The first phase of the project deals with pre-replacement issues (issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark). It was added to the standard-setting agenda of the IASB in December 2018 and saw the publication of an exposure draft of propoed amendments in May 2019. The IASB is currently working towards the finalisation of the amenments with an additional Board meeting scheduled for August 28, 2019.

The second phase of the project now added to the work plan deals with replacement issues (issues that might affect financial reporting when an existing interest rate benchmark is replaced). Deliberations have not begun yet and are currently expected to be taken up in Q3 2019.

Review the press release on the Board's website.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

• Business combination under common control (1–12): The ASAF provided views related to the application of alternative approaches as well as how to apply a current value approach and predecessor approach.
• Man­age­ment com­men­tary (13–26): The ASAF provided views on the staff’s proposals related to the notion of narrative coherence and identifying and reporting matters that could affect the entity’s long-term success.
• IBOR reform (27–43): The ASAF provided information on the current state of interest rate benchmark reform in their jurisdictions and discussed their views on financial reporting issues discovered. The members also discussed how they should address the issues in phase II of the project.
• Better communication — Primary financial statements (44–59):  The ASAF commented on possible approaches to structuring the new requirements. In addition, the members planned outreach events during the comment period.
• Variable and contingent consideration (60–65) — The ASAF discussed the FRC’s project on the conceptual basis for transactions involving variable and contingent consideration.
• Business reporting of intangibles: realistic proposals (66–70): The ASAF provided views on the FRC’s discussion paper and gave suggestions for developing FRC’s analysis on intangible assets.
• Discussion Paper Accounting for Pensions Plans with an Asset-return Promise (71–73): The ASAF commented on the EFRAG’s discussion paper where they had mix views on the three accounting alternatives.
• Updated and agenda plan (74–76): The ASAF discussed items to be added to the proposed agenda for the October 2019 ASAF meeting.

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

The proposed rule would modernize the description of business, legal proceedings, and risk factor disclosures that registrants are required to make pursuant to Regulation S-K. The proposed amendments are intended to update the rules to improve disclosures for investors and to simplify compliance efforts for registrants.

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

Review the comment letters for full details on the AASB's website.

The study was sponsored by the Autorité des Normes Comptables (ANC), the French standard setter, and was presented at the 8th Symposium on Accounting Research 2018 in Paris (a recording of the research forum is available).

The project behind the study sought answers to the questions:

• Where and by whom has integrated reporting been adopted?
• To what extent has the International <IR> Framework been followed (‘depth’ of adoption)?
• How are organisations reporting on the capitals?
• Are integrated reporters using the GRI Standards too?

The research reveals that integrated reporting has matured into fast-paced diffusion around the world, but it also offers some interesting insights such as the fact that more developed countries are lagging in adoption, some companies developed integrated reports even before the International <IR> Framework was published, and the title ‘integrated report’ is not necessarily used - some integrated reports are labeled 'annual report' or 'sustainability report'.

Review the press release on the IIRC website, which offers a brief summary and access to the full report.

Background

The feedback on the Board's DP on Principles of Disclosure suggested that guidance is required to assist entities in determining which accounting policies to disclose. It was noted that the application of materiality is key to deciding which accounting policies to disclose, however IAS 1, Presentation of Financial Statements does not refer to materiality but states that ‘[a]n entity shall disclose its significant accounting policies' without the Board providing a definition for the term ‘significant’.

Therefore, the Board decided to develop amendments to paragraphs 117-122 of IAS 1 to require entities to disclose their material accounting policies rather than their significant accounting policies. To support this amendment the Board has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2 Making Materiality Judgements to accounting policy disclosures.

Suggested changes

ED/2019/6 Disclosure of Accounting Policies proposes to amend paragraphs 117-122 of IAS 1 in the following ways:

• Paragraph 117 of IAS 1 would be amended to require an entity to disclose its material accounting policies instead of its significant accounting policies;
• Paragraphs 117A-D of IAS 1 would be added to explain how an entity can identify a material accounting policy (for example an accounting policy has changed during the reporting period, was chosen from alternatives allowed in IFRSs, was developed in accordance with IAS 8 in the absence of an IFRS that specifically applies, relates to an area of significant judgement and assumption, or reflects unique entity-specific application of an IFRS);
• Paragraph 122, which requires an entity to make disclosures about ‘other judgements’, would be retained but would see a minor amendment to replace the reference to ‘significant accounting policies’ with the reference to ‘material accounting policies’.

The Board has also developed additional guidance to be included in the Materiality Practice Statement for entities to use when applying the four-step materiality process to accounting policy disclosure. This additional guidance is supported by two new examples that highlight the need to focus on information that is useful to users of financial statements and demonstrate how the application of the four-step materiality process can address the issues of: i) boilerplate or generic information being disclosed in accounting policies that are material to the financial statements; and ii) instances in which accounting policy disclosures contain only information that repeats the requirements of IFRSs. 

Comments on the proposed changes are requested by November 29, 2019.

Effective date and transition

The exposure draft does not contain a proposed effective date as the IASB intends to decide on this after exposure. The proposed amendments would be applied prospectively and early adoption would be permitted.

Dissenting opinion

Board member Martin Edelmann dissented from issuing the exposure draft. Mr. Edelmann does not believe that materiality is a concept that should be applied to accounting policies as accounting policies differ from other information in the financial statements. He is also concerned that the application of the concept to accounting policies might lead to a loss of important information.

Additional information

• IASB press release
• IASB exposure draft

The notice clarifies existing legal requirements and does not create any new ones. It reinforces and expands upon the guidance provided in CSA Staff Notice 51-333 Environmental Reporting Guidance and should be read in conjunction with that notice. CSA Staff Notice 51-333 continues to provide guidance to issuers on existing continuous disclosure requirements relating to a broad range of environmental matters, including climate change.

Review the press release and Staff Notice on the CSA's website.

This issue features:

• Spotlight — Intangible resources and financial reporting—an evolving debate
• In profile—Jacques De Greling, Scope Ratings
• We need your views
• Stay up to date
• Resources for investors

Review the Investor Update newsletter on the Board’s website.

Most companies understand how critical the record-to-report process is to their business. However, lopsided attention and investment on the front side (recording, closing and consolidating) have left the financial analysis and reporting functions trailing behind in both efficiency and effectiveness — despite reporting being the most visible and scrutinized part of the process.

Thankfully, enterprises have potent tools to quickly improve their financial reporting and make it both faster and more accurate. Such tools, along with streamlined processes and a renewed commitment to the reporting function, can alleviate most of the issues plaguing financial reporting in organizations.

Review the full article on Accounting Today's website.

The proposed revisions respond to stakeholder calls for the IESBA to explore whether and how the Code could contribute to strengthening the application of concepts underlying professional skepticism by all professional accountants.

Among other matters, the proposals:

• Highlight professional accountants’ wide-ranging role in society and the relationship between compliance with the Code and a professional accountant’s responsibility to act in the public interest;
• Include enhancements to the robustness of the fundamental principles of integrity, objectivity and professional behavior;
• Further strengthen the Code through requiring professional accountants to have an inquiring mind when applying the conceptual framework; and
• Highlight the importance of being aware of bias and having the right organizational culture.

Review the press release and Exposure Draft in the IESBA's website.