Suggested changes

The changes proposed in ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8) are focused on three areas:

• Relation of accounting policies and accounting estimates to each other.
  • The ED proposes to clarify the exisiting definition of accounting policies by removing the terms "conventions" and "rules" as the Board feels that their meanings are not clear and because these terms are not used elsewhere in IFRSs. Also, the Board proposes to clarify the term "bases" by using "measurement bases" instead.
  • The ED proposes to add a definition of accounting estimates because so far a defintion has not been provided. The definition makes clear that accounting policies are the overall objectives and accounting estimates are the inputs used in achieving that objective by stating that "accounting estimates are judgements or assumptions used in applying an accounting policy when, because of estimation uncertainty, an item in financial statements cannot be measured with precision".
• Selecting an estimation technique or valuation technique. The ED proposes to clarify that selecting an estimation technique or valuation technique (the ED deliberately uses both terms as both terms are used in IFRSs) used when an item cannot be measured with precision constitutes making an accounting estimate.
• IAS 2 Inventories. In developing the ED, the Board concluded that that selecting one of the two cost formulas for interchangeable inventories is not an attempt to estimate the actual flow of these inventories, therefore it does not constitute making an accounting estimate but selecting an accounting policy.

Effective date

The exposure draft does not contain a proposed effective date which the IASB intends to decide on after the exposure. However, the Board has already concluded that an entity should apply the amendments only to changes in accounting policies and changes in accounting estimates that occur on or after the start of the first annual period in which the entity applies the amendments.

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

In his speech, Mr. Bricker discussed a number of topics related to public company reporting, including the role of financial reporting in our financial and capital markets, the FASB’s new credit loss standard, and recent PCAOB activities.

Review the speech on the SEC's website.

The study notes that the potential benefits of using structured data have not been realized yet, even though the use of such data can potentially improve the way financial information can be consumed by investors, regulators, and other users. The authors argue that this is primarily the case because companies mainly see structured data and reporting as a cost burden.

Therefore, the study looks first at what companies are saying about the costs associated with their XBRL filings and then goes through several case studies to demonstrate how, with proper implementation, companies can benefit from structured data. The authors conclude that if companies:

• bring structured reporting in-house instead of using outside vendors to prepare their regulatory filings,
• implement inline XBRL so that the data is both human and machine readable, and
• curtail the use of company-specific tags

they can reduce costs, allowing both companies and users to benefit from structured reporting.

Review the full study on the CFA Institute's website.

The report notes that by mid-2017 there were 32 stock exchanges providing formal guidance to issuers on reporting environmental, social, and governance (ESG) information and that stock exchanges, through their ability to influence the reporting behaviour of their listed entities, are successfully generating a rapid uptake in sustainability disclosure.

Review the report on the WFE's website.

The briefing paper covers:

• Development of IFRS 9 and expected loss accounting
• Regulatory expected loss
• Staging of provisions
• Complexities of presenting and understanding the new information

The briefing note covers an understanding of the role of banks, changes required by IFRS 9 and the expected effect on banks in applying its requirements.

Review the Briefing paper and the Briefing note on the ICAEW's website.

The working drafts address the following topics:

• Disclosure requirements (aerospace and defense and engineering and construction)
• Costs of managing investment companies (asset management)
• Soft-dollar revenue (broker-dealers)
• Revenue recognition for fixed-price contracts (power and utilities)
• Determination of whether a customer’s right to acquire additional users/copies of a delivered software product constitutes an option to acquire additional software rights or variable consideration related to software rights already purchased (software)
• Principal-versus-agent considerations related to time-share interval sales (time shares)

Comments on the working drafts are due by November 1, 2017.

For more information, see the revenue recognition page on the AICPA’s Web site.

The topics covered during the meeting were the following:

• Disclosure initiative — Principles of disclosure
• Goodwill and impairment
• Accounting policy changes
• Post-implementation review of IFRS 13
• Primary financial statements
• Property, plant and equipment
• Project updates and agenda planning
• Wider corporate reporting
• Amendments to IFRS 8 and IAS 34
• Rate-regulated activities

Review the press release and the summary of the meeting on the IASB's website.

This issue features discussions on:

• New metrics for evaluating the performance of insurers.
• Premiums versus insurance revenue.
• Contractual service margin.
• Disclosures and ratios.

Review the press release and the newsletter the IASB’s website.

Both organizations have a public interest mission and the transparency created by appropriate disclosures as a result of rigorous accounting standards promotes financial stability and enhances market discipline.

The Memorandum of Understanding notes two priorities of interaction:

• Fostering the sharing of information and the BCBS members’ views in support of work in the development of IFRS Standards and sharing information to support the understanding of interactions between IFRS Standards and the BCBS Framework.
• Fostering the sharing of information to support both parties in their work in the application of IFRS Standards on a globally consistent basis.

Review the press release and the Memorandum of Understanding on the IASB's website.

The 2018 U.S. GAAP financial reporting taxonomy “contains updates for accounting standards and other recommended improvements,” while the 2018 shared reporting taxonomy “contains elements of the GAAP Financial Reporting Taxonomy needed by International Financial Reporting Standards (IFRS) filers for U.S. Securities and Exchange Commission-specific disclosure requirements.”