During the meeting on 21 September, the IASB discussed a possible deferral in addition to the "overlay" tentatively decided on in July and transition reliefs on initial application of the new insurance contracts standard. The IASB decided on the details of the possible deferral, but was split on the final vote with seven members voting to defer the effective date of IFRS 9 for specified entities that issue contracts within the scope of IFRS 4 until the new insurance contracts standard is applied and seven members against. During today's session, the tie was resolved in favour of proposing a deferral.

The IASB also considered today whether there should be a time horizon on how long such a deferral would last - it was decided to propose a deferral until 2021. The deferral of IFRS 9 for insurers to 2021 will expire in 2020 if the IASB issues the new insurance contracts standard with an effective date of 2020. The IASB expects to publish a final standard in 2016. An Exposure Draft proposing both the overlay approach and the deferral approach will be published later this year.

For more information, see Deloitte's meeting notes from the 21 September and 23 September insurance contracts sessions as well as the press release on the IASB website.

The IASB followed the staff's recommendation and decided to extend the comment period for the Conceptual Framework ED from 150 to 180 days, ending on 25 November 2015. Please see the IASB Update for further information.

The Accounting Council commenced consideration of the IASB’s Conceptual Framework Exposure Draft at its July meeting and published its tentative views on ‘Stewardship, the business model, prudence and reliability’ and ‘The Statement of Profit or Loss and Other Comprehensive Income’ in July 2015.

The Accounting Council continued its consideration of the Conceptual Framework Exposure Draft at its September meeting.  Tentative views were expressed in the following areas:

• Elements;
• Recognition and derecognition;
• Measurement; and
• Presentation 

The draft Accounting Council advice is available on the FRC website.

Editorial corrections to consequential amendments affect the following standards:

• Annual Improvements to IFRSs 2012–2014 Cycle
• Equity Method of Separate Financial Statements (Amendments to IAS 27)

Editorial corrections affect the following individual pronouncements:

• Exposure Draft Remeasurement on a Plan Amendment, Curtailment or Settlement/Availability of a Refund from a Defined Benefit Plan (Proposed amendments to IAS 19 and IFRIC 14)
• 2015 Amendments to the IFRS for SMEs
• Annual Improvements to IFRSs 2012–2014 Cycle
• IFRS 9 Financial Instruments

Editorial corrections to A Guide through IFRS 2014, 2015 IFRS (Red Book) and 2015 IFRS (Blue Book) affect the following standards:

• IFRS 1 First-time Adoption of International Financial Reporting Standards
• IFRS 3 Business Combinations
• IAS 1 Presentation of Financial Statements
• IAS 27 Separate Financial Statements
• IAS 28 Investments in Associates and Joint Ventures

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The editorial corrections can be viewed on the editorial corrections page of the IASB's website.

Topics discussed at the meeting included:

• Significant increases in credit risk.
• Use of changes in the risk of a default occurring over the next 12 months when assessing for significant increases in credit risk.
• Measurement of expected credit losses for revolving credit facilities
• Forward-looking information.
• Status of Basel guidance on accounting for expected credit losses.

The next ITG meeting is planned for 11 December 2015.

The consultation follows a recent policy announcement by the Department for Business, Innovation and Skills (BIS) on the UK implementation of the EU audit reforms.  The proposed requirements will apply for financial years commencing on or after 17 June 2016.

The Financial Conduct Authority (FCA) has already issued its consultation on changes to audit committee requirements for companies with securities admitted to trading on an EEA regulated market.  If a firm falls within the scope of the FCA and PRA audit committee rules, it will have to follow both sets of rules.

The key proposals contained within the PRA consultation paper (CP34/15: Implementing audit committee requirements under the revised Statutory Audit Directive) are:

Scope

• Audit committees will generally be required for: CRD credit institutions; Solvency II insurers, the Society of Lloyd's and managing agents; and UK designated investment firms
• Subsidiaries of EEA parents that have an audit committee in accordance with article 39 do not need to have an audit committee, unless those subsidiaries are significant. If the non-executive directors (NEDs) of the significant subsidiary are the same as those of the parent, then the significant subsidiary does not need to have an audit committee.

Structure

• The audit committee must be a sub-committee of the board.

Membership

• The audit committee of a significant firm should consist entirely of independent non-executive directors (independent NEDs). For other firms (lower impact firms) audit committees must consist entirely of NEDs provided that a majority, and the chairman, are independent NEDs.

Functions

• The audit committee must carry out the responsibilities prescribed by article 39. In addition, the audit committee of a lower impact firm is allowed to be combined with, and carry out the functions of, the risk committee.

The Financial Reporting Council (FRC) and BIS will be separately consulting on other aspects of the UK implementation of the EU Audit Directive, including on aspects related to governance.

Comments are invited until 18 December 2015.

Click for:

• CP34/15: Implementing audit committee requirements under the revised Statutory Audit Directive (link to PRA website).
• Our previous news item on the EU Audit Directive
• Our previous news item on the FCA consultation
• Our UK Accounting Plus project page on EU audit reform

The Principles provide recommendations for national policymakers on shareholder rights, executive remuneration, financial disclosure, the behaviours of institutional investors and how stock markets should function. 

The Principles were originally developed by the OECD in 1999 and last updated in 2004. The 2015 version addresses developments in corporate governance and the rapidly changing corporate and financial landscape. 

The revised Principles maintain many of the recommendations from earlier versions as continuing essential components of an effective corporate governance framework. They also introduce some new issues and bring greater emphasis or additional clarity to others.  

The Principles are non-binding.  They are intended to “provide a robust but flexible reference for policy makers and market participants to develop their own frameworks for corporate governance”. 

The Principles provide guidance through recommendations and annotations across six areas (taken directly from the Principles): 

Principle 1 

The corporate governance framework should promote transparent and fair markets, and the efficient allocation of resources. It should be consistent with the rule of law and support effective supervision and enforcement. 

Principle 2 

The corporate governance framework should protect and facilitate the exercise of shareholders’ rights and ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights. 

Principle 3 

The corporate governance framework should provide sound incentives throughout the investment chain and provide for stock markets to function in a way that contributes to good corporate governance. 

Principle 4 

The corporate governance framework should recognise the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises. 

Principle 5 

The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company. 

Principle 6 

The corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board, and the board’s accountability to the company and the shareholders. 

Further information and a full version of the Principles are available on the OECD website.

The document was prepared to provide greater clarity and broaden the general understanding of the governance functions supporting standard-setting and reflects the current state of the standard-setting model in audit and assurance (through the International Auditing and Assurance Standards Board, IAASB), ethics (through the International Ethics Standards Board for Accountants, IESBA), and education (through the International Accounting Education Standards Board, IAESB) for accountants.

Please click to access the document, which was produced at the request of the Monitoring Group as recommended in the 2013 Monitoring Group Statement on Governance, on the IFAC website.

In April 2014, the IPSASB released a consultation document on its long term strategy and work plan for public sector standards. The final strategy now published reveals that the proposed single strategic objective for the IPSASB was supported by constituents and has been adopted for the IPSASB activities from 2015 forward:

In addition, that IPSASB has approved eight projects to be added to the work plan starting in 2015 and 2016:

• Public Sector Measurement;
• Heritage Assets;
• Infrastructure Assets;
• Revenue;
• Non-Exchange Expenses;
• Limited scope review of the Cash Basis IPSAS
• Limited scope review of IPSAS 25 Employee Benefits; and
• Consequential amendments arising from Chapters 1-4 of the IPSASB Conceptual Framework.

The objective of the revenue project is to develop IPSAS dealing with revenue that are consistent with the IPSASB Conceptual Framework, and to the extent appropriate, IFRS 15 Revenue from Contracts with Customers. It will consider the extent to which the performance obligation approach in IFRS 15 is appropriate for transactions in the public sector.

Please click to access the final strategy document Leading through Change on the IPSASB website.