(Notes 1.3 “Revenue”, “Assets on contracts” and “Liabilities on contracts” and 26 “Liabilities on contracts” to the consolidated financial statements)
Risk identified
Total revenue amounts to €10,788 million as of December 31, 2020 in the consolidated financial statements. Service contracts between the Groupe and its clients include specific contractual terms. Accounting standards related to the recording of this type of contracts require a detailed analysis of contractual obligations and criteria when control of a service is passed to the customer, particularly in case of complex contracts. An error in the analysis of contractual obligations and terms for determine when control of a service is passed to the customer may lead to an error in revenue recognition. Consequently, we consider revenue recognition to be a key audit matter.
Our response
For each type of contract, we obtained an understanding of the revenue recognition process established by the management, from the conclusion of the agreement, through the performance of the services, invoicing and booking the corresponding entries in the accounts, to the receipt of payment.
We evaluated the key controls concerning the processes and information systems relating to revenue.
We assessed the appropriateness and correct application of the accounting principles and methods relating to revenue recognition.
We performed tests of details on accounting for revenue by reference to the signed agreements as well as other external supporting evidence. We also assessed the proper cut-off of accounting periods.
We have assessed the contractual documentation and the analysis made by the Groupe, including the recoverability of trade receivables and WIP balances.
