IFRS 15 revenue recognition for a civil engineering contractor
Anonymised construction and engineering firm (Niger Delta)
Published May 3, 2026
The contractor delivered roads and drainage projects under multi-year letters of award. Revenue had historically been recognised on invoice issuance, which overstated progress on two loss-making jobs and understated work-in-progress on a delayed public-sector scheme.
We analysed contracts against IFRS 15 five-step criteria, separated performance obligations where maintenance was bundled with construction, and designed percentage-of-completion models based on certified engineer valuations. Management accounts were re-stated for the comparative year with clear bridge notes for the board.
Year-end financial statements included enhanced contract disclosures, sensitivity analysis on variable consideration, and a policy manual for estimating costs to complete. Audit committees now receive quarterly margin reports by project.
Measurable outcomes
- Revenue recognition policy aligned to IFRS 15 for all active contracts
- Identified and provided for ₦48m contract loss exposure before year-end
- Bank covenant reporting reconciled to IFRS-based management accounts
- Board-approved contract profitability dashboard in place