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May 2019

2018 Changes to Part I of the CPA Canada Handbook – A summary of AcSB’s Due Process and Endorsement Activities

May 31, 2019

On May 31, 2019, the Ac­count­ing Stan­dards Board (AcSB) re­leased this doc­u­ment which describes its due process and endorsement activities related to the changes made to Part I of the CPA Canada Handbook during 2018.

Download the document from the AcSB's website.

AcSB Exposure Draft – Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)

May 13, 2019

On May 13, 2019, the Accounting Standards Board (AcSB) issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by June 17, 2019.

The AcSB would like input from Canadian respondents on the following additional question regarding the proposed amendments:

The IASB has developed the proposed amendments in accordance with its due process for application around the world. Assuming the Exposure Draft proposals are finalized and approved by the IASB in accordance with its due process, do you think that the proposals are appropriate for application in Canada? If not, please specify which aspects of the proposals, and what
circumstances, make the accounting requirements proposed in the Exposure Draft inappropriate.

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

AICPA issues SAS 134 and SAS 135

May 08, 2019

On May 8, 2019, The American Institute of CPAs (AICPA) Auditing Standards Board published two Statements on Auditing Standards (SASs): No. 134, “Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements,” and No. 135, “Omnibus Statement on Auditing Standards — 2019.”

SAS 134 “addresses the auditor’s responsibility to form an opinion on the financial statements and the form and content of the auditor’s report issued as a result of an audit of financial statements.” This SAS also discusses “the auditor’s responsibilities, and the form and content of the auditor’s report, when the auditor concludes that a modification to the auditor’s opinion on the financial statements is necessary, and when additional communications are necessary in the auditor’s report.”

SAS 135 “is intended to more closely align [AICPA] guidance with the PCAOB's standards by primarily amending AU-C section 260, Communications With Those Charged With Governance, AU-C section 550, Related Parties, and AU-C section 240, Consideration of Fraud in a Financial Statement Audit, in AICPA Professional Standards.”

Review the press release on the AICPA’s website.

Chief Accountant to leave SEC

May 30, 2019

On May 30, 2019, the SEC an­nounced that Wesley R. Bricker, the agency's Chief Ac­coun­tant, will leave the SEC in June. The current deputy chief ac­coun­tant, Sagar Teotia, will become the acting chief ac­coun­tant after Mr. Bricker’s de­par­ture.

Mr. Bricker was ap­pointed acting chief ac­coun­tant in the SEC's Office of the Chief Ac­coun­tant in July 2016. He was named to the po­si­tion per­ma­nently in No­vem­ber 2016.

Mr. Teotia was ap­pointed deputy chief ac­coun­tant in March 2017. He is a former partner at De­loitte & Touche LLP.

For more in­for­ma­tion, see the press re­leases on Mr. Bricker’s de­par­ture and Mr. Teotia’s ap­point­ment on the SEC's Web site.

Death of Thomas E. Jones, former Vice-Chairman of the IASB

May 31, 2019

The members of the IASB and staff of the IFRS Foun­da­tion have released con­do­lences on the death of Thomas E. Jones, former Chair of the IASB's pre­de­ces­sor body, the IASC and the first Vice-Chair­man of the IASB.

Mr. Jones' work as an accounting stan­dard-set­ter followed a suc­cess­ful career in in­vest­ment banking. In 2007, Financial Ex­ec­u­tives International recog­nized his career achieve­ments by inducting him into the FEI Hall of Fame.

Download the statement re the passing of Mr Jones on the IASB website.

ESEF becomes European law

May 29, 2019

On May 29, 2019, the European Com­mis­sion announced that it has published a reg­u­la­tion requiring all listed companies across the European Union to submit their annual financial state­ments digitally as Inline XBRL documents effective January 1, 2020 onwards.

The new European Single Elec­tronic Format (ESEF) aims at improving ac­ces­si­bil­ity and at making the in­for­ma­tion much more user-friendly. The move will also fa­cil­i­tate the avail­abil­ity of key financial in­for­ma­tion in all EU official languages. In support of these new rules, the European Se­cu­ri­ties and Markets Authority (ESMA) has prepared an ESEF Reporting Manual and ESEF taxonomy files to help companies in their prepa­ra­tion. The new pro­vi­sions will be updated on a yearly basis to reflect possible updates to the International Financial Reporting Standards (IFRS) taxonomy, which aims to improve com­mu­ni­ca­tion between preparers and users of financial state­ments.

Please click for the following ad­di­tional in­for­ma­tion:

FRC guide to help smaller listed companies improve financial reporting

May 13, 2019

In May 2019, the UK Financial Reporting Council (FRC) published "Smaller Listed and AIM Quoted Companies — A Practical Guide for Audit Committees on Improving Financial Reporting".

In 2015, the FRC published a discussion paper on the same topic found that "whilst the system of financial reporting is not fundamentally flawed, there is a higher incidence of poorer quality annual reports by smaller quoted companies than by their larger counterparts". Therefore, the FRC has developed a guide that offers practical, cost-effective suggestions on how smaller quoted companies can improve the quality of their financial reporting and suggested questions for audit committees to ask themselves and those associated with the financial reporting process that are designed to encourage the smaller quoted companies to reflect on current practices and consider areas for improvement. The guide not only builds on the 2015 discussion paper but also includes more recent developments such as three new international accounting standards, on revenue (IFRS 15), leases (IFRS 16) and financial instruments (IFRS 9), coming into effect in the last three years.

Review the guide on the FRC's website.

IASB issues podcast on IFRS 17 discussions

May 17, 2019

On May 17, 2019, the International Accounting Standards Board (the Board) released a podcast recorded by Darrel Scott, IASB member, and Andrea Pryde, technical staff, reporting on the discussion at the May 2019 meeting of the Board about IFRS 17, "Insurance Contracts".

Listen to the 10-minute podcast on the Board's website.

IASB publishes proposals for amendments under its annual improvements project (cycle 2018-2020)

May 21, 2019

On May 21, 2019, the International Accounting Standards Board (the Board) published an exposure draft ED/2019/2 "Annual Improvements to IFRS Standards 2018–2020". It contains proposed amendments to four International Financial Reporting Standards as result of the Board's annual improvements project. Comments are requested by August 20, 2019.

The Board uses the annual improvements process to make necessary, but non-urgent, amendments to IFRS Standards® that will not be included as part of another major project.

The ED proposes the following amendments:

Standard Subject of proposed amendment
IFRS 1, First-time Adoption of International Financial Reporting Standards Subsidiary as a first-time adopter. The proposed amendment would require a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRS Standards.
IFRS 9, Financial Instruments Fees in the ‘10 per cent’ test for derecognition. The proposed amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability. Applying the proposed amendment, an entity would include only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
IFRS 16, Leases Lease incentives. The proposed amendment to Illustrative Example 13 accompanying IFRS 16 would remove from the example the illustration of the reimbursement of leasehold improvements by the lessor. The proposed amendment would resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.
IAS 41, Agriculture Taxation in fair value measurements. The proposed amendment would remove the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. The proposed amendment would ensure consistency with the requirements in IFRS 13.

In June 2018, the Board tentatively decided to also propose some amendments to IFRS 17, Insurance Contracts as part of its next cycle of annual improvements. However, these proposed amendments have now been moved the general project regarding proposed amendments to IFRS 17 that will see an exposure draft in June 2019.

ED/2019/2 Annual Improvements to IFRS Standards 2018–2020 does not contain proposed effective dates for the proposed amendments as the intention is to decide on these after the exposure period.

Review the following additional information:

 

IASB publishes proposed amendments to IFRS 3 to update a reference to the Conceptual Framework

May 30, 2019

On May 30, 2019, the International Accounting Standards Board (the Board) published an exposure draft "Reference to the Conceptual Framework (Proposed amendments to IFRS 3)" with three proposed amendments to IFRS 3 "Business Combinations" that would update an outdated reference in IFRS 3 without significantly changing its requirements. Comments are requested by September 27, 2019.

 

Background

In March 2018, the IASB issued the 2018 Conceptual Framework and most references to the Framework included in IFRS Standards® were updated to the 2018 Framework at that time. However, paragraph 11 of IFRS 3, Business Combinations, which still refers to the 1989 Framework, was not updated as this could have caused conflicts for entities applying IFRS 3.

Potential conflicts occur as the definition of assets and liabilities in the 2018 Framework differ to those in the 1989 Framework potentially leading to day 2 gains or losses post-acquisition for some balances recognized.

The IASB has now identified three possible amendments to IFRS 3 that would update IFRS 3 without significantly changing its requirements.

 

Suggested changes

The changes proposed in ED/2019/3 Reference to the Conceptual Framework (Proposed amendments to IFRS 3):

  • update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
  • add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer should apply IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and
  • add to IFRS 3 an explicit statement that an acquirer should not recognize contingent assets acquired in a business combination.

The exposure draft also notes alternative approaches considered by the Board as well as the Board's reasons for not choosing those.

Comments on the proposed changes are requested by September 27, 2019.

 

Effective date

The exposure draft does not contain a proposed effective date for the amendments as the intention is to decide on it after the exposure period. However, it is already clear that early application would be permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier.

 

Additional information

 

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.