During his presentation, Mr Hoogervorst explored “whether IFRS Standards provide sufficient criteria by which performance can be judged by users of financial statements.” He noted the increasing use of non-GAAP measures and research showing that these measures are becoming increasingly misleading. Mr Hoogervorst said:

The fact is that IFRS Standards prescribes very little in the way of formatting the income statement. Companies have considerable freedom in the way they present the components of income that make up profit or loss. As a result, there is little comparability above the bottom line, making it difficult for users to judge performance.

He went on to say that securities regulators are primarily responsible for cutting back the use of non-GAAP measures but that the IASB “should also look at its own role in this matter.” He admitted that the IASB provides “too little guidance” in formatting the income statement. He also suggested “potential remedies” for IASB consideration:

• Defining more subtotals in the income statement;
• Providing a principle-based definition of operating income which does not allow for obfuscating restructuring or impairment charges;
• Creating a “rigorous definition” of earnings before interest and tax (EBIT);
• Looking for better solutions for some elements of income and expense that are currently parked in other comprehensive income;
• All of the above and more.

Mr Hoogervorst concluded:

[U]ltimately the number that counts most is the unadjusted bottom line, where all elements of income come together, both recurring items and exceptional items, whatever those may be. No-one can predict the extent to which seemingly extraordinary elements of income are recurring and not. That is why it is important that the bottom line is as inclusive as possible and that it shows everything, warts and all.

The full text of Mr Hoogervorst’s speech is available on the IASB’s Web site.

The amendments, which were issued in response to feedback received by the FASB–IASB joint revenue recognition transition resource group (TRG), include the following:

• Collectibility
• Presentation of sales tax collected from customers
• Noncash consideration
• Contract modifications at transition
• Transition technical correction

The ASU notes that in light of the following, there may be “minor differences in financial reporting outcomes between U.S. GAAP and IFRS” as a result of the ASU’s amendments:

• IFRS 15, Revenue From Contracts With Customers, does not allow a policy election for the presentation of sales taxes on a net basis.
• IFRS 15 does not prescribe the measurement date for noncash consideration.
• The different dates associated with an entity’s application of (1) the practical expedient for contract modifications and (2) the term “completed contracts” for transition purposes.

The ASU’s effective date and transition provisions are aligned with the requirements in the new revenue standard, which is not yet effective. For more information, see the ASU on the FASB’s website.

The report looks at the evidence on whether financial reporting encourages short-termism and asks whether it would be possible for financial reporting to provide better information on long-term performance. In particular, it looks at five areas in which current financial reporting has been accused of encouraging short-termism:

The webcast discusses the IFRS 16 requirements relating to the recognition exemptions and provides Ms. Lloyd's insight on the scope exemptions, practical examples, and implementation information.

The topics discussed at the meeting included:

• IFRS Advisory Council — Role and recent activities
• Disclosure Initiative — Final amendments to IAS 7
• Different effective dates — IFRS 9 and the new insurance contracts standard
• Structured Electronic Reporting — What do investors need?
• Education Session — The new impairment requirements in IFRS 9
• Primary Financial Statements
• IFRS 16 — Update on the new standard

The full meeting summary is available on the IASB's website.

Traditionally the financial audit process has been opaque, operating in a black box environment with only a pass or fail judgement rendered by the auditor on an annual basis.

However, there has been a growing realization that increasing transparency into the audit process would be of benefit to audit committees, investors and other stakeholders.

A number of initiatives are underway internationally in order to increase transparency into the audit process. This publication outlines two initiatives: audit quality indicators (AQls) and transparency reporting.

Review the publication on the CPAB's Web site.

Traditionally the financial audit process has been opaque, operating in a black box environment with only a pass or fail judgement rendered by the auditor on an annual basis.

However, there has been a growing realization that increasing transparency into the audit process could benefit audit committees, investors and other stakeholders.

A number of initiatives are underway internationally to increase transparency into the audit process. The publication outlines two initiatives: enhanced auditor reporting and enhanced audit committee reporting.

Review the publication on the CPAB's Web site.

The CPAB has heard from audit committees that IT risk is a growing priority for boards and audit committees, yet they often feel ill-equipped to perform their oversight role in this area. Understanding the risks of the organization and asking the right questions of external auditors, internal auditors and management can help audit committees manage its IT risks and protect its information assets more effectively.

Review the publication on the CPAB's Web site.

At December 31, 2015, 286 audit firms were registered with CPAB. During 2015, CPAB inspected 39 firms in total and 179 engagement files. For the 14 firms inspected annually, CPAB inspected 144 files and identified significant inspection findings in 43 of these files. In addition, CPAB inspected 35 files at 25 other firms and identified significant inspection findings in 28 files.

The majority of CPAB’s total significant inspection findings in 2015 required the audit firm to carry out additional audit procedures to verify there was no need to restate the financial statements due to material error. The remaining findings required the audit firms to add considerable evidence to the audit file to show they had obtained sufficient and appropriate audit evidence with respect to a major balance sheet item or transaction stream. The results of carrying out additional audit procedures resulted in 11 restatements or six per cent of files inspected.

Review the Annual Report on the CPAB's Web site.

The majority of CPAB's total significant inspection findings in 2015 required the audit firm to carry out additional audit procedures to determine the need, if any, to restate the financial statements due to material error. The remaining findings required the audit firms to add considerable evidence to the audit file to show they had obtained sufficient and appropriate audit evidence with respect to a major balance sheet item or transaction stream.

The following audit quality themes noted in CPAB's November 2015 inspections report on the Big Four accounting firms also apply to the other firms inspected this year:

• Executing audit fundamentals
• Understanding business processes relevant to financial reporting
• Complex accounting estimates
• Internal controls
• Professional judgment and skepticism
• Identification of accounting issues

Review the press release, the Annual Inspections Report and the Highlights for Audit Committees on the CPAB's Web site.