Universal Registration Document 2023

6. Consolidated Financial Statements 2023 Year - AFR

Revenue recognition

(Notes 1.3 « Revenue », « Contract assets» and «Contract liabilities» and 27 «Contract liabilities» to the consolidated financial statements)

Risk identified Total revenue amounts to 14 802 million euros as of December 31, 2023 in the consolidated financial statements. The principles of revenue recognition are presented in note 1.3 to the consolidated financial statements. Service contracts between the Group’s entities and their clients include specific contractual terms. Accounting standards related to the recording of these contracts require a detailed analysis of contractual obligations and criteria for the transfer of control of promised services to the customer, particularly for contracts in progress at the closing date. An error in the analysis of contractual terms and obligations to determine the transfer of control of promised services to the customer may lead to an error in revenue recognition. Consequently, we consider revenue recognition as a key audit matter.
Our response
  • For each type of contract, we obtained an understanding of the revenue recognition process established by management, from the conclusion of the agreement, through the performance of the services, the invoicing, the estimation of the amount to recognize at the closing date, and its booking in the accounts, until the receipt of payment.
  • We performed design, implementation and effectiveness testing of key controls over revenue processes and information systems related to revenue recognition.
  • We analyzed the appropriateness and correct application of the accounting principles and methods relating to revenue recognition, as described in the consolidation financial statements.
  • We performed substantive testing of revenue recognition for a selection of contracts based on quantitative and qualitative criteria, with reference to signed contracts and other external evidence, and checked for proper booking and cut‑off.
  • We examined the contractual documentation, the subsequent payment and the analysis carried out by the Group, concerning particularly the recoverability of accounts receivables and work‑in‑progress.
  • We have also assessed the appropriateness of the information disclosed in the notes to the consolidated financial statements.