EFRAG broadly agrees with the IASB proposals; however, it is concerned that “amending IAS 12 Income Taxes without providing guidance on how to determine whether the payments are distributions of profits may not lead to a significant improvement in consistent application compared to the current situation” and that the short time period between issuing the amendments to IAS 28 Investments in Associates and Joint Ventures with the purposed effective date of 1 January 2018 could present issues.  EFRAG therefore proposes an effective date of 1 January 2019 with earlier application permitted with transitional provisions for entities that will not be able to apply the amendments at the same time as they apply IFRS 9 Financial Instruments. 

EFRAG is supportive of addressing proposed amendments to IAS 28 before IFRS 9 becomes effective and considers that the proposed amendments “to be a practical solution, in that they codify an acceptable interpretation of existing guidance and do not involve extensive changes to that guidance”.  EFRAG recommends guidance on the application of the proposed amendments to IAS 28. 

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

There are five topics on the agenda. One session will be held jointly with the FASB.

Monday 24 April

The meeting will start with a brief update on the strategy for supporting the implementation of the forthcoming IFRS 17 Insurance Contracts, including the objective of the Transition Resource Group the IASB plans to establish.

This will be followed by an education session addressing concerns expressed during the February meeting about some aspects of the Rate-regulated Activities project.

In the afternoon session the IASB will be joined by the FASB, by video, for an education session on the FASB’s Financial Performance Reporting project.

Thursday 27 April

The meeting continues on Thursday afternoon with some IFRS Implementation Issues and further discussions on a proposal to amend the definition of a business in IFRS 3 Business Combinations.

The implementation session will consider the Interpretation Committee’s tentative decision on fees included in the ‘10 per cent’ test for the purpose of derecognition; completing the amendments to IAS 19 and IFRIC 14; and analysing feedback on amendments to IFRS 3 and IFRS 11 for previously held interests.

The discussion of the definition of a business will focus on whether the screening test should be modified in light of comments received.

Our pre-meeting summaries are available on our April meeting note page and will be supplemented with our popular meeting notes after the meeting.

The main drivers for the revisions are:

• revisions to UK auditing standards (ISAs (UK));
• changes to UK accounting standards (Financial Reporting Standard (FRS) 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland) and the revision of the pension Statement Of Recommended Practice (SORP);
• continuing developments in regulatory codes and guidance issued by The Pensions Regulator (TPR);
• changes in relevant legislation; and
• the increase in master trusts in the pension sector. 

The FRC intends to issue a final version of the revised Practice Note in the autumn and at the same time will withdraw Practice Note 22 – The Auditors’ Consideration of FRS 17 – Retirement Benefits – Defined Benefit Schemes. 

Comments are requested until 30 June 2017.

The press release, consultation and impact assessment and exposure draft are available on the FRC website.

The Board will discuss the following:

• Insurance contracts
• Rate-regulated activities
• Financial performance reporting (education session with FASB)
• IFRS implementation issues
• Definition of a business

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries as well as observer notes from the meeting on this page as they become available.

ESMA are generally supportive of proposed amendments that would affect three IFRSs: IAS 12 Income Taxes, IAS 23 Borrowing Costs and IAS 28 Investments in Associates and Joint Ventures. However they suggest that the IASB consider introducing additional clarity in the following areas:

• on how to determine when payments on equity instruments qualify as dividends, in relation to the proposed amendments to IAS 12; and
• on the definition of long-term interests and the interaction with IFRS 9 Financial Instruments, in relation to the proposed amendments to IAS 28.

The full comment letter is available on the ESMA website.

The definitions promote harmonisation in the measurement and application of non-performing exposures and forbearance, which are two important measures of asset quality, in order to foster consistency in supervisory reporting. The guidelines complement the existing accounting and regulatory framework for asset categorisation.

Please click to access the BCBS guidelines on the website of the Bank for International Settlements (BIS).

The updated guidance has been published by the Office of the Scottish Charity Regulator (OSCR), the Charity Commission for England and Wales (CCEW) and the Charity Commission for Northern Ireland (CCNI). In all three of these jurisdictions, auditors and other examiners are legally required to report any matters of material significance to the regulator. The new guidance adds two new areas for reporting in this area:

1. If an auditor has concerns regarding a charity’s accounts and issues a modified audit opinion report or qualified independent examiner’s report.
2. Where an auditor has concerns that conflicts of interests or related party transactions have not been properly managed or declared.

The revised guidance is applicable for accounting periods beginning after 1 May 2017.

For the press release click here.

For the revised list of matters of material significance click here.

As a consequence of the financial crisis, the G20 launched a comprehensive programme of financial reforms and the FSB has coordinated the development of these reforms and reported annually on the progress with the most recent report published in August 2016.

The proposed new framework is intended to guide analyses of whether the core financial reforms are achieving their intended outcomes and to help to identify any material unintended consequences that may have to be addressed.

Please click for a press release and the consultation paper on the FSB website. The FSB welcomes comments and responses to the questions set out in the consultation by 11 May 2017.

The letter highlights the following key areas of focus and indicates what investors should be looking out for: 

• The Strategic report. The letter:
  • covers business model reporting and references to the Financial Reporting Lab’s report in October 2016 which indicated that there is room for improvement in business model reporting.
  • indicates that the FRC will “continue to monitor how alternative performance measures (APMs) (or ‘non-GAAP measures’) are used to report performance”. The FRC says that investors “should expect to see disclosures that give a clear and complete understanding of the APMs presented, how they are calculated and why they are useful and, where relevant, reconciliation to amounts presented in the financial statements”.  The FRC highlights its Frequently Asked Questions on APMs and its thematic study on the use of APMs in interim reports in November 2016.
  • covers risk reporting and viability statements and highlights that companies should be providing “clear disclosure of why the period of assessment selected is appropriate for the particular circumstances of the company, what qualifications and assumptions were made, and how the underlying analysis was performed”.
  • covers Brexit and highlights that companies should consider the impact of Brexit on their business with respect to risks and uncertainties. It draws attention to the FRC press release on this matter in July 2016.  The FRC indicates that “as the economic and political effects are developed and become more certain in the medium and longer term, we would expect Boards to provide increasingly company specific disclosures with, ultimately, quantification of the effects”.
• Governance reporting. The FRC indicates that where Boards elect not to comply with key provisions of the UK Corporate Governance Code, “they should provide specific explanations”.  The FRC encourages investors “to challenge companies where they do not believe that explanations given are sufficiently persuasive”
• Audit committee report. The FRC highlights that investors  “should expect to see” audit committees evaluating and reporting on audit quality in the context of the company’s business model and strategy, the business risks it faces, and its perception of the reasonable expectations of the company’s investors and other stakeholders.
• Financial statement disclosures. The FRC indicates that:
  • with respect to tax it would expect improved reporting of the amount of tax provisions than in previous years. The FRC highlights its thematic study of tax reporting which identified areas for improved disclosure.
  • with respect to divided disclosure, whilst there have been “examples of improved disclosure”, it expects to see further improvements in this area. The FRC highlights that investors may wish to “challenge companies that provide insufficient information in this area” and draws attention to the Lab’s 2015 report.
  • with respect to low interest rates, companies should already be considering the impacts on the amounts reported in the financial statements especially around the valuation of long-term assets and liabilities.  The FRC highlights that companies may need to provide sensitivity analysis to highlight potential impacts.
  • investors should expect to see improved disclosures of accounting policies, particularly in relation to revenue recognition. It highlights that investors should be able to see  “a clear link between the sources of income described in the business model and revenue recognition policies”.  The FRC also indicates that investors should “expect companies to identify the precise nature of the judgements they make rather than merely repeat the accounting standards” as this will help them assess the quality of management’s policy decisions.
  • Investors should also expect companies to indicate the likely impact of IFRS 15 Revenue from Contracts with Customers, IFRS 9 Financial Instruments and IFRS 16 Leases in their financial statements where it has been concluded by the company that the impact can be reasonably estimated. 

The press release and full letter are available on the FRC website.

As many public sector entities have heritage responsibilities, the consultation paper is intended to be a first step toward developing financial reporting guidance to support accountability and decision making in this area. The paper describes heritage items as items that are intended to be held indefinitely and preserved for the benefit of present and future generations because of their rarity and/or significance. It proposes that:

• heritage items' special characteristics do not prevent them from being assets for the purposes of financial reporting;
• heritage items should be recognised in the statement of financial position if they meet the recognition criteria in the Conceptual Framework; and
• in many cases, it will be possible to assign a monetary value to heritage assets.

The paper also discusses initial and subsequent measurement of heritage assets, whether heritage preservation responsibilities could involve present obligations for entities that should be recognised as liabilities in the financial statements, and presentation of information for heritage in general purpose financial reports.

Comments on the consultation paper are due to the IPSASB by 30 September 2017.

Please click for the following additional information on the IPSASB website:

• Press release
• Consultation paper