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Summary of the October ASAF meeting now available

29 Oct 2015

The staff of the International Accounting Standards Board (IASB) have made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 1-2 October 2015.

The first two discussions also featured feedback from the World standard-setters meeting held earlier that week. The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • 2015 Agenda consultation (1-22). ASAF members discussed (a) the factors used to allocate resources between standards-level projects, research and maintenance and implementation, (b) the prioritisation of the research programme, (c) the level and mix of implementation support provided, (d) the pace of change and the level of detail given in IFRS, and (e) a proposal to extend the interval between agenda consultations to five years.
  • Conceptual Framework (23-54). ASAF members discussed (a) possible implications for IAS 37 Provisions, Contingent Liabilities and Contingent Assets of the proposals in the Conceptual Framework exposure draft, (b) the proposals on measurement in the ED, and (c) possible implications of the ED for the rate-regulated activities project.
  • Clarifications to IFRS 15 (55-58). The IASB staff provided an overview of the exposure draft of clarifications to IFRS 15 and asked the ASAF members (a) to comment on the high hurdle applied by the IASB when considering whether and how to amend IFRS 15 and (b) to provide their preliminary views on the questions in the ‘Invitation to comment’ section of the ED.
  • Measuring quoted investments in subsidiaries, joint ventures and associates at fair value -unit of account (59-82). ASAF members were asked to provide their views on the relevance of the proposed measurement model included in the exposure draft Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value published in September 2014.
  • Pollutant pricing mechanisms (83-96). ASAF members considered a possible model to account for a cap-and-trade type of emissions trading scheme that reflected the feedback received from ASAF members at the July 2015 meeting.
  • Equity method of accounting (97-104). The FASB briefly outlined its simplification project on the equity method of accounting, which includes eliminating the requirement for an entity to measure at fair value its share of the investee’s identifiable assets and liabilities. The IASB staff then sought the views of the ASAF’s members on the IASB staff’s preliminary proposals to amend the equity method of accounting.
  • IASB project update including insurance contracts (105-113). The IASB staff provided an overview of the recent IASB’s tentative discussions on the insurance contracts project, which focussed on (a) requirements for insurance contracts with participation features and (b) the different effective dates of IFRS 9 and the new insurance contract. The staff then presented an overview of the IASB’s current projects, a summary of the actions taken on the advice provided by the ASAF in previous meetings and the suggested agenda topics for the December 2015 and April 2016 ASAF meetings .

A full report of the meeting is available on the IASB's website.

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Second IASB work plan update for October with minimal change

29 Oct 2015

The IASB updated its work plan for the second time this month to reflect yesterday's issuance of its proposed Practice Statement on materiality.

The publication of ED/2015/8 IFRS Practice Statement - Application of Materiality to Financial Statements means that the project on materiality is now in public consultation phase, no longer in exposure draft drafting phase. All other entries remain as reported two days ago. The newly revised IASB work plan is available on the IASB's website.

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2016 IFRS Blue Book — Coming soon

29 Oct 2015

The IFRS Foundation has announced that the '2016 IFRS Consolidated without early application' will be published in December 2015. This volume (nicknamed the "Blue Book") will contain all official pronouncements that are mandatory on 1 January 2016. It does not include IFRSs with an effective date after 1 January 2016. The Blue Book differs from the traditional Bound Volume (the "Red Book"), which includes all pronouncements issued at the publication date, including those that do not become mandatory until a future date.

The Blue Book will sell for £72 plus shipping (academic, developing country, and volume discounts apply). You will find more information and ordering details here.

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We comment on the proposed clarifications to IFRS 15

28 Oct 2015

We have published our comment letter on the International Accounting Standards Board's (IASB) Exposure Draft ED/2015/6 'Clarifications to IFRS 15'.

In our comment letter, we welcome the Board’s initiative in addressing a number of issues that were likely to cause significant practical difficulties in the application of IFRS 15 and support the proposed amendments. Also, we provide general comments regarding (1) the value of convergence, (2) clarity and stability of the platform and timing of further amendments, (3) the importance of drafting and updating the Standard itself, and (4) the ongoing role of the Transition Resource Group.

Please click to access the full comment letter.

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IASB publishes proposed Practice Statement on materiality

28 Oct 2015

The International Accounting Standards Board (IASB) has published an Exposure Draft (ED) of a proposed IFRS Practice Statement (PS) 'Application of Materiality to Financial Statements'. The PS aims at explaining and illustrating the concept of materiality and at helping preparers of financial statements in applying the concept. Comments are requested by 26 February 2016.



The IASB initiated its disclosure initiative in December 2012 as part of its response to the Agenda Consultation 2011. In March 2014, a project on materiality was added to the disclosure initiative. The objective of the project is be to help preparers, auditors and regulators use judgement when applying the concept of materiality in order to make financial reports more meaningful. The final pronouncement the IASB is driving at is a Practice Statement, not a standard. Consequently, entities applying IFRSs are not required to comply with the Practice Statement, unless specifically required by their jurisdiction. Furthermore, non-compliance with the Practice Statement will not prevent an entity's financial statements from complying with IFRSs, if they otherwise do so.


Suggested guidance

The guidance proposed in ED/2015/8 IFRS Practice Statement - Application of Materiality to Financial Statements is intended to provide explanations and examples to help management apply the definition of materiality. The guidance covers three main areas: characteristics of materiality, presentation and disclosure in the financial statements, and Omissions and misstatements. It also contains a short section on applying materiality when applying recognition and measurement requirements.

Characteristics of materiality. The PS builds on the definition of materiality in the Exposure Draft ED/2015/3 Conceptual Framework for Financial Reporting that states: "Information is material if omitting it or misstating it could influence decisions that the primary users of general purpose financial reports make on the basis of financial information about a specific reporting entity." It states that materiality is pervasive to the preparation of general purpose financial statements and needs to be considered in the primary financial statements as a whole. The IASB also concedes that judgement needs to be applied to assess whether information could reasonably be expected to influence decisions that its primary users make. The PS also notes that the assessment of whether information is material needs to be on both an individual and a collective basis and also needs an overall assessment and does involve assessing qualitative and quantitative factors.

Presentation and disclosure in the financial statements. The PS notes that in preparing the financial statements, management should consider the objective of providing information that is useful to users in assessing the prospects for future net cash inflows to the entity and in assessing its stewardship of the entity's resources. This objective provides the context for materiality judgements and may lead to different materiality assessments in different parts of the financial statement. The IASB proposes three steps - to assess what information should be presented in the primary financial statements, to assess what information should be disclosed within the notes (including assessment of appropriate emphasis), and then to review the financial statements as a whole - to ensure that the financial statements are a comprehensive document with an appropriate overall mix and balance of information. The IASB also states that an entity shall not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions, although it concedes that "IFRS does not prohibit entities from disclosing immaterial information".

Omissions and misstatements. The PS notes that the materiality of identified errors or omissions needs to be assessed individually and on basis of the financial statements as a whole. Material misstatements or omissions that offset each other still are considered material misstatements of the financial statements as such. The PS also states that intentionally made misstatements shall always be considered material.

Recognition and measurement. The PS notes that materiality considerations also apply to decisions not to apply a requirement in an IFRS when recording a particular item on grounds of the effect of not applying it being considered immaterial. It stresses that some entities might choose practical expedients for this reason. However, the PS states that IFRS recognition and measurement requirements need to be applied if their effect is material and that financial statements do not comply with IFRSs if they contain either material errors or immaterial errors made intentionally to achieve a particular presentation of an entity’s financial position, financial performance or cash flow.


Initial application and transition

Given the proposed PS is not a mandatorily applicable IFRS, it does contain neither a proposed effective date nor transition guidance. The IASB also notes that the PS may undergo further changes even after being finalised depending on developments in the conceptual framework project and the project on principles of disclosure.


Additional information

Please click for:


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Agenda for November 2015 CMAC meeting

28 Oct 2015

Representatives from the International Accounting Standards Board (IASB) will meet with the Capital Markets Advisory Council (CMAC) in London on Friday, 6 November 2015. The agenda for meeting as well as the meeting papers have been released.

A summary of the agenda for the meeting is set out below:

Friday, 6 November 2015 (09:25-17:00)

  • Welcome
  • 2015 Agenda Consultation
  • Brief overview of work on goodwill and impairment
  • Trustees’ Review of Structure and Effectiveness
  • Conceptual Framework: Measurement
  • IFRS 9 Financial Instruments: Education session on new Impairment requirements
  • IFRS 15 Revenue from Contracts with Customers: Deferral of the effective date
  • Disclosure Initiative Project: Materiality Practice Statement
  • Follow up from CMAC/GPF joint meeting

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

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Studies on IFRS 9

27 Oct 2015

The Committee on Economic and Monetary Affairs (ECON) of the European Parliament has commissioned four studies on IFRS 9 'Financial Instruments' that have been made publicly available.

The four studies are (all links to the European Parliament website):

  • The Significance of IFRS 9 for Financial Stability and Supervisory Rules. The paper examines the interaction of the IFRS 9 expected credit loss model with supervisory rules and discusses potential implications for financial stability. It concludes that combined with improved transparency, IFRS 9 might enhance financial stability.
  • IFRS Endorsement Criteria in Relation to IFRS 9. The paper evaluates whether IFRS 9 meets the criteria 'true and fair view', 'qualitative aspects', and 'European public good'. It concludes that the standard cannot reasonably be rejected on grounds of these criteria.
  • Impairments of Greek Government Bonds under IAS 39 and IFRS 9: A Case Study. In a case study of a Greek government bond for the period 2009 to 2011 when Greece’s credit rating declined sharply, the study highlights the discretion that preparers have when estimating impairments. It concludes that IFRS 9 will lead to earlier impairments, however, these appear still delayed and low if compared to the fair value losses.
  • Expected-Loss-Based Accounting for the Impairment of Financial Instruments: The FASB and IASB IFRS 9 Approaches. The paper outlines the work of the FASB and the IASB on the development of expected-loss methods for measuring the impairment of financial instruments arising from credit losses, and describes and compares key features of the different approaches developed by the two standard setters. It also provides information indicative of the possible effect of differences between the two approaches and summarises arguments for and against the main elements of the approaches proposed by the two standard setters.
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IASB updates work plan

27 Oct 2015

The IASB recently updated its work plan. The Board changed the format in July 2015, so that a direct comparison with previous work plans is not easily possible, as the attribution to quarters has been abandoned.

On major projects, the decision on the project direction on conceptual framework has moved from "after six months" to "within six months."  The disclosure initiative – materiality practice statement project is expected to be publish “after six months.” For all other major pro­jects — as far as can be told from the IASB's new ap­proach — the next project steps may or may not have been pushed back by one month since the last work plan update.

Updates re­gard­ing the im­ple­men­ta­tion pro­jects now include the addition of the annual improvements 2015–2017 and remeasurement of previously held interests — obtaining control or joint control in a joint operation that constitutes a business projects. Next, disclosure initiative – amendments to IAS 7 is now in the draft IFRS stage and a final IFRS is expected within the “next three months.” Also, remeasurement at a plan amendment, curtailment or settlement / availability of a refund of a surplus from a defined benefit plan project is no longer in public consultation stage; instead the IASB will conduct analysis and decide on the direction of this project within the “next six months.” Lastly, two recently published draft IFRIC Interpretations (uncertainty over income tax treatment and foreign currency transactions and advance consideration) are now in public consultation; further direction on the project will occur “after six months.” For all other im­ple­men­ta­tion pro­jects, the next project steps may also have been pushed back by one month or not.

In addition, two research projects (discount rates and goodwill and impairment) in the assessment phase have been updated to reflect that discussions have begun.

The revised IASB work plan is avail­able on the IASB's Web site.

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ESMA announces enforcement priorities for 2015 financial statements

27 Oct 2015

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2015 financial statements will focus on.

ESMA considers the following key topics to be especially relevant for the examinations of listed companies' financial statements:

  • impact of financial markets conditions on financial statements;
  • statement of cash flows and related disclosures; and
  • fair value measurement and related disclosures.

ESMA notes that these topics were chosen based on the recurrence of issues in the application of certain IFRS requirements identified when reviewing financial statements. They are also posing particular challenges in the current economic environment where some reference interest rates and the market prices of a number of commodities have decreased significantly and continue to be highly volatile while some exchange rates have fluctuated significantly.

ESMA and European national enforcers will monitor and supervise the application of the IFRS requirements outlined in the priorities, with national authorities incorporating them into their reviews and taking corrective actions where appropriate. ESMA will collect data on how European listed entities have applied the Priorities and will publish its findings in early 2017.

Please click for the following documents on the ESMA website.

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ESMA issues public statement on disclosures

27 Oct 2015

The European Securities and Markets Authority (ESMA) has published a Public Statement aimed at improving the quality of disclosures in financial statements.

The ESMA public statement is a reaction to the perceived disclosure overload and the tendency to provide boilerplate disclosures. While ESMA commends initiatives taken up by standard-setters (not least by the IASB in its Disclosure Initiative) and even enforcers (for example in Danmark), ESMA states that relatively few issuers have taken action so far. Therefore, ESMA has developed five disclosure principles issuers should consider regarding the disclosures made in annual reports:

    1. Telling the entity’s own story by focussing on entity-specific disclosures and avoiding boilerplate language.
    2. Providing relevant information that is necessary to understand the issuer’s financial performance and position in the financial statements in an easily accessible way.
    3. Thinking about materiality and applying the IFRS materiality principle.
    4. Promoting readability of the financial statements by producing information that is written in as clear and concise a way as possible.
    5. Providing consistent information within annual reports.

Please click for addition information on the ESMA website:

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