Spring FG changes revenue recognition

The Australian Securities and Investment Commission has noted Spring FG Limited's (Spring) decision to change its policy for recognising commissions earned on property development contracts as revenue.

No revenue will be recognised until the company's client has exchanged unconditional contracts with a developer.

ASIC raised a preliminary concern with Spring about the recognition of revenue from property development commissions before the certainty provided by the exchange of unconditional contracts between developers and Spring's clients in its financial report for the year ended June 30, 2015.

In its December 31, 2015 interim financial report Spring elected to early adopt Australian Accounting Standard AASB 15 Revenue from Contracts with Customers. It now recognises revenue from contracts with property developers only when the developer has exchanged an unconditional contract for the sale of a property with a Spring client. This results in later recognition of revenue and smaller trade receivables and payables balances.

Revenue recognition continues to be an area of focus in ASIC's financial reporting surveillance program.