The proposed interim release contains additional taxonomy concepts that reflect new IFRSs and improvements to IFRSs published by the IASB and technical updates and corrections. In particular, this proposed interim release includes taxonomy elements for IFRS 15 Revenue from Contracts with Customers, which was issued on 28 May 2014.

The IFRS Foundation finalised its first interim release to the IFRS Taxonomy 2014 on 15 May 2014. It includes taxonomy elements for IFRS 14 Regulatory Deferral Accounts.

Comments on the proposed interim release are requested by 20 October 2014.

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

The Impairment Transition Resource Group (ITG) group will support stakeholders by providing a discussion forum on implementation issues that may arise as a result of the new impairment requirements under IFRS 9 Financial Instruments that were issued in July this year.

The current membership of the ITG includes:

• Wayne Basford, BDO, Partner, IFRS leader Asia Pacific
• Graham Dyer, Grant Thornton, Senior Manager, National Professional Standards Group
• Paul Fallon, Standard Bank Group, Head of Group Risk Model Development and Model Management
• William Hayward, Barclays, Director, Head of Regulatory Risk
• Helen Killoch, Bank of Montreal, Vice-President and Chief Accountant
• John McDonnell, PwC, Partner in Banking and Capital Markets Group and Global Accounting Consulting Services
• Tetsuo Nanri, Bank of Tokyo-Mitsubishi, Manager, Credit Policy & Planning Division
• Hervé Phaure, Deloitte, Partner, FSI Risk Advisory
• George Prieksaitis, Ernst & Young, Partner, Financial Services Organisation; Leader of the EY Financial Accounting Advisory Services business in Canada
• Jörg Michael Scharpe, Deutsche Bank, Group Reporting Director for External Capital and Risk Reporting
• Chris Spall, KPMG, Partner, Internal Standards Group, Global IFRS Financial Instruments Leader
• Yu Xiaofel, Bank of China, Accounting Manager

The first meeting date for the ITG is planned for the last quarter in 2014.

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

The Directive (Chapter 10 of the EU Accounting Directive (Directive 2013/34/EU (link to European Commission website)) (and changes made by Directive 2013/50/EU (link to the European Commission website) to the Transparency Directive (2004/109/EC)) requires such companies to prepare a report on a project-by-project basis of all payments to governments (including, but not restricted to, licence fees, taxes and royalties). Parent companies must prepare a report for the group which they head; subsidiaries are exempt if they are part of a larger EEA incorporated group which publishes a consolidated report including their payments.

In its response, the Government confirms its intention to lay regulations before Parliament in Autumn 2014 and will require extractives companies to prepare and file country-by-country reporting for financial years commencing on or after 1 January 2015, a year in advance of the EU deadline. As this might require UK subsidiaries of EEA incorporated parents to prepare a report for one year, prior to their parent being obliged to prepare a group report and therefore them becoming exempt, the government will exempt such subsidiaries for one year only.

Other significant points of the Government’s response are:

• The deadline for all companies within the scope of the regulations to file their report with Companies House will be eleven months from the end of the financial year.
• The penalty regime for filing late, or failing to file at all, will be aligned with that for filing.
• The government will require electronic filing of payments to government reports. It is encouraging an industry-led solution, working with civil society, to guidance on electronic reporting.
• If Companies House believes that a company ought to file a payments to government report but has not done so, the Registrar of Companies will write to the company asking for confirmation that (a) no report is needed as no reportable payments have been made; (b) a report is necessary and will be filed within 28 days; (c) a report has been filed in another EEA member state by the company’s parent; or (d) an report prepared a non-EEA reporting regime recognised as equivalent by the EU has been filed. The response to this letter will be published. Directors found guilty of failure to file a report may be subject to an unlimited fine; directors who file a false, misleading or deceptive report, or give a false, misleading or deceptive answer to an enquiry by Companies House, may be liable to a term of imprisonment or a fine.

A similar obligation in the amended Transparency Directive will require extractives companies incorporated outside the EEA but with securities traded on an EEA regulated market to prepare a similar report. Respondents to the consultation said that it would be helpful if this requirement was implemented in the UK on the same timescale as that applying to UK incorporated companies. The Financial Conduct Authority is expected to consult on this later in August 2014.

In relation to this, on 15 October 2014 the government announced that the UK had been admitted as a candidate country for the Extractive Industries Transparency Initiative (EITI). This will require extractives companies operating and paying taxes in the UK to report on material payments to the UK government, which in return will report the receipts it receives. These payments will then be checked by an independent administrator and form part of the UK’s EITI reports. The UK’s first report is due in April 2016, which means extractives companies will need to submit their information by mid-2015.  Guidance on reporting is available on the BIS website (including guides for oil and gas companies and mining and dredging companies).

Please click for:

• The response from BIS together with an updated impact assessment and a further draft of the regulations (link to BIS website).
• Our previous UK Accounting Plus news item on the original consultation
• Our response to the consultation
• The government's announcement regarding EITI admission (link to BIS website)

The Act consolidates various enactments relating to co-operative societies, community benefit societies and other societies registered under the Industrial and Provident Societies Act 1965, with certain amendments.

The Institute of Chartered Accountants in England and Wales (ICAEW) has published a summary of the Act’s impact on annual reports, financial statements and audit reports on or after that date, irrespective of the financial year to which they relate.

Please click for:

• ICAEW summary (link to ICAEW website).
• Access to the 2014 Act (link to Regulations).

The working group was formed as a result of the IASB's 2011 agenda consultation and held an initial meeting in Kuala Lumpur in July 2013. During the meeting, the group identified four areas that it wants to address:

• The application of IFRS 9's classification and measurement principles;
• the application of the IASB's proposed lease standard to Ijarah;
• whether restricted and unrestricted investment accounts are to be presented on- or off-balance sheet; and
• profit equalisation reserves (PER) because of significant differences in practice.

The upcoming discussion in Kuala Lumpur will address the first of these points and will be based on a staff paper made recently available on the IASB's website. The paper identifies three main issues that need to be considered:

1. Which IFRS applies to the accounting of Islamic financial instruments? Are these contracts with customers that fall within the scope of IFRS 15 Revenue from Contracts with Customers?
2. Do some of the instruments common in Islamic finance meet the characteristics-of-the-instrument test in IFRS 9 Financial Instruments?
3. How should the revenue from Islamic finance instruments be described and measured?

Please click for access to the full staff paper offering background and considerations on the three issues on the IASB's website.

The proposed amendments clarify that entities reporting under FRS 102 should measure their obligations using the projected unit credit method and should not recognise additional liabilities to reflect funding valuations or agreements to fund deficits. Entities would therefore not need to recognise additional liabilities for a schedule of contributions, even if such an agreement would otherwise be considered onerous. This contrasts with the position for companies reporting under IFRSs, which may have to recognise an additional liability for such obligations in some circumstances.

The draft amendments also propose to clarify that remeasurements recognised in other comprehensive income include movements in irrecoverable surpluses, i.e. movements in those scheme surpluses that are not recognised as assets.

Please click for:

• Press release (link to FRC website)
• Financial Reporting Exposure Draft 55: 'Draft Amendments to FRS 102 – Pension Obligations' (link to FRC website)

The topics discussed at the meeting included:

• Conceptual Framework — The CMAC and GPF discussed (1) the distinction between liabilities and equity, and (2) the distinction between profit or loss and other comprehensive income.
• Disclosure Initiative — CMAC and GPF members provided input on debt reconciliation and principles of disclosure projects.
• Leases— GPF and CMAC members discussed three areas of lessee disclosures:
  1. maturity analysis of the contractual lease payments included in lease liabilities;
  2. reconciliations of the opening and closing balances of right-of-use assets and lease liabilities and alternative quantitative disclosures; and
  3. qualitative disclosures.
• Post-implementation Review of IFRS 3 — The IASB staff presented an overview of the status of project and solicited input from CMAC and GPF members on some of the more significant issues included in the Request for Information.

The next CMAC meeting is scheduled for 16 October 2014.

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

In November the government expressed their support for the removal of mandatory quarterly reporting requirements which were one of the recommendations of Professor Kay in his review of the UK Equity market in 2012 (the “Kay Review”) (link to BIS website). 

The removal of mandatory quarterly reporting has been agreed at a European Union level as part of the amendments to the Transparency Directive and must be transposed into UK law by November 2015.  However, as part of the government’s autumn statement, they announced that they would bring forward this change in advance of the November 2015 deadline and adopted enabling secondary legislation in June 2014 allowing the FCA to implement this change.  In July 2014, the FCA issued a consultation on these proposals.

We supported the proposals of the Kay Review to promote long-term decision making, which called for this change. As the amendment to European law has now been transposed into UK law which now permits removal of this requirement, our comments are limited to asking the FCA to confirm removal as soon as they can in order that companies can update markets with their planned timetable for announcements.

Click for the full comment letter.

Background

The proposals in ED/2012/1 Annual Improvements to IFRSs: 2010-2012 Cycle included proposals to amend IAS 12 Income Taxes to clarify when a deferred tax asset should be recognised for unrealised losses. In response to constituent feedback on the proposals, the IASB decided that the accounting for deferred tax assets for unrealised losses on debt instruments should be clarified by a separate narrow-scope project to amend IAS 12.

Suggested changes

Based on the IFRS Interpretation Committee's identification of diversity in practice and the different views taken, the IASB proposes in ED/2014/3 Recognition of Deferred Tax Assets for Unrealised Losses (Proposed amendments to IAS 12) amendments aimed at clarifying the following aspects:

• Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.
• The carrying amount of an asset does not limit the estimation of probable future taxable profits.
• Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences.
• An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

Transition requirements and effective date

The ED proposes limited retrospective application of the amendments for entities already applying IFRS. However, full retrospective application is proposed for first-time adopters of IFRS.

The ED does not contain a proposed effective date. The IASB will consider this point based on the comments that it receives.

Additional information

Please click for:

• IASB press release (link to IASB website)
• Access to the exposure draft on the IASB website
• Our IAS Plus project page on IAS 12 — Recognition of deferred tax assets for unrealised losses
• Deloitte's Need to Know newsletter summarising the amendments

The Taylor & Francis research papers are sourced from Accounting and Business Research, Accounting Education, Accounting in Europe, China Journal of Accounting Studies, and European Accounting Review. Among the 25 articles are contributions on "A Multi-Issue/Multi-Period Analysis of the Geographic Diversity of IASB Comment Letter Participation", "Intended and Unintended Consequences of Mandatory IFRS Adoption: A Review of Extant Evidence and Suggestions for Future Research", and "The continued survival of international differences under IFRS". Access to all research papers is available here (link to Taylor & Francis Online).

The papers made freely available by SAGE include articles, editorials and book reviews sourced from Accounting History and are devoted to accounting topics from 800 AD to the financial crisis. Access to all research papers is available here (link to SAGE publishers online). Please note that free access to these papers expires on 31 August 2014.