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IFRIC 13: accounting for “customer loyalty programmes”

Author

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  • Sandra Chapple
  • Lee Moerman
  • Kathy Rudkin

Abstract

Purpose - The purpose of this paper is to present the views and challenges from a range of accounting professionals, regulators and preparers with the introduction of a standardised approach to accounting for customer loyalty programmes (CLPs). It aims to highlight the ambiguities of the classification of commercial transactions, particularly the nature and timing of revenue recognition. Design/methodology/approach - Comment letters in response to the exposure draft D20 CLPs are analysed together with an exposition of the effect of International Financial Reporting Interpretations Committee (IFRIC) 13 on an early adopter, Qantas airlines. Findings - Despite limited support for the consensus view advocated in D20, the International Accounting Standards Board (IASB) has upheld the deferred revenue approach consistent with the anticipated outcome of the IASB and Financial Accounting Standards Board revenue recognition project. Research limitations/implications - The paper analyses the characteristics and views of lobbyists using the IFRIC process. The use of other discourse methodologies may present issues of power within this process. Practical implications - The paper highlights how the implementation of IFRIC interpretations has the potential to alter reported financial results. Originality/value - The paper highlights the lobbying process and interpretation process at an international level. It also illustrates how companies can engage accounting interpretations to manage earnings, particularly in times of economic challenges.

Suggested Citation

  • Sandra Chapple & Lee Moerman & Kathy Rudkin, 2010. "IFRIC 13: accounting for “customer loyalty programmes”," Accounting Research Journal, Emerald Group Publishing Limited, vol. 23(2), pages 124-145, September.
    • Handle: RePEc:eme:arjpps:v:23:y:2010:i:2:p:124-145
    DOI: 10.1108/10309611011073232
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    References listed on IDEAS

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    1. Young, Joni J., 1994. "Outlining regulatory space: Agenda issues and the FASB," Accounting, Organizations and Society, Elsevier, vol. 19(1), pages 83-109, January.
    2. Durocher, Sylvain & Fortin, Anne & Cote, Louise, 2007. "Users' participation in the accounting standard-setting process: A theory-building study," Accounting, Organizations and Society, Elsevier, vol. 32(1-2), pages 29-59.
    3. Young, Joni J., 2003. "Constructing, persuading and silencing: the rhetoric of accounting standards," Accounting, Organizations and Society, Elsevier, vol. 28(6), pages 621-638, August.
    4. Walter Masocha & Pauline Weetman, 2007. "Rhetoric in standard setting: the case of the going‐concern audit," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 20(1), pages 74-100, March.
    5. George Georgiou, 2004. "Corporate Lobbying on Accounting Standards: Methods, Timing and Perceived Effectiveness," Abacus, Accounting Foundation, University of Sydney, vol. 40(2), pages 219-237, June.
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