مرکز منطقه ای اطلاع رساني علوم و فناوري - ACCOUNTING FOR CUSTOMER LOYALTY PROGRAMMES ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

Abstract :

Customer loyalty programmes used in many industries are a marketing strategy to retain their customers. The most popular customer loyalty program used is loyalty programmes cards. There are different accounting applications for the revenue related to sales within customer loyalty programmes. International Financial Reporting Interpretation Committee (IFRIC) published IFRIC Interpretation 13 Customer Loyalty Programmes to remove and standardize different accounting applications. IFRIC 13 determines how to use IAS 18 Revenue Standard for customer loyalty programmes. A new draft standard is released proposing revenue recognition by a joint project of IASB and FASB. The draft standard is going to supersede all the standards and interpretations about revenue recognition including IFRIC 13. In this study, first scope of customer loyalty programmes and recognition of revenue from customer loyalty programmes is examined according to existing regulations. Afterwards, for the purpose of determining the effect of the draft revenue recognition standard on accounting for customer loyalty programmes, related regulations in the draft standard is examined. It is determined that both regulations adopted deferring the revenue allocated to reward point as an accounting principle but it is also established that the draft standard brings changes about calculating the deferred revenue and in conceptual basis. The changes in the draft standard don’t have significant effect on financial reports for customer loyalty programmes but the draft standard brings significant changes about describing the process of revenue realization.