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May

IASB issues podcast on latest Board developments

31 May 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 May 2018 IASB meeting.

The 13-minute podcast features dis­cus­sions of the following topics:

  • Primary financial statements.
  • Disclosure initiative.
  • Business combinations under common control.
  • Rate-regulated activities.
  • Goodwill and impairment.

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 May 2018 meeting.

CIPFA/LASAAC consults on incorporating the requirements of IFRS 16 into the new Code of Practice on Local Authority Accounting

30 May 2018

The Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local Authority (Scotland) Accounts Advisory Committee (LASAAC) are seeking comments, via an ‘Invitation to Comment’, on proposals to incorporate the requirements of IFRS 16 ‘Leases’ into the 2019/20 Code of Practice on Local Authority Accounting in the UK (‘the Code’) which would apply to accounting periods beginning on or after 1 April 2019.

Local authorities in the United Kingdom are required to keep their accounts in accordance with ‘proper practices’. This includes compliance with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom prepared by the CIPFA/LASAAC Local Authority Accounting Code Board.

The proposed developments for the 2019/20 Code, included within the consultation, are on IFRS 16 Leases . It is anticipated that the remaining changes to the 2019/20 Code will be included in the annual consultation in July 2018.

The consultation considers and welcomes feedback on the implementation proposals, including:

  • recognition exemptions
  • identifying a lease
  • initial recognition and measurement
  • subsequent measurement
  • concessionary leases (lessees only)
  • lessor accounting
  • sale and leaseback transactions
  • consequential amendments – Service Concession Arrangements (PFI/PPP)
  • effective date
  • further guidance

Additionally, CIPFA/LASAAC welcome feedback and information on the practical implications that implementation of the proposals has for local government bodies. They have therefore requested responses to a readiness assessment questionnaire in relation to IFRS 16 Leases.

The invitation to comment, exposure draft of proposed changes and readiness assessment can be found within the press release on the CIPFA website.

Comments are requested by 7 September 2018.  

Report on the spring 2018 IFASS meeting

30 May 2018

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held in Mumbai on on 12 and 13 April 2018.

The report covers:

  • Continuation of the internal discussions
  • Proposals on the goodwill and impairment project of the IASB
  • The IASB’s work on implementation
  • Jurisdictional/standard-setters’ updates
    • Relevance of parent and/or subsidiary financial statements if consolidated financial statements are available
    • Q&A on IASB's work plan including research project pipeline
    • Recent developments in the work of the not-for-profit working group
  • Facilitating the adoption of new IFRSs
    • IFRS 15: Enforceable right to payment: Off-plan apartment complex construction contracts
    • IFRS 16: Exchange of lessons learned
  • Facilitating the adoption of new IFRSs: IFRS 17 - Exchange of lessons learned
  • Other optional sessions in brief:
    • Consolidation of not-for-profit entities under IFRS 10
    • Taxonomy update
    • NFRS implementation in Nepal – progress and challenges
  • Equity instruments: Impairment and Recycling
  • Intangibles: First Thoughts
  • BCUCC – Follow-up from London 2017
  • Primary financial statements: Some issues arising in IASB’s current projects

IFASS will meet next time in London on 2 and 3 October 2018 following the IFRS Foundation’s World Standard Setters meeting. The subsequent IFASS meeting is scheduled to be held in Argentina in late March 2019, the exact location and date are not determined yet.

Please click for the full report from the meeting.

IASB posts webcast on proposed amendments to IAS 8

29 May 2018

The IASB has posted a webcast by IASB member Mary Tokar and staff member Jawaid Dossani that provided an overview on why the IASB proposed amendments to IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors,’ and discussed the proposed amendments.

In addition, the webcast answered certain questions presented to the Board during the exposure draft period as well as next steps in the project.

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

EC follows up on action plan on sustainable finance with first legislative proposals

28 May 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 EC reacted to the recommendations by publishing an action plan on sustainable finance in March. They have now followed up by publishing legislative proposals that aim at identifying which investments are sustainable.

The key features of the proposed measures aim at:

  1. a unified EU classification system setting harmonised criteria to determine whether an economic activity is environmentally sustainable;
  2. consistency and clarity on how institutional investors should integrate environmental, social and governance (ESG) factors in their investment decision-making process;
  3. benchmarks reflecting companies' carbon footprint and give investors greater information on an investment portfolio's carbon footprint; and
  4. better to advice to clients on sustainability.

As such, the proposals do not affect financial reporting yet, however, they aim at establishing a framework that can be used for judging whether the public reporting obligations including financial and non-financial reporting requirements for EU companies are meeting their objectives, which is the aim of the EU 'Fitness Check on the EU Framework for Public Reporting by Companies' (still open for comment until 21 July 2018).

The following information is available on the EC website:

May 2018 IASB meeting notes posted

25 May 2018

The IASB met at its offices in London on 22 and 23 May 2018. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board discussed the primary financial statements project, focusing on aggregation and disaggregation of line items in the financial statements, criteria to help entities determine whether to analyse expenses by function or by nature and some remaining issues in relation to management performance measures (MPMs) and earnings per share (adjusted EPS) from the April 2018 Board meeting.

The Board had an initial discussion of establishing guidance for it to use when developing and drafting disclosure objectives and requirements.

The Board considered the staff analysis of Business Combinations under Common Control and what they describe as the Full Fair Value and Ceiling approaches.

The Board supported the staff recommendation to measure rate-regulated assets on a basis that reflects estimates of the future cash flows arising from the assets, updated if necessary, and discounted if there is a significant financing component.

The Board was asked to decide the form of consultation document that should be issued as the next step in the project on goodwill and Impairment. The Board had asked the staff to provide it with some additional analysis when it considered this in April. However, the Board deferred that decision again and asked the staff to bring back the alternative solutions and a strategy.

The Board decided to propose an amendment (in the next Annual Improvements cycle) to an illustrative example in relation to lease incentives that is included in the material accompanying IFRS 16 Leases.

The Board was given a summary of the Insurance Contracts Transition Resource Group meeting held on 2 May and a report on implementation challenges.

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

Updated IASB work plan — Analysis

25 May 2018

Following the IASB's May 2018 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments in May. Changes are minor.

Below is an analysis of all changes made to the work plan since our last analysis on 30 April 2018.

Maintenance project

  • Lease incentives (amendments to IFRS 16 Illustrative Examples) — Added project to work plan; no milestone or expected date listed.

Research project

  • Goodwill and impairment — The IASB removed the expected date for a DP or ED; the previous work plan had listed H1 2018.

The above is a faithful comparison of the IASB work plan at 30 April 2018 and at 25 May 2018. For access to the current IASB work plan at any time, please click here.

Recent sustainability reporting developments

23 May 2018

A summary of recent developments at the WBCSD, TCFD/CDSB, CDSB, ICAEW, UNEP FI, and GRI.

The World Business Council for Sustainable Development (WBCSD) has launched the Social and Human Capital Coalition, designed to help companies recognise, measure and value the importance of people and communities. As part of the launch, the Coalition is also opening the Social and Human Capital Protocol for public consultation until 16 June 2018. Please click for more information on the WBCSD website.

The Task Force on Climate-related Financial Disclosures (TCFD) and the Climate Disclosure Standards Board (CDSB) have launched the TCFD Knowledge Hub – a platform with relevant insights, tools and resources to help organisations implement the TCFD recommendations. The TCFD Knowledge Hub is the first online platform to provide useful information on quality climate-related disclosures in line with the recommendations of the Task Force. Please click to access the hub here.

The CDSB has also published an introduction to scenario analysis, tips, pitfalls and insights as scenario analysis presents one of the biggest challenges organisations are facing when reporting climate information following the TCFD recommendations. Please click to access the introduction to scenario analysis on the CDSB website.

The Institute of Chartered Accountants in England and Wales (ICAEW) has produced a practical guide Reporting on climate risks and opportunities. The guide is designed to help organisations considering how best to implement the TCFD recommendations which focus on communicating the financial impact of climate change on reporting organisations.

The United Nations Environment Programme Finance Initiative (UNEP FI) has published Connecting Finance and Natural Capital: A Supplement to the Natural Capital Protocol. The supplement is a tool for financial institutions to assess how their business is impacted by, and depends upon the natural world. Please click to access the supplement on the UNEP FI website.

The Global Reporting Initiative (GRI) has published an article sharing the process that the organisation underwent when writing its own sustainability report, the problems that came up along the way, and the solutions that were found. The article is available on the GRI website.

IASB to explore how technological disruption may influence the outcome of its projects

22 May 2018

As it has become clear that massive changes in relation to technology will have an impact upon accounting and corporate reporting, the IASB is looking for a 'Technology Principal' who will be responsible for "a group of projects related to the effect of technology on financial reporting and standard-setting".

There have been repeated calls in the past for the IASB to consider how technological developments can be used to overcome problems or find solutions for issues with projects on its agenda. The principles of disclosure project and the perceived "disclosure overload" immediately spring to mind, as does the primary financial statements project. The more general field of wider corporate reporting, which the IASB is aiming to address through updating the Management Commentary Practice Statement, would also offer itself.

It seems that the IASB is set to actively explore opportunities arising from technological disruption as the job description includes research into the possible effects of new and emerging technology on the delivery and consumption of financial information including likely impact on standard-setting as well as the education of the Board on relevant new technologies. Threats the IASB might be facing from changes in technology are also included among the responsibilities.

The full job description is available on the IASB website.

ICAEW publishes guidance on how best to implement the TCFD's recommendations

17 May 2018

The Institute of Chartered Accountants in England and Wales (ICAEW), in association with the Carbon Trust, have published a practical guide on how organisations can best implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The practical guidance is in the style of FAQs and covers benefits, implementation of the recommendations and next steps.

A press release and the full guidance, Reporting on climate risks and opportunities, are available on the ICAEW website.

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