The International Financial Reporting Interpretations Committee (IFRIC) released on September 7, 2006, a draft interpretation, IFRIC D20 “Customer Loyalty Programs”, for public comment. The proposals stay available to public comment until November 6, 2006.

The draft interpretation addresses accounting by entities that grant their customer points, air miles or other award credits when the customers buy goods or services. The draft interpretation proposes that entities should allocate some of the proceeds of the first sale to the award credits and defer recognition of this amount of revenue until they have fulfilled their obligations to supply the free or discounted goods and services.

The Chairman of the International Accounting Standards Board(IASB) and the IFRIC Robert Garnett stated “ customer loyalty programs are now widespread in a range of businesses-retail, IFRSs lack detailed guidance on how these businesses should account for their obligations and practices vary.”

IASB  is committed to developing in the public interest a single set of high quality global accounting standards.

IFRIC’s principal role is to consider, on a timely basis within the context of International Financial Reporting Standards and the International Accounting Standards Board (IASB) Framework, accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance, with a view to reaching consensus on the appropriate accounting treatment.

For more information please visit the following website: www.iasb.org