Summary of the December ASAF meeting now available

  • ASAF meeting (mid blue) Image

10 Feb, 2015

The staff of the International Accounting Standards Board (IASB) have made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 4-5 December 2014. The meeting saw discussion on the disclosure initiative, emissions trading schemes, rate-regulated activities, leases, post-employment benefits, dynamic risk accounting, the equity method of accounting, foreign currency translation, inflation accounting, insurance contracts, current projects and research, the 2015 agenda consultation, and the IASB's agenda.

The topics covered during the meeting included:

  • Disclosure initiative. The meeting considered the principles of disclosure in connection with the statement of cash flows and related disclosures. Some ASAF members suggested that the objective of the statement of cash flows needs to be identified. In addition, some ASAF members also suggested to also undertake research into the statement of financial position and the statement(s) of profit or loss and other comprehensive income (OCI) at the same time as researching the statement of cash flows.
  • Emissions trading schemes. As the project is still in the preliminary stages of research, the discussion consisted mainly of seeking ASAF members' views on the scope of, and approach to, the project.
  • Rate-regulated activities. ASAF members were invited to share their preliminary views on the Discussion Paper on rate regulation and to seek clarification from the staff of any issues related to the DP. A FASB representative provided a summary of the guidance in US GAAP to provide some background about why regulatory balances are recognised as assets and liabilities. The EFRAG representative provided a summary of targeted outreach EFRAG has undertaken with users of the financial statements.
  • Leases. The IASB staff presented an update on the project on leases and provided a summary of the most important tentative decisions reached to date. Convergence was discussed at length with some members stating that convergence was critical to the project and IASB and FASB should discuss again their tentative decisions on the lessee accounting model. The FASB representative explained that the FASB is not considering changing its tentative decision. Other members stated that achieving a higher quality solution was more important than achieving convergence.
  • Inflation accounting. GLASS presented a paper considering inflation accounting and how IAS 29 Financial Reporting in Hyperinflationary Economies could be improved. It was argued that the current threshold for hyperinflation was late in recognising hyperinflation conditions. ASAF members recommended that the IASB should consider a short-term project in order to review changing the threshold in IAS 29. In addition, the IASB might also consider a longer-term project on the accounting concepts for inflation accounting in general.
  • Foreign currency translation. The IASB staff explained that the IASB has decided to reclassify the research project on foreign currency translation from short-term to longer-term. Depending on feedback during the agenda consultation, the IASB might even consider removing it from the research programme altogether. The staff noted that the IASB would consider specific narrow-scope issues in respect of IAS 21 that are brought to its attention separately from any research project.
  • Post-employment benefits. The IASB staff introduced the research project on post-employment benefits and sought ASAF members’ views on the scope and approach. The IASB staff has the preliminary idea to explore conceptually a single measurement model for pension plans. ASAF members supported scope and approach of the project.
  • Dynamic risk accounting. The IASB staff provided a summary of the feedback received during outreach meetings on the Discussion Paper and CASB and AASB presented their findings from outreach conducted. Views were mixed. While there is support for developing a new model that reflects dynamic risk management activities, there is also a preference for improvements to the existing accounting models. It was also noted that views differ between preparers and users. ASAF members pointed out that non-financial entities tend to think the dynamic risk accounting is not applicable to them as the analysis in the DP is focused on banks. ASAF members also stressed that disclosures would play a significant role regardless of the direction of the project.
  • Equity method of accounting. The KASB presented a research report on the equity method and the ASBJ presented the results from a survey it has undertaken on the topic.
  • 2015 Agenda consultation. The meeting discussed the next agenda consultation, which is due to take place in 2015. ASAF members agreed with the proposal that the consultation should seek input on how and which projects that are part of the research programme should be prioritised. However, there should also be the opportunity to recommend new projects or the removal of projects. The consultation should identify the available resources of the IASB and its staff and it should be explained that ambitions need to be matched to the resources available. ASAF members also warned of too many narrow-scope projects and reminded the IASB of the desired period of calm.
  • Insurance contracts. The meeting discussed recent developments in the insurance contracts project, including the IASB’s tentative decisions on transition as well as the accounting for contracts with participating features and disclosures.

A full report of the meeting is available on the IASB's website.

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