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March 2020

2020 IFRS XBRL taxonomy issued

Mar 17, 2020

On March 17, 2020, the IFRS Foundation issued its 2020 IFRS Taxonomy. The IFRS Taxonomy is a translation of IFRS Standards into XBRL (eXtensible Business Reporting Language).

The IFRS Taxonomy 2020 is consistent with IFRS Standards as issued by the IASB at January 1, 2020, including those issued but not yet effective.

The IFRS Foundation has also published IFRS Taxonomy 2019 — Update 1 Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7). The IFRS Taxonomy 2020 incorporates the changes resulting from this update.

Review the press release and IFRS Taxonomy 2020 page on the IASB's website.

EFRAG to conduct field-testing on IASB’s project on primary financial statements

Mar 06, 2020

On March 6, 2020, the European Financial Reporting Advisory Group (EFRAG), in coordination with European National Standard Setters and the IASB, will conduct field-testing on the IASB’s Exposure Draft ED/2019/7, "General Presentation and Disclosures", and invites companies to participate in the field-testing.

The field-testing will help "identify potential implementation and application concerns, to determine whether there is a need for additional guidance, and to estimate the effort required to implement and apply the proposals". The deadline to participate in the field-testing is March 20, 2020.

Review the press release on the EFRAG’s website.

IASB publishes discussion paper on goodwill and impairment

Mar 19, 2020

On March 19, 2020, the International Accounting Standards Board (IASB) has published a comprehensive discussion paper DP/2020/1 "Business Combinations — Disclosures, Goodwill and Impairment". The IASB's related project aims at improving the information companies provide to investors, at a reasonable cost, about the businesses those companies buy and would help to hold management to account for its decisions to acquire those businesses. In this context, the IASB is investigating possible improvements to IFRS 3, "Business Combinations" and IAS 36, "Impairment of Assets". The comment period on the discussion paper ends on September 15, 2020.

 

Background

The IASB's project on goodwill and impairment results from the post-implementation review of IFRS 3 Business Combinations.

The feedback on the post-implementation review had revealed that impairment of goodwill is not always recognized in a timely fashion and that disclosures required by IFRS Standards do not provide enough information to understand whether the acquired business is performing as was expected at the time of the acquisition. There were also comments that the impairment test required for goodwill under IAS 36, Impairment of Assets is costly and complex. Some respondents also suggested reintroducing amortization of good will.

In February 2015, to address the concerns mentioned and investigate possible improvements to IFRS 3, Business Combinations and IAS 36, the IASB added to its research agenda the following areas of focus, which later evolved into the goodwill and impairment project:

  • improving the impairment test in IAS 36;
  • subsequent accounting for goodwill (including the relative merits of an impairment-only approach and an amortization and impairment approach); and
  • identification and measurement of intangible assets acquired in a business combination.

The discussions leading to the discussion paper published today were taken up in September 2015.

 

Summary of preliminary views

The discussion paper DP/2020/1 Business Combinations — Disclosures, Goodwill and Impairment presents preliminary views on the following topics:

Improving disclosures about acquisitions. The IASB believes that companies should be required to disclose the strategic rationale for an acquisition, the objectives for the acquisition, and the metrics for monitoring achievement of objectives. This should be disclosed at the acquisition date. After the acquisition date the performance against the objectives should be disclosed. Companies would disclose information management uses internally to monitor acquisitions, therefore, they would not need to create information solely for external reporting purposes. Disclosure would be required for as long as the performance is monitored by management. If the company ceases to monitor the performance or if the metrics for monitoring the performance are changed, the reason for doing so would be disclosed. The Board also believes that it should develop additional proposals that would require companies to disclose the amount, or range, of synergies expected from the acquisition, to disclose the amount of defined benefit pension liabilities and debt of the acquiree, and to disclose both actual and pro-forma revenue, operating profit and cash flows from operating activities.

Improving accounting for goodwill — Can the impairment test be made more effective? The Board believes that significantly improving the effectiveness of the test at a reasonable cost is not feasible. It also points out that shielding cannot be eliminated because goodwill has to be tested for impairment with other assets. The discussion paper also notes that an impairments test cannot always signal how an acquisition is performing, but that does not mean that the test has failed. When performed well, the test can be expected to achieve its objective of ensuring that the carrying amount of the cash-generating unit as a whole is not higher than its combined recoverable amount. The disclosure ideas discussed above could help provide investors with the information about the performance of acquisition they need. Finally, the discussion paper notes that if estimates of cash flows are too optimistic, this is best addressed by auditors and regulators, not by changing IFRS Standards.

Improving accounting for goodwill — Should amortization of goodwill be reintroduced? Having concluded that the impairment test cannot be significantly improved at a reasonable cost, the Board considered whether to reintroduce amortization of goodwill (an impairment test would still be required). The discussion paper notes that Board members have different views on this topic, but by (narrow) majority came to the preliminary view that the Board should retain the impairment only approach because there is no compelling evidence that amortization would significantly improve financial reporting. The impairment test is believed to provide more useful information than an arbitrary amortization charge and is more effective at holding management to account for acquisition decisions. The Board believes that it would not be appropriate to reintroduce amortization solely because of concerns that the impairment test is not being applied rigorously or simply to reduce goodwill carrying amounts. In this context, the Board also came to the preliminary conclusion that it should develop a proposal to require companies to present on their balance sheets total equity before goodwill.

Improving accounting for goodwill — Simplifying the impairment test. The Board is of the preliminary view that it should provide relief from the mandatory annual quantitative impairment test. A quantitative impairment test would be required only if there is an indication of impairment. The Board believes that the reduction in robustness of the test would be marginal because it is unlikely that material impairment losses occur with no indicator. Similarly, the Board is of the opinion that the benefit of performing the test when there is no indicator is marginal. The Board also intends to improve the calculation of value in use. This would be achieved by removing the restriction in IAS 36 that prohibits companies from including uncommitted restructuring and asset enhancement cash flows and by allowing companies to use post-tax inputs and post-tax discount rates in calculating value in use.

Other topics. The discussion paper also sets out the Board's preliminary view that it should continue to require identifiable intangible assets to be recognized separately from goodwill. The Board believes that there is no compelling evidence that the requirements in IAS 38 should be amended. Considering whether to align the accounting treatments for acquired and internally generated intangible assets would be beyond the scope of the project.

Comments on the discussion paper are requested by September 15, 2020.

 

Additional information on the IASB's website

 

IASB releases podcast on IFRS 17

Mar 02, 2020

On March 2, 2020, the International Accounting Standards Board (IASB) released a podcast featuring IASB member Darrel Scott and technical staff member Anne McGeachin as they discuss the developments at the February 2020 Board meeting related to the amendments to IFRS 17, "Insurance Contracts".

Listen to the seven minute podcast on the IASB's website.

IASB releases podcast on IFRS 17

Mar 23, 2020

On March 23, 2020, the International Accounting Standards Board (the Board) released a podcast featuring IASB member Darrel Scott and technical staff member Chalani Mohotti as they discuss the developments at the March 2020 Board meeting related to the amendments to IFRS 17, "Insurance Contracts".

Specifically, the podcast discusses the Board’s decisions related to effective date of IFRS 17 and the expiry date of the IFRS 9 temporary exemption in IFRS 4.

Listen to the podcast on the IASB's website.

IASB to complete its planned redeliberations of the proposed IFRS 17 amendments

Mar 06, 2020

At its upcoming March 17-19, 2020 meeting, the International Accounting Standards Board (IASB) will discuss the remaining issues resulting from the feedback received on the exposure draft ED/2019/4 "Amendments to IFRS 17" which are the effective date of IFRS 17 and the expiry date of the IFRS 9 temporary exemption in IFRS 4.

On the effective date, which originally was set at January 1, 2021 and which ED/2019/4 proposed to move to January 1, 2022, the staff now recommend that the Board:

  • a) defer the effective date of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after January 1, 2023; and
  • b) extend the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after January 1, 2023.

The staff recommend that the amendment to IFRS 4 — reflecting the extension of the fixed expiry date for the temporary exemption from applying IFRS 9 — is balloted separately from the amendments to IFRS 17 (including consequential amendments to other IFRSs). This will give jurisdictions with an endorsement process the possibility to endorse the temporary exemption independently (and possibly more quickly) and so avoid endorsement after the current temporary exemption has run out (January 2021).

The papers for the meeting also offer an overview of all topics discussed and the Board's tentative decisions (links are to our Deloitte meeting notes taken at the meeting the decision was made).

Topic Confirm amendment as proposed in the ED Confirm proposed amendment with some changes Amendment not proposed in the ED
1A — Scope exclusion for credit cards January 2020
1B — Scope exclusion for loans December 2019
2 — Expected recovery of insurance acquisition cash flows December 2019, January 2020
3 — Contractual service margin attributable to investment services December 2019, February 2020
4 — Reinsurance contracts held — recovery of losses December 2019
5 — Presentation in the statement of financial position December 2019
6A — Applicability of the risk mitigation option — reinsurance contracts held December 2019
6B — Applicability of the risk mitigation option — non-derivative financial instruments at fair value through profit or loss February 2020
7 — Accounting policy choice relating to interim financial statements January 2020
8A — Effective date of IFRS 17 To be decided at March 2020 meeting
8B — Expiry date of IFRS 9 temporary exemption in IFRS 4 To be decided at March 2020 meeting
9A — Transition relief for contracts acquired December 2019
9B — Transition reliefs for the risk mitigation option — the application from the transition date December 2019
9C — Transition relief for risk mitigation option — the option to apply the fair value approach December 2019
9D — Transition relief for investment contracts with discretionary participation features February 2020
9E — Transition relief for identifying the date a reinsurance contract held was acquired February 2020
9F — Transition relief relating to interim financial statements February 2020
10 — Minor amendments February 2020

After its March 2020 meeting, the Board will have completed its planned redeliberations of the feedback on the exposure draft. If the Board gives permission to start the balloting process at this meeting, the staff plan to draft the amendments to IFRS 17 and bring any sweep issues identified during the balloting of the amendments for discussion at a future meeting. The staff expect that the amendments will be issued in the second quarter of 2020, in line with the Board’s plan as stated in the exposure draft.

Please click to access all papers for the meeting on the IASB website. The discussion of the IFRS 17 amendments is currently scheduled for Tuesday 17 March 14.30-15.30 London time.

IASB updates work plan in view of COVID-19 developments

Mar 27, 2020

On March 27, 2020, the International Accounting Standards Board (IASB) updated its work plan. The IASB postponed to May 2020 the publication of several narrow-scope amendments to IFRS Standards originally planned for March and April 2020. This consolidation of publications is intended to facilitate more efficient post-publication procedures by the stakeholders. The work plan has been updated accordingly.

Below is an analysis of all changes made to the work plan since our last analysis on March 21, 2020. We also note the projects the IASB intends to move forward with in April 2020.

Standard-setting projects

  • No changes

Maintenance projects

Research projects

Other projects

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

IASB votes on IFRS 17 effective date

Mar 17, 2020

On March 17, 2020, the International Accounting Standards Board (IASB) held a meeting and discussed and voted on the remaining issues resulting from the feedback received on the exposure draft ED/2019/4 "Amendments to IFRS 17" which were the effective date of IFRS 17 and the expiry date of the IFRS 9 temporary exemption in IFRS 4.

On the effective date, which originally was set at January 1, 2021 and which ED/2019/4 proposed to move to January 1, 2022, the Board now decided to:

  1. defer the effective date of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after January 1, 2023; and
  2. extend the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after January 1, 2023.

Although, several Board members expressed doubt or concerns, the final vote on a) was 12 in favour, 1 against, 1 absent (the one absent Board member had lost connection but later stated that he would also have voted in favour). On question b) the final vote was 12 in favour, 2 against.

The Board then proceeded to discuss questions around the balloting process. All Board members agreed that there is no need to re-expose the amendments to IFRS 17, no Board member intends to dissent from the issuance of the final amendments, and all Board members gave permission to start the balloting process. 

The staff will therefore begin to draft the amendments to IFRS 17 and bring any sweep issues identified during the balloting of the amendments for discussion at a future meeting. The staff expect that the amendments will be issued in the second quarter of 2020, in line with the Board’s plan as stated in the exposure draft.

Review the press release announcing the deferral on the IASB's website.

SEC accepts 2020 U.S. GAAP Financial Reporting Taxonomy and SEC Reporting Taxonomy

Mar 10, 2020

On March 10, 2020, the Financial Accounting Standards Board (FASB) and Securities and Exchange Commission (SEC) made an announcement related to the taxonomy.

The FASB has announced that the SEC has accepted the 2020 U.S. GAAP Financial Reporting Taxonomy and SEC Reporting Taxonomy. The 2020 taxonomies reflect accounting standards issued during the past year as well as other corrections and improvements.

The SEC also has upgraded its EDGAR system to support the 2020 U.S. GAAP, 2020 SEC Reporting, 2020 Countries, 2020 Currencies, 2020 Exchanges, and 2020 Standard Industrial Classification taxonomies. In addition, the EDGAR system will no longer support the 2013 and 2012 INVEST taxonomies.

SEC amends definitions of accelerated filer and large accelerated filer

Mar 12, 2020

On March 12, 2020, the Securities and Exchange Commission (SEC) issued a final rule, Amendments to the Accelerated Filer and Large Accelerated Filer Definitions. The final rule allows “smaller issuers that have been public for more than five years, but have not yet reached $100 million in revenues, to continue to benefit from the JOBS Act exemption as they build their businesses, while maintaining important investor protections.”

Review the press release on the SEC’s website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.