Original Research

The effect of the new revenue standard on client loyalty programmes

Sophia Brink
Journal of Economic and Financial Sciences | Vol 7, No 2 | a147 | DOI: https://doi.org/10.4102/jef.v7i2.147 | © 2019 Sophia Brink | This work is licensed under CC Attribution 4.0
Submitted: 22 December 2017 | Published: 31 July 2014

About the author(s)

Sophia Brink, School of Accountancy, Stellenbosch University, South Africa

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Abstract

The popularity of client loyalty programmes has increased drastically over the past few years, with more than 100 suppliers in South Africa currently making use of them. On 1 July 2007 the IASB issued IFRIC 13 to give specific guidance to suppliers on the accounting treatment of client loyalty programme transactions. In the process of compiling a new revenue standard, the International Accounting Standard Board published Exposure Draft ED/2011/6 Revenue from Contracts with Customers on 14 November 2011 to supersede virtually all existing revenue standards and interpretations under IFRS, including IFRIC 13. Although the effective date of the new revenue standard is 1 January 2017, in view of the nature of a client loyalty programme transaction it would be prudent for suppliers to start collecting data immediately for the retrospective application. Given the time limit and the minimal specific reference to client loyalty programme transactions in the proposed new model, the main aim of the research was to investigate the proposed new model’s impact on the accounting treatment of client loyalty programme transactions. The similarities and differences between the guidelines in IFRIC 13 and those of the proposed new model as well as the specific paragraphs in the proposed new model that are applicable to client loyalty programme transactions were considered. A specific recognition difference and a presentation difference has been identified between the accounting treatment of a client loyalty programme transaction under IFRIC 13 and that of the proposed new model.

Keywords

client loyalty programmes; IFRIC 13; ED/2011/6; new revenue standard

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Crossref Citations

1. An IFRS Decision Heuristic—A Model for Accounting for Credit Card Rewards Programme Transactions
Sophia M. Brink, Gretha Steenkamp
Journal of Risk and Financial Management  vol: 16  issue: 3  first page: 169  year: 2023  
doi: 10.3390/jrfm16030169