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IFRS Foundation (blue) Image

Video on the mission behind IFRSs

10 Feb 2016

The IFRS Foundation has published on its website a short video explaining the role IFRSs play in the wider economy.

The video follows on from the publication last year of the organisation’s Mission Statement, which sets out what the IFRS Foundation aims to achieve. The video is currently available in English and Spanish and can be accessed on the IASB website.

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Pre-meeting summaries for the February IASB meeting

09 Feb 2016

The International Accounting Standards Board (IASB) will meet at its offices in London on 16–17 February 2016. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

Check out the summaries for the forth­com­ing dis­cus­sions on insurance contracts, goodwill and impairment, IFRS implementation issues, and financial instruments with characteristics of equity. We have added them to our meeting note page and will sup­ple­ment them with our popular meeting notes after the meeting.

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2016 IFRS 'Red Book' coming in March

09 Feb 2016

The International Accounting Standards Board (IASB) has announced that the 2016 edition of the Bound Volume of International Financial Reporting Standards (the 'Red Book') is expected to be available in March.

Copies will be priced at £72 each before discounts, plus shipping. More information is available on the IASB's 'register my interest' webpage (link to IASB website).

IASB (International Accounting Standards Board) (blue) Image

Reactions to the proposed amendments intended to address concerns about the different effective dates of IFRS 9 and the forthcoming new insurance contracts standard

08 Feb 2016

On 9 December 2015, the IASB published ED/2015/11 'Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Proposed amendments to IFRS 4)'. The comment deadline for this ED has now ended.

ED/2015/11 proposed two options for entities that issue insurance contracts within the scope of IFRS 4:

  • an option that would permit entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
  • an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.

The comment letters on the ED made available on the IASB website seem to focus on two questions:

  1. Is one of the two approaches preferable?/ Can one or the other be dropped altogether?
  2. How can predominance best be determined for the deferral approach?/ What is the appropriate level for assessing predominance?

On the first question, the vast majority of respondents state that both approaches are needed. They claim that both the overlay approach and the temporary exemption from applying IFRS 9 are needed as these address different issues depending on the type of business activities and group structures. On the ends of the spectrum are the insurance industry on the one side, and user organisations on the other side. The insurance industry is asking for a deferral of IFRS 9 until the insurance standard is completed; they mostly cite cost reasons. Some user groups are asking for the overlay approach only, some very few even argue that it is best to do nothing; these respondents mainly cite lack of comparability if multiple options exist.

One level down, it is especially the deferral approach that triggers suggestions for refinement. While most respondents agree that assessing predominance is the right approach, the IASB's proposal to assess predominance "at the reporting entity level" causes confusion. Most respondents seem to believe that the IASB sees the group level as the reporting entity level. Others believe that "reporting entity level" is an empty phrase that could also mean lower levels than the group level. The question of how to treat conglomerates is important in both cases. Therefore, respondents assuming that the IASB intends testing at the group level often argue that a testing "below the reporting entity level" is needed; respondents assuming an assessment at a lower level often wonder of the implications for the group. The two possibilities that seem to emerge are:

  • Assessment is at the group level and results are cascaded down - this would leave pure insurance companies that are subsidiaries of conglomerates without the option of deferral while companies that are not subsidiaries of conglomerates would have the option.
  • Assessment is at a lower level than the group level, however, there is the question of roll-up - this could either mean that groups need to consolidate IFRS 9 and IAS 39 numbers or that qualifying subsidiaries would need to keep two sets of books - an IAS 39 one for reporting to their users and an IFRS 9 one for reporting within the group.

Expectations are currently (as communicated at the October 2015 IASB meeting) that the IASB will begin re-deliberation of the exposure draft in the second quarter of 2016. Final amendments are expected in the third quarter of 2016.

Deloitte document (mid gray) Image

We comment on the IASB’s proposed amendments to IFRS 4

08 Feb 2016

We have responded to the IASB's Exposure Draft, 'Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Proposed amendments to IFRS 4)', that was IASB published in December 2015.

As stated in the comment letter, we agree:

  • The exposure draft has identified valid reasons to introduce a temporary solution to issues arising from transitioning to two major and interrelated new standards at different times.
  • An option to defer IFRS 9 should be available for insurance activities and that a predominance criterion based on the carrying amount of liabilities is appropriate means to determine when that option should be available. However, we have concerns over the methodology for measuring that criterion and also disagree that it should be assessed only at the reporting entity level.
  • The proposed expiry date for the deferral approach is appropriate, but recommend that the IASB conclude its deliberations on the new insurance contracts standard taking into account the inputs received from comment letters and outreach activities, so that the effective date of the new standard is within this timescale.

In addition, we do not believe that a clearly defined insurance business should be excluded from the deferral approach only because it is part of a larger group and recommend the predominance test be permitted at the reporting entity level or each level below the parent entity (“waterfall” approach). Further, we provided some suggestions on how the predominance test could be modified to ensure that the temporary deferral can be applied by an appropriate population of entities.

FASB (US Financial Accounting Standards Board) (lt blue) Image

FASB adds four projects to research agenda

08 Feb 2016

As result of a survey of different advisory groups, the FASB decided to add four new financial reporting issues in its upcoming agenda discussion paper expected in the first half of 2016.

The issues to be added are:

  • Pensions and other postretirement employee benefit plans;
  • Intangible assets;
  • Distinguishing liabilities from equity; and
  • Financial performance reporting.

With the exception of intangible assets, which the IASB currently does not address in a research project, the issues to be added correspond to a large part with the issues respondents to the IASB's agenda consultation, which had asked repondents to rank the IASB's research projects as high, medium or low priorities, ranked as "high importance". A full analysis of the 118 responses on the IASB website is not available yet, however especially pensions and other postretirement employee benefit plans and distinguishing liabilities from equity rank high among the research projects currently on the IASB's agenda.

Please click for the following information on the FASB website:

FEE (Federation of European Accountants - Fédération des Experts-comptables Européens) (lt green) Image
European Union Image

FEE briefing paper on the endorsement of IFRS 9

08 Feb 2016

The Federation of European Accountants (Fédération des Experts-comptables Européens, FEE) has prepared a short briefing paper with additional answers to some of the questions asked by Members of the European Parliament of the Economic and Monetary Affairs Committee (ECON) during recently-held two public hearings on the International Financial Reporting Standards (IFRS) broadly , and on IFRS 9 'Financial Instruments' specifically.

The first hearing took place on 1 December 2015 and featured an introduction by the ECON Chair Roberto Gualtieri followed by short presentations by four invited experts. The presentations were followed by a joint discussion with ECON members.

The second hearing took place on 11 January 2016. IASB Chairman Hans Hoogervorst gave a short presentation of the current work of the IASB. Afterwards, he and Michel Prada, Chairman of the IFRS Foundation Trustees, answered questions of the ECON members.

The FEE paper summarising the statements and providing addition anwers can be downloaded from their website.

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Interview with IPSASB Chair

08 Feb 2016

The International Public Sector Accounting Standards Board (IPSASB) has released an interview with Ian Carruthers who took office as new IPSASB Chair on 1 January 2016.

In the interview, Mr Carruthers talks about the IPSASB and the importance of International Public Sector Accounting Standards (IPSAS) for transparency and accountability in public sector financial management. Please click to access the recording on the IPSASB website.

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February 2016 IASB meeting agenda posted

05 Feb 2016

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 16–17 February 2016.

The meeting will feature discussions on:

  • Insurance contracts — whether to grant permission to begin the balloting process or whether it considers that it needs to re-expose the new insurance contracts Standard.
  • Goodwill and impairment.
  • IFRS implementation issues — IFRIC Update.
  • Financial instruments with characteristics of equity — current and next steps.

The full agenda for the meeting can be found here. We will post any updates to the agenda, as well as our Deloitte pre-meet­ing summaries and observer notes from the meeting, on this page as they become available.


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IFRS Foundation Trustees hold January 2016 meeting

05 Feb 2016

The IFRS Foundation Trustees met in London on 26–28 January 2016.

Meeting ac­tiv­i­ties included the following:

  • Executive session — The Trustees discussed a number of important strategic issues:
    • Review of structure and effectiveness of the IFRS Foundation — The Trustees reviewed (1) the progress of the review of structure and effectiveness of the IFRS Foundation and (2) the comments received on the request for views. Topics discussed included relevance of IFRS Standards, consistent application, governance and financing.  
    • Strategic Plan 2016 — The Trustees discussed specific actions and activities for 2016.
    • Working with National Standard-Setters and regional bodies — The Trustees decided on three goals: (1) to maintain effective relationships and communication with NSS and regional bodies, (2) promote consistent application of IFRS from NSS and regional bodies, and (3) work together with NSS and regional bodies on the Technical Work Programme.
    • Other issues.
    • Committee reports — The Trustees discussed reports from the Audit and Finance Committee, Human Capital Committee, and the Nominating Committee.
  • IASB Chairman’s report — The Chair of the IASB provided the Trustees with an update on a number of the IASB’s technical ac­tiv­i­ties.
    • Major projects — The IASB chair discussed its recently issued leases standard, the end of deliberations in the insurance contracts project, and the different effective dates of IFRS 9 and new insurance contracts standard.
  • Report of the Due Process Oversight Committee (DPOC) — The Trustees received a report about the DPOC’s January 2016 meeting. For more in­for­ma­tion, see our related news item.
  • Investors in financial reporting event — The IFRS Foun­da­tion, with the CFA Institute, hosted an event 'Investors in Financial Reporting’.

The full report on the IFRS Foun­da­tion trustees’ meeting is available on the IASB’s website.

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