February

IASB staff publishes update on the leases project

24 Feb, 2015

The IASB staff has published a document that provides an overview of the definition of a lease as it would be defined in the upcoming leases standard as well as (1) accompanying guidance to assess whether a contract is a lease, (2) a summary of decisions, and (3) examples portraying hypothetical situations.

On 16 May 2013, the IASB and FASB issued a revised exposure draft to improve the accounting for leases. The boards will be ending their redeliberations soon and will be deciding on an effective date within the next few months. According to this update, the new leases standard is expected to be issued by the IASB before the end of 2015, which is slightly different than the IASB’s current work plan of an expected issuance in second half of 2015.

For more in­for­ma­tion, see the document on the IASB’s website. In addition, Deloitte has followed the re­de­lib­er­a­tions of the IASB and all tentative decisions to date; see our leases project page for details.

Table connecting corporate non-financial reporting approaches

24 Feb, 2015

The Climate Disclosure Standards Board (CDSB) has published a table showing how the most widely used corporate natural capital-related reporting approaches align.

The table cross references the requirements in the CDSB Reporting Framework, which will be available as completed version in March, with commonly used reporting provisions such as CDP, SASB, GRI, IIRC, UN Global Compact as well as regulatory requirements such as the new EU Non-Financial Reporting Directive, the UK Companies Act, the German Sustainability Code and Grenelle II. The table allows stakeholders to identify similar requirements and shows how information collected for one reporting audience/purpose can be used to satisfy other audiences and purposes.

Please click to access the table and a corresponding press release on the CDSB website.

February 2015 IASB meeting notes posted — part II

23 Feb, 2015

The IASB met at its offices in London on 18–20 February 2015. Some of the meeting was a joint session with the FASB. We have posted the Deloitte observer notes from the sessions on the disclosure initiative and IFRS implementation issues.

Click through for direct access to the notes:

Thursday, Feb­ru­ary 19, 2015

Friday, Feb­ru­ary 20, 2015

The pre­lim­i­nary and un­of­fi­cial notes taken by De­loitte ob­servers for the entire meeting are also avail­able.

IFRS Foundation appoints two new Vice-Chairs to the Advisory Council

23 Feb, 2015

The IFRS Foundation has announced the appointments of Gavin Francis and Goro Kumagai as Vice-Chairs to the IFRS Advisory Council.

Mr Francis represents the Institute of International Finance and is the Deputy Group Chief Accounting Officer at HSBC Holdings plc. Mr Kumagai represents the Securities Analysts Association of Japan on the IFRS Advisory Council and is a Senior Fellow of the Strategic Research Department at Mizuho Securities Co. Ltd.

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

Agenda for the March 2015 ASAF meeting

23 Feb, 2015

The International Accounting Standards Board (IASB) has released the tentative agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 26-27 March 2015. The meeting will discuss a number of the IASB's active projects, including the conceptual framework, leases, the disclosure initiative, and insurance contracts. IFRS 15 'Revenue from Contracts with Customers' and initial feedback from the ASAF review will also be discussed.

The agenda for the meeting is summarised below:

Thursday, 26 March 2015 (9:20-18:15)

  • Postimplementation review of IFRS 3
  • Conceptual Framework
  • Leases
  • Disclosure initiative
  • IFRS 15 Revenue from Contracts with Customers


Friday, 27 March 2015 (9:00-16:45)

  • Insurance contracts
  • Financial instruments with characteristics of equity
  • Business combinations under common control
  • Equity method of accounting
  • Review of the Accounting Standards Advisory Forum
  • Current projects andfeedback

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

February 2015 IASB meeting notes posted — Part I

20 Feb, 2015

The International Accounting Standards Board (IASB) met at its offices in London on 18–20 February 2015, some of it a joint meeting with the FASB. We have posted the Deloitte observer notes from the sessions on the IFRS for SMEs, rate-regulated activities, and leases. Additional notes will be posted in due course.

Click through for direct access to the notes:

Wednesday, 18 February 2015

Thursday, 19 February 2015

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

 

Government response to consultation on charities’ audit and independent examination

20 Feb, 2015

The Cabinet Office has published the government’s response to feedback received on its earlier consultation, published in December 2014, on proposals to increase the audit exemption thresholds for charities, increase the threshold at which group accounts must be prepared and broaden the class of bodies whose members can carry out independent examinations of audit exempt charities.

As a result of the feedback received to the December consultation (link to Cabinet Office website), the government will: 

  • raise the income threshold for charities below which an audit is not required from £500,000 to £1m.  Newly exempt charities will require an independent examination by a qualified independent examiner. The threshold for the preparation of group accounts will be similarly increased.
  • Not alter the asset threshold for audit exemption for now. An audit will be required if a charity’s income exceeds £250,000 and its gross assets exceed £3.26m. The government was unable to increase the income part of this test without primary legislation, and will consider increasing the asset part of the test once the outcome of the BIS consultation on audit reform is known.
  • Add the Institute of Financial Accountants to the list of bodies whose members can carry out independent examinations; the Certified Public Accountants Association may also be added subject to receipt of additional information by the Cabinet Office. 

The Government intends to lay a statutory instrument before Parliament with a view to the changes taking effect for financial years ending on or after 31 March 2015. 

A copy of the Government’s response is available on the Cabinet Office website.

IASB and FASB discuss potential clarifications to joint revenue recognition guidance

20 Feb, 2015

At their meeting on Wednesday, the IASB and FASB discussed issues that their joint revenue Transition Resource Group (TRG) has identified in connection with implementation of their converged standard, “Revenue From Contracts With Customers” (issued as IFRS 15 by the IASB and as ASU 2014-09 by the FASB). Specifically, the boards addressed whether to clarify certain aspects of the standard that seem to be causing implementation problems for some preparers.

Topics that one or both boards may consider revising or clarifying include de­ter­min­ing the nature of an entity’s promise in granting a licence of in­tel­lec­tual property, iden­ti­fy­ing per­for­mance oblig­a­tions related to the level at which promised goods or services are iden­ti­fied in a contract with a customer, evaluating whether promised goods and services are distinct, and de­ter­min­ing whether shipping and handling services are promised services in the contract or a ful­fil­lment cost.

For more information, see Deloitte’s 18 February observer notes.

FRC consults on proposed revisions to the accounting standards for small and micro entities

19 Feb, 2015

The Financial Reporting Council (FRC) has today published three financial reporting exposure drafts (FREDs) proposing changes to the existing UK financial reporting framework resulting from the UK implementation of the EU Accounting Directive. The FRC is requesting comments on the FREDs by 30 April 2015.

In September 2014 the FRC consulted on the future of accounting standards for micro-entities, small entities and other amendments to accounting standards necessary as result of the UK implementation of the EU Accounting Directive (“the Directive”). This followed a consultation issued by the Department for Business, Innovation and Skills (BIS) on the implementation of the Directive, which sought to consolidate existing legislation on financial reporting and reduce the regulatory burden on smaller companies. 

Following the recent government response on the UK implementation of the Directive, the FRC has now issued the following FREDs, for public comment:

FRED 58 - Draft FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.  This introduces a single financial reporting standard for entities that qualify as micro-entities as defined by the Companies Act 2006 and choose to apply the micro-entities regime ("the regime"), introduced into UK company law in November 2013.  The draft FRS includes the presentation and disclosure requirements of the regime as set out in law.  Micro-entities will only need to provide the disclosures required by law.  The recognition and measurement requirements are based on FRS 102 with a number of significant simplifications including exempting micro–entities from having to account for complex transactions such as equity-settled share-based payments, defined benefit pension schemes and deferred tax. 

FRED 59 - Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – Small entities and other minor amendments.  This sets out the revised presentation and disclosure requirements for financial reporting by small entities in a new section of FRS 102, Section 1A Small Entities.  It is proposed that small entities will apply the recognition and measurement requirements of FRS 102 with different presentation and disclosure requirements and that this section, within FRS 102, will replace the existing Financial Reporting Standard for Smaller Entities (FRSSE).  A number of other necessary amendments are proposed to maintain consistency between FRS 102 and company law.

FRED 60 - Draft amendments to FRS 100 Application of Financial Reporting Requirements and FRS 101 Reduced Disclosure Framework.  This proposes amendments to FRS 100 to reflect the revised framework of accounting standards, including the proposed replacement of the FRSSE with a new section in FRS 102 and the proposed introduction of micro-entity accounting standard, draft FRS 105.  The FRED also proposes minor amendments to FRS 101 to maintain consistency between FRS 101 and company law.   

The FREDs take into account the feedback from the previous consultation and are consistent with the requirements outlined in the draft Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (link to draft regulations), which implement the Accounting Directive in the UK. These Regulations are expected to be debated and approved in due course, coming into force on 6 April 2015.

Finalised standards and amendments are expected to be issued in July 2015.  Once finalised, they will be effective for accounting periods beginning on or after 1 January 2016 with earlier application permitted subject to some restrictions.

Click for (all links to FRC website):

EFRAG recommends postponing the endorsement process on IAS 28/IFRS 10 amendments due to an identified conflict with IAS 28

19 Feb, 2015

The European Financial Reporting Advisory Group (EFRAG) has recommended to the European Commission to postpone the endorsement process on the amendments to IFRS 10 and IAS 28 regarding the sale or contribution of assets between an investor and its associate or joint venture until the IASB has addressed an identified conflict with IAS 28.

On 11 September 2014, the IASB issued Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28). Subsequently, EFRAG identified a conflict of the amendments with IAS 28 Investments in Associates and Joint Ventures and notified the IASB of the conflict. The IASB has acknowledged the conflict and discussed the issue at its January 2015 meeting. The Board members tentatively decided to:

  • clarify the requirements of IFRS 10 and IAS 28 to address the conflict;
  • to do so in the forthcoming ED on another amendment to IAS 28 regarding the elimination of gains or losses arising from transactions between an entity and its associate or joint venture; and
  • to propose a postponement of the effective date of the September 2014 amendments so that the effective date of the clarification to be included with the forthcoming ED and the September 2014 amendments are the same.

In light of these developments, EFRAG has recommended to the European Commission to postpone the endorsement process relating to the amendments to IFRS 10 and IAS 28 until the project on Elimination of gains or losses arising from transactions between an entity and its associate or joint venture is completed. Please click for the letter to the Commission on the EFRAG website. EFRAG has updated its endorsement status report accordingly.

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