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Recent sustainability reporting developments

17 Nov 2015

A summary of recent developments at the WBCSD/CDSB, the United Nations, and the GRI.

The World Business Council for Sustainable Development (WBCSD) and the Climate Disclosure Standards Board (CDSB) have joined forces to create The Reporting Exchange, a freely available, multi-lingual, global sustainability reporting knowledge platform. The platform will be available in open beta format at the end of 2016 to enable public users to share their feedback. The platform is planned for global release in mid-2017. Please click to access the press release on the WBCSD website.

The fourth United Nations forum on business and human rights is currently taking place in Geneva. Yesterday saw a session on "Promoting the Guiding Principles on Business and Human Rights in global governance frameworks: Recent developments and opportunities for further alignment" with speakers from a wide range of institutions. A recording of the session is available on the UN website.

During the session, the Global Reporting Initiative (GRI) launched its latest linkage document that highlights the connections between the GRI G4 Reporting Guidelines and key concepts of the United Nations Guiding Principles on Business and Human Rights. For more information, see the press release and Linking G4 and the UN Guiding Principles on the GRI website.

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Report on IFRS adoption by Japanese companies — full English version available

16 Nov 2015

In April 2015, the Financial Services Agency of Japan (FSA) released a report studying IFRS adoption by Japanese companies and covering their motivation to adopt IFRSs, the migration process and project management structure, the cost of adoption, and implementation challenges. At that time, the full report was only available in Japanese.

The FSA has now published a full English language version of the report and in doing so has also revised the preliminary translation of the abridged English version made available in April. Please click to access the full English language report on the FSA website.

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5th ANC Symposium on Accounting Research — programme available

16 Nov 2015

On 11 December 2015, the Autorité des Normes Comptables (ANC), the French standard setter, will host its 5th Symposium on Accounting Research in Paris. The programme for the symposium has now been made available.

The general theme of the symposium is "The general principles of accounting, European criteria and IASB’s Conceptual Framework" and it will feature roundtables on prudence, on substance over form, on measurements of performance, on historical cost versus fair value, and on the European public good.

Please click to access the full programme on the ANC website.

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IASB Chairman speaks on ten years of IFRS in Italy and the European Union

13 Nov 2015

IASB Chairman Hans Hoogervorst discussed the impact of 10 years of IFRS in Italy and throughout the European Union during a speech in Milan.

In his speech, Mr Hoogervorst commented on what he views as the main lessons learned from IFRS in Europe in the past decade. These three lesson are:

  1. The use of IFRS has improved financial reporting and increased transparency throughout the European Union.
  2. The co-operative relationship the IASB has develop with Europe has increased level of outreach and stakeholder participation by national standard-setters and others.
  3. The decade-long work with Europe shows other jurisdictions that adopting a single set of high quality standards can be achieved globally.

Full transcript of his speech is available on the IASB’s website.

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IFAC study links accounting to prosperity and better living standards

13 Nov 2015

The International Federation of Accountants (IFAC) has published a study, conducted by the Centre for Economics and Business Research on IFAC's behalf, that finds that regions of the world with a higher share of accountants in total employment have a higher per capita GDP.

The study reveals that the accounting profession is strongly linked to national economic growth and improved living standards and is estimated to contribute $575 billion annually to the global economy. IFAC concludes:

Professional accountants contribute to better information, reporting, measurement and decision making. When nations have a robust system to track the flow of money in government, within businesses, and between organizations, transparency and accountability are improved, organizations are strengthened, and economies are enhanced.

Please click to access the study Nexus 2: The Accountancy Profession – A Global Value Add on the IFAC website.

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Seventh annual AOSSG meeting

13 Nov 2015

The seventh annual meeting of the Asian-Oceanian Standards Setters Group (AOSSG) will be held in Seoul on 25-26 November 2015. The meeting is expected to be attended by 20 member standard-setters as well as representatives of the International Accounting Standards Board (IASB) and the IFRS Foundation.

The attendees will discuss various topics relating to the projects that are being undertaken by the IASB. Those projects include the Conceptual Framework, the disclosure initiative, revenue, rate regulation and the Agenda Consultation. The IASB representatives will also update the group on recent IFRS progress and strategic developments.

The agenda for the meeting also includes some topical issues raised by member jurisdictions:

  • Australia and Korea will share a preliminary outcome of their joint research project, which explores how cultural background and translation affect interpretation of the terms of 'likelihood' that are used in IFRS.
  • Japan and Pakistan will provide an update on the progress relating to IFRS adoption.
  • Malaysia, Thailand, and Sri Lanka will raise issues of IFRS implementation.

Detailed information on the meeting including a full preliminary agenda is available on the website of the KASB website (please go to "Activities"/"2015 Annual AOSSG Meeting").

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EFRAG supports conclusions in DI/2015/2

13 Nov 2015

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on IFRS Interpretations Committee exposure draft DI/2015/2 'Foreign Currency Transactions and Advance Consideration'.

In its draft comment letter, EFRAG welcomes the guidance proposed in the draft interpretation, as it will help reduce the identified diversity in practice. EFRAG also agrees with the proposed consensus and believes it is consistent with the underlying principles in IAS 21 The Effects of Changes in Foreign Exchange Rates.

Please click to access the draft comment letter on the EFRAG website. Comments are requested by 13 January 2016.

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FASB to issue final standards on leases and classification and measurement

12 Nov 2015

At its meeting yesterday, the FASB finished redeliberations related to its upcoming standards on (1) leases and (2) classification and measurement. Further, the Board directed the staff to proceed with drafting two final Accounting Standards Updates for a vote by written ballot.


Classification criteria

Under current U.S. GAAP, if the beginning of the lease term occurs within the last 25 percent of the leased property’s total estimated economic life, an entity is not required to evaluate the lease classification criteria related to (1) the lease term in relation to the property’s estimated economic life (the 75 percent test) and (2) the present value of the minimum lease payments in relation to the fair value of the leased property (the 90 percent test). In a previous decision, the FASB had tentatively agreed that under the new leasing guidance, lease classification would be evaluated in accordance with criteria similar to those in IAS 17, Leases, which does not include a similar exception.

The FASB has received feedback indicating that the consequence of not retaining this exception is that leases that begin near the end of an asset’s useful life that otherwise should be classified as operating leases may be classified as finance leases. In response to this concern, the FASB tentatively decided that the final standard will include an exemption from the “lease term is for the major part of the remaining economic life of the underlying asset” classification criterion for leases that begin near the end of the underlying asset’s economic life.

Effective date

For public business entities (PBEs), the new leases standard would be effective for annual periods beginning after December 15, 2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods therein. For all other entities, the standard would be effective for annual periods beginning after December 15, 2019 (i.e., calendar periods beginning on January 1, 2020), and interim periods thereafter. Early adoption would be permitted for all entities. Further, an entity’s ability to early adopt the leases standard would not be linked to its adoption of any of the FASB’s other standards.

For more information, see Deloitte’s related journal entry as well as the press release and tentative Board decisions on the FASB’s website.

Classification and measurement

Effective date

For PBEs, the new standard would be effective for fiscal years beginning after December 15, 2017, including interim periods therein. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on plan accounting, the effective date would be in line with the recommendation of the private-company decision-making framework — that is, fiscal years beginning one year after the effective date for PBEs (i.e., December 15, 2018) and interim reporting periods within fiscal years beginning two years after the PBE effective date (i.e., December 15, 2019).

Early adoption would be permitted for all entities, but only with respect to the following changes made to ASC 825:

  • For financial liabilities measured under the fair value option, fair value changes resulting from an entity’s own credit would be recognized through other comprehensive income.
  • The fair value disclosure requirements for financial instruments not recognized at fair value would be eliminated for non-PBEs.

Non-PBEs may elect to early adopt all the provisions of the final standard once the standard becomes effective for PBEs.

For more information, see Deloitte’s related journal entry as well as the press release and tentative Board decisions on the FASB’s website. In addition, see Deloitte’s February 2, 2015, Heads Up, which outlines key differences between the FASB’s approach and the approach in IFRS 9.

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ASBJ continues short discussion paper series

12 Nov 2015

The Accounting Standards Board of Japan (ASBJ) has published the second issue of a new series of short discussion papers intended to contribute to the global discussion around financial reporting standards. Issue No.2 is entitled 'Recognition Criteria in the Conceptual Framework'.

The ASBJ publishes the paper as a contribution to the global debate about the recognition criteria in the Conceptual Framework. In the paper, the ASBJ analyses the need for a probability criterion. The ASBJ concludes that a robust description of such a criterion would be necessary while the use of the critrion is not always necessary. In particular, the ASBJ believes that:

  • for the recognition of an asset or a liability that reflects a right or an obligation that results from a transaction, it is not necessary to apply a probability criterion;
  • for the recognition of an asset or a liability that reflects a right or an obligation that results from other events, it will be necessary to apply a probability criterion.

Please click to access the discussion paper on the ASBJ website. The first paper in the series, entitled 'Is OCI Unnecessary?' was published in May 2014.

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Pre-meeting-summaries for the November IASB meeting

12 Nov 2015

The International Accounting Standards Board (IASB) will meet at its offices in London on 18–19 November 2015. 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 summarised 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 fair value measurement, post-employment benefits, goodwill and impairment, insurance contracts, the research project on share-based payment, and IFRS implementation issues. 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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