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June 2015

AcSB Due Process Activities – 2010-2013 Changes to Part I

Jun 02, 2015

On June 2, 2015, the Accounting Standards Board (AcSB) released a summary of the due process activities it undertook in support of the changes made to Part I of the Handbook from 2010-2013.

During the period 2010-2013, the AcSB:

  • approved the incorporation, into Part I of the CPA Canada Handbook – Accounting, of new or amended International Financial Reporting Standards (IFRSs) and a revised Conceptual Framework, issued by the International Accounting Standards Board (IASB) after Part I was established; and
  • amended the Introduction to Part I.

Review the summary.

ASAF membership update

Jun 24, 2015

On June 24, 2015, the IFRS Foundation Trustees announced the new composition of the Accounting Standards Advisory Forum (ASAF) for the next three years. The ASAF organization is chaired by the IASB and includes 12 other members from various locations around the world.

The Accounting Standards Board will continue to be part of the ASAF.

For more information, see the press release on the IASB’s website.

Canada joins the IAS Plus family

Jun 12, 2015

We are proud to announce two new subsites of IAS Plus, Centre for Financial Reporting and Centre de l’information financière, which build on our successful and long-established IAS Plus site to provide users in Canada with comprehensive tailored news and resources.

You will find on the new sites:

  • breaking news on financial reporting developments relevant to all Canadian organizations;
  • summary information and related resources for each standard and for each Canadian financial reporting framework;
  • publications library that features our electronic newsletters and technical update webcasts;
  • relevant tools to help you apply new or complex standards; and
  • spotlights on our Deloitte subject matter specialists so that you can see our breadth and depth of expertise.

Access to the new sites in English and French is free of charge for all users. You can easily switch between the global site and the Canadian sites using the pull-down menu showing in the upper right corner of the site.

With the addition of the two new sites, the IAS Plus family now consists of six sites:

  • IAS Plus Global site (www.iasplus.com) – a comprehensive resource on IFRS and global financial reporting, including the worldwide use and adoption of IFRS, other reporting frameworks, global reporting issues and more
  • IAS Plus in German (www.iasplus.de) – the content available on the IAS Plus Global site in German translation, plus information on financial reporting developments in Germany, Austria and Switzerland
  • Centre for Financial Reporting (http://www.cfr.deloitte.ca) – dedicated resource for Canada in English
  • Centre de l’information financière (http://www.cif.deloitte.ca) – dedicated resource for Canada in French
  • UK Accounting Plus (www.ukaccountingplus.com) – dedicated resource for the United Kingdom
  • US GAAP Plus (www.usgaapplus.com) – dedicated resource for the United States

Chief Accountant of the SEC believes former SEC Chairman's call for burying IFRS was "premature"

Jun 08, 2015

On June 5, 2015, at a financial reporting conference in California, Jim Schnurr, Chief Accountant of the Securities and Exchange Commission (SEC) confirmed that the SEC does not intend to bury the objective of a single set of high-quality, globally accepted accounting standards.

Mr. Schnurr stated that there is continued support for a single set of high-quality, globally accepted accounting standards.

In my opinion, in the near term, FASB and IASB should continue to focus on converging the standards. The boards should renew their commitment to cooperate and develop standards that eliminate differences between IFRS and U.S. GAAP whenever it meets the needs of its constituents and improves the quality of financial reporting. I recognize the boards will not always be able to eliminate differences during the standard-setting process, primarily because they serve different constituents that have different needs. However, when differences in standards arise, the boards should monitor the implementation of those standards with the objective of learning from the implementation and re-engaging with each other with the goal of converging to the standard with the highest quality financial reporting outcome.

Please click to access the full text of Mr Schnurr's speech on the SEC website. All conference materials are available on the conference Web site.

European Commission concludes evaluation of the use of IFRS in EU

Jun 18, 2015

On June 18, 2015, the European Commission published a report on the evaluation of its Regulation on the application of International Financial Reporting Standards (IFRS). The evaluation aimed at establishing whether the initial objectives are still relevant and at identifying areas for improvement in the functioning of theRegulation, if needed.

The key findings of the evaluation launched in August 2014 show that IFRSs were successful in creating a common accounting language for capital markets. Preparers claimed mostly positive experiences regarding their application of IFRSs and stated that in most cases benefits outweighed costs. Investors also largely supported IFRS for improving the transparency and comparability of financial statements. 

Please click for the following information on the European Commission's website:

European Commission consults on corporate tax transparency

Jun 17, 2015

On June 17, 2015, the European Commission launched a public consultation on corporate tax transparency in the EU. This consultation aims to find out whether requiring companies to disclose more information about the taxes they pay could help tackle tax avoidance and aggressive tax practices in the EU.

This consultation aims to find out whether requiring companies to disclose more information about the taxes they pay could help tackle tax avoidance and aggressive tax practices in the EU. For instance, companies could be required to disclose the taxes they pay, in every country where they operate.

Please click to access the consultation page with additional information on the European Commission's website.

FEE supports IFRS 9 deferral for insurance companies

Jun 22, 2015

On June 22, 2015, the Federation of European Accountants (FEE) responded to the European Financial Reporting Advisory Group (EFRAG) draft endorsement advice on IFRS 9 "Financial Instruments".

The principal comment in the comment letter FEE submitted, however, relates to the potential deferral of IFRS 9 for insurance business activities while the International Accounting Standards Board (IASB) finalizes its forthcoming insurance standard. The letter states:

We agree with EFRAG that the European Commission should ask the IASB to defer the effective date of application of IFRS 9 for institutions with significant insurance activities, or alternatively identify and assess any other workable solutions to address accounting mismatches that may obscure performance reporting by those institutions. FEE stresses the importance of having an international solution for this matter. A Europe-only deferral would de facto be a carve-out from full IFRS, which in our view should generally be avoided as they do not come without consequences.

FEE also states that any deferral of IFRS 9 should be limited in duration and optional.

Please click to access the full comment letter on the FEE Web site.

Hans Hoogervorst speaks about historical cost and fair value

Jun 29, 2015

On June 29, 2015, at the IFRS Foundation's IFRS conference held in Paris, the International Accounting Standards Board Chairman Hans Hoogervorst spoke about the question of how assets and liabilities should be measured, a topic he called "one of the most difficult topics in accounting".

Mr. Hoogervorst referred to the recently published Exposure Draft on the new Conceptual Framework which includes a chapter on measurement offering a description of different measurement bases, the information that they provide and their advantages and disadvantages. In this chapter, the IASB has divided the measurement techniques into two categories: historical cost and current value.

Mr. Hoogervorst pointed out that "the dichotomy between historical cost and fair value is not as stark as one would expect". He listed four aspects where the assumed stability of historical cost and the often cited vulnerability of current value are not necessarily that far apart. He cited (i) the fact that, for many transactions, historical cost starts and ends with fair value (or values that come very close to it); (ii) that, despite its name, historical cost gets updated too (depreciation/amortization); (iii) that the alleged stability resulting from historical cost accounting can be extremely misleading; and (iv) that the stability of historical cost can be interrupted by steep cliff effects.

Mr. Hoogervorst also stated that it would not do to abandon historical costs completely in favor of fair value. Instead, he noted in "very broad brushstrokes indeed" the following general conclusions as to when the different categories of measurement bases should be applied: (i) if the nature of business activities is to use assets in combination with other assets to produce goods or services, this generally points in the direction of historical cost; (ii) if the nature of business activities is to trade assets or liabilities in active markets, this would generally point in the direction of current value measurement; (iii) if the characteristics of an asset of a liability are such that they are highly sensitive to market factors or to other risks in the item, this would generally point in the direction of current value measurement.

He also noted of course that more factors than these will need to be taken into consideration, such as the cost of performing the measurement, the degree of measurement uncertainty, faithful presentation and the avoidance of accounting mismatches. He encouraged his audience to comment on the proposals in the IASB's Exposure Draft.

The full transcript of Chairman Hoogervorst’s speech is available on the IASB’s website.

IASB and FASB discuss principal-versus-agent considerations

Jun 22, 2015

At their June 22, 2015, joint meeting, the International Accounting Standards Board and the Financial Accounting Standards Board discussed questions that have arisen regarding the implementation of the principal-versus-agent considerations in IFRS 15 and ASC 606, “Revenue From Contracts With Customers.”

The boards made tentative decisions about the following aspects of the principal-versus-agent considerations:

  • Principle for determining whether an entity’s promise is to provide or to arrange
  • Unit of account for the principal-versus-agent evaluation
  • Application of the control principle
  • Control indicators
  • Illustrative examples

For more information, review the tentative Board decisions on the FASB’s Web site.

IASB completes post-implementation review of IFRS 3

Jun 17, 2015

On June 17, 2015, the International Accounting Standards Board (IASB) announced that it has completed its post-implementation review (PIR) of IFRS 3 "Business Combinations". The review concluded that there is general support for IFRS 3 and its related Standards; however, there are several aspects where additional research is needed.

The PIR report assessed in­for­ma­tion gathered from academic lit­er­a­ture as well as feedback from investors and other financial statement users and preparers, auditors, and reg­u­la­tors. It showed general support for the “usefulness of reported goodwill, other intangible assets and goodwill impairment.” However, views were mixed on certain elements of the standard.

On the basis of the PIR report, the IASB added to its agenda two research projects that will focus on:

  • Effectiveness and complexity of testing goodwill for impairment.
  • Subsequent accounting for goodwill.
  • Challenges related to applying the definition of a business.
  • Identification and fair value measurement of intangible assets such as customer relationships and brand names.

For more information, see the press release and the PIR report on the IASB’s website.

Correction list for hyphenation

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