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July 2017

AcSB Exposure Draft – Property, Plant and Equipment – Proceeds before Intended Use (Proposed amendments to IAS 16)

Jul 13, 2017

On July 13, 2017, the Ac­count­ing Stan­dards Board (AcSB) is­sued an Ex­po­sure Draft that cor­re­sponds to the IASB’s Ex­po­sure Draft on this topic. Stake­hold­ers are en­cour­aged to sub­mit their com­ments by October 19, 2017.

The proposed amendments would prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced before the asset is available for use. Instead, an entity would recognize the proceeds from selling such items, and the related production costs, in profit or loss.

Re­view the Ex­po­sure Draft on the AcSB's web­site.


AICPA issues four revenue working drafts

Jul 03, 2017

On July 3, 2017, the AICPA’s revenue recognition task forces have released for public comment four working drafts on accounting issues associated with the implementation of the new revenue standard for airlines, gaming, health care, and telecommunications industries.

The working drafts address the following topics:

  • Regional contracts (airlines).
  • The timing for recognition of a wide-area progressive operator’s liability for base progressive and incremental progressive jackpot amounts (gaming).
  • Consideration of the new revenue standard in connection with third-party settlement estimates (health care).
  • Miscellaneous fees (telecommunications).

Comments on the working drafts are due by September 1, 2017.

For more information, see the revenue recognition page on the AICPA’s Web site.

AICPA issues proposed financial instruments disclosure framework

Jul 12, 2017

In July, 2017, as global accounting standards as well as requirements promulgated by other standard-setting bodies increasingly call for measurements and disclosures that comply with a defined measurement objective, the American Institute of Certified Public Accountants (AICPA) has issued an Exposure Draft of a proposed disclosure framework for the valuation of financial instruments.

The purpose of the ED, entitled Disclosure Framework for the Valuation of Financial Instruments is to provide a framework for the valuation professional when engaged or assigned to provide fair value and other measurements of financial instruments and components thereof. By design, the framework does not provide instructions on how to arrive at a valuation conclusion, but instead, the documents provide valuation professionals with guidance on the level of documentation and substantiation that is required when performing, reviewing or working with securities or financial instrument valuations.

Comments on the Exposure Draft are requested by September 27, 2017.

For more in­for­ma­tion, see summary on the AICPA’s website.

Conference addresses complexities of the new leasing standard

Jul 06, 2017

On July 6 2017, Accounting Today released an article that highlights a recent Financial Executives International conference where Deloitte & Touche LLP partners, Jeanne McGovern and Derek Bradfield, discussed the complexities of the new leasing standard.

In the article, Mr. McGovern says that “the FASB and IASB standards that came out in early 2016 fundamentally brought all leases on the balance sheet. While those standards are similar in that regard and were originally a convergence project for the IASB and FASB, they definitely diverged quite a bit and created a number of differences which create complications for global companies that report in both U.S. GAAP and IFRS.”

Also, audit committees are asking more and more questions and that they’ve learned their lesson from revenue: It’s better to start asking questions sooner rather than later. So, experts are warning companies not to procrastinate anymore. They need to be gathering a lot of information over the next 18 months to be ready for 2019.

Review the article on Accounting Today's website.

EBA reports on results of the second impact assessment of IFRS 9

Jul 13, 2017

On July 13, 2017, the European Banking Authority (EBA) published a report on the results of its second impact as­sess­ment of IFRS 9 'Financial In­stru­ments'. For the report, EBA looked at a sample of ap­prox­i­mately 50 in­sti­tu­tions across the European Union.

The exercise, which follows up on the first impact as­sess­ment published in November 2016, has confirmed the EBA's initial ob­ser­va­tions on the stage of prepa­ra­tion for the im­ple­men­ta­tion of IFRS 9 and the estimated impact of IFRS 9 on reg­u­la­tory own funds.

On the qual­i­ta­tive side, the report high­lights that banks have made further progress on the im­ple­men­ta­tion of IFRS 9 since the previous exercise, but smaller banks are still lagging behind in their prepa­ra­tion compared with larger banks. On the quan­ti­ta­tive side, the responses received show that the estimated impact of IFRS 9 is mainly driven by IFRS 9 im­pair­ment re­quire­ments. The estimated increase of pro­vi­sions is on average 13% compared to the current levels of pro­vi­sions under IAS 39.

The full report can be accessed on the EBA website.

EFRAG’s Summary Report of the joint investor outreach event on the Discussion Paper: Disclosure Initiative—Principles of Disclosure

Jul 19, 2017

On July 19, 2017, the European Financial Reporting Advisory Group (EFRAG) published a summary report of an outreach event for investors held on July 3, 2017 in Brussels on the Discussion Paper: Disclosure Initiative—Principles of Disclosure

The event was organized by the International Accounting Standards Board, in conjunction with EFRAG, the European Federation of Financial Analysts Societies (EFFAS), and the Association Belge des Analystes Financiers (ABAF/BVFA).

It introduced the main elements of the Discussion Paper, the preliminary positions held, focused on the information needs of investors, and sought input on the following issues included in the Discussion Paper: (i) Can principles make communication more effective? (ii) What do investors think are useful examples of disclosures in the financial statements? (iii) Alternative (non-IFRS) performance measures in the financial statements: misleading or useful? (iv) Should unusual or infrequently occurring items be separately reported and if so how? and (v) How important is the application of materiality when deciding what and how to disclose information?

Re­view the Summary Report on the IASB’s website.

ESMA issues report on the application of IFRS 13

Jul 12, 2017

On July 12, 2017, the Eu­ro­pean Se­cu­ri­ties and Mar­kets Au­thor­ity (ESMA), issued a report, “Review of Fair Value Mea­sure­ment in the IFRS Financial State­ments.” The report provides an overview of the ap­pli­ca­tion of fair value mea­sure­ment and dis­clo­sure re­quire­ments in IFRS 13, “Fair Value Mea­sure­ments,” as applied by European issuers

The review focused on four key topics, which included (1) fair value dis­clo­sures, (2) unit of account, (3) level of market activity and fair value, and (4) valuation ad­just­ments for de­riv­a­tives. The review found that the Standard has “generally been well in­cor­po­rated in the financial state­ments of the issuers in the sample.” However, the report noted that com­pli­ance and com­pa­ra­bil­ity in the ap­pli­ca­tion of IFRS 13 could improve.

The results of this review will con­tribute to the IASB’s post-im­ple­men­ta­tion review of IFRS 13.

For more in­for­ma­tion, see the press release and report on the ESMA’s Web site.

ESRB publishes a report on the financial stability implications of IFRS 9

Jul 17, 2017

On July 17, 2017, the European Systemic Risk Board (ESRB) published a report on the financial stability im­pli­ca­tions of IFRS 9 'Financial In­stru­ments'. The ESRB’s work on this topic was requested by the European Par­lia­ment in January 2016.

The analysis in the report entitled, Financial stability im­pli­ca­tions of IFRS 9, focuses on two aspects: (i) IFRS 9 and fair value accounting for the mea­sure­ment of financial assets; (ii) the new expected credit loss paradigm

The report notes that the ESRB concludes that IFRS 9 rep­re­sents a major im­prove­ment in com­par­i­son with IAS 39 and is expected to bring sub­stan­tial benefits from a financial stability per­spec­tive. Together with the greater clarity and certainty as­so­ci­ated with its prin­ci­ples-based approach to the clas­si­fi­ca­tion and mea­sure­ment of financial in­stru­ments, the earlier and fuller recog­ni­tion of im­pair­ment losses under the new expected credit losses model is expected to have positive effects on financial stability.

The ESRB report is ac­com­pa­nied by an oc­ca­sional paper entitled, Assessing the cyclical im­pli­ca­tions of IFRS 9 – a recursive model. This paper describes a model for assessing different ap­proaches to the accounting of credit im­pair­ment losses. In par­tic­u­lar, it compares the impact of a crisis on banks assuming four such different ap­proaches, including the current approach in IAS 39 (incurred losses) and the solutions adopted under IFRS 9 and in the United States re­spec­tively.

For further information, refer to the press release on the ESRB’s website.


FinREC unveils 4 more revenue recognition working drafts

Jul 03, 2017

On July 3, 2017, the AICPA Financial Reporting Executive Committee (FinREC) issued another batch of working drafts of accounting issues related to the implementation of FASB’s new revenue recognition standard.

The AICPA is collecting feedback on the working drafts as part of its ongoing work to develop a new revenue recognition guide.

The four working drafts released are:

  • Airlines: Issue No. 2-1, Regional Contracts.
  • Gaming: Issue No. 6-5, The Timing for Recognition of the WAP Operator’s Liability for Base Progressive and Incremental Progressive Jackpot Amounts.
  • Health Care: Issue No. 8-8, Consideration of FASB ASC 606, Revenue From Contracts With Customers, for Third Party Settlement Estimates.
  • Telecommunications: Issue No. 15-10, Miscellaneous Fees.

The deadline for informal feedback on the implementation issues is September 1, 2017.

Review a press release on the Journal of Accountancy's website.

HLEG questionnaire on interim report

Jul 19, 2017

On July 18, 2017, the High-Level Expert Group (HLEG) on Sustainable Finance, established by the European Commission, published a first report setting out concrete steps to create a financial system that supports sustainable investments. The HLEG has now launched a questionnaire aimed at gathering targeted feedback on the analysis and reflections in the interim report and informing the preparation of the final report.

This questionnaire is open from July 18, 2017 through September 20, 2017. A copy of the report can be accessed here.

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