Auditor-Revenue and expense recognition

SUBJECT	IFRS	US GAAP
Revenue recognition
Revenue recognition	Based on several criteria, which require the recognition of revenue when risks and rewards have been transferred and the revenue can be measured reliably.	Four key criteria. In principle, similar to IFRS. Extensive detailed guidance exists for specific transactions.
Construction contracts	Accounted for using the percentage of completion method. Completed contract method prohibited.	Percentage of completion method is preferable; however, completed contract method permitted in rare circumstances.

SUBJECT	IFRS	US GAAP
Expense recognition
Interest expense	Interest expense recognised on an accrual basis. Effective yield method used to amortise non-cash finance charges.	Similar to IFRS.
Employee benefits – pension costs – defined benefit plans	Use projected unit credit method to determine benefit obligation.	Similar to IFRS conceptually, although several differences in detail.
Employee share compensation	Recognise expense for services acquired. The corresponding amount will be recorded either as a liability or as an increase in equity, depending on whether the transaction is determined to be cash- or equity-settled. The amount to be recorded is measured at the fair value of the shares or share options granted.	Two alternative methods for determining cost: intrinsic value (market price at measurement date less any employee contribution or exercise price) or fair value at issue using option pricing model. Recognise cost of share awards or options over period of employee's performance.
Termination benefits	Account for post-retirement benefits as pensions. Rules also given for termination benefits arising from redundancies and other post-employment and long-term employee benefits. Account for termination indemnity plans as pensions.	Similar to IFRS for post-retirement benefits. More detailed guidance given for termination benefits. Termination indemnity accounted for as pension plans and calculated as either the vested benefit obligation or the actuarial present value of the vested benefits.

Auditor-Revenue and expense recognition