August

IASB launches second agenda consultation on its future work programme

11 Aug, 2015

The International Accounting Standards Board (IASB) launched today its second public consultation to seek broad public input on the strategic direction and overall balance of its future work programme. As the IASB's current agenda is very full as a result of the 2011 agenda consultation, the IASB's ability to consult is constrained by the current commitments in its work programme and the 2015 agenda consultation process is not as detailed as the previous process was.

Preface

In his introductory message, IASB Chairman Hans Hoogervorst notes that the agenda consultation is linked to the review of the structure and effectiveness of the organisation the Trustees of the IFRS Foundation launched in July 2015. The Trustees' questions with respect to the relevance of IFRS (including a possible extension of the IASB's remit beyond the current focus either in terms of the types of entity covered or the types of reporting) and consistent application are pertinent to any discussion of the IASB's agenda, and the IASB encourages stakeholders to consider both consultations jointly.

The IASB's approach to standard-setting

The first part of the agenda consultation paper is dedicated to the IASB’s approach to standard-setting since it has evolved significantly since the last agenda consultation. The IASB now pursues a standard-setting process that more clearly based on evidence. A detailed description is provided of the research phase, standards-level projects, maintenance and post-implementation reviews.

Current position and questions on the IASB’s work plan 2016–2020

The scope of the 2015 agenda consultation, which covers the IASB's work programme from mid-2016 to mid-2020, is limited by the expected level of standard-setting activity during that period. Therefore, the first section of the Request for Views (RfV) published today details the current situation. It describes the message received from the agenda consultation 2011 that stakeholders thought that the IASB should dedicate additional resources to the implementation and maintenance of IFRS. It also offers an overview of all projects currently on the IASB's agenda including expected completion.

The IASB concludes that the 2015 agenda consultation process is constrained by both the capacity of the IASB to take on additional technical projects and by the stakeholders' ability to deal with the change that results from standard-setting activities. Against this backdrop the IASB asks in the RfV whether constituents believe that the IASB's current balance of projects (major/implementation/research) is right, whether any additional projects should be added to the major projects work programme, whether enough implemenation support is provided, and whether the pace current of change is right.

A substantive part of the RfV is dedicated to the interplay of research with the work programme. The research programme, initiated as a response to the agenda consultation 2011, was established as a broad-based programme with a relatively low threshold for adding projects. Most of the projects now on the research programme were added at that time. The IASB has since introduced a more disciplined approach to the research programme and assigned the projects to exploratory, assessment and development phases. Still the research agenda is very full.

The IASB wants to ensure that all projects on the agenda fill an existing gap in IFRS, increase the relevance of IFRS, and/or support the consistent application of IFRS. It therefore asks respondents what priority they would ascribe to each topic on the research programme, whether there are there any topics that should be added to the research programme, and whether there are any topics that should be deleted from the research programme.

Frequency of agenda consultations

In the third section of the RfV, the IASB asks respondents whether a three-yearly agenda consultation process is appropriate in view of the fact that the time frame for developing and issuing standards is a long one. The IASB proposes that a five year interval between agenda consultations is more appropriate than the three year interval currently required.

Additional information

The IASB makes the agenda consultation document and several supporting documents and links available on its website:

 
Deloitte has published a Need to know newsletter outlining the contents of the Request for Views: Agenda Consultation 2015.

Comments on the consultation document are required by 31 December 2015.

 

Joint outreach event on the conceptual framework (Warsaw)

11 Aug, 2015

On 30 September 2015, the EFRAG, the Polish Accounting Standards Committee (KSR), and the IASB will host a joint outreach event on the Conceptual Framework in Warsaw.

The event is designed to offer an opportunity to discuss the proposals in the IASB Exposure Draft ED/2015/3 Conceptual Framework for Financial Reporting. The event will feature EFRAG Senior Technical Manager Rasmus Sommer, IASB Senior Technical Manager Yulia Feygina and a representative of the Center for Financial Reporting Reform of the World Bank.

Please click to access the formal invitation on the EFRAG website.

EFRAG draft comment letter on the IASB's exposure draft on updating references to the Conceptual Framework

11 Aug, 2015

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on IASB exposure draft (ED) ED/2015/4 “Updating References to the Conceptual Framework”.

On 28 May 2015, the IASB issued two EDs, ED/2015/3and ED/2015/4, forming together a new proposed Conceptual Framework and proposed upates of references to the framework. EFRAG published a document for public consultation on the proposed new Conceptual Framework early in July 2015 and later that month requested to extend the comment period related to the ED. The draft comment letter published now refers to the accompanying proposed amendments to IFRS 2, IFRS 3, IFRS 4, IFRS 6, IAS 1, IAS 8, IAS 34, SIC-27 and SIC-32 in order to update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework.

In the draft comment letter EFRAG expresses concerns about possible unintended effects of the proposed amendments and believes that the amendments should remain editorial in nature. It further questions the feasibility and the enforceability of the proposed amendments to IAS 8 as the exclusive link to the conceptual framework may be difficult to establish.

Comments on the draft comment letter are due by 26 October 2015.

For more information, see the press release and draft comment letter on the EFRAG’s website.

IASB proposes deferring the effective date of September 2014 amendments to IFRS 10 and IAS 28

10 Aug, 2015

The International Accounting Standards Board (IASB) has published an Exposure Draft (ED) of proposed amendments to IFRS 10 'Consolidated Financial Statements' and IAS 28 'Investments in Associates and Joint Ventures'. The amendments aim at deferring the effective date of the September 2014 amendments to these standards indefinitely until the research project on the equity method has been concluded. Comments are requested by 9 October 2015.

 

Background

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) as result of the work on one of the issues in relation to the transfers of assets between an investor and its associates or joint ventures the IASB was considering. Among the issues that were also considered at that time was the elimination of gains or losses arising from transactions between an entity and its associate or joint venture where an exposure draft (ED) had been announced for November 2014 but was never published. A second attempt at progressing with the issues in the November ED was undertaken in February 2015, now combined with addressing an identified conflict of the September 2014 amendments with IAS 28. However, in June 2015 the IASB decided that it wants to deal with the issues in the February ED more comprehensively as part of its research project on the equity method of accounting. To avoid that entities would need to change the way in which they apply IAS 28 twice in a short period of time the IASB also decided to defer the effective date of the September 2014 amendments until it has finalised amendments, if any, that result from the research project on the equity method.

 

Suggested changes

The amendments proposed in ED/2015/7 Effective Date of Amendments to IFRS 10 and IAS 28 aim at deferring the effective date of the September 2014 amendments to these standards indefinitely until the research project on the equity method has been concluded. The IASB suggests that earlier application of the September 2014 amendments should continue to be permitted.

 

Timeframe

Comments on the proposal are requested by 9 October 2015. The IASB will then consider the comments received to decide whether to proceed with this amendment. As the effective date of the 2014 amendments is currently 1 January 2016, the IASB would need to finalise its proposal 31 December 2015 in order to achieve the intended deferral.

 

Additional information

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IFAC translations better accessible

10 Aug, 2015

The International Federation of Accountants (IFAC) has updated and rebuilt its translations database of publications issued by IFAC and its independent standard-setting boards (IAASB, IAESB, IESBA, IPSASB).

The new interactive translations database is now searchable and results can be filtered by language, status (in progress, completed), body, and date of original publication in English. Translations into more than 50 languages are available. Please click to access the database on the IFAC website.

Alan Teixeira joins Deloitte

07 Aug, 2015

Alan Teixeira, for ten years one of the most experienced people working with the IASB, has decided to jump the fence and bring all his energy and experience to Deloitte as its newly appointed Global Director of IFRS Research.

For the last ten years he has been on the inside track at the IASB.  He was their longest serving Technical Director. He has been at the heart of the development of most of the recent standards.  More recently he engineered the IASB’s new research program, building a formidable track record in research and evidence-based work behind the standard-setting scene.

In this interview with Robert Bruce he talks about how the standard-setting world has changed, what challenges lie ahead, why he has joined Deloitte, and what he intends to achieve in his new role.

ICAS supports the FRC’s proposed new Assurance Standard

06 Aug, 2015

The Institute of Chartered Accountants of Scotland (ICAS) has published its comment letter on the Financial Reporting Council’s (FRC’s) exposure draft of a proposed new Assurance Standard over client assets.

Where an entity holds client assets the FCA's Supervisory Manual (SUP rules) require the CASS auditor, annually, to provide a Reasonable Assurance Client Assets Report and to report, among other things, on whether the entity has adequate systems in place to safeguard their client assets.  Where an investment business claims not to hold client assets, a Limited Assurance Report is required.

The Assurance Standard Providing Assurance on Client Assets to the Financial Conduct Authority has been developed to support and challenge auditors when providing these reports.  The proposed new Standard will contain requirements relating to: reasonable assurance engagements, limited assurance engagements, special reports and non-statutory client money trusts.

ICAS is supportive of the FRC proposal to issue a new Assurance Standard and comments that “the proposals will formalise the work already being undertaken by many firms preparing client asset reports”.  It also does not see that the proposed new Standard will lead to a compliance burden as many as many of its requirements are already required under existing professional and ethical standards”.

The full comment letter and responses raised to all questions in the invitation to comment is available on the ICAS website

Conduct Committee findings in relation to accounting under IAS 18 and IFRS 3

06 Aug, 2015

The Financial Reporting Council (FRC) has issued a press release of the findings of its Conduct Committee stemming from the review of the annual reports and accounts of Quindell Plc ("the company").

The principal issues included:

  • The timing and amount of revenue recognised for claims management and related services under IAS 18 Revenue.
  • The accounting for the purchase of the company by an unlisted shell company which was accounted for using acquisition accounting under IFRS 3 Business Combinations.  Following its review, the Conduct Committee concluded that the company was, for accounting purposes, the acquirer in the business combination and therefore that the transaction should have been accounted for as a reverse acquisition.
  • The accounting for share-based payment awards of an acquiree in a business combination which should have been accounted for as employee compensation rather than as part of the cost of the business combination in line with the requirements in IFRS 3.

The Conduct Committee press release serves as a reminder that revenue recognition is a continued area of focus for the Conduct Committee.  It also highlights that entities should review transactions carefully to identify the acquirer in an acquisition scenario and need to carefully assess whether share-based payment awards held by employees of an acquiree should be treated as part of the cost of the business combination or employee compensation as this can have a significant impact on the resultant accounting under IFRS 3.

Please click here for the full press release on the FRC’s website.

HMRC amends existing corporation tax legislation to deal with transitional adjustments arising on the adoption of IFRS 9 in respect of credit losses

06 Aug, 2015

Amendments have been made to existing tax legislation, coming into force on 7 August 2015, to deal with the tax treatment of credit losses as a result of the introduction of IFRS 9 ‘Financial Instruments’. The changes will affect all companies that incur credit losses; especially those in the banking sector.

The amendments to the Change of Accounting Practice Regulations 2004 (SI 2004/3271) require all transitional adjustments arising on first-time adoption of IFRS 9 for credit losses to be spread over 10 years.  They are effective for accounting periods commencing on or after 1 January 2015.  IFRS 9 is effective for accounting periods beginning on or after 1 January 2018; it has not yet been endorsed for use in the EU.

A Tax Information and Impact Note (TIIN) which sets out guidance and the impacts of the amendments has been published by HMRC.  This indicates that up to 15,000 business could be affected by the accounting change and those affected are expected to incur a “negligible” one off familiarisation cost on the change in the tax rules.

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IASB announces Conceptual Framework webcast series

06 Aug, 2015

The IASB has announced the creation of a webcast series on the proposed changes to its Conceptual Framework. Eight pre-recorded webcasts will be posted to the IASB's website weekly, starting today.

The on-demand webcasts will provide detailed discussions of each part of the IASB's May 2015 Exposure Draft, ED/2015/3 Conceptual Framework for Financial Reporting.

The webcast on Chapters 4 and 5 — the elements of financial statements: definitions and recognition is available today. For information about the upcoming webcasts and a complete archive, see the webcast page on the IASB's website.

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