This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.


Summary of the CMAC February 2015 meeting

09 Apr 2015

The IASB has released a summary of the Capital Markets Advisory Committee (CMAC) meeting which was held in London on 27 February 2015.

The topics discussed at the meeting included:

  • EFRAG discussion paper on separate financial statements.
    In September 2014, a European discussion paper was published that considered how separate financial statements are used in Europe for economic decision-making and analysed the technical financial reporting issues that arise under IFRS when preparing such financial statements. CMAC members discussed the paper and considered that it was useful to have separate and consolidated financial statements prepared under the same basis (IFRS).
  • Financial reporting in hyperinflationary economies (IAS 29).
    The IASB has been asked to consider a request to change the definition of hyperinflation so that 8 per cent per annum over a three year period (ie cumulatively 26 per cent) would indicate hyperinflation. CMAC members were of the view that the IASB should not lower the indicative threshold.
  • Income taxes.
    The staff asked the CMAC members what tax information is used for analysis today and how this information is incorporated into valuation models and whether today’s accounting for income tax provides the information needed or whether the corresponding standard should be improved. CMAC members stated that investors use tax information, to help them to project future tax cash flow but that investors are looking for more information about effective tax rates and differences in taxation that relate to jurisdictional factors.
  • Disclosure Initiative.
    The IASB staff provided an overview and update on the activities that collectively comprise the Disclosure Initiative. Feedback from CMAC members was sought on the overall initiative and in particular on the Principles of Disclosure project. Most CMAC members agreed with the topics addressed in the Principles of Disclosure project and stressed that the concept of materiality was of particular interest to investors. As part of the discussion, CMAC members also considered the results of the the OIC survey for investors launched in December 2014.

The next CMAC meeting will take place on 11 and 12 June 2015.

The full meeting summary is available on the IASB website.

AAOIFI amends its standard on consolidation

09 Apr 2015

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has amended its existing accounting standard on consolidation – FAS 23 'Consolidation'.

The amendments to FAS 23 clarify, that control over an entity that triggers consolidation does not only exist if the Islamic financial institution preparing consolidated financial statements holds 50 per cent or more of the voting rights in the entity or if the Islamic financial institution has obtained control through agreement with the entity's other shareholders or with the entity itself. Rather, the amendments clarify that, in addition to the existing stipulations in the FAS 23, control may also exist through rights arising from other contractual arrangements, voting rights of the Islamic financial institutions that give de facto power over an entity, potential voting rights, or a combination of these factors. FAS 23 will thus be closer aligned with IFRS 10 Consolidated Financial Statements.

The amendment is effective for annual reporting periods ending on or after 31 December 2015. The full text of the amendment will be included in the next publication of AAOIFI standards scheduled for early 2015.

Please click for the press release on the AAOIFI website offering more details on the amendments to FAS 23.

US FASB aligns with IFRSs on presentation of debt issuance costs

07 Apr 2015

The US Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, as part of its simplification initiative. The ASU changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortisation of the costs is reported as interest expense.

The ASU specifies that “issue costs shall be reported in the balance sheet as a direct deduction from the face amount of the note” and that “[a]mortization of debt issue costs shall also be reported as interest expense.” According to the ASU’s Basis for Conclusions, debt issuance costs incurred before the associated funding is received (i.e., the debt liability) should be reported on the balance sheet as deferred charges until that debt liability amount is recorded.

For public business entities, the guidance in the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015. For entities other than public business entities, the guidance is effective for fiscal years beginning after 15 December 2015, and interim periods beginning after 15 December 2016. Early adoption is allowed for all entities for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e. the balance sheet for each period is adjusted).

Requiring presentation of debt issuance costs as a direct reduction of the related debt liability (rather than as an asset) is consistent with the presentation of debt discounts under US GAAP. In addition, it converges the guidance in US GAAP with that in IFRSs, under which transaction costs that are directly attributable to the issuance of the liability are treated as an adjustment to the initial carrying amount of the financial liability.

For more information, see Deloitte's related Heads Up newsletter, as well as the ASU on the FASB’s website.

Agenda published for the April 2015 IFRS Foundation Trustees meeting

07 Apr 2015

The agenda for the public session of the upcoming meeting of the IFRS Foundation Trustees, which will be held in Toronto, Canada on 14-16 April 2015, is now available. The Trustees' Due Process Oversight Committee will also meet during this time.

The agendas for the two public sessions of the meeting are summarised below:

Tuesday, 14 April 2015

Due Process Oversight Committee meeting (13:00–14:45 EDT (local time); 18:00–19:45 BST)

  • Introduction
  • Update on technical activities
  • Leases: due process ‘lifecycle’ review
  • Post-Implementation Review of IFRS 3 Business Combinations: draft report and feedback statement
  • Education materials: update
  • Consultative groups and DPOC engagement update
  • Correspondence update
  • Summary

Thursday, 16 April 2015

IFRS Foundation Trustees meeting (12:15–1:15 EDT (local time); 17:15–18:15 BST)

  • Report of the Chair of the IFRS Foundation Trustees
  • Report of the IASB Chair
  • Report of the Due Process Oversight Committee

Agenda papers for the meeting are available on the IASB's website (DPOC meeting papers are included as agenda paper 3).

The Trustees meeting will also include various other events, including a webinar, a speech by IASB Chairman Hans Hoogervorst and a panel discussion. More information on the planned activities are available on the website of the Canadian Accounting Standards Board (see decision summary of the March 2015 meeting under "IFRS Foundation Trustees".)

South African study into how integrated reporting fosters integrated thinking and better decision-making

07 Apr 2015

The South African Institute of Chartered Accountants (SAICA) has published the results of a survey that show that among organisations that produce high-quality integrated reports there is a strong awareness of the concept of integrated thinking and how it benefits the organisation. However, the survey also shows that many aspects of integrated thinking are not yet fully understood.

Under the listing rules of the Johannesburg Stock Exchange (JSA), South African companies listed on the exchange have for a number of years been required to produce, on a 'comply or explain' basis, an integrated report following the King Report on Governance for South Africa and the King Code of Governance Principles ('King III') developed by the Integrated Reporting Committee (IRC) of South Africa. In March 2014, the IRC also endorsed the International Integrated Reporting Framework, issued in December 2013 by the International Integrated Reporting Council (IIRC), as guidance on good practice on how to prepare an integrated report. The purpose of the survey now published by SAICA was to distil a perspective on the current state of integrated thinking practice in South Africa. At the same time it offers insights into how integrated thinking gains traction in a jurisdiction that has been practising integrated reporting for several years.

The survey shows that:

  • more than 70% of respondents believe that integrated reporting has been a driver of integrated thinking;
  • more than 70% are convinced that integrated thinking has improved decision-making at the management as well as at the board level;
  • more than 65% state that integrated thinking has helped organisations to develop a more cohesive approach to reporting;
  • more than 70% see that integrated thinking has increased the quality of organisations' dialogue with providers of financial capital and other stakeholders; and
  • more than 70% expect that organisations will derive further benefits in the short, medium and long term from integrated thinking.

However, the survey results also show that to date few organisations seem to be using the capitals model outlined in the IIRC Framework to identify and manage their capitals and do not use special tools to measure or manage the impact that capitals have on the business, or on each other, or to enhance integrated thinking, even though there does seem to be an awareness of the six capitals and that these contribute to the value creation process. The authors conclude:

This project has highlighted that many aspects of integrated thinking are not yet understood. Much research and development is needed to guide organisations on the road they must travel to integrated thinking and its consequent reporting. Looking to the future, we believe that organisations will increasingly recognise the significant benefits of integrated thinking to enhance their competitiveness and support their sustainability from all perspectives.

Please click to access the full report on the SAICA website.

EFRAG appoints three new TEG members

02 Apr 2015

The Board of the European Financial Reporting Advisory Group (EFRAG) has announced the appointment of three new members of its Technical Experts Group (TEG). The appointments are a consequence of EFRAG's new governance structure and one current TEG member stepping down from her role.

As of 1 April 2014, under its new structure, the EFRAG TEG consists of a maximum of 16 members of which at least four members are nominated by the standard-setters of France, Germany, Italy and the UK. Its new role is to provide technical advice to the EFRAG Board who will be responsible for all EFRAG positions.

The two newly-appointed members are Heinz Hense from ThyssenKrupp (Germany), and Ambrogio Virgilio from EY (Italy). As of 1 June 2015, Andrew Spooner from Deloitte (United Kingdom) will replace current TEG member Joanna Frykowska, who will be stepping down from her role.

Please click for the press release on the EFRAG website.

Agenda for the first face-to-face meeting of the ITG

02 Apr 2015

The agenda has been released for the upcoming meeting of the Transition Resource Group for Impairment of Financial Instruments (ITG), which is being held at the offices of the IASB on 22 April 2015.

The ITG was created to keep the IASB informed on issues occurring during implementation of the new impairment requirements in IFRS 9 Financial Instruments, to assist in determining what action may be needed to resolve diversity in practice and to provide a public forum for stakeholders to learn about the new impairment requirements from others involved with implementation. The first face-to-face meeting of the group was originally planned for the last quarter of 2014 but was replaced by a conference call to discuss operating procedures and the status of implementation as not enough substantive technical implementation issues that meet the submission criteria had been received by then.

The agenda for the meeting is as follows:

Wednesday, 22 April 2015, 09.30-15.30

  • Introductory remarks
  • The maximum period to consider when measuring expected credit losses
  • Forecasts of future economic conditions
  • Loan commitments – Scope
  • Revolving credit facilities
  • Assessment of significant increase in credit risk for guaranteed debt instruments
  • Measurement of expected credit losses for an issued financial guarantee contract
  • Expected credit losses - measurement date
  • Measurement of expected credit losses in respect of a modified financial asset

Agenda papers for this meeting will be made available on the IASB's website closer to the meeting.

CDSB and WBCSD to develop mapping tool for sustainability reporting

02 Apr 2015

The Climate Disclosure Standards Board (CDSB) and the World Business Council for Sustainable Development (WBCSD) are jointly developing a web-based tool and database to help companies understand and navigate the corporate sustainability reporting landscape.

As the information companies are required to disclose in their annual, sustainability or integrated reports varies and the landscape of reporting frameworks, regulation, policies, standards and guidance is diverse and complex, WBCSD and CDSB have launched a three year "Reporting Landscape Mapping" project. The project aims to develop a web-based tool and database that will help business navigate the corporate sustainability reporting landscape and assess which rules, methods or practices are relevant and applicable to them. WBCSD and CDSB hope that this will enhance and consolidate the disclosure of sustainability information in corporate reporting and encourage the convergence of reporting. The first pilot version of the database is planned for late autumn 2015.

Please click for more information on the CDSB website. WBCSD and CDSB are also looking for companies that would like to contribute to the development process and participate in the pilot programme.

TRG discusses implementation of new revenue standard

01 Apr 2015

At its 30 March 2015 meeting, the joint revenue transition resource group (TRG) and IASB and FASB board members discussed potential issues related to implementing the boards’ new revenue standard.

Topics discussed at the meeting included:

  • Allocation of the transaction price for discounts and variable consideration
  • Material rights
  • Consideration payable to a customer
  • Partially satisfying performance obligations before identifying the contract
  • Warranties
  • Significant financing components
  • Whether contributions are within the scope of the new revenue standard

For more information, see Deloitte’s TRG Snapshot.

At a separate FASB meeting on Wednesday, 1 April 2015, the FASB tentatively decided to defer the new revenue standard for one year. It is currently unclear whether the IASB will defer the effective date of IFRS 15; the IASB plans to discuss this issue later in April. For more information on the FASB's deferral, see Deloitte's Heads Up newsletter.

US FASB tentatively decides to defer the new revenue standard

01 Apr 2015

At its meeting today, the US Financial Accounting Standards Board (FASB) tentatively decided to defer for one year the effective date of the new revenue standard (ASU 2014-09 'Revenue From Contracts With Customers') for public and nonpublic entities reporting under US GAAP.

The Board also tentatively decided to permit entities to early adopt the standard. The tentative decisions will be exposed in an upcoming proposed Accounting Standards Update (ASU) with a 30-day comment period.

It is currently unclear whether the IASB will defer the effective date of IFRS 15 Revenue from Contracts with Customers; the IASB plans to discuss this issue later in April.

For more information, see Deloitte (United States) related Heads Up newsletter and the tentative board decisions on the FASB's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.