2016

IASB begins webinar series on upcoming insurance contracts standard

01 Apr, 2016

The IASB has started a weekly webinar series, hosted by IASB member Darrel Scott, which provides an overview of its upcoming standard on insurance contracts.

The series will discuss the following topics related to the upcoming standard:

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

For more information, see the webinar page on the IASB’s website.

FSB task force on climate-related financial disclosures publishes first report

01 Apr, 2016

The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders has published its first report.

In a first phase, the TCFD has conducted a high-level review of the existing landscape of climate-related disclosures — including current voluntary and mandatory climate-related disclosure regimes — to identify commonalities, gaps, and areas for improvement and highlights these in its first report. The report also defines the scope and objectives of its work for the second phase where the TCFD will target climate-related financial disclosures pertaining to near-, medium- , and long-term physical and nonphysical impacts faced by both nonfinancial companies and the financial sector. Finally, the task force has identified seven fundamental principles that are critical for an effective regime for climate-related financial disclosure and that will underpin the TCFD's recommendations to be developed in phase two for enhancing climate-related disclosures and providing an enduring framework:

  • present relevant information;
  • be specific and complete;
  • be clear, balanced, and understandable;
  • be consistent over time;
  • be comparable among companies within a sector, industry, or portfolio;
  • be reliable, verifiable, and objective; and
  • provide on a timely basis.

Please click to access an executive summary and a full version of the report on the TCFD website. The website has been newly set up to provide the public with access to TCFD materials and offer greater transparency on the TCFD's work. It also features a public consultation on the TCDF's work in the second phase.

IASB Chairman discusses lease accounting

01 Apr, 2016

IASB Chairman Hans Hoogervorst has written an article “Shining the Light on Leases” that discusses the problems with current lease accounting requirements and how the IASB addresses these in its new standard IFRS 16 'Leases'.

In his article, Mr Hoogervorst acknowledges that IFRS 16 will result in a substantial change to many companies’ balance sheets and "will not be popular with everyone". However, he notes, the IASB has looked at all possible risks carefully and has concluded that the risks and costs are manageable. He states that:

  • IFRS 16 will not put the leasing industry out of business and leases will remain attractive as a flexible source of finance. 
  • The IASB believes that is is highly unlikely that the improved visibility of lease obligations will lead to significant effects in terms of the cost of borrowing and debt covenants.
  • There will be costs involved in updating systems to implement IFRS 16.
  • The IASB is convinced that the benefits of IFRS 16 will greatly outweigh its costs.

Please click to access the full text of Mr Hoogervorst's article, which first appeared on IFAC Global Knowledge Gateway, on the IASB website.

HM Treasury publishes guidance to assist with sustainability reporting in the public sector

31 Mar, 2016

HM Treasury has published guidance to assist those in the public sector in meeting sustainability reporting requirements.

The guidance sets out minimum requirements that must be met, provides some best practice guidance and also indicates the underlying principles that should be adopted in preparing the information.

The guidance is applicable to all central government bodies that fall within the scope of the Greening Government Commitments (i.e. departments, non-ministerial departments, agencies and Non departmental public bodies) that produce annual reports and accounts in accordance with HM Treasury’s Government Financial Reporting Manual (FReM) who must report on sustainability (unless exempt from doing so).

The guidance is not applicable to the devolved governments of Northern Ireland, Scotland and Wales and local government entities.

The guidance is available on the HM Treasury website.

IFRS Foundation appoints new Trustee

31 Mar, 2016

The IFRS Foundation has announced the appointment of Guillermo Babatz as Trustee of the IFRS Foundation. The appointment will begin on 1 April 2016.

Mr Babatz is Managing Partner at Atik Capital, S.C., and was the former executive chairman of Comisión Nacional Bancaria y de Valores (CNBV), the Mexican banking and securities commission. Mr Babatz appointment fill one of the two vacancies to represent North America.

For more in­for­ma­tion, see the press release on the IASB's website.

EFRAG publishes March 2016 issue of 'EFRAG Update'

31 Mar, 2016

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during March 2016.

EFRAG comment letter and feedback statement on transfers of investment property

31 Mar, 2016

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter on the International Accounting Standard Boards (IASB’s) exposure draft ED/2015/9 ‘Transfers of Investment Property: Proposed amendment to IAS 40 ’. EFRAG has also issued the related feedback statement summarising the main comments received from constituents invited to respond to its draft comment letter.

EFRAG supports the proposed amendments and believes they will reduce divergence in practice and improve the quality of financial reporting under IFRS in regard to investment properties.

The press release, comment letter and feedback statement are available on the EFRAG website.

PRA issues supervisory statement on good board governance for PRA-regulated firms

31 Mar, 2016

The Prudential Regulation Authority (PRA) has published a supervisory statement which identifies some key aspects of good board governance for boards to consider to which the Prudential Regulation Authority (PRA) attaches particular importance and pays close attention to in the course of its supervision.

The PRA consulted on a draft supervisory statement in May 2015 and, concurrently with publishing the supervisory statement, has also issued a policy statement which sets out responses to feedback received on the May consultation.

Consistent with the May consultation paper CP 18/15 Corporate Governance: Board responsibilities, the supervisory statement is relevant for all PRA-regulated firms and provides guidance on the PRA’s expectations relating to:

  • Setting strategy;
  • Culture;
  • Risk appetite, risk management and internal controls;
  • Board composition;
  • The respective roles of executive and non-executive directors;
  • Knowledge and experience of non-executive directors;
  • Board time and resources;
  • Management information and transparency;
  • Succession planning;
  • Remuneration;
  • Subsidiary boards; and
  • Board committees

The PRA indicates that the supervisory statement “is not intended to provide a comprehensive guide for boards of what constitutes good or effective governance”.  It indicates that such guidance is contained within other sources such as the Financial Reporting Council’s UK Corporate Governance Code and the Corporate Governance Principles for Banks, published by the Basel Committee on Banking Supervision. 

The policy statement PS13/16 Corporate Governance: Board responsibilities and supervisory statement SS5/16 Corporate Governance: Board responsibilities are available on the PRA website.

2016 IFRS XBRL taxonomy issued

31 Mar, 2016

The IFRS Foundation has issued its 2016 IFRS Taxonomy. The IFRS Taxonomy is a translation of IFRSs (International Financial Reporting Standards) into XBRL (eXtensible Business Reporting Language).

The IFRS Taxonomy 2016 is consistent with IFRSs as issued by the IASB at 13 January 2016 and incorporates the finalised taxonomy update 1 and the finalised taxonomy update 2, both published by the IFRS Foundation in December 2015. Final changes resulting from the proposed taxonomy update 3 published in January 2016 have been incorporated directly into the IFRS Taxonomy 2016.

On 13 April 2016, the IFRS Taxonomy team is holding a webinar session to answer questions about the IFRS Taxonomy 2016.

For more information, see the press release and the IFRS Taxonomy 2016 page on the IASB's website.

We comment on FRED 63 — Draft amendments to FRS 101 'Reduced Disclosure Framework' - 2015/16 cycle

31 Mar, 2016

We have published our comment letter on the Financial Reporting Council's (FRC's) Financial Reporting Exposure Draft (FRED) 63 Draft amendments to FRS 101 'Reduced Disclosure' Framework - 2015/16 cycle.

As stated in the comment letter, we support the amendments proposed in the FRED however we highlight the need for the FRC to clarify the current requirement to notify shareholders about their right to object to the use of FRS 101.

Please click to access the full comment letter.

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