Recognising Training Programme Revenue under IFRS 15: On Collection or on Delivery?

Why is collection or invoicing not enough to record revenue?

The core principle of IFRS 15 is that revenue depicts the transfer of promised services to the customer, in an amount reflecting the consideration the entity expects to be entitled to. ^[1] The question is therefore not when the money was paid or when the invoice was issued, but when the provider delivered the training it promised.

If the customer pays, or the provider has an unconditional right to payment, before the service is delivered, the provider presents a contract liability representing its obligation to provide services for which it has received consideration. ^[2] That is the normal position in training, where fees are often paid before the programme starts.

How do the five steps apply to a training contract?

The standard sets out five steps: identify the contract, identify the performance obligations, determine the transaction price, allocate it to the obligations on the basis of relative stand-alone selling prices, and recognise revenue as each obligation is satisfied. ^[1] For training providers the second step is the decisive one, because contracts rarely cover tuition alone.

Is a training bundle one performance obligation or several?

A promise is distinct if two conditions are met: the customer can benefit from it on its own or together with readily available resources, and the promise is separately identifiable from the other promises in the contract. ^[2]

Test each element of the bundle against those two conditions:

• Classroom or live tuition: usually the main promise.
• Access to a learning platform after the programme ends: may be distinct if the customer can benefit from it on its own.
• Exam or assessment session: may be distinct, or part of a single integrated service, depending on the contract.
• Printed materials and kits: need testing, as they are goods that may transfer at a point in time.

If more than one obligation emerges, the bundle price is allocated to each on the basis of relative stand-alone selling prices, ^[1] so the whole price is not recorded with the first session.

Over time or at a point in time?

Revenue is recognised over time if any one of three criteria is met: the customer simultaneously receives and consumes the benefits as the entity performs; the performance creates or enhances an asset the customer controls as it is created; or the performance creates no asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. ^[2] Training usually meets the first criterion, because the learner benefits from each session as it is delivered.

When recognising over time, the provider measures progress towards complete satisfaction in a way that depicts its performance in transferring the service. This may be an output or an input method; the same method is applied consistently to similar obligations and progress is remeasured at the end of each reporting period. ^[2] Sessions or hours delivered are a suitable measure if they are broadly equivalent in content and effort, and become misleading if the service is concentrated in one part of the programme.

In April 2025 the IFRS Interpretations Committee published an agenda decision on an educational institution that asked over which period tuition fee revenue should be recognised: the academic year or the full reporting period. The Committee found no diversity in practice, attributed differing periods to differing facts and circumstances, and did not add a standard-setting project. ^[3] The lesson for training providers is that the answer lies in the facts of the contract itself, not in a general rule.

Hypothetical example: an advance payment for a four-session programme

A hypothetical training provider receives AED 12,000 in advance for a contract containing a single training service delivered over four equivalent sessions. We assume the customer benefits during each session and that the number of sessions faithfully depicts progress, and we ignore VAT for simplicity.

If the reporting period ends after the second session, revenue of 6,000 and a contract liability of 6,000 are shown. The treatment changes if the bundle includes distinct platform access or if the sessions are not equivalent.

Cancellations, refunds and unused places

Variable consideration: if the transaction price includes a variable amount, such as a discount tied to participant numbers or a refund right on cancellation, the provider must estimate the consideration it expects to be entitled to. ^[1]

Unused places: when a customer prepays a non-refundable amount for a right to future services, it may not exercise all of its rights. If the provider expects to be entitled to that amount, it recognises it in proportion to the pattern of rights the customer exercises; otherwise it recognises it when the likelihood of the customer exercising the remaining rights becomes remote, subject to the constraint on variable consideration. ^[2] So a place that nobody attended is not revenue simply because the session date has passed, if the contract lets the delegate join a later run.

Non-refundable registration fees: first decide whether the fee relates to the transfer of a service. In many cases the registration activity transfers nothing to the customer, so the fee is an advance payment for future services and is recognised when they are provided. If the contract gives the customer an option to renew that amounts to a material right, the recognition period extends beyond the initial term. ^[2]

A checklist for the training provider’s accountant

Each month, reconcile the programme delivery and attendance log with customer contracts and contract liability balances. Every programme postponed or rescheduled should remain a liability until it is delivered, and every expected refund should be reviewed within the estimate of variable consideration.

Errors that recur at period close in training providers:

• Recording an advance payment as revenue on receipt because the contract says it is non-refundable, even though the service has not yet been delivered.
• Recognising the whole bundle with the first session without testing it for distinct promises.
• Using a measure of progress that does not depict performance, such as spreading revenue over calendar days while sessions are concentrated in two weeks.
• Leaving balances for cancelled or postponed programmes unreviewed until year end, so they land in a period they do not belong to.

Application in Gulf organisations

Keep the accounting recognition of revenue separate from the timing of VAT, which is set by separate tax rules in each country, such as those of the Federal Tax Authority in the UAE and the Zakat, Tax and Customs Authority in Saudi Arabia, and which may not coincide with the date revenue is recognised. Confirm which accounting framework your organisation must follow, whether IFRS as issued or as adopted by the regulator in your country.

In large government contracts covering several programmes over a year, separating the promises, allocating the price and measuring progress for each programme matter more than any other detail, because errors there shift revenue between reporting periods.

Conclusion

At a training provider, revenue follows delivery of the training, not collection of the fees. Identify the distinct promises in each contract, allocate the price to them, choose a measure of progress that genuinely reflects your performance, and keep advance payments as a contract liability until the service is delivered.