RWS AR 23 Final Single pages - Flipbook - Page 106
Independent Auditors' Report to the Members of
RWS Holding plc (continued)
Revenue recognition (2023: £733.8m, 2022: £749.2m)
Refer to the Audit Committee Report (page 82) and Note 3 of the Consolidated Financial Statements (page 120)
In “Our response to the risk” and “Key Observations” sections below, we have disaggregated revenue into two streams, being
Technology revenue (relating to revenue recognised within the Language and Content Technology segment) and Services
revenue (being revenue recognised within all other segments). Refer to Note 3 for further details.
There is a cut-o昀昀 risk that revenue earned around the year-end date is inappropriately recognised in the period in order to
meet budgets and market expectations. This can apply to both point in time and over time revenue recognition, arising from
the sale of both technology and services to customers.
In addition, recognition of revenue may include an allocation of transaction price, speci昀椀cally for bundled or bespoke
technology deals where there are multi-element arrangements. There is a risk that the transaction price is incorrectly
allocated to each performance obligation and/or recognised inappropriately (point in time or over time).
Our response to the risk
Our audit procedures comprised the following:
Where applicable, we vouched to supporting documentation including proof of
completed works and acceptance documentation.
We concluded that revenue
recognised was materially correct
in accordance with IFRS 15. We
concluded based on our procedures
performed that the standalone
selling price of multi-element
arrangements has been calculated
and recorded materially correctly in
the Technology division.
For services revenue, we understood the underlying process for identifying and
measuring accrued income and performed analytical procedures to identify any
speci昀椀c risks. Further, we identi昀椀ed material or unusual accrued income balances, for
which we performed the following procedures, where applicable:
Based on the procedures we
performed we concluded that the
accounting policy and associated
disclosures are in line with IFRS 15
We understood the process for recognition of revenue transactions and assessed the
design e昀昀ectiveness of key controls.
Cut-o昀昀
For all revenue streams, we tested a sample of revenue transactions recognised
around the balance sheet date to validate the correct timing of revenue recognition.
•
obtaining orders/contracts and supporting documentation to verify amounts,
for example purchase invoices for costs incurred to date and completion
documentation where applicable;
•
for services revenue, meeting with project managers to challenge the valuation of
accrued income;
•
reviewing post year-end accrued income schedules to identify unusual movements
in accrued income balances; and
•
Obtaining post-year end invoices raised
We considered each component’s application of IFRS 15 through review of underlying
contracts and terms and conditions, particularly in relation to the timing and quantum
of revenue recognition around the balance sheet date to validate that the “over time”
or “point in time” recognition policy was appropriate and in line with the nature and
characteristics of the services provided.
We reviewed the Group’s disclosures in relation to revenue recognition made in the
昀椀nancial statements to con昀椀rm the adequacy of disclosure of the Group’s revenue
recognition policy.
Multi-element arrangements:
We tested a sample of technology revenue contracts by performing the following:
•
•
•
agreeing revenues to contracts, purchase orders or software licence agreements;
•
reviewing terms and conditions to establish whether all performance obligations
have been identi昀椀ed and for any conditions that would impact the timing of
revenue recognition and in turn the completeness of contract liabilities;
•
ensuring appropriate allocation of the fair value and recognition of revenue for other
deliverables included within the contract based on relative standalone selling price;
•
We obtained management’s assessment of the determination of standalone selling
price and validated this assessment to evidence obtained through our test of
details above.
agreeing the revenue to subsequent payment as evidence of collectability;
checking evidence, such as licence keys or evidence of 昀椀ling of patents to support
that performance obligation has been ful昀椀lled prior to revenue recognition;
We performed full and speci昀椀c scope audit procedures over this risk area in 4
locations, which covered 87% of the risk amount.
106
Key observations communicated
to the Audit Committee
RWS Holdings plc — Annual Report 2023 FINANCIAL STATEMENTS
