April

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Feedback on the European Discussion Paper on separate financial statements

16 Apr, 2015

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement summarising the main messages from respondents to EFRAG’s Discussion Paper 'Separate financial statements'.

The Discussion Paper, published in September 2014, considered how separate financial statements are used in Europe for economic decision-making and analysed the technical financial reporting issues that arise under IFRS when preparing such financial statements. The paper also proposed solutions to the issues identified and offered suggestions on how to consider separate financial statements in the future.

Respondents were supportive of the Discussion Paper as a way of stimulating the discussion on separate financial statements.  Although not all respondents considered that separate financial statements give rise to significant issues, the majority agreed that the IASB should review existing requirements on separate financial statements and develop a specific set of general principles that could be used as a basis to set requirements for them.

The press release and feedback statement are available on the EFRAG website.

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EFRAG issues feedback statement on the IASB's Exposure Draft of amendments to IFRS 2

16 Apr, 2015

The European Financial Reporting Advisory Group (EFRAG) has published its feedback statement summarising the main comments received from constituents invited to respond to their draft comment letter in relation to the International Accounting Standards Board’s (IASB’s) Exposure Draft 'ED/2014/5 Classification and measurement of share-based payment transactions (proposed amendments to IFRS 2)'.

The IASB’s proposed amendments clarify the classification and measurement of share-based payment transactions and consider the following issues:

  • accounting for cash-settled share-based payment transactions that include a performance condition;
  • classification of share-based payment transactions with net settlement features; and
  • accounting for modifications of share-based payment transactions from cash-settled to equity-settled.

EFRAG published its draft comment letter in December 2014 and its final comment letter in April 2015.

The feedback statement summarises the main comments received by the EFRAG Board in relation to the draft comment letter and explains how those comments were considered by the EFRAG Board reaching their final position on the IASB ED set out in their final comment letter to the IASB.

The press release and full feedback statement are available on the EFRAG website. 

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Recording of the ECON hearing of the new EFRAG President

16 Apr, 2015

The Committee on Economic and Monetary Affairs (ECON) of the European Parliament has made available a recording of the hearing of Dr Wolf Klinz, who was recently nominated as President of the Board of the European Financial Reporting Advisory Group (EFRAG) by the European Commission.

In his introductory remarks, Mr Klinz stressed that moving to IFRSs in Europe in 2005 was the right decision to make, however, he also stated that he sees a more active role for EFRAG going forward. So far, he said, EFRAG has been primarily the IASB's ambassador in Brussels. He believed it was now time that EFRAG became the EU ambassador at the IASB in London. Mr Klinz summed  up his introductory remarks by five goals he sees for EFRAG under his leadership:

  • EFRAG should become the uncontested European voice as regards accounting standard-setting.
  • EFRAG must work to achieve maximum consensus in the European Union.
  • EFRAG must help to ensure that prudence and true and fair view remain aspects of accounting.
  • EFRAG must involve the European Parliament in the discussion around accounting standards through regular dialogue.
  • EFRAG must face the fact that it does not only have a technical but also a political role.

After the hearing, the ECON voted almost unanimously for the appointment of Mr Klinz.

Please click to access the recording on the ECON website. The first ten minutes cover the opening remarks of Mr Klinz, the remaining time questions and answers. Please be aware that you can listen to the recording in twenty-one different languages as well as in the original, multi-language version.

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IASB's Financial Instruments Guide 2015 available now

16 Apr, 2015

The IFRS Foundation has announced that the 'Financial Instruments 2015 Guide' is now available to buy. The guide offers the complete text, with extensive cross-references, of the standards on financial instruments issued by the IASB.

The guide comprises two volumes:

  • Volume 1 is a guide through the official text of IAS 39 and the other financial instruments Standards as it assumes no early application.
  • Volume 2 is a guide through the official text of IFRS 9 and the other financial instruments Standards assuming early application.
It sells for £58  a copy plus shipping. Please click for more information and placing your order.
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Summary of March GPF meeting now available

16 Apr, 2015

Minutes of the meeting of the Global Preparers Forum (GPF) with representatives of the International Accounting Standards Board (IASB) held in London on Thursday, 5 March 2015 are now available.

The following are some of the highlights of the matters discussed at the meeting:

  • IASB Update. One of the concerns of the GPF members was convergence. GPF members challenged the extent to which the IASB and FASB really are converged in respect of the Leases projects. Also, GPF members commented that that it was unhelpful to refer to convergence in respect of IFRS 15 if the words in IFRS are going to be different from US GAAP and, as a result, outcomes may also be different.
  • IFRS Interpretations Committee Update. The meeting discussed:
    •  IAS 2/IAS 38: Should interest be accreted on prepayments for long-term supply contracts?
    • IAS 16: Accounting for proceeds and costs of testing of PPE
    • IAS 12: Reflecting uncertainty in the recognition and measurement of income taxes
  • Agenda consultation 2015. GPF members commented on the strategic direction of the IASB Agenda and suggested that the IASB should now spend more time on maintaining existing standards. They also commented on projects that should be prioritised. Again, convergence was brought up as a topic, however, GPF members felt that convergence should not be raised as a topic in the agenda consultation as convergence has been tried but has failed.
  • Business combinations under common control. The IASB staff provided an update on the research project on business combinations under common control (BCUCC). A few GPF members commented on the scope of the project.
  • Income tax accounting. The purpose of this session was to understand how, and to what extent, income tax information is used by internal management; to identify the existing practical problems about the current accounting for income taxes; and to get a sense of a direction for improving the accounting standard for income tax.
  • Review of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. GPF members were provided with results of a preparers’ survey launched by the OIC in December 2014 and were asked whether those results were consistent with their views. Most members agreed with the findings of the survey.
  • Discount rates. The IASB staff provided an update on the research project on discount rates. GPF members expressed support for conducting research on discount rates, however, they stated that this research should be of medium priority. They also stated that any standard-setting action should occur through cross-cutting projects as opposed to piecemeal amendments to different individual standards at different times.
  • Share-based payment. The IASB staff provided an update on the research project on share-based payment. The objective of the project is to identify the most common areas of complexity in IFRS 2. GPF members agreed that there are some areas of complexity in IFRS 2, however, they also commented that the standard issued in 2004 has achieved its main objective. They stated that this research should be of medium to low priority.
  • Performance reporting. The IASB staff provided an update on the research project on performance reporting that was added to the IASB's agenda in July 2014. Although the project is entitled ‘Performance reporting’, it is inevitable that the statement of financial position will be considered as part of the project. The staff emphasised that the IASB would learn from the consultations it undertook in the FSP project, and the mistakes it made. GPF members voiced some concerns, and the IASB staff promised that the IASB would develop the project cautiously. Opinions as to what priority should be given to this project were split.

The full report is available on the IASB website.

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Deloitte releases e-learning module on IFRS 15

15 Apr, 2015

Deloitte’s Global Audit Learning group has released an e-learning module on IFRS 15. This new module is an addition to the extensive catalogue of IFRS e-learning content made freely available by Deloitte.

Each Deloitte e-learning module provides training in the background, scope and principles of each pronouncement, and provides practical insights into their application. Topics covered in the IFRS 15 module include the principles for the recognition of revenue to the sale of goods, services, licenses, royalties, and any variable consideration or modifications to contracts; and guidance is provided on how these principles should be applied by using the new five step revenue recognition model.

The IFRS e-learning modules are available free of charge and may be used and distributed freely, without alteration from the original form and subject to the terms of the Deloitte copyright over the material.

For details on the full range of e-learning modules go to Deloitte’s IFRS e-learning website. A listing of available e-learning modules is also available on our UK Accounting Plus IFRS e-learning page.

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Updated 'IFRS as global standards' publication

15 Apr, 2015

The IFRS Foundation has published an updated version of 'IFRS as Global Standards: a Pocket Guide'. The guide provides an overview of the adoption of IFRS in 138 countries and other jurisdictions around the world.

The summaries on the use of IFRS are based off information obtained by national standard-setters and other organisation that have responded to a survey by former IASB member, Paul Pacter.

IFRS as Global Standards: a Pocket Guide can be downloaded free of charge from the IASB' website. It is accompanied by Financial Reporting Standards for the World Economy, an analysis of what can be learned from the jurisdiction profiles that form the basis for the pocket guide.

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EFRAG update for March

14 Apr, 2015

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during March 2015.

The Update reports on the meeting of the EFRAG Board on 11 March, the EFRAG TEG conference calls of 10 and 20 March, the meeting of the EFRAG Technical Expert Group (EFRAG TEG) on 1 - 2 April, the meeting of the EFRAG Consultative Forum of Standard Setters (EFRAG CFSS) on 19 March as well as written procedures of the EFRAG Board in March. The Update also lists EFRAG publications issued in March:

Please click to download the March EFRAG Update from the EFRAG website.

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EFRAG to hold a Board meeting in April 2015

14 Apr, 2015

The European Financial Reporting Advisory Group (EFRAG) will hold a Board meeting on 22 April 2015 in Brussels.

An agenda with supporting papers and details on how to register for the public meeting can be found on the EFRAG website.

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PRA clarifies its expectations on the use of UK GAAP under Solvency II

14 Apr, 2015

The Prudential Regulation Authority (PRA) has issued a consultation paper seeking feedback on a draft supervisory statement that sets out its expectations for firms within the scope of Solvency II wishing to recognise and value assets and liabilities under UK Generally Accepted Accounting Principles (UK GAAP) for Solvency II purposes.

The draft supervisory statement is relevant to all insurance firms within the scope of Solvency II reporting under UK GAAP rather than under International Financial Reporting Standards (IFRSs).

The Solvency II Regulation contains a derogation, within Article 9 (4), which allows firms within the scope of Solvency II and preparing annual financial statements under UK GAAP the option to recognise and value assets and liabilities under UK GAAP if:

  • UK GAAP is consistent with Article 75 of the Solvency II Directive;
  • the valuation method is proportionate to the nature, scale, and complexity inherent in the business of the undertaking; and
  • the process of valuing the assets and liabilities using international accounting standards would impose costs which are disproportionate with respect to the total administrative expenses of the firm. 

The consultation paper comments:

The PRA’s clarification of which UK GAAP provisions may potentially be applied for recognition and valuation purposes (if the specific criteria of the derogation are fulfilled) will reduce the administrative burden on firms which are considering whether to seek to apply the derogation and so facilitates both effective competition and consistent treatment between firms.

The statement expands on the PRA’s general approach as set out in its Insurance Approach document (link to PRA website).

Responses to the consultation are requested by 10 July 2015.

The press release and full consultation are available on the PRA website.

*UPDATE 02/09/2015 - the PRA has now released its supervisory statement (link to PRA website).  As a result of the above consultation there were amendments made to improve clarity of wording but no change in policy*

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