Additional cost risk from quality assurance and specification changes under order contracts
First written in FY2021. 2 of 5 entries say "Restated". Latest entry: FY2026.
The whole theme swung hardest in 2017: 9 of 31 companies on the "Worse" side.
2 other companies' latest entry also says "Other".
- FY2026Updated revenue recognised based on the degree of progressAnnual report
「Amounts recognised in the consolidated financial statements for the fiscal year Amount of revenue recognised based on the degree of progress 8,358,485 Of the above, revenue from projects in progress 2,764,933」
Revenue recognised based on the degree of progress amounted to ¥8,358.485 million, while revenue from projects in progress amounted to ¥2,764.933 million. The possibility that estimated total costs may be revised due to quality assurance, changes in specifications, changes to the development structure and other factors continues. - FY2025RestatedAnnual report
「If estimated total costs for projects in progress at the end of the fiscal year are revised, this may affect profit or loss in the following fiscal year.」
The Company disclosed revenue recognised based on the degree of progress of ¥7,060.004 million, including ¥2,308.144 million in revenue from projects in progress, and continues to identify the risk of cost estimate revisions arising from quality assurance, changes in specifications and changes to the development structure. - FY2023RestatedAnnual report
「Estimated total costs must be assessed individually because each commissioned contract project differs according to the characteristics of the industry, customer requirements and other factors, and therefore involves a certain degree of uncertainty. Although the costs are calculated taking past performance and other factors into account, if estimated total costs for projects in progress at the end of the fiscal year are revised due to unforeseen events, such as the need to ensure quality agreed with customers, changes in specifications or changes to the development structure, this may affect profit or loss in the following fiscal year.」
The Company continues to disclose the uncertainty surrounding the degree of progress and estimated total costs used for revenue recognition, as well as the possibility of an impact on profit or loss in the following fiscal year from quality assurance, changes in specifications and changes to the development structure. Revenue recognised based on the degree of progress was ¥5,647.625 million. - FY2022ReframedAnnual report
「The degree of progress used as the basis for calculating revenue from software development contracts and other commissioned work is calculated as the ratio of costs incurred to estimated total costs. Estimated total costs must be assessed individually because each commissioned contract project differs according to the characteristics of the industry, customer requirements and other factors, and therefore involves a certain degree of uncertainty. If estimated total costs for projects in progress at the end of the fiscal year are revised due to unforeseen events, such as the need to ensure quality agreed with customers, changes in specifications or changes to the development structure, this may affect profit or loss in the following fiscal year.」
The disclosure of significant estimation risks has shifted from the previous description of a ¥37.610 million provision for loss on orders to uncertainty regarding the degree of progress and estimated total costs following application of the revenue recognition accounting standard. - FY2021First statedAnnual report
「The consolidated balance sheet includes a provision for loss on orders of ¥37.610 million. Work in progress related to order contracts expected to incur losses is presented net against the provision for loss on orders. If additional work required to ensure the quality agreed with customers or to accommodate changes in specifications results in costs exceeding estimates, it may have a material impact on the provision for loss on orders in the consolidated financial statements for the following fiscal year.」
The Company recognised a provision for loss on orders of ¥37.610 million and, for the first time, explicitly identified as a significant accounting estimate the possibility of costs exceeding estimates arising from additional work to ensure quality or accommodate changes in specifications.