commitment to the a special treatment compared to the SIC 18. Thus, the option
contracts with the customers. for discounts must be highlighted in these contracts and
b) IT services and solutions. As far as the software taken into account when identifying the income even if at
industry is concerned, the applicability of the IFRS the time of the identification there is no certainty as to
15 requires a great deal of professional judgment whether or not this reduction will be granted. The IFRS 15
and study of the recommendations of the standard recommends that income should be recorded at its net value.
in place. In the event the reductions are granted according to the
Contracts with customers in this service and/or goods contractual conditions, then the value of the income remains
sector are usually very consistent as customers require an IT the same. In case of a non-compliance, an additional income
product in the form of hardware and installation, some is identified in the amount of the stipulated reduction.
deployment services and some post-installation d) Telecommunications services. In the case of the
maintenance services. Consequently, in such cases, it is companies operating telecommunications services,
indispensable to detail the contract to the maximum. This the revenue recognition was significantly influenced
fact will ensure a process of clear distinction of the elements by the emergence of the IFRS 15.
from the contractual obligations. Following a well-defined In this area, the contracts with customers are very diverse
structure, it will be possible both to identify constant and/or such as telecommunications services, equipment sales,
variable prices for each separate bond and the time of internet services, television services, connection/maintenance
revenue recognition in stages depending on the time factor: services, subscription services and equipment. In this context,
the product - hardware will be recognized at the time of the companies shall sort out all contracts by their nature in
transmission, while the revenues generated by installation order to use the IFRS 15 algorithms for the sample contracts.
services and maintenance will be recognized during the The homogenization of contracts will allow the use of
period in which they are provided directly. Yet, in this case, accounting treatment for a large number of contracts based
there could be differences due to the fact that the inflows of on the same approach. As for the integrated contracts where
economic benefits coming from the installation services the equipment and subscriptions for services are sold, it is
could be recorded in accounting after the installation is necessary to identify the products/services and to allocate a
completed, while the maintenance services must be transaction price for each individually. This procedure is
periodically identified. performed based on estimation, assuming that each of the
A difficulty in contracts with customers in the IT goods and/or services are sold independently by using the
services and solutions industry can be encountered when rates that a price is allocated to the performance bonds.
assigning the transaction price to each of the distinct Another important aspect in the telecommunications
goods/services identified in the contract. In such instances, industry refers to the contracts with customers with a
the estimation would be useful, but this estimation should payment period of more than one year. Thus, in the note to
be as accurate as possible. For example, if the contract refers the financial statements, it is necessary to separate the
to 4 separate goods and services, yet the contractual value is revenue which was identified at the time of delivery from
for all these related obligations, then an estimation must be the revenue which was generated by customer contracts
made, namely to assess the value of each separate where the acknowledgement takes place over a given period
good/service as if it were delivered independently while of time. As far as the telecommunications industry is
using the individual reports as a whole to be applied as part concerned, the payment for subscriptions is usually made
of the current actual contract. before the actual delivery period of the services (i.e. they
Local companies focused on the delivery of IT services must be acknowledged as a contractual commitment and not
and/or products operate in many cases as official dealers of as debt on advances as it was the case until the advent of the
IT giants. So, if we correlate this hypothesis with IFRS 15 IFRS 15).
for economic entities in emerging economies, then there is It looks like a specific feature of the telecommunications
a big problem with how the distributor operates: as an agent industry in terms of the IFRS 15 refers to the implementation
or as a principal?; the difference in terms of the standard of the requirements of the standard in the company's billing
between them is that in the case of operating as principal, system as this adjustment is very expensive. Otherwise, the
the entity will recognize its income in full, in the event of corresponding income adjustments must be performed
taking part in the transaction as an agent, then the recognition monthly.
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It is important to note that in the field of tele- as a result of which several standards were ruled out and
communications, a combination of standards in a particular replaced with one to be used in different fields of activity.
contract with customers can often be encountered due to the The most important aspect refers to the focus on the most
fact that in addition to the IFRS 15, the “Financial important aspect of an entity’s activity in order to get profits,
Instruments” IFRS 9 often appears according to which namely, the focus is geared towards getting profits.
receivables and payables need be valued at a fair value. The The IFRS 15 in the present study has been analyzed
“Leases” IFRS 16 has many leases for antennas, commercial from a qualitative point of view in order to evaluate the
spaces and consultation spaces as the provisions of the degree of applicability in emergent countries such as the
mentioned standard must be strictly applied starting from Republic of Moldova and Romania.
January 1, 2019. The respondent entities have been the ones already
e) Construction. This field of activity had as a guide, using the IFRS reporting framework otherwise the present
until the implementation of IFRS 15, the research would have been pointless. The authors have
International Accounting Standard 11 “Construction noticed at least the following aspects related to the fairly
Contracts”. new IFRS 15 standard:
The impact, as in the other areas listed by the author, is - the IFRS reporting entities of the Republic of Moldova
major and specific to the construction industry. and Romania from different sectors make use of the IFRS
Construction companies have very valuable contracts with 15 and are those which are in favour of a prospective system
customers compared to contracts on trading activity, without estimating the impact during the previous periods.
telecommunications, etc. Thus, unless the contracts are very They have led extra costs which could have been avoided at
valuable, it is difficult to get such contracts and there are the time when it was implemented as such;
some related costs, too. One of the issues is whether the - the IFRS 15 can be much more widely used and has a
company is allowed to collect pre-contractual costs in the more visible impact on those companies which opt for
amount of the contract or it needs to consider them as signing contracts with their clients during more than one
current expenses as part of its income statement. year. In the case of these types of contracts, the impact of
Consequently, the standard comes with a recommendation the IFRS 15 from the accounting perspective will definitely
to recognize current expenses as those incurred in the short have an impact on the balance sheet, PL as well as on the
term. However, those which are longer than one year are to disclosure of the profits in the financial statement, during
be capitalized in a cost account in order to sign contracts and short-term shipments up to one year. However, the IFRS 15
amortize them over the term of the contract. does not have a significant impact on the financial statement
An important and very difficult aspect of construction as compared to the IAS 18 except for the event when the
contracts refers to the time of revenue identification. The shipment is done during two distinct financial periods of
contracts in this industry last for a fairly long period. Thus, time.
the revenue of the income must be identified for the - the 5 steps in estimating the profits as established by
finishing stages. The amount of revenue identified for the IFRS 15 are a framework for those entities using this
example at the 50 % finishing stage will be equal to the costs particular standard including the respondent entities as part
which were actually incurred for the construction of 50 % of the present study.
of the entire object. In practice, there are instances when the - the implementation of the IFRS 15 is mandatory, thus
construction company may be subcontracted by another entities have no options whatsoever, whereas the IFRS
construction company in order to come up with some reporting brings about indirect extra advantages by making
specific works. Consequently, more attention must be paid investments more appealing and attracting the niche of
to the position in which it operates - as principal or agent clients with an elevated financial education - a crucial
depending on the role the revenues, they will fully identify phenomenon for any emergent economy as the total can
it in case they act as principal as well as within the have a high value solely based on the increase of the key
commission in the event they act as an agent. Given that parts.
contracts with customers in construction have a very long- - the former profits standard comprises multiple sub-
life cycle, the company must keep a strict record of the standards for estimating the revenues. The overly accepted
variable price factor which may occur during the contract. accounting principles in the USA comprise more than 80
Regardless of the field in which a company operates, articles regarding the estimation of the profits while the
the IFRS 15 requires that income needs to be disclosed in Council for the international accounting standards
the notes to the financial statements. This is done in order to comprises IAS 11, IAS 18 and IFRIC 13. All these varied
provide users with financial statements that are detailed and standards have created discrepancies in terms of reporting
relevant at the same time. The criteria for disaggregating the financial statement, whereas the latest standards of
revenues can be the following: geographical, market, the estimating profits are meant to solve this issue. The latest
types of contracts, the moment of acknowledgement, the standard provides a framework which is supposed to
types of goods and/or services, etc. generate more comparable financial statements. However,
The reporting framework based on the use of the IFRS one can argue that the number of estimations and trials
represents an important step in terms of the development of which can be done based on this latest standard may have
the financial reporting due to the fact that the qualitative an impact on the very nature of the reporting of the financial
result of those from IASB was possible solely based on the statement.
use of the universal approach which refers to a unique - the financial statement has been used in the case of
concept in terms of the reporting itself. The IFRS 15 had in reporting historical financial data. Several improvements
view a unique set of regulations for identifying the profits have been brought about by the IFRS 15 in this respect. The
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latest standard requires the need for making forecasts. The economic entities from the 5 sectors of activity have leaned
forecasts may bring about higher profits as well as the towards an active implementation of the IFRS 15.
budgeting of the cash flow. A company’s planning and Thus, the emergent countries (in our case as countries
performance management would be influenced by the latest of origin for the analyzed companies) have proved to be
standard due to the fact that the latest profit standards are more affected by the financial stress than the emergent
related to a closer look at the contracts’ advancement. This countries, they are open and embrace the changes brought
fact could provide stakeholders more useful information. by the IFRS on the whole and imposed by the new
Moreover, the disclosure requirements provide information configuration of the worldwide economy. Consequently, the
which will allow the users of the financial statement to authors believe that the conceptualization of a unique and
understand the nature, the value, the timeframe as well as viable model for an extended implementation of the IFRS
the uncertainty in terms of the profits and cash flow 15 has become mandatory in itself. This model would be
corresponding to the contracts with clients. implemented by all companies using the IFRS15
irrespective of their field of activity. The advantages of
Conclusions implementing this model support these companies because
it addresses a niche regarding the estimation and
The present study has managed to evaluate the actual acknowledgement of the profits which are generated as a
effects of the IFRS 15 implementation in the fields such as result of the contracts signed with clients which will lead, in
telecommunications, construction, the banking system, its turn, to a visible improvement of the way stakeholders
production, services and IT from countries like Romania will perceive and interpret the transactions of these
and the Republic of Moldova with an emergent economy. companies, their level of informational transparency as well
Thus, it is a fact that the IFRS 15 is able to make adjustments as the decrease of the informational asymmetry.
in terms of the informational or accounting shortcomings There is no doubt of the fact that there have been certain
when estimating, identifying and reporting the profits obstacles in regard to designing the present study related to
resulting from the contracts with clients as part of the former the fact that the authors have chosen to focus solely on the
IAS 18 and address the weak points and the legal deficits Romanian companies as well as on those from the Republic
which were prone to interpretations and the of Moldova based on the fact that, to fill in the
stakeholders’tampering. Taking into account the fact that questionnaire, there was the need of having a direct
IFRS 15 is responsible for this change and that it forces the connection among the authors and the respondents alike.
use of the 5 steps approach for those profits resulting from However, future research will be devoted to the study of
the contracts with clients, the present issue proves the fact other countries with an emergent economy from South-
that in these companies there are managers who are capable Eastern Europe in order to be able to compare the results.
of balancing the interests of the involved parties and meet Another drawback of the present research has to do with
their expectations in such a way as to consolidate the the fact that, even if many companies use the IFRS 15, they
relationships throughout time. are still not totally familiar with the requirements of this
Another obvious effect of making use of the IFRS 15 particular standard which is a reason why shortly there may
which has a positive influence on both the reporting be shifts in their interpretation or in their full use. These
companies and the stakeholders in general refers to the facts may have an influence on their relationships with
improvement of the quality of the financial and accounting stakeholders.
information, especially in terms of the relevance and the In conclusion, the authors believe that the use of the
comparability of the financial statement. The magnitude of IFRS 15 by the companies from Romania and from the
these effects is obviously different in regards to every field Republic of Moldova which are countries with an emergent
in the sense that for some of them the IFRS 15 will have a economy, represents a continuous process in itself together
significant impact which will bring about changes in the with the implementation of the degree of evolution.The
way profits are estimated. This fact will be followed by the emergency phenomenon for these two countries is a
adoption of new systems and processes or it can have a particular one not only from the point of view of those
lower impact depending on the nature of the contract terms standards which have been imposed by authorities, but also
and the conditions which have been negotiated by the due to the fact that the influence of the emergency is also
contracting parties based on the duration of the contract or perceived as resulting from the global business expansion,
the complexity of the accounting and legal treatments of the the development of the corporate culture, the increase of the
resulting profits. This aspect has been verified in the present responsibility in terms of the integrated sustainability and
study, too, which highlights the fact that all the analyzed reporting.
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Authors’ Biographies
Veronica Grosu is a PhD Professor at the University of Suceava “Ștefan cel Mare”, Romania, Department of
Accounting, Auditing and Finance. She is also the editor-in chief of the Journal of Accounting, Finance & Business. Areas
of interest: international accounting, IFRS, corporate governance, financial audit, intellectual capital, CSR, integrated
reporting, digital revolution. Her research appeared in journals such as Environment, Development and Sustainability,
Frontiers in Nutrition, Revista de Economia Mundial, Economic Research-Ekonomska Istraživanja, Journal of Business
Economics and Management, Polish Journal of Environmental Studies, Journal E&M Economics and Management,
Argumenta Oeconomica, Economic Annals-XXI, Sustainability, Entrepreneurship and Sustainability Issues.
Svetlana Mihaila is a PhD Associate professor at the Academy of Economic Studies of Moldova, Chisinau, Moldova,
Department of Accounting, Audit and Economic Analysis. Areas of interest: international accounting, management
accounting, audit, integrated reporting. Her research appeared in journals such as Economic Research-Ekonomska
Istraživanja, Journal of Business Economics and Management, Sustainability.
Nicolai Jieri is a PhD student at the University of Suceava “Ștefan cel Mare”, Romania, Department of Accounting,
Auditing and Finance. Areas of interest: international accounting, audit, financial reporting, business economics. His
research appeared in Eastern European Journal for Regional Studies (EEJRS), European Journal of Accounting, Finance &
Business.
Monica-Laura Zlati is a PhD in accounting at the University of Suceava “Ștefan cel Mare”, Romania, Department of
Accounting, Auditing and Finance. Areas of interest: international accounting, CSR, audit, food industry, management,
digitalization, agriculture, health and education economics, business economics, econometrics. Her research appeared in
journals such as Technological and Economic Development of Economy, Economic Research-Ekonomska Istraživanja,
Mathematics, Healthcare, Sustainability, Technological Forecasting and Social Change, International Journal of Finance &
Economics, Journal of cleaner production, Environment, Development and Sustainability, Economic Annals-XXI.
Marian Socoliuc is a PhD Associate Professor at the University of Suceava “Ștefan cel Mare”, Romania, Department
of Accounting, Auditing and Finance. Areas of interest: public accounting, fiscality, tax evasion, international accounting,
audit, financial reporting. His research appeared in Frontiers in Nutrition, Economic Research-Ekonomska Istraživanja,
Journal of Business Economics and Management, Polish Journal of Environmental Studies, Journal E&M Economics and
Management, International Journal of Finance & Economics, Argumenta Oeconomica, Economic Annals-XXI,
Sustainability.
Cristina-Gabriela Cosmulese is a PhD Assistant professor at the University of Suceava “Ștefan cel Mare”, Romania,
Department of Accounting, Auditing and Finance. She is also assistant editor of the Journal of Accounting, Finance &
Business. Areas of interest: international accounting, financial audit, business economics, intangible assets, CSR, integrated
reporting, digital revolution. Her research appeared in journals such as Frontiers in Nutrition, Economic Research-
Ekonomska Istraživanja, Journal of Business Economics and Management, Polish Journal of Environmental Studies, Journal
E&M Economics and Management, International Journal of Finance & Economics, Argumenta Oeconomica, Economic
Annals-XXI, Sustainability.
The article has been reviewed.
Received in October 2020; accepted in July 2022.
This article is an Open Access article distributed under the terms and conditions of the Creative
Commons Attribution 4.0 (CC BY 4.0) License http://creativecommons.org/licenses/by/4.0
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Inzinerine Ekonomika-Engineering Economics, 2022, 33(4), 356–371

Extended Implementation of IFRS 15 Integrated Model in Countries with an

IFRS 15, revenue recognition is based on the transfer of Literature Review

Figure 1. “Bitriangular” Model of the Input-Output Correlation of Resources

Description of the IFRS 15 Integrated Model Use

Activity sector Variable Sum of Squares df Mean Square F Sig.

Total value of the The value under IFRS 15,

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