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November 2017

AICPA issues revenue working drafts for broker-dealers and telecommunications entities

Nov 02, 2017

On November 2, 2017, the American Institute of Certified Public Accountants’ (AICPA) revenue recognition task forces released for public comment two working drafts on accounting issues associated with the implementation of the new revenue standard for broker-dealers and telecommunications entities.

The broker-dealer working draft addresses underwriting revenues, while the telecommunications working draft covers the determination of transaction prices.

Comments on the working drafts are due by January 2, 2018. For more information, see the revenue recognition resource page on the AICPA’s website.

AICPA proposes changes in auditor’s report

Nov 30, 2017

In November 2017, the American Institute of CPAs’ Auditing Standards Board (AICPA) released three exposure drafts proposing ways to improve the usefulness of the auditor’s report, in response to recent standards from the Public Company Accounting Oversight Board and the International Auditing and Assurance Standards Board. Comments are request by May 15, 2018.

ASCG paper on information gaps in group financial statements and the role of consolidation

Nov 30, 2017

In November 2017, the Accounting Standards Committee of Germany (ASCG) submitted a paper "Information deficiencies of today’s group f/s and the specific role of consolidation regarding these" for discussion at the upcoming meeting of the Accounting Standards Advisory Forum (ASAF) at the IASB's offices in London on December 7-8, 2017.

The paper states that whilst it is widely acknowledged that transactions with and between members of the same group should not influence the outside appearance of that group and therefore be eliminated, such eliminations do result in a loss of information which is definitely and finally lost for outside users of financial statements. It goes on to note that, furthermore, much of today’s complexity in the environment is not captured in the group’s financial statements although it could highly influence the position, performance and cash flows of the group.

Review the paper on the IASB's website.

December 2017 ASAF meeting—agenda papers primary financial statements

Nov 20, 2017

On November 20, 2017, the International Accounting Standards Board (IASB) released the agenda papers for the next ASAF meeting on definition of finance income/expenses and better ways to communicate other comprehensive income (OCI).

Here's a summary of staff recommendations:

Definition of finance income/expenses

The staff recommended:

  1. using ‘cash and cash equivalents’ as a proxy for cash and temporary investments of excess cash (‘excess cash’) in the definition of finance income/expenses.
  2. that finance income/expenses consist of the following five line items:
    1. interest income from cash and cash equivalents calculated using the effective interest method;
    2. other income from cash, cash equivalents and financing activities;
    3. expenses from financing activities;
    4. other finance income; and
    5. other finance expenses. 
  3. clarifying the current description of ‘financing activities’ in IAS 7 Statement of Cash Flows using the wording recommended to the IFRS Interpretations Committee by the staff in March 2013.  

Better ways to communicate other comprehensive income (OCI)

The staff recommended:

  1. renaming the two categories in the OCI section of the statement(s) of financial performance as follows:
    1. ‘remeasurements reported outside profit or loss’ (previously OCI items that will not be reclassified subsequently to profit or loss); and
    2. ‘income and expenses to be included in profit or loss in the future’ (previously OCI items that will be reclassified subsequently to profit or loss).
  2. introducing a new subtotal between the two categories called ‘income after remeasurements reported outside profit or loss’.
  3. developing investor education material in the form of case studies that illustrate why it is important for users of financial statements to consider items of OCI in their analysis of companies.

Review the agenda papers and listen to the webcast for this meeting on the IASB's website.

FASB simplifying leases standard implementation

Nov 29, 2017

On November 29, 2017, the Financial Accounting Standards Board (FASB) made decisions to reduce costs and ease the implementation burden of the Leases standard for preparers.

The board decided to issue an Accounting Standard Update (ASU) that will:

  • Provide an optional practical expedient for transition. Organizations that elect the practical expedient would not be required to consider their accounting for existing land easements that are not currently accounted for under FASB ASC Topic 840.
  • Clarify that new or modified land easements should be evaluated under Topic 842 (the leases standard) once effective.

In addition, the board decided to issue a proposed ASU with a comment period of 30 days that would add an option for transition to Topic 842 that would enable an organization to not provide comparative period financial statements. Instead, an organization would apply the transition provisions of the lease accounting standard at its effective date.

Review the press release on the FASB's website and an article on the Journal of Accountancy's website.

Fourth IASB Research Forum - papers and case studies

Nov 30, 2017

In November 2017, the International Accounting Standards Board (IASB) posted the papers presented and case studies discussed at its fourth Research Forum held on November 28 and 29, 2017 in Brussels.

IASB Chairman comments on the IASB's role in wider corporate reporting

Nov 09, 2017

On November 9, 2017, the International Accounting Standards Board (IASB) released a speech by IASB Chairman, Hans Hoogervorst, given at a Brazilian international accounting seminar held on November 9. In his speech, Mr. Hoogervorst discussed the IASB's present initiative on better communication in financial reporting, support of implementation and application of IFRSs, and the IASB’s role in reporting that goes beyond the financial statements.

On better communication Mr. Hoogervorst offered no new insights, but confirmed that the IASB feels that it now has a good set of standards that covers the vast majority of transactions and would therefore prioritize better presentation and formatting of the information in the financial statements in the coming years, rather than developing new, big standards with focus on recognition and measurement. Similarly, on support of implementation and application, he mainly stressed the importance of the work of the IFRS Interpretations Committee, but offered no detailed insights.

Turning then to wider corporate reporting, Mr. Hoogervorst stated that the IASB is often asked questions about its role in this space and that some constituents would like the IASB to play a more central role in trying to create more uniformity in the multitude of sustainability standards. He admitted:

[T]he IASB knows that financial reporting in the narrow sense has its limitations. There are many elements of value creation which are important to the investor but which are not adequately captured in the financial statements. Investors need to understand a company’s business model and its strategy for long-term value creation. They need to understand the intangibles that are vital to their business model. And, yes, sustainability issues can also be important for long-term value creation in certain industries, just think of mining and car manufacturing.

And yet he also stated:

Let me be clear; we do not plan to get into environmental and sustainability reporting. That is not our area of expertise. There are many other players. Our remit is, and will remain, financial reporting—with focus on the participants in the capital markets. That is investors and potential creditors.

In conclusion, Mr. Hoogervorst offered that there has been a lot of development in this area since 2010 when the IASB published its Management Commentary Practice Statement and therefore, the IASB "is considering" whether to update the practice statement to capture the developments. This topic has been included on the IASB's agenda for its next meeting.

Review the full speech on the IASB's website.

IASB discusses investors’ reactions to IFRS 17

Nov 20, 2017

On November 20, 2017, the International Accounting Standards Board (IASB) issued an article by IASB board member Nick Anderson that discusses the top five question investors and analysts have on the IASB’s new insurance contracts standard, IFRS 17.

The five questions discussed include:

  1. Will IFRS 17 affect dividend payouts?
  2. How can a principle-based Standard like IFRS 17 improve comparability between insurers?
  3. Will IFRS 17 bring global comparability to the insurance sector?
  4. What are the main differences between IFRS 17, regulatory reporting and embedded value reporting?
  5. How will removing insurance premiums from the income statement improve comparability?

Review the article on the IASB’s website.

IASB posts webcast on IFRS 17

Nov 02, 2017

On November 2, 2017, the International Accounting Standards Board (IASB) posted a webcast on recognition and derecognition requirements in IFRS 17, "Insurance Contracts".

The new webcast is part of a series on the implementation of IFRS 17 and can be accessed on the IASB website. Earlier webcasts and webinars on IFRS 17 are available through an archive on the IASB's website.

IFRS 17 Transition Resource Group meeting summary and podcast - November 2017

Nov 17, 2017

On November 17, 2017, the International Accounting Standards Board (IASB) released a summary of its meeting held on November 13, 2017.

The TRG is intended to support implementation by providing a public forum to discuss questions raised on implementation of the new Standard IFRS 17, Insurance Contracts.

The TRG discussed Agenda Paper 1, which included an overview and operating procedures.

Review the meeting summary and podcast on the IASB's website.

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