Remaining performance obligations disclosure and the one year expedient most organisers can use

The audit query arrives in the second week of January and asks for the remaining performance obligations disclosure, broken down by expected timing of recognition. The finance lead reads it twice, opens last year's accounts, and finds one sentence saying the group has applied the practical expedient. Nobody currently in the building wrote that sentence.

That is a common position and mostly a comfortable one, because for a single edition trade show business the expedient is usually the right answer. It stops being the right answer the moment the sponsorship team sells something that runs for three years, and the transition happens quietly.

What does the standard actually require?

IFRS 15 paragraph 120 asks an entity to disclose two things about its remaining performance obligations. First, "the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period". Second, an explanation of when the entity expects to recognise that amount as revenue, given either "on a quantitative basis using the time bands that would be most appropriate for the duration of the remaining performance obligations" or by using qualitative information.

The US wording is close enough that most groups run one process for both. ASC 606-10-50-13, as set out by the Financial Accounting Standards Board in Accounting Standards Update 2014-09, asks for the same aggregate amount and the same explanation of timing, with the same choice between quantitative time bands and qualitative information.

So the disclosure is a contracted revenue figure with a maturity profile attached. An organiser reading that description will recognise it, because it is close to the forward bookings number the commercial team already produces, and the differences between the two are worth understanding before anyone tries to reconcile them. The voluntary version has its own problems, starting with the comparison date it gets struck on.

The expedient, and why it swallows most of an event portfolio

IFRS 15 paragraph 121 gives the relief. "As a practical expedient, an entity need not disclose the information in paragraph 120 for a performance obligation if either of the following conditions is met: (a) the performance obligation is part of a contract that has an original expected duration of one year or less."

ASC 606-10-50-14 says the same thing in the same order, with the same first condition: "The performance obligation is part of a contract that has an original expected duration of one year or less."

Read the wording carefully, because the test is not about the obligation. It is about the contract the obligation sits inside. A stand contract signed nine months before a three day show has an original expected duration of nine months, so the expedient applies, and it applies to every one of the several hundred stand contracts that look like it.

Both standards carry a second condition alongside the duration test, covering obligations where revenue is recognised in the amount the entity has a right to invoice. That route matters for usage based arrangements and rarely does much work in an exhibitions business, where the money is contracted up front and the invoice schedule is set at signature.

There is a condition attached under US GAAP that gets skipped. ASC 606-10-50-15 requires an entity to "explain qualitatively whether it is applying the practical expedient in paragraph 606-10-50-14", and to say whether any consideration has been excluded from the transaction price and therefore from the disclosure. Using the expedient silently is a disclosure failure in itself, which is why last year's one sentence exists.

The relief is also elective at the level of each qualifying obligation, so a group can disclose more than the minimum if it wants to. Some do, on the reasonable view that a reader who can see eighteen months of contracted sponsorship values the business more accurately than one who can see nothing. That is an investor relations decision with an accounting floor under it, and the floor is the only part an auditor will argue about.

Which event contracts fall outside the expedient?

Four kinds, in rough order of how often they catch teams out.

Multi year sponsorship. A title sponsorship sold as three annual instalments is one contract with an expected life of about three years, so the expedient is unavailable for it regardless of how the invoicing is phased.

Multi edition space agreements. An exhibitor who signs for three consecutive editions to hold a corner position has signed a three year contract. Each individual edition is delivered in a week. The contract is still three years long, and the test looks at the contract.

Bundled data or media subscriptions. Where a sponsorship package carries a two year data licence, the licence element extends the contract past the twelve month line even if the show week element does not.

Renewals signed early. A stand contract for next year's edition signed at this year's show, fourteen months before doors, is a fourteen month contract. Sales teams that push on site rebooking hard are quietly moving contracts out of the expedient, one signature at a time.

Working the numbers on a mixed portfolio

Take a portfolio with 640 stand contracts running for next year's editions at an average of 8,750 each, so 5.60 million of contracted space revenue. Every one of them was signed inside twelve months of its show. All 640 fall inside the expedient and none of that 5.60 million appears in the disclosure.

Now add one sponsorship. A three year title deal at 450,000 a year, signed on 1 July 2025 and running to 30 June 2028, total transaction price 1.35 million. At a 31 December 2026 reporting date, eighteen months of the term remain, so the transaction price allocated to unsatisfied performance obligations is 1.5 multiplied by 450,000, which is 675,000.

The time band split follows from the dates. In the twelve months to 31 December 2027 the entity expects to recognise 450,000. In the following six months, to 30 June 2028, it expects to recognise the remaining 225,000. Those two figures sum to the 675,000 aggregate, which is the check a reviewer will do first.

Add three more multi edition space agreements at 96,000 an edition for three editions, signed at different points, with an aggregate 528,000 unsatisfied at the reporting date, and the disclosure becomes 1.203 million against a total contracted book of well over six million. A reader who does not know about the expedient will read 1.203 million as the size of the forward order book and be wrong by a factor of five.

That gap is the reason the qualitative sentence matters more than the number. Say which contracts are excluded and why, and the 1.203 million becomes informative. Leave it out and the disclosure is technically compliant and practically misleading.

What the disclosure needs from your systems

Three fields, and most event systems hold two of them.

Contract start date and contract end date, at the contract level rather than the edition level. Systems built around editions frequently store only the show date, which makes a three edition agreement look like three separate one year contracts and quietly moves it into the expedient. That is the single most common data cause of an understated disclosure.

Transaction price at the contract level, net of any element already recognised. For a multi element package the allocation has to be stored against the contract and left alone, because a standalone selling price estimated in 2025 should not quietly change when the rate card moves in 2027. Recomputing it at report time produces a disclosure that walks between periods for reasons nobody can explain in the meeting.

Expected satisfaction date per obligation, which is what generates the time bands. For a show that is simply the door date, which is the easiest field in the whole exercise and the one most likely to be missing from the contract record because everyone knows it by heart.

Where this stops

The disclosure is a floor rather than a picture of the business. It tells a reader what has been contracted and not yet performed under the accounting definition of a contract, which excludes a large amount of revenue that is highly likely and not yet signed.

It also carries a constraint that will surprise anyone treating it as a bookings figure. Variable consideration that is constrained sits outside the transaction price, so a revenue share sponsorship with an uncertain upside contributes only its fixed floor. The disclosure will understate the commercial value of exactly the contracts the sponsorship team is proudest of.

And it says nothing about profitability or about whether the contracted work is worth doing. A three year sponsorship at 450,000 a year with a delivery cost that has risen 30 per cent since signature is still 675,000 of unsatisfied transaction price, and the note will not mention that. Measures that try to say something about quality of growth sit outside the accounts entirely, which is why they need their own definitions and a bridge back to a statutory line, and why the portfolio version of that question turns into how you define organic growth.

The first step this week

Run one query against your contract table: count the contracts where the gap between signature date and the last deliverable date is more than 365 days, and sum their unrecognised transaction price. If your system cannot answer that because it stores editions rather than contracts, you have found the fix, and it is a data model change rather than an accounting one. Everything else in the finance reporting stack depends on that same contract level view.