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IFRS 9 published in Official Journal of the EU

29 Nov 2016

The European Union has published a Commission Regulation endorsing IFRS 9 'Financial Instruments', confirming the decision to adopt the standard announced last Friday.

Commission Regulation (EC) No 2016/2067 of 22 November 2016 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council published in the Official Journal on 29 November 2016 adopts IFRS 9 Financial Instruments. The EU effective date is the same as the IASB's effective date (annual periods beginning on or after 1 January 2018 with earlier appication permitted).

Please click to access the entry in the Official Journal (available in all official languages of the EU).

As a result of the EU's adoption, the EFRAG has updated its endorsement status report.

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European Commission announces decision to adopt IFRS 9

25 Nov 2016

On 22 November, the International Financial Reporting Standard (IFRS) 9 on Financial Instruments was adopted into EU law. There is no entry in the Offical Journal yet, however, the European Commission (EC) communicated the decision by press release.

After a positive opinion by the Accounting Regulatory Committee on 27 June 2016 and after a 3 months scrutiny period by the European Parliament and the Council that ended on 7 October 2016, the Commission has completed the endorsement process of IFRS 9 Financial Instruments.

The decision was made public in the EC's Banking and finance newsletter and a press release on the EC's Company reporting website.

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Two AASB papers for the upcoming ASAF meeting

25 Nov 2016

The Australian Accounting Standards Board (AASB) has published two papers that will be discussed by members during the upcoming meeting of the Accounting Standards Advisory Forum (ASAF) at the IASB's offices in London on 8 and 9 December 2016: one on digital currency and one on country-by-country reporting.

Digital currency – A case for standard setting activity recommends the IASB develop a standard that addresses the accounting for investments in intangible assets or other commodity type assets that are not financial instruments or inventory as the current alternatives to account for digital currencies (IAS 2 or IAS 38) do not provide relevant information to users of financial statements and as this issue highlights a broader issue with IFRSs in that there is no accounting standard that deals with investments in intangible assets or other commodity type assets that are not financial instruments or inventory. Please click to access the paper on the AASB website.

The second paper offers an update on the AASB approach to country-by-country reporting and argues that while much of the tax transparency initiative to date has been driven by the tax authorities, as part of remaining relevant in an ever-changing regulatory environment, it is timely for accounting standard-setters to take a leadership role in improving income tax disclosures for users of financial reports. Please click to access the paper on the AASB website.

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EBA launches second impact assessment of IFRS 9 on banks

25 Nov 2016

The European Banking Authority (EBA) has launched a second impact assessment of IFRS 9 'Financial Instruments' on a sample of approximately 50 institutions across the European Union.

The second assessment builds on the on the results of the first exercise published on 10 November 2016. As announced, the EBA expects that institutions will be able to provide more detailed and accurate insights into their implementation of IFRS 9 as the information provided by the respondents in the first exercise reflected the early stage of implementation. The new exercise builds on the objectives of the first impact assessment, namely the estimated impact of IFRS 9 on regulatory own funds, the interaction between IFRS 9 and other prudential requirements, and the implementation issues relating to IFRS 9.

Please click for the press release on the EBA website.

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IASB podcast on tentative decisions in the insurance project

24 Nov 2016

The IASB has released a podcast discussing the deliberations at the November 2016 IASB meeting on the issues that have arisen from the external testing of a draft of IFRS 17 'Insurance Contracts' and in the drafting process thus far.

During the insurance contracts session, the Board also decided to set the mandatory effective date for IFRS 17 as for annual periods beginning on or after 1 January 2021.

Please click to access the podcast (approx. 9 minutes long) on the IASB website.

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Report on corporate governance policy in the European Union

24 Nov 2016

The CFA Institute, a global association of investment professionals, has published 'Corporate Governance Policy in the European Union: Through an Investor’s Lens'. The report identifies that investors believe there is still much that could be done in Europe to simplify mechanisms to enhance corporate accountability and realise maximum value from reforms that have already been undertaken.

The findings note that investors are open to many stakeholder issues, such as promoting board diversity, environmental reporting, or good corporate citizenship more generally. The 2013 Accounting Directive including provisions on country-by-country reporting for the extractive industries and the 2014 amendments to the Accounting Directive with its focus on nonfinancial statement disclosures, including information relating to ESG issues, sustainability, and disclosure of diversity policies, are cited as examples of the need for integrated reporting and for harmonising reporting and disclosure standards, including nonfinancial reporting.

Please click to access the full report on the CFA Institute website (includes access to abstract, full PDF, summary, and references).

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Agenda for the November 2016 GPF meeting

23 Nov 2016

Representatives of the IASB will meet with the Global Preparers Forum (GPF) in London on Tuesday, 29 November 2016. The agenda for the meeting has been released.

The full agenda for the meeting is sum­marised below:

Tuesday, 29 November 2016 (13:00-16:30)

  • IASB and Interpretations Committee Update
  • Post-implementation Review of IFRS 13 Fair Value Measurement
  • Education Initiative commercial publications — possible improvements to the usefulness of
    • A Guide through IFRS Standards (the ‘Green Book’); and
    • A Briefing for Chief Executives, Audit Committees and Boards of Directors
  • Definition of a business

Agenda papers for this meeting are available on the IASB's website.

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SEC chief accountant to retire; interim chief accountant to fill the position

22 Nov 2016

The SEC has announced that Chief Accountant James Schnurr will be retiring from the agency and will be succeeded by Wesley R. Bricker.

Mr. Schnurr began his tenure in October 2014 but suffered injuries from a serious bicycle accident in April 2016. Mr. Bricker assumed the role of interim chief accountant in July 2016.

For more information, see the press releases on Mr. Schnurr’s retirement and Mr. Bricker’s appointment on the SEC’s Web site.

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The Bruce Column — Impact, collaboration, and integrated thinking

22 Nov 2016

This year’s Finance for the Future Awards was the most successful ever, with a wide range of entrants from all around the world, and new categories for Communicating Integrated Thinking and Investing and Financing. Our regular, resident columnist, Robert Bruce interviewed all the contenders, and then the eventual winners again, and wrote the case studies. Here he sums up the main themes of this year’s winners’ success.

If there was a theme running through the stories of all the winners of this year’s Finance for the Future Awards it was surely the focus on the impact that the efforts of the organisations concerned was creating. Bridges Ventures, which triumphed in the investment and financing category, was all about impact investing, bringing together social investors wanting to foster social impact with social enterprises wishing to grow. The success of water and waste water company United Utilities, which won the newly established Communicating Integrated Thinking award, was all about how the company was reaping the benefits from all the ways that integrated thinking had transformed both its processes and performance. The award for Innovative New Idea went to the Public Services Lab, (PSL), a consortium of organisations on Merseyside which were bringing their different but complementary skills together to create a collaborative approach to rethinking the way that public services could be delivered. Everywhere the world was being turned upside down.

‘It’s really hard’ said Bridges’ investment director, Caroline Tulloch, ‘to combine traditional financial structures and models of socially-focused businesses, and entrepreneurs’. ‘We changed the way we were working’, said United Utilities CFO Russ Houlden, ‘and we needed to communicate that to all of our stakeholders, particularly our investors, our customers and the society around us’. ‘This is a partnership between a number of different organisations’, said Chris Wright, CEO of Catch22, one of the organisations in the consortium, PSL, ‘and the idea is that we bring our collective expertise, energy, drive, and imagination to the fore to encourage others to step up and come up with solutions around the future of public service delivery’.

And this theme stretched across all of the winners. The Climate Disclosure Standards Board, CDSB, was a good example. Collaboration, for them, became the solution. ‘There was this gap in the market’, said managing director, Mardi McBrien. ‘We had climate change. We had investors who said they couldn’t use the information in the market. We had companies saying there were way too many ways to report that information and what did we want them to do. We had Governments saying: “We can’t regulate that yet”. So CDSB’s objective was to harmonise all these different interests into one place, our framework, and try and reconcile all those different objectives’. Collaboration was the only way forward. ‘It’s all about collaboration’, said McBrien. ‘It’s about bringing different disciplines and different ideas together, sharing experiences, testing things out, putting it onto the market, accepting the feedback, and trying again’. This lesson also shone through the highly commended award for HM Treasury in the public sector category. This was all about how the accounts of over 6,000 entities in the public sector were brought together to create one set of consolidated accounts for the whole of the public sector. This was a unique challenge which will create an impact which has profound consequences. ‘One of the big benefits of pulling all of the assets and liabilities into one place’, said Vicky Rock, head of government financial reporting at HM Treasury, ‘is that you can use that to assess the long-term sustainability of the public finances. So we have been working with the Office for Budget Responsibility on this and going wider than their definitions by putting in provisions, putting in guarantees, putting in contingent liabilities, to start to say how the Government’s balance sheet is going to evolve over time. What are the scale of these liabilities? How are they going to be paid for? And this is leading to changes in how policies are made in Government’.

And the range and the geographic reach of the finalists around the world emphasised how ideas of sustainability, integrated reporting and thinking, and collaborative efforts between the old silos of information within organisations are being brought together. From the social and environmental outcomes of the expansion of Auckland Airport to the way mobile banking was overcoming financial exclusion amongst the 110 million people of Pakistan, from the transformative integrated thinking at global healthcare company Novo Nordisk to the ultimate winner of the large business award, Coca-Cola Hellenic Bottling, the story was the same. ‘It really teaches you lots of lessons about collaborative working and collaborative thinking’, said Basak Kotler, director, investor relations at Coca-Cola.

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IFRS Foundation and Yemen sign licensing agreement

22 Nov 2016

IFRS Foundation and Yemen have signed a licensing agreement which allows the Yemen Association of Certified Public Accountants the rights to publish the official Arabic translation of IFRS Standards and the IFRS for SMEs within its jurisdiction.

Currently in Yemen, IFRS is required by all banking institution and large and medium-sized companies. All other companies are permitted to use IFRS. The licensing agreement is considered an important step towards incorporating IFRS into Yemen’s legal framework.

For more information, see our Yemen jurisdiction page.

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