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Part I - IFRS

IASB finalizes amendments to IAS 1 to clarify the classification of liabilities

Jan 23, 2020

On January 23, 2020, the International Accounting Standards Board (IASB) issued "Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)" providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.

 

Background

The issue was originally addressed as part of the annual improvements project 2010 -2012 cycle. Exposure Draft ED/2012/1 Annual Improvements to IFRSs (2010—2012 Cycle), published in May 2012, proposed amendments to IAS 1.73 to clarify that a liability is classified as non-current if an entity expects, and has the discretion, to refinance or roll over an obligation for at least twelve months after the reporting period under an existing loan facility with the same lender, on the same or similar terms. During 2013, however, the IASB decided not to finalise the amendment, but instead pursue a narrow-scope project to refine the existing guidance in IAS 1 on when liabilities should be classified as current.

In February 2015, the Board published its proposals in the Exposure Draft  ED/2015/1 Classification of Liabilities (Proposed amendments to IAS 1). The Board discussed feedback on the ED from December 2015 to September 2019, pausing the project between 2016 and 2018 while it finalised revisions to the definition of a liability in the Conceptual Framework. As a result of these discussions, the Board made no fundamental changes to the proposed amendments but decided to clarify some aspects of them.

 

Amendments

The amendments in Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) affect only the presentation of liabilities in the statement of financial position — not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They:

  • clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the "right" to defer settlement by at least twelve months and make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability;
  • clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and
  • make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

 

 

Effective date and transition

The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and are to be applied retrospectively. Earlier application is permitted.

 

Additional information

Review the press release on the IASB's website.

 

AcSB Exposure Draft – General Presentation and Disclosures

Jan 15, 2020

On January 15, 2020, the Accounting Standards Board (AcSB) released an exposure draft that corresponds to the International Accounting Standards Board's (IASB) exposure draft of a new standard "General Presentation and Disclosures" that is intended to replace IAS 1, "Presentation of Financial Statements". Comments are requested by June 30, 2020.

The AcSB would like input from Canadian respondents on the following additional question regarding the proposed amendments:

  • The IASB has developed the proposed amendments in accordance with its due process for application around the world. Assuming the Exposure Draft proposals are finalized and approved by the IASB in accordance with its due process, do you think that the proposals are appropriate for application in Canada? If not, please specify which aspects of the proposals, and what circumstances, make the accounting requirements proposed in the Exposure Draft inappropriate.

Review the press release and exposure draft on the AcSB's website.

Summary of the December 2019 MCCG meeting

Jan 13, 2020

On January 13, 2020, the International Accounting Standards Board (the Board) published a summary of the Management Commentary Consultative Group (MCCG) meeting held on December 13, 2019.

The meeting focused on topics for further input, an overview of the staff’s current proposals, and supporting the adoption of the Practice Statement.

The topics for further input were:

  • information on intangibles and ESG matters in management commentary;
  • the meaning of ‘management’s view’;
  • the entity’s purpose; and
  • guidance on narrative coherence.

Review the press release and summary on the Board's website.

AcSB and ASBJ hold joint meeting

Jan 13, 2020

On January 13, 2020, the Accounting Standards Board (AcSB) and the Accounting Standards Board of Japan (ASBJ) held a joint meeting in Toronto. The meeting was the first bilateral meeting between the two standard-setters.

At the meeting, the AcSB and the ASBJ both introduced their respective financial reporting frameworks and activities, and exchanged views on the opportunities for cooperation. They also discussed specific technical topics in which both Boards have interest, including insurance, revenue recognition and leases. The two standard-setters plan to continue to exchange views.

Review the press release on the ASBJ's website.

ICAS report on fair value measurement of financial instruments

Jan 13, 2020

In 2019, the Institute of Chartered Accountants of Scotland (ICAS) released a report examining the preparation and evaluation of fair value measurements for financial instruments reported in the financial statements.

ICAS joined forces with the International Association of Accounting Education and Research (IAAER) and the International Audit and Assurance Standard Board (IAASB) to commission qualitative research on the valuation of financial instruments. Previous research had been done from the perspective of auditors, but this research focuses on the perspective of the valuation specialist.

While the report notes no distinct differences across geographical regions, it analyses pressure points and potential conflicts in the four phases of the production of fair value measurements reported in financial statements: 1) project acquisition and planning; 2) scoping, valuation approach, and methodology; 3) estimate preparation and relationship management; and 4) negotiations and final estimate reporting.

The report does include some policy recommendations for regulators, standard-setters, and other stakeholders:

  • Auditors and regulators should consider the relative advantages and disadvantages of adopting the independent estimate approach as best practice when evaluating clients’ fair value measurements;
  • Standard-setters should consider strengthening auditor awareness of the effects of budget and timeline pressures, and scope constraints, and encourage a more collaborative team-based approach between auditors and specialists;
  • Regulators should consider incorporating an evaluation of management’s competence related to fair value measurements as a component of the auditors’ risk assessment process; and
  • Standard-setters should consider enhancing corporate governance by promoting understanding of the subjectivity inherent in fair value measurements among the board and audit committees.

Review the full report on the ICAS' website.

EFRAG TEG appointments and reappointments

Jan 07, 2020

On January 7, 2020, the Board of the European Financial Reporting Advisory Group (EFRAG) announced the appointment of four new members of — and six reappointments to — its Technical Experts Group (TEG).

The new EFRAG TEG members are Jens Berger (Leader of Deloitte Germany's IFRS Centre of Excellence), Erlend Kvaal (academic, Norway), David Procházka (at large, Czech Republic) and Christoph Schauerte (industry, Germany). The appointments of Mr. Berger, Mr. Kvall and Mr. Schauerte are effective January 1, 2020, while Mr. Procházka will begin his term on April 1, 2020.

EFRAG TEG Vice-Chair Nicklas Grip has been reappointed, along with Ana Rosa Cortez, Geert Ewalts, Emmanuelle Guyomard, Ambrogio Virgilio and Jed Wrigley. Their reappointments are effective from April 1, 2020.

Review the press release on the EFRAG's website.

 

IASB publishes overview of consultation documents to be expected in 2020

Jan 07, 2020

On January 7, 2020, the International Accounting Standards Board (the Board) released a list of consultation documents that it plans to publish in 2020, including a discussion paper on goodwill and impairment, an exposure draft in its management commentary (wider corporate reporting) project, and a request for information regarding the 2020 Agenda consultation.

The full list of consultations to be expected and the currently expected timing is given below:

Project Type of consultation document When to be expected?
Goodwill and impairment Discussion paper Q1 2020
Comprehensive review of the IFRS for SMEs Request for information Q1 2020
Business combinations under common control Discussion paper Q2 2020
IBOR reform and its effects on financial reporting — Phase 2 Exposure draft Q2 2020
Rate-regulated activities Exposure draft Q2 2020
Post-implementation review of IFRS 10, IFRS 11, and IFRS 12 Request for information Q2 2020
Disclosure initiative — Targeted standards-level review of disclosures Exposure draft H2 2020
Management commentary (wider corporate reporting) Exposure draft H2 2020
2020 Agenda consultation Request for information H2 2020

Review the press release on the Board's website.

Year in review — 2019

Jan 03, 2020

2019 was another successful year for the Centre for Financial Reporting. 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.

Overall, our most popular pages remain our accounting standards summaries and project summaries, and we continued to witness strong demand for our news and publications.

Our 10 most popular stories of 2019
    1. IASB publishes proposed amendments to IFRS 17 (June)
    2. IASB publishes proposed amendments to IAS 12 (July)
    3. IASB finalizes phase 1 of its IBOR reform project (September)
    4. IASB proposes amendments to IAS 1 and the Materiality Practice Statement (August)
    5. IASB publishes proposals for amendments under its annual improvements project (cycle 2018-2020) (May)
    6. IASB discusses redeliberation plan for proposed IFRS 17 amendments (November)
    7. AcSB releases the Basis for Conclusions for revenue, agriculture, investments and income tax standards (May, November and December)
    8. PSAB releases Exposure Drafts on purchased intangibles and public private partnerships (November)
    9. AASB releases the Basis for Conclusions revising the requirements to communicate key audit matters in accordance with CAS 700 (December)
    10. Canadian Securities Regulators issue guidance on climate change-related disclosure (August)

 

We wish you a happy and safe New Year. We look forward to bringing you the latest financial reporting news in 2020.

Statement on role of audit committees in financial reporting and key reminders regarding oversight responsibilities

Dec 30, 2019

On December 30, 2019, the Securities and Exchange Commission (SEC) released a public statement providing observations and reminders on a number of potential areas of focus for audit committees.

It is their intention that these observations and reminders will assist audit committees carrying out their year-end work, including promoting efficient and constructive dialogue among audit committees, management and independent auditors in these and other areas.

Review the public statement on the SEC's website.

SEC proposes to codify certain consultations and modernize auditor independence rules

Dec 30, 2019

On December 30, 2019, the Securities and Exchange Commission (SEC) announced that it is proposing amendments to codify certain staff consultations and modernize certain aspects of its auditor independence framework.

The proposed amendments would update select aspects of the nearly two-decade-old auditor independence rule set to more effectively structure the independence rules and analysis so that relationships and services that would not pose threats to an auditor’s objectivity and impartiality do not trigger non-substantive rule breaches or potentially time consuming audit committee review of non-substantive matters.

Review the press release and proposed amendments on the SEC's website.

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