April

EFRAG issues feedback statement on the IASB's Discussion Paper on rate regulation

02 Apr, 2015

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement summarising the main comments received from constituents invited to respond to its draft comment letter in relation to the International Accounting Standards Board’s (IASB’s) Discussion Paper (DP) 2014/2 Reporting the Financial Effects of Rate Regulation.

The aim of the IASB’s discussion paper was to solicit feedback from constituents as to whether, and under which circumstances, financial effects arising from rate regulation should be accommodated in financial reporting.

EFRAG published its draft comment letter in October 2014 and the final comment letter was published in January 2015.   

The feedback statement provides an analysis of the EFRAG tentative position expressed in the draft comment letter, describes the comments received from constituents and then highlight how these comments were considered by the EFRAG Technical Group (EFRAG TEG) in reaching their final position as set out in its final comment letter to the IASB.

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EFRAG final comment letter on the IASB's Exposure Draft of amendments to IFRS 2

02 Apr, 2015

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter on the IASB Exposure Draft (ED) proposing amendments that would clarify the classification and measurement of share-based payment transactions.

ED/2014/5 Classification and measurement of share-based payment transactions considers the following the 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.

In its comment letter, EFRAG generally agrees with the IASB's assessment of the issues and with its proposed amendments to address them, as it believes that they provide practical solutions that would reduce divergences in application.

However, EFRAG is concerned that addressing more and more specific terms and conditions of different share-based plans is resulting in ever-increasing complexity in the requirements of IFRS 2. EFRAG believes that the IASB should envisage a more general review of IFRS 2 to consider all implementation issues in a principle-based way.

The press release and full comment letter are available on the EFRAG website.

Agenda for the first face-to-face meeting of the ITG

02 Apr, 2015

The agenda has been released for the upcoming meeting of the Transition Resource Group for Impairment of Financial Instruments (ITG), which is being held at the offices of the IASB on 22 April 2015.

The ITG was created to keep the IASB informed on issues occurring during implementation of the new impairment requirements in IFRS 9 Financial Instruments, to assist in determining what action may be needed to resolve diversity in practice and to provide a public forum for stakeholders to learn about the new impairment requirements from others involved with implementation. The first face-to-face meeting of the group was originally planned for the last quarter of 2014 but was replaced by a conference call to discuss operating procedures and the status of implementation as not enough substantive technical implementation issues that meet the submission criteria had been received by then.

The agenda for the meeting is as follows:

Wednesday, 22 April 2015, 09.30-15.30

  • Introductory remarks
  • The maximum period to consider when measuring expected credit losses
  • Forecasts of future economic conditions
  • Loan commitments – Scope
  • Revolving credit facilities
  • Assessment of significant increase in credit risk for guaranteed debt instruments
  • Measurement of expected credit losses for an issued financial guarantee contract
  • Expected credit losses - measurement date
  • Measurement of expected credit losses in respect of a modified financial asset

Agenda papers for this meeting will be made available on the IASB's website closer to the meeting.

CDSB and WBCSD to develop mapping tool for sustainability reporting

02 Apr, 2015

The Climate Disclosure Standards Board (CDSB) and the World Business Council for Sustainable Development (WBCSD) are jointly developing a web-based tool and database to help companies understand and navigate the corporate sustainability reporting landscape.

As the information companies are required to disclose in their annual, sustainability or integrated reports varies and the landscape of reporting frameworks, regulation, policies, standards and guidance is diverse and complex, WBCSD and CDSB have launched a three year "Reporting Landscape Mapping" project. The project aims to develop a web-based tool and database that will help business navigate the corporate sustainability reporting landscape and assess which rules, methods or practices are relevant and applicable to them. WBCSD and CDSB hope that this will enhance and consolidate the disclosure of sustainability information in corporate reporting and encourage the convergence of reporting. The first pilot version of the database is planned for late autumn 2015.

Please click for more information on the CDSB website. WBCSD and CDSB are also looking for companies that would like to contribute to the development process and participate in the pilot programme.

TRG discusses implementation of new revenue standard

01 Apr, 2015

At its 30 March 2015 meeting, the joint revenue transition resource group (TRG) and IASB and FASB board members discussed potential issues related to implementing the boards’ new revenue standard.

Topics discussed at the meeting included:

  • Allocation of the transaction price for discounts and variable consideration
  • Material rights
  • Consideration payable to a customer
  • Partially satisfying performance obligations before identifying the contract
  • Warranties
  • Significant financing components
  • Whether contributions are within the scope of the new revenue standard

At a separate FASB meeting on Wednesday, 1 April 2015, the FASB tentatively decided to defer the new revenue standard for one year. It is currently unclear whether the IASB will defer the effective date of IFRS 15; the IASB plans to discuss this issue later in April.

US FASB tentatively decides to defer the new revenue standard

01 Apr, 2015

At its meeting today, the US Financial Accounting Standards Board (FASB) tentatively decided to defer for one year the effective date of the new revenue standard (ASU 2014-09 'Revenue From Contracts With Customers') for public and nonpublic entities reporting under US GAAP.

The Board also tentatively decided to permit entities to early adopt the standard. The tentative decisions will be exposed in an upcoming proposed Accounting Standards Update (ASU) with a 30-day comment period.

It is currently unclear whether the IASB will defer the effective date of IFRS 15 Revenue from Contracts with Customers; the IASB plans to discuss this issue later in April.

For more information, see the tentative board decisions on the FASB's website.

Small Business, Enterprise and Employment Bill receives Royal Assent

01 Apr, 2015

The Small Business, Enterprise and Employment Bill (“the Bill) which brings in measures aimed at making it easier for small firms to establish and grow in the UK has received Royal Assent.

The Bill, consists of 11 parts and covers a wide range of topics including company filing requirements and corporate trust and transparency upon which the Department for Business, Innovation and Skills (BIS) has previously consulted.

Company filing requirements  

In October 2013, BIS published proposals aimed at reducing the amount of information that companies need to file and the frequency with which it is sent to Companies House.  Following a period of consultation, BIS published updated proposals in April 2014 which are included within Part 8 of the Bill.  Measures within Part 8 will:

give companies flexibility to confirm whether their basic company information is correct and complete at any point in a year - instead of requiring an annual return to be completed at a set point – and simplify the process by allowing companies to check and confirm the information;

allow companies to opt out of the requirement to keep certain company registers and, instead, keep the information on the public register if that is easier for them;

simplify the financial information contained in the statement of capital;

simplify filing requirements where directors are appointed and provide a new means of resolving disputes about directors’ appointments;

suppress part of the director’s date of birth shown on the public register to make identity theft more difficult;

implement a faster ‘strike off’ regime to get defunct companies off the public register and keep it up to date;

make it simpler to remove inaccurate registered office addresses from the public register; and

allow companies to make additional information available on the public register, if they wish to do so. 

Corporate trust and transparency

In July 2013 (link to BIS website), BIS published proposals aimed at a enhancing the transparency of UK company ownership and increasing trust in UK business.  Following a period of consultation, updated proposals were published in April 2014 which are now included in Part 7 of the Bill.  The measures:

  • Require UK companies to keep a register (a ‘Person with significant control (PSC) register’) of people with significant control over the company (those individuals who own or controls more  than 25 per cent of a company’s shares or voting rights or who otherwise exercises control over a company or its management).  The PSC register needs to include details on the individuals including name, date of birth, nationality, address and details of their interest in the company.  Companies are required to keep the PSC register up to date.  In October 2014, BIS consulted as to how to implement these requirements and what guidance would be required to help companies and others understand and comply with them.
  • Increase transparency of company ownership and control through measures including:
    • Prohibiting UK companies from issuing bearer shares and requiring existing bearer shareholders to surrender their shares to the company in exchange for registered shares.
    • Prohibiting the use of corporate directors (one company as the director of another) with limited exceptions.  In November 2014 BIS consulted on the circumstances in which UK companies could continue to have corporate directors.

The government has published a timetable of the expected implementation dates for the Bill (link to Companies House website).

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We comment on the proposed amendments to IAS 7

01 Apr, 2015

We have published our comment letter on the International Accounting Standards Board's (IASB) Exposure Draft ED/2014/6 'Disclosure Initiative (proposed amendments to IAS 7)'.

The IASB's proposed amendments aim at clarifying IAS 7 to improve information provided to users of financial statements about an entity's financing activities and liquidity. In our comment letter, we support the Board's Disclosure Initiative, but believe that it is premature to make additional disclosure requirements of the sort proposed in the ED ahead of discussions on the Principles of Disclosure element of that project.

Click to access the full comment letter.

IPSASB finalises proposals on reporting service performance information

01 Apr, 2015

The International Public Sector Accounting Standards Board (IPSASB) has published Recommended Practice Guideline 3 (RPG 3) that provides guidance on the reporting of service performance information. The RPG is designed to allow public sector entities to be held accountable through the provision of high quality service performance information, by providing guidance on how such information should be presented, and its recommended characteristics.

RPG 3 follows an exposure draft published in 2013 and an earlier consultation paper released in 2011. It responds to the perceived need for a principles-based and consistent framework for service performance information that focuses on user needs. The press release states:

Service provision is the primary function of the vast majority of public sector entities. Service performance information is essential for users to evaluate the services provided and public sector entities' efficient and effective use of resources to deliver those services. RPG 3 provides guidance to support the quality of service performance information already reported by entities and offers a useful framework for entities that have not yet started to report service performance information.

The guidance in RPG 3 Reporting Service Performance Information aligns with the IPSASB's view that public sector financial reporting has a greater scope than financial statements alone. Therefore, it:

  • provides principles applicable to the presentation of service performance information and definitions that establish a standardised service performance information terminology;
  • addresses the reporting entity and reporting period for service performance information;
  • provides guidance on the choice of performance indicators that show an entity's achievements with respect to its service performance objectives, disclosures about the basis of the reported information, and service performance-related narrative discussion and analysis; and
  • states that service performance information may be presented either in the same report as the financial statements or in a separate report, and identifies factors to consider when making that decision.

RPGs are considered 'good practice', are not mandatory, and do not need to be applied in order for a public sector entity to comply with International Public Sector Accounting Standards (IPSAS).

Please click for the following additional information on the IPSASB website:

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