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).

His thought-provoking points included the statements that in financial reporting there have been no major developments in Europe since 2005, that the current approach seemed to continue to try to apply a "manufacturing-centric" accounting model to an increasingly service-oriented industry (which might indeed be fostering the use of non-GAAP measures), and that the difficulty of addressing a problem should never be an excuse for not addressing it (this was said in the context of intangibles). Prof Barckow also pointed out that while there is one international accounting standard-setter (the IASB), there are up to 1,000 organisations active in the field of wider corporate reporting. On technology, he stated that the current thinking is still focused on printed reports, which means to ignore the vast posiibilities technological developments offer that could see for example ideas such as the CORE & MORE approach to corporate reporting realised.

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. While moving from incurred losses to expected losses with IFRS 9 was indeed a conceptual change, however, it was stated that in practice even under IAS 39 preparers were already half way to expected loss accounting. In the end, the moderator even questioned whether 2005 was a reporting development or merely a convergence development.
• Non-GAAP measures. After quickly clarifying what had been meant by the non-GAAP measure problem in the keynote address, panelists discussed whether non-GAAP measures were a problem at all. They concluded that not the non-GAAP measures were a problem in themselves ("non-GAAP measures come and go") but the lack of reconciliation or indeed lack of reconcilability was. Nevertheless, panelists refused to place the fault entirely with the preparers. Comments included that the increased use of non-GAAP measures expressed a management approach and showed that "the true North" was not always where the standard-setters believed it to be. It was also stated that the use of these measures showed that we are on a way away from standardised accounting. It was in this context that the IASB's work on management performance measures was brought up and questioned as it would indeed cling to a broader boundary question that tries to define what gets in and what must be left out. It was noted that trust was about systems and processes, not about printed reports, and that the non-GAAP measure problem could be addressed by moving away from the paper approach.
• Intangibles. Intangibles were described not only as a concern but as a growing concern as the economy is more and more service-oriented and there are many intangible assets that never show up on a balance sheet although the market clearly sees them. After an intervention from the audience that noted that the logic should not be that the markets see something and then the accounting needs to explain it, the panelists agreed that the problem was not so much in not recognising intangible assets but rather in the question why there was often such a gap between an entity's market capitalisation 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. The new definition of an asset in the revised Conceptual Framework was mentioned and questioned, especially in the context of research and development costs.
• 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. The wish was expressed that the many organisations on the sustainability side would combine under the umbrella of (ideally) one, and the clear favourite was the Global Reporting Initiative (GRI). The IASB could then work together with that one organisation and concentrate on areas where the requirements overlap to harmonise them so that for example not several concepts of materiality clash. Again the CORE & MORE concept was brought up where not only the sustainability organisations would combine but also the IASB and the remaining organisation would be brought together under one even larger umbrella that would also include other corporate reporting organisations.
• 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. He clearly advocated normative research in this case and expressed disappointment that at least as far as he was aware no research had been contributed to the revision of the Conceptual Framework of the IASB, which would have been a prime opportunity for normative research. His fellow panelists agreed and concluded that research should lead standard-setting and not just try to follow it.

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

• Slides for the keynote address
• Information on the full programme of the AMIS 2018

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.

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.

In his speech, Mr. Hinman states that:

Review the full speech on the SEC's website.

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); 
  
  and/or
  
  
• 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

• Press release on the Board's website
• Discussion Paper DP/2018/1 Financial Instruments with Characteristics of Equity
• IASB Snapshot introducing the DP
• IASB Video: Vice-Chair Sue Lloyd talks about the DP

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.

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).

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.”

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.

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.