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September 2018

Deloitte readiness survey highlights complexities around implementing the new Leases standards

Sep 07, 2018

On September 7, 2018, we released the report "Navigating the impact of the new Leases Standards — A Deloitte Global IFRS 16 and ASC 842 readiness survey". As Deloitte accompanies organizations in their new Leases standards implementation projects, we identified a need for organizations to share their many challenges and to understand those faced by others in their jurisdictions, regions and industries around the world. In response, Deloitte launched the Global IFRS 16 and ASC 842 readiness survey, which highlights the challenges and complexities facing organizations when implementing IFRS 16 and ASC 842 across the world.

Key findings of the survey are:

  • 52% of organizations anticipate a "material change" to their financial reporting
  • 67% of all organizations have not yet started or are on the impact assessment phase
  • 34% rate the determination of lease terms as highly complex
  • 86% of organizations are not considering early adoption
  • 43% have not yet determined their transition budgets
  • 74% of respondents do not currently have dedicated software systems for contracts
  • 61% of respondents are considering externally developed leasing systems
  • 38% of IFRS 16 respondents are considering the modified retrospective approach

Review the full survey results on our Global IAS Plus website.

Financial Executives International (FEI) published an interview with Deloitte lead partner on the survey Laurence Rivat discussing the survey results and especially IT aspects around implementing the new standards.

IASB concludes FICE DP webcast series

Sep 11, 2018

September 11, 2018, the International Accounting Standards Board (the Board) released its sixth and final webcast in a series of web presentations related to the Discussion Paper "Financial Instruments with Characteristics of Equity".

This webcast discusses the Board’s preferred approach approach to the presentation of financial liabilities.

Review the press release on the Board's website, which offers access to the webcast and to the slides, which can be downloaded separately.

All six webcasts of the series are available on the Board's FICE project page.

IFRS 16 – Changes that impact borrowers and lenders are coming to Canada - Are you ready?

Sep 06, 2018

On September 6, 2018, Cassels Brock Lawyers published an article on the impact of IFRS 16 on loan agreements.

Considerations that both the borrowers and lenders need to take include:

  • The most apparent effect of the new IFRS 16 will be on a borrower’s financial ratios in their loan agreements. Any ratios that utilize these terms, including asset turnover ratios, debt-to-equity ratios, current ratios and EBTIDA metrics, all which are common financial covenants in loan agreements, will also be impacted and should be tested in light of IFRS 16 treatment.
  • Borrowers should consider whether they will be able to meet their financial covenants as currently contemplated and they should consider working with their lenders to amend loan agreements to deal with the implementation of IFRS 16.
  • Lenders will need to consider if their current lending documents adequately deal with the changes that IFRS 16 will bring.

Review the full article on Cassels Brock Lawyers' website.

IFRS Foundation publishes proposed IFRS Taxonomy update

Sep 20, 2018

On September 20, 2018, the IFRS Foundation published "IFRS Taxonomy 2018 — Proposed Update 1 Common Practice (IFRS 13 "Fair Value Measurement")". Comments are requested by November 19, 2018.

This Taxonomy update includes elements to reflect the new common reporting practice for the disclosure requirements in IFRS 13, Fair Value Measurement, including (1) sensitivity of fair value measurement to changes in unobservable inputs and (2) quantitative information about significant unobservable inputs used in fair value measurement.

Review the press release and Taxonomy update on the Board’s website.

Paper on the satisfaction with existing segment disclosure requirements

Sep 10, 2018

In 2018, the CFA Institute, a global association of investment professionals, published "Segment Disclosures: Investor Perspectives". For the paper, the CFA Institute surveyed its members, including portfolio managers and analysts, regarding their level of satisfaction with existing segment disclosure requirements and solicited their views on areas for improvement as well as general perceptions about segment disclosures.

The survey results show that 75% of investors rate segment disclosures as very important to their analysis, but that only 13.4% are satisfied with the segment disclosures as currently provided. The survey therefore concludes that the implication for standard-setters is that there is substantial work to be done to meet segment disclosure investor needs.

The following additional results are also provided in the report:

  • 83.4% of respondents strongly agreed or agreed that segments should be disclosed as a critical audit matter.
  • 67.8% of respondents agreed or strongly agreed that competitive harm is overstated as a reason not to improve segment disclosures.
  • 86.6% of respondents agreed or strongly agreed that technological improvements should, but have not, substantially improved segment disclosures.
  • 72.7% of respondents agreed that regulators do not seem to enforce segment disclosure requirements effectively.
  • 61.8% of respondents indicated that the public discussion of results was not necessarily consistent with segment results.
  • 74.8% of respondents agreed that non-GAAP measures are not, but should be, reconciled to segment results.
  • 77.8% of respondents noted that segment disclosures are not always presented clearly and reconciled to the basic financial statements.
  • 82.4% stated that presentation by product/service or by region made comparative analysis more difficult.

Although the paper is more focused on US GAAP and Topic 280, the paper points at the similarity of the segment reporting requirements between US GAAP and IFRS and notes that a review of IFRS 8 Operating Segments should also be a project for the IASB.

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

Reporting on climate risk gains traction but still lacks financial impact analysis

Sep 26, 2018

On September 26, 2018, the Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders published a status report providing an overview of the extent to which companies in their 2017 reports included information aligned with the core TCFD recommendations published in June 2017.

The TCFD surveyed disclosures of over 1,700 firms from diverse sectors with broad geographical representation.

Even though the TCFD found that the majority of the firms surveyed disclose information aligned with at least one of the TCFD recommended disclosures, many companies just describe climate-related risks and opportunities but don't disclose the financial impact of climate change on the company.

The report also notes that disclosures vary widely across industries and that more non-financial companies than financial companies reported their climate-related metrics and targets. In addition, disclosures are often made in sustainability reports or spread across financial filings, annual and sustainability reports.

Review the press release and the status report on the FSB's website.

Summary of the July 2018 ASAF meeting now available

Sep 04, 2018

On September 4, 2018, the staff of the International Accounting Standards Board (the Board) have made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on July 9 and 10, 2018.

The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • Financial instruments with characteristics of equity (1–6): The IASB staff provided an education session for ASAF members on the Discussion Paper Financial Instruments with Characteristics of Equity issued in June 2018.
  • Business combinations under common control (7–25): ASAF members discussed (1) discuss the results of a joint investor survey conducted by the HKICPA and OIC as well as (2) measurement approaches developed by the staff for transactions within the scope of the Board’s BCUCC project.
  • Better communication (26–41): ASAF members gave feedback (1) on moving the primary financial statements project from the research agenda to the standard-setting agenda and (2) on the AcSB’s draft framework for reporting performance measures.
  • Property, Plant and Equipment – Proceeds before intended use (42–48): ASAF members were asked for advice on the possible ways forward regarding ED and the project in general.
  • Goodwill and impairment (49–68): ASAF members (1) offered their views about disclosures that the Board tentatively decided to consider and additional possible disclosures the staff are considering to improve disclosure requirements for business combinations, goodwill and impairment and (2) were asked whether they have any suggestions or ideas for other possible disclosures that can provide better and timely information without imposing costs that exceed the benefits.
  • Better communication (continued) (69–77): The ASAF members provided advice on (1) the Board's process for developing and drafting guidance for the Board regarding disclosure objectives and requirements and (2) which standards the Board should select for review.
  • Accounting for pensions (78–91): ASAF members discussed a proposal that the IASB consider hybrid pension plans either as another dimension of the research pipeline project or a project in itself.
  • Project updates and agenda planning (92–95): ASAF members discussed the proposed agenda for the October 2018 ASAF meeting.

A full summary of the meeting is available on the Board's website.

Updated IASB work plan — Analysis

Sep 25, 2018

On September 25, 2018, the International Accounting Standards Board (the Board) updated its work plan following its September 2018 meeting. Six new projects were added to the work plan.

Below is an analysis of all changes made to the work plan since our last analysis on July 20, 2018.

Standard-setting projects

Main­te­nance projects

Research projects

  • Extractive activities — Newly added to the work plan. The Board discussed this topic at its September meeting and plans to review research. No expected date is listed.
  • IBOR reform and the effects of financial reporting — Newly added to work plan; the Board plans to decide the project direction in Q4 2018.
  • Pension benefits that depend on asset returns — Newly added to the work plan; the Board plans to review research in H2 2019.
  • Share-based payment — The project summary slipped from September 2018 and is now expected in October 2018.

Other projects

  • IFRS Taxonomy update — 2018 general improvements — Newly added to the work plan; a proposed update is expected in Q4 2018.
  • IFRS Taxonomy update — Common practice (IFRS 13) — The IASB published this update on 20 September 2018. The work plan now states that the Board will analyse feedback in Q1 2019.

The revised IASB work plan is available on the Board's website.

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