This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice ( for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

June 2018

Academic conference sees keynote speech and panel discussion on the future of corporate reporting

Jun 13, 2018

On June 13, 2018, the 13th International Conference on Accounting and Management Information Systems (AMIS 2018) was held at the Bucharest University of Economic Studies. The conference was opened by a keynote address "The future of corporate reporting - A standard setter's perspective on contents and proliferation", immediately followed by a panel discussion drilling more deeply into some of the messages presented.

The keynote address was delivered by Prof Andreas Barckow, President of the German standard-setter Accounting Standards Committee of Germany and Vice-President of the European Financial Reporting Advisory Group (EFRAG). In his presentation, he took stock of the current situation in financial reporting, other (wider) corporate reporting, and technological aspects (proliferation/dissemination).

The panel discussion following the keynote address was moderated by Prof Katherine Schipper of Duke University and saw as panelists Prof Axel Haller, University of Regensburg, Prof Paul André, HEC Lausanne, and Prof Barckow. They picked up several aspects mentioned in the keynote address:

  • No major developments in financial reporting since 2005. While the point was at first contested in extreme form, the panelists by and by concluded that there was some validity to it. It was even stated that IFRS 9, IFRS 15, and IFRS 16 replaced standards that many in practice saw as working well, i.e. that were not broken. The new standards often also build on ideas that had been around for a long time - in some cases since the 1990s.
  • Non-GAAP measures. Panelists discussed whether non-GAAP measures were a problem at all. They concluded that the non-GAAP measures were not a problem in themselves ("non-GAAP measures come and go"), but the lack of reconciliation or indeed lack of reconcilability was.
  • Intangibles. The panelists agreed that the problem was not so much in not recognizing intangible assets, but rather in the question why there was often such a gap between an entity's market capitalization and the profit (or lack of profitability) shown in the financial statements. There was not necessarily a need to align the two numbers but there should be a way to reconcile them.
  • Sustainability. Panelists were asked which way forward they saw for wider corporate reporting or rather linking sustainability and other wider corporate reporting aspects with financial reporting.
  • Academic contribution to standard-setting. The standard-setter on the panel was asked what he thought researchers could contribute to standard-setting. He replied that he saw two ways he would want research to support standard-setting: (a) by confirming (or refuting) that certain problems (such as mentioned in the keynote address) existed and (b) if indeed the existence of a problem was confirmed to then offer thoughts and solutions.

The following additional information is available on the website of the Bucharest University of Economic Studies:

Review the entire summary on our Global IAS Plus website.

Article on IFRS 17 preparations published

Jun 11, 2018

On June 11, 2018, the International Accounting Standards Board (the Board) posted to its website an article "Preparing the market for IFRS 17," in which financial journalist Liz Fisher discusses how the new Standard affects the investor community.

The article noted the "seismic change" IFRS 17 is expected to have on insurance companies as well as the user community. Though implementing the Standard may be turbulent, Ms. Fisher emphasized it's impact: "it will make a huge difference to the consistency and comparability of insurance companies."

The article explains:

  • The "trouble" with IFRS 4, the interim insurance contracts Standard;
  • comparability and transparency; and
  • impact around the world.

Review the article is available on the Boards's website.

CFA Institute and IFRS Foundation discuss technology’s impact on financial information

Jun 26, 2018

On June 26, 2018, the International Accounting Standards Board (the Board) released a summary of their June 5 event, where the CFA Institute and the IFRS Foundation hosted a joint investor event, "Transforming the impact of financial information—the role of technology," where they discussed the benefits of technological advancements as well as its fears.

The panel discussed how technological developments in the collection and analysis of data has create an era of systematic investing which can search past price correlations and predict future changes in price. In addition, technological developments in AI are assisting auditors by flagging anomalies that may need to be investigated. Further, the automation of some task eliminates some of the human error that occurs during the collection of data.

The fears of technological advancements discussed by the panel included price crashes of exchanges within the highly automated trading environment; loss of jobs due to automation, and the loss of skepticism in the algorithms used (the human element).

Review the event notes on the Board's website.

Digital Asset Transactions: When Howey Met Gary (Plastic)

Jun 14, 2018

On June 14, 2018, the Securities and Exchange Commission (SEC) posted a speech by William Hinman, Director of the Division of Corporation Finance, on whether a digital asset offered as a security can, over time, become something other than a security.

In his speech, Mr. Hinman states that:

To start, we should frame the question differently and focus not on the digital asset itself, but on the circumstances surrounding the digital asset and the manner in which it is sold. To that end, a better line of inquiry is: “Can a digital asset that was originally offered in a securities offering ever be later sold in a manner that does not constitute an offering of a security?” In cases where the digital asset represents a set of rights that gives the holder a financial interest in an enterprise, the answer is likely “no.” In these cases, calling the transaction an initial coin offering, or “ICO,” or a sale of a “token,” will not take it out of the purview of the U.S. securities laws.

But what about cases where there is no longer any central enterprise being invested in or where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created? I believe in these cases the answer is a qualified “yes.” I would like to share my thinking with you today about the circumstances under which that could occur.

Review the full speech on the SEC's website.

Discussion paper on financial instruments with characteristics of equity published

Jun 28, 2018

On June 28, 2018, the International Accounting Standards Board (the Board) published a comprehensive discussion paper DP/2018/1 "Financial Instruments with Characteristics of Equity". The discussion paper defines the principles for the classification of financial liabilities and equity instruments without, however, fundamentally changing the existing classification outcomes of IAS 32. The IASB's proposed preferred approach is based on two features, timing and amount, and is accompanied by the provision of additional information through a separate presentation of expenses and income from certain financial liabilities in other comprehensive income and additional disclosures. The comment period ends on January 7, 2019.


Summary of main proposals

To begin with, the IASB expects many of the existing classification outcomes of IAS 32 to remain unchanged if the approach preferred by the IASB is implemented.

In accordance with the preferred approach proposed by the IASB, equity is a residual that remains if the characteristics of a financial liability are not fulfilled. Accordingly, a financial instrument must be classified as a financial liability if its contractual terms contain an unavoidable obligation:

  • a) to transfer cash or another financial asset at a specified time other than at liquidation (timing feature); 


  • b) for an amount independent of the entity’s available economic resources (amount feature).

The analysis of the timing feature enables the assessment of funding liquidity and cash flows, including whether an enterprise has the economic resources necessary to meet its obligations at maturity and to estimate the need for economic resources at specific times. The timing feature can be specified as a fixed date as another date such as for example dates of coupon or interest payments.

The amount feature, on the other hand, supports the assessment of the balance sheet solvency and returns. This concerns in particular the question of whether an entity has sufficient economic resources to meet its obligations in terms of amount. It is central to the amount feature that a change in the value of the issuer's available economic resources does not limit the amount of the obligation. A simple example is the obligation to repay a loan when it matures: this obligation exists on the merits and in terms of amount, regardless of how the economic resources of the debtor develop. Nevertheless, there may also be changes in the amount of the obligation if, for example, the nominal amount changes due to exchange rates.

In the opinion of the IASB, the component approach already known under IAS 32 should be retained for compound financial instruments that contain both an equity and a liability component. Consequently, the issuer of a non-derivative financial instrument must assess whether it contains both a debt and an equity component. These components would continue to be classified separately as financial liabilities, financial assets or equity instruments.

A puttable instrument that comes puttable exception in IAS 32 would meet the definition of a financial liability if the Board’s preferred approach with timing feature and amount feature is applied. Consequently, the puttable exception would continue to be required under the Board’s preferred approach.

A derivative on own equity would be classified in its entirety. Such a derivative may be classified as an equity instrument, a financial asset or a financial liability in its entirety. The individual legs of the exchange would not be separately classified. A derivative on own equity would be classified as a financial asset or financial liability if:

  • a) the derivative requires the entity to deliver cash or another financial asset, and/or contains a right to receive cash, for the net amount at a specified time other than at liquidation - it is net-cash settled (timing feature); or
  • b) the 'net amount' of the derivative is affected by a variable that is independent of the entity’s available economic resources (amount feature).

The proposed preferred approach requires consistent accounting for redemption obligations, including NCI puts, and compound instruments with derivative components, e.g. convertible bonds. The IASB sees this as an improvement in the usefulness of financial statements because consistent debt and equity classifications are achieved for similar contractual rights and obligations.

In the opinion of the IASB, additional information on the timing feature is not necessary, as the current presentation and disclosure requirements in other IFRS Standards provide sufficient information to facilitate assessments of funding liquidity and cash flows. In contrast, additional disclosures on the amount feature are required to provide more comprehensive information to users of the financial statements; more detailed breakdowns are required in the balance sheet, the income statement and the revaluation reserve (other comprehensive income) to facilitate the assessment of solvency and return. The IASB proposes a separate disclosure in other comprehensive income for income and expenses from financial liabilities and derivative financial assets or financial liabilities that depend on the company's available economic resources, as well as partially independent derivatives. These amounts are not subsequently reclassified to profit or loss.

In addition, the discussion paper proposes to provide more comprehensive information on the characteristics of issued instruments, such as the ranking of financial liabilities and equity instruments in the event of liquidation.

Annexes to the discussion paper contain a discussion of the two alternative approaches discussed by the IASB, each based on only one of the two features, and a comparison of the classification of selected financial instruments under IAS 32 and under the IASB's preferred approach.

Comments on the discussion paper are requested by January 7, 2019.


Additional information


Draft Framework for Reporting Performance Measures – Enhancing the relevance of financial reporting

Jun 14, 2018

On June 14, 2018, the Accounting Standards Board (AcSB) issued a Draft Framework for Reporting Performance Measures to enhance the relevance of financial information for all entities – from public and private companies, to not-for-profit organizations and pensions plans. Comments are requested by September 17, 2018.

The AcSB wants to discuss and improve financial and non-financial performance measures reported outside of financial statements.

In introducing the framework, the AcSB notes concerns that are often mentioned in connection with performance measures:

  • the quality of performance measures being reported;
  • the lack of consistency, transparency and comparability of performance measures reported period to period;
  • the “expectation gap” about the governance practices of entities over how performance are developed and reported, and whether those measures are subject to assurance, and
  • the limited guidance available on how to develop and report performance measures not usually subject to assurance.

Consequently, the framework is intended to be a tool to guide:

  • management in developing and assessing how effectively they report financial and non-financial performance measures;
  • directors and others charged with governance in fulfilling their responsibilities when assessing management’s processes and reporting of performance measures; and
  • investors, contributors, lenders and other resource providers in setting expectations and seeking compliance with the framework as part of obtaining the information they need.

This Framework applies to a performance measure that is reported separately from and is not part of a set of financial statements (including note disclosures) prepared in accordance with an accounting framework, such as Canadian GAAP, IFRS® Standards or US GAAP; and is:

  • a non-GAAP financial measure that is an adjustment to a GAAP financial measure*, such as funds from operations and adjusted earnings;
  • another financial measure that is a financial measure and is not a GAAP or non-GAAP financial measure, such as dollars of order backlog and cost per dollar raised; or
  • a non-financial measure or operational measure that reports physical or non-financial data, such as number of volunteers, employees, members, active users or new stores, and performance ratings on client service, safety and reliability.

Review the press release and Draft Framework on the AcSB's website.

Educational webcast on IFRS 9

Jun 29, 2018

On June 29, 2018, the International Accounting Standards Board (the Board) released a webcast that discusses how to apply IFRS 9 "Financial Instruments" to financial assets with prepayment features.

The eleven minute webcasts focusses on the "SPPI test", including the amendments made to the IFRS 9 requirements in October 2017.

View the webcast on the Board's website (available as full webcast or in a slides only version).

FASB staff issues two taxonomy implementation guides

Jun 13, 2018

In June 2018, the Financial Accounting Standards Board (FASB) staff issued two U.S. GAAP taxonomy implementation guides on (1) revenue from contracts with customers and (2) dimensional modeling for disclosures of consolidated and nonconsolidated entities.

The objective of the first implementation guide, Revenue From Contracts With Customers (Including Remodeling of Revenue and Cost of Revenue Presentation in the Statement of Income), is to “demonstrate the modeling for disclosures related to revenue from contracts with customers under [ASC 606] and the remodeling of revenue and cost of revenue presentation in the statement of income.”

The second implementation guide, Dimensional Modeling for Disclosures of Consolidated and Nonconsolidated Entities, provides examples “to help users of the Taxonomy understand how the modeling for disclosures of consolidated and nonconsolidated entities is structured within the Taxonomy.”

FASB staff proposes taxonomy improvements related to ASUs 2018-07 and 2018-08

Jun 20, 2018

On June 20, 2018, the Financial Accounting Standards Board (FASB) staff issued proposed taxonomy improvements related to Accounting Standards Update (ASU) Nos. 2018-07, “Improvements to Nonemployee Share-Based Accounting,” and 2018-08, “Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made.”

Comments on the proposed taxonomy improvements related to nonemployee share-based accounting are due by July 20, 2018.

Comments on the proposed taxonomy improvements related to contributions received and contributions made are due by July 21, 2018.

FRC Lab report on blockchain

Jun 20, 2018

In June 2018, the Financial Reporting Lab of the UK Financial Reporting Council (FRC) released a new report that concludes that the growing use of blockchain means that those involved in corporate reporting processes need to consider its potential disruptive impact.

The Lab considered how current developments and use-cases of blockchain technology might impact corporate reporting processes in the future. In the report, the Lab use their digital reporting framework to explore how different technologies might impact the production, distribution and consumption of corporate reporting.

The report recommends actions for various groups who have an interest in this area including:

  • Regulators, standard-setters and professional bodies are encouraged to monitor blockchain developments and consider how they may impact corporate reporting.  The report recommends the creation of a forum where all those involved in corporate reporting can share and learn.
  • Preparers and users should focus on gaining a greater level of understanding and consider experimentation and cautious innovation when costs and benefits are balanced.

Review the report on the FRC's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.