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January 2020

AcSB and ASBJ hold joint meeting

Jan 13, 2020

On January 13, 2020, the Accounting Standards Board (AcSB) and the Accounting Standards Board of Japan (ASBJ) held a joint meeting in Toronto. The meeting was the first bilateral meeting between the two standard-setters.

At the meeting, the AcSB and the ASBJ both introduced their respective financial reporting frameworks and activities, and exchanged views on the opportunities for cooperation. They also discussed specific technical topics in which both Boards have interest, including insurance, revenue recognition and leases. The two standard-setters plan to continue to exchange views.

Review the press release on the ASBJ's website.

AcSB Exposure Draft – General Presentation and Disclosures

Jan 15, 2020

On January 15, 2020, the Accounting Standards Board (AcSB) released an exposure draft that corresponds to the International Accounting Standards Board's (IASB) exposure draft of a new standard "General Presentation and Disclosures" that is intended to replace IAS 1, "Presentation of Financial Statements". Comments are requested by June 30, 2020.

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.

EFRAG TEG appointments and reappointments

Jan 07, 2020

On January 7, 2020, the Board of the European Financial Reporting Advisory Group (EFRAG) announced the appointment of four new members of — and six reappointments to — its Technical Experts Group (TEG).

The new EFRAG TEG members are Jens Berger (Leader of Deloitte Germany's IFRS Centre of Excellence), Erlend Kvaal (academic, Norway), David Procházka (at large, Czech Republic) and Christoph Schauerte (industry, Germany). The appointments of Mr. Berger, Mr. Kvall and Mr. Schauerte are effective January 1, 2020, while Mr. Procházka will begin his term on April 1, 2020.

EFRAG TEG Vice-Chair Nicklas Grip has been reappointed, along with Ana Rosa Cortez, Geert Ewalts, Emmanuelle Guyomard, Ambrogio Virgilio and Jed Wrigley. Their reappointments are effective from April 1, 2020.

Review the press release on the EFRAG's website.

 

Executive Vice President of the European Commission calls for European non-financial reporting standards

Jan 28, 2020

On January 28, 2020, at a conference on implementing the European Green Deal, Executive Vice President Valdis Dombrovskis announced that the European Commission will support a process to develop European non-financial reporting standards.

Mr Dombrovskis said that later this year he would present a renewed sustainable finance strategy, which would include a revision of the Non-Financial Reporting Directive. This would require companies to increase disclosure on their sustainable activities and give adequate reliable information on sustainability risks and opportunities. However, he said, not every detail can - or should - be fixed in law. There was also a need for clear reporting standards for companies to apply. Mr Dombrovskis went on to say:

So today, I can tell you that the European Commission will support a process to develop European non-financial reporting standards. I will soon invite the European Financial Reporting Advisory Group [EFRAG] to begin preparatory work for these standards as quickly as possible. The many overlapping international reporting standards and set-ups confuse companies and investors. They also find it expensive. The EU is well placed to address this situation – and show leadership in building consensus for a set of standards that can be widely accepted.

Mr Dombrovskis conceded that the European Commission cannot do this alone. Therefore, he stated, the best and most widely accepted elements of what exists today will be the starting point and expert assistance from those organisations and individuals who can best contribute to the process will be used. 

Review the Mr. Dombrovskis' speech on the European Commission's website.

FASB Staff issues Q&As on revenue recognition

Jan 31, 2020

In January 2020, the Financial Accounting Standards Board (FASB) staff issued a Q&A document, Revenue Recognition Implementation Q&As.

The Q&As are compiled from previously issued educational materials and address the following topics:

  • Scope
  • Step 1 — Identifying the contract
  • Step 2 — Identifying the performance obligation
  • Step 3 — Determining the transaction price
  • Step 4 — Allocating the price to the performance obligation
  • Step 5 — Recognizing revenue
  • Licensing
  • Presentation
  • Contract costs

Review the Q&A document on the FASB's website.

FRC Lab report shows need for improved workforce reporting

Jan 20, 2020

On January 20, 2020, the Financial Reporting Lab of the UK Financial Reporting Council (FRC) issued a report that reveals that reporting on workforce-related issues needs to improve to meet investor needs.

The Lab’s report provides practical guidance and examples on how companies can provide improved information to investors. It encourages companies to think of the workforce as a strategic asset and explain how it is invested in. Alongside the report, the Lab also published a summary of the report covering questions companies should ask themselves about their reporting on workforce matters.

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

Global accountancy bodies call for improved SDG disclosures

Jan 20, 2020

In January 2020, the International Federation of Accountants (IFAC), the Association of Chartered Certified Accountants (ACCA), the Institute of Chartered Accountants of Scotland (ICAS), the Chartered Accountants Australia and New Zealand (CA ANZ), the International Integrated Reporting Council (IIRC) and the World Benchmarking Alliance have jointly published a report calling for improved UN Sustainable Development Goals (SDG) disclosures.

The report follows on the consultation paper Recommendations for SDG Disclosures and considers feedback from the consultation. The recommendations for SDG Disclosure are designed to be both used in conjunction with existing reporting frameworks and neutral with respect to them. The recommendations are also SDG specific, recognising the complexity and interconnectedness of the sustainable development issues that the SDGs address.

Review the following information on the IIRC's website:

Hyperinflationary economies - updated IPTF watch list available

Jan 27, 2020

IAS 29 "Financial Reporting in Hyperinflationary Economies" defines and provides general guidance for assessing whether a particular jurisdiction's economy is hyperinflationary. But the IASB does not identify specific jurisdictions. The International Practices Task Force (IPTF) of the Centre for Audit Quality (CAQ) monitors the status of "highly inflationary" countries. The Task Force's criteria for identifying such countries are similar to those for identifying "hyperinflationary economies" under IAS 29.

The IPTF's discussion document for the November 19, 2019 meeting is now available and states the following view of the Task Force:

Countries with three-year cumulative inflation rates exceeding 100%:

  • Argentina
  • South Sudan
  • Sudan
  • Venezuela
  • Zimbabwe

Countries with projected three-year cumulative inflation rates exceeding 100%:

  • Islamic Republic of Iran

Countries where the three-year cumulative inflation rates had exceeded 100% in recent years:

There are no countries in this category for this period.

Countries with recent three-year cumulative inflation rates exceeding 100% after a spike in inflation in a discrete period:

  • Angola
  • Suriname

Countries with projected three-year cumulative inflation rates between 70% and 100% or with a significant (25% or more) increase in inflation during the current period

  • Democratic Republic of Congo
  • Liberia
  • Yemen

The IPTF also notes that there may be additional countries with three-year cumulative inflation rates exceeding 100% or that should be monitored which are not included in the analysis as the necessary data is not available. An example cited is Syria.

The full list, including exact numbers, detailed explanations of the calculation of the numbers, and observations of the Task Force is available on the CAQ website. We also offer the overview of the IPTF's assessment of hyperinflationary jurisdictions at the end of our summary of IAS 29.

IASB finalizes amendments to IAS 1 to clarify the classification of liabilities

Jan 23, 2020

On January 23, 2020, the International Accounting Standards Board (IASB) issued "Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)" providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.

 

Background

The issue was originally addressed as part of the annual improvements project 2010 -2012 cycle. Exposure Draft ED/2012/1 Annual Improvements to IFRSs (2010—2012 Cycle), published in May 2012, proposed amendments to IAS 1.73 to clarify that a liability is classified as non-current if an entity expects, and has the discretion, to refinance or roll over an obligation for at least twelve months after the reporting period under an existing loan facility with the same lender, on the same or similar terms. During 2013, however, the IASB decided not to finalise the amendment, but instead pursue a narrow-scope project to refine the existing guidance in IAS 1 on when liabilities should be classified as current.

In February 2015, the Board published its proposals in the Exposure Draft  ED/2015/1 Classification of Liabilities (Proposed amendments to IAS 1). The Board discussed feedback on the ED from December 2015 to September 2019, pausing the project between 2016 and 2018 while it finalised revisions to the definition of a liability in the Conceptual Framework. As a result of these discussions, the Board made no fundamental changes to the proposed amendments but decided to clarify some aspects of them.

 

Amendments

The amendments in Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) affect only the presentation of liabilities in the statement of financial position — not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They:

  • clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the "right" to defer settlement by at least twelve months and make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability;
  • clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and
  • make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

 

 

Effective date and transition

The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and are to be applied retrospectively. Earlier application is permitted.

 

Additional information

Review the press release on the IASB's website.

 

IASB publishes "Request for Information: Comprehensive Review of the IFRS for SMEs Standard"

Jan 28, 2020

On January 28, 2020, the International Accounting Standards Board (IASB), in cooperation with the SME Implementation Group (SMEIG), has developed and issued a request for information seeking comments on strategic and general questions, specific sections of the IFRS for SMEs, as well as new topics and other matters related to the IFRS for SMEs. Responses are due by July 27, 2020.

IFRS for SMEs was first issued in July 2009. A first comprehensive review of the standard took place between 2012 and 2014. The IASB has now launched a second review with the objective of seeking views on whether and how to align the IFRS for SMEs with full IFRSs.

The Request for Information is divided into three parts:

  • Part A contains strategic and general questions.
  • Part B contains questions on specific sections of the IFRS for SMEs and their alignment with the full IFRSs; and
  • Part C contains questions on new topics and other matters related to the IFRS for SMEs.

A summary of the questions asked in each Part is set out in the table at the bottom of the article.

The SMEIG is expected to review comments on the request for information and make recommendations to the IASB on possible amendments.

Click for:

 

Summary of questions asked in the request for information

Part A - Strategic and general questions

  • Alignment approach
    • Should the IFRS for SMEs be aligned with full IFRSs?
    • What extent of alignment of the IFRS for SMEs with full IFRSs is most useful, and why?
  • Alignment principles
    • Do the Board's proposed principles provide a framework to assist in determining whether and how the IFRS for SMEs should be aligned with full IFRSs?
  • When to consider alignment
    • Of the three possible dates for when to consider alignment, which is preferable?

Part B - Specific issues

  • Should Section 2 of the IFRS for SMEs be aligned with the 2018 Conceptual Framework and how?
  • Should Section 9 of the IFRS for SMEs be aligned with IFRS 10 and how?
  • Should Section 11 of the IFRS for SMEs be aligned with IFRS 9 and how?
  • Should Section 15 of the IFRS for SMEs be aligned with IFRS 11 and how?
  • Should Section 19 of the IFRS for SMEs be aligned with IFRS 3 and how?
  • Should Section 20 of the IFRS for SMEs be aligned with IFRS 16 and how?
  • Should Section 23 of the IFRS for SMEs be aligned with IFRS 15 and how?
  • Should Section 28 of the IFRS for SMEs be aligned with IAS 19 and how?
  • Should the IFRS for SMEs be aligned with IFRS 13 and how?
  • Should multiple sections of the IFRS for SMEs for amendments to IFRSs and IFRIC Interpretations and how?

Part C - New topics and other matters

  • Should the IFRS for SMEs be aligned with IFRS 14 or not?
  • Should holdings of cryptocurrency be addressed in the IFRS for SMEs?
  • Are there difficulties in applying the simplifications allowed by paragraph 28.19 of the IFRS for SMEs?
  • Are there any topics the IFRS for SMEs does not address that should be the subject of specific requirements?
  • Are there additional issues that should be brought to the Board’s attention relating to the IFRS for SMEs?

Correction list for hyphenation

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