KU2021
26 . New Accounting Policy for Intangibles
( a ) Implementation of IFRIC agenda decision During the year , the Company revised its accounting policy in relation to upfront configuration and customisation costs incurred in implementing SaaS arrangements in response to the IFRIC agenda decision clarifying its interpretation of how current accounting standards apply to these types of arrangements . The new accounting policy is presented below .
Historical financial information has been restated to account for the impact of the change – refer Note 26 ( b ).
Software-as-a-Service ( SaaS ) arrangements SaaS arrangements are service contracts providing the Company with the right to access the cloud provider ’ s application software over the contract period . Costs incurred to configure or customise , and the ongoing fees to obtain access to the cloud provider ’ s application software , are recognised as operating expenses when the services are received .
Key judgements in applying the entity ’ s accounting policies This note describes the entity ’ s accounting policy in respect of customisation and configuration costs incurred in implementing SaaS arrangements . In applying the entity ’ s accounting policy , the Directors made the following key judgements that have had the most significant effect on the amounts recognised in financial statements .
Capitalisation of configuration and customisation costs in SaaS arrangements Part of the customisation and configuration activities undertaken in implementing SaaS arrangements may entail the development of software code that enhances or modifies , or creates additional capability to the existing on-premise software to enable it to connect with the cloud-based software applications ( referred to as bridging modules or APIs ). Judgement is applied in whether such costs meet the definition of and recognition criteria for an intangible asset in AASB 138 Intangible Assets . During the year , the Company recognised $ nil ( 2020 restated : $ nil ) as intangible assets in respect of customisation and configuration costs incurred in implementing SaaS arrangements .
Determination whether configuration and customisation services are distinct from the SaaS access Costs incurred to configure or customise the cloud provider ’ s application software are recognised as operating expenses when the services are received . In a contract where the cloud provider provides both the SaaS configuration and customisation , and the SaaS access over the contract term , the Directors applied judgement to determine whether these services are distinct from each other or not , and therefore , whether the configuration and customisation costs incurred are expensed as the software is configured or customised ( i . e . upfront ), or over the SaaS contract term .
Specifically , where the configuration and customisation activities significantly modify or customise the cloud software , these activities will not be distinct from the access to the cloud software over the contract term . Judgement has been applied in determining whether the degree of customisation and modification of the cloud-based software that would be deemed significant . During the year , the Company recognised $ nil ( 2020 restated : $ nil ) as prepayments in respect of customisation and configuration activities undertaken in implementing SaaS arrangements which are considered not to be distinct from the access to the SaaS access over the contract term .
( b ) Retrospective restatement As disclosed in Note 26 ( a ) the Company revised its accounting policy in relation to SaaS arrangements during the year resulting from the implementation of agenda decisions issued by the IFRIC .
Impact of change in accounting policy For the current year , $ 713,960 of costs that would previously have been capitalised ( under the previous policy ) were expensed and amortisation of $ 183,448 has not been charged to the profit and loss in respect of previously capitalised SaaS costs . Further , cash outflows of $ 713,960 were included in payments to suppliers in the Statement of Cash Flows that previously would have been included as payments to acquire intangible assets .
The change in policy has been retrospectively applied and comparative financial information has been restated , as follows :
32