The debate over which accounting standards philosophy is better—principles or rules—has persisted for decades with no end in sight. It’s a healthy debate. Principles written at too high a level result in issues with comparability and other challenges but excessive rules result in unnecessary complexity and invite structuring.

Having spent 40 years in this space as a US auditor and preparer and for several years as an IASB member, I have the benefit of seeing this issue from several perspectives, and I have no doubt that a principle-based approach to establishing accounting standards is, without question, the better way to go.

However a principle-based approach is only successful when several pre-conditions are present—some technical, some mindset—which is the focus of this article.

Read the editorial on the IASB's Web site.

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.

The proposal revises the property disclosure requirements for mining registrants and related guidance “by aligning them with current industry and global regulatory practices and standards.” The purpose of the revisions is to help investors understand registrants’ mining properties so that they can “make more informed investment decisions.”

Foreign private issuers that use Form 20-F to file their Exchange Act registration statements and annual reports, or that refer to Form 20-F when filing their Securities Act registration statements on Forms F-1 and F-4, are generally not subject to Regulation S-K.

Because the SEC believes that the same property disclosure requirements should apply to both domestic and foreign mining registrants, the proposed rules would amend Form 20-F.

The proposed conforming changes are intended to ensure consistency in the mining disclosures of SEC filers across both domestic registrants and foreign private issuers (other than Canadian issuers that use the Multijurisdictional Disclosure System filing on Forms 40-F, F-10, F-7, F-8 or F-80). The proposed changes would particularly affect Canadian registrants that report pursuant to Form 20-F and are currently permitted to provide additional mining disclosure under NI 43-101 pursuant to the “foreign or state law” exception under Guide 7 and the “foreign law” exception under Form 20-F. The proposed rules would eliminate this exception and may thus increase compliance costs for these registrants to the extent that, as discussed previously, the proposed disclosure requirements differ from NI 43-101.482 That said, to the extent that these differences in disclosure requirements also provide expected incremental benefits, these benefits would mitigate any increase in compliance costs.

Comments on the proposed rule are due 60 days after the date of its publication in the Federal Register.

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

The study begins by pointing out that the current system presumes that information is consumed by humans, therefore machine-readable formats are often neglected or viewed as secondary. However, the study concludes that the use of data and technology can result in a more effective and efficient overall financial reporting process in which users at every level receive more transparent, better-quality information on a timely basis. The three levels the study identifies are companies, auditors and investors.

• Companies. Using standardized data from very early on in the process (and not only at the regulatory filing stage) would enable companies to use applications that are able to pull information from different data sources to write automated reports, which will streamline current labor-intensive processes.
• Auditors. Structuring data early in the process would also allow auditors to use audit data analytics to make the audit more efficient and potentially provide users with a better quality and greater granularity of financial information with greater reporting frequency and possibly a higher level of assurance.
• Investors. Structured quantitative data not bounded by the document in which the information is contained would give investors the possibility to apply current technology to sift through data and analyse the numbers in a faster and more comprehensive manner.

However, the study also notes that to achieve these changes, regulators need to improve access to and searchability of information within the regulator’s primary source documents.

Review the full study on the CFA Institute's website.

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.

On Relevance, the Trustees intend to accelerate the work to address barriers to high-quality digital reporting by collaborating with investors, securities regulators and others to ensure the IFRS Taxonomy remains fit for purpose. They will also establish a network of experts to provide advice on technological innovation and its impact and relevance to IFRS Standards. The Trustees have also decided to retain the existing focus of the Board on for-profit entities, with no expansion at this time to cover either the public sector or the private not-for-profit sector.

Regarding Consistent application, there will be an increased emphasis on activities to support the consistent application, additional resources and materials will be developed to assist the consistent implementation, and the Trustees will continue to develop relationships with securities regulators to support implementation of IFRSs around the world.

Governance and financing will see no change to the current three-tier structure, but steps will be taken to enhance the visibility of Trustee oversight of the Board. The geographical distribution of both the Trustees and the Board will be changed by combining the North American and South American allocations into a single ‘Americas’ category, and the size of the Board will be reduced to 13 members, with the flexibility to appoint a 14th member if appropriate. The Trustees will maintain the current funding model until the funding regime based on publicly supported financing is fully achieved.

The following additional information is available on the IASB's website:

• Press release
• ED of proposed changes to the Constitution
• Feedback statement
• Video of Michel Prada explaining the results of the review

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.

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.

Changes to the work plan include:

Major projects

• No changes made to major projects.

Im­ple­men­ta­tion projects

• Annual Improvements (2014-2016): Updated to indicate that a decision on the direction of the project is now expected within 3 months.
• Transfer of In­vest­ment Property: Updated to indicate that a final standard is expected within 6 months.
• Draft IFRIC In­ter­pre­ta­tion — Foreign Currency Trans­ac­tions and Advance Con­sid­er­a­tion: Updated to indicate that a final interpretation is expected after 6 months.

In addition, the work plan has updated the details of the primary financial statements, income taxes, and share-based payment (where the IASB has decided not to perform any further research on this topic or to publish a formal consultation document) research projects and indicated that a feedback statement on the 2015 agenda consultation is expected within 6 months.

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