August 2019

AcSB Exposure Draft – Disclosure of Accounting Policies (Proposed amendments to IAS 1 and IFRS Practice Statement 2)

Aug 22, 2019

On August 22, 2019, the Accounting Standards Board (AcSB) issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by November 29, 2019.

Review the press release and Exposure Draft on the AcSB's website.

AICPA issues discussion paper on materiality in an attestation engagement

Aug 15, 2019

On August 15, 2019, the AICPA issued a discussion paper (DP), “Materiality Considerations for Attestation Engagements Involving Aspects of Subject Matters That Cannot Be Quantitatively Measured.”

The DP (1) highlights potential challenges that practitioners may encounter when exercising professional judgment related to materiality and (2) outlines the AICPA’s approaches to addressing those challenges.

Comments on the DP are due by October 31, 2019.

Review the discussion paper on the AICPA’s website.

AICPA releases working drafts on implementation issues related to credit losses

Aug 13, 2019

On August 13, 2019, the AICPA’s Financial Reporting Executive Committee has released for public comment three working drafts on accounting issues associated with the implementation of FASB Accounting Standards Update No. 2016-13, “Financial Instruments — Credit Losses” (issued in June 2016), which “provides a new current expected credit loss (CECL) model to measure impairment for financial assets (and instruments) measured at amortized cost.”

The working drafts address the following topics:

Comments on the working draft are due by October 15, 2019.

Review the CECL issues page on the AICPA’s website.

FASB proposes to defer effective date for standard on long-duration insurance contracts

Aug 21, 2019

On August 21, 2019, the Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU), “Financial Services — Insurance (Topic 944): Effective Date,” which would give insurance companies additional time to implement the Board’s August 2018 standard on long-duration contracts, ASU 2018-12.

The proposed ASU states the following regarding how entities would be affected by the deferral:

For SEC filers, excluding entities eligible to be [smaller reporting companies] as defined by the SEC, the amendments in Update 2018-12 would be effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. . . . Early application of the amendments in Update 2018-12 would be permitted. For all other entities, the amendments in Update 2018-12 would be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early application of the amendments in Update 2018-12 would be permitted.

The proposed deferral is consistent with the FASB’s new philosophy to stagger the effective dates of major standards so that the standards are effective for larger public companies at least two years before they are effective for all other entities.

Comments on the proposed ASU are due by September 20, 2019.

Review the proposal and press release on the FASB’s website.

FASB publishes new articles

Aug 30, 2019

In August 2019, the Financial Accounting Standards Board (FASB) released three new articles on effective dates, intangible assets and the upcoming proposal on reference rate reform and the revised proposal on balance sheet classification of debt.

The Philosophy of Effective Dates

The FASB recently took a fresh look at its philosophy for setting effective dates. FASB Chairman Russ Golden discusses how it should help smaller public companies, private companies and not-for-profit organizations apply standards more efficiently.

Internally Generated Intangible Assets

Intangible assets have become an increasingly larger component of the valuation for all companies. Under U.S. GAAP, however, most internally generated intangible assets are not recorded on the balance sheet. FASB Member Gary Buesser considers whether they should be.

On the Horizon

Here's what you need to know about the FASB's upcoming proposal on reference rate reform and its revised proposal on balance sheet classification of debt.

IASB adds second phase of IBOR reform project to its work plan

Aug 15, 2019

On August 15, 2019, the International Accounting Standards Board (the Board) added the second phase of its project focused on potential financial reporting implications linked to the interest rate benchmark reform—IBOR reform. Recent market developments have brought into question the long-term viability of Interbank offered rates (IBORs) and the IASB is currently looking into the potential effects of financial reporting.

The first phase of the project deals with pre-replacement issues (issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark). It was added to the standard-setting agenda of the IASB in December 2018 and saw the publication of an exposure draft of propoed amendments in May 2019. The IASB is currently working towards the finalisation of the amenments with an additional Board meeting scheduled for August 28, 2019.

The second phase of the project now added to the work plan deals with replacement issues (issues that might affect financial reporting when an existing interest rate benchmark is replaced). Deliberations have not begun yet and are currently expected to be taken up in Q3 2019.

Review the press release on the Board's website.

IASB proposes amendments to IAS 1 and the Materiality Practice Statement

Aug 01, 2019

On August 1, 2019, the International Accounting Standards Board (the Board) published an exposure draft "Disclosure of Accounting Policies" with proposed amendments that are intended to help preparers in deciding which accounting policies to disclose in their financial statements. Comments are requested by November 29, 2019.



The feedback on the Board's DP on Principles of Disclosure suggested that guidance is required to assist entities in determining which accounting policies to disclose. It was noted that the application of materiality is key to deciding which accounting policies to disclose, however IAS 1, Presentation of Financial Statements does not refer to materiality but states that ‘[a]n entity shall disclose its significant accounting policies' without the Board providing a definition for the term ‘significant’.

Therefore, the Board decided to develop amendments to paragraphs 117-122 of IAS 1 to require entities to disclose their material accounting policies rather than their significant accounting policies. To support this amendment the Board has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2 Making Materiality Judgements to accounting policy disclosures.


Suggested changes

ED/2019/6 Disclosure of Accounting Policies proposes to amend paragraphs 117-122 of IAS 1 in the following ways:

  • Paragraph 117 of IAS 1 would be amended to require an entity to disclose its material accounting policies instead of its significant accounting policies;
  • Paragraphs 117A-D of IAS 1 would be added to explain how an entity can identify a material accounting policy (for example an accounting policy has changed during the reporting period, was chosen from alternatives allowed in IFRSs, was developed in accordance with IAS 8 in the absence of an IFRS that specifically applies, relates to an area of significant judgement and assumption, or reflects unique entity-specific application of an IFRS);
  • Paragraph 122, which requires an entity to make disclosures about ‘other judgements’, would be retained but would see a minor amendment to replace the reference to ‘significant accounting policies’ with the reference to ‘material accounting policies’.

The Board has also developed additional guidance to be included in the Materiality Practice Statement for entities to use when applying the four-step materiality process to accounting policy disclosure. This additional guidance is supported by two new examples that highlight the need to focus on information that is useful to users of financial statements and demonstrate how the application of the four-step materiality process can address the issues of: i) boilerplate or generic information being disclosed in accounting policies that are material to the financial statements; and ii) instances in which accounting policy disclosures contain only information that repeats the requirements of IFRSs. 

Comments on the proposed changes are requested by November 29, 2019.


Effective date and transition

The exposure draft does not contain a proposed effective date as the IASB intends to decide on this after exposure. The proposed amendments would be applied prospectively and early adoption would be permitted.


Dissenting opinion

Board member Martin Edelmann dissented from issuing the exposure draft. Mr. Edelmann does not believe that materiality is a concept that should be applied to accounting policies as accounting policies differ from other information in the financial statements. He is also concerned that the application of the concept to accounting policies might lead to a loss of important information.


Additional information


SEC clarifies investment advisers’ proxy voting responsibilities

Aug 21, 2019

On August 21, 2019, the Securities and Exchange Commission (SEC) issued “Commission Interpretation and Guidance Regarding the Applicability of the Proxy Rules to Proxy Voting Advice.”

The guidance addresses “the ability of investment advisers to establish a variety of different voting arrangements with their clients and matters they should consider when they use the services of a proxy advisory firm.” The guidance will become effective upon the date of its publication in the Federal Register.

The SEC also issued a 26-page interpretive release about proxy voting responsibilities for investment advisors, providing steps that mutual fund managers should consider if they become aware of potential factual errors or weaknesses in a proxy advisor’s analysis.

Review the press release and guidance on the SEC’s website.

SEC proposes modernizing descriptions of certain disclosures provided under Regulation S-K

Aug 08, 2019

On August 8, 2019, the Securities and Exchange Commission (SEC) issued a proposed rule, “Modernization of Regulation S-K Items 101, 103, and 105.”

The proposed rule would modernize the description of business, legal proceedings, and risk factor disclosures that registrants are required to make pursuant to Regulation S-K. The proposed amendments are intended to update the rules to improve disclosures for investors and to simplify compliance efforts for registrants.

Review the press release and proposed rule on the SEC’s website.

Study into the uptake of integrated reporting

Aug 05, 2019

On August 5, 2019, the International Integrated Reporting Council (IIRC) published a study "Integrated Reporting and the Capitals’ Diffusion". The study quantitatively analyzes integrated reporting to determine the extent of diffusion of integrated reporting, the depth of integrated reporting adoption, and the extent and nature of the disclosure of multiple capitals.

The study was sponsored by the Autorité des Normes Comptables (ANC), the French standard setter, and was presented at the 8th Symposium on Accounting Research 2018 in Paris (a recording of the research forum is available).

The project behind the study sought answers to the questions:

  • Where and by whom has integrated reporting been adopted?
  • To what extent has the International <IR> Framework been followed (‘depth’ of adoption)?
  • How are organisations reporting on the capitals?
  • Are integrated reporters using the GRI Standards too?

The research reveals that integrated reporting has matured into fast-paced diffusion around the world, but it also offers some interesting insights such as the fact that more developed countries are lagging in adoption, some companies developed integrated reports even before the International <IR> Framework was published, and the title ‘integrated report’ is not necessarily used - some integrated reports are labeled 'annual report' or 'sustainability report'.

Review the press release on the IIRC website, which offers a brief summary and access to the full report.

Summary of the July 2019 ASAF meeting now available

Aug 12, 2019

On August 12, 2019, the staff of the International Accounting Standards Board (IASB) published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held in London on July 11 and 12, 2019.

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

  • Business combination under common control (1–12): The ASAF provided views related to the application of alternative approaches as well as how to apply a current value approach and predecessor approach.
  • Man­age­ment com­men­tary (13–26): The ASAF provided views on the staff’s proposals related to the notion of narrative coherence and identifying and reporting matters that could affect the entity’s long-term success.
  • IBOR reform (27–43): The ASAF provided information on the current state of interest rate benchmark reform in their jurisdictions and discussed their views on financial reporting issues discovered. The members also discussed how they should address the issues in phase II of the project.
  • Better communication — Primary financial statements (44–59):  The ASAF commented on possible approaches to structuring the new requirements. In addition, the members planned outreach events during the comment period.
  • Variable and contingent consideration (60–65) — The ASAF discussed the FRC’s project on the conceptual basis for transactions involving variable and contingent consideration.
  • Business reporting of intangibles: realistic proposals (66–70): The ASAF provided views on the FRC’s discussion paper and gave suggestions for developing FRC’s analysis on intangible assets.
  • Discussion Paper Accounting for Pensions Plans with an Asset-return Promise (71–73): The ASAF commented on the EFRAG’s discussion paper where they had mix views on the three accounting alternatives.
  • Updated and agenda plan (74–76): The ASAF discussed items to be added to the proposed agenda for the October 2019 ASAF meeting.

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

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