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July

CMAC call for members

31 Jul 2017

The IASB's Capital Markets Advisory Committee (CMAC) is currently seeking applications for membership after the terms of a number of members expire at the end of 2017.

The CMAC is a group of pro­fes­sional financial analysts who meet three times a year with members of the IASB to provide the views of pro­fes­sional investors on financial reporting issues.

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

World Standard-setters meeting programme available

31 Jul 2017

A programme has been released for the upcoming World Standard-setters meeting, which is being held in London on 25-26 September 2017.

A summary of the programme is set out below:

Monday, 25 September 2016 (09:00 - 18:30)

  • Welcome address
  • IASB Technical programme update
  • Working with National Standard-setters (NSS), including supporting implementation of IFRS 17 Insurance Contracts
  • Rate-regulated activities
    • case study
    • small-group discussions
  • Education sessions (two rounds)
    • IFRS 17 Insurance Contracts
    • Better communication in financial reporting
    • Maintenance activities/supporting implementation
    • Conceptual Framework

Tuesday, 26 September 2016 (09:00 - 13:00)

  • Financial instruments with characteristics of equity
    • case study
    • small-group discussions
  • Feedback on case studies
    • Rate-regulated activities
    • Financial instruments with characteristics of equity

Papers for the meeting are expected to be made available in due course on the IASB's website. The WSS meeting will be immediately followed by a meeting of the International Forum of Accounting Standard Setters (IFASS).

IFRS Foundation publishes results of a reputation research study

31 Jul 2017

The IFRS Foundation has published a report with findings of a reputation research study conducted between February and May 2017. The objective of the study was to learn about (1) the perceived performance of the Foundation as regards reputation attributes such as transparency and independence, (2) perceptions of engagement and consultation, and (3) whether it is felt that the Foundation meets its public interest mission and delivers on its objectives.

The study builds on close to 130 interviews of which over 100 were conducted with external parties (accountants/auditors, preparers, users, standard-setters, regulators as well as members of the different IFRS Foundation advisory groups).

Overall, the IFRS Foundation is rated highly for its transparency and independence. Its consultations are perceived as professional, open, and effective with good quality documentation. The vast majority of respondents also agree that the Foundation meets its public interest mission and the Foundation’s not-for-profit, privately organised status is not seen to have a detrimental effect on the public interest mission.

However, several weaknesses were also identified by the study. The main one is the perception that the Foundation is not timely and does not respond quickly enough to a changing world. Especially long development and consultation phases are seen as a weakness, which are attributed to a lack of proper balance right between quantity of due process and speed and to a tendency to be too technical or conceptual. Respondents would also like to see more opportunities to engage outside the consultation process through informal dialogue, training, and events. Stakeholders also feel that both smaller companies and developing markets are at risk of being sidelined, and call for greater consideration of difficulties they may experience implementing standards.

The report offers six recommendations for the Foundation:

  • Continue the good work
  • Improve outreach and consult more widely
  • Develop events, training and education
  • Improve timeliness
  • Respond to the need for simple, practical, and workable standards
  • Harness advocates to act as ambassadors

The full report and a corresponding press release are available on the IASB website.

EFRAG publishes July 2017 issue of 'EFRAG Update'

28 Jul 2017

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during July 2017.

The Update reports on the EFRAG Board meeting on 20 July and the EFRAG TEG meeting on 26-27 July.

The Update also lists EFRAG publications issued in July:

Please click to download the July EFRAG Update from the EFRAG website.

The auditor’s response to the risks of material misstatement posed by estimates of expected credit losses under IFRS 9

28 Jul 2017

The introduction of new requirements for the accounting for expected credit losses in IFRS 9 'Financial Instruments' will be a significant change to the financial reporting of banks when required in 2018.

The Global Public Policy Committee (GPPC)1 have issued a paper titled The auditor’s response to the risks of material misstatement posed by estimates of expected credit losses under IFRS 9.

The paper is addressed primarily to the audit committees of systemically-important banks, although much of its content will be relevant to other banks and financial institutions, and aims to promote the implementation of accounting for expected credit losses to a high standard.

The paper notes that introduction of new requirements for the accounting of expected credit losses in IFRS 9 Financial Instruments will be a significant change to the financial reporting of banks when required in 2018. Banks are expected to design and implement high-quality policies, procedures, internal controls, systems and models in accordance with the accounting standard to enable bank management to exercise appropriate judgements when estimating expected credit losses (ECL).

However, the paper also notes that there are risks of material misstatement related to the estimation of ECL under IFRS 9, are as a result of:

  • the complexity of estimating expected losses;
  • a higher number of inputs and assumptions, which are subject to judgement;
  • an increased estimation uncertainty; and
  • the potential magnitude of the ECL estimate for systemically-important banks.

The GPPC hopes the paper will help those charged with governance to effectively evaluate the quality of the auditor’s response to the risks of material misstatement posed by estimates of expected credit losses.

Please click to access The auditor’s response to the risks of material misstatement posed by estimates of expected credit losses under IFRS 9 and a corresponding press release.

____________________

1 The Global Public Policy Committee (GPPC) of the six largest international accounting networks comprises representatives of BDO, Deloitte, EY, Grant Thornton, KPMG and PwC, and focuses on public policy issues for the profession.

IASB posts webinar on IFRS 17

27 Jul 2017

The IASB has posted to its website a two-part webinar on the recently issued standard IFRS 17 'Insurance Contracts'.

The webinar discusses initial recognition and subsequent measurement requirements in IFRS 17.

For more information, see Part 1, Part 2, and the slides of the webinar on the IASB's website.

Report on the financial stability implications of IFRS 9

27 Jul 2017

The European Systemic Risk Board (ESRB) has published a report on the financial stability implications of IFRS 9 'Financial Instruments'. The ESRB’s work on this topic was requested by the European Parliament in January 2016.

The analysis in Financial stability implications of IFRS 9 focuses on two aspects:

  • IFRS 9 and fair value accounting for the measurement of financial assets
  • The new expected credit loss paradigm

The report notes:

The ESRB concludes that IFRS 9 represents a major improvement in comparison with IAS 39 and is expected to bring substantial benefits from a financial stability perspective. Together with the greater clarity and certainty associated with its principles-based approach to the classification and measurement of financial instruments, the earlier and fuller recognition of impairment losses under the new expected credit losses model is expected to have positive effects on financial stability.

The ESRB report is accompanied by an occasional paper Assessing the cyclical implications of IFRS 9 – a recursive model. This paper describes a model for assessing different approaches to the accounting of credit impairment losses. In particular, it compares the impact of a crisis on banks assuming four such different approaches, including the current approach in IAS 39 (incurred losses) and the solutions adopted under IFRS 9 and in the United States respectively.

Please click for the two reports on the ESRB website:

FRC publishes a factsheet on the EU Non-Financial Reporting Directive

26 Jul 2017

The Financial Reporting Council (FRC) has today published a factsheet on non-financial reporting that provides an overview of the new regulations implementing the EU Directive on non-financial and diversity information (“EU NFR Directive”).

The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016 (SI 2016/1245) (“the Regulations”), which were published by The Department for Business, Energy & Industrial Strategy (BEIS) in December 2016, implement the EU NFR Directive in the UK.  The Regulations apply to the financial years of companies and qualifying partnerships, within scope of the Regulations, beginning on or after 1 January 2017.

The factsheet covers:

  • Scope of the Regulations.
  • What companies within scope need to disclose in both the strategic report and in the corporate governance statement.
  • How the new requirements for the Strategic Report fit within the narrative reporting framework.
  • Changes to existing narrative reporting requirements for those companies within scope of the Regulations.

The press release and factsheet are available on the FRC website.  Our related Need to know publication on the Regulations is available here.

IFRS Foundation issues Formula Linkbase 2017

26 Jul 2017

The IFRS Foundation has issued the 2017 IFRS Taxonomy Formula Linkbase. The Formula Linkbase is updated from the 2016 version; it is designed to help improve the data quality of IFRS Taxonomy filings and to provide additional guidance for both technical and financial reporting audiences so that they can better understand the IFRS concepts and their meanings.

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

FRC appoints new members to its Audit and Assurance Council and Conduct Committee

25 Jul 2017

The Financial Reporting Council (FRC) has appointed new members to its Audit and Assurance Council and Conduct Committee.

Mary Cleary will join the Audit and Assurance Council and John Hitchins will join the Conduct Committee.

The press release is available from the FRC's website.

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