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IASB member discusses the forthcoming leases standard

05 Jan 2016

In an article for ‘ Compliance Week’, IASB member Gary Kabureck talks about the forthcoming standard on lease accounting and concludes that there is "little to fear".

Mr Kabureck picks up four points.

The business benefits of leasing would remain unchanged

He stresses that the forthcoming changes are about accounting for leases only; the benefits of leases - such as the ability to pay for and use only the portion of an asset’s life the lessee requires, predictable payments, use of assets without legal ownership, an alternative source of financing, and simplified asset disposals - would remain as they are.

Being off-balance had never meant that leases were out of sight

Mr Kabureck explains credit providers have always known about material operating lease commitments and have routinely adjusted entity financial statements. As long as information was not and will not be intentionally distorted, there was no reason to assume that a company's credit rating will be affected.

The reporting entity would still be the exact same company

He admits that a company’s balance sheet for a lease intensive company will look different, yet the leases that were part of the off-balance sheet arrangements were still part of the company’s essence and will continue to be so.

The world would adjust just fine

Mr Kabureck concludes that even though sometimes changes are controversial and meet resistance and sometimes even lead to transitional impacts, the new requirements would operationally be little more than adopting another mandatory accounting change that provides enhanced transparency about what already exists.

Please click to access the full text of Mr Kabureck's article on the IASB website.

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IASB establishes procedure for receiving implementation issues on the 'IFRS for SMEs'

04 Jan 2016

The IASB announced today that it has developed a procedure for small companies to submit for consideration implementation issues on the 'IFRS for SMEs'.

During its comprehensive review of the IFRS for SMEs, the IASB decided to establish a procedure for constituents to submit implementation issues. Submitted issues will be either:

  • Referred to the SME Implementation Group (SMEIG) — The SMEIG will review major issues that meet the criteria in paragraph 15 of the Terms of Reference and Operating Procedures for the SMEIG. The SMEIG will consider whether to develop non-mandatory implementation guidance.
  • Retained by the staff — The staff will consider other, non-major issues when (1) updating educational material or (2) during the next periodic review of the IFRS for SMEs.

For more information, see the IASB's website for the press release as well as information on submitting implementation issues.

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Agenda for the January 2016 IFRS Interpretations Committee meeting

04 Jan 2016

The IFRS Interpretations Committee will meet at the IASB's offices in London on 12 January 2016. The agenda for the meeting was published today.

The Interpretations Committee will continue its discussions on IFRIC 12 — Payments made by an operator to a grantor in a service concession arrangement. The Interpretations Committee is also expected to finalise six agenda decisions, all of which — except for issues around IFRS 5 — will only see very short discussions (15–20 minutes each).

The full agenda for the meeting can be found here. We will update this page for our pre-meeting summaries of the staff papers, any changes to the agenda, and our Deloitte observer notes from the meeting as they become available.

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We comment on the IASB agenda consultation

04 Jan 2016

We have responded to Request for Views document that the IASB published in August 2015 to launch its second public consultation to seek broad public input on the strategic direction and overall balance of its future work programme.

We support the emphasis the consultation places on completing the remaining major projects. We also note that the Board should allocate sufficient resources to the implementation of these standards, of the forthcoming IFRS 16 Leases, and of the recently published standards IFRS 9 and IFRS 15. We welcome the attention given to research projects.

However, we miss a sense of context how the Board sees its current standard-setting priorities in relation to a wider and more long-term view of financial and corporate reporting.

Please click to access the full comment letter.

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IFRS Foundation publishes additional framework-based teaching material

04 Jan 2016

The IFRS Foundation has published the fourth and fifth parts of its comprehensive, framework-based IFRS teaching material for its education initiative. The material is free to download and is designed to enhance educators’ teaching about IFRSs and to help students develop their abilities to make the necessary estimates and judgments when applying IFRSs and the IFRS for SMEs.

Part 4 of the material made available now focusses on accounting for business combinations and consolidated financial statements. Part 5 focusses on changing accounting policies and accounting estimates, correcting prior period errors and reflecting changes in circumstances.

Please click to access all batches of the teaching material on the IASB website.

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Year in review — 2015

30 Dec 2015

2015 was another successful year for the IAS Plus family with over 13 million page views. We've devoted significant resources to bring you comprehensive coverage of all things IFRS and broader financial reporting and other relevant topics and are pleased that our readers appreciate our efforts.

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2016 New Year (fireworks red) Image

Season's Greetings

24 Dec 2015

We wish all our readers a peaceful holiday and all the best for the New Year.

We look forward to seeing you again after the holidays and to continue to be your preferred accounting website in 2016.

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EFRAG draft comment letter on proposed amendments to address concerns about the different effective dates of IFRS 9 and the new insurance contracts standard

24 Dec 2015

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2015/11 'Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Proposed amendments to IFRS 4)'.

EFRAG welcomes the IASB proposals. EFRAG believes that the temporary exemption from applying IFRS 9 addresses all the concerns relating to the misalignment of IFRS 9 and the new insurance contracts standard, while the overlay approach would only address the accounting mismatches. Nevertheless, EFRAG supports both approaches as complementary solutions.

While EFRAG believes the temporary exemption to address all concerns, EFRAG is also convinced that the exemption should be available to all entities that issue material insurance contracts within the scope of IFRS 4 in order to avoid an uneven playing field in the insurance sector. As the exemption should not capture material non-insurance activities, EFRAG is of the opinion that it should be available both at and below the reporting entity level. In order to achieve this, EFRAG suggests to base the exemption on one of the following approaches:

  • A widened ‘predominant activity’ criterion which is determined on a basis that is not limited to the issuance of contracts within the scope of IFRS 4. However, it would be set at a higher threshold than proposed by the IASB; or
  • A ‘regulated entity’ criterion which considers definitions from regulatory sources.

Finally, EFRAG agrees with the expiry date set for the temporary exemption from applying IFRS 9.

Comments on EFRAG's draft comment letter are requested by 20 January 2016. For more information, see the press release and the draft comment letter on the EFRAG website.
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Summary of the CMAC November 2015 meeting

22 Dec 2015

The IASB has released a summary of the Capital Markets Advisory Committee (CMAC) meeting which was held in London on 6 November 2015.

The topics discussed at the meeting included:

  • 2015 agenda consultation
  • Goodwill and impairment
  • Trustees’ review of structure and effectiveness
  • Conceptual framework: measurement
  • IFRS 9 Financial Instruments: Education session on new impairment requirements
  • Disclosure initiative project: materiality practice statement

The next CMAC meeting will take place on 25 February 2016.

The full meeting summary is available on the IASB's website.

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FASB to issue final standard on recognition and measurement of financial instruments in early January

22 Dec 2015

The US Financial Accounting Standards Board (FASB) has announced that it plans to issue its final standard on the recognition and measurement of financial instruments during the first week of January 2016.

The FASB finished redeliberations related to its upcoming standard in November 2015 and directed the staff to proceed with drafting a final Accounting Standards Update for a vote by written ballot. Please click for the press release on the FASB website.

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