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November 2018

SEC wants companies to boost disclosures

Nov 13, 2018

On November 13, 2018, the Wall Street Journal (WSJ) published an article on how the SEC wants companies to ramp up the level of disclosure surrounding the risks posed by cybersecurity, Brexit and the planned phaseout of the London interbank offered rate.

The SEC issued new cybersecurity disclosure guidance earlier this year, and the regulator wants companies to align their current disclosure policies with that guidance. That means including in corporate filings discussions of board risk oversight, disclosure controls and procedures, and insider trading policies as they relate to cybersecurity.

Risks related to the U.K.’s exit from the European Union are another area in which the SEC is looking for additional detail in corporate filings. Negotiators for Britain and the EU reached a draft deal for the divorce on Tuesday, but British Prime Minister Theresa May must now rally her deeply divided cabinet behind this proposal.

The planned transition away from Libor, which financial regulators expect to complete by the end of 2021, is another topic corporate accountants should consider when preparing disclosures for compiling financial filings. There are significant uncertainties surrounding legacy financial instruments that rely on Libor and how the switch to another benchmark for these instruments may affect the reporting company’s hedge accounting.

Review the full article on the WSJ's website.

Summary of the October 2018 ASAF meeting now available

Nov 07, 2018

On November 7, 2018, the staff of the International Accounting Standards Board (IASB) made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on October 4, 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 (1–18): The ASAF members discusses views and feedback on the Dis­cus­sion Paper Financial In­stru­ments with Char­ac­ter­is­tics of Equity issued in June 2018.
  • IFRS 3 Business Combinations reference to the Conceptual Framework (19–27): ASAF members discussed problems that could arise if an existing reference in IFRS 3 to the Framework for the Preparation and Presentation of Financial Statements were replaced with a reference to the 2018 Conceptual Framework.
  • Extended external reporting (28–36): ASAF members gave feedback on the New Zealand’s External Reporting Board’s research on preparers of corporate reports and users of EER information.
  • Accounting policies and accounting estimates (37–50): ASAF members provided their views on the definition of accounting estimate and accounting policy and were updated on feedback received from the IFRS Interpretations Committee.
  • Rate-regulated activities (51–58): ASAF members provided their views on disclosure objectives and requirements for defined rate regulation.
  • Extractive activities (59–64): The ASAF members provided information on what significant changes since the issuance of the 2010 Discussion Paper Extractive Activities.
  • Project updates and agenda planning (65–70): ASAF members discussed the proposed agenda for the December 2018 ASAF meeting, disclosure initiative, and goodwill and impairment.

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

TRG IFRS 17 meeting: Implementation questions submitted

Nov 20, 2018

On November 20, 2018, the International Accounting Standards Board (the Board) released a log of implementation questions submitted so far for the next Transition Resource Group for IFRS 17, "Insurance Contracts" meeting on April 4, 2019.

Review the press release and implementation questions on the Board's website.

UK taskforce publishes report on IFRS 9 expected credit loss disclosures

Nov 26, 2018

On November 26, 2018, the Taskforce on Disclosures about Expected Credit Losses published its first report. Three regulators in the United Kingdom, one of which is the UK Financial Reporting Council (FRC), jointly established a taskforce on disclosures about expected credit losses in November 2017. The taskforce is modeled on the Enhanced Disclosure Task Force (EDTF) of the Financial Stability Board (FSB) and was set up to promote high-quality disclosures about expected credit losses and to encourage greater consistency between and comparability of those disclosures.

The recommendations in the report were developed primarily for use by the preparer firms represented on the taskforce. However, the recommendations may be of relevance to other banks and similar financial institutions as a guide to best practice.

Review the report on the FRC's website.

Updated IASB work plan — Analysis

Nov 17, 2018

On November 16, 2018, the International Accounting Standards Board (the Board) updated its work plan following its November 2018 meeting. A project on IFRS 17 amendments is still missing from the work plan although the IASB has begun discussing possible amendments to IFRS 17, "Insurance Contracts" and has already tentatively decided to defer the effective date of the standard by one year.

Below is an analysis of all changes that were made to the work plan since our last analysis on October 26, 2018.

Standard-setting projects

  • Primary financial statements — a discussion paper or exposure draft is now expected in the second half of 2019 (was: first half of 2019)

Maintenance projects

Research projects

Other projects

  • IFRS Taxonomy update — Common Practice (IFRS 13) — an analysis of the feedback received is now expected in January 2019 (was: first quarter of 2019)
  • Revisions to the Preface to IFRSs — newly added to the work plan; finalized wording is expected in December 2018

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

Why companies should blow up best practices

Nov 07, 2018

On November 7, 2018, Geoff Tuff, principal at Deloitte Consulting and senior leader of the organization’s innovation and applied design practices, and Steven Goldbach, principal at Deloitte, chief strategy officer and member of its U.S. executive leadership team, joined the Knowledge@Wharton radio show to talk about their book, "Detonate: Why and How Corporations Must Blow Up Best Practices (and Bring a Beginner’s Mind)".

Both Tuff and Goldbach have learned one sure thing after decades of working with different companies: Relying on best practices does not guarantee future success. Today’s accelerated speed of change means that business leaders need to ditch old habits and bring a fresh perspective to their operations if they want to get to the top and stay there.

Tuff emphasizes:

When change accelerates and we can no longer rely on the lessons of the past to do things well, that’s where best practices become really dangerous.

Review the transcript of the conversation and podcast on Wharton's website.

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