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.

The amendments, which were issued in response to feedback received by the FASB–IASB joint revenue recognition transition resource group (TRG), include the following:

• Collectibility
• Presentation of sales tax collected from customers
• Noncash consideration
• Contract modifications at transition
• Transition technical correction

The ASU notes that in light of the following, there may be “minor differences in financial reporting outcomes between U.S. GAAP and IFRS” as a result of the ASU’s amendments:

• IFRS 15, Revenue From Contracts With Customers, does not allow a policy election for the presentation of sales taxes on a net basis.
• IFRS 15 does not prescribe the measurement date for noncash consideration.
• The different dates associated with an entity’s application of (1) the practical expedient for contract modifications and (2) the term “completed contracts” for transition purposes.

The ASU’s effective date and transition provisions are aligned with the requirements in the new revenue standard, which is not yet effective. For more information, see the ASU on the FASB’s website.

The report looks at the evidence on whether financial reporting encourages short-termism and asks whether it would be possible for financial reporting to provide better information on long-term performance. In particular, it looks at five areas in which current financial reporting has been accused of encouraging short-termism:

The webcast discusses the IFRS 16 requirements relating to the recognition exemptions and provides Ms. Lloyd's insight on the scope exemptions, practical examples, and implementation information.

The topics discussed at the meeting included:

• IFRS Advisory Council — Role and recent activities
• Disclosure Initiative — Final amendments to IAS 7
• Different effective dates — IFRS 9 and the new insurance contracts standard
• Structured Electronic Reporting — What do investors need?
• Education Session — The new impairment requirements in IFRS 9
• Primary Financial Statements
• IFRS 16 — Update on the new standard

The full meeting summary is available on the IASB's website.

The statement includes a comparison of materiality from the following organizations:

• CDP
• Climate Disclosure Standards Board (CDSB)
• Financial Accounting Standards Board (FASB)
• Global Reporting Initiative (GRI)
• International Accounting Standards Board (IASB)
• International Integrated Reporting Council (IIRC)
• International Organization for Standardization (ISO)
• Sustainability Accounting Standards Board (SASB)

In October 2015, the IASB published an exposure draft on the concept of materiality, which explains and illustrates the concept of materiality and helps preparers of financial statements when applying the concept.

For more information, see the statement on the CRD’s website.

One of the aspects Mr. Schnurr elaborated on was the status of the revenue transition resource group (TRG) formed jointly by the IASB and the FASB. In January this year, the IASB announced that it will no longer attend TRG meetings. The FASB declared in February that it will continue to address implementation issues and has scheduled three TRG meetings for 2016.

On this development, Mr. Schnurr commented:

While I am optimistic that the key practice issues that require standard setting have been identified through the implementation activities of preparers, auditors and standard setters, I am concerned that there are still a number of questions that would benefit from the TRG process. [...] Without joint participation of the IASB’s TRG in the coming scheduled FASB TRG meetings, there is a concern that IFRS 15 may be interpreted through a U.S. GAAP lens without the perspective of IFRS preparers.

He even went as far as suggesting that IFRS preparers could "provide input to the FASB staff and the FASB TRG participants to the extent they believe they have important factors that should be considered for discussion by the FASB TRG". At a minimum, he noted, he expected SEC registrants to monitor the TRG discussions and meeting minutes to inform their selection and implementation of reasonable policies.

Review the full text of Mr. Schnurr's speech on the SEC's website.

This issue fea­tures:

• An interview with the President of the Asian Infrastructure Investment Bank, Mr Jin Liqun.
• An overview of key features in the new leases standard, IFRS 16.
• Current pro­jects that need input from the in­vest­ment com­mu­nity.
• A cal­en­dar of current events.

The In­vestor Update newslet­ter is avail­able on the IASB’s website.