Media · Technology · Telecoms

Audit in media & technology –
IFRS for investors – and digital revenue accounting

Technology and media companies face specific accounting challenges: subscription revenue recognition, R&D cost capitalisation, and transformation of financial statements from PAS to IFRS, where a statutory auditor helps prepare data for a foreign investor or PE fund.

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PAS to IFRS transformation

First IFRS financial statements

Subscription revenue (IFRS 15)

R&D cost capitalisation (IAS 38)

Audit for PE/VC investors

Media & content companies

Intangible asset valuation

Projects from the media & technology sector

Selected case studies – media & technology

Projects for technology and media companies in investment processes and standards transformation.

PAS → IFRS transformation for a foreign investor

Situation

Polish media/technology company keeping books under PAS. Entry of a foreign strategic investor required preparation of historical and current financial statements under IFRS as a condition for closing the transaction.

Action

Comprehensive accounting transformation: analysis of differences between PAS and IFRS, alignment of accounting policies, retrospective restatement of prior-period statements, and preparation of the first IFRS 1-compliant financial statements.

Result

First IFRS financial statements prepared within the investor's required deadline. Transaction closed on schedule.

Transaction closed on time – IFRS as a condition

Industry challenges

Key accounting challenges in the TMT sector

Revenue recognition (IFRS 15)

Subscriptions, licences, freemium models, advertising revenue, and multi-element arrangements – correct application of IFRS 15 is one of the biggest challenges for technology companies.

R&D cost capitalisation (IAS 38)

When can research and development costs be capitalised, and when must they be expensed in the period? This question arises in every technology company audit.

PAS to IFRS transformation on investor entry

Foreign investors, PE funds, and IPOs require IFRS financial statements. PAS to IFRS transformation is not just a format change – it often significantly affects asset values and results.

Employee share option valuation (IFRS 2)

Share option programmes for key employees – their valuation and recognition as a remuneration cost is an area commonly overlooked by companies outside the orbit of large auditors.

Intangible assets and goodwill

Acquisitions in the TMT sector generate high goodwill and intangible asset values – their identification in PPA and annual impairment tests are critical.

SaaS models and ARR – revenue quality

Investors assess SaaS companies through the lens of ARR, churn, and LTV. The auditor verifies that these metrics are consistent with financial data and correctly presented, while a CFO Lab cash-release review can show how much liquidity is trapped in the model.

Technology or media company ahead of investor entry or IPO?

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FAQ

Frequently asked questions

Accounting questions specific to TMT – subscription revenue, bundled contracts, and startup audits.

How should subscription and SaaS licence revenue be recognised under IFRS 15?▾

For companies applying IFRS, subscription and licence revenues are recognised under IFRS 15. The key question: is the licence access to IP (recognise upfront) or the right to use a continuously updated product (recognise over the licence period)? In SaaS models with upfront payment, revenue is spread proportionally over the service period. The auditor verifies that the accounting policy reflects the true nature of customer contracts and is applied consistently across all customer segments.

How should bundled contracts (software + implementation + support) be accounted for?▾

Bundled arrangements require identification of separate performance obligations and allocation of the transaction price at each element's stand-alone selling price (SSP). A common error: recognising all revenue at software delivery rather than spreading it across the licence, implementation, and support subscription components. The auditor checks whether identified performance obligations are complete, whether SSPs have been determined by a sound methodology, and whether the policy is consistent with contract terms.

How should customer acquisition costs (CAC) and contract initiation costs be recognised?▾

Costs directly attributable to obtaining a contract (e.g. sales commissions) are capitalised as a contract cost asset under IFRS 15 and amortised over the expected contract period, if their recovery is probable. A practical expedient allows immediate expensing for contracts with a term of 12 months or less. In companies with high CAC and churn, an incorrect capitalisation policy can materially affect EBIT – making it one of the first areas tested by the auditor at a technology company.

What does an auditor verify in a technology startup seeking investment?▾

A pre-investment or VC fund audit covers: correct capitalisation of R&D costs (Polish Accounting Act art. 33 or IAS 38), valuation of employee stock options and warrants (ESOP), correct classification and presentation of revenue aligned with the business model, and the shareholder structure with protective rights. The auditor provides credibility to the financial statements for the investor, which may require additional procedures or restating Polish GAAP statements under IFRS.

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