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March 2019

IASB decides on last round of potential amendments to IFRS 17

Mar 14, 2019

At its meeting on March 12-14, 2019, the International Accounting Standards Board (the Board) discussed the last of the 25 concerns regarding the standard that were identified in October 2018 as candidates for potential amendments.

Applying the criteria for evaluating proposed amendments agreed on in October 2018, the staff asked the Board to consider the following recommendations:

Issue identified at the October IASB meeting Agenda paper with detailed description (link to IASB website) Staff recommendation Board decision
2 — Level of aggregation of insurance contracts Agenda paper 2A
  1. To retain the IFRS 17 requirements on the level of aggregation unchanged
 14 Yes
1 — Scope of IFRS 17 Agenda paper 2D
  1. To amend IFRS 17 to exclude from the scope of the standard certain credit card contracts that provide insurance coverage
 14 Yes
25 — Transition: Risk mitigation option Agenda paper 2E
  1. To amend the requirements of IFRS 17 to permit an entity to apply the risk mitigation option prospectively from the IFRS 17 transition date
  2. To amend the requirements of IFRS 17 to permit an entity that can apply IFRS 17 retrospectively to a group of insurance contracts with direct participating features to use the fair value transition approach for the group under certain circumstances
 14 Yes
1 — Scope of IFRS 17 Agenda paper 2F
  1. To maintain the transition requirements in IFRS 17 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 17 to a portfolio of such loans
  2. To maintain the transition requirements in IFRS 9 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 9 to a portfolio of such loans and initially applies IFRS 17 and IFRS 9 at the same time
  3. To amend the transition requirements in IFRS 9 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 9 to a portfolio of such loans and has applied IFRS 9 before it initially applies IFRS 17
  4. If the Board supports recommendation 3., to amend IFRS 9 to require an entity to apply the transition requirementsin IFRS 9 necessary for applying the proposed amendments
  5. If the Board supports recommendation 3., to permit an entity to newly designate, and to require an entity to revoke its previous designations of, a financial liability under the fair value option at the date the entity first applies the proposed amendments if a new accounting mismatch is created or a previous accounting mismatch no longer exists as a result of applying the proposed amendments
  6. If the Board supports recommendation 3., not to require an entity to restate prior periods to reflect the application of the proposed amendments but to permit an entity to restate prior periods under particular conditions
  7. If the Board supports recommendation 3., to exempt an entity from presenting the quantitative information required by IAS 8.28(f) and to require an entity to disclose specific information in addition to the disclosures that any other IFRS Standard would require
 14 Yes
Amendments to disclosure requirements resulting from the Board’s tentative decisions to date Agenda paper 2G
  1. To amend IFRS 17 to require quantitative disclosure of the expected recognition in profit or loss of the contractual service margin remaining at the end of the reporting period and specific disclosure of the approach to assessing the relative weighting of the benefits provided by insurance coverage and investment-related services or investment return service
  2. To amend IFRS 17 to require a reconciliation of the asset created by insurance acquisition cash flows not yet included in the measurement of a group of insurance contracts at the beginning and the end of the reporting period and quantitative disclosure of the expected inclusion of these acquisition cash flows in the measurement of related insurance contracts when the related insurance contracts are recognised
 14 Yes
Overall disclosure and transition requirements Agenda paper 2H
  1. To amend IFRS 17 as discussed in Agenda Papers 2E, 2F and 2G and retain all other disclosure and transition requirements in IFRS 17
 14 Yes

The Board has now considered all 25 topics identified in October 2018. At its April 2019 meeting, the Board plans to consider the package of amendments tentatively decided by the Board as a whole.

IASB to discuss last round of potential amendments to IFRS 17

Mar 05, 2019

In March 2019, the International Accounting Standards Board (the Board) released the agenda papers for their upcoming meeting. The Board will discuss the last of the 25 concerns regarding the standard that were identified in October 2018 as candidates for potential amendments.

Applying the criteria for evaluating proposed amendments agreed on in October 2018, the staff asks the Board to consider the following recommendations:

Issue identified at the October IASB meeting

Agenda paper with detailed description (link to IASB website)

Staff recommendation

2 — Level of aggregation of insurance contracts Agenda paper 2A
  1. To retain the IFRS 17 requirements on the level of aggregation unchanged
1 — Scope of IFRS 17 Agenda paper 2D
  1. To amend IFRS 17 to exclude from the scope of the standard certain credit card contracts that provide insurance coverage
25 — Transition: Risk mitigation option Agenda paper 2E
  1. To amend the requirements of IFRS 17 to permit an entity to apply the risk mitigation option prospectively from the IFRS 17 transition date
  2. To amend the requirements of IFRS 17 to permit an entity that can apply IFRS 17 retrospectively to a group of insurance contracts with direct participating features to use the fair value transition approach for the group under certain circumstances
1 — Scope of IFRS 17 Agenda paper 2F
  1. To maintain the transition requirements in IFRS 17 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 17 to a portfolio of such loans
  2. To maintain the transition requirements in IFRS 9 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 9 to a portfolio of such loans and initially applies IFRS 17 and IFRS 9 at the same time
  3. To amend the transition requirements in IFRS 9 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 9 to a portfolio of such loans and has applied IFRS 9 before it initially applies IFRS 17
  4. If the Board supports recommendation 3., to amend IFRS 9 to require an entity to apply the transition requirementsin IFRS 9 necessary for applying the proposed amendments
  5. If the Board supports recommendation 3., to permit an entity to newly designate, and to require an entity to revoke its previous designations of, a financial liability under the fair value option at the date the entity first applies the proposed amendments if a new accounting mismatch is created or a previous accounting mismatch no longer exists as a result of applying the proposed amendments
  6. If the Board supports recommendation 3., not to require an entity to restate prior periods to reflect the application of the proposed amendments but to permit an entity to restate prior periods under particular conditions
  7. If the Board supports recommendation 3., to exempt an entity from presenting the quantitative information required by IAS 8.28(f) and to require an entity to disclose specific information in addition to the disclosures that any other IFRS Standard would require
Amendments to disclosure requirements resulting from the Board’s tentative decisions to date Agenda paper 2G
  1. To amend IFRS 17 to require quantitative disclosure of the expected recognition in profit or loss of the contractual service margin remaining at the end of the reporting period and specific disclosure of the approach to assessing the relative weighting of the benefits provided by insurance coverage and investment-related services or investment return service
  2. To amend IFRS 17 to require a reconciliation of the asset created by insurance acquisition cash flows not yet included in the measurement of a group of insurance contracts at the beginning and the end of the reporting period and quantitative disclosure of the expected inclusion of these acquisition cash flows in the measurement of related insurance contracts when the related insurance contracts are recognised
Overall disclosure and transition requirements Agenda paper 2H
  1. To amend IFRS 17 as discussed in Agenda Papers 2E, 2F and 2G and retain all other disclosure and transition requirements in IFRS 17

The staff notes that after its March 2019 meeting, the Board will have considered all 25 topics identified in October 2018. At its April 2019 meeting, the Board plans to consider the package of amendments tentatively decided by the Board as a whole.

IASB updates IFASS on IFRS 17, IASB meeting papers available

Mar 29, 2019

On March 29, 2019, at the meeting of the International Forum of Accounting Standard Setters (IFASS) in Buenos Aires, IASB Board member Darrel Scott updated the IFASS members on the status of the project regarding potential amendments to IFRS 17 "Insurance Contracts". In addition, the International Accounting Standards Board (IASB) made available the papers for discussing the project at the upcoming IASB meeting.

In his presentation, Mr. Scott first discussed where the project on possible amendments currently is, the envisioned timeline for the project and next steps:

  • The IASB expects to issue an exposure draft of proposed amendments to IFRS 17 by the end of June 2019.
  • A shortened comment period is likely in order to speed up the process.
  • The IASB expects the finalization of the amendments in early to mid 2020.
  • The comparative period would begin in 2021.
  • The amended standard would become effective in 2022 (Mr. Scott reminded IFASS members that the postponed effective date is still only an amendment to the standard the IASB intends to propose).

Mr. Scott then went on to explain the amendments the IASB intends to propose. These comprise 12 amendments that fall into 7 broad areas:

  • Effective date;
  • Acquisition cash flows for renewals;
  • Profit allocation for some contracts;
  • Reinsurance contracts held;
  • Balance sheet presentation;
  • Transition; and
  • Loans that transfer insurance risks.

There will also be minor amendments to IFRS 17 that will be proposed as part of the annual improvements.

At its April 2019 meeting, the Board plans to consider the package of amendments tentatively decided by the Board as a whole. The following agenda papers were made available on the IASB website:

  • AP2: Cover note
  • AP2A: Overview of the amendments to IFRS 17
    • considering the proposed amendments as a whole;
    • evaluating each of the proposed amendments against the criteria the Board set in October 2018; and
    • considering the likely effects of the proposed amendments to IFRS 17
  • AP2B: Due process steps and permission for balloting
    • asking the Board to confirm its tentative decisions from the November 2018 meeting relating to the mandatory effective date of IFRS 17;
    • considering the due process steps undertaken by the Board in completing the narrow-scope project on the amendments to IFRS 17 and asking the Board to confirm that it wishes to proceed with an exposure draft; and
    • asking if there are any planned dissents at this stage
  • AP2C: Sweep issues
    • discussing additional stakeholder concerns relating to IFRS 17 that have arisen in the project on the amendments to IFRS 17; and
    • recommending that the effective date of proposed amendments should be aligned with the effective date of IFRS 17
  • AP2D: Annual improvements
    • including recommendations for other minor changes that would fall within the scope of the annual improvements process but could also be addressed in the exposure draft of proposed amendments to IFRS 17

IFASS meeting: Summary update of the outcome of the public consultation on the EU framework for public reporting by companies

Mar 29, 2019

At the meeting of the International Fed­er­a­tion of Accounting Standard Setters (IFASS) currently being held in Buenos Aires, Mr. Peter Sampers, Chairman of the Dutch Accounting Standards Board (DASB) and Professor of Financial Accounting at Maas­tricht Uni­ver­sity, provided an update on the outcome of the public con­sul­ta­tion on the EU framework for pubic reporting by companies.

For his detailed analysis, Mr Sampers drew on the summary report of the EU and on further analysis of in­di­vid­ual responses to the con­sul­ta­tion that were made public by the EU. The focus of his research was on the IFRS-re­lated questions in the con­sul­ta­tion.

Mr Sampers noted that stake­hold­ers from 23 Member States and 25 third countries submitted 338 responses with 82% of the responses being from or­gan­i­za­tions and companies, 9% from public au­thor­i­ties and international or­gan­iza­tions and 9% from private in­di­vid­u­als. In this context, Mr. Sampers es­pe­cially noted the high number of responses from private in­di­vid­uals that would show that stake­hold­ers were really concerned about de­vel­op­ments. He also noted the high number of responses from Germany.

In dis­cussing the responses to in­di­vid­ual questions, Mr. Sampers noted the confusing design of certain elements of the con­sul­ta­tion document that led to some false positives and con­tra­dic­tory answers and that only allowed ad­di­tional comments in case of support for what seemed to be the EC Com­mis­sion's pre­lim­i­nary view. He sum­marized the following insights:

  • Regarding the question of whether the EU should be able modify the content of IFRSs on adoptions, the majority of re­spon­dents was clearly against "carve-ins", however, clear regional dif­fer­ences became obvious with 75% of re­spon­dents in France sup­port­ing the pos­si­bil­ity of carve-ins against only 15% in Germany, the UK and the Nether­lands doing so.
  • A clear majority of re­spon­dents (68%) is convinced that the EU en­dorse­ment process is ap­pro­pri­ate to ensure that IFRS do not pose an obstacle to broader EU policy ob­jec­tives such as sus­tain­abil­ity and long-term in­vest­ments. This cor­re­lates with the answers to the question of how the EU could ensure that IFRS do not pose an obstacle to sus­tain­abil­ity and long-term in­vest­ments, where only 11% of re­spon­dents believed the pos­si­bil­ity of mod­i­fi­ca­tions to IFRS was needed to ensure this.
  • On the question of whether an EU conceptual framework should underpin the IFRS en­dorse­ment process, the answer was clearly negative, however, a sur­pris­ing number (not a majority, though) supported adopting the IASB's Conceptual Framework for use in the EU. (Dis­cussing this point, par­tic­i­pants made clear that adopting a pro­nounce­ment that is not binding for the IASB would lead to a legally difficult situation, es­pe­cially since some of the IASB's standards are not aligned with the Conceptual Framework. Therefore, outright adoption would not seem to be an option.)

Overall, Mr Samper's pre­sen­ta­tion showed that it can be concluded that there is little support for changes to the current en­dorse­ment process and for the in­tro­duc­tion of an ability for Europe to modify the content of IFRS. This is in line with the overall summary in the EC Com­mis­sion's summary of responses which stated that the EU framework overall brings added value, is effective and relevant for achieving its ob­jec­tives and is coherent.

Mr. Sampers kindly gave Deloitte per­mis­sion to make his pre­sen­ta­tion slides available on IAS Plus. They can be accessed here.

 

 

IFRS Advisory Council to discuss disclosure of sensitive information

Mar 11, 2019

On March 11, 2019, the IFRS Foundation published the agenda papers for the IFRS Advisory Council meeting to be held on March 19-20, 2019. Included on the agenda is a session to discuss the disclosure of sensitive information.

The IFRS Advisory Council is the formal advisory body to the International Accounting Standards Board (Board). It consists of a wide range of representatives, comprising individuals and organizations with an interest in international financial reporting. The focus of the Advisory Council is to provide strategic support and advice.

The nature of the sensitive information to be discussed at the meeting is information whose disclosure could result in commercial loss to an entity. Examples of such items include details of litigation under IAS 37 and segment information under IFRS 8.

The agenda papers for the discussion note that the IASB has various projects focused on presentation and disclosure currently underway: (i) goodwill and impairment; (ii) management commentary; (iii) disclosure initiative – primary financial statements; and (iv) dynamic risk management. In the past, preparers have often raised the issue of sensitive information in their feedback on Exposure Drafts; however, this information may be material to investors.

The agenda papers also note that the purpose of the discussion is to assist the Board with future deliberations on these projects. There is no general plan to revisit existing standards, nor a plan to develop a framework for sensitive information.

IFRS Interpretations Committee discusses accounting for cryptocurrencies

Mar 05, 2019

At its meeting on March 5-6, 2019, the IFRS Interpretations Committee discussed how the IFRS Standards apply to holdings of cryptocurrencies. Following the discussion, the Committee tentatively decided not to add this accounting issue to its standard-setting agenda. The Committee will reconsider this tentative decision, including the reasons for not adding the issue to its standard-setting agenda, at a future meeting.

The IFRS In­ter­pre­ta­tions Com­mit­tee (IFRIC) noted that paragraph 8 of IAS 38, Intangible Assets, defines an intangible asset as ‘an identifiable non-monetary asset without physical substance’. The Committee also observed that a holding of cryptocurrency meets the definition of an intangible asset in IAS 38 on the grounds that (a) it is capable of being separated from the holder and sold or transferred individually; and (b) it does not give the holder a right to receive a fixed or determinable number of units of currency.

The Committee concluded that IAS 2, Inventories, applies to cryptocurrencies when they are held for sale in the ordinary course of business. If IAS 2 is not applicable, then an entity applies IAS 38 to holdings of cryptocurrencies. In reaching these conclusions, the Committee noted that a holding of cryptocurrency is not a financial asset. This is because a cryptocurrency is not cash, nor is it an equity instrument of another entity. It does not give rise to a contractual right for the holder and it is not a contract that will or may be settled in the holder’s own equity instruments.

With respect to disclosure, an entity applies the disclosure requirements in the IFRS Standard applicable to its holdings of cryptocurrencies. Accordingly, an entity applies the disclosure requirements in (a) paragraphs 36–39 of IAS 2 to cryptocurrencies held for sale in the ordinary course of business, and (b) paragraphs 118-128 of IAS 38 to holdings of cryptocurrencies to which it applies IAS 38. If an entity measures holdings of cryptocurrencies at fair value, paragraphs 91–99 of IFRS 13, Fair Value Measurement, specify applicable disclosure requirements.

For further details of the discussion, refer to the IFRIC Update on the IASB’s website.

In Brief – Research findings on hybrid pension plans

Mar 25, 2019

On March 25, 2019, the Accounting Standards Board (AcSB) published an overview of the research findings on work done by national standard setters from Canada, Germany, Japan, the United Kingdom, and the United States on hybrid pension plans.

Findings prove the need for action in addressing the challenges in applying current accounting standards to these plans by public companies. The IASB plans to consider the results of our research on hybrid plans when assessing priorities in its next Agenda Consultation.

Review the overview on the AcSB's website.

One-page summary and video – Framework for reporting performance measures

Mar 15, 2019

On March 15, 2019, the Accounting Standards Board (AcSB) released additional resources on their Framework to help entities, from public to private companies, to not-for-profits and pension plans, improve the quality of financial and non-financial performance measures they choose to report outside of the financial statements.

The summary gives an overview of the type of guidance in the Framework and the video explains why the AcSB developed the Framework and how it can help you.

Review the Reporting Performance Measures page on the AcSB's website.

SEC accepts 2019 U.S. GAAP Financial Reporting Taxonomy and SEC Reporting Taxonomy

Mar 12, 2019

On March 12, 2019, the Financial Accounting Standards Board (FASB) announced that the SEC has accepted the 2019 U.S. GAAP Financial Reporting Taxonomy and SEC Reporting Taxonomy. The 2019 taxonomies reflect accounting standards issued during the past year as well as other corrections and improvements to the 2018 taxonomies.

Review the press release on the FASB’s website.

SEC simplifies and modernizes certain disclosure requirements in Regulation S-K

Mar 20, 2019

On March 20, 2019, the Securities and Exchange Commission (SEC) issued a final rule, “FAST Act Modernization and Simplification of Regulation S-K.”

The final rule is intended to "modernize and simplify certain disclosure requirements in Regulation S-K, and related rules and forms, in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors." The overall purpose of the final rule is to increase the transparency of registrants' disclosures while eliminating "repetition and disclosure of immaterial information."

For more in­for­ma­tion, see Deloitte's related Heads Up newsletter as well as the press release and final rule on the SEC's website.

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