Software as a Service is a delivery service where the software purchased is actually licensed. Often the software is centrally distributed or hosted, and the customers pay subscription fees in order to use the software.
Due to the nature of this business model, IFRS has some added complexities.
Two main issues, referenced by KPMG, are that :
- IFRS is not explicit on how fees should be handled to SaaS providers
- How implementation costs of SaaS providers should be handled.
IFRS does not have specific guidance on SaaS arrangements, and therefore it is often difficult to assess whether the customer should recognize the right to use the software as an intangible asset or should account for the arrangement as a service contract.https://advisory.kpmg.us/articles/2019/cloud-computing-costs-ifrs-compared-to-us-gaap.html
My takeaway from the kpmg.us report linked above, is that IFRS is in general a principle based standard. Unlike GAAP, which is a rule based system, IFRS remains less explicit and open to interpretation.