September 2013 IASB meeting notes — Part 2

18 Sep, 2013

The IASB's meeting was held in London on 13, 17 and 18 September 2013, some of it a joint meeting with the FASB. We have posted Deloitte observer notes from this week's sessions on revenue recognition.

Click through for direct access to the notes:

Tuesday, 17 September 2013 (IASB-FASB)

Wednesday, 18 September 2013 (IASB-FASB)

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

FRC record of the Annual Open Meeting on 12 September 2013

18 Sep, 2013

The Financial Reporting Council (FRC) has published the transcript and proceedings of the Annual Open Meeting held on Thursday 12 September 2013. The meeting began with an opening address by Chairman Baroness Hogg, included a report by the Chief Executive Stephen Haddrill on the key activities of the FRC and also included an opportunity to ask questions.

In her opening speech Baroness Hogg noted that the “primary task of the FRC is to help capital markets operate effectively by ensuring that investors in the capital markets have what they need to place their money”.  This would include: 

  • Effective boards who communicate well;
  • Useful annual reports and accounts, robust and easily comparable accounting standards; and
  • Effective audit and actuarial standards. 

She described that the FRC has been working hard to produce guidelines and codes to help preparers meet new regulatory requirements and also emphasised the “better coordination” that has been secured with key players such as the Bank of England, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). 

Stephen Haddrill then discussed the work of the FRC during the past year. 

Key highlights include: 

  • The revision of the UK Corporate Governance Code in 2012 which, among other things includes the requirement that companies should state their policies in relation to diversity, including gender diversity and to also ensure that the board present a fair, balanced and understandable assessment of the company’s position and prospects in their annual report. 
  • Revised guidance for Audit Committees.
  • Guidance on conducting effective audit tenders.
  • The introduction of the Stewardship Code to ensure that investors are paying attention to the explanations provided by companies in meeting the requirements of the UK Corporate Governance Code.
  • The introduction of “new” UK GAAP.
  • Progress made during consultations to implement Lord Sharman’s proposals on going concern. 
  • The success of the Financial Reporting Lab which has created a number of reports to “help companies to identify better ways of reporting”.
  • The opening of an office in Brussels which will allow the FRC to operate more efficiently on an international stage. 

He also expressed a view on the current status of corporate reporting in the UK.  He noted that “much of the quality of corporate reporting is good” but “poorer accounting” was being carried out by smaller companies.  Stephen Haddrill identified these “poorer accounting” areas as: 

  • Accounting in relation to revenue recognition.
  • The impairment of financial instruments.
  • Cash flow statements.
  • Too much “clutter” in annual reports. 

To address these issues, the FRC would like smaller listed companies to “focus on this with their auditors”.  It is hoped that through this dialogue it will prevent such “mistakes in the accounts”. 

The current strategic priorities of the FRC were also highlighted and include: 

  • Monitoring and enforcing our codes and standards;
  • A focus on stewardship and the importance of trying to encourage investor engagement with companies;
  • Continuing to monitor corporate reporting to ensure that it is fair, balanced and not overburdened with clutter;
  • Building confidence in the value of audit (on which we have a specific project from which we will be publishing some views later in the autumn);
  • Implementing the new role of actuarial regulation; and
  • Getting a better understanding of the economic and market context of our work. 

It was noted that a draft of the next plan, as part of the FRC three year strategy, will be published in mid-December. 

Please click here for a link to the FRC website and the full transcript.

Further collaboration planned between IOSCO and IFRS Foundation

18 Sep, 2013

The International Organization of Securities Commissions (IOSCO) and the IFRS Foundation announced that the two organisations will deepen their cooperation in the development and implementation of IFRS on a globally consistent basis.

In October 2012, the IOSCO Board and the IFRS Foundation agreed to further progress their interactions on IFRSs, focusing on the practical application of IFRS to improve financial statements. Today, the IOSCO and IFRS Foundation announced that they have agreed on a set of protocols to improve consistency in the implementation of IFRS. The Statement of Protocols for Cooperation on International Financial Reporting Standards reiterates the current relationship between the two organisations, and identifies four new areas for mutually supportive work:

  • Use of IFRSs within jurisdictions around the world — IOSCO and IFRS Foundation will periodically share information to maintain current and accurate data on the progress of global IFRS adoption.
  • How securities regulators will be affected by IASB standards — The IFRS Foundation will identify and explain implementation aspects of the IASB’s new or significantly amended standards that are of interest to securities regulators.
  • Discussion of IFRS enforcement matters — The IOSCO will organise an annual IFRS enforcers’ discussion session for its members to discuss issues, standards and other IFRS enforcement matters with IASB members or staff .
  • Providing critical and timely input — The IFRS Foundation will solicit IOSCO member opinions on any time-sensitive IFRS implementation matters needing urgent input from securities regulators. 

The Statement of Protocols is available on the IASB website.

IASB publishes further editorial corrections

18 Sep, 2013

The International Accounting Standards Board (IASB) has published the second scheduled batch of editorial corrections for 2013. The corrections impact various individual pronouncements (including a number of exposure drafts) and the IASB's various compilation publications.

In accordance with the IASB's current practice of releasing editorial corrections prior to the publication of its major publications, the editorial corrections precede the expected publication of a revised edition of A Guide through IFRS ('Green Book').

The editorial corrections affect the following individual pronouncements:

  • IFRS 2 Share-based Payment (issued in February 2004)
  • IFRS 3 Business Combinations (issued in January 2008)
  • IFRS 9 Financial Instruments (issued October 2010)
  • IFRS 13 Fair Value Measurement (issued May 2013)
  • IAS 39 Financial Instruments: Recognition and Measurement (issued December 2003)
  • Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) (issued June 2012)
  • Exposure Draft ED/2012/4 Classification and Measurement: Limited amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010)) (issued November 2012)
  • Exposure Draft ED/2013/3 Financial Instruments: Expected Credit Losses (issued March 2013)
  • Exposure Draft ED/2013/7 Insurance Contracts (issued June 2013)

In addition, the corrections will, to the extent relevant, impact the IASB's publications A Guide through IFRS 2012 ('Green Book'), 2013 IFRS (official pronouncements applicable on 1 January 2013, the 'Blue Book'), 2013 IFRS (all pronouncements issued as at 1 January 2013 even if not applicable at that date, the 'Red Book').  Further editorial corrections are also made to these publications to reflect errors made in their compilation.

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors.  Full details of the editorial corrections is available on the IASB website.

Second collection of free research papers in renowned accounting journals

17 Sep, 2013

In order to further promote accounting research, the publisher Taylor & Francis Online has pulled together another four freely available collections of research papers on currently much debated issues. The new topic groups are: 'Accounting Regulation', 'International Accounting', '20th Century Accounting', and 'Auditing'.

The research papers are sourced from Accounting and Business Research, Accounting Education, Accounting in Europe, European Accounting Review, Accounting History Review, Review of International Political Economy, New Political Economy, Total Quality Management and Business Excellence, Public Money & Management, and Quantitative Finance.

Among the articles are contributions by distinguished researchers: Christian Leuz (University of Chicago Booth School of Business), Thorsten Sellhorn (WHU - Otto Beisheim School of Management ), and Katherine Schipper (Duke University).

Access to the collections of research papers is available through the links below (all links to Taylor & Francis Online). Please note that free access expires at the end of 2013.

The free access to four earlier collections on accounting research (on the topics 'International Financial Reporting Standards', 'Sustainability in Accounting', 'The Financial Crises', and 'Accounting Education') was originally intended to end at the end of July 2013. However, for the time being these continue to be freely accessible.

On UK Accounting Plus, we offer a dedicated subpage on Research and education and a collection of research papers on financial reporting.

September 2013 IASB meeting notes — Part 1

16 Sep, 2013

The IASB's meeting is being held in London on 13, 17 and 18 September 2013, some of it a joint meeting with the FASB. We have posted Deloitte observer notes from Friday's sessions on employee contributions, narrow focus amendments to IAS 1, annual improvements, and IFRS Interpretations Committee updates.

Revised Public Benefit guidance issued by Charity Commission

16 Sep, 2013

The Charity Commission has today published revised public benefit guidance for all charities. The new guidance completely replaces the Commission’s previous general public benefit guidance ‘Charities and Public Benefit’ and supplementary public benefit guidance on ‘Public Benefit and Fee-charging’.

The guidance, which is available in both online and offline formats, is split into three high-level guides: 

  • Public Benefit: the public benefit requirement.  This guide explains that in order for an organisation to be recognised as a charity its purposes must be for the public benefit, known as the “public benefit requirement”.  The guide explains what “for the public benefit means” and then provides guidance on terms such as “beneficial” to the public.  The Charities Act requires that trustees must “have regard” to the public benefit guidance “when exercising any powers or duties to which the guidance is relevant”.  The guide is relevant for those thinking of setting up a charity or trustees who are thinking of changing their charity’s purpose. 
  • Public Benefit: running a charity.  This guide explains the duties of trustees when running their charity in order to carry out their charity’s purposes for the public benefit.  The guide is relevant to charity trustees when running their charity and also those thinking of setting up a charity.  
  • Public Benefit: reporting.  This guide explains the reporting requirements on trustees in the annual accounts of their charities.  It explains the requirements (set out in the Charities (Accounts and Reports) Regulations 2008) on trustees to report each year in their Trustees’ Annual Report on how they have carried out their charity’s purposes for the public benefit.  The guide explains the reporting requirements of both smaller and larger charities and explains how the trustees may discharge their responsibilities in the Trustees’ Annual Report.  The guide is relevant for trustees of a registered charity and also those thinking of setting up a charity.

Click here for the press release on the Charity Commission website with links to all of the guidance.

We comment on the joint leases ED

13 Sep, 2013

We have published our comment letter on the joint IASB-FASB Exposure Draft on leases. We believe that conceptually the right-of-use (ROU) asset approach appropriately depicts the rights and obligations for lessees and should serve as the foundation for changes to the recognition and measurement requirements in the current lease standards. However, we have significant concerns with the approach currently included in the proposal.

The concerns described in the comment letter include:

  • The conceptual merit of the Type B lessee approach — specifically, that it would result in an increasing amount of amortisation over the lease term. The proposed dual-model approach may also be more costly and complex for preparers than existing standards, and may not result in sufficiently improved information for users.
  • The combination of the proposed measurement requirements for the lease liability and proposed disclosures may not provide financial statement users with sufficient information about a lessee’s future lease payments.
  • The boards have not yet sufficiently developed the ROU model for lessors and have not made a compelling case that the information provided by the proposed lessor accounting model represents a significant improvement over the existing lessor accounting model.

The comment letter also questions about whether the cost-benefit analysis of introducing this new model continues to support the case for change at this stage of the development of the ROU concept and proposes an alternative approach.

Click for the full comment letter.

ACCA does not support new leasing standard

13 Sep, 2013

The Association of Chartered Certified Accountants (ACCA) has published their response to the IASB’s exposure draft ED/2013/6 Leases (“the ED”). ACCA do not support the right-of-use (RoU) model proposed by the ED and call on the IASB to “abandon attempts to incorporate the RoU methodology in a new standard on leasing”.

For lessees, the Exposure Draft ED/2013/6 Leases proposes the recognition of a liability and a right-of-use asset for all leases with a profit or loss impact dependent on the classification of a lease. The lessor model in the ED is similar to current lease accounting with some nuances for the recognition of revenue and discounting of the residual asset. The proposals are only applicable for leases with a lease term of more than 12 months. 

There are a number of areas of the RoU model that the ACCA do not support.  Their view is that “the proposals run some of the risks of a method based on probabilities” and this could mean the recognition of assets and liabilities that do not meet the Conceptual Framework definitions.  Additionally they note that the proposed changes “will result in additional complexity for preparers especially those who currently hold a large number of operating leases”.  

The ACCA comment that there is a “lack of guidance” in the ED and the Basis for Conclusions as to what constitutes an “insignificant portion of economic benefits embedded in the underlying asset” when determining the recognition, measurement and presentation of expenses and cash flows arising from a lease.  They comment that this could lead to “uncertainty in practice”, “higher compliance costs” and “inconsistency between reporting entities”. 

Furthermore the ACCA are of the view that it would not be "appropriate" for all leases to be shown in the Statement of Financial Position and question why intangible assets are excluded from the scope of the proposed standard. 

They instead favour keeping the existing IAS 17 model with certain amendments.  These would include additional disclosures and “possibly a lower threshold for the recognition of finance leases”.  The ACCA views the current IAS 17 model as “much simpler and easier-to-understand” and feel that the IASB will need to issue another ED to gather views as to whether an approach based upon an amendment to IAS 17 would be favourable.  

The detailed responses to the questions raised in the ED can be found here and the press release here (both links to ACCA website).  

September IFRS Interpretations Committee meeting notes

13 Sep, 2013

We've posted Deloitte observer notes from the IFRS Interpretations Committee meeting which was held on 10-11 September 2013.

The topics discussed were as follows (click through to access detailed Deloitte observer notes for each topic):


Tuesday, 10 September 2013 (10:00-17:15)

Redeliberation of proposed amendments

Items for continuing consideration

Tentative agenda decisions to finalise

Items for continuing consideration

Items for initial consideration

 Post-implementation review

Wednesday, 11 September 2013 (09:00-11:35)

Items for initial consideration

Administrative session

Click here to go to the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

Correction list for hyphenation

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