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2015

EFRAG TEG appointments and reappointments

21 Dec 2015

The Board of the European Financial Reporting Advisory Group (EFRAG) has announced the appointment of four (new) members of its Technical Experts Group (TEG).

The new EFRAG TEG Members are Søren Kok Olsen, auditor from Denmark, and Nicolas de Paillerets, French preparer. Christian Chiarasini, French auditor, and Serge Pattyn, Belgian user, have been reappointed. In addition, Nicklas Grip, banking and financial instruments’ specialist from Sweden, has been appointed new TEG vice-Chair. All (re)appointments will run from 1 April 2016 when the new EFRAG TEG Chairman and EFRAG CEO will also take office.

Please click for the press release announcing the appointments on the EFRAG website.

European Union formally adopts amendments to IAS 1

21 Dec 2015

The European Union has published a Commission Regulation endorsing the December 2014 amendments to IAS 1 that clarify the standard to address perceived impediments to preparers exercising their judgement in presenting their financial reports.

Commission Regulation (EC) No 2015/2406 of 18 December 2015 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council published in the Official Journal on 19 December 2015 adopts Disclosure Initiative (Amendments to IAS 1) issued by the IASB in December 2014. The EU effective date is the same as the IASB's effective date (annual periods beginning on or after 1 January 2016 with earlier appication permitted).

In addition, the EU's endorsement is reflected in the updated EFRAG IFRS endorsement status report.

IASB updates work plan

21 Dec 2015

Following its December 2015 meeting, the IASB has updated its work plan. As mentioned before, directly tracing the Board's progress on the individual projects has become impossible since the change of the work plan format in July, unless the Board makes definite progress or has to make larger corrections. Of these, only a few can be identified in the December work plan.

On major projects, the only change the Board notes is that a decision on the direction of the Disclosure initiative project on Materiality is now expected within 6 months (was: after six months). For all other projects the next project steps may or may not have been pushed back by one month since the last work plan update.

Updates regarding the implementation projects are:

There are no updates to the research projects.

The revised IASB work plan is available on the IASB's website.

ICAEW comments on FRED 62 — Draft amendments to FRS 102 – Fair value hierarchy disclosures

21 Dec 2015

The Institute of Chartered Accountants in England and Wales (ICAEW) has published its comment letter on the Financial Reporting Council’s (FRC’s) Financial Reporting Exposure Draft (FRED) 62 ‘Draft amendments to FRS 102 – Fair value hierarchy disclosures’.

FRED 62 was published in November 2015.  The FRC has received feedback that amending the fair value disclosure requirements applicable to financial institutions and retirement benefit plans will reduce the costs of complying with Financial Reporting Standard (FRS) 102 and allow these entities to provide information to users that is more consistent with EU-adopted IFRS. This should also make it easier for users to make comparisons between the financial statements of these entities and those applying EU-adopted IFRS.  

The ICAEW supports the proposed amendments.  It comments that the proposed amendments “would improve the comparability of financial statements prepared under FRS 102 with those prepared under EU-adopted IFRS”.  It recommends that the amendments are finalised without delay.

The full comment letter is available on the ICAEW website.

We comment on the FRC Exposure Draft on Going Concern for non-Code companies

18 Dec 2015

We have published our comment letter on the Financial Reporting Council Exposure Draft: Guidance on the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity Risks. We generally support the draft guidance, although we believe that small and micro-companies should be more clearly excluded from its scope.

Our full comments on the questions raised in the Exposure Draft are contained within the full comment letter which can be downloaded from our publications page.

Basel Committee finalises guidance on accounting for expected credit losses

18 Dec 2015

The Basel Committee on Banking Supervision has issued final guidance on accounting for expected credit losses. Comprising 11 fundamental principles, the guidance sets out supervisory expectations for banks relating to sound credit risk practices associated with implementing and applying an expected credit loss (ECL) accounting framework.

The guidance is structured around 11 principles:

  • A bank's board of directors and senior management are responsible for ensuring appropriate credit risk practices.
  • A bank should adopt, document and adhere to methodologies that allow for appropriately assessing and measuring the level of credit risk on all lending exposures.
  • A bank should have a process in place to appropriately group lending exposures on the basis of shared credit risk characteristics.
  • A bank's aggregate amount of allowances should be adequate and consistent with the objectives of the relevant accounting requirements.
  • A bank should have policies and procedures in place to appropriately validate its internal credit risk assessment models.
  • A bank's use of experienced credit judgment is essential to the assessment and measurement of expected credit losses.
  • A bank should have a sound credit risk assessment and measurement process that provides it with a strong basis for assessing and pricing credit risk, and accounting for expected credit losses.
  • A bank's public reporting should promote transparency and comparability by providing timely, relevant and decision-useful information.
  • Banking supervisors should periodically evaluate the effectiveness of a bank's credit risk practices.
  • Banking supervisors should be satisfied that the methods employed by a bank to determine allowances produce a robust measurement of expected credit losses under the applicable accounting framework.
  • Banking supervisors should consider a bank's credit risk practices when assessing a bank's capital adequacy.

The scope of the guidance is accounting for expected credit losses broadly, so it covers IFRS 9 Financial Instruments as well as all other accounting frameworks (including impending changes to US GAAP). However, there is an appendix specifically dealing with IFRS 9.

Please click for access to the final guidance and a corresponding press release on the website of the Bank for International Settlements (BIS).

Call for papers: Third IASB Research Forum

18 Dec 2015

The IASB Research Forum will form part of the 2016 Contemporary Accounting Research (CAR) conference that will take place in Waterloo, Ontario, Canada on 15 and 16 October 2016.

Topics that might be addressed by researchers who want to submit papers are, among others, the following:

  • issues the IASB must resolve in any of its standard-setting, conceptual framework and research projects;
  • issues related to the IASB’s post-implementation reviews of standards;
  • issues raised in the IASB’s conceptual framework project, including issues raised explicitly in the Exposure Draft published in May 2015.

Please click here for further information on the Canadian Academic Accounting Association's website.

Summary of November GPF meeting now available

18 Dec 2015

Minutes of the meeting of the Global Preparers Forum (GPF) with representatives of the International Accounting Standards Board (IASB) held in London on Wednesday, 4 November 2015 are now available.

The following are some of the highlights of the matters discussed at the meeting:

  • IASB Update. One of the concerns of the GPF members was the interaction of IFRS 9 and the forthcoming standards on insurance. The Technical Director described the solutions available through the existing IFRS 4 and the potential solutions available through the overlay and deferral approaches the IASB proposed in December 2015.
  • IFRS Interpretations Committee Update. The meeting discussed:
    • IFRS 9/IAS 28 — Is measurement of long-term interests in associates and joint ventures, including impairment, in accordance with IFRS 9, IAS 28, or both?
    • IAS 16: Accounting for proceeds and costs of testing of PPE
    • Activities of the Interpretations Committee in general
  • Concepual Framework. The GPF discussed some of the proposals in the exposure draft, especially around (a) the definitions of assets and liabilities, (b) concepts for recognition of assets and liabilities, and (c) concepts for derecognition of assets and liabilities.
  • IFRS Advisory Council: Role and recent activities. GPF members discussed the Council’s recent advice to the IFRS Foundation, and agreed that consistency of implementation and relevance of IFRS are some of the key areas to consider.
  • IASB Agenda Consultation and Trustees’ Review of Structure and Effectiveness of the IFRS Foundation. The GPF members were asked about the priorities they would ascribe projects on the IASB’s research agenda, whether the IASB provided the right mix of implementation support, and whether the IASB’s work plan delivered change at the right pace. Members discussed whether the IASB had issued too many narrow-scope amendments to IFRS since the last agenda consultation and some thought that change in general had been too rapid and that preparers wanted a period of calm. In the context of the Trustees' review the GPF discussed the relevance of IFRS, consistent application of IFRS, and governance and funding issues.
  • Fair Value Measurement: Unit of Account. GPF members were asked to provide their views on the relevance of the measurement proposal included in the exposure draft (that the fair value measurement of quoted investments should be based on the product of the quoted price and the quantity of financial instruments (P × Q)). Many GPF members thought that P × Q was not a relevant measure for quoted investments.
  • Disclosure Initiative: Materiality Practice Statement. GPF members supported the explanatory nature of the draft practice statement, however, they were were not sure whether it would discourage treating the specific disclosures requirements in standards as a checklist, disclosure of immaterial information or the omission of material information not captured by a specific requirement.

The full report is available on the IASB website.

ITG discusses implementation of impairment requirements in IFRS 9

18 Dec 2015

On 11 December 2015, the IFRS Transition Resource Group for Impairment of Financial Instruments (‘ITG’) held its third meeting to discuss implementation issues arising from the new impairment requirements following the issue of IFRS 9 'Financial Instruments' (2014).

Topics discussed at the meeting included:

  • Meaning of current effective interest rate
  • Collateral and other credit enhancements and the measurement of expected credit losses
  • Inclusion of cash flows expected from the sale of a defaulted loan in the measurement of expected credit losses
  • Assessing for significant increases in credit risk for financial assets with a maturity of less than 12 months
  • Measurement of the loss allowance for credit impaired financial assets
  • Presentation of the loss allowance for financial assets measured at amortised cost
  • Scope of paragraph 5.5.20 of IFRS 9
  • Measurement of expected credit losses for charge cards
  • Period over which to measure expected credit losses for revolving credit facilities
  • Incorporation of forward looking scenarios

This meeting was the final meeting of the ITG; further meetings beyond 2015 have intentionally not been planned.

For more information, and a summary of the discussions at the meeting, see Deloitte’s Need to know.

Latest IASB 'Investor Update' issued

18 Dec 2015

The IASB has issued the eighth edition of its newsletter 'IASB Investor Update' to provide investors with quick access to information on current accounting and financial reporting issues.

This issue features:

The IASB Investor Update newsletter is available on the IASB's website.

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