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IASB member discusses financial instruments

24 Apr 2015

In a report issued by the ‘Banking magazine: Association of Banks in Israel’, IASB member Sue Lloyd talks about IFRS 9, specifically looking at the new loan loss accounting model.

Ms Lloyd began by stating the reasons why IFRS 9 is an improvement over IAS 39, such as combining all aspects of financial instruments accounting into one standard and enhanced disclosures. Next, she describes the loan model under IFRS 9 which requires “financial institutions and other companies to estimate and account for expected credit losses from when they first lend money or invest in a financial instrument.” She notes that although the IASB and FASB have worked together to create a converged model, the FASB has taken a different approach. Lastly, she comments that the implementation of the expected loss model for loan loss provisions will require significant changes to financial institutions and other companies' systems and processes, which is the reason why the IASB set the mandatory effective date to 1 January 2018.

For more in­for­ma­tion, see the report on the IASB’s website.

ITG discusses implementation of impairment requirements in IFRS 9

24 Apr 2015

On 22 April 2015, the IFRS Transition Resource Group for Impairment of Financial Instruments (‘ITG’) held its first meeting. The ITG is a discussion forum established by the International Accounting Standards Board (IASB) to provide support for stakeholders on implementation issues arising from the new impairment requirements following the issue of IFRS 9 'Financial Instruments' (2014).

 Topics discussed at the meeting included:

  • Forecasts of future economic conditions.
  • Loan commitments — scope.
  • Expected credit losses — measurement date.
  • Assessment of significant increase in credit risk for guaranteed debt instruments.
  • The maximum period to consider when measuring expected credit losses.
  • Revolving credit facilities.
  • Measurement of expected credit losses for an issued financial guarantee contract.
  • Measurement of expected credit losses in respect of a modified financial asset.

For more information, and a summary of the discussion at the meeting, see Deloitte’s IFRS in Focus.

IASB publishes update on the conceptual framework project

24 Apr 2015

The staff of the IASB has published a document setting out the key tentative decisions made by the IASB up to the end of March 2015 that affect the proposals in the discussion paper on the conceptual framework.

On 18 July 2013, the IASB issued Discussion Paper A Review of the Conceptual Framework for Financial Reporting to consider areas where revisions and amendments of the existing conceptual framework was needed. At its January 2015 meeting the IASB substantially completed its redeliberations on the Discussion Paper and published a first summary of tentative decisions. In March 2015, the IASB discussed issues that have arisen in drafting the Conceptual Framework exposure draft. This new update includes the tentative decisions made in March. An exposure draft is expected in the second quarter of 2015.

For more information, see the document on the IASB’s website. In addition, Deloitte has followed the redeliberations of the IASB and all tentative decisions to date; see our conceptual framework project page for details.

Video recording of the stakeholder event at the IFRS Foundation Trustees’ meeting

24 Apr 2015

On 15 April 2015, the IFRS Foundation Trustees and the Canadian Accounting Standards Oversight Council (AsSOC) jointly hosted an event to discuss Canada's perspective on IFRS and global standards.

The event saw an opening address by Linda Mezon, Chair of the Canadian Accounting Standards, a eulogy to Harvey Goldschmid, who passed away in February 2015, by Michel Prada, Chairman of the IFRS Foundation, a keynote speech by Hans Hoogervorst, Chairman of the IASB, and a panel discussion "IFRS and Global Standards: A Canadian Perspective".

We already reported on the speech by Mr Hoogervorst who presented a mission statement for the IASB and the IFRS Foundation. A video recording of the whole event including the panel discussion has now been made available on the IASB's website. The whole recording is about one hour and twenty minutes long - the press release indicates the timing of each contribution. Please click to access the recording through the press release.

IASB member speaks about 'Financial Reporting and Financial Markets'

22 Apr 2015

At a conference in Madrid, Spain, IASB member Philippe Danjou gave a speech offering an inventory of IFRS adoption around the world and looked at trends and mega-trends in financial reporting.

Mr Danjou split his speech into three parts. He began by looking at the mega-trends that shape the IASB's technical work. Globalisation, currency changes, high leverage and asset valuation problems, low interest rates, diversification, and key performance indicators, non-GAAP figures and disclosure overload were the trends he identified.

Mr Danjou then turned to the adoption of IFRSs around the world. He offered a general overview as well as more detailed analyses of several jurisdictions including Japan, China, India and the United States.

Finally, Mr Danjou turned to the question of whether the adoption of IFRSs in the European Union brought the expected benefits. His analysis was based mainly on the responses to the European Commission's public consultation on the impact of  IFRS in the European Union. He concluded:

I am confident that IFRS has delivered most of the benefits that were expected and that the initial costs of learning and implementing the system, while they have not been capitalised on the balance sheets of companies and investors, would not need to be written off if they had been.

Please click to access the full text of the speech on the IASB website.

IFRS Foundation issues Formula Linkbase 2015

20 Apr 2015

The IFRS Foundation has issued the 2015 IFRS Taxonomy Formula Linkbase. The Formula Linkbase is updated from the 2014 version; it is designed to help improve the data quality of IFRS Taxonomy filings and to provide additional guidance for both technical and financial reporting audiences so that they can better understand the IFRS concepts and their meanings.

From a business perspective, the formula linkbase provides additional validation opportunities for preparers to help ensure that the facts reported in their filings are of a high quality. From a technical perspective, it improves the quality of IFRS Taxonomy filings based on the final IFRS Taxonomy 2015.

For more information, see the press release on the IASB's website.

IASB to discuss effective date of IFRS 15

20 Apr 2015

In preparation for the IASB's meeting next week, an agenda paper has been released today discussing the effective date of IFRS 15 and asking the IASB whether it wishes to defer the effective date in the light of (i) issues emerging from discussions of the Revenue Transition Resource Group (TRG) and (ii) the FASB’s tentative decision regarding the effective date.

In the paper the IASB staff makes the following recommendations:

We recommend that the IASB defer the effective date of IFRS 15 by one year to 1 January 2018. An entity would continue to be permitted to apply the requirements to annual periods beginning before that date.

If the IASB agrees to propose a deferral of the effective date, we recommend publishing the proposed deferral for comment as a separate narrow-scope Exposure Draft. That Exposure Draft would include a comment period of no less than 30 days that allows for the finalisation of the IASB’s discussions in this respect at the July 2015 board meeting.

In May 2014, the IASB and FASB issued converged standards on revenue recognition and also agreed a common effective date. However, in April 2015 the FASB tentatively decided to defer for one year the effective date of its new revenue standard (ASU 2014-09 Revenue From Contracts With Customers) for public and nonpublic entities reporting under US GAAP. The IASB staff is now asking the IASB whether it wants to follow suit in the light of issues discussed at the TRG meetings and intended clarifications as well as in order to keep up convergence with the FASB.

Please click to access the agenda paper on the IASB website. It offers the staff's recommendations, historical background, an explanation of what the FASB has decided, and a summary of IFRS stakeholder feedback.

Agenda for the April 2015 IASB meeting

17 Apr 2015

The IASB will meet at its offices in London on 27-29 April 2015. Topics discussed at the meeting will include fair value measurement, revenue recognition, IFRS Interpretation issues, the disclosure initiative, and inflation.

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

Hans Hoogervorst speaks about the reasons behind the IASB's work

16 Apr 2015

At the IFRS Foundation trustees’ stakeholder event in Toronto, Canada, IASB Chairman Hans Hoogervorst presented a mission statement for the IASB and the IFRS Foundation explaining not only ‘what’ but also ‘why’ the organisation does what it does.

The statement Mr Hoogervorst presented was, in a nutshell:

Our mission is to develop IFRS that bring transparency, accountability and efficiency to financial markets around the world. Our work serves the public interest by fostering trust, growth and long-term financial stability in the global economy.

Mr Hoogervorst went on to explain that the transparency was to be achieved by enhancing the quality and international comparability of financial information, accountability would improve by reducing the information gap between the providers of capital and the people to whom they have entrusted their money, and economic efficiency would be enhanced by helping investors to identify opportunities and risks across the world. These three aspects together would then make up the contribution of IFRSs to the public good.

As always, Mr Hoogervorst also touched upon adoption of IFRSs around the world. One of his points was commending Canada, that has close ties to the United States, for adopting IFRSs although "there has been no further breakthrough for IFRS in the United States". He also warned against giving up whatever convergence has so far been achieved. On revenue recognition he stated:

Completing IFRS 15 took more than a decade of hard work by both Boards, three formal rounds of public consultation, thousands of hours of meetings and countless outreach meetings. The perfect accounting standard does not exist. An endless process of tinkering will certainly not bring us close to perfection.

The full transcript of Chairman Hoogervorst’s speech is available on the IASB’s website.

Recording of the ECON hearing of the new EFRAG President

16 Apr 2015

The Committee on Economic and Monetary Affairs (ECON) of the European Parliament has made available a recording of the hearing of Dr Wolf Klinz, who was recently nominated as President of the Board of the European Financial Reporting Advisory Group (EFRAG) by the European Commission.

In his introductory remarks, Mr Klinz stressed that moving to IFRSs in Europe in 2005 was the right decision to make, however, he also stated that he sees a more active role for EFRAG going forward. So far, he said, EFRAG has been primarily the IASB's ambassador in Brussels. He believed it was now time that EFRAG became the EU ambassador at the IASB in London. Mr Klinz summed  up his introductory remarks by five goals he sees for EFRAG under his leadership:

  • EFRAG should become the uncontested European voice as regards accounting standard-setting.
  • EFRAG must work to achieve maximum consensus in the European Union.
  • EFRAG must help to ensure that prudence and true and fair view remain aspects of accounting.
  • EFRAG must involve the European Parliament in the discussion around accounting standards through regular dialogue.
  • EFRAG must face the fact that it does not only have a technical but also a political role.

After the hearing, the ECON voted almost unanimously for the appointment of Mr Klinz.

Please click to access the recording on the ECON website. The first ten minutes cover the opening remarks of Mr Klinz, the remaining time questions and answers. Please be aware that you can listen to the recording in twenty-one different languages as well as in the original, multi-language version.

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