June 2016

'Better communication' to be the theme of the second term of the IASB Chairman

Jun 30, 2016

On June 30, 2016, Hans Hoogervorst, International Accounting Standards Board Chairman, at the IFRS Foundation's annual European Conference held in Zurich, outlined plans to prioritize improvements to the communications effectiveness of financial statements.

Mr Hoogervorst said:

Valuable information gets drowned out by ‘tick the box’ disclosures and voluminous, but poorly organized and presented, financial data. For the investor, it is often difficult to see the woods through the multitude of information trees. We will take a fresh look at how financial information is presented, how it is grouped together, and in what form it is made available.

"Better Communication" will bring together a number of work streams, including:

  • Primary Financial Statements—improving the organisation and structure of the ‘face of financial statements’ (statements of financial position, financial performance and cash flows);
  • Disclosure Initiative—improving the quality and usefulness of financial disclosures through amendments;
  • Financial Instruments with the Characteristics of Equity (FICE)—clarifying the definition, presentation and disclosure requirements for such instruments;
  • Digital reporting—further developing the IFRS Taxonomy to ensure it meets electronic reporting needs and remains fit for purpose; and
  • Non-financial reporting—assessing strategic challenges and exploring any potential future role that the Board may play in this area.

"Better Communication" as a theme for the Board's work responds to much of the feedback received through the 2015 Agenda Consultation, and should deliver material improvements to users’ ability to make economic decisions from financial information.

Mr Hoogervorst also announced that the Board will be playing a more active role in supporting jurisdictions in the implementation of new and existing IFRS Standards.

Read the full speech on the IASB's Web site.

Accounting leaders need a wake-up call on revenue recognition

Jun 01, 2016

On June 1, 2016, Compliance Week released an article where they discuss that with 18 months remaining until all companies are required to report revenue following hundreds of pages of new accounting guidance, accounting leaders are a little stumped on why companies aren’t taking more action to prepare.

At Compliance Week’s recent annual conference, a session on the massive new revenue recognition standard was perhaps the most sparsely attended. In an onsite poll of those in the room, more than half said they came from companies that hadn’t yet decided how they would adopt the new standard. That’s a troubling sign that those companies probably hadn’t yet completed even a high-level assessment to determine how they will be affected by the new requirements.

Chris Chiriatti, managing director at Deloitte & Touche says: “The results are somewhat—I wouldn’t say surprising—maybe alarming.”

“It’s an indicator that many companies view this as 18 months from now,” said Eric Knachel, senior consultation partner also with Deloitte. They have other more time-sensitive priorities, perhaps, or limited resources to devote to the effort. He adds that “the next three to nine months will be critical.”

Review the article on (Free Registration Required) Compliance Week's Web site.

IASB addresses definition of a business and accounting for previously held interests

Jun 28, 2016

On June 28, 2016, the International Accounting Standards Board (IASB) published for public consultation proposed amendments to IFRS 3, Business Combinations and IFRS 11, Joint Arrangements. It clarifies both the definition of a business and how to account for previously held interests.

The proposed amendments provide:

  • clearer application guidance to help distinguish between a business and a group of assets when applying IFRS 3; and
  • clarification on how a company should account for previously held interest in a business, if acquiring control, or joint control, of that business.

The proposed amended application guidance on the definition of a business in IFRS 3 arises from the Board’s Post-implementation Review (PIR) process, which is conducted on each Standard and major amendment approximately two years after their effective dates. The IFRS 3 PIR shows general support for the accounting requirements in the Standard but identifies some areas where further research will be undertaken.

The proposed amendment to accounting for previously held interests was developed through the IFRS Interpretations Committee.

Further information about the Exposure Draft—Definition of a Business and Accounting for Previously Held Interests (Proposed Amendments to IFRS 3 and IFRS 11)—can be accessed on the IASB's Web site. The deadline for comments is October 31, 2016.

Additional information

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IASB issues 'Investor Perspectives' on disclosure effectiveness

Jun 27, 2016

On June 27, 2016, the International Accounting Standards Board (IASB) issued the latest issue of "Investor Perspectives." In this edition, IASB board member Pat Finnegan discusses improving disclosure effectiveness.

This issue of Investor Perspective features:

  • An examination of capitalization tables;
  • A closer look at the IASB's projects on Conceptual Framework and financial instruments with characteristics of equity;
  • A solicitation for ideas on "more efficient and effective way for investors and lenders to obtain a comprehensive picture of the rights and obligations created by a company’s liability and equity claims"; and
  • Recent resources related to disclosure effectiveness.

For more information, see the June 2016 edition of the Investor Perspectives newsletter on the IASB’s website.

IASB issues narrow-scope amendments to IFRS 2 Share-based Payment

Jun 20, 2016

On June 20, 2016, the International Accounting Standards Board (IASB) issued amendments to IFRS 2 "Share-based Payment", clarifying how to account for certain types of share-based payment transactions.

The amendments, which were developed through the IFRS Interpretations Committee, provide requirements on the accounting for:

  • the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments;
  • share-based payment transactions with a net settlement feature for withholding tax obligations; and
  • a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled.

Companies are required to apply the amendments for annual periods beginning on or after January 1, 2018. Earlier application is permitted.

Further information about the amendments—Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)—can be on the IASB's Web site.


IASB posts webinar on principles of disclosure project

Jun 14, 2016

On June 14, 2016, the International Accounting Standards Board (IASB) posted a webinar that provides an overview of the disclosure initiative and discusses the upcoming discussion paper on principles of disclosures, which is expected to be issued by the end of 2016.

The webinar is hosted by the IASB’s senior technical manager Suzanne Morsfield and assistant technical manager Arjuna Dangalla.

For more in­for­ma­tion, see the webinar page on the IASB’s website.

IASB updates work plan

Jun 23, 2016

On June 23, 2016, the International Accounting Standards Board (IASB) released its updated work plan. As per this updated work plan the EDs on the definition of a business and on the remeasurement of previously held interests are expected to be released next week.

Changes to the work plan include:

Major projects

  • No changes made to major projects.

Im­ple­men­ta­tion projects

In addition, the work plan indicates that the exposure drafts on the definition of a business and on the remeasurement of previously held interests are expected to be released next week.

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

IASB webcast on lessee measurement now available

Jun 30, 2016

On June 30, 2016, the International Accounting Standards Board (IASB) released a webcast on lessee measurement, as part of its webcast series on IFRS 16 implementation.

In the webcast, the IASB staff discuss:

  • measurement of lease liabilities
    • lease term
    • variable lease payments
    • in-substance fixed lease payments
    • discount rate
  • measurement of right-of-use assets

The new webcast and all previous webcasts of the series are available on the IFRS 16 implementation page on the IASB’s website.

Report of the IFRS Foundation Trustees May 2016 meeting

Jun 10, 2016

On June 10, 2016, the report of the IFRS Foundation Trustees meeting in Jakarta held on May 24–26, 2016 was released.

Meeting activities included the following:

  • Executive session — The Trustees discussed a number of important strategic issues:
    • Review of structure and effectiveness of the IFRS Foundation — The Trustees extensively discussed and concluded their review of structure and effectiveness of the IFRS Foundation.
    • Agenda consultation — The Trustees were updated on the progress on the Board’s Agenda Consultation, in particular the key messages received from respondents and how these messages, as well as those received on the Trustees’ review, had been used to develop a draft work plan for the Board for the period 2017-2021.
    • Presentation on IFRS in Indonesia — The Trustees received a presentation on the status of IFRSs in Indonesia.
    • Insurance contracts — The Trustees received a presentation on the forthcoming standard.
    • Other issues.
    • Committee reports — The Trustees discussed reports from the Audit and Finance Committee, the Education and Content Services Committee, the Human Capital Committee, and the Nominating Committee.
  • IASB Chairman’s report — The Chair of the IASB provided the Trustees with an update on a number of the IASB’s technical activities with special focus on the 2015 Agenda consultation and consistent application of IFRSs around the world.
  • Report of the Due Process Oversight Committee (DPOC) — The Trustees received a report about the DPOC’s May 2016 meeting.
  • Events in Jakarta — The report especially notes the stakeholder event and the signing of the joint agreement with Indonesian authorities.

The full report on the IFRS Foundation trustees’ meeting is available on the IASB’s website.

Revenue standard causes concern about compensation arrangements

Jun 03, 2016

On June 3, 2016, the Journal of Accountancy released an article where they discuss how compensation arrangements are emerging as a big concern for companies as they implement the new revenue recognition standard.

The new revenue recognition standard is causing companies to review compensation arrangements and bonus structures that are based on revenue metrics, said Deloitte & Touche LLP's Eric Knachel, CPA. Knachel said that compensation arrangements are just one example of the broader nonaccounting issues that make it necessary to focus immediately on implementation.

Review the article on the Journal of Accountancy's Web site.

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