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Two papers regarding measurement aspects in the Conceptual Framework

05 Mar 2015

For the upcoming meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 26-27 March 2015, the Accounting Standards Board of Japan (ASBJ) has submitted 'Identification, Description and Classification of Measurement Bases' and 'Role of "Nature of an Entity’s Business Activities" in Accounting Standard-Setting'.

In the first paper, the ASBJ provides its view on the IASB's tentative decisions regarding identification, description and categorisation of measurement bases. The ASBJ believes that the IASB's tentative decision to have a binary classification (classifying measurement bases into historical cost and current value) is insufficient. Therefore, the ASBJ suggests an alternative approach that would classify measurement bases on the basis of (a) whether inputs for measurements need to be updated (the ASBJ envisions three categories: fully-updated inputs, partially-updated inputs, and locked-in inputs) and (b) whether market participants assumptions or entity-specific assumptions need to be adopted when measuring an asset or a liability.

In the second paper, the ASBJ underlines its view that the nature of an entity's business activities has significant effect on various aspects of accounting standard-setting and that there should be an overarching description in the Conceptual Framework that should be applied consistently throughout the standard-setting process. The ASBJ thus disagrees with the IASB's tentative decision that the forthcoming Exposure Draft of possibles changes to the Conceptual Framework should not provide a single over-arching description of how the nature of an entity's business activities would affect standard-setting. In the paper, the ASBJ identifies questions that need to be ansered in this context and suggests principles for classifying and describing the nature of an entity's business activity.

Both papers can be accessed through the press release on the ASBJ website.

Two new GRI publications

05 Mar 2015

The Global Reporting Initiative (GRI) has published 'Linking GRI and CDP - How are GRI's G4 Guidelines and CDP's 2015 Climate change questions aligned?' and 'Defining materiality: What matters to reporters and investors'.

The first document is a linkage document similar to the document on linking the G4 Guidelines and the new EU Directive on disclosure of non-financial and diversity information (published by GRI in February 2015) and the table connecting corporate non-financial reporting approaches (published by the CDSB in February 2015). The guidance reveals how GRI's G4 Guidelines and CDP's 2015 climate change questions are aligned so that duplication of disclosure efforts can be avoided. This harmonisation will help companies to streamline their disclosure efforts and improve the consistency and comparability of environmental data. Please click to download Linking GRI and CDP from the GRI website.

The second document provides the results of research into materiality from the reporter's perspective, as expounded in GRI reports, and compares this with the investor perspective of materiality. The research reveals an overall high degree of overlap between the topics considered material by reporting organisations, and those considered material by investors. The research also underlines the value that an analysis of the most material issues provides for both companies and investors. Please click to download Defining materiality from the GRI website.

UN Guiding Principles Reporting Framework

04 Mar 2015

Supported by the United Nations Working Group on Business and Human Rights, the first comprehensive guidance for companies to report on human rights issues in line with the United Nations Guiding Principles on Business and Human Rights (UNGPs) has been launched. The framework will help companies wanting to improve their reporting on human rights and provides guidance on identifying human rights content for inclusion in an integrated report.

The framework provides a concise set of questions and offers companies clear and straightforward guidance on how to answer these questions with relevant and meaningful information about their human rights policies, processes and performance. It is also intended as an incentive to improve these policies and processes and the performance over time.

The framework is the first of two guidance frameworks around the UNGPs. The second  - expected to be published in early 2016 - will be an assurance framework. It will provide guidance for assurance providers on how to appropriately assess and assure the information reported by companies in line with the UN Guiding Principles Reporting Framework.

Please click to access the framework on the newly created UNGP reporting website.

'IFRS and Global Standards: A Canadian Perspective'

04 Mar 2015

On 13 April 2015, CPA Canada offers a webinar to discuss the work of the IASB to establish International Financial Reporting Standards (IFRS) as the global standard for financial information, as well as the role that Canada plays in influencing the development of international standards. The webinar will be hosted by the Chair of the Accounting Standards Board, Linda Mezon; her guests will be International Accounting Standards Board (IASB) Chair Hans Hoogervorst and Board member, Stephen Cooper.

Application of IFRSs has been mandatory in Canada since 2011 although there were exceptions for investment entities and rate regulated entities. Canada has since been an active and important voice in the development of IFRSs. The Canadian standard-setter AcSB is also an ASAF member.

The topics to be discussed during the webinar are:

  • Complexity in accounting standards
  • Disclosure overload
  • Global effective dates of new standards
  • Key implementation concerns for revenue and credit impairment
  • Latest developments on leases or insurance and other projects

Registration for the webinar is free. Participants are asked to submit questions on the topics above (or other topics) when they register. Please click for registration and more information on the webinar.

Summary of the ITCG February 2015 meeting

03 Mar 2015

The IASB has issued its meeting notes on the IFRS Taxonomy Consultative Group's (ITCG) meeting held on 11 February 2015.

Topics discussed were:

  • Exposure Draft Disclosure Initiative (Proposed Amendments to IAS 7)
    ITCG members were pre­sen­ted with an update on the exposure draft, which includes the proposed IFRS Taxonomy Update as accompanying material.
  • Approaches for a potential 2015/2016 Common Practice project
    The staff sum­marised its research on potential approaches to determine the scope of a 2015/2016 Common Practice project and presented a combined approach consisting of “an empirical review focussing on the disclosures of specific activities” and a review of the disclosures in Standards with upcoming IASB post-implementation reviews during 2015/2016. In general, the ITCG agreed with the staff’s combined approach.
  • Terms and conditions of using the IFRS Taxonomy
    A description of the changes to the IFRS Taxonomy’s terms and conditions was presented to the ITCG. These changes are expected to be implemented around the same time as the issuance of the 2015 IFRS Taxonomy.

For more information, see the meeting notes on the IASB’s website.

Report recommends enhanced governance arrangements for IPSAS

03 Mar 2015

The IPSASB Governance Review Group has published it's final recommendations on the future governance of the IPSASB. The Review Group concludes that the International Public Sector Accounting Standards Board (IPSASB) should continue to operate under the auspices of the International Federation of Accountants (IFAC). At the same time, however, the group recommends that a new governance body, the Public Interest Committee, should be established to ensure that the public interest is served by the standard-setting activities of the IPSASB.

The final report is the result of a public consultation that was conducted from 17 January to 30 April 2014 and discussions held at the Review Group's meetings on 31 May 2013 and 22 September 2014. Among the questions asked in the consultation paper was whether the needed strengthening of the monitoring and oversight of the IPSASB would best be served by moving it under the auspices of the IFRS Foundation, whether it should be established as a standard-setter in its own right or whether the IPSASB could continue to work under the auspices of the IFAC if the governance arrangements were enhanced.

The Review Group's final report contains the following recommendations:

  • The IPSASB should continue to operate under the auspices of the IFAC.
  • A new governance body (Public Interest Committee) should be established to ensure that the public interest is served by the standard-setting activities of the IPSASB.
  • The Committee should be independent from IFAC and distinct from the existing governance bodies overseeing the IFAC's private sector standard-setting activities.
  • The Committee would review and advise the IFAC and the IPSASB on the terms of reference, the nomination and appointment of members, and the procedures for formulating the strategy and work plan and development of IPSAS of the IPSASB.
  • The Committee should not have a direct role in the development, adoption, and implementation of accounting standards.
  • The Committee should conduct a first review of the terms of reference, nomination procedures, and standard-setting arrangements no later than the first semester of 2015.
  • The Committee should meet at least annually thereafter to review progress against the recommendations following from their review.
  • The initial membership of the Committee should include individuals with expertise in public sector financial reporting and an interest in promoting high-quality and internationally comparable financial information. Members should not be compensated and serve for a limited period (not longer than three years).
  • The functioning of the Committee should be defined in public Terms of Reference.
  • The Committee will receive reports from the IFAC and the IPSASB regarding procedures and progress against goals.
  • The IFAC should establish a separate Consultative Advisory Group (CAG) for the IPSASB.
  • A further public consultation on the improvements to the IPSASB's governance arrangements should be undertaken no later than 2020.

Please click for access to the full report on the IFAC website. It also contains an appendix with suggested Terms of Reference for the Public Interest Committee.

Agenda for the upcoming meeting of the IASB's Rate-regulated Activities Consultative Group

27 Feb 2015

The IASB's Rate-regulated Activities Consultative Group will meet in London on Wednesday, 4 March 2015. Main purpose of the meeting is to discuss an overview of the feedback received on the Discussion Paper on rate regulation, disclosure requirements, performance, types of regulatory deferral account balances, and the interaction with IFRIC 12.

The full agenda for the meeting is summarised below:

Wednesday, 4 March 2015 (10:15-16:00)

  • Overview of papers
  • Overview of feedback received
  • User information needs
  • What is performance?
  • What types of regulatory deferral account balances are there?
  • Service concession arrangements
  • Next steps and closing remarks

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

Agenda for the March 2015 Global Preparers Forum meeting

27 Feb 2015

Representatives of the International Accounting Standards Board (IASB) will meet with the Global Preparers Forum (GPF) in London on Thursday, 5 March 2015. The agenda for the meeting has been released, which includes updates from the IASB and IFRS Interpretations Committee, together with discussion on specific topics including the agenda consultation 2015, income tax accounting, business combinations under common control, a review of IAS 8, discount rates, share-based payments, and performance reporting.

The full agenda for the meeting is summarised below:

Thursday, 5 March 2015 (09:40-17:10)

  • IASB update
  • IFRS Interpretations Committee update:
    • IAS 2/IAS 38: Should interest be accreted on prepayments for long-term supply contracts?
    • IAS 16: Accounting for proceeds and costs of testing of PPE
    • IAS 12: Reflecting uncertainty in the recognition and measurement of income taxes
  • Agenda consultation 2015
  • Income tax accounting: The need for change?
  • Business combinations under common control
  • Review of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
  • Discount rates
  • Share-based payments
  • Performance reporting

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

Assessment of the FASB's Private Company Council

27 Feb 2015

The US Financial Accounting Foundation (FAF) has issued a request for comment asking stakeholders for their assessment of the Private Company Council's (PCC) effectiveness and accomplishments as well as it's future role in setting standards for private companies.

While the IASB issued the IFRS for SMEs in July 2009, a set of international accounting requirements developed specifically for small and medium-sized entities (SMEs) prepared on IFRS foundations but a stand-alone product separate from the full set of International Financial Reporting Standards (IFRSs), the FAF went down a different road: After a long consultative process, which also included the question whether the IFRS for SMEs might be an appropriate solution for granting US private companies relief from listed company requirements under US GAAP, the FAF announced in May 2012 that a new body would be established to determine whether exceptions or modifications to existing US GAAP are necessary to address the needs of users of private company financial statements.

The PCC has two responsibilities:

  • It determines whether alternatives to existing US GAAP are necessary for private companies.
  • It serves as an advisory body to the FASB for private company aspects of projects on the FASB's active technical agenda.

While at first there were calls for creating a separate standard-setting board for private companies overseen by the FAF (an approach that was not chosen because of the danger of establishing two separate sets of US accounting standards), the impression has been lately that the PCC, even though working under the FASB, has not only been successful in developing alternatives for private companies, it has also proved to be a catalyst for the FASB's simplification efforts aimed at all companies – public and private. The FAF Chairman states: "The PCC has made significant progress in addressing issues that are important to private companies and the wider financial reporting community."

Please click for access to the press release and the request for comment on the FASB website. Comments are requested by 11 May 2015.

IASB member writes about the use of IFRSs around the world

27 Feb 2015

IASB member Philippe Danjou has written an article for 'Finance & Gestion' analysing the use of IFRS around the world.

Based on the jurisdiction profiles the IFRS Foundation has compiled, the article describes developments in the adoption of IFRSs since the European Union adopted IFRSs in 2005. Mr Danjou writes about the many jurisdictions that have adopted IFRSs since then as well as about the jurisdictions that haven't  - among them China and the United States. He lists three lessons that are to be learned from this anlysis:

  • IFRSs now play a preeminent role throughout the world - the majority of jurisdictions have made a commitment to IFRSs and the jurisdictions that apply them represent more than half of the world's wealth.
  • The European Union continues to be a major user of IFRSs but it is no longer the dominant one.
  • IFRSs are applied by 52 per cent of the Fortune 500 companies; US GAAP is applied by 29 per cent of these companies.

Please click to access Mr Danjou's article (English translation) on the IASB website. It is also available in the original version (French).

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