ABSTRACT:
Recently, following the issuance of the IFRS 15 ‘Revenue from Contracts with Customers’, the Italian Standard Setter OIC has issued a Discussion Paper (DP) about the recognition of revenues and has received few Comment Letters, underlying several problematic aspects to be solved. The aim of the analysis is to be useful both under a theoretical point of view, and a practical point of view, in the development of high-quality accounting standards, consistent with scientific accounting studies and with the current Italian regulation stated within the Civil Code, useful to support reliability and comparability of financial statements. The recognition of revenues is theoretically and operationally connected with the accrual principle, traditionally articulated in realization principle and matching principle. Italian accounting system is based on the so called ‘income system’ proposed by Zappa and differentiates from the ‘patrimonial system’ surrounding the International Accounting Standards on which the proposal of the DP is based. This paper analyses if the proposals contained in the DP of the OIC can be considered correct and consistent with the scientific accounting background and objectives, even considering the peculiarities of the traditional Italian accounting system. This critical analysis has been conducted by analyzing some of the main scientific accounting contributions published by Italian and International authors, in particular during last Century, period in which main theoretical contributions for the development of accounting, have appeared. The analysis has even benefitted of the scientific and practical contributions included within the Comment Letters recently submitted to the OIC. This paper underlines that some proposals included within the DP, contain dangerous mistakes that can negatively affect both accounting and financial statements of the companies that should adopt OIC standards, putting in evidence the reasons of such mistakes in the light of the accounting theory. This research finds that the rules contained within the DP are not fully consistent with the rules contained in the Italian civil law and with the traditional accounting hierarchy that puts at the top the principles (postulates), and at the bottom the valuation criteria. Even the terminology adopted in the DP, with reference to ‘provisions, accruals and debts’, is in some cases inconsistent with the scientific meaning generally attributed to such terms, generating some biases that can affect the reliability of the ledgers and of related financial statements. The paper contains some proposals for a more accurate regulation, consistent with the Italian accounting system, with the traditional principle-based system and consistent with the scientific meaning of accounting terms.
KEYWORDS: Revenues, accounting theory, Discussion Paper OIC
