IASB posts fifth webinar on insurance contracts standard

29 Apr, 2016

The IASB has posted the fifth instalment of its weekly webinar series on the upcoming insurance contracts standard.

The series, hosted by IASB member Darrel Scott, will discuss the following topics related to the upcoming insurance contracts standard:

  • The need for change and the history of the project. (issued 1 April)
  • What is an insurance contract? (issued 8 April)
  • Initial measurement of insurance contracts. (issued 15 April)
  • Subsequent measurement of insurance contracts. (issued 22 April)
  • Modifications to the general model: variable fee contracts. (issued 29 April)
  • Other modifications to the general model.
  • Presentation and disclosure.
  • Applying the Standard for the first time.

For more information as well as presentation slides, see the webinar page on the IASB’s website.

Report on payments to governments guidance published

29 Apr, 2016

The International Association of Oil and Gas Producers (IOGP) has published guidance to help companies in the extractive and logging industries meet the UK requirements on reporting payments to governments.

The Reports on Payments to Government Regulations 2014 were introduced into UK law in December 2014.  Under the Regulations, an entity will be required to prepare and deliver a report to Companies House if it is a UK registered company or partnership and meets the test to be either a large undertaking or a public interest entity (PIE), and is engaged in mining, oil and gas or primary forestry logging activities.  Such companies will be required to report publicly payments made to governments in the countries where they undertake extractive and logging operations.  The amended EU Transparency Directive extended the requirements to include entities with securities traded on an EU regulated market (both debt and equity), therefore including non-EU incorporated companies with securities admitted to trading on an EU regulated market.  This requirement was implemented by the Financial Conduct Authority in January 2015.

The guidance seeks to answer the following questions:

  • Which entities are under an obligation to prepare and deliver a report?
  • Does every entity have to prepare a report or can a consolidated report be prepared for a group?
  • Are any entities exempted from preparing reports under the UK Regulations?
  • What are the reporting requirements for entities that are subject to equivalent disclosure regimes?
  • Do the reports only cover payments made by the entities that have to prepare reports or do the reports cover payments made by other group entities?
  • Which business activities are within the scope of the UK Regulations?
  • Which types of payment have to be included in the report?
  •  Who has the obligation to include payment information in a report in situations where a payment is made on behalf of multiple parties?
  • Which government entities that receive payments have to be covered in the reports?
  • How should payments be attributed to projects?
  • When and how should reports be delivered? 

The guidance is available on the IOGP website.

Agenda and pre-meeting summaries for the May 2016 IFRS Interpretations Committee meeting

29 Apr, 2016

The IFRS Interpretations Committee will meet at the IASB's offices in London on 10 May 2016. The agenda for the meeting is now available. We have also posted our pre-meeting summaries for the meeting that allow you to follow the decision making more closely.

The committee will be considering papers related to 10 topics. Three of those topics (Agenda items 6, 8 and 10) were originally scheduled for discussion in the March meeting but the Committee did not have sufficient time to deal with these matters. The staff papers for those topics are unchanged from those posted in March.

For eight of the matters being discussed the staff are recommending that the Interpretations Committee not take them onto the agenda. If the Committee agrees with these recommendations it will finalise three items and issue tentative decisions for the other five:

  • Recommended final agenda decisions: Government assistance on research activities; derecognition of modified financial assets; and the recoverable and carrying amounts of a cash-generating unit in an impairment assessment.
  • Recommended tentative agenda decisions: impairment of an investment in an associate or joint venture; service concession arrangements with leased infrastructure; written puts over NCI; recovery of deferred tax on indefinite life intangible assets; and fees and costs included in the derecognition test for financial liabilities.   

The meeting will also include a discussion the comments received on a proposal to amend IAS 40 Investment Property in relation to the conditions for reclassifying property to, or from, investment property. The Interpretations Committee has been developing the amendment for the IASB. The staff are recommending that, subject to some modifications to the proposal, the Interpretations Committee ask the Board to finalise the amendments. 

The remaining item is the draft interpretation of IAS 21 The Effects of Changes in Foreign Exchange Rates, when there is advance consideration. Discussion of this item is likely to continue at future meetings of the committee.   

The full agenda for the meeting and our detailed pre-meeting summaries 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.

FRC issues Plan and Budget for 2016/2017

28 Apr, 2016

The Financial Reporting Council (FRC) has published its Plan and Budget for 2016/2017. The plan sets out the activities that the FRC will focus on in the first year of its new 2016/19 three year strategic programme.

During 2016/17 the FRC intends to focus on the following key priorities:

Audit regulation – Make effective use of its significant new role as UK competent authority under EU audit regulation and directive.

Audit quality – Promote audit quality so that by 2019 at least 90 percent of FTSE 350 audits require no more than limited improvements.

Corporate governance – Identify and promote good practice through its work on corporate culture. Promote effective engagement between boards and investors.

Corporate reporting – Help embed recent changes, influence the development of IFRS and help smaller listed and AIM companies with the quality of reporting.

Actuarial standards – Implement new framework of Technical Actuarial Standards. In 2017, consult publicly on the future of actuarial regulation.

Key projects will include:

  • Corporate governance: to continue to promote corporate governance and corporate cultures which support the long-term success of companies.  During 2016/17 the FRC will publish a report of the findings of its market-led initiative launched in 2015 in order to gather practical insight into corporate culture and the role of boards. This report will include observations, identify best practice and develop practical and market-led ‘how to’ resources. There will also be feedback published in 2016/17 on the discussion paper on ‘UK Board Succession Planning’ with the eventual aim of replacing the FRC’s Guidance on Board Effectiveness.
  • Investor stewardship: to focus on promoting effective investor engagement, including the monitoring of reporting by Stewardship Code signatories and encouraging advisers and intermediaries to help to facilitate engagement. The relevant parts of the EU Shareholders Rights Directive will also be implemented by the FRC. In addition the FRC will publish its annual assessment of the quality of engagement.
  • Corporate reporting: The FRC will direct their annual programme of reviews of corporate reports at “companies of economic significance where a material misstatement could have implications not just for the individual company but for confidence in the market as a whole”.  Priority sectors will be:
    • Extractive industries and companies using extractive companies
    • Companies servicing the public sector
    • Media businesses

There will be a “targeted review” of tax disclosures and this will be an area of corporate reporting that the FRC seeks improvements.  The FRC will follow up on its project to improve the quality of reporting by smaller listed and UK AIM quoted companies. The FRC will continue to influence the IASB’s agenda and work on its Conceptual Framework and standards on financial instruments, leasing and insurance.  In continuing to develop its ‘Clear & Concise’ initiative the FRC will assist the Department for Business, Innovation and Skills (BIS) in the UK implementation of the EU Non-Financial Reporting Directive. The Financial Reporting Lab is also expected to deliver its report on Business Model reporting and develop its project on the Digital Future.

  • Audit and assurance: The FRC will implement the Audit Regulation and Directive (ARD) “with a clear delineation of responsibility” between the FRC and the professional bodies.  It comments that it will seek to ensure that this new framework “serves the interests of investors in the reliability of financial statements; and that it supports the UK audit profession in delivering statutory audit to the necessary high standards and with close regard to the public interest”.  In 2016/17 the FRC will monitor and report on audit quality of approximately 140 individual engagements and will impose appropriate sanctions where poor quality has been identified.  In particular the FRC will pay particular attention to the quality of first year audits, revenue recognition policies, tax provisioning and the audit of IT controls.  Additionally the FRC will undertake thematic reviews of firms’ quality review processes, the use of data analytics on audits and firms’ root cause analysis of the findings from internal and external monitoring.

The full Plan and Budget and Levies 2016/17 contain effectiveness indicators that the FRC will use to assess progress against these objectives and additional areas of focus to the ones identified above.  The FRC also identify actions it will take to enhance actuarial regulation and standards and explain how these key activities for 2016/17 will be funded.

The full details of the plan and budget and press release can be obtained from the FRC website.  Our previous story on the draft plan and budget sets out further information on the background behind these areas of focus.

IFRS Foundation publishes first update to IFRS Taxonomy 2016

28 Apr, 2016

The IFRS Foundation has published 'Update 1 to the IFRS Taxonomy 2016'.

The taxonomy updates contain additional taxonomy concepts that reflect new IFRSs and improvements to IFRSs, technical updates, and corrections. This update includes taxonomy elements for the January 2016 final amendments to IAS 7 under the disclosure initiative.

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

IFRS Foundation appoints Director of Education

28 Apr, 2016

The IFRS Foundation has appointed Mr Matt Tilling as its new Director of Education responsible for the development of the organisation's educational activities.

Support of the consistent application of IFRSs through developing a wider range of educational activities is part of the Foundation's part strategic plan for 2016 and beyond. As of May 2016, Mr Tilling will be part of the newly-formed integrated team covering interpretations of standards, implementation, adoption support and educational activities. He was was previously based in Perth, Australia, where he split his time between professional accounting and academia.

Please click for the press release on the IASB website.

IASB's investor programme gains three new members

27 Apr, 2016

In December 2014, the International Accounting Standards Board (IASB) launched a new 'Investors in Financial Reporting' programme designed to foster greater investor participation in the development of International Financial Reporting Standards (IFRS). The number of investment organisations participating in the programme has now risen to 18.

As part of the programme, the investment firms commit to an ongoing dialogue, executive level support of the programme and access to analysts and portfolio managers. In return, the IASB has committed to providing an improved channel through which to influence standard development, developing investor-tailored webcasts, providing investor-friendly articles on proposed changes, providing access to IASB members and staff, and providing investor-focused education sessions.

Please click for press release announcing the increased membership on the IASB's website.

Agenda for the May 2016 Emerging Economies Group meeting

27 Apr, 2016

The agenda is available for the eleventh meeting of the IASB's Emerging Economies Group (EEG), which is being held in Istanbul on 3-4 May 2016.

The agenda is summarised below:

Tuesday 3 May 2016 (09:00-17:00)

  • Address by hosting country (Turkey)
  • Address by the EEG Chair
  • Presentations on Government grants
  • Discussion: Government grants
  • Administrative issues (topics for future meetings)

Wednesday 4 May 2016 (09:00-12:50)

  • IASB updates
  • IAS 16: Accounting for proceeds and costs of testing PPE
  • IAS 32: Classification of the liability for a prepaid card in the issuer’s financial statements
  • IAS 16 and IAS 38: Variable payments for asset purchases
  • 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.

Harmonisation of accounting standards improves cross-border mobility

25 Apr, 2016

New joint research from the University of Chicago and the Humboldt University of Berlin shows that the recent EU harmonisation of accounting and auditing standards had a discernible positive effect on accountants’ cross-border migration relative to other professions when compared with pre-harmonisation levels.

The analysis uses the fact that over the past decade, national accounting and auditing standards have to a large extent been replaced by international standards now common across the EU member states. This enabled the authors to study the extent to which professional standards constitute an economically significant barrier to cross-border migration and also whether harmonising standards can have a meaningful effect on cross-border mobility.

The authors find that after accounting and auditing standards were harmonised, there was a 17-24% increase in the movement of accountants relative to comparable professions, relative to pre-harmonisation mobility rate. They conclude that accounting harmonisation can have a meaningful effect on cross-border migration and thus can be used as a tool to improve the efficiency of the labour market.

A summary of the research with references to underlying papers is available free of charge through VoxEU portal of the Centre for Economic Policy Research. There is also an SSRN version of the main research paper that forms the backbone of the VoxEU article, likewise available free of charge.

The different effects of the adoption of IFRSs has been the object of extensive research. We'd especially like to point out the research of Professor Christian Leuz of the Booth School of Business of the University of Chicago (one of the authors of the article highlighted above) around the ‘Global Player Segment’ (GPS), which we reported on earlier.

IASB updates work plan

22 Apr, 2016

Following its April 2016 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 2015, unless the Board makes definite progress or has to make larger corrections. Of these, only a few can be identified since the previous work plan. However, the IASB has begun to indicate the month which issuance of exposure drafts or final standards may occur.

Changes to the work plan include:

Major projects

  • Conceptual framework is now expected to be issued after 6 months. Previously, no timeline was set for issuance.

Im­ple­men­ta­tion projects

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

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