The reports, which surveyed 300 investors, shows that many investors feel too much discretion is given to managers over the financial numbers reported and would rather collect information elsewhere than from a traditional corporate report. Some investors even believe that annual reports do not provide much value. This is reflected in the following results of the report:

• 69% respondents are more skeptical about company-provided information since the global financial crisis
• 63% place greater value on information generated outside the company
• 63% believe management has too much discretion in the numbers it reports

This led Ewan Willars, ACCA director of policy, to note that “[a]ccounting standard setters and regulators should be worried about the high percentage of investors who see no use to annual reports and the distrust of management discretion over company figures.” He also suggested that there might be a need to place more emphasis on external audits.

However, the findings of the reports also show that investors see a responsibility for selective reporting with the companies themselves: 93% of the respondents expressed support for the concept of integrated reporting and believed this could contribute to the usefulness of the information put out by the company. They would, among others, expect the following benefits from integrated reporting:

• Better ability to understand the long-term outlook of a company
• Greater information on how long-term risks, such as climate change, will affect the business model
• Better understanding of all sources of capital, not just financial
• Greater understanding of key risks and opportunities
• More robust, less marketing-oriented approach to reporting on non-financial issues
• More joined-up picture of a company’s prospects

While the reports show that investors are clearly interested in integrated reporting, they also remain wary of the complexity and the fact that sometimes integrated reporting seems to be a goal in itself. The reports state: “It will be important to ensure that developments such as integrated reporting help investors to access the information they need, rather than simply burden them with even more data.”

Please click for (links to ACCA website):

• Press release
• Understanding investors: direction for corporate reporting
• Understanding investors: the changing landscape

The main provisions provided in this ASU are:

1. Change the approach to the investment company assessment in Topic 946, clarify the characteristics of an investment company, and provide comprehensive guidance for assessing whether an entity is an investment company

2. Require an investment company to measure noncontrolling ownership interests in other investment companies at fair value rather than using the equity method of accounting

3. Require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entity’s status as an investment company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees.

On convergence with IFRSs, the ASU guidance is generally similar to the IASB Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27); however, differences exists in certain characteristics, scope, and the accounting and reporting requirements. The FASB states, “The guidance under IFRS requires a controlled investee to be present for a company to be eligible for the investment entity exception to consolidation guidance. In contrast, longstanding U.S. GAAP has provided comprehensive accounting and reporting guidance for investment companies.”

The ASU is effective for fiscal periods beginning after 15 December 2013.

Click for:

• ASU 2013-08, Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements (link to FASB website)
• FASB press release (link to FASB website)
• FASB in Focus (link to FASB website)
• FASB Podcast (link to FASB website)
• Our project page on the Investment Company project

EFRAG comes to the conclusion that the results of the study indicate that information on goodwill is used in many different manners and that there are many different views on how to measure goodwill after initial recognition.

These results are not surprising considering that respondents already had different opinions on what goodwill normally consisted of or thought the calculation of it unverifiable. This uncertainty led some respondents to claim that they did not use the information on goodwill presented in financial statements at all, some said they used the goodwill figure differently in their analysis depending on what they thought goodwill included, some use specific criteria for assessing the overall reliability of the financial information on goodwill, and some consider other information together with reported goodwill figures or correct the figures.

Therefore, the survey seems to suggest that not only the subsequent measurement of goodwill would need further discussion and several respondents suggested alternative methods for accounting for goodwill altogether.

Please click for access to the feedback statement on the EFRAG website.

The conference followed a report assessing the suitability of the International Public Sector Accounting Standards (IPSAS) for the Member States of the EU that was published in March 2013 and used information from the feedback received on the public consultation on the suitability of  IPSAS for application in the EU.

Overall, two conclusions were drawn in the report: (1) it seemed that IPSAS cannot easily be implemented in EU Member States as it stands currently and (2) the IPSAS standards represent a suitable framework for the future development of EPSAS.

The Brussel discussions of the findings and proposals of the report were structured into four sessions:

• Session 1 'The political context – sovereign debt crisis, economic governance, transparency and trust in fiscal data' discussed the current economic and political context and the joint efforts that are needed to move forward and to reinstall the transparency and trust on fiscal data of the European Union as a whole and of each particular Member State in particular.
• In Session 2 'Fiscal transparency and public accounting' technical and academic interventions highlighted the need for having strong and reliable harmonised accruals accounting systems providing improved international acceptance and legitimacy.
• Session 3 -'Suitability of IPSAS and national experiences of reforms' saw interventions and sharing of views of experts from national administrations on reform experiences and successful implementation of accruals accounting in the public sector.
• Session 4 'Accounting standards, governance, the way forward' was a roundtable on lessons learnt, best practices and suggestions concerning accounting standards, future governance for harmonised European public sector accounting standards and the next steps to be taken, including the development of a road map.
  The discussions in session four were based on two core proposals by the Statistical Office of the European Union (Eurostat): (1) The "two-legs" principle with strong EU governance, independent from the IPSASB, and the IPSAS as the starting point, but non-binding, for EPSAS and (2) a governance structure in the form of an organisation inspired by the EU legislative process, a core body composed of one representative from each member state, and two expert working groups (one on standards, one on interpretation).

The conference website offers a wealth of information around the conference and the opinions voiced, including speaker biographies, abstracts, full texts of speeches, videos of speeches, presentation slides, and background papers. Please click for access to the conference website (link to European Commission website).

The fourth issue of the newsletter takes a look at the discussions held during Accounting Standards Advisory Forum (ASAF) meeting in April 2013 and the impact certain discussions had in the IASB’s tentative decisions on the conceptual framework project.

Specifically, this newsletter considered the following issues:

• measurement;
• presentation in the statements of profit or loss and comprehensive income;
• uncertainty;
• the role of the business model;
• the unit of account;
• additional issues ASAF members wanted to be considered in the Conceptual Framework; and
• the comment period for the IASB discussion paper.

Click for (links to EFRAG website):

• EFRAG press release
• Fourth issue on the outcome of the ASAF meeting

The starting point for the profiles were the answers provided by standard-setting and other relevant bodies in response to a survey that the IFRS Foundation conducted between August and December 2012 on the application of IFRSs around the world and to which to date the 66 jursidiction responded. They answered questions regarding the commitment in support of moving towards a single set of high quality global accounting standards, the state of IFRS adoption (for domestic and foreign companies), the endorsement process and translations. The survey also extended to the adoption of the IFRS for SMEs.

The profiles drafted by the Foundation on the basis of the information provided were circulated for comment to the original respondents, regulators, international audit firms, and others. We are proud to have been able to help the IFRS Foundation with this ambitious project, which is led by Paul Pacter, former IASB member and former webmaster of IAS Plus who originally set up our popular table on the use of IFRSs around the world which has been supplemented recently by the more detailed table on the use of IFRSs by the G20 jurisdictions.

On basis of the information provided in the profiles, the IFRS Foundation comes to the following observations regarding the adoption of IFRSs around the world:

1. There is almost universal support for IFRS as the single set of global accounting standards. 95% of the 66 jurisdictions have made a public commitment of support for a single set of high quality global accounting standards and with the exception of Switzerland every jurisdiction stated that IFRSs should be that single set of standards.
2. More than 80% of the profiles state that IFRSs have been adopted for all are almost all public companies.
3. The jurisdictions that have adopted IFRSs claim to have made very few modifications to the standards. The modifications are mostly described as limited, temporary of of little impact.

In a speech on the posting of the profiles and the information they provide, Hans Hoogervorst, the IASB Chairman, was very encouraged by the results and concluded from then on the general adoption of IFRSs around the world:

This is only a subset of the information provided by this first batch of profiles and there is no reason to believe the remaining profiles to be published will tell a very different story.

He also rang a hopeful note that future adopters or jurisdictions that adopt each new pronouncement through an endorsement process will have little reason to make changes to IFRSs as issued by the IASB:

Even when our constituents disagree with part of our standards, they almost always resist the temptation to alter them. Local adjustments are viewed with suspicion by investors, so most jurisdictions will simply take IFRS in full. Also, most of our constituents accept that if local adaptations were to become rife, the benefits of having a global standard would be undermined.

Nevertheless, Hoogervorst also reflected on what remains to be done. Most obvious to him is the fact that some large and important economies have not yet (fully) adopted IFRS: Japan, the United States, and China. He also stated that "adoption in itself is not enough" and that proper and consistent application of the standards is equally important.

Further information

On the IASB website:

• Access to the jurisdiction profiles
• Press release on the posting of the profiles
• Speech by Hans Hoogervorst Are we there yet? (full text)
• Speech by Hans Hoogervorst Are we there yet? (audio presentation with slides)

On IAS Plus:

• Use of IFRSs by jurisdiction
• Use of IFRSs by jurisdiction - G20 domestic listed companies

Mr Golden commented on the FASB’s and IASB’s convergence projects, noting that they are “critically important” and a top priority. The FASB’s current plan is to issue (1) a standard on revenue recognition in the coming months, (2) two financial instruments standards in early 2014 (on classification and measurement and on impairment), and (3) standards on leasing and insurance sometime in 2014. Mr Golden also explained that shortly after issuing each standard, the FASB will create a "transition resource group" to facilitate implementation of the standards. The groups will focus on issues related to education, amendments, and interpretation and will include FASB and IASB members as well as representatives from preparer, auditor, and investor communities.

In addition, Mr Golden discussed the new Accounting Standards Advisory Forum (ASAF) and how the FASB’s membership in the ASAF will help advance the convergence process.

Regarding the FASB’s future agenda items, Mr Golden noted that the Financial Accounting Standards Advisory Council has published a survey seeking information from stakeholders on what projects they believe the FASB should prioritise. Possible projects include disclosure framework, hedging, pension accounting, and liabilities and equity. Further, the FASB will continue to work with the Private Company Council to address the needs of users of private company financial statements.

Lastly, Mr Golden stated that in response to feedback from stakeholders about the FASB Accounting Standards Codification, the FASB plans to “conduct an analysis of areas where the codification may be improved.” The focus of the analysis will be to improve on how changes to the codification are written and communicated and “to rewrite some of the more confusing sections” (the FASB is presently rewriting the Liabilities and Equity sections).

The full text of the speech is available on the FASB website.

The report notes the following challenges faced by companies in adopting the new standard: “(1) applying the definition of a business, (2) accounting for purchased loans, and (3) separately reporting some intangibles and goodwill.” The FASB has noted that it will consider these findings while working on other ongoing projects.

The PIR findings also note that companies experienced issues implementing FASB Statement No. 157, Fair Value Measurements, to certain types of assets and liabilities acquired in a business combination. The FASB also noted that it will decide on starting any additional standard-setting activities after the upcoming PIR on Statement 157 is available and it has an opportunity to work with the IASB once the review of IFRS 3 is complete. The FASB will continue to keep the FAF’s Oversight Committee and the Board of Trustees updated of any progress that is made.

Click for:

• Press release (link to FASB website)
• Full response to PIR 141R (link to FASB website)
• Our news story on FAF's Post-implementation Review of FASB 141R.

The report, It’s time...for global, high quality public sector financial reporting, notes an "emerging consensus of the need for improvements in the quality of financial reporting by governments and their agencies around the world" (such as the February 2013 meeting of the G20 financial ministers and central bank governors), and points out that the IPSASB has a key role to play.

The report sets out a vision of "high-quality, transaction-neutral, global financial reporting standards that are applied by reporting entities in the private and public sectors around the world". It argues that the IASB is a role model for the possible approach to reform of the public sector reporting focused on a 'transformed' IPSASB.

The report recommends the IPSASB should be restructured and adequately resourced, and that it operate in an environment where it can act, and be perceived to act, independently. It notes:

• the possibility of placing the IPSASB within the scope of the Public Interest Oversight Board (PIOB) of the International Federation of Accountants (IFAC) may not be sufficient to ensure the perception of independence exists
• the majority of members of the IPSASB should be appointed on a full-time basis, mirroring the process that occurred when the International Accounting Standards Committee (IASC) was reconstituted as the IASB
• a new resourcing model is necessary, as the current level of funding is inadequate to maintain a full-time professional staff, follow an adequate due process, and ensure liaison with constituents.

In terms of the possibility moving toward 'transaction neutral' standards, the report states:

Some have interpreted transaction-neutral accounting standards as meaning that identical standards would apply to entities in both sectors or that private sector standards should apply to public sector entities. This is a misunderstanding of the notion of transaction-neutral standards.

Transaction-neutral standards should reflect the nature of the transactions and other events affecting the entity in question. For example, a for-profit entity (whether in the private or public sector) acquires and uses assets to generate profits for stakeholders... [whereas] a not-for-profit entity (whether in the private or public sector) acquires and uses assets to provide needed goods and services in accordance with its service delivery objective, not to directly generate future cash flows. ... The impairment standards should be the same for for-profit entities in either sector but different from the impairment standards for not-for-profit entities in either sector

To achieve such an outcome, it is acknowledged that a transaction-neutral conceptual framework would be a necessary base for standard setting.

The report considers possible approaches to developing the vision, including creating a completely new body, adopting the standards of a countries as the base for new standards, and a global standard setter established and funded by governments. It concludes:

... we believe the IFRS Foundation course of action, which would involve bringing the IPSASB into the IFRS Foundation, would be a more efficient strategy and would be more likely to be successful in achieving the vision.

The report recommends the following steps to implement this preferred course of action:

• Amending the IFRS Foundation Constitution to include development of standards for the public sector, and the transaction neutral standard concept
• Adding members from the public sector to the IFRS Monitoring Board and IFRS Foundation Trustees (ideally equal public and private representation)
• Reconstituting the IPSASB with a smaller number of full-time members, with consideration in the longer term of merging the IASB and IPSASB, "after the transition to the modified IFRS Foundation has occurred and the two boards have been successfully pursuing their mandates"
• Enlarging the IFRS Foundation's funding model to include contributions from public sector constituents.

Click for access to the report (link to the ICAA website).