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IASB publishes Request for Information on the post-implementation review of IFRS 13

May 25, 2017

On May 25, 2017, the International Accounting Standards Board (IASB) issued a Request for Information (RFI) seeking comments from stakeholders to identify whether IFRS 13 "Fair Value Measurement" provides information that is useful to users of financial statements; whether there are areas of IFRS 13 that are difficult to implement and may prevent the consistent implementation of the standard; and whether unexpected costs have arisen in connection with applying or enforcing the standard.

So far, four broad areas have been identified where IFRS 13 might benefit from improvements. These four areas are the backbone of the RFI:

  • Disclosures about fair value measurements. Some of the disclosure requirements for Level 3 fair value measurements are perceived as onerous while at the same time their usefulness is questioned.
  • Prioritising Level 1 inputs or the unit of account. IFRS 13 is perceived as not clear on whether entities should prioritise Level 1 inputs or the unit of account when determining the fair value of investments in joint ventures and associates.
  • Application of the concept of the highest and best use. Concerns in this area regard the implications of applying the concept of highest and best use in the measurement of groups of operating assets.
  • Application of judgement in specific areas. Challenges around this have been mentioned to the IASB and the question is whether further support could be helpful.

Also, the RFI asks respondents whether the IASB should strive to maintain convergence with US GAAP Topic 820 Fair Value Measurement in any changes that might be the result of the PIR.

Comment deadline is September 22, 2017.

Review the press release and request for information on the IASB's website.

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The Bruce Column — Sunshine and the ideas behind management commentary

May 25, 2017

The concept of management commentary has long been perceived by the IASB like a worrying cloud hovering over financial reporting. But the sun may be about to break through. A speech by Hans Hoogervorst, Chairman of the IASB, looks likely to have confirmed that the weather has changed, reports regular columnist, Robert Bruce.

The <IR> framework has become widely adopted and the UK’s guidance on the concept of a strategic report is seen as mainstream. In Hans Hoogervorst’s words: "They put more emphasis on interconnectivity among elements of an integrated report’" They look at "how developments in the external environment have affected a company’s business model and strategy’" he said. It is time for change. Now more than ever people need integrated reporting-style reporting.

Read the entire column on our Global IAS Plus site.


Summary of the March 2017 CMAC meeting

May 24, 2017

On May 24, 2017, the International Accounting Standards Board (IASB) released a summary of the Capital Markets Advisory Committee (CMAC) meeting which was held in London on March 16, 2017.

The topics discussed at the meeting included:

  • Primary financial statements
  • Rate-regulated activities
  • Clarifications to IFRS 8 arising from the post-implementation review
  • IFRS 3, Business Combinations: Definition of a business
  • Disclosure Initiative — outreach planning for the Disclosure Initiative — Principles of Disclosure discussion paper and case studies
  • Education session — insurance contracts

Review the meeting page and the meeting summary on the IASB's website.


PSAB 2017-2020 Strategic Plan – Journey Forward

May 24, 2017

On May 24, 2017, the Public Sector Accounting Board (PSAB) released their new three-year strategic plan.

The key strategies included in the strategic plan are as follows:

  • Strategy 1 — Develop standards in accordance with due process and the public interest
  • Strategy 2 — Finalize the conceptual framework
  • Strategy 3 – Review our approach to International Public Sector Accounting Standards
  • Strategy 4 – Encourage stakeholders to support and accept our standards
  • Strategy 5 – Implement a public sector not-for-profit organization strategy that meets the public interest

Review the Strategic Plan on the PSAB's website.


IASB launches IFRS 17 implementation support page

May 23, 2017

On May 23, 2017, after the issuance of IFRS 17 "Insurance Contracts" on May 18, the International Accounting Standards Board (IASB) has set up an implementation support page for IFRS 17.

In addition to material issued alongside IFRS 17, the page also offers contact details and submission information for technical inquiries and implementation issues.

The IASB will keep the implementation support page available through the whole implementation process for IFRS 17 and will continue to add additional information that becomes available.

Review the new page on the IASB's website.


PIR of IFRS 13 to be substantiated by a literature review

May 23, 2017

On May 23, 2017, the International Accounting Standards Board (IASB) announced that it will launch the public phase of the post-implementation review (PIR) of IFRS 13 "Fair Value Measurement" in May. The IASB is now also calling for applications to undertake a literature review on the effect on IFRS 13.

The call for research seeks applications to undertake a literature review, bringing together the existing academic literature on the effect of implementation of IFRS 13, Fair Value Measurement. The IASB expects to receive a full literature review and a summary, which highlight findings in the existing literature as they relate to the areas of focus in the Board’s PIR of IFRS 13.

Review the call for applications on the IASB's website.

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AASB Operating Plan – 2017-2018

May 19, 2017

On May 19, 2017, the Auditing and Assurance Standards Board (AASB) released its Operating Plan where it sets out its objectives and planned activities along with other initiatives to be undertaken in 2017-2018.

The AASB's 2017-2018 Operating Plan is based on the vision, mission and strategic objectives set out in the 2016-2021 Strategic Plan. Appendix 1 outlines key assumptions made in developing this Plan.

The AASB 2016-2017 Annual Report includes details of their performance in relation to the goals set out in the 2016-2017 Operating Plan.

Review the Operating Plan on the AASB's Web site.

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Reporting on Controls at a Service Organization — Bridging the Gap Between Canadian and Revised U.S. Standards

May 18, 2017

On May 18, 2017, the Auditing and Assurance Standards Board (AASB) released a bulletin that will assist stakeholders during the period while the Canadian and U.S. standards on reporting on controls at a service organization are not aligned.

The Bulletin explains changes made to the U.S. standards and highlights key differences between the Canadian and revised U.S. standards, as well as implications for:

  • service audits conducted in accordance with multiple standards (i.e., Canadian and U.S.) or with the revised U.S standards;
  • service audits previously conducted in accordance with the Canadian standard that will be conducted in accordance with the revised U.S. standards; and
  • the issuance or use of a service auditor’s report conducted in accordance with the Canadian standard only, if any.

Review the Bulletin on the AASB's website.


Updated IASB work plan — Analysis

May 18, 2017

On May 18, 2017, the International Accounting Standards Board (IASB) updated its work plan following its May 2017 meeting. There were no major changes with the exception of the insurance contracts project being removed from the active projects due to the issuance of IFRS 17.

Below is an analysis of all changes made to the work plan since the last update in April 2017.

Research projects

  • no changes

Major projects

Nar­row-scope amend­ments

  • a new project on long-term interests in associates and joint ventures has been split off from the Annual improvements 2015–2017 — final amendments to IAS 28 are expected within six months
  • a new project vaguely called "Annual improvements (next cycle)" has been added to the agenda — an exposure draft is expected after six months

IFRS Taxonomy

  • proposed taxonomy update on insurance contracts (published together with IFRS 17 yesterday) — a final updated is expected within six months

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


IASB issues new insurance contracts standard

May 18, 2017

On May 18, 2017, the International Accounting Standards Board (IASB) published a new standard, IFRS 17 "Insurance contracts". The new standard requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 "Insurance Contracts" and related interpretations and is effective for periods beginning on or after January 1, 2021, with earlier adoption permitted if both IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments" have also been applied.



An entity shall apply IFRS 17, Insurance Contracts to:

  • Insurance and reinsurance contracts that it issues;
  • Reinsurance contracts it holds; and
  • Investment contracts with discretionary participation features (“DPF”) it issues, provided it also issues insurance contracts.

Scope changes from IFRS 4

  • The requirement, that in order to apply the insurance standard to investment contracts with DPF, an entity has to also issue insurance contracts.
  • An option to apply IFRS 15, Revenue from Contracts with Customers to fixed-fee contracts, provided certain criteria are met.


Level of aggregation

IFRS 17 requires entities to identify portfolios of insurance contracts, which comprises contracts that are subject to similar risks and are managed together. Each portfolio of insurance contracts issued shall be divided into a minimum of three groups:

  • A group of contracts that are onerous at initial recognition, if any;
  • A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any; and
  • A group of the remaining contracts in the portfolio, if any.

An entity is not permitted to include contracts issued more than one year apart in the same group. Furthermore, if a portfolio would fall into different groups only because law or regulation constrains the entity's practical ability to set a different price or level of benefits for policyholders with different characteristics, the entity may include those contracts in the same group.


Overview of the new accounting model

The standard measures insurance contracts either under the general model or a simplified version of this called the Premium Allocation Approach. The general model is defined such that at initial recognition an entity shall measure a group of contracts at the total of (a) the amount of fulfillment cash flows (“FCF”), which comprise probability-weighted estimates of future cash flows, an adjustment to reflect the time value of money (“TVM”) and the financial risks associated with those future cash flows and a risk adjustment for non-financial risk; and (b) the contractual service margin (“CSM”).

On subsequent measurement, the carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. The liability for remaining coverage comprises the FCF related to future services and the CSM of the group at that date. The liability for incurred claims is measured as the FCF related to past services allocated to the group at that date.

An entity may simplify the measurement of the liability for remaining coverage of a group of insurance contracts using the premium allocation approach on the condition that, at initial recognition, the entity reasonably expects that doing so would produce a reasonable approximation of the general model, or the coverage period of each contract in the group is one year or less.


Presentation in the statement of financial performance

An entity shall disaggregate the amounts recognized in the statement(s) of financial performance into an insurance service result, comprising insurance revenue and insurance service expenses, and insurance finance income or expenses. Income or expenses from reinsurance contracts held shall be presented separately from the expenses or income from insurance contracts issued.

An entity shall present in profit or loss revenue arising from the groups of insurance contracts issued, and insurance service expenses arising from a group of insurance contracts it issues, comprising incurred claims and other incurred insurance service expenses. Revenue and insurance service expenses shall exclude any investment components.


Effective date

IFRS 17 is effective for annual reporting periods beginning on or after January 1, 2021. Earlier application is permitted if both IFRS 15, Revenue from Contracts with Customers and IFRS 9, Financial Instruments have also been applied.



An entity shall apply the standard retrospectively unless impracticable, in which case entities have the option of using either the modified retrospective approach or the fair value approach.

At the date of initial application of the standard, those entities already applying IFRS 9 may retrospectively re-designate and reclassify financial assets held in respect of activities connected with contracts within the scope of the standard.


Additional information

IASB website

Global IAS Plus website

Other updated information

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.