On Relevance, the Trustees intend to accelerate the work to address barriers to high-quality digital reporting by collaborating with investors, securities regulators and others to ensure the IFRS Taxonomy remains fit for purpose. They will also establish a network of experts to provide advice on technological innovation and its impact and relevance to IFRS Standards. The Trustees have also decided to retain the existing focus of the Board on for-profit entities, with no expansion at this time to cover either the public sector or the private not-for-profit sector.

Regarding Consistent application, there will be an increased emphasis on activities to support the consistent application, additional resources and materials will be developed to assist the consistent implementation, and the Trustees will continue to develop relationships with securities regulators to support implementation of IFRSs around the world.

Governance and financing will see no change to the current three-tier structure, but steps will be taken to enhance the visibility of Trustee oversight of the Board. The geographical distribution of both the Trustees and the Board will be changed by combining the North American and South American allocations into a single ‘Americas’ category, and the size of the Board will be reduced to 13 members, with the flexibility to appoint a 14th member if appropriate. The Trustees will maintain the current funding model until the funding regime based on publicly supported financing is fully achieved.

The following additional information is available on the IASB's website:

• Press release
• ED of proposed changes to the Constitution
• Feedback statement
• Video of Michel Prada explaining the results of the review

The new revenue recognition standard is causing companies to review compensation arrangements and bonus structures that are based on revenue metrics, said Deloitte & Touche LLP's Eric Knachel, CPA. Knachel said that compensation arrangements are just one example of the broader nonaccounting issues that make it necessary to focus immediately on implementation.

Review the article on the Journal of Accountancy's Web site.

At Compliance Week’s recent annual conference, a session on the massive new revenue recognition standard was perhaps the most sparsely attended. In an onsite poll of those in the room, more than half said they came from companies that hadn’t yet decided how they would adopt the new standard. That’s a troubling sign that those companies probably hadn’t yet completed even a high-level assessment to determine how they will be affected by the new requirements.

Chris Chiriatti, managing director at Deloitte & Touche says: “The results are somewhat—I wouldn’t say surprising—maybe alarming.”

“It’s an indicator that many companies view this as 18 months from now,” said Eric Knachel, senior consultation partner also with Deloitte. They have other more time-sensitive priorities, perhaps, or limited resources to devote to the effort. He adds that “the next three to nine months will be critical.”

Review the article on (Free Registration Required) Compliance Week's Web site.

Changes to the work plan include:

Major projects

• No changes made to major projects.

Im­ple­men­ta­tion projects

• Annual Improvements (2014-2016): Updated to indicate that a decision on the direction of the project is now expected within 3 months.
• Transfer of In­vest­ment Property: Updated to indicate that a final standard is expected within 6 months.
• Draft IFRIC In­ter­pre­ta­tion — Foreign Currency Trans­ac­tions and Advance Con­sid­er­a­tion: Updated to indicate that a final interpretation is expected after 6 months.

In addition, the work plan has updated the details of the primary financial statements, income taxes, and share-based payment (where the IASB has decided not to perform any further research on this topic or to publish a formal consultation document) research projects and indicated that a feedback statement on the 2015 agenda consultation is expected within 6 months.

The revised IASB work plan is available on the IASB's Web site.

Instead of addressing these changes as part of its technical corrections and improvements project, the FASB issued the proposed ASU separately “to increase stakeholders’ awareness of the proposals and to expedite improvements to Update 2014-09.” The tech­ni­cal cor­rec­tions affect the following narrow aspects of the new revenue standard:

• Preproduction costs related to long-term supply arrangements.
• 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 the new revenue standard.
• Disclosure of remaining performance obligations.
• A contract modification example.
• Fixed-odds wagering contracts in the casino industry.
• Cost capitalization for advisers to private and public funds.

Com­ments on the pro­posed ASU are due by July 2, 2016.

Review the pro­posed ASU on the FASB’s website.

He says that the vast amounts of information collected generate new analytic techniques and opportunities and that today’s leaders have to anticipate change and identify approaches to capitalize on it for the benefit of their constituents.

Review the article on the IFAC's Web site.

At its May meeting, the IASB concluded deliberations on this topic and asked staff to draft the final amendments to IFRS 4, Insurance Contracts, which the IASB expects to issue in September 2016.

The new insurance contracts standard is currently being drafted and the IASB expects to issue it around the end of 2016 with an effective date no earlier than 2020. Both IFRS 9, Financial Instruments, effective January 1, 2018, and the new insurance contracts standard are relevant to companies that issue insurance contracts.

Responding to some companies’ concerns about the timing of the implementation of the two standards and the related consequences, the IASB has, following public consultation, confirmed that it will issue amendments to IFRS 4 that:

• give companies that issue insurance contracts the option to remove from profit or loss the volatility that may be caused by certain changes in the measurement of financial assets when applying IFRS 9 before the new insurance contracts standard; and
• give companies whose predominant activities are insurance-related an optional temporary exemption from applying IFRS 9 until 2021.

The amendments to IFRS 4 will supplement existing options in that standard that could be used to address the volatility that may be caused by applying IFRS 9 before the new insurance contracts standard.

Review the press release on the IASB's Web site.

The author of the report, who is the Founding Director of CDSB and responsible for CDSB’s work to develop a framework to report environmental information in mainstream corporate reports, examines the changing corporate sustainability reporting landscape, outlines its components, discusses current challenges and proposes development opportunities. She also considers the trends, levers and drivers influencing the reporting landscape and concludes that new and evolving expectations about corporate performance, new measurement criteria, and the means by which companies are assessed are calling into question the role of the corporation and the definition of corporate performance.

Please click to access the report on the ACCA website.

During his presentation, Mr Hoogervorst explored “whether IFRS Standards provide sufficient criteria by which performance can be judged by users of financial statements.” He noted the increasing use of non-GAAP measures and research showing that these measures are becoming increasingly misleading. Mr Hoogervorst said:

The fact is that IFRS Standards prescribes very little in the way of formatting the income statement. Companies have considerable freedom in the way they present the components of income that make up profit or loss. As a result, there is little comparability above the bottom line, making it difficult for users to judge performance.

He went on to say that securities regulators are primarily responsible for cutting back the use of non-GAAP measures but that the IASB “should also look at its own role in this matter.” He admitted that the IASB provides “too little guidance” in formatting the income statement. He also suggested “potential remedies” for IASB consideration:

• Defining more subtotals in the income statement;
• Providing a principle-based definition of operating income which does not allow for obfuscating restructuring or impairment charges;
• Creating a “rigorous definition” of earnings before interest and tax (EBIT);
• Looking for better solutions for some elements of income and expense that are currently parked in other comprehensive income;
• All of the above and more.

Mr Hoogervorst concluded:

[U]ltimately the number that counts most is the unadjusted bottom line, where all elements of income come together, both recurring items and exceptional items, whatever those may be. No-one can predict the extent to which seemingly extraordinary elements of income are recurring and not. That is why it is important that the bottom line is as inclusive as possible and that it shows everything, warts and all.

The full text of Mr Hoogervorst’s speech is available on the IASB’s Web site.