In the article, Mr. Knachel observes that “some of the operational aspects of the new revenue standard seem to present the greatest challenge” and that “there is a significant amount of judgment around applying the new standard, and while similar facts should be followed by similar judgments; in practice, organizations may bump up against the notion that facts can be interpreted differently.”

While Mr. Chiriatti suggested that new guidance around contract modifications could affect whether a contract is considered new or modified. He mentions that there is a significant amount of judgment required around assessing the scope and pricing of work being added to a contract, and the resulting decision could impact revenue recognition patterns because new contracts are accounted for differently than modified ones, depending on several other factors.

Review the full article on the Wall Street Journal's website.

The following narrow-scope topics were brought to the FASB’s attention after the initial deliberations of the May 2016 proposed ASU:

• Loan guarantee fees.
• Contract asset versus receivables.
• Refund liabilities.
• Advertising costs.

Comments on the proposed ASU are due by October 4, 2016. For more information, see the proposed ASU on the FASB’s Web site.

This short paper discusses the preparation of the reporting infrastructure, practical integration of climate change information into mainstream reports, and materiality. In conclusion the paper identifies that there is a crucial role for the reporting community to play to ensure the success of the TCFD’s recommendations.

Please click for the press release and the publication on the CDSB's Web site.

Blockchain is an emerging peer-to-peer database tool for recording transactions. By removing the need to reconcile transactions externally, blockchain has the potential to make interactions more efficient, less expensive and safer working to respond to the risks and opportunities on the path to a sustainable future. International blockchain standards will play a key role in creating greater market certainty and confidence while supporting regulation of financial transactions, commodity exchanges and asset transfers.

Joining Australia on the technical committee are 35 ISO member bodies including Germany, USA, Canada, Estonia, France, Japan, UK, and Korea.

Re­view the press release on the Standards Australia web­site.

Following a distinguished career at the FASB, Mr. Upton joined the IASB in 2001 and was, at different times, Research Director, Chair of the IFRS Interpretations Committee, Chair of the Emerging Economies Group, and Coordinator of the Islamic Finance Consultative Group. In his role as Director of International Activities, he played an important role in supporting jurisdictions around the world with their transition to IFRSs.

See the press release on the IASB's website.

The SEC received over 276 non-form comment letters in response to the Concept Release, with a strong showing of support for improved disclosure of sustainability-related information in SEC filings. Two-thirds of comment letters address sustainability-related concerns. Most of these letters support improved sustainability-related disclosures in SEC filings; for many commenters this was the only matter of concern.

In addition to climate change, sustainability-related areas of interest noted in comments to the SEC include a vast array of issues, including but not limited to: land tenure rights; water (access to, stewardship of); political spending and lobbying; gender pay equity; diversity; human rights; human capital management; international tax payments; sustainable palm oil; forestry, and; supply chain management.

The report is available on the SASB's Website.

The amendments in Applying IFRS 9 "Financial Instruments" with IFRS 4 "Insurance Contracts" (Amendments to IFRS 4) provide two options for entities that issue insurance contracts within the scope of IFRS 4:

• an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
• an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.

The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

An entity would apply the overlay approach retrospectively to qualifying financial assets when it first applies IFRS 9. The application of the overlay approach requires disclosure of sufficient information to enable users of financial statements to understand how the amount reclassified in the reporting period is calculated and the effect of that reclassification on the financial statements.

An entity would apply the deferral approach for annual periods beginning on or after January 1, 2018. The application of the deferral approach needs to be disclosed together with information that enables users of financial statements to understand how the insurer qualified for the temporary exemption and to compare insurers applying the temporary exemption with entities applying IFRS 9. The deferral can only be use for the three years following January 1, 2018.

Read further:

• IASB press release (IASB's Web site)
• Project summary and feedback statement (IASB's Web site)

Here are some excerpts from his remarks:

"We finished our deliberations recently and our staff are very busy drafting the Standard.

We have been working on the new insurance Standard for many years and its publication will not come a day too soon. Our current insurance Standard, IFRS 4, is a holding standard which has grandfathered an array of highly diverse national accounting standards. As a result, there is little comparability between insurance companies around the world.

Moreover, there is variety in the measurement of the insurance liability. Some insurers use discount rates that are based on the expected return of assets, others use risk-free discount rates; others still use historical rates based on interest rates at the date of inception.

As a result, the devastating impact of the current low-interest-rate environment on long-term obligations is not nearly as visible in the insurance industry as it is in the defined benefit pension schemes of many companies. Clearly, discounting an insurance liability that was incurred 15 years ago at a historical interest rate of 5-6 per cent does not give relevant information in a time when interest rates are close to—or even below—zero.

In some cases, minimum-return guarantees and other complex features are typically reflected in the insurance liability only when they become worth exercising and even then typically only at an amount that does not reflect their true economic value. For a bank, such treatment of complex financial liabilities would be unthinkable.

As a result, there is not only a lack of comparability among insurance companies, but there is also a great lack of comparability between insurance and other parts of the financial industry, such as banks."

Please click to access the full text of Mr. Hooger­vorst's speech on the IASB's Web site.

The proposed ASU and IFRS 9 provide similar methodologies for measuring the hedged item in a partial-term fair value hedge of interest rate risk. The proposed update would allow qualitative assessments of hedge effectiveness if certain conditions are met, while IFRS 9 allows for either quantitative or qualitative assessment of hedge effectiveness.

However, there are some differences between FASB’s proposed ASU and IFRS 9 pertaining to the presentation of changes in the fair value of hedging instruments. FASB’s proposed amendments would eliminate the concept of hedge ineffectiveness, while IFRS 9 retains that concept. FASB’s proposed changes would require an institution to record the entire change in the fair value of the hedging instrument in the same income statement line item as the earnings effect of the hedged item, while IFRS 9 does not provide broad guidance on presentation.

FASB plans to decide on an effective date for the update after redeliberates about all the comments gets during the comment period and from the public roundtable meetings. Early application of the proposed amendments would be allowed at the beginning of any fiscal year before the effective date.

In the paper, the ASBJ argues two points:

• As long as the statement of profit or loss is the primary source of information about an entity’s financial performance, the Conceptual Framework should, at a minimum, describe the fundamental characteristics that information about profit or loss should possess.
• In order to calculate profit or loss that is useful, the measurement basis should be selected appropriately from the perspective of the statement of financial position and from the perspective or the statement(s) of financial performance, respectively. If the measurement basis differ, the difference in the changes in the measurements should be included in OCI.

Please click for access to the full paper on the ASBJ's Web site.