Technical Accounting Memo Template (IFRS and US GAAP Position Paper)

Technical Accounting Memo: [Issue title]

A position paper for one significant accounting judgement: the issue, the facts and documents reviewed, the applicable guidance cited by standard and paragraph number, the analysis, the alternatives considered and rejected, the conclusion, the journal entries and financial statement effect, the disclosures, the controls that keep the conclusion valid, and the discussion with the auditor. Works for IFRS Accounting Standards (including IFRS 18 from 2027-01-01) and US GAAP (FASB ASC). Standards are cited by number only: obtain the standard for the normative text. Replace every [bracketed] value and every row marked Example. This is a document format, not accounting, audit, tax, legal or financial advice.

Document control

Approvals

Revision history

Contents

1. Issue and summary conclusion
2. Background and facts
3. Applicable guidance
4. Analysis
5. Alternatives considered
6. Conclusion
7. Journal entries and financial statement effect
8. Disclosure implications
9. Controls and ongoing monitoring
10. Consultation and auditor discussion
11. Glossary and references

1. Issue and summary conclusion

Issue. [State the accounting question in one sentence.]

Example: At what point in Corvid's product development process should directly attributable costs of building new platform features begin to be recognised as an internally generated intangible asset under IAS 38, and when should capitalisation stop?

Summary conclusion. [State the answer, the amount affected and the periods affected in two or three sentences.]

Example: Capitalisation begins when a feature passes the group's architecture review gate (gate G2) with an approved business case and funding, and stops when the feature is released to customers. Applying this point, EUR 5,200k of FY2026 costs is capitalised, of which EUR 4,200k relates to features released in FY2026 and EUR 1,000k to a feature still in development at year end. FY2026 amortisation is EUR 394k.

Why this memo is needed. The capitalisation point is a significant judgement for Corvid because the amounts are large relative to operating profit, because the development process changed in 2026 when the group introduced gate G2, and because the auditor identified capitalised development as a significant risk area in its FY2026 audit plan.

2. Background and facts

2.1 Background

Describe the business context: what the entity does, why the transaction or situation arose, and what has changed since the matter was last considered. Keep it short and factual, and leave the accounting language for section 4.

Example: Corvid's subscription platform is developed by about 140 engineers, two thirds in the Vietnam development centre and one third in Germany. Until 2025 the group expensed all development costs because it had no reliable way to separate costs of new features from maintenance work and no formal point at which a feature's design was proven. In January 2026 the group introduced a stage-gate process: discovery (G0 to G1), design and prototyping (G1 to G2), build (G2 to release) and run. Gate G2 requires a working prototype tested against the target load, a security design review, a business case with expected revenue or cost savings, and allocated budget. Time is recorded per epic in the work tracking tool, and each epic is tagged with its stage.

2.2 Facts relied on

2.3 FY2026 platform engineering cost by stage

The build cost of EUR 5,200k splits by feature: Smart replenishment EUR 2,000k, Multi-warehouse routing EUR 2,200k, Partner API v2 EUR 1,000k (Example).

2.4 Documents reviewed and assumptions

List every document you read, including contracts, board minutes, system reports and prior memos, with the version or date. Then list the assumptions you made where a fact could not be confirmed, and say how and when each will be confirmed. An assumption that is never confirmed becomes a weakness in the audit file.

Example: Documents reviewed: gate register extract at 2026-12-31, timesheet data export, cost rate workbook v3, FY2027 budget and plan, prior memo TAM-2025-012 (the 2025 decision to expense). Assumption: the FY2027 plan funds all three features through release; confirmed by the CFO in the budget approved by the board on 2026-12-10.

3. Applicable guidance

Read each reference in the standard itself. This section records only what applies and why it was considered.

Check that each standard and amendment is effective, and adopted in the reporting jurisdiction (UK-adopted for Corvid, EU-endorsed for an EU issuer), for the period the memo covers. A dual compliance statement means the conclusion must hold under both versions; where the UK has not yet adopted an IASB amendment, say whether early application is permitted under both. Where the guidance changes during the periods affected (as with IAS 1 and IFRS 18 between FY2026 and FY2027), say which version applies to which period.

4. Analysis

4.1 Framing the question

Begin the analysis by framing the question in the terms the standard uses, so that the reader can see which part of the guidance decides the outcome. Then test the facts against each requirement in turn. Where two requirements depend on each other, analyse them in the order the standard does.

Example: The question is not whether development costs can be capitalised in principle, since IAS 38 provides for this, but at which point in Corvid's process the entity can demonstrate every condition in GDN-002, and which costs from that point qualify under GDN-003. Work done before that point is expensed. The analysis therefore tests each condition at each candidate gate (G1, G2 and release) and selects the earliest gate at which all conditions are demonstrated with evidence.

4.2 Analysis by requirement

Use one row per requirement. Cite the paragraph, describe the evidence, rate its strength and conclude. Do not restate the requirement; the reviewer reads it in the standard.

Example: At gate G1 none of the six conditions is evidenced, so G1 is too early. At gate G2 every condition is supported by documents that exist at the decision date. Waiting until release would leave out build costs incurred after every condition was already evidenced, so release is not supported by the facts either. The analysis therefore points to G2.

4.3 Costs included and excluded

Identify which costs from the start point qualify and how they are measured. Explain the cost rate, the allocation basis and the exclusions. The reviewer should be able to rebuild the capitalised amount from the timesheet data and the cost rates.

Example: Included: salaries, social charges, bonuses and share-based payment cost of engineers who book time to build-stage epics, at the fully loaded hourly rate by country (FCT-004), plus invoices from two contractor firms for build-stage work. Excluded: general overhead, office rent, training, management time not booked to an epic, and idle time. Hours booked to bug fixing on released features are excluded even when they occur in the same sprint as build work. FY2026 result: 61,300 build-stage hours at a blended EUR 72.50 per hour gives EUR 4,444k of staff cost, plus EUR 756k of contractor invoices, total EUR 5,200k.

4.4 Judgements, estimates and sensitivity

List each judgement and estimate in the analysis, the range of reasonable outcomes and the effect of the range. Explain why the chosen point within the range is the best estimate. This section feeds the judgements and estimates disclosure.

Example: The amortisation figures are computed in section 7.2 for 3 years, and in the same way for 2 years (EUR 2,000k / 24 x 6 = 500.0 plus EUR 2,200k / 24 x 1 = 91.7, total EUR 592k) and for 4 years (EUR 2,000k / 48 x 6 = 250.0 plus EUR 2,200k / 48 x 1 = 45.8, total EUR 296k).

4.5 Policy, estimate or neither

Decide whether the outcome is a change in accounting policy, a change in estimate, the correction of a prior-period error, or the first application of a policy to circumstances that did not exist before. The answer decides whether comparatives are restated. Cite the IAS 8 or ASC 250 paragraphs you rely on and explain your reasoning.

Example: In 2025 Corvid could not demonstrate the conditions for any feature because it had no gate process and no stage-tagged time. The 2026 capitalisation therefore results from new facts, not from a change in policy, and FY2025 comparatives are not restated. Memo TAM-2025-012 is reviewed to confirm that its conclusion was reasonable on the facts then available. The auditor agreed with this classification (section 10).

5. Alternatives considered

Write each rejection reason as an analysis of the facts against the guidance. A rejection that says only "not preferred by management" is not a reason. Where the choice between two alternatives is a policy election that the standard permits, say so, and record the election in the accounting policy manual instead of treating it as a judgement.

6. Conclusion

[State the conclusion, the policy wording the entity will use, the periods it applies to, and the facts that, if they change, require the memo to be revisited.]

Example: Corvid recognises directly attributable build costs of platform features as an internally generated intangible asset from the date the feature passes gate G2 until the date it is released, measured at the fully loaded cost of engineer time booked to build-stage epics plus build-stage contractor invoices. Capitalised features are amortised on a straight-line basis over 3 years from release. Features not yet released are tested for impairment each year end. The conclusion applies from FY2026. It must be revisited if the gate criteria are weakened, if timesheet completion falls below 95% in any quarter, or if the replacement history of features suggests a different useful life.

The policy wording is added to the accounting policy manual, section 5.3, and the judgement is added to the manual's judgements register as JUD-001. Both are written in the group's own words; nothing in the policy text is copied from the standard.

7. Journal entries and financial statement effect

7.1 Journal entries

All amounts are EUR thousand. Debits positive, credits in parentheses.

Each entry is prepared and approved under the group's journal entry controls; supporting documents are filed with Journal Entry Support (finance/journal-entry-support).

7.2 Amortisation calculation

Carrying amount at 2026-12-31: 5,200 less 394 = EUR 4,806k, of which EUR 3,806k available for use (4,200 less 394) and EUR 1,000k under development.

7.3 Tax effect

Example: The development costs are deducted for tax as incurred in both Germany and Vietnam, so the tax base of the asset is nil and a taxable temporary difference of EUR 4,806k arises. At the group's blended Example rate of 25%, the deferred tax liability is 4,806 x 25% = EUR 1,201.5k, rounded to EUR 1,202k. Replace the blended rate with the enacted rate of each jurisdiction applied to its share of the asset, and confirm the tax treatment with the tax team before closing; the computation belongs in Income Tax Provision (finance/income-tax-provision).

7.4 Effect on the primary statements

The cash flow presentation of capitalised development as investing activity follows from recognising the asset; confirm the classification against IAS 7 for the period. Note the effect on EBITDA-based metrics and covenants: EBITDA rises by EUR 5,200k because amortisation sits below EBITDA. Tell treasury, investor relations and anyone who calculates covenant ratios, and check the covenant definitions in the facility agreement with Covenant Compliance Certificate (finance/covenant-compliance-certificate).

8. Disclosure implications

Run the completed note through the Financial Statement Disclosure Checklist (finance/financial-statement-disclosure-checklist) as part of the year-end review. Under IFRS 18, from FY2027, check whether a management-defined performance measure affected by this conclusion needs the reconciliation disclosure that the standard introduces.

9. Controls and ongoing monitoring

Every judgement that changes recognition creates a new risk in the financial reporting process, so define the controls in the same memo and add them to the group's risk and control matrix in Risk and Control Matrix (compliance/risk-control-matrix). Testing of the controls follows Control Testing Workpaper (compliance/control-testing-workpaper).

Triggers that reopen the memo: a change in the gate process, a fall in timesheet completion below 95% in any quarter, the abandonment of a capitalised feature, an acquisition that brings a different development process, or a new standard or interpretation on the topic.

10. Consultation and auditor discussion

Record every internal and external consultation. Significant judgements should be discussed with the external auditor before the period end, so the auditor's view can be reflected before the statements are drafted. The auditor's work on such matters is planned under auditing standards that cover estimates and communications with those charged with governance (for example ISA 540 (Revised), ISA 260 (Revised) and ISA 450 under the International Standards on Auditing, or PCAOB AS 2501 and AS 1301 for US public company audits); cite the standard numbers only.

Example: Corvid's statutory auditor, the fictional Ashgrove & Partners LLP, audits the consolidated statements under ISAs (UK) for the UK annual report and under PCAOB standards for the Form 20-F. Because the group is subject to SOX 302 and 404, the controls in section 9 are also in scope of management's ICFR assessment (Form 20-F Item 15), so share the memo with both the audit engagement team and the internal controls team before the year end.

Where the auditor and management disagree, record both positions, the evidence each relies on, and how the matter was resolved. Do not delete a disagreement from the memo after it is resolved: the history is part of the evidence that the judgement was challenged.

11. Glossary and references

11.1 Glossary

11.2 References

Standards are cited by number only. Obtain each standard from its publisher for the normative text.

Standard and licence note

Structure aligned with common practice for technical accounting position papers used by preparers and expected by auditors. IFRS Accounting Standards and IFRIC material (IFRS Foundation), the FASB Accounting Standards Codification, ISAs (IAASB) and PCAOB auditing standards are cited by standard and paragraph number only; no text from them is reproduced or paraphrased, and the analysis rows show how evidence is mapped to a cited paragraph without restating it. ESMA guidelines are named only and are not endorsed by ESMA. SEC rules are US federal public-domain material, cited by number. Corvid Commerce Group, its features and every figure are fictional. This template is original text written for this collection. Check the current official version and effective date of each standard before use. Template licence: MIT.