March

European Commission publishes action plan on sustainable finance

08 Mar, 2018

In January 2018, the High-Level Expert Group (HLEG) on Sustainable Finance, established by the European Commission (EC), published its final report setting out strategic recommendations for a financial system that supports sustainable investments. The European Commission has now reacted to the recommendations by proposing an EU strategy on sustainable finance setting out a roadmap for further work and upcoming actions covering all relevant actors in the financial system.

As regards accounting, the action plan includes the following points:

  • Fitness check of EU legislation on public corporate reporting, including theNon-Financial Reporting Directive, to assess whether public reporting requirements for listed and non-listed companies are fit for purpose;
  • by Q2 2019, revision of the guidelines on non-financial information to provide further guidance to companies on how to disclose climate-related information, in line with the recommendations of the Financial Stability Board's Task Force on Climate-related Financial Disclosure (TCFD);
  • by Q3 2018, creation of a European Corporate Reporting Lab as part of the European Financial Reporting Advisory Group (EFRAG);
  • request EFRAG, where appropriate, to assess the impact of new or revised IFRSs on sustainable investments; and
  • as part of the firness check evaluation of relevant aspects of the International Accounting Standards Regulation focusing in particular on how the adoption process of IFRSs can allow for specific adjustments to standards where they are not conducive to the European public good.

Please click for the full text of the action plan on the EC website. Additional documents such as FAQs and a factsheet are available here.

FRC Podcast - revised UK Corporate Governance Code

07 Mar, 2018

The Financial Reporting Council (FRC) has released a podcast discussing the revised UK Corporate Governance Code.

This podcast is the first in the FRC Podcast series, 'In conversation with'. In the podcast, David Styles, Director of Corporate Governance, FRC, discusses the revised UK Corporate Governance Code and how it will help promote trust in business for long term sustainable growth in the UK economy.

The podcast can be accessed through the FRC website.

IASB posts webcast on IFRS 17

07 Mar, 2018

The IASB has posted a webcast on recognising the contractual service margin in profit or loss in IFRS 17 'Insurance Contracts'.

This webcast is part of a series to support the implementation of IFRS 17.

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.

EFRAG publishes report on the perception of its work in the financial reporting community

07 Mar, 2018

In the fourth quarter of 2017, the European Financial Reporting Advisory Group (EFRAG) commissioned an independent perception survey to gauge awareness of its work in the financial reporting community and provide a snapshot of the organisation's progress in delivering on its European public interest mission. ​​​

The survey was addressed to and received responses from:

  • National (EU and non-EU) financial reporting standard-setters,
  • Private sector accountancy firms and associations,
  • Users of financial reporting standards, and
  • Think-tanks, NGOs, and international organisations.

Findings are structured around seven key areas:

  1. EFRAG’s visibility,
  2. Inclusiveness and transparency of EFRAG’s work,
  3. Quality of EFRAG’s research work,
  4. EFRAG’s perceived influence on financial reporting standards,
  5. EFRAG’s endorsement work,
  6. Serving the European public interest, and
  7. Future areas of EFRAG focus.

The report finds that the European financial reporting community see EFRAG as being effective in its three core activities of upstream influence, improving IFRS and providing endorsement advice. Stakeholders also confirm the high quality of EFRAG's work while they are suggesting that EFRAG should seek to boost its visibility and join the wider debate on corporate reporting.

Please click to access the press release and the final report on the EFRAG website.

IASB issues podcast on latest Board developments

06 Mar, 2018

The IASB has released a podcast featuring Chair Hans Hoogervorst, Board member Darrel Scott, and education director Matt Tilling to discuss the deliberations at the February 2018 IASB meeting.

The 19-minute podcast features discussions of the following topics:

  • Disclosures
  • Rate-regulation
  • IFRS 17 implementation
  • Cash flows
  • Management performance measures
  • Business combinations under common control

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 of the February 2018 meeting.

FRC panel discussion on IFRS 17

05 Mar, 2018

The Financial Reporting Council (FRC) is holding a panel discussion on 24 April 2018 to assess the possible benefits and barriers to implementing IFRS 17 'Insurance Contracts'.

The event will provide participants with an opportunity to hear from experts about their key issues and challenges with the standard and will enable them to provide their own views on the standard. The outcome of the discussions will feed into the assessment of whether IFRS 17 should be endorsed in Europe or not via the FRC’s contribution to the European endorsement of IFRS 17.

More information, including registration details can be found on the FRC website.

Accountancy Europe issues position paper on sustainable finance

05 Mar, 2018

In the context of the EU’s transition to a low-carbon, resource-efficient and sustainable economy, Accountancy Europe has published a position paper that notes that the financial system has a critical role to play in this process and that professional accountants are crucial in building a comprehensive sustainable financial system.

In January 2018, the High-Level Expert Group (HLEG) on Sustainable Finance, established by the European Commission, published its final report setting out strategic recommendations for a financial system that supports sustainable investments. Accountancy Europe now adds to the HLEG recommendations by noting the three areas where the profession can contribute most. The position paper cites:

  • corporate reporting to accommodate long-term horizons;
  • disclosure requirements to address investors’ needs; and
  • accounting frameworks to be in line with long-term investments.

As regards IFRSs, the paper notes:

IFRS are not designed to encourage or discourage long-term investments or any type of investments. The financial reporting purpose is to provide for users of financial statements information on what is currently happening.

Therefore, the position paper warns against two recommendations of the HLEG:

  1. To authorise the EU to change specific aspects of IFRSs before adopting them as setting European standards would isolate Europe from the global capital market, hinder investment, create confusion, increase the cost of capital, and diminish Europe's influence on the standard-setter.
  2. To only adopt IFRSs if they consider sustainability and long-term investment objectives as at this early point of time this would not focus on improving non-financial reporting but rather hinder transparency that is currently in the process of developing.

Please click to access the position paper on the Accountancy Europe website.

Agenda and pre-meeting summaries for the March 2018 IFRS Interpretations Committee meeting

05 Mar, 2018

The IFRS Interpretations Committee meets in London on Tuesday 13 March 2018. The Committee will discuss ten issues, including five new interpretation requests.

Finalisation of draft agenda decisions

The staff are recommending that the Committee finalise four tentative agenda decisions.

Three of those decisions relate to IFRS 15 Revenue for Contracts with Customers (Revenue recognition in a real estate contract; Revenue recognition in a real estate contract that includes the transfer of land; and Right to payment for performance completed to date). As well as considering the specific issues, the Committee received more general comments about these agenda decisions, including the appropriateness of considering specific fact patterns. 

The fourth item is the presentation of interest revenue for particular financial instruments.

Continuing discussions

The Committee is continuing its discussions of whether or how to clarify the meaning of the term ‘unavoidable costs’, which is used in the definition of an onerous contract in IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The staff are recommending that ‘cost of fulfilling’ a contract should include both the incremental costs of fulfilling the contract and an allocation of overhead costs incurred for activities required to fulfil the contract—the costs that relate directly to the contract. They are also recommending that this be in the form of an amendment to IAS 37, rather than an Interpretation.

New issues

There are five new issues.

  • IAS 12 Income Taxes Deferred tax – tax base of assets and liabilities (Agenda Paper 4). How should the exemption (in IAS 12.15 and IAS 12.24) to recognising a deferred tax asset or a deferred tax liability be applied?
  • IAS 7 Statement of Cash Flows - classification of short-term loans and credit facilities (Agenda Paper 6). Whether a short-term bank arrangement that is always overdrawn and does not fluctuate from being in to out of funds can qualify as a component of cash and cash equivalents.
  • IAS 37 Provisions, Contingent Liabilities and Contingent Assets - payments relating to taxes other than income tax (Agenda Paper 7). What is the appropriate accounting when an entity makes a voluntarily payment to a tax authority that will either be returned or used to settle the tax liability (which the entity has determined is not probable and therefore not recognised).
  • IFRS 9 Financial Instruments - classification of a particular type of dual currency bonds (Agenda Paper 8). How to assess whether a financial instrument has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding when a bond has a par amount denominated in one currency and fixed interest coupon payments denominated in another currency.
  • IFRS 9 Financial Instruments hedge accounting with load following swaps (Agenda Paper 9). How should the term “highly probable” be applied, as it is used in IAS 39.88 and IFRS 9.6.3.3, to assess whether a hedging relationship qualifies for hedge accounting?

The Staff are recommending that the Committee not add any of these items to its agenda, either on the grounds that there is insufficient evidence that the matter has widespread effect or is expected to have a material effect on those affected or because they think the requirements in the relevant Standard provide an adequate basis for an entity to determine the appropriate accounting.

Work in progress

There are no new or ongoing matters that have yet to be presented to the Committee.

The full agenda for the meeting and our pre-meeting summaries can be found here. We will update this page for any changes to the agenda and our Deloitte observer notes from the meeting as they become available.

EFRAG TEG meeting March 2018

02 Mar, 2018

The European Financial Reporting Advisory Group (EFRAG) will hold a TEG meeting on 7 and 8 March 2018 in Brussels.

An agenda and details on how to register for the meeting can be found on the EFRAG website.

IFRS Foundation reappoints two IFRS Interpretations Committee members

02 Mar, 2018

The Trustees of the IFRS Foundation have announced the reappointment of two IFRS Interpretations Committee members, one of them Robert Uhl, Head of Deloitte's IFRS Centre of Excellence for the United States.

Robert Uhl is US National Director of Accounting Standards. He is also the US leader on Deloitte’s Global IFRS Leadership Team and a member of the Financial Accounting Standard Board’s Emerging Issues Task Force.

The other reappointed member, Jongsoo Han, is a Member of the Korea Accounting Standards Board (KASB) and Chairman of the Korea Institute of CPAs’ Accounting Research Committee.

Please click to access the press release on the IASB website.

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