Turnover represents the fair value of consideration receivable for professional services provided, excluding value added tax.
Revenue from the provision of professional services is recognised as follows:
Time-based services – Where work is charged on a time basis, turnover is recognised as services are performed, measured at the agreed charge-out rates.
Fixed fee assignments – Where a fixed fee has been agreed, turnover is recognised by reference to the stage of completion at the balance sheet date, provided the outcome of the engagement can be estimated reliably. Where the outcome cannot be estimated reliably, turnover is recognised only to the extent of recoverable costs incurred.
Contingent fee arrangements – Turnover is recognised only when the uncertainty is resolved and the right to consideration has been established.
Amounts recoverable on contracts that are not yet billed at the balance sheet date are included within work in progress, stated at cost plus attributable profit (where reliably measurable) less foreseeable losses.
Fees invoiced in advance of work being performed are included within deferred income and released to turnover in the period in which the related services are performed.
Reimbursable expenses and disbursements incurred on behalf of clients are excluded from turnover unless the practice bears the risks and rewards of those costs.