The IPSASB of the International Federation of Accountants focuses on the accounting, auditing, and financial reporting needs of national, regional, and local governments, related governmental agencies, and the constituencies they serve. Mr Carruthers has served on the IPSASB since January 2010. Currently, he serves as chair of the IPSASB Task Force on Alignment of IPSAS and Public Sector Statistical Reporting. Please click for the press release on the IPSASB website.

The Chairmen of both bodies discuss the audience of IFRS, the characteristics of IFRS, and the organisation's three-tier structure, governance and funding. They explain that while investors are the primary audience of IFRS, the public at large is a stakeholder in the standard-setter’s work as accounting standards aim to portray economic reality and not shape it. They also comment on the wrong perceptions that IFRS is tilted towards fair value and that the IASB privileges commercial interests or certain types of investors or investment activities.

The publication is available free of charge on the IASB website.

The full agenda for the meeting can be found here. We will post any updates to the agenda, as well as our De­loitte ob­server notes from the meeting, on this page as they become avail­able.

Background

On 28 May 2014, the IASB issued IFRS 15 with an effective date of 1 January 2017 with earlier application permitted. After issuing the new revenue standard, which is substantially the same as the FASB's ASU 2014-09 Revenue from Contracts with Customers, the IASB and the FASB formed the joint Revenue Transition Resource Group to support the implementation of the new standard. As result of the discussions of the resource group, the IASB has proposed some targeted amendments to IFRS 15. As some entities may wish to apply these amendments at the same time as they first apply IFRS 15, the IASB has decided to postpone the effective date of the standard by one year to provide additional time for these entities to implement the amended standard. The FASB issued an ASU deferring the effective date of its revenue standard in August 2015.

Amendments

The amendments issued today merely aim at changing the mandatory effective date of IFRS 15 from annual periods beginning on or after 1 January 2017 to annual periods beginning on or after 1 January 2018. Earlier application of IFRS 15 continues to be permitted. Entities also continue to be permitted to choose between applying the standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application.

Additional information

Please click for:

• IASB press release (link to IASB website)
• Access to the amendments (link to IASB website)
• Summary of feedback to the exposure draft (link to IASB website)
• Need to know newsletter explaining the amendments
• Our UK Accounting Plus project page on Clarifications to IFRS 15

The report is based on an analysis of fiduciary duty and investment practices in eight countries - Australia, Brazil, Canada, Germany, Japan, South Africa, the UK and the US. The authors find that despite significant progress many investors are not yet considering ESG issues in their investment research and decision-making. The report examines the reasons why investors are not systematically integrating ESG as part of their fiduciary duty and finds that inconsistency in corporate reporting, including inadequate analysis of the financial materiality of ESG issues, is making it hard to assess investment implications. Among the practical practical actions proposed in the report is therefore also support for international harmonisation in this area.

Please click for a press release and the full report on the UN website.

In her speech entitled "Accountants and Capital Markets in an Era of Digital Disruption", Commissioner Stein discussed many ideas around technological change, transforming business models, and instantaneously available data. One of her points was the effect this might have on financial reporting. She commented that while there has been an effort over the last years to find a globally accepted, single set of high-quality financial reporting standards, which would be attactive in view of borderless business and instantaneous movement of data, the practical challenges of the task seem to be overwhelming: "Quite frankly, it often feels like we are searching for the Holy Grail. But I am not sure it is there." Commissioner Stein even questioned whether the convergence efforts so far have contributed to improved quality at all. She therefore advocated rather than trying to overcome differences to make use of technological developments to further timely access to information and bridge gaps in understanding:

I think we should go back to first principles. Information provided to investors must be relevant, reliable, and timely, to be decision-useful. How that is achieved may vary across cultures and reflect deeply entrenched political and economic structures. And that is appropriate – indeed, unavoidable. Advances in communications, technology, and data analytics can contribute to improvements in financial reporting, and this too can help bridge those gaps. The key in my mind is not necessarily to converge for the sake of convergence, but rather to expand timely access to information and provide for understanding differences.

Please click for access to the full text of the speech on the SEC website.

In the speech, Mr Prada outlined these three criteria as it applies to IFRS. First, he used the IFRS Foundation’s mission statement to present a clear and supported purpose. The mission statement states:

Our mission is to develop IFRS that bring transparency, accountability and efficiency to financial markets around the world. Our work serves the public interest by fostering trust, growth and long-term financial stability in the global economy.

Next, he noted that 116 jurisdictions require the use of IFRS and many other permit the use of IFRS on a voluntary basis. In addition, most of the countries that have adopted IFRS have done so without any modifications. This signifies wide and consistent use around the world.

Lastly, Mr Prada noted the positive results from reviews on the use of IFRS within Europe and other jurisdictions such as Australia, Canada and Korea. The reviews show that the application of IFRS “raised the quality and consistency of financial reporting, and brought benefits to companies and investors."

A transcript of Mr Prada's speech is available on the IASB’s website.

All three will take up their position from 1 September 2015.  David Cannon will also join the Monitoring Committee.

The Update reports on the meeting of the EFRAG Board on 1 September and the conference calls of the EFRAG Technical Expert Group (EFRAG TEG) on 13 and 27 August.  The Update also lists EFRAG publications issued in August:

• EFRAG’s draft comment letter in response to the IASB Exposure Draft ED/2015/4 Updating References to the Conceptual Framework (proposed amendments to IFRS 2, IFRS 3, IFRS 4, IFRS 6, IAS 1, IAS 8, IAS 34, SIC-27 and SIC-32); and
• EFRAG’s feedback report on the results of the pre-endorsement questionnaire on IFRS 9 Financial Instruments.

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