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2018

New IPSASB video on the move to accruals in the United Kingdom

28 Dec 2018

The International Public Sector Accounting Standards Board (IPSASB) has issued a new video as part of a series examining the challenges and benefits of governments adopting International Public Sector Accounting Standards (IPSASs) and accrual accounting.

In the video interview, David Watkins, IPSASB Technical Advisor, Chair of CIPFA's Accounting and Auditing Standards Panel and former Head of Financial Reporting Policy at HM Treasury, UK, offers his insights on the move to accruals in the United Kingdom in the IPSASB's latest instalment of the "Closer Look at" series.

The new video is available on YouTube.

Earlier videos are available on the IPSASB website.

Season's greetings

24 Dec 2018

We wish all our readers a peaceful holiday and all the best for the New Year.

We look forward to seeing you again after the holidays and to continue to be your preferred accounting website in 2019.

EBA publishes results of the first post-implementation impact assessment of IFRS 9

22 Dec 2018

Following the first period of application of IFRS 9 'Finacial Instruments' in the European Union, the European Banking Authority (EBA) is scrutinising the effective implementation of the standard by EU institutions and its impact as initially observed. In this context, the EBA has conducted a new exercise on the standard’s impact on EU institutions and has now published a first report that is meant to provide preliminary observations on the first stages of implementation while a deeper analysis is still ongoing.

The post-implementation impact assessment builds on the previous exercises conducted by the EBA before the first application of the new standard published in November 2016 and July 2017. The analysis is now based on actual data reported by banks to competent authorities and supplemented by public disclosures where possible. The sample used for the exercise is the same as the one used in the two previous EBA impact assessments (consisting of 54 institutions across 20 Member States).

Given the complexity of the new standard and the challenges still being faced by banks, it is expected that data accuracy will increase over time. However, the general conclusion can already be drawn that the observations in the report are consistent with the forecasts of the second EBA impact assessment report, in particular in terms of increase in provisions. The EBA notes that the monitoring of IFRS 9 is just starting and the effective impact and implementation of the standard will need to be reviewed through time.

The report is mainly factual and does not include recommendations, however, it does identifiy some areas for ongoing scrutiny and areas for further work from an EBA perspective.

Please click to access the full report on the EBA website.

Agenda for the second meeting of the Management Commentary Consultative Group

22 Dec 2018

The agenda for the second meeting of the IASB's new Management Commentary Consultative Group created to support the project to update the IFRS Practice Statement 'Management Commentary' is now available.

The agenda for the meeting, which will be dedicated to "Performance, position and progress", is as follows:

Friday, 11 January 2019 (08:30-15:30)

  • Overall approach
  • Analysis of the financial statements
  • Matters that could affect the entity’s future development

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

IFRS Foundation appoints three new Trustees

20 Dec 2018

The IFRS Foundation has announced the appointment of Sarah J. Al Suhaimi, Dr Suresh P. Kana, and Kazuyuki Masu as Trustees of the IFRS Foundation. Their appointments will begin on 1 January 2019 and will expire on 31 December 2021.

Ms Al Suhaimi is Chair of the Board of Directors of Tadawul, the Saudi Stock Exchange, and the CEO of NCB Capital, the investment banking arm of Saudi Arabia’s National Commercial Bank.

Dr Kana is the Chairman of the South-African standard-setter, the Financial Reporting Standards Council. He also chairs the King Committee on Corporate Governance in South Africa and the Audit Committee of the United Nations World Food Programme.

Mr Masu is the Executive Vice President and CFO of Mitsubishi Corporation. He is also a Director of the Japan Investor Relations Association and a member of the Japan Business Federation’s committees on taxation and finance and accounting.

In addition, current IFRS Foundation Trustee, Guillermo Babatz has been reappointed to serve a second three-year term, also beginning on 1 January 2019.

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

European Commission approves ESEF Regulation

20 Dec 2018

The European Commission has adopted the ESMA draft for a single European electronic reporting format (ESEF) as Delegated Regulation. This regulation is to be applied to annual financial reports containing financial statements for financial years beginning on or after 1 January 2020.

The delegated act has not yet entered into force. The European Parliament and the Council of the European Union may raise objections to regulatory technical standards; if they raise objections, those standards should not enter into force.

The format proposed by ESMA makes use of the eXtensible HyperText Markup Language (XHTML) for the human readable representation of annual financial reports. In order to facilitate the accessibility, analysis and comparability of the consolidated financial statements prepared under the International Financial Reporting Standards (IFRS), ESMA proposes to introduce eXtensible Business Reporting Language (XBRL) markups, which will make items disclosed therein machine-readable.

The taxonomy to be used builds on the IFRS Taxonomy developed by the IFRS Foundation as the Delegated Regulation notes that the IFRS Taxonomy is a well-established taxonomy developed to mark up IFRS disclosures and its use facilitates comparability of markups of financial statements drawn up in accordance with IFRS on a global level.

Please click to access the Delegated Regulation and its Annexes on the European Commission website.

European Lab seeks members for first task force

20 Dec 2018

The European Financial Reporting Advisory Group (EFRAG) has published a call for candidates for members of the​ new project task force on climate-related reporting of the European Corporate Reporting Lab.

The task force will assess the current state of play for climate-related reporting by European companies and assess the current and potential use of climate-related information by investors and other users. The primary focus will be on the Task Force on Climate-related Financial Disclosures' (T​CFD) recommendations with consideration of other reporting frameworks as appropriate, while also taking account of the EC’s non-binding guidelines on non-financial reporting. ​The deadline for applications is 26 January 2019.

Please click for more information in the press release on the EFRAG website.

EFRAG publishes summary report for the joint outreach event on FICE in London

19 Dec 2018

The EFRAG has issued a summary report on the joint outreach event on the financial instruments with characteristics of equity (FICE) Discussion Paper (DP) co-hosted with the UK Financial Reporting Council (FRC) on 4 December 2018 in London.

Please see the summary report on the EFRAG website.

IASB issues podcast on latest Board developments

18 Dec 2018

The IASB has released a podcast featuring Chair Hans Hoogervorst, Vice-Chair Sue Lloyd and education director Matt Tilling to discuss the deliberations at the December 2018 IASB meeting.

The 17-minute podcast features discussions of the following topics in more detail:

  • The IASB's recent meeting with the ASAF, discussing the post-implementation review of IFRS 13
  • IFRS 17 Insurance Contracts
  • Primary financial statements
  • Interest-rate benchmark reform
  • Rate-regulated activities

The podcast can be accessed through the press release on the IASB website. More information on the topics discussed is available through our comprehensive notes taken by Deloitte observers at the December IASB meeting.

December 2018 IASB meeting notes posted

18 Dec 2018

The IASB met on Tuesday 11, Wednesday 12 and Thursday 13 December 2018 to discuss twelve topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board decided to update a reference to the Conceptual Framework in IFRS 3.  

The Board decided that an entity can apply the Dynamic Risk Management model if two criteria are met. The first is that there must be an economic relationship between the target profile, the asset profile and the derivatives designated within the DRM model. This criterion needs further development around how strong/good the economic relationship needs to be.  The second is that any designation must not reflect an imbalance that would create misalignment that could result in an accounting outcome inconsistent with the purpose of the DRM accounting model.

The Board discussed whether a Business Combination under Common Control should be accounted for using an approach based on the acquisition method set out in IFRS 3 Business Combinations when it affects non-controlling interests. Board members expressed a variety of concerns about the staff proposal.

For the Primary Financial Statements project, the Board decided to prohibit the use of columns to present information about MPMs in the statement(s) of financial performance. The Board also decided to permit, but not require, the subtotal ‘operating profit before depreciation and amortisation’ on the face of the statement(s) of financial performance. An entity would need to reconcile any other similar measure (like EBITDA) to this sub-total. IFRS Standards will not impose any restrictions on the use of EBIT or EBITDA.

The Board decided to move the IBOR project to its standard-setting programme and focus on issues affecting financial reporting leading up to IBOR reform and when the reform is enacted. 

At the October 2018 meeting, the Board discussed concerns and implementation challenges raised by stakeholders about the requirements in IFRS 17 Insurance Contracts. At this meeting the Board considered 12 of those issues and decided to amend IFRS 17 for presentation of insurance contracts on the statement of financial position but not to make amendments for the other issues. The remaining nine topics will be considered at a future meeting.

In the Disclosure Initiative the Board decided to amend paragraphs 117-124 of IAS 1 to require entities to disclose their material accounting policies rather than their significant accounting policies. This amendment would be issued together with the guidance and examples being developed for inclusion in the Materiality Practice Statement.

In the Rate-regulated Activities project the Board considered staff recommendations relating to the discount rate to be used when measuring regulatory timing differences. There was significant debate and the Board was split in its views. 

The staff gave updates on the projects on Provisions and Pensions Benefits that Depend on Asset Returns as well as the Research Programme.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

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