July 2018

AcSB and OIC hold joint meeting

Jul 03, 2018

On July 3, 2018, the Accounting Standards Board (AcSB) posted a summary of a joint meeting held on June 20 between the AcSB and the Italian standard-setter Organismo Italiano di Contabilità (OIC) in Toronto. The meeting was the first bilateral meeting between the two standard-setters.

In addition to giving updates on their respective standard-setting activities at the meeting, the two boards exchanged views on implementation activities regarding the standards on financial instruments, revenue, and leases, technical issues on IFRS 17 and the IASB’s current project on rate-regulated activities. In addition, the AcSB and the OIC discussed two projects of individual interest, specifically, relevance of performance measures and business combinations under common control.

Review the press release on the AcSB's website.

AcSB Response – Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8)

Jul 26, 2018

On July 26, 2018, the Accounting Standards Board (AcSB) submitted a comment letter responding to the International Accounting Standards Board’s (IASB) Exposure Draft issued in March 2018.

The letter disagrees with the proposals to amend IAS 8 to lower the impracticability threshold for retrospective application of voluntary changes in accounting policy resulting from agenda decisions published by the IFRS® Interpretations Committee (agenda decisions).

The AcSB expresses concerns that amending IAS 8 as proposed would essentially elevate the authority of agenda decisions without the extent of due process expected for such an outcome.

The AcSB also notes that the proposals could lead to unintended consequences in jurisdictions, including Canada, where entities are expected to apply accounting policies in line with explanatory material in agenda decisions and, therefore, such changes in accounting policy are not voluntary in practice.

The AcSB strongly encourages the IASB to consider another mechanism, such as a change in the process around agenda decisions, to achieve its objectives for this project.

Review the AcSB letter posted on the IASB's website.

Article on IFRS 17

Jul 05, 2018

On July 5, 2018, the International Accounting Standards Board (the Board) published the article "Reducing the gap between insurance and other industries" by IASB® member Gary Kabureck.

The article outlines the similarities between IFRS 17 and other IFRS® Standards as regards the measurement of obligations at current value and the recognition of revenue as a company provides services to its customers. It concludes that the changes introduced by IFRS 17 will enable a wider range of users to understand insurers’ financial statements and compare them with the financial statements of companies within and outside the insurance industry.

Review the article on the Board's website.

Change to Part I for IFRS 17 Insurance Contracts – AcSB Due Process – Endorsement Activities

Jul 12, 2018

On July 12, 2018, the Accounting Standards Board (AcSB) released an overview of endorsement activities they carried out before incorporating IFRS 17 into Part I of the Handbook.

Given the complexity of IFRS 17 and the change it represents for Canadians, the AcSB performed extensive additional outreach activities. The Appendix to the summary lists these activities, all of which were influential in the development of the final standard.

Review the publication on the AcSB's website.

Climate-related financial disclosure by oil and gas companies

Jul 19, 2018

On July 19, 2018, the World Busi­ness Coun­cil for Sus­tain­able De­vel­op­ment (WBCSD) has released a publication, ‘Climate-related financial disclosure by oil and gas companies: implementing the TCFD recommendations’.

The report provides an in-depth description of the current state of climate-related financial disclosure and effective disclosure practices among leading oil and gas companies.

It is available here on the WBCSD website.

Deloitte comments on the EU fitness check

Jul 20, 2018

On July 20, 2018, De­loitte has responded to the European Commission’s consultation document 'Fitness check on the EU framework for public reporting by companies'. While Deloitte supports the Commission’s efforts and progress towards coherence, it notes that it considers that the overall corporate reporting framework is broadly working well. For IFRS reporting entities it suggests that changes are not currently required to the IAS Regulation and stress the importance of the EU remaining globally influential.

In the response to the consultation, Deloitte also notes that if reducing local GAAP differences were to be considered a priority in the EU and if feasibility studies show that obstacles can be overcome, it would favor initiatives that would gradually allow closer or fuller convergence with IFRS. This could take place through amendments to the Directives or the IAS Regulation allowing companies to voluntarily adopt IFRS in individual or consolidated financial statements, rather than leaving this to the discretion of Member States to decide whether or not this option is granted to the companies in their jurisdiction.

Please click to download the full comment letter here (cover letter with main messages first, followed by completed questionnaire).

Deloitte issues results of global IFRS insurance survey

Jul 18, 2018

On July 18, 2018, Deloitte has issued, 'Global IFRS Insurance Survey 2018: 2021 countdown underway — Insurers prepare for IFRS 17 im­ple­men­ta­tion', which aims to provide a com­pre­hen­sive view of insurers' reactions to the re­quire­ments in IFRS 17, as well as their per­cep­tions on the scale and com­plex­ity of this major reg­u­la­tory change, and the timelines sur­round­ing system im­ple­men­ta­tion necessary to achieve com­pli­ance.

Key findings of the survey include:

  • Just enough time to get ready
    Global insurers are cau­tiously confident that they will meet the im­ple­men­ta­tion date with 90 percent re­spond­ing that they believe they will be compliant by January 1, 2021. Of this total, 45 percent indicated strong con­fi­dence to finish on time, with health insurers being the more confident sub-group at 60 percent, and life insurers, with only 37 percent, being the more cautious sub-group. From a regional per­spec­tive, Europe is more confident than other regions.
  • Upgrading tech­nol­ogy is necessary
    87 percent of insurers believe their systems tech­nol­ogy will require upgrades to capture the new data and perform the cal­cu­la­tions required for com­pli­ance. Capturing data inputs was also cited as the largest tech­nol­ogy challenge.
  • Sig­nif­i­cant im­ple­men­ta­tion costs have been budgeted
    The majority of insurers have now set some ex­pec­ta­tions around budget, with results showing the expected spend to be sig­nif­i­cantly greater than ex­pec­ta­tions captured in 2013. 35 percent of insurers expect to spend more than EUR 50m to meet com­pli­ance, compared with only 7 percent five years ago.
  • Insurers are seeing more benefits vs. cost
    93 percent of global insurers feel that the benefits of adopting IFRS 17 will outweigh the cost of com­pli­ance. This is compared to only 21 percent in 2013.
  • Actuarial, accounting and col­lab­o­ra­tion skills will be in high demand
    Insurers cited col­lab­o­ra­tion skills as being equally as important as actuarial skills. Many of them said they would try to drive tighter in­te­gra­tion between finance, actuarial, and other de­part­ments. They also report having the greatest dif­fi­culty in finding actuarial and accounting expertise.

For more in­for­ma­tion, see the Global IFRS Insurance Survey 2018 and visit the survey page on Deloitte.​com.


Educational material on IFRS 17

Jul 10, 2018

On July 10, 2018, the International Accounting Standards Board (the Board) published "Insurance contracts issued by mutual entities" to support the implementation of IFRS 17, "Insurance Contracts".

The publication covers:

  • what a mutual entity is;
  • accounting for contracts issued by a mutual entity; and
  • whether a mutual entity could have equity.

Review the press release and the publication on the Board's website.

ESMA believes EU should show leadership by reaffirming its commitment to IFRS

Jul 17, 2018

On July 17, 2018, the European Se­cu­ri­ties and Markets Authority (ESMA) has responded to the European Com­mis­sion’s con­sul­ta­tion document 'Fitness check on the EU framework for public reporting by companies'. ESMA, con­sis­tent with its prior positions, strongly disagrees with the in­tro­duc­tion of the pos­si­bil­ity to modify the content of IFRS as issued by the IASB.

One of the questions in the fitness check relates to whether it is still ap­pro­pri­ate that the IAS Reg­u­la­tion prevents the European Commission (EC) from modifying the content of IFRS as issued by the IASB. ESMA notes that the EC has only recently sought feedback on this question twice (2013 and 2015) and both times the great majority of stake­hold­ers cautioned against in­tro­duc­ing such a pos­si­bil­ity. The ESMA response adds:

In line with its prior positions, ESMA strongly disagrees with this rec­om­men­da­tion, most notably because any Eu­ro­pean-spe­cific ad­just­ments to IFRS would defy one of the key ob­jec­tives of the IAS Reg­u­la­tion, namely that financial reporting standards applied by listed issuers are accepted in­ter­na­tion­ally and are truly global standards. In addition, we believe that mod­i­fi­ca­tions to IFRS at the European level would hinder the capacity of European companies to compete for financial resources on equal terms in global capital markets. In our view, the different levels of com­mit­ment to require IFRS as issued by the IASB around the globe is not a jus­ti­fi­ca­tion for in­tro­duc­ing carve-ins. On the contrary, Europe should show lead­er­ship in reaf­firm­ing its com­mit­ment to IFRS. This in turn would increase its ability to influence the de­vel­op­ment of IFRS, which the EU should continue to actively do as part of the IASB’s due process. 

ESMA also states that the current en­dorse­ment criteria should not be changed as the current en­dorse­ment process already provides the necessary safe­guards to the European public good, by providing the pos­si­bil­ity for the non-en­dorse­ment of a standard, which is not conducive to European public good.

Please click to access the press release on the ESMA website, which offers a quick overview over ESMA's position as well as access to the letter of response and the completed ques­tion­naire.


FASB makes improvements to its leasing guidance

Jul 18, 2018

In July 2018, the Financial Accounting Standards Board (FASB) has issued Ac­count­ing Stan­dards Update (ASU) No. 2018-10, “Cod­i­fi­ca­tion Im­prove­ments to Topic 842, Leases.”

The ASU makes im­prove­ments to the fol­low­ing aspects of the guid­ance in the ASU:

  • Resid­ual value guar­an­tees.
  • Rate im­plicit in the lease.
  • Lessee’s re­assess­ment of lease clas­si­fi­ca­tion.
  • Lessor’s re­assess­ment of lease term and pur­chase option.
  • Vari­able lease pay­ments that depend on an index or a rate.
  • In­vest­ment tax credits.
  • Lease term and pur­chase option.
  • Tran­si­tion guid­ance related to amounts pre­vi­ously rec­og­nized in busi­ness com­bi­na­tions.
  • Certain tran­si­tion ad­just­ments.
  • Tran­si­tion guid­ance for leases pre­vi­ously clas­si­fied as capital leases under ASC 840.
  • Tran­si­tion guid­ance related to mod­i­fi­ca­tions to leases pre­vi­ously clas­si­fied as direct fi­nanc­ing or sales-type leases under ASC 840.
  • Tran­si­tion guid­ance related to sale-and-lease­back trans­ac­tions.
  • Im­pair­ment of net in­vest­ment in the lease.
  • Un­guar­an­teed resid­ual assets.
  • Effect of initial direct costs on rate im­plicit in the lease.
  • Failed sale-and-lease­back trans­ac­tions.

For more in­for­ma­tion, see the ASU on the FASB’s Web site.


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