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IASB publishes proposed amendments as a result of the second phase of its project on the IBOR reform

Apr 09, 2020

On April 9, 2020, the International Accounting Standards Board (IASB) published an exposure draft "Interest Rate Benchmark Reform — Phase 2 (Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)" that contains proposed amendments that would address issues that might affect financial reporting after the reform of an interest rate benchmark, including its replacement with alternative benchmark rates. Comments are requested by May 25, 2020.



Interbank offered rates (IBORs) are interest reference rates, such as LIBOR, EURIBOR and TIBOR, that represent the cost of obtaining unsecured funding, in a particular combination of currency and maturity and in a particular interbank term lending market. Recent market developments have brought into question the long-term viability of those benchmarks.

The IASB addresses the issues in a project split into two phases: Phase 1 dealt with pre-replacement issues (issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark). This part of the project was concluded on 26 September 2019 by publishing Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7).

Phase 2 of the project deals with replacement issues, therefore, the proposed amendments published today are intended to address issues that might affect financial reporting when an existing interest rate benchmark is actually replaced.


Suggested changes

The changes proposed in ED/2020/1 Interest Rate Benchmark Reform — Phase 2 (Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) relate to the modification of financial assets, financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure requirements applying IFRS 7 to accompany the Board’s proposals for classification and measurement and hedge accounting.

  • Modification of financial assets, financial liabilities and lease liabilities. The IASB proposes a practical expedient for modifications required by the reform (modifications required as a direct consequence of the IBOR reform and made on an economically equivalent basis). These modifications are accounted for by updating the effective interest rate. All other modifications are accounted for using the current IFRS requirements. A similar practical expedient is proposed for lessee accounting applying IFRS 16. For qualifying modifications, there would be no specific gain or loss associated with the replacement of the IBOR rate.
  • Specific hedge accounting requirements. Under the IASB's proposals, hedge accounting would not discontinued solely because of the IBOR reform. Hedging relationships (and related documentation) must be amended to reflect modifications to the hedged item, hedging instrument and hedged risk. Any valuation adjustments resulting from the amendments are recognized as part of ineffectiveness. Amended hedging relationship should meet all qualifying criteria to apply hedge accounting, including effectiveness requirements.
  • Disclosures. In order to allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is exposed to and how the entity manages those risks as well as the entity’s progress in transitioning from IBORs to alternative benchmark rates, and how the entity is managing this transition, the exposure draft proposes that an entity would disclose information about
    • how the transition from interest rate benchmarks to alternative benchmark rates is managed and progress made at the reporting date,
    • the carrying amount of financial assets and financial liabilities that continue to reference benchmarks subject to the reform, disaggregated by significant interest rate benchmark,
    • for each significant alternative benchmark rate to which the entity is exposed, an explanation of how the entity determined which modifications qualified for the practical expedient, including a description of significant judgements the entity made to determine qualifying modifications, and
    • to the extent that the IBOR reform has resulted in changes to an entity’s risk management strategy, a description of these changes and how is the entity managing those risks.

The IASB also proposes to amend IFRS 4 to require insurers that apply the temporary exemption from IFRS 9 to apply the amendments in accounting for modifications directly required by IBOR reform.

The IASB also proposes that the application of all proposed amendments should be mandatory. The IASB has also come to the conclusion that the nature of the proposed amendments is such that they can only be applied to modifications of financial instruments and changes to hedging relationships that satisfy the relevant criteria and, as such, no specific end of application requirements need to be specified.

Comments on the proposed changes are requested by May 25, 2020.


Effective date

The exposure draft proposes that the amendments would be effective for annual periods beginning on or after January 1, 2021 and would be applied retrospectively. Early application would be permitted.


Additional information


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IAASB releases conforming amendments that align international standards more closely with the revised IESBA Code

Apr 08, 2020

On April 8, 2020, the International Auditing and Assurance Standards Board (IAASB) released conforming amendments to the IAASB’s International Standards as a result of the recently restructured and revised International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code).

The conforming amendments aim to align the IAASB’s International Standards with the revisions to the IESBA Code, thus ensuring that they can continue to be applied together with the IESBA Code.

The conforming amendments to the IAASB’s International Standards become effective as of July 15, 2020.

Review the press release and final pronouncement on the IAASB's website.

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Spotlight on IAASB future projects and future priorities - a discussion with the IAASB Chair and Deputy Chair

Apr 07, 2020

On April 7, 2020, the International Auditing and Assurance Standards Board (IAASB) released a video of a recent outreach trip to Australia and New Zealand, where IAASB Chair, Tom Seidenstein and IAASB Deputy Chair, Fiona Campbell sat down with Amir Ghandar from CA ANZ to discuss the future of standard setting, embracing agile-standard setting and the board’s focus on keeping trust in its audit product.

This is the first in a series of four interview videos conducted by CA ANZ.

Watch the video on the IAASB's website.

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IESBA extends comment period on proposals to strengthen international independence standards

Apr 07, 2020

On April 7, 2020, the International Ethics Standards Board for Accountants (IESBA) announced that it is extending by one month the comment period on the Exposure Drafts (EDs): "Proposed Revisions to the Non-Assurance Services Provisions of the Code and Proposed Revisions to the Fee-related Provisions of the Code". The extension will provide stakeholders who are experiencing disruptions caused by the coronavirus (COVID-19) pandemic additional time to comment.

The new comment deadline is June 4, 2020. Stakeholders who are able to submit their feedback by May 4, 2020, the original comment deadline, are encouraged to do so. 

The EDs were released on January 21, 2020 and include proposals aimed at strengthening the non-assurance services (NAS) and fee-related independence provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards).

Review the press release on the IESBA's website.


IPSASB publishes COVID-19 guidance

Apr 06, 2020

On April 6, 2020, the International Public Sector Accounting Standards Board (IPSASB) published "COVID-19: Relevant IPSASB Accounting Guidance". The questions and answers publication was issued by the staff of the IPSASB to provide insight into the financial reporting issues associated with COVID-19 government responses.

The objective of the document is to indicate the accounting implications of COVID-19-related government initiatives, including how IPSAS and other IPSASB guidance deal with transactions and events which arise because of the pandemic. The publication does not constitute an authoritative pronouncement of the IPSASB, nor does it intend to amend, or override the requirements of existing IPSAS or provide further implementation guidance.

Review the guide on the IPSASB's website.


IOSCO statement on the application of accounting standards during the COVID-19 outbreak

Apr 03, 2020

On April 3, 2020, the International Organization of Securities Commissions (IOSCO) released a statement on consistent application and enforcement of high-quality accounting standards which are of critical importance to the proper functioning of the capital markets — especially in times of uncertainty.

The statement notes that the responsibility for developing and maintaining high quality standards resides with the IASB and welcomes the IASB's recent educational material that addresses the application of accounting for expected credit losses in accordance with IFRS 9, Financial Instruments during the period of economic uncertainty arising from the COVID-19 outbreak. IOSCO also notes that the related financial instruments principles-based disclosure requirements in IFRSs (i.e. IFRS 7, IAS 1) should result in disclosure that considers the impact of the important emerging issues.

Review the statement on the IOSCO's website.

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IAASB enhances ISRS 4400 to respond to evolving needs of stakeholders

Apr 03, 2020

On April 3, 2020, the International Auditing and Assurance Standards Board (IAASB) released International Standard on Related Services (ISRS) 4400 (Revised), its revised standard for performing agreed-upon procedures engagements.

In an agreed-upon procedures engagement, the practitioner performs the procedures that have been agreed upon by the practitioner and the engaging party, and the practitioner communicates those procedures and the related findings in the agreed-upon procedures report. A wide range of stakeholders use agreed-upon procedures reports for a variety of reasons; for example, regulators, funding bodies, creditors and others ask for agreed-upon procedures reports to support or complement information, such as audited financial statements or loan or grant applications.

In addition to having been redrafted using the clarity drafting conventions to be consistent with other IAASB International Standards, some of the significant enhancements to ISRS 4400 (Revised), Agreed-Upon Procedures Engagements, include:

  • Responding to the needs of stakeholders – Broadening the scope of the standard to meet demand for agreed-upon procedures engagements and introducing requirements and application material to address evolving engagement circumstances, such as the use of a practitioner’s expert in an agreed-upon procedures engagement.
  • Providing transparency in the AUP report – Introducing requirements and application material to clarify whether or not the practitioner is required to comply with independence requirements and, if so, the determination and disclosure of the relevant independence requirements.
  • Enhancing consistency in the performance of AUP engagements – Clarifying how professional judgment is exercised in an agreed-upon procedures engagement and introducing requirements and application material on engagement acceptance and continuance conditions and documentation.

ISRS 4400 (Revised) will be effective for AUP engagements for which the terms of engagement are agreed on or after January 1, 2022.

Review the press release and revised standard on the IAASB's website.

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PCAOB staff provides reminders for audits nearing completion in light of COVID-19

Apr 02, 2020

On April 2, 2020, the Public Company Accounting Oversight Board (PCAOB) released a staff Spotlight document, "COVID-19: Reminders for Audits Nearing Completion", to provide important reminders to auditors of issuers and broker-dealers for audits nearing completion.

"The COVID-19 crisis is having a significant impact on investors, issuers, and auditors alike," said Chairman William D. Duhnke III. "This Spotlight is intended as a reminder that adherence to our standards takes on added importance as investors depend now, more than ever, on the integrity of financial statements."

Review the following on the PCAOB's website:

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AcSB endorses Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

Apr 02, 2020

On April 2, 2020, the Accounting Standards Board (AcSB) announced that the amendments, which clarify how to classify liabilities as current or non-current, are now in Part I of the CPA Canada Handbook – Accounting, and are effective for annual reporting periods beginning on or after January 1, 2022. Earlier application is permitted.

Review the press release on the AcSB's website.


Comment deadline extended AcSB Exposure Draft, Combinations – Initial Measurement and Related Disclosures

Apr 01, 2020

On April 1, 2020, in light of the evolving uncertainties created by the global COVID-19 crisis and its effects in Canada, the Accounting Standards Board (AcSB) announced that it has extended the deadline to submit a comment letter from April 14 to May 14, 2020.

This is an interim decision and will be discussed in more depth at the April 15, 2020 AcSB meeting.

Review the Exposure Draft on the ACSB's website.

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