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IFRS Interpretations Committee holds November 2017 meeting

21 Nov 2017

The IFRS Interpretations Committee met in London on Monday 20 November 2017. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The Committee discussed six issues, including three new interpretation requests.

Finalisation of draft agenda decisions

The Committee consider the public feedback on a request related to IFRS 3 Business Combinations on the acquisition of a group of assets, and decided to finalise the decision not to add to its agenda. However the IASB will monitor this issue and proactively seek feedback from stakeholders on the significance of the issue after the revised definition of a business takes effect.

Continued discussions

In its September 2017 meeting, the IC tentatively decided to add a project to clarify the meaning of the term ‘unavoidable costs’, which is used in the definition of an onerous contract in IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The staff recommended that the clarification be by way of an amendment to IAS 37 and that the scope of the project be limited to clarifying the meaning of ‘unavoidable costs’, and not consider broader issues related to identifying or measuring an onerous contract. The Committee agreed with the Staff’s recommendation but decided to leave open what form the clarification should take until the project is more mature.

In its September 2017 meeting, the IC asked the Staff to research into the scope of a potential narrow-scope amendment to IFRS 1 First Time Adoption of International Financial Reporting Standards with the aim of reducing compliance costs when a subsidiary becomes a first-time adopter later than its parent. The Staff recommended amending IFRS 1 to allow a subsidiary that applies paragraph IFRS 1.D16(a) to measure cumulative translation differences using the amounts reported by the parent based on the parent’s date of transition to IFRS. The Committee supported that recommendation but the Staff will provide further analysis on whether IFRS 1 should require or permit the subsidiary to measure CTD based on the parent’s reported amounts.

New issues

There were three new issues. Two relate to IFRS 15 Revenue from Contracts with Customers:

  • Revenue recognition in a real estate contract that includes the transfer of land
  • Right to payment for performance completed to date

The third relates to IAS 1 Presentation of Financial Statements and IFRS 9 Financial Instruments:

  • Presentation of interest revenue for particular financial instruments

For all three issues the Committee tentatively decided not to add the issue to its agenda. The draft Agenda Decisions will be published in IFRIC Update.

Future items

The Staff are analysing requests received on whether a dual currency bond meets the solely payments of principal and interest condition in IFRS 9; whether an instrument for which the notional amount varies depending on the outcome of a transaction can be a hedging instrument applying IFRS 9; and how the initial recognition exemption in paragraphs 15 and 24 of IAS 12 applies to the recognition of right-of-use assets and lease liabilities arising under IFRS 16.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

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We comment on two IFRS Interpretations Committee tentative agenda decisions

20 Nov 2017

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions on IFRS 15 and IAS 28, as published in the September 2017 IFRIC Update.

More in­for­ma­tion about the issues is set out below:


Agenda decision supported?

More in­for­ma­tion

IFRS 15Revenue recognition in a real estate contract 

Yes, however, we recommend an amendment to the wording in the tentative agenda decision to highlight the distinction between control of an asset and of a right to sell or pledge that asset in the future.  

IAS 28Contributing property, plant and equipment to an associate


Click to access all our comment letters to the IASB, IFRS Foun­da­tion, and IFRS In­ter­pre­ta­tions Committee.

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EFRAG feedback statement on the IASB’s DP on Principles of Disclosure

20 Nov 2017

The European Financial Reporting Advisory Group (EFRAG) has published its feedback statement in relation to the IASB's Discussion Paper DP/2017/1 ‘Disclosure Initiative – Principles of Disclosure’.

EFRAG published its final comment letter in October 2017.

The feedback statement describes the main comments received by EFRAG in response to its draft comment letter and how these comments were considered by EFRAG in finalising its final comment letter to the IASB.

The press release and full feedback statement are available on the EFRAG website.

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FRC revises Practice Note 11

20 Nov 2017

The Financial Reporting Council (FRC) has issued a revised Practice Note 11: ‘The Audit of Charities in the United Kingdom’.

The main drivers for the revisions are:

  • revisions to UK auditing standards (ISAs (UK));
  • changes to UK accounting standards (Financial Reporting Standard (FRS) 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland) and the revision of the charities Statement Of Recommended Practice (SORP);
  • continuing developments in regulation and guidance issued by the Charity Regulators; and
  • changes in relevant legislation. 

The press release and revised Practice Note 11 are available on the FRC website.

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FRC announces thematic reviews for 2018/2019

20 Nov 2017

The Financial Reporting Council (FRC) has announced the thematic reviews that it will undertake in 2018/19.

The thematic reviews, which will supplement the FRC’s routine monitoring work, will cover “certain aspects of corporate reports and audits where there is a particular shareholder interest, and scope for improvement and learning from good practice”.

Within the areas of corporate reporting the FRC will undertake thematic reviews in the following areas:

The FRC has indicated that it will write to 40 smaller listed and AIM quoted companies prior to their year-end, informing them that it will review two specific aspects of their next published report and accounts. These specific aspects will be drawn from five areas of FRC focus that have featured in recent thematic reviews or Financial Reporting Lab reports.

The FRC will also review and report on companies’ disclosures in December 2017 reports in relation to the future impact of IFRS 16 Leases and will also review June 2018 interim reports of a number of companies in industries whom it expects that IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial instruments will have the most material impact.

Within the area of audit, thematic reviews will be conducted in the following areas:

  • Transparency Reporting: A comparative analysis of transparency reports of firms with public interest entity (PIE) audits.
  • Audit Quality Indicators (AQIs): An assessment of the development and use of AQIs by UK audit firms, which will draw heavily on international best practice.

In addition to the thematic reviews, noted above, the FRC will focus its routine corporate reporting review and audit monitoring activity on the reports and audits in the priority sectors of:

  • financial Services, with particular emphasis on banks, other lenders and insurers;
  • oil and gas;
  • general retailers; and
  • business support services.

It will particularly focus on:

  • first and last year audits;
  • the audit of fair value investments, including goodwill impairment;
  • the nature and extent of the use of auditor’s experts and specialists; and
  • the approach to the audit of controls.

Click for (all links to the FRC website):

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IASB discusses investors’ reactions to IFRS 17

20 Nov 2017

The IASB has issued an article by IASB board member Nick Anderson that discusses the top five question investors and analysts have on IASB’s new insurance contracts standard, IFRS 17.

The five questions discussed include:

  1. Will IFRS 17 affect dividend payouts?
  2. How can a principle-based Standard like IFRS 17 improve comparability between insurers?
  3. Will IFRS 17 bring global comparability to the insurance sector?
  4. What are the main differences between IFRS 17, regulatory reporting and embedded value reporting?
  5. How will removing insurance premiums from the income statement improve comparability?

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

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Agenda for the December 2017 ASAF meeting

20 Nov 2017

The International Accounting Standards Board (IASB) has released an agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 7 and 8 December 2017.

The agenda for the meeting is sum­marised below:

Thursday, 7 December 2017 (9:00-17:15)

  • Primary financial statements.
    • Introduction of an investing category into the statement of financial performance.
    • Defining finance income/expenses.
    • Improving the presentation of OCI.
  • Disclosure initiative — Definition of material (proposed amendments to IAS 1 and IAS 8).
  • Disclosure initiative — Principles of disclosure — Overview and next steps.
  • Post-implementation review of IFRS 13 Fair Value Measurement — Overview on feedback and next steps.
  • Wider corporate reporting — Update from IASB discussions.
  • Academic liaison — Strategy session.
  • Information deficiencies and consolidated financial statements — Impact of consolidation on information content.

Friday, 8 December 2017 (10:10-13:45)

  • Improvements to IFRS 8 Operating Segments (Proposed amendments to IFRS 8 and IAS 34) — Explore possible alternative approaches and next steps.
  • Business combinations under common control — Update on the project and discussions on the scope and the appropriate accounting method for transactions.
  • Project updates and agenda planning.

Agenda papers for the meeting are available on the IASB's website.

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ASCG paper on information gaps in group financial statements and the role of consolidation

20 Nov 2017

The Accounting Standards Committee of Germany (ASCG) has submitted a paper 'Information deficiencies of today’s group f/s and the specific role of consolidation regarding these' for discussion at the upcoming meeting of the Accounting Standards Advisory Forum (ASAF) at the IASB's offices in London on 7-8 December 2017.

The paper states that whilst it is widely acknowledged that transactions with and between members of the same group should not influence the outside appearance of that group and therefore be eliminated, such eliminations do result in a loss of information which is definitely and finally lost for outside users of financial statements. It goes on to note that, furthermore, much of today’s complexity in the environment is not captured in the group’s financial statements although it could highly influence the position, performance and cash flows of the group.

The paper can be accessed on the IASB website.

An agenda for the meeting is not yet available, however, papers are in the process of being posted here.

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Report on the autumn 2017 IFASS meeting

20 Nov 2017

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held in London on 26 and 27 September 2017.

As reported earlier, a major topic of the meeting was wider corporate reporting and the way forward for the IASB. Please see our detailed summary of that discusssion. (The IASB has just recently added a project to its agenda that seeks to review and update the Management Commentary Practice Statement issued in 2010 to help address the lack of alignment and integration between wider corporate reporting and financial reporting.)

The IFASS members also discussed:

  • Cooperation of IFASS participants;
  • BCUCC: Mergers & Acquisitions – The premise for separate accounting methods;
  • Research on pensions: Hybrid plans; and
  • Interpretation issues regaring IAS 24 Related Party Disclosures and IAS 12 Income Taxes.

The next meeting of the IFASS will take place in Mumbai on 12 and 13 April 2018.

Please click for the full report from the meeting.

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EBA stress test methodology

20 Nov 2017

The European Banking Authority (EBA) has published its 2018 EU-wide stress test methodology. The exercise will cover 70% of the EU banking sector and will, for the first time, incorporate IFRS 9 'Financial Instruments'.

For banks starting to report under IFRS 9 in 2018, the 2018 EU-wide stress test takes into account the impact of the implementation of IFRS 9 on 1 January 2018 both in terms of starting point and projections.

The stress test exercise will be formally launched in January 2018 and the results to be published by 2 November 2018.

Please click for more information on the EBA website.

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