This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.


FRC responds to IASB and IFRS Foundation consultations

01 Dec 2015

The Financial Reporting Council (FRC) has responded to the IASB's Request for Views on its 2015 Agenda Consultation. Although they have responded to the consultation, the FRC believes that the Trustees of the IFRS Foundation should agree a strategic direction for standard-setting before the IASB consults on an agenda. They have expressed this view to the IFRSF in response to their Review of Structure and Effectiveness.

In responding to the IASB's 2015 Agenda Consultation, the FRC makes the following key points.

  • Once the revised IFRS Conceptual Framework is issued, they strongly urge the IASB to continue to update specific areas of the Framework.
  • They support the IASB's Disclosure Initiative and consider that the main focus of the project should be on the upcoming Discussion Paper on Principles of Disclosure.
  • In terms of research projects, they believe that priority should be given to performance reporting research as part of the Primary financial sstatements project.
  • In the context of maintenance and implementation projects, they note that a large number of changes can be burdensome for preparers to implement and users to understand. They recommend that the IASB should consider this burden when assessing the merits of proposed amendments.

In response to the IFRS Foundation's Review of Structure and Effectiveness, the FRC makes the following broad observations.

  • They agree that the IFRS Foundations's current three-tier governance structure remains appropriate, although in their view it is important for the composition of the Monitoring Board to change to reflect both the balance of global financial activity and the adoption of (or commitment to adopt) IFRSs.
  • They consider that the Trustees should provide more direct oversight of both the strategic direction of the IASB's standard setting and its output. In particular, they should work to address the perception that the IASB's standards are too theoretically-based and not focussed on commercial reality by increasing their scrutiny of cost-benefit analyses.
  • They do not agree with the proposed increase in the number of "at large" Trustees, believing that the geographic distribution of Trustees should focus, though not exclusively, on those jurisdictions that apply IFRS or are committed to their adoption.
  • They support the goal of the IFRS Foundation being publicly funded and believe it is a positive step for the Foundation to be working to increase the number of accounting firms contributing to its funding.

The full response to the IASB consultation and the full response to the IFRS Foundation consultation can be found on the FRC website.

EFRAG explains its conclusion that IFRS 9 is not contrary to 'true and fair'

01 Dec 2015

Upon the request of the European Commission, the European Financial Reporting Advisory Group (EFRAG) has further explained how it has reached the conclusion contained in its endorsement advice that IFRS 9 is not contrary to the true and fair principle.

The letter does not provide additional elements of assessment on the subject but brings together in one place the elements, contained in the appendices to EFRAG’s endorsement advice on IFRS 9 Financial Instruments, that are relevant for the assessment of 'true and fair'.

Please click to access the letter with the explanations on the EFRAG website.

IFRS Foundation publishes first update to IFRS Taxonomy 2015

01 Dec 2015

The IFRS Foundation has published 'Update 1 to the IFRS Taxonomy 2015'.

The taxonomy updates contain additional taxonomy concepts that reflect new IFRSs and improvements to IFRSs, technical updates, and corrections.

For more information and access to the update, see the press release on the IASB’s website.

We comment on the Trustees’ review of structure and effectiveness

01 Dec 2015

We have responded to the IFRS Foundation Trustees' Request for Views document with proposals for further enhancing the structure and effectiveness of the organisation.

On the question of the IASB's remit, we also follow the cost argument and state that while not-for-profit organisations are within the IASB’s ‘private sector’ scope, resources at the IASB are scarce and should be concentrated on work in the for-profit sector. However, we would support the IFRS Foundation Trustees assuming oversight (not standard-setting) of activities in the public sector as many public sector entities are active in capital markets.

We disagree with the proposal to reduce the size of the IASB to 13 members as the IASB needs sufficient technical and standard-setting experience to have the ability to challenge the staff (and constituents) effectively. As it is, we already have a serious concern about the quality control over due process documents and issued IFRSs.

Finally, we think that what is missing from the consultation is a sense of context, how the IFRS Foundation Trustees see their current priorities in relation to a wider and more long-term view of financial and corporate reporting generally, and how and whether its structure and processes support that view.

Please click to access the full comment letter.

We comment on a number of tentative agenda decisions of the IFRS Interpretations Committee

30 Nov 2015

We have published our comment letters on IFRS Interpretations Committee agenda decisions on IAS 32, IAS 39, IFRS 5, IFRS 9, and IFRS 11, as published in the September 2015 IFRIC Update.

More information about the issues is set out below:

IssueAgenda decision supported?More information
IAS 32 Financial Instruments: Presentation — Classification of the liability for a prepaid card in the issuer’s financial statements yes
IAS 39 Financial Instruments: Recognition and Measurement — Separation of an embedded interest rate floor from a floating rate host contract in a negative interest rate environment yes
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations — To what extent can an impairment loss be allocated to non-current assets within a disposal group? yes
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations — How to present intragroup transactions between continuing and discontinued operation no
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations — Various IFRS 5-related issues yes
IFRS 9 Financial Instruments — Transition for hedge accounting yes
IFRS 11 Joint Arrangements — Remeasurement of previously held interests: Various transactions yes

You can access all our comment letters to the IASB, IFRS Foundation, and IFRS Interpretations Committee here.

Agenda for December 2015 Emerging Economies Group meeting

27 Nov 2015

The agenda is available for the tenth meeting of the Emerging Economies Group (EEG) and International Accounting Standards Board (IASB), which is being held in Riyadh on 1-2 December 2015.

The agenda is summarised below:

Tuesday 1 December 2015 (09:00-17:00)

  • Address by hosting country (Saudi Arabia)
  • Address by the EEG Chair
  • Presentation on the IASB Agenda consultation
  • Discussion: IASB Agenda consultation
  • Business combination under common control
  • Discussion (continued) : IASB Agenda consultation
  • Administrative issues (topics and venue for future meetings, video conference test, expanding new members)

Wednesday 2 December 2015 (09:00-12:20)

  • IASB updates
  • IFRIC exposure draft on uncertainty over income tax treatments
  • Open discussion on topics from members
  • Discussion and approval of the communiqué
  • Meeting summary

 Agenda papers from this meeting are available on the IASB's website.

Should the IASB extend its remit beyond the current focus of the organisation to develop standards; in particular for entities in the private, not-for-profit sector?

27 Nov 2015

On 7 July 2015, the Trustees launched the 2015 Constitution review. One of the questions asked was whether the IASB should extend its remit beyond the current focus of private sector, for-profit entities. With the comment letter deadline approaching (next Monday), two major positions emerge.

The proponents (among them AICPA, AASB, and MASB) argue from a conceptual viewpoint:

  • There clearly is a need for international financial reporting standards for private not-for-profit entities.
  • The IASB has the experience necessary for dealing with international standard-setting.
  • Even though circumstances differ between the for-profit and the private not-for-profit sectors, fundamentally the economics are not sector-specific.
  • Standard-setting across sectors and testing new concepts across all of them can result in better quality standards and decisions for the for-profit sector.
  • Some of the proponents even believe public sector standard-setting should be included in the IASB's responsibilities for the same reasons.

The opponents (among them ASCG, ESMA, FRC, IFAC, Keidaren, and XRB) mostly argue from the cost perspective:

  • Even though most acknowledge the existing lack of and the potential need for international financial reporting standards for private not-for-profit entities, they are not convinced that this means the IASB has to step in.
  • There are still significant gaps in financial reporting for listed entities that need to be addressed first.
  • The IASB simply doesn't have the funds and resources to take on additional responsibilites.
  • Changes to scope would also likely mean that changes would need to be made to the oversight arrangements, IASB membership and competencies, staff competencies and resources, and Advisory Council membership.

Please click for access to all comment letters on the 2015 Constitution review made available publicly so far on the IASB website.

Agenda for the December 2015 ASAF meeting changed

27 Nov 2015

The agenda for the upcoming meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 7-8 December 2015, has been updated. On the face of things, the change is minor, however, it could bear significance as it relates to IFRS 9 and the forthcoming standard on insurance contracts.

So far, the different effective dates of IFRS 9 and the new standard on insurance contracts were supposed to be dealt with as part of an omnibus discussion of current IASB projects at the end of the meeting. The issue has now been given a slot in its own right (Monday, 7 December, 16:15-17:30). According to the new agenda, the session is intended to focus only on the overlay approach; the deferral approach will not be discussed. An additional agenda paper for the session has been made available.

We have updated our agenda overview for the entire meeting to reflect the change.

EFRAG draft comment letter on the materiality exposure draft

27 Nov 2015

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on IASB exposure draft ED/2015/8 'IFRS Practice Statement - Application of Materiality to Financial Statements'.

In its draft comment letter, EFRAG expresses the view that the proposed guidance could be helpful, in particular in the context of disclosures, in order to provide a common ground for applying judgement in deciding which information is relevant for users and fostering thinking on how materiality is applied. EFRAG also believes that it is appropriate that the guidance takes the form of a practice statement as the essence of the proposed guidance is to foster the exercise of judgement, i.e. work on a mindset. Nevertheless, EFRAG believes that the draft practice statement should be drafted in a more concise and practical way and focus on the key steps of the process necessary to make decisions and exercise judgement on materiality.

Comments are requested by 15 February 2016. For more information, see the press release and the draft comment letter on the EFRAG website.

Recent sustainability and integrated reporting developments

27 Nov 2015

A summary of recent developments at the IIRC, the ACCA, the CFA Institute, and the Natural Capital Coalition.

The International Integrated Reporting Council (IIRC) announces that it will be launching the <IR> Academic Network on Wednesday, 16 December 2015 via a webinar. The session will include a welcome from the IIRC, an overview of current research on, opportunities for further research, and an introduction to the features of the Academic Network – including how to join. Please click to access the press release on the IIRC website.

The Association of Chartered Certified Accountants (ACCA) has published a report into the challenges to providing independent assurance over an integrated report.

The CFA Institute, a global association of investment professionals, has added Environmental Social & Governance Issues in Investments: A Guide for Investment Professionals to its portfolio of environment, social and governance (ESG) resources. The guide was developed in response to growing interest among investment professionals to better incorporate ESG issues in investment analysis, and serves as a comprehensive introduction to ESG considerations. Please click to access the press release on the CFA Institute's website.

The draft Natural Capital Protocol and Sector Guides have been launched for consultation at the World Forum on Natural Capital. The draft protocol and sector guides have been developed by the Natural Capital Coalition as a standardised framework for business to measure and value its impacts and dependencies on natural capital and to help them integrate this into their decision making. For more information, see the press release on the organisation's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.