November

IFRS Foundation invites comments on amended IFRS Taxonomy due process

04 Nov, 2015

The Trustees of the IFRS Foundation have published for public comment proposed amendments to the due process for the development and maintenance of the IFRS Taxonomy, which would give the IASB greater involvement and responsibility.

The main proposed amendments would require:

  • IASB approval of IFRS content reflecting new or amended standards;
  • review by three to five members of the IASB of content reflecting common practice;
  • formalisation of the enhancements that were implemented in January 2014 (creation of the IFRS Taxonomy Consultative Group and establishment of a process that seeks public consultation on IFRS Taxonomy updates that are released during the year); and
  • inclusion of enhancements that reflect current practices and processes, but are not documented in the Due Process Handbook for XBRL Activities.

Please click to access the press release and the invitation to comment on the proposed amendments on the IASB website. Comments are requested by 3 February 2016.

Agenda for the November 2015 IFRS Interpretations Committee meeting

04 Nov, 2015

The IFRS Interpretations Committee will meet at the IASB's offices in London on 10–11 November 2015. Again, we provide you with summaries of the agenda papers made available by the staff and point out the main issues to be discussed so that you can plan for upcoming meeting and follow the decision making more closely.

The Interpretations Committee will continue its discussions on four issues. Of these, the most substantial discussions are likely to be those that relate to variable payments for asset purchases (Tuesday 10:05 to 11:05) and the relationship between IFRS 9 and IAS 28 in terms of impairment testing of financial instruments that are “in substance” part of an entity’s net investment in an associate or joint venture (Tuesday 11:35 – 12:15). The Interpretations Committee is also expected to finalise one agenda decision and will consider five new issues. For all of the new issues, the recommendation is not to take the item onto the agenda.

The full agenda for the meeting and the pre-meeting summaries of the staff papers can be found here. We will update this page for any changes to the agenda, and our Deloitte observer notes from the meeting as they become available.

IFAC paper on the contribution of professional accountants to integrated thinking

04 Nov, 2015

The International Federation of Accountants (IFAC) has released 'Creating Value with Integrated Thinking: The Role of Professional Accountants'. The paper sets out a vision for integrated thinking and explores what professional accountants working in the public and private sectors can do in practical terms to facilitate it in their organisation, regardless of whether their organisation is planning to publish an integrated report.

The paper builds on the fundamental concepts and principles as captured by the IIRC's International Integrated Reporting Framework issued in December 2013. It explains how a connected approach supports the other four key areas of integrated thinking: an external value focus, integrated planning, effective governance and oversight, and integrated communications. The authors argue that with a broader view of an organisation, the CFO and the finance function can begin to ensure that all aspects involving people, processes, and systems are better connected while a disconnected approach can lead to important drivers of value being omitted from both information provided to management and external reports.

Please click to access the thought paper on the IFAC website.

Revenue transition resource group releases meeting agenda

03 Nov, 2015

The FASB and IASB have released the agenda for the next meeting of their joint revenue transition resource group (TRG), which will be held on 9 November 2015.

The purpose of the TRG is to seek feed­back on po­ten­tial issues related to im­ple­men­ta­tion of the boards’ new revenue stan­dard. By an­a­lyz­ing and dis­cussing po­ten­tial im­ple­men­ta­tion issues, the TRG will help the boards de­ter­mine whether they need to take ad­di­tional action, such as pro­vid­ing clar­i­fi­ca­tion or issuing other guid­ance.

The agenda for the meeting is as follows:

Monday, 9 November 2015

  • In­tro­duc­tory remarks and project updates.
  • Customer options for additional goods and services.
  • Pre-production activities.
  • Licenses — Specific application issues about restrictions and renewals.
  • Whether fixed odds wagering contracts are included or excluded from the scope of Topic 606.
  • Administration session.

Agenda papers for this meeting are avail­able on the IASB's Web site.

HMRC publishes draft guidance on the corporation tax treatment of interest-free loans and other non-market loans

03 Nov, 2015

HM Revenue and Customs (HMRC) has published draft guidance on the corporation tax treatment of interest-free loans and other non-market loans.

The draft guidance has been issued as a result of the change to the way that companies will need to account for financial instruments (if they were not adopting FRS 26 (IAS 39) Financial Instruments: recognition and measurement under old UK GAAP) when moving from old UK GAAP to new UK GAAP (FRS 101 Reduced Disclosure Framework or FRS 102 The Financial Reporting Standard applicable in the UK and the Republic of Ireland) or to full International Financial Reporting Standards (IFRSs).

One particular area where there can be significant difference from Old UK GAAP (where FRS 26 has not been applied) is in respect of non-interest bearing loans and in other cases where loans are entered into on non-market terms.

The accounting difference arises from the requirement in Section 11 of FRS 102 that a basic financial instrument should, in the case of a financing transaction, be measured on initial recognition in the accounts at the present value of future expected cash flows discounted at the market rate of interest. This is similar to the requirement in Section 12 of FRS 102 that non-basic financial instruments (and in IAS 39 for all financial instruments), be measured on initial recognition at the fair value of the instrument.

In most cases, the transaction price for entering into the financial instrument will be the same as its present value / fair value. However, in cases where the loan is not entered into on market terms, this is likely to lead to an accounting difference being booked on inception.

There are a number of accounting and tax rules that can be relevant, depending on the nature of the transaction. The draft guidance looks to cover the interaction of those rules and explain how this particular accounting issue should be treated for corporation tax purposes in the most common circumstances with a number of illustrative examples.

HMRC has also published two papers which provide an overview of the key accounting changes and the key tax considerations of moving from ‘old’ UK GAAP to either FRS 101 or FRS 102.  An updated paper for FRS 102 was published in October 2015.

The draft guidance is available on the HMRC website.

EFRAG publishes October 2015 issue of 'EFRAG Update'

03 Nov, 2015

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

The Update reports on the meeting of the EFRAG Board on 28 October, the EFRAG Technical Expert Group (EFRAG TEG) conference calls on 20 and 29 October and the EFRAG TEG meeting on 7-8 October.  The Update also lists EFRAG publications issued in October:

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

'What kind of accounting standards should the IASB write?'

02 Nov, 2015

The IASB makes available a paper by IASB member Mary Tokar published in the Journal of Accounting and Management Information Systems (JAMIS). The paper focuses on a long-standing challenge for standard setters: What kind of standards should they write?

In her paper, Ms Tokar splits the question into several subquestions:

  • How specific and prescriptive should standards be?
  • How should cost considerations influence requirements?
  • How should standard setters balance comparability with effective communication of an entity’s strategy and business model?
  • What are reasonable expectations for the use of judgement?
  • What is the interaction of the types of standards with the training – both skills and subject matter knowledge – of accountants?

Ms Tokar primarily uses revenue recognition and IFRS 15 to illustrate the subject and writes about comparability versus communication and the role of the business model, the role of judgement in financial reporting in general, mutual expectations, and the role of feedback. She concludes that there is no single answer to all the questions she touched upon but states:

The objective of IFRS is to provide useful information to users of financial statements. To achieve this goal, they need to be a communication tool and not a compliance exercise. Setting standards that support this goal requires the participation of many stakeholders, as does interpreting and applying the standards after they have been issued. Good faith application of judgement, seeking to realise the objectives of the standard and questioning established practice are all part of achieving this goal.

Please click to access the paper on the JAMIS website (please note that you need to use the Download button on the far right, otherwise you cannot access the full text of the paper). Ms Tokar's article is based on a speech that she gave at Bucharest University in June. The transcript of the speech is available on the IASB website.

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