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EFRAG issues draft endorsement advice on Annual Improvements to IFRS Standards 2015-2017 Cycle

26 Jan 2018

The European Financial Advisory Group (EFRAG) has issued for comment its draft endorsement advice for the use of the Annual Improvements to IFRS Standards 2015-2017 Cycle in the European Union (EU).

The Amendments, issued in December 2017 make amendments to the following three Standards as result of the IASB's annual improvements project.

  • IFRS 3 Business Combinations and IFRS 11 Joint Arrangements - The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.
  • IAS 12 Income Taxes - The amendments clarify that all income tax consequences of dividends (i.e. distribution of profits) should be recognised in profit or loss, regardless of how the tax arises.
  • IAS 23 Borrowing Costs - The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

EFRAG recommends the endorsement of the Amendments. EFRAG’s initial assessment is that the Amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.
EFRAG also considers that the overall benefits of the Amendments are likely to outweigh the associated costs to implement them.

Comments are requested by 26 February 2018.

For more information, see the press release, draft endorsement advice letter and the invitation to comment on the EFRAG’s website. EFRAG has also updated its endorsement status report that is available here.

Transition to the new IFRS for insurance contracts

26 Jan 2018

The IASB has released a summary of the materials and other support available to national standard-setters and regulators planning for implementation of IFRS 17 'Insurance Contracts'.

The materials introduced by IASB member Amaro Gomes include:

  • Set the scene:
    • To understand and explain why IFRS 17 was developed
    • To familiarise stakeholders with the scope, timing and requirements of IFRS 17
    • To understand and explain the possible benefits and costs of IFRS 17
    • To understand and explain how IFRS 17 relates to prudential regulation
    • To understand and explain what investors think about IFRS 17
  • Plan for implementation
  • Education
  • Use implementation support provided by the IFRS Foundation

Please click to access the summary on the IASB website.

Two IASB presentations on financial stability and long-term investments

25 Jan 2018

The IASB has made two presentations publicly available that were originally prepared for the Trustees of the IFRS Foundation in 2017.

The first presentation (20 slides) explores the impact of accounting volatility on financial stability, how IFRS 9 Financial Instruments and IFRS 17 Insurance Contracts contribute to stability, and the relationship between the IFRS Foundation and regulators.

The second presentation (26 slides) explains how accounting standards contribute to long-term investments and how capital markets benefit from transparent reporting.

AAOIFI's standard on impairment and credit losses may be early adopted

24 Jan 2018

In November 2017, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) issued its new standard FAS 30 'Impairment, Credit Losses and Onerous Commitments'. The AAOIFI's Accounting Board has now approved transitional arrangements that will allow for an early adoption of FAS 30 from 1 January 2018.

Transitional arrangements had to be found since while FAS 30 was issued in November, its companion standard FAS 35 Risk Reserves is still only an exposure draft and will need some more time to be issued.

Please see the press release on the AAOIFI website for the transition arrangements.

EFRAG's comment letter and Feedback Statement on Proposed amendments to IAS 1 and IAS 8

23 Jan 2018

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter and Feedback Statement on the IASB's Exposure Draft ED/2017/6 'Definition of Material - Proposed amendments to IAS 1 and IAS 8'

In its comment letter, EFRAG:

  • supports the objective to remove the existing inconsistencies in the definition of 'material' in the Conceptual Framework for Financial Reporting and in IFRS Standards and replacing the threshold 'could influence' with 'could reasonably be expected to influence; 
  • does not support inclusion of references to 'omitting', 'misstating' and 'obscuring' within the definition of 'material'. Instead,  EFRAG suggests removing the references to 'omitting', 'misstating' and 'obscuring' from the definition and defining material information as 'information that can reasonably be expected to, individually or collectively, influence the economic decisions that the primary users of financial statements make on the basis of those financial statements'; and
  • lastly, EFRAG suggests that the IASB should concentrate the guidance on materiality in a single general standard and use cross-references from other IFRS Standards to that guidance when needed.

The Feedback Statement describes the main comments received by EFRAG in response to its draft comment letter and how these comments were considered by EFRAG in finalising its comment letter to the IASB.

The press release, comment letter and the Feedback Statement are available on the EFRAG website.

Agenda for the January 2018 DPOC meeting

23 Jan 2018

The Trustees of the IFRS Foundation will be meeting in Hong Kong from 30 January to 1 February 2018. However, only the meeting of the Due Process Oversight Committee (DPOC) on 31 January will be held in public.

The agenda for the DPOC meeting is summarised below.

Wednesday, 31 January 2018 (16:00–16:55)

  • Introduction and Actions from DPOC meeting held on 7 November 2017
  • Technical activities: Key issues and update
  • IFRS Taxonomy Consultative Group: appointment of Vice-Chair – report on discussions in private session
  • Due Process Handbook Review
  • Correspondence: update
  • Summary

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

Live webinar on the scope of the Business Combinations under Common Control project

23 Jan 2018

The International Accounting Standards Board (IASB) announces a live webinar on the scope of its Business Combinations under Common Control project. Registration for the 31 January webinar is now open.

In December 2017 the IASB concluded its discussions of the scope of the project and the webinar will discuss the Board’s decisions and illustrative examples of transactions within the scope.

The IASB will offer a morning and an afternoon session to accommodate stakeholders in time zones around the world. Both 45-minute web presentations will also allow participants to ask questions. Registration is required (on the IASB's website) for the sessions:

A recording of the webinar will be available in due course. Please see the IASB press release for more information.

Insurance contracts transition resource group releases meeting agenda

23 Jan 2018

The IASB has released the agenda for IFRS 17 transition resource group (TRG) meeting on 6 February 2018.

The purpose of the TRG is to seek feedback on potential issues related to implementation of IFRS 17 Insurance Contracts. By analysing and discussing potential implementation issues, the TRG will help the IASB determine whether additional action is needed, such as providing clarification or issuing other guidance. This meeting will be the first meeting where technical matters will be discussed.

The agenda for the meeting is as follows:

Tuesday, 6 February 2018

  • Welcome and in­tro­duc­tory remarks
  • Separation of insurance components of a single contract
  • Boundary of contracts with annual repricing mechanisms
  • Boundary of reinsurance contracts held
  • Insurance acquisition cash flows paid on an initially written contract
  • Determining quantity of benefits for identifying coverage units
  • Insurance acquisition cash flows when using fair value transition
  • Reporting on other questions submitted
  • Administrative matters

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

IASB announces fifth research forum

23 Jan 2018

The International Accounting Standards Board (IASB) will host its fifth Research Forum on 11 and 12 November 2018 in Sydney.

The Forum will be held in conjunction with Abacus, an academic journal from the Accounting Foundation at the University of Sydney. The editors of Abacus have issued a call for papers inviting submissions that can provide evidence to inform the standard-setting activities of the IASB.

IASB posts webcast on IFRS 17

22 Jan 2018

The IASB has posted a webcast on the level of aggregation requirements in IFRS 17 'Insurance Contracts'.

The webcast is presented in two parts:

  • Part 1 explaining why and how insurance contracts are grouped.
  • Part 2 discusses recognition, derecognition and disclosures.

For more information, see the press release on the IASB’s website. In addition, earlier webcasts and webinars on IFRS 17 are available through an archive.

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