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Deloitte document (mid gray) Image

We comment letter on the IASB's proposed amendments to IAS 12

14 Nov 2019

We have responded to the IASB exposure draft ED/2019/5 'Deferred Tax related to Assets and Liabilities arising from a Single Transaction', which was published by the IASB in July 2019 to clarify how companies account for deferred tax on leases and decommissioning obligations.

We support the efforts of the IASB to address an issue that has been the source of diversity in practice and that is likely to increase as a result of the application of IFRS 16 Leases. Currently, most entities faced with the issue either apply IAS 12 separately to the asset and liability (i.e., no deferred taxes are recognised on initial recognition or subsequently because of the application of the initial recognition exemption (IRE) to the temporary difference on the asset and the liability) or they apply the requirements of IAS 12 to the transaction as a whole (i.e., no deferred taxes are recognised initially because the transaction results in a nil net asset but deferred taxes are recognised subsequently as the carrying amount of the asset and liability diverge). We believe that either of these approaches is acceptable under IAS 12 and that diversity could have been addressed by the Board proposing the method it considered most relevant through an Interpretation of IAS 12.

The accounting treatment resulting from the proposals in the ED is more complex than the methods currently applied by entities. To ensure that the amendments achieve the objective of reducing diversity in practice, further clarification beyond those proposed in the ED will be required. The Board may wish to reconsider whether, in the context of a narrow scope project, it may be preferable to address diversity in practice through an Interpretation (as discussed in BC13 to BC15) and consider whether changes should be made to the IRE as part of a more comprehensive review of the IRE. If the Board pursues modifying the scope of the IRE, we note that important elements of the proposed approach are currently discussed in the Basis for Conclusions. We believe that it is important that these elements be brought into IAS 12 itself. An illustrative example of the proposed approach would also be helpful. Our specific concerns regarding the need for further clarification are presented in the Appendix to this letter.

As further explained in our detailed response, we believe that a key difficulty that needs to be address is the identification of transactions that are indeed subject to the IRE.

We note that the Board proposes transition relief to permit entities on adoption of the proposed amendments to assess the recoverability requirement only at the beginning of the earliest comparative period presented. We suggest that the transition relief be expanded such that entities are permitted to recognise and measure deferred tax amounts based on the temporary differences determined at the beginning of the earliest comparative period presented with the difference recognised in opening retained earnings (or component of equity). This appears appropriate considering that deferred tax assets and liabilities are reassessed and remeasured at each reporting period. We believe that the same transition relief should be offered to first-time adopters for the same reason.

Please click to download our full comment letter here.

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Applicants invited for IFRS Interpretations Committee membership

12 Nov 2019

The Trustees of the IFRS Foundation have invited applications for candidates to fill two vacancies on the IFRS Interpretations Committee.

Specifically, the Trustees are seeking individuals who are not currently practicing at a Big Four accounting firm. Members are expected to attend ap­prox­i­mately six two-day meetings each year held in London. Terms of mem­ber­ship will begin immediately and will expire on 30 June 2022. Mem­ber­ship is unpaid, but the IFRS Foun­da­tion meets members' expenses of travel on IFRS IC business.

Ap­pli­ca­tions are accepted until 6 December 2019.

For more information, see the press release on the IASB’s website.

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Investment Association publishes updated Principles of Remuneration

11 Nov 2019

The Investment Association (IA) has published its updated Principles of Remuneration ("the Principles").

This remuneration guidance sets out its members’ views on the role of shareholders and directors in relation to remuneration and the manner in which remuneration should be determined and structured.

Updates have been made to reflect current best practice and to reflect the views of the Investment Association’s members in areas such as:

  • The impact of remuneration on wider stakeholders.
  • The consultation process.
  • Approach to leavers.
  • Long-term incentives and alignment or performance conditions with the company strategy.

Additionally the IA has issued a letter to Remuneration Committee chairmen highlighting key aspects of the Principles that its members have identified as areas of focus for the forthcoming AGM season. These are:

  • Alternative remuneration structures;
  • Discretion on vesting outcomes;
  • Approach to pensions;
  • Shareholding requirements and post-employment shareholding requirements;
  • Levels of remuneration; and
  • Pay for performance.

The press release, revised Principles of Remuneration and letter to the chairs of Remuneration Committees are available from the IVIS website.

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November 2019 IASB meeting agenda posted

08 Nov 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 19–20 November 2019. There are six topics on the agenda.

The Board will discuss the following:

  • Subsidiaries that are SMEs.
  • Disclosure initiative.
  • IFRS 3 reference to the Conceptual Framework.
  • Management commentary.
  • Amendments to IFRS 17 Insurance Contracts.
  • Implementation matters — Lack of exchangeability (IAS 21), annual improvements, and cryptoassets.

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries as well as observer notes from the meeting on this page as they become available.

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IFRS model financial statements 2019

08 Nov 2019

Deloitte's Global IFRS Office has released 'International GAAP Holdings Limited — Model financial statements for the year ended 31 December 2019'.

These financial statements illustrate the presentation and disclosure requirements of IFRSs for the year ended 31 December 2019 by an entity that is not a first-time adopter of IFRSs. They illustrate the impact of the application of IFRSs that are mandatorily effective for the annual period beginning on 1 January 2019.

The publication includes:

  • Consolidated statement of profit or loss and other comprehensive income
  • Consolidated statement of financial position
  • Consolidated statement of changes in equity
  • Consolidated statement of cash flows
  • Notes to the consolidated financial statements
  • Independent auditor’s report
  • Appendix 1 – Prior year adjustment

Please click to download the model financial statements here. The model financial statements illustrate the initial application of IFRS 16 Leases using a full retrospective approach. An appendix illustrating transitioning to IFRS 16 Leases using the cumulative catch-up approach is available here.

In addition, UK IFRS reporters should additionally consider the legal and regulatory requirements which UK IFRS reporters will also need to comply with.

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IFRS Foundation Trustees and Due Process Oversight Committee hold October 2019 meeting

07 Nov 2019

The IFRS Foundation Trustees and the Due Process Oversight Committee (DPOC) met in New York on 15–17 October 2019.

Meeting ac­tiv­i­ties included the following:

  • Executive session:
    • Report of the Executive Director — The Trustees received a report from the Executive Director Lee White on ac­tiv­i­ties since the last meeting.
    • Strategy review — The Trustees discussed non-financial reporting including sustainability reporting.
    • Gov­er­nance issues — The Trustees received a presentation on the annual Risk Review for the Foundation and discussed managing and mitigating risk.
    • Op­er­a­tions analysis — The Trustees received pre­sen­ta­tions on the work of the Foundation’s Legal and Compliance team.
    • Committee reports — The Trustees discussed reports from the Business Process and Technology Committee, the Audit and Finance Committee, the Human Capital Committee, the Nom­i­nat­ing Committee, and the DPOC. (A report of the DPOC meeting is attached to the meeting summary.)
  • IASB Chairman’s report — The Chair of the IASB provided the Trustees with a general update on the IASB’s technical ac­tiv­i­ties, es­pe­cially on the IBOR reform, proposed amendments to IFRS 17, accounting for goodwill, and the 2020 agenda consultation.
  • External engagement — The Trustees met with Nicolas Veron and Curtis Ravenel. In addition, they held a stakeholder event with the CFA Institute on how financial reporting can remain relevant in a changing world. The event featured a keynote speech by Bob Pozen and a panel discussion between IASB Chair Hans Hoogervorst and FASB Chair Russell Golden.

For more information, see the press release, which also offers an article on the stakeholder event, and the full summary on the IFRS Foun­da­tion Trustees’ and DPOC meeting on the IASB’s website.

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EFRAG publishes October 2019 issue of 'EFRAG Update'

07 Nov 2019

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during October 2019.

The Update reports on the meeting of the EFRAG Board on 8 October, the conference call of the EFRAG Technical Expert Group (EFRAG TEG) on 14 October and the meeting of the European Lab Steering Group (European Lab SG) on 15 October.

The Update also lists EFRAG publications issued in October:

Please click to download the October EFRAG update from the EFRAG website.

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ICAEW webinar on hot topics and tips for the 2019/20 reporting season

07 Nov 2019

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar covering current hot topics and tips for the 2019/20 reporting season.

The webinar will cover:

  • Findings from the Financial Reporting Council’s (FRC’s) Annual review of corporate governance and reporting 2018/19 and recent thematic reviews
  • Important aspects relating to new accounting standards and other regulatory developments affecting 2019/20 annual reports
  • The impact of wider political and economic factors

Although aimed primarily at IFRS reporters, the topics and practical tips covered in the webinar will also be relevant to larger entities reporting under UK GAAP.

Further details are available on the ICAEW website.

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IFRS Foundation appoints three new Trustees

07 Nov 2019

The IFRS Foundation has announced the appointment of Alexsandro Broedel, Joanna Perry, and Maria Theofilaktidis as Trustees of the IFRS Foundation. Their appointments will begin on 1 January 2020 and will expire on 31 December 2022.

Alexsandro Broedel is Group Executive Finance Director and Investor Relations Head at Itau Unibanco in Brazil.

Joanna Perry holds a variety of senior non-executive positions for both public and private organisations in New Zealand and is serving the last few weeks of her second term as Chair of the IFRS Advisory Council.

Maria Theofilaktidis is Executive Vice-President, Chief Compliance Officer and Head of Enterprise Risk for The Bank of Nova Scotia.

In addition, the current IFRS Foundation Trustees Else Bos, Su-Keun Kwak, and Guangyao Zhu have been reappointed to serve a second three-year term, also beginning on 1 January 2020.

For more information, see the press release on the IASB's website.

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Summary of the October 2019 CMAC meeting

06 Nov 2019

Representatives from the International Accounting Standards Board (IASB) met with the Capital Markets Advisory Council (CMAC) in London on 10 October 2019. Notes from the joint meeting have now been released.

The topics discussed at the meeting included:

  • Rate regulated activities.
  • Post-implementation review of IFRS 10, IFRS 11, and IFRS 12.
  • Agenda consultation.

The next meeting will be held on 26 March 2020.

For more in­for­ma­tion, see the meeting page and the meeting summary on the IASB's website.

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