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Part I - IFRS

FASB proposes amendments to classification of debt that would bring US GAAP and IFRSs closer together

Sep 12, 2019

On September 12, 2019, the US standard-setter FASB issued a revised version of its proposed Accounting Standards Update (ASU) "Simplifying the Classification of Debt in a Classified Balance Sheet (Current Versus Noncurrent)." Comments are requested by October 28, 2019.

The proposed amendments would make US GAAP more consistent with IFRSs, especially with IAS 1 Presentation of Financial Statements that includes guidance on the classification of liabilities. The exposure draft notes that FASB leveraged IAS 1 guidance when developing its proposals for the classification of debt. Furthermore, the FASB’s decision on applying the debt classification principle to post-balance-sheet refinancings of debt is consistent with the guidance in IAS 1. However, differences would still remain between US GAAP and IFRSs for classifying debt arrangements with covenant violations.

The IASB currently has a project on its agenda to amend IAS 1 that is specifically related to the classification of liabilities. Final amendments to IAS 1 are currently expected in the fourth quarter of 2019.

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

IASB publishes project update on goodwill and impairment related to business combinations

Sep 10, 2019

On September 10, 2019, the International Accounting Standards Board (the Board) published an article by IASB member Tom Scott on the status of the Board's goodwill and impairment project following its post-implementation review of IFRS 3, "Business Combinations".

Within its goodwill and impairment project, the Board is investigating how companies can provide users of financial statements with better information about mergers and acquisitions (business combinations) at a reasonable cost. This investigation includes the challenging question of how companies should account for goodwill after the business combination.

The six-page article discusses the Board's preliminary views that:

  • "we should enhance disclosure objectives and requirements to improve the information provided to users about an acquired business and its subsequent performance, even if that information must be on a combined basis where the acquired business has been integrated into an existing business;
  • it is not feasible to make the impairment test significantly more effective at recognizing impairment losses of goodwill;
  • reintroducing amortization of goodwill would not provide significantly better information to users;
  • we should reduce the cost and complexity of the impairment test by providing relief from the mandatory annual quantitative impairment test for goodwill;
  • we should also reduce the cost and complexity of the impairment test by simplifying some of the requirements for estimating value in use;
  • we should not allow more intangible assets to be included in goodwill; and
  • we should enhance transparency by requiring companies to present total equity before goodwill in their balance sheets."

The article notes that the Board plans to issue a discussion paper on these issues at the end of 2019.

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

AcSB response – Annual Improvements to IFRS® Standards 2018-2020 Exposure Draft

Sep 09, 2019

On September 9, 2019, the Accounting Standards Board's (AcSB) response to the International Accounting Standards Board’s (IASB) Exposure Draft, Annual Improvements to IFRS® Standards 2018-2020, was published by the IASB.

The AcSB continues to strongly support the IASB in its efforts to identify and address standards implementation issues.

Overall, the letter agrees with most of the proposals but recommends that the IASB provide additional guidance to IFRS 16 Leases, to clarify when the reimbursement of leasehold improvements will be identified as a lease incentive.

Review the press release on the AcSB's website and the full letter on the IASB's website.

IASB chair speaks in South Korea

Sep 04, 2019

On September 4, 2019, the International Accounting Standards Board (IASB) released a keynote speech given at an event organized to celebrate the 20th anniversary of the Korea Accounting Standards Board (KASB). In his speech, IASB chair Hans Hoogervorst discussed Korea’s contribution to international standard-setting through history and remaining relevant in the future.

Mr. Hoogervorst began by reflecting on the IASB's history with the KASB. He moved on to discuss the future of financial reporting and remaining relevant in a changing world. He noted, 'To remain relevant, we must adapt.' He reiterated his view that the IASB is unlikely to tackle sustainability reporting standards, but noted their importance. He also pointed to the work the KASB is doing to shrink the gap between book value and market value of companies — the KASB is researching the possibility of a separate 'Statement of Key Intangibles'. 

Review the transcript of Mr. Hoogervorst's speech on the IASB's website.

IASB publishes "Investor Perspectives" article on proposed amendments to IFRS 17

Sep 04, 2019

On September 4, 2019, the International Accounting Standards Board (the Board) issued the latest issue of "Investor Perspectives." In this edition, IASB board member Nick Anderson discusses the new disclosures in the targeted amendments to IFRS 17.

Specifically, this issue features insight into the proposed amendments related to commission paid on short-term insurance contracts with expected renewals and profit recognition on long-term insurance contracts with investment returns.

Review the press release and Investor Per­spec­tives article on the Board's website.

Updated IASB work plan — Analysis

Sep 03, 2019

On September 3, 2019, the International Accounting Standards Board (the Board) updated its work plan following its August 2019 meeting.

Below is an analysis of all changes that were made to the work plan since our last analysis on July 29, 2019.

Standard-setting projects

  • No changes

Maintenance projects

Research projects

  • SME Implementation Group draft Q&A — newly added o the work plan, discussion of the feedback on the draft Q&A is expected to begin in the fourth quarter of 2019

Other projects

  • Updated IFRS Foundation Due Process Handbook — Discussions on feedback received on the exposure draft is expected to occur in October 2019 (previously fourth quarter of 2019)

The revised IASB work plan is available on the Board's website.

FASB publishes new articles

Aug 30, 2019

In August 2019, the Financial Accounting Standards Board (FASB) released three new articles on effective dates, intangible assets and the upcoming proposal on reference rate reform and the revised proposal on balance sheet classification of debt.

The Philosophy of Effective Dates

The FASB recently took a fresh look at its philosophy for setting effective dates. FASB Chairman Russ Golden discusses how it should help smaller public companies, private companies and not-for-profit organizations apply standards more efficiently.

Internally Generated Intangible Assets

Intangible assets have become an increasingly larger component of the valuation for all companies. Under U.S. GAAP, however, most internally generated intangible assets are not recorded on the balance sheet. FASB Member Gary Buesser considers whether they should be.

On the Horizon

Here's what you need to know about the FASB's upcoming proposal on reference rate reform and its revised proposal on balance sheet classification of debt.

AcSB Exposure Draft – Disclosure of Accounting Policies (Proposed amendments to IAS 1 and IFRS Practice Statement 2)

Aug 22, 2019

On August 22, 2019, the Accounting Standards Board (AcSB) issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by November 29, 2019.

Review the press release and Exposure Draft on the AcSB's website.

SEC clarifies investment advisers’ proxy voting responsibilities

Aug 21, 2019

On August 21, 2019, the Securities and Exchange Commission (SEC) issued “Commission Interpretation and Guidance Regarding the Applicability of the Proxy Rules to Proxy Voting Advice.”

The guidance addresses “the ability of investment advisers to establish a variety of different voting arrangements with their clients and matters they should consider when they use the services of a proxy advisory firm.” The guidance will become effective upon the date of its publication in the Federal Register.

The SEC also issued a 26-page interpretive release about proxy voting responsibilities for investment advisors, providing steps that mutual fund managers should consider if they become aware of potential factual errors or weaknesses in a proxy advisor’s analysis.

Review the press release and guidance on the SEC’s website.

FASB proposes to defer effective date for standard on long-duration insurance contracts

Aug 21, 2019

On August 21, 2019, the Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU), “Financial Services — Insurance (Topic 944): Effective Date,” which would give insurance companies additional time to implement the Board’s August 2018 standard on long-duration contracts, ASU 2018-12.

The proposed ASU states the following regarding how entities would be affected by the deferral:

For SEC filers, excluding entities eligible to be [smaller reporting companies] as defined by the SEC, the amendments in Update 2018-12 would be effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. . . . Early application of the amendments in Update 2018-12 would be permitted. For all other entities, the amendments in Update 2018-12 would be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early application of the amendments in Update 2018-12 would be permitted.

The proposed deferral is consistent with the FASB’s new philosophy to stagger the effective dates of major standards so that the standards are effective for larger public companies at least two years before they are effective for all other entities.

Comments on the proposed ASU are due by September 20, 2019.

Review the proposal and press release on the FASB’s website.

Correction list for hyphenation

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