October 2019

AcSB response – Amendments to IFRS 17

Sep 25, 2019

On September 25, 2019, the Accounting Standards Board (AcSB) responded to the International Accounting Standards Board's (IASB) Exposure Draft, issued in June 2019.

The AcSB encouraged the IASB to move quickly to finalize IFRS 17, as the standard is expected to benefit the global capital markets. A common global adoption date of IFRS 17 is critical to the success of transitioning to the new insurance contract standard.

Review the press release and letter on the AcSB's website.

Background papers for the 36th annual ISAR meeting

Oct 28, 2019

The thirty-sixth session of the United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) will be held in Geneva on October 30 - November 1, 2019. One of the main agenda items discussed during the session will be the practical implementation of core indicators for entity reporting and the contribution towards the attainment of the Sustainability Development Goals.

For this agenda item, background notes have been prepared by the UNCTAD secretariat to facilitate deliberations. The paper can be downloaded from the UNCTAD website:

Since the thirty-fifth session of ISAR, UNCTAD has completed and published the Guidance on Core Indicators for Entity Reporting on Contribution towards Implementation of the Sustainable Development Goals.

The core indicators contained in the current version of the Guidance are follows:

Economic area

  • Revenue
  • Value added
  • Net value added
  • Taxes and other payments to the Government
  • Green investment
  • Community investment
  • Total expenditures on research and development
  • Percentage of local procurement

Institutional area

  • Number of board meetings and attendance rate
  • Number and percentage of women board members
  • Board members by age and range
  • Number of meetings of audit committee and attendance rate
  • Compensation: total compensation per board member (both executive and non-executive directors)
  • Amount of fines paid or payable due to settlements
  • Average number of hours of training on anti-corruption issues, per year per employee

Social area

  • Proportion of women in managerial positions
  • Average hours of training per year per employee
  • Expenditure on employee training per year per employee
  • Employee wages and benefits as a proportion of revenue, by employment type and gender
  • Expenditures on employee health and safety as a proportion of revenue
  • Frequency/incident rates of occupational injuries
  • Percentage of employees covered by collective agreements

Environmental area

  • Water recycling and reuse
  • Water use efficiency
  • Water stress
  • Reduction of waste generation
  • Waste reused, remanufactured and recycled
  • Hazardous waste
  • Greenhouse gas emissions (scope 1)
  • Greenhouse gas emissions (scope 2)
  • Ozone-depleting substances and chemicals
  • Renewable energy
  • Energy efficiency

A review of the case studies provided evidence that environmental and social indicators were more difficult to report on than economic and institutional indicators.

General information on the session including a provisional agenda for the meeting is available here.

Further publication of interest in the context of the meeting are available on the UNCTAD website:

Chairman of the Trustees believes IASB needs to be prepared for sustainability

Sep 30, 2019

On September 30, 2019, the Chairman of the IFRS Foundation Trustees, Erkki Liikanen, spoke at the WSS meeting about his impressions after one year as Chairman and about three issues he believes the IFRS Foundation must look out for: its gains, consistent application, and sustainability.

Mr. Liikanen began his speech by describing the three tasks the IFRS Foundation has (governance, responsibility for strategy, oversight) and noted that the Foundation is there to “ defend the independence of the IASB”. He called the history of the IASB a short, but successful one with IFRS having become the de facto global language of financial reporting.

With that Mr. Liikanen turned to the three issues that he sees as the future task of the IFRS Foundation. Firstly, he said, the Foundation must protect its gains in times of  geopolitical tensions, increasing protectionism, and globalization. He cautioned that “the IFRS Foundation is not immune against pressure”. He also noted that the Foundation cannot sit back and live on its successes but must work to make sure that IFRSs continue to be the global standard in uncertain times in order to continue to maintain the full confidence of the investors. In this context he described the IFRS Foundation as the “custodian of the IFRS product”.

Mr. Liikanen then turned to the question of consistent application. He especially noted that in this area the IASB and the national standard-setters need to work together. While, as he said, the IASB can operate alone, it needs everybody else for support. And, as he said earlier, the national standard-setters really impressed him by the level of engagement and level of expertise. So, Mr. Liikanen concluded, for consistent application and the success of IFRS the Foundation always needs to keep an open ear and ask: “What can we do more?”

Mr. Liikanen concluded his speech by turning to the subject of sustainability, an issue investors increasingly ask for. They want pure financials “and more”, which would translate into the usual numbers plus environmental impact and long-term impact. So what would be the role of the IFRS Foundation in this? He noted that it is very difficult to follow the different systems. He said he had come across “many great products with great acronyms”. However, this means that information is not always comparable, while investors ask for comparability and tools to work with. And, he noted, some time in the future investors might come to the IFRS Foundation and ask for that there. Therefore, he concluded, the IASB is currently not moving into the foreground of sustainability reporting, but, when asked, “we must be prepared”.

Review the conference agenda papers on the IASB's website.

FASB approves proposed effective date delays

Oct 16, 2019

On October 16, 2019, the Financial Accounting Standards Board (FASB) approved its August 2019 proposal to grant private companies, not-for-profit organizations, and certain small public companies various effective date delays on its credit losses (CECL), leases, and hedging standards.

At this meeting, the FASB discussed (1) the effective dates of its standards on credit losses, hedging, leases, and insurance for private companies, not-for-profit organizations, and small public companies and (2) multiple-layer hedging.

Effective-date considerations

The Board affirmed its decision to stagger effective dates for major standards and to amend the effective dates of its standards on credit losses, hedging, leases, and insurance to give implementation relief to certain types of entities. The Board directed its staff to draft a final Accounting Standards Update (ASU) for a vote by written ballot.

Review the press release and tentative Board decisions on the FASB’s website and Deloitte's related journal entry.

Hedging — last-of-layer method

The Board discussed multiple-layer and fair value hedge basis adjustment issues and directed its staff to draft a proposed ASU for external review.

Review the tentative Board decisions on the FASB’s website and Deloitte's related journal entry.

FRC Lab report discussing reporting on climate-related issues

Oct 31, 2019

In October 2019, the Financial Reporting Lab of the UK Financial Reporting Council (FRC) released a new report which reveals that companies are falling short of investors’ expectations for clearer reporting on climate-related issues. It notes that while reporting on climate change is an evolving practice, investor expectations are changing rapidly.

The report highlights the gap between current reporting and investor expectations as economies increasingly transition towards low carbon and climate resilient futures and calls on companies to bridge this gap. It provides practical guidance about where companies can improve their reporting. The report also outlines what investors want to understand, questions companies should ask themselves, recommended disclosures, and a range of examples of the developing practice of climate-related reporting.

Review the report Climate-related corporate reporting – Where to next? from the FRC's website.

FRC publishes thematic review findings of IFRS 9, IFRS 15, and IAS 36 company disclosures

Oct 10, 2019

On October 10, 2019, the UK Financial Reporting Council (FRC) published three thematic reviews to help companies improve the quality of their corporate reporting in relation to IFRS 9 "Financial Instruments", IFRS 15 "Revenue from Contracts with Customers" and the impairment of non-financial assets.

The reports analyze the disclosures in a sample of companies’ reports and provide examples of better practice.

The FRC concluded that IFRS 15 disclosures could be improved especially with respect to

  • improving the descriptions of accounting policies and ensuring that these are tailored to their own particular circumstances; and
  • providing more detailed information about the judgements significantly affecting the amount and timing of revenue.

In connection with IFRS 9 the FRC found that there was still room for companies to improve disclosures by

  • analysing the credit quality of trade receivables by non-banking companies; and
  • providing details of the indicators of a significant increase in credit risk particularly by the smaller banks.

As regards IAS 36 and the impairment of non-financial assets, the FRC encourage companies to pay greater attention to:

  • providing relevant information around significant judgements and key assumptions made in estimating the recoverable amount of assets and cash-generating units;
  • explaining the sensitivity to changes in key assumptions, where reasonably possible changes could give rise to impairment of goodwill or material further adjustments to already-impaired assets. 

Review the following additional information on the FRC's website:


IFRS Foundation publishes proposed IFRS Taxonomy update

Oct 14, 2019

On October 14, 2019, the IFRS Foundation published "IFRS Taxonomy 2019 — Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)". Comments are requested by December 13, 2019.

The proposed update includes elements to reflect the new disclosure requirements introduced by the amendments to IFRS 9, IAS 39 and IFRS 7, issued by the Board on September 26, 2019.

Review the press release and proposed update on the IASB’s website.

Paper on climate-related risk and financial statements

Oct 28, 2019

The Australian Accounting Standards Board (AASB) announced the availability of a paper "Climate-related Risk and Financial Statements: Implications for Regulators, Preparers, Auditors and Users".

The AASB recently published published the bulletin Climate-related and other emerging risks disclosures: assessing financial statement materiality using AASB Practice Statement 2, with AASB Practice Statement 2 being essentially the same as the IASB Practice Statement on Materiality. The paper now released provides an outline of the guidance in the practice statement and motivation behind the issuance of the bulletin on climate‐related risk disclosures, key takeaways and recommendations, and the AASB's suggestions on the type of evidence that would be useful for standard-setters.

Climate-related Risk and Financial Statements: Implications for Regulators, Preparers, Auditors and Users was published in the Australian Accounting Review and can be accessed free of charge in the Wiley Online Library.

Sixth IASB Research Forum

Oct 21, 2019

The International Accounting Standards Board (IASB) in conjunction wit the Journal of International Accounting Research (JIAR) will host its sixth research forum on October 28–29, 2019.

The paper Standard Precision and Aggressive Financial Reporting—The Influence of Incentive Horizon will be presented. Here's a copy of the abstract:

The extant literature on standard precision suggests that financial statement preparers are less likely to make aggressive financial reporting decisions under less precise, principles-based accounting standards as compared to under more precise, rules-based accounting standards. We extend this line of research by examining how the incentive horizon of financial statement preparers influences earnings management behavior. Consistent with prior literature, we find evidence that more precise standards lead to more income-increasing earnings management behavior than do less precise standards when the incentive horizon is short-term in nature. However, when the incentive horizon is long-term, more precise standards are associated with financial reporting decisions that reduce current income relative to less precise standards. Importantly, the findings demonstrate that the effects of standard precision are changed by the incentive time horizon, and the market implications of standard precision cannot be fully understood when precision is studied without considering the incentives of decision makers.

Updated IASB work plan — Analysis

Oct 01, 2019

On October 1, 2019, the International Accounting Standards Board (the Board) updated its work plan following its September 2019 meeting.

Below is an analysis of all changes that were made to the work plan since our last analysis on September 3, 2019.

Standard-setting projects

  • No changes

Maintenance projects

Research projects

  • SME Implementation Group draft Q&A — project has disappeared from the work plan
  • Extractive activities — the review of research is now expected in the first half of 2020 (previously fourth quarter of 2019)
  • Goodwill and impairment — a discussion paper is now expected in the first quarter of 2020 (previously fourth quarter of 2019)

Other projects

  • 2020 Agenda Consultation — newly added to the work plan, a request for information is expected in the first half of 2020
  • IFRS Taxonomy Update — Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) — newly added to the work plan, a proposed IFRS Taxonomy Update is expected in October 2019

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

Updated IASB work plan — Analysis (October 2019)

Oct 25, 2019

On October 25, 2019, the International Accounting Standards Board (the Board) updated its work plan following its October 2019 meeting.

Below is an analysis of all changes that were made to the work plan since our last analysis on October 1, 2019.

Stan­dard-set­ting projects

Main­te­nance projects

  • 2019 Comprehensive Review of the IFRS for SMEs Standard — the request for information is now expected in the first quarter of 2020 (previously fourth quarter of 2019)
  • Accounting Policies and Accounting Estimates — dis­cus­sions on the project direction happened in October 2019 (previously fourth quarter of 2019).
  • Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) — An IFRS amendment is expect in the first half of 2020.

Research projects

Other projects

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

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