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News

IFAC (International Federation of Accountants) (lt gray) Image

IFAC publishes call to action on climate change

12 Dec 2019

The International Federation of Accountants (IFAC) has published a ‘Points of view’ document calling on action from various stakeholders with respect to climate change highlighting that they should all “embrace climate action and be part of the solution”.

In the Point of View, IFAC sets forth recommendations for various stakeholders including Governments, Businesses, Professional accountancy organisations and accountants.

The IFAC indicates that professional accountancy organisations have a key role to play in influencing climate-change mitigation and adaption as advocates for the profession and providers of accounting training and support. It calls on professional accountancy organisations to commit to keeping accountants informed of how they can support their organisations’ and clients’ efforts to respond to climate risk.

IFAC identifies that accountants themselves are influential in governments, not-for-profits, and businesses large and small. It highlights that accountants “are uniquely positioned to enhance meaningful action on climate change by providing relevant insights and analysis, reporting, and assurance to help organisations create and protect long-term value”. IFAC has signalled its intention to continue to support and facilitate the involvement of professional accountants in climate action in the following areas:

  • Providing objective data and insights to help organisations set and achieve appropriate emissions targets.
  • Contributing to efforts to integrate climate change risk into governance, strategy, finance, and operations, and enabling reliable and decision-useful climate related information.
  • Delivering insights on the financial impacts of climate risk and how it relates to revenues, expenditures, assets, liabilities, and financial capital.
  • Providing assurance on climate information serving to enhance confidence in public disclosures and to facilitate capital flows to sustainable organisations.
  • Advising on potential changes in tax law dealing with emissions regulations and helping fulfil evolving tax requirements impacted by climate change.  

The call comes as the UN Climate Change Conference meets and follows an earlier Points of View publication, Enhancing Corporate Reporting, which discusses the need for enhancing the corporate reporting system, integrated reporting, and the role of the accountancy profession in enhancing corporate reporting.

A press release and the Points of View publication are available on the IFAC website.

DPOC meeting (mid blue) Image

DPOC to hold conference call on 16 December

11 Dec 2019

The Due Process Oversight Committee (DPOC) of the IFRS Foundation has published an agenda and papers for a conference call to be held on 16 December 2019.

The DPOC will discuss:

  • Correspondence received on due process matters; and
  • Due process handbook review — agenda decisions.

The correspondence slot regards two letters received by the DPOC that question whether the full due process was adhered to in an agenda decision of the IFRS Interpretations Committee regarding the lease term and and the useful life of leasehold improvements.

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

European Union Image

European Union formally adopts amendments to IAS 1 and IAS 8 regarding the definition of materiality

11 Dec 2019

The European Union has published a Commission Regulation endorsing 'Definition of Material (Amendments to IAS 1 and IAS 8)'.

The amendments clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards themselves.

The European Union effective date is the same as the IASB effective date (1 January 2020).

The Commission Regulation amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council was published in the Official Journal of the European Union on 10 December 2019.

Accounting Roundup - Closing Out 2018 Image

Closing Out 2019

10 Dec 2019

Welcome to our one-stop guide covering the issues relevant to the preparation of December 2019 annual reports.

The FRC's annual review of corporate reporting and ESMA’s common enforcement priorities provide areas of regulatory scrutiny which reporters of all sizes should focus on within in the coming reporting season.

Whether this is correctly classifying cash flows in the cash flow statement, disclosing the nature and amount and impact on liquidity of complex supplier arrangements or proper disclosure of the judgements and estimates applied in preparing financial statements; there are many things to consider.

2019 sees the introduction of a number of new requirements for the front half of the annual report, perhaps the most significant of which is the requirement for all large companies to present an identifiable statement in the strategic report which describes how the directors have discharged their duty under section 172 of the Companies Act 2006. It is expected that most companies will include discussion of their capital allocation and dividend policy within this statement.

In addition, a new Corporate Governance Code takes effect for companies with a premium listing. Very large private companies and unlisted public companies will need to start disclosing their corporate governance arrangements within their directors' report for the first time. Meanwhile, companies required to prepare a directors’ remuneration report will need to include information about the ratio of their chief executive officer’s total remuneration compared to the remuneration of their employees.

Regulators are increasingly taking the position that environmental, social and governance (ESG) matters, including climate change, should be considered as core business issues. Companies are expected to avoid boilerplate disclosures and provide specific disclosure of the impact on a company’s operations on the environment and how environmental matters may affect a company’s development, performance and position.  

Further FRC challenge can be expected over presentation and reconciliation of APMs and business reviews, which should be a balanced and comprehensive analysis of both performance and position.

Turning to the financial statements, UK GAAP reporters will need to consider the changes as a result of the first triennial review of FRS 102. For IFRS reporters, the biggest change for most will be the adoption of IFRS 16 Leases. The FRC expects companies to apply this new standard properly and provide sufficient disclosure of the impact including key judgements made and clear communication of the transition methods adopted. It has published a thematic review to help companies with disclosures in this area.

Our Closing Out 2019 publication covers all these topics and more, providing an invaluable guide to the issues affecting today’s corporate reporting.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG publishes November 2019 issue of 'EFRAG Update'

10 Dec 2019

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

The Update reports on the meeting of the EFRAG Board on 13 November, the EFRAG Technical Expert Group (TEG) meeting on 5-6 November and Project Task Force on Climate-related Reporting meeting on 19 November 2019. 

The Update also lists EFRAG publications issued in November:

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

FRC Image
Auditing Image

FRC issues revised Client Asset Assurance Standard

10 Dec 2019

The Financial Reporting Council (FRC) has issued a revised Client Asset Assurance Standard (CASS Standard).

The CASS Standard establishes requirements and provides guidance for CASS auditors reporting to the Financial Conduct Authority (FCA) in accordance with its SUP (Supervision Manual) rules in respect of engagements that involve evaluating and reporting on a regulated firm’s (firm) compliance with the FCA’s CASS rules and other rules relevant to the holding of client assets.

The CASS Standard is applicable to the CASS audit of each firm that is required to have a CASS audit pursuant to SUP 3. 3

More specifically, the CASS Standard establishes requirements with respect to:

  • The process for forming, and the expression of, reasonable assurance opinions;
  • The process for forming, and the expression of, limited assurance opinions;
  • The provision of reasonable assurance to the FCA with respect to a firm’s proposed adoption of:
    • i. The alternative approach to client money segregation; and
    • ii. A non-standard method of client money reconciliation1; and
  • CASS auditor confirmations in respect of non-statutory client money trusts.

The CASS Standard is effective for reports to the FCA with respect to Client Assets for periods commencing on or after 1 January 2020.

A press release and the revised standard are available on the FRC website.

IASB speeches (blue) Image

IASB Vice-Chair speaks at annual AICPA conference

10 Dec 2019

At the 2019 AICPA Conference on Current SEC and PCAOB Developments, which is currently being held in Washington, IASB Vice-Chair Sue Llyod spoke about the IASB's primary financial statements project, the linkage between financial and non-financial reporting in the IASB's management commentary project, and consistent application of IFRSs.

On primary financial statements, Ms Lloyd noted that the IASB's work reflects the fact that while the traditional financial statements continue to remain the core of investment analysis, the way in which that information is consumed has evolved. In this environment proper structure and comparability of the financial information provided by companies is especially important.  She explained the Board's thinking on new subtotals that are to be introduced and  on non-GAAP measures, where the IASB's proposals will reflect the growth in the use of these measures in the market and their relevance for investors. The IASB plans to publish its proposals in an exposure draft around the end of this year.

On management commentary, Ms Lloyd pointed out that wider corporate reporting information can be classified broadly into two types: (i) information about how the company affects the world and (ii) information about how the world affects the company. It is the second area where the IASB has decided it can and should play a larger role. The corresponding project is therefore aimed at updating the IASB's practice statement on management commentary so that investors have visibility of factors that may affect a company’s future cash flows but may not yet be reflected in the financial statements. As a next step in this project the IASB intends to publish an exposure draft proposing changes to the practice statement in 2020.

Finally, on supporting consistent application, Ms Lloyd explained the work of the IASB's IFRS Interpretations Committee, which she chairs.

The full text of the speech is available on the IASB website.

The AICPA conference runs from 9 to 11 December and features speeches by — as well as panel discussions and question-and-answer sessions with — members of the SEC, PCAOB, FASB, and IASB and professionals from various industries. Our US colleagues are in the process of preparing a Heads Up newsletter with highlights from the conference that will be available on IAS Plus soon.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG explains how comments on its draft IFRS 17 comment letter were considered in finalising the letter

09 Dec 2019

The European Financial Reporting Advisory Group (EFRAG) published its final comment letter on the IASB exposure draft ED/2019/4 ‘Amendments to IFRS 17' in September 2019. EFRAG has now released a feedback statement summarising comments received on the draft comment letter and explaining how those comments were considered by EFRAG during its technical discussions leading to the publication of the final comment letter.

The press release on the EFRAG website offers a general analysis of the comments received (proposals that were generally supported, proposals that ed to concerns, calls for reconsideration of certain aspects, and effective date) and access to the full feedback statement (29 pages).

UKGAAP Image

UK GAAP application for reporting periods ending 31 December 2019

06 Dec 2019

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 31 December 2019.

As the revised UK GAAP regime has now been in place for a number of years, preparation of either parent company or subsidiary accounts under either FRS 101 or FRS 102 should now have become a more routine exercise. The FRC has made several changes to FRS 102 as part of its first triennial review of the Standard to deal with issues highlighted in its implementation. The amendments were published in December 2017. More recently amendments to FRS 102 related to multi-employer defined benefit plans have been issued.

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 31 December 2019. For those reporters who want to understand new UK GAAP application for earlier periods please select one of the following:

Pronouncement Effective date Application for quarters ending 31 December 2019?
1st qtrs.* 2nd qtrs.** 3rd qtrs.*** Full yrs****
FRS 100
Amendments to FRS 102 (first triennial review) Effective 1 January 2019. Early application is permitted provided that all the amendments to FRS 101 as a result of the triennial review are applied at the same time. Mandatory Mandatory Mandatory Mandatory
FRS 101
The amendments are available from when an entity applying FRS 101 first applies IFRS 16 - see note 2. Mandatory Mandatory Mandatory Mandatory
Amendments to FRS 102 (first triennial review)

Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted provided that all the amendments to FRS 101 as a result of the triennial review are applied at the same time

 

Mandatory Mandatory Mandatory Mandatory
Amendments to the Basis for Conclusions FRS 101 Reduced Disclosure Framework

No effective date. No amendments to FRS 101 have been made

N/A (see effective date column) N/A (see effective date column) N/A (see effective date column) N/A (see effective date column)
Amendments to FRS 101 - 2018/19 cycle issued

The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time.

# # # #
FRS 102
Amendments to FRS 102 (first triennial review) The effective date for most of the amendments to FRS 102 is for accounting periods beginning on or after 1 January 2019, with early application permitted provided all amendments are applied at the same time. The only exceptions to this are the amendments relating to directors’ loans and the tax effects of gift aid payments, for which early application is permitted separately. Limited transitional provisions are also available. The amendments to disclosure requirements under Section 1A for small entities in the Republic of Ireland are effective for accounting periods beginning on or after 1 January 2017. However, early application is permitted for companies in the Republic of Ireland that apply the Companies (Accounting) Act 2017 is applied from the same date.

Mandatory

 

Mandatory

 

Mandatory

 

Mandatory

 

Amendments to FRS 102: Multi-employer defined benefit plans

The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.

Optional

Optional

Optional

Optional

FRS 103
Amendments to FRS 102 (first triennial review) Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted provided that all the amendments to FRS 103 as a result of the triennial review are applied at the same time. Mandatory Mandatory Mandatory Mandatory
FRS 104
Amendments to FRS 102 (first triennial review) Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted if an entity also applies the Triennial review 2017 amendments to FRS 101 or FRS 102 for an accounting period beginning before 1 January 2019. Mandatory Mandatory Mandatory Mandatory
FRS 105
Amendments to FRS 102 (first triennial review)
The changes to disclosure requirements in FRS 105 for micro entities in the UK are applicable for accounting periods beginning on or after 1 January 2017; all other amendments to FRS 105 as a result of the triennial review are applicable for accounting periods beginning on or after 1 January 2019. Early application for UK micro-companies is permitted provided that all the amendments to FRS 105 are applied at the same time.

With respect to the Republic of Ireland, the changes to incorporate FRS 105 are applicable to accounting periods beginning on or after 1 January 2017. Earlier application is permitted for companies in the Republic of Ireland that apply the Companies (Accounting) Act 2017 is applied from the same date. All other amendments to FRS 105 as a result of the triennial review are applicable for accounting periods beginning on or after 1 January 2019. Early application of the other amendments is permitted provided that all of these other amendments are applied at the same time.

Requirements (other than disclosure requirements for micro entities)- mandatory

Amendments other than ROI changes to incorporate FRS 105 - mandatory

Requirements (other than disclosure requirements for micro entities)- mandatory

Amendments other than ROI changes to incorporate FRS 105 - mandatory

Requirements (other than disclosure requirements for micro entities)-mandatory

Amendments other than ROI changes to incorporate FRS 105 - mandatory

Requirements (other than disclosure requirements for micro entities)-mandatory

Amendments other than ROI changes to incorporate FRS 105 - mandatoryl

* 1st quarter ending on 31 December 2019 (accounting period began on 1 October 2019).

** 2nd quarter ending 31 December 2019 (accounting period began 1 July 2019).

*** 3rd quarter ending 31 December 2019 (accounting period began 1 April 2019).

**** 4th quarter ending 31 December 2019 (accounting period began 1 January 2019).

# - The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time. IFRS 17 has not yet been endorsed for use in the EU.

Note 1 - IFRS 16 is applicable to an entity's first annual IFRS financial statements for a period beginning on or after 1 January 2019.

 

Calendar Image

New and revised pronouncements as at 31 December 2019

06 Dec 2019

Our popular summary of new and revised financial reporting requirements, updated for financial reporting periods ending on 31 December 2019. This listing can be used to perform a quick check that new financial reporting requirements such as new and revised accounting standards and interpretations, and amendments to standards and interpretations, have been fully considered in the reporting close process.

The information below reflects developments to 11 December 2019 and will be updated through to 31 March 2020 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 31 December 2019. For accounts approved after March 2020, please also refer to subsequent versions of this document for any new and revised IFRSs that have additionally been issued that might require disclosure in the accounts under IAS 8:30.

The information below is organised as follows:

Summary

The table below provides a summary of the pronouncements which will be mandatorily applied by entities for the first time at 31 December 2019, for various quarterly reporting periods. Where an EU entity chooses to prepare financial statements in accordance with IFRSs as issued by the IASB, as well as in compliance with IFRSs as adopted by the EU, that entity should comply with the earlier IASB effective date for those items. The table below provides a summary of these pronouncements, and which reporting periods they apply to:

Pronouncement IASB Effective date* EU effective date* EU Mandatory at 31 December 2019?
1st qtrs.** 2nd qtrs.*** 3rd qtrs.**** Full yrs*****
IFRS 16 Leases 1 January 2019 1 January 2019 Yes Yes Yes Yes
NEW OR REVISED INTERPRETATIONS
IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019 1 January 2019 Yes Yes Yes Yes
Annual Improvements 2015-2017 Cycle 1 January 2019 1 January 2019 Yes Yes Yes Yes
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
1 January 2018 1 January 2018 Optional ~ Optional ~ Optional ~ Optional ~
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) 1 January 2019 1 January 2019 Yes Yes Yes Yes
Prepayment Features with Negative Compensation (Amendments to IFRS 9) 1 January 2019 1 January 2019 Yes Yes Yes Yes
Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) 1 January 2019 1 January 2019 Yes Yes Yes Yes

* Generally annual reporting periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see below for full details).

** 1st quarter ending on 31 December 2019 (accounting period began on 1 October 2019).

*** 2nd quarter ending 31 December 2019 (accounting period began 1 July 2019).

**** 3rd quarter ending 31 December 2019 (accounting period began 1 April 2019).

***** 4th quarter ending 31 December 2019 (accounting period began 1 January 2019).

~ The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

More information about these pronouncements, and all new and revised pronouncements, is set out below.

Financial statement considerations in adopting new and revised pronouncements

Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:

  • Updates to accounting policies. The terminology and substance of disclosed accounting policies may need to be updated to reflect new recognition, measurement and other requirements, e.g IAS 19 Employee Benefits may impact the measurement of certain employee benefits.
  • Impact of transitional provisions. IAS 8 Accounting Policies, Changes in Estimates and Errors contains a general requirement that changes in accounting policies are retrospectively applied, but this does not apply to the extent an individual pronouncement has specific transitional provisions.
  • Disclosures about changes in accounting policies. Where an entity changes its accounting policy as a result of the initial application of an IFRS and it has an effect on the current period or any prior period, IAS 8 requires the disclosure of a number of matters, e.g. the title of the IFRS, the nature of the change in accounting policy, a description of the transitional provisions, and the amount of the adjustment for each financial statement line item affected
  • Third statement of financial position. IAS 1 Presentation of Financial Statements requires the presentation of a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements in a number of situations, including if an entity applies an accounting policy retrospectively and the retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period
  • Earnings per share (EPS). Where applicable to the entity, IAS 33 Earnings Per Share requires basic and diluted EPS to be adjusted for the impacts of adjustments result from changes in accounting policies accounted for retrospectively and IAS 8 requires the disclosure of the amount of any such adjustments.

Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation.

 

New or revised standards

The information below can be used to assist with the disclosure requirements under paragraph 30 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which requires entities to disclose any new IFRSs that are in issue but not yet effective and which are likely to impact the entity

New or revised pronouncement When EU effective

Application at 31 December 2019 to:

1st qtrs 2nd qtrs 3rd qtrs Full yrs

IFRS 16 Leases

IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.
Issued: 13 January 2016 (Summary of IFRS 16, article, IFRS 16 resources)
Applicable to annual reporting periods beginning on or after 1 January 2019

Mandatory Mandatory Mandatory Mandatory

IFRS 17 Insurance Contracts

IFRS 17 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 as of 1 January 2021.

Issued: 18 May 2017 (Summary of IFRS 17, Article, Newsletter).

Applicable to annual reporting periods beginning on or after 1 January 2021

Not yet endorsed for use in the EU.

 

New or revised interpretations

New or revised interpretation When effective Application at 31 December 2019 to:
1st qtrs. 2nd qtrs. 3rd qtrs 4 qtrs.

IFRIC 23 Uncertainty over Income Tax Treatments

The interpretation sets out how to determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments under IAS 12 Income Taxes.

The Interpretation requires an entity to:

  • determine whether uncertain tax positions are assessed separately or as a group; and
  • assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings:
    • If yes, the entity should determine its accounting tax position consistently
      with the tax treatment used or planned to be used in its income tax filings.
    • If no, the entity should reflect the effect of uncertainty in determining its accounting tax position.

Issued: 7 June 2017 (article)

Effective date: annual periods beginning on or after 1 January 2019. Entities can apply the Interpretation either on a fully retrospective or modified retrospective approach (where comparatives are not permitted or required to be restated).

 

Mandatory

Mandatory

Mandatory

Mandatory

Amendments

New or revised pronouncement When effective Application at 31 December 2019 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

Editorial Corrections (various)

The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2012, such corrections have been made in February 2012, July 2012, March 2013, September 2013, November 2013 and March 2014, September 2014, December 2014, March 2015, April 2015, September 2015, December 2015, March 2016, May 2016, September 2016, December 2016, September 2017, November 2017, December 2018, March 2019 and May 2019.

Note: For details of these editorial corrections, see our IASB editorial corrections page.

As minor editorial corrections, these changes are effectively immediately applicable under IFRS See comment in previous column
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
  • an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
  • an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.
The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Issued: 12 September 2016 (article, newsletter)

Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018 and only available for three years after that date.

 

Optional

Optional

Optional

Optional

Annual Improvements 2015-2017 Cycle
Makes amendments to the following standards:
  • IFRS 3 Business Combinations and IFRS 11 Joint Arrangements - The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

  • IAS 12 Income Taxes - The amendments clarify that the requirements in the former paragraph 52B (to recognise the income tax consequences of dividends where the transactions or events that generated distributable profits are recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A that only deals with situations where there are different tax rates for distributed and undistributed profits.
  • IAS 23 Borrowing Costs - The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

The amendments are all effective for annual periods beginning on or after 1 January 2019.

Mandatory Mandatory Mandatory Mandatory
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
The amendments clarify that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
The amendments in Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) are:
  • Paragraph 14A has been added to clarify that an entity applies IFRS 9 including its impairment requirements, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
  • Paragraph 41 has been deleted because the Board felt that it merely reiterated requirements in IFRS 9 and had created confusion about the accounting for long-term interests.
Issued:12 October 2017 (article)
Annual periods beginning on or after 1 January 2019
Annual periods beginning on or after 1 January 2019

Annual periods beginning on or after 1 January 2019

Mandatory

Mandatory

Mandatory

Mandatory

Prepayment Features with Negative Compensation (Amendments to IFRS 9)
The amendments address concerns about how IFRS 9 Financial Instruments classifies particular prepayable financial assets. In addition, the IASB has clarified an aspect of the accounting for financial liabilities following a modification.
The amendments are:

Changes regarding symmetric prepayment options

Under the current IFRS 9 requirements, the SPPI condition is not met if the lender has to make a settlement payment in the event of termination by the borrower (also referred to as early repayment gain).

Prepayment Features with Negative Compensation amends the existing requirements in IFRS 9 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments.

Under the amendments, the sign of the prepayment amount is not relevant, i. e. depending on the interest rate prevailing at the time of termination, a payment may also be made in favour of the contracting party effecting the early repayment. The calculation of this compensation payment must be the same for both the case of an early repayment penalty and the case of a early repayment gain.

Clarification regarding the modification of financial liabilities

The final amendments also contain (in the Basis for Conclusions) a clarification regarding the accounting for a modification or exchange of a financial liability measured at amortised cost that does not result in the derecognition of the financial liability. The IASB clarifies that an entity recognises any adjustment to the amortised cost of the financial liability arising from a modification or exchange in profit or loss at the date of the modification or exchange. A retrospective change of the accounting treatment may therefore become necessary if in the past the effective interest rate was adjusted and not the amortised cost amount.
Issued: 12 October 2017 (article)

 

The amendments are to be applied retrospectively for fiscal years beginning on or after 1 January 2019, i. e. one year after the first application of IFRS 9 in its current version. Early application is permitted so entities can apply the amendments together with IFRS 9 if they wish so. Additional transitional requirements and corresponding disclosure requirements must be observed when applying the amendments for the first time.

Mandatory

Mandatory

Mandatory

Mandatory

Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
The amendments in Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) are:
  • If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement.
  • In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.

Issued: 7 February 2018 (article)

Annual periods beginning on or after 1 January 2019.

Mandatory

Mandatory

Mandatory

Mandatory

Amendments to References to the Conceptual Framework in IFRS Standards


Together with the revised Conceptual Framework published in March 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework.

Issued: 29 March 2018 (article)

Annual periods beginning on or after 1 January 2020

Optional

Optional

Optional

Optional

Definition of a Business (Amendments to IFRS 3)

The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. They:

  • clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;
  • narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;
  • add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
  • remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and
  • add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

Issued: 22 October 2018 (article/newsletter)


Business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

Definition of Material (Amendments to IAS 1 and IAS 8)

The amendments in Definition of Material (Amendments to IAS 1 and IAS 8) clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards.

Issued: 31 October 2018 (article)

 

Annual reporting periods beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

The amendments in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) clarify that entities would continue to apply certain hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform.

Issued: 26 September 2019 (article)

Annual reporting periods beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

 

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.