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December 2016

6th ANC Symposium on Accounting Research

Dec 12, 2016

On December 12, 2016, the Autorité des Normes Comptables (ANC), the French standard-setter, hosted its 6th Symposium on Accounting Research in Paris. We have prepared a report from the symposium that explored the general theme of "Accounting and performance".

The mainstay of the symposium were presentations of six research papers each followed by roundtables on the topic presented and key speeches summing up the discussions.

Research papers

  • The first research paper was dedicated to non-GAAP financial indicators and the question of whether they are representative strategic governance. The paper is available in French original and English translation on the ANC's website.
  • The second research paper discussed the theoretical foundations of the accounting representation of performance in a stakeholder and territorial approach. A French version and an English translation can be accessed on the ANC's website.
  • The third research paper on the impact of accounting and prudential standards for financial intermediaries on long-term capital investment is again available in French and English on the ANC's website. The roundtable discussed the question of whether the long-term perspective can or must be integrated. Key speaker Linda Mezon (AcSB, Canada) concluded the session by providing insights from the Canadian perspective. She explained that in Canada it is believed that one can only get so many uses out of financial statements, therefore financial statements in Canada are understood not to be "be all and say all". Rather, financial statements are seen as a starting point on which others can build. She concluded that building too many expectations into financial statements bears the danger of making them not useful for anybody.
  • The presentation of the fourth research paper “Marking to Market versus Taking to Market” (French version and English translation) was followed by a roundtable that discussed alternatives to mark to market and relevance and fairness.
  • The fifth research paper used a study a sample of European companies over ten years to discuss performance measures and components of OCI and their volatility and impact (French version and English translation).
  • The sixth and final research paper was dedicated to recognizing environmental issues in performance measurement. This paper is also available in French and English.

CAQ issues publication on revenue for audit committees

Dec 13, 2016

On December 13, 2016, the Center for Audit Quality (CAQ) of the American Institute of Certified Public Accountants (AICPA) released the publication "Preparing for the New Revenue Recognition Standard: A Tool for Audit Committees".

The publication is a tool to help audit committees assess a company’s implementation of the new revenue recognition standard. It is organized into four sections:

  • Understanding the New Revenue Recognition Standard – What Is It?
  • Evaluating the Company’s Impact Assessment – How Will Revenue Recognition Change?
  • Evaluating the Implementation Project Plan – How Do We Need to Prepare?
  • Other Implementation Considerations – What Else Do We Need to Consider?

In addition to key questions for audit committees, the tool offers a list of resources on revenue recognition.

Review the publication on the CAQ's website.

Deferral of IFRS 9 Application for Federally Regulated Life Insurers

Dec 19, 2016

On December 19, 2016, the Office of the Superintendent of Financial Institutions (OSFI) issued the Draft Advisory: Deferral of IFRS 9 Application for Federally Regulated Life Insurers (the Advisory) for consultation.

The Advisory is in response to the September 2016 International Accounting Standards Board (IASB) approved amendment to the IFRS 4, Insurance Contracts allowing companies whose activities are predominately connected with insurance to defer the application of IFRS 9, Financial Instruments before January 1, 2021.

Review the press release and Draft Advisory on the OSFI's website.

Early Adoption of ASC 606, Revenue From Contracts With Customers: First Glance

Dec 22, 2016

On December 22, 2016, Audit Analytics released a blog summarizing their findings resulting from a preliminary analysis of recent public filings where reporting issuers discuss their effort towards the implementation of IFRS 15.

In a recently released tool for the Audit Committees, the Center for the Audit Quality stated that it is “urgent that audit committees understand how management is assessing the impact of the new revenue recognition standard”. ASC 606 (which is based on ASU 2014-09, Revenue from Contracts with Customers) is effective starting with annual reporting periods beginning after December 15, 2017. Early adoption is permitted for fiscal periods beginning after December 15, 2016. The implementation is expected to have a material impact across the broad range of the industries.

Review the blog on the Audit Analytics' website.

EFRAG believes Conceptual Framework should contain guidance on asymmetry

Dec 21, 2016

On December 21, 2016, the European Financial Reporting Advisory Group (EFRAG) wrote to the IASB asking for the Conceptual Framework to include directions for the use of asymmetry.

As EFRAG notes, the IASB decided unanimously at its October 2016 meeting while discussing the Conceptual framework project that the Conceptual Framework should acknowledge that in financial reporting standards asymmetry may sometimes arise as a consequence of requiring the most useful information.

EFRAG supports the decision but believes that such an acknowledgement by itself is not sufficient and that the Conceptual Framework should also include guidance regarding the use of asymmetry when developing recognition and measurement principles. EFRAG quotes examples and also points out that in some cases potential guidance has already been developed by the IASB staff.

Review the letter on the EFRAG's website.

ESMA Announces Inline XBRL will be Required for IFRS Filings Starting in 2020

Dec 21, 2016

On December 21, 2016, the European Securities and Markets Authority (ESMA), the EU agency responsible for the rules that govern EU securities regulation and the conduct of EU public markets, announced that starting in 2020, public companies that prepare consolidated IFRS financial statements will provide them in Inline XBRL.

ESMA has not yet released the detailed technical rules that will govern this vital digitization effort. XBRL International are particularly pleased to hear that the use of iXBRL will mean that securities filings in Europe will involve a single, integrated document that can be read by humans and at the same time digitally consumed by systems to assist in analysis and comparison. 

iXBRL is used by many regulators, including, most notably, HMRC and Companies House in the UK, the Danish Business Authority, the Japanese FSA, and the US Securities and Exchange Commission. Much of this data is already available, see a UK example and a US example.

The SEC has still not approved the IASB Taxonomy, so reporting issuers filing using IFRS with the SEC should not file xbrl exhibits.

Review the press release and the feedback statement detailing responses to the consultation paper on the ESMA's website.

FASB Chairman discusses international collaboration

Dec 06, 2016

On December 6, 2016, the Financial Accounting Standards Board (FASB) released a speech by FASB Chairman, Russell Golden, where he spoke about the FASB's priorities as the “Five Is” - one of which is “International”, during the annual AICPA Conference on Current SEC and PCAOB Developments.

Mr. Golden explained that after winding down its bilateral working relationship with the IASB, the FASB chose a new approach to achieve greater comparability of global standards: (i) through the continued development and improvement of GAAP, (ii) by actively participating in the development of IFRS, and (iii) by enhancing relationships and communications with other national standard-setters.

In the context of strengthened relationships with other national standard-setters, Mr. Golden mentioned individual meetings with standard-setters from Canada, Japan, China, South Korea and other countries and explained that the FASB expects to have joint meetings with them in 2017 to talk about respective priorities and future initiatives. He concluded: "Such relationships help us improve financial reporting, while at the same time bringing us all closer to common solutions around the globe."

Review the full transcript of the speech on the FASB’s website.

FASB issues technical corrections and improvements to its new revenue standard

Dec 21, 2016

On December 21, 2016, the US Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue From Contracts With Customers,” which makes minor changes to the Board’s new revenue guidance which is converged with IFRS 15. This ASU is the result up two sets of technical corrections on revenue proposed by the FASB in May and in September this year.

The following topics are addressed:

  • Loan guarantee fees
  • Contract costs — impairment testing
  • Contract costs — interaction of impairment testing with guidance in other topics
  • Provisions for losses on construction-type and production-type contracts
  • Scope of Topic 606
  • Disclosure of remaining performance obligations
  • Disclosure of prior-period performance obligations
  • Contract modifications example
  • Contract asset versus receivable
  • Refund liability
  • Advertising costs
  • Fixed-odds wagering contracts in the casino industry
  • Cost capitalisation for advisors to private funds and public funds

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

FYI Article – AcSB Hosts IASB Members; Canadians Contribute to International Dialogue

Dec 05, 2016

On December 5, 2016, the Accounting Standards Board (AcSB) released an article summarizing the events, where the AcSB connected visiting IASB members directly with its Canadian stakeholders. These events enabled stakeholders to share their views and receive information to support IFRS application.

In October 2016, the AcSB hosted members of the International Accounting Standards Board (IASB). They were in town to take part in the IASB’s 2016 Research Forum, held in conjunction with an annual conference of Canada’s pre-eminent academic accounting journal, Contemporary Accounting Research.

The visit provided a golden opportunity for the AcSB to demonstrate its commitment to its stakeholders — by connecting them directly with the IASB. The AcSB hosted or took part in a variety of events that enabled Canadians to share their views and receive information to support their application of IFRS.

Review the article on the AcSB's website.

Hans Hoogervorst discusses pension liability

Dec 08, 2016

On December 8, 2016, the International Accounting Standards Board (IASB) released a speech by IASB Chairman, Hans Hoogervorst, where he spoke about pension liabilities and the effect of a low interest rate environment. The speech was given at the Institute of Pension Education in Rotterdam.

In his speech, Mr. Hoogervorst noted the need for the IASB to develop additional guidance on pension scheme designs to adapt to recent developments. In addition, he commented that the IASB’s liability measurement approach is well accepted and that they “reject calls to fundamentally change pension accounting to eliminate or reduce pension deficits.” Further, he provided his views on macro-economic policies. He stated:

A return to more normal interest rates will reduce the pension liability and will be beneficial for the long-term health of the pension system. But even then, short-term pain seems inevitable, because a lot of damage has been done. While the pension liability will be reduced, there will probably be short-term harm to both your bond and stock portfolios. This is another reason why I do not believe that our accounting for the pension liability exaggerates the problem.

Review the full tran­script on the IASB’s website.

Correction list for hyphenation

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