Misstatement of Revenue

"An error is the more dangerous in proportion to the degree of truth which it contains." Henri Frederic Amiel

Builder. ai, a UK start-up (founded a.o. by Microsoft, Quatar Invest. Authority), restated their 2023 revenue down to $140 million.

Builder. ai also appointed a new auditor (BDO) after accusations of corporate governance issues.

As Builder. ai do not publish their financial statements, I used some deduction to illustrate the issue and possible root causes.

The basis is the five-step model of the IFRS 15 Revenue from Contracts with Customers:

1. Identifying the contract.
2. Identifying performance obligations.
3. Determining the transaction price.
4. Allocating the transaction price to performance obligations.
5. (Pattern of) satisfaction of performance obligations.

Learn more in the attached slide show.

*Source: Financial Times.