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2018

November 2018 IASB meeting notes posted

21 Nov 2018

The IASB met on 14 and 15 November 2018 to discuss seven topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board decided to propose an amendment to defer the effective date of IFRS 17 Insurance Contracts (and the related temporary exemption to IFRS 9 Financial Instruments) by a year.  

In the Primary Financial Statements discussion the Board decided that EBITDA not be a required sub-total but that more research was necessary before it could decide whether, or how, to define it as “operating profit before depreciation and amortisation.”  The Board also decided to develop non-mandatory illustrative examples to accompany a revised IAS 1 Presentation of Financial Statements, remove the requirement in IAS 1:82(b) to present “finance costs” in the statement(s) of financial performance and clarify how the minimum line items are presented.

The Board discussed three implementation issues. The Board decided to proceed with the amendments to IAS 16 Property, Plant and Equipment, with some modifications, rather than support the staff recommendation that the proceeds continue to be deducted from the cost of the asset. The Board decided not to start a project on accounting for cryptocurrencies or ICOs, but they will continue to monitor developments in these areas. The Chairman used his casting vote to ask the IFRS Interpretations Committee to consider issuing an Agenda Decision on the accounting for cryptocurrency holdings. The Board decided that the Exposure Draft proposing amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets in relation to costs of fulfilling a contract also propose that early application be permitted.

The staff explained how they expect to manage the Management Commentary project using three work streams. The Board discussed the recommended objective of management commentary.

The Board decided to make some small changes to the proposed amendments to IAS 1 in relation to Classification of Liabilities as Current or Non-current.

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

The proposed model for Rate-regulated Activities supplements the information provided by applying current IFRS Standards. The Board discussed how the proposed model interacts with those other Standards. The Board also supported the recommendations about what information should be presented about rate-regulated activities, except for one related to OCI.

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

IFRS Advisory Council membership update

21 Nov 2018

The Trustees of the IFRS Foundation have announced appointments and re-appointments to the IFRS Advisory Council effective 1 January 2019.

The Advisory Council is the formal advisory body to the Trustees and the IASB. It advises the IFRS Foundation on its strategic direction, technical work plan and priorities.

The new and reappointed members of the Advisory Council are:

  • Andreas Barckow - Accounting Standards Committee of Germany
  • Garth Jones - AIA Group
  • Maria Ángeles Peláez Morón - Banco Bilbao Vizcaya Argentaria, SA
  • Sergey Epifanov - Lukoil
  • Tessa Kuijl - Ortec Finance
  • M P Vijar Kumar - South Asian Federation of Accountants
  • James Andrus - Council of Institutional Investors
  • Trevor Derwin - Deloitte & Touche
  • Daniel Civit - Grant Thornton
  • Russell Guthrie - International Federation of Accountants (IFAC)
  • Ellen Gaston - International Monetary Fund (IMF)
  • George Iguchi - The Securities Analysts Association of Japan
  • William Coen - Basel Committee on Banking Supervision
  • Aziz Dieye - Fédération Internationale des Experts-Comptables Francophones
  • Isabelle Ferrand - International Co-operative Alliance
  • Andrew Marshall - KPMG
  • Yibin Gao - Ministry of Finance, People’s Republic of China

All appointments take effect 1 January 2019 and are for a three-year period.

In addition, the Trustees noted that the following members are stepping down from the Council at the end of 2018 or have stepped down already: Gavin Francis, Jake Green, Igor Kozyrev, Ghiath Shabsign, Anne Simpson, Lynda Sullivan, Stephen Taylor, Goro Kumagai, and Colin McDonald.

The press release announcing the new appointments can be found on the IASB's website.

IFRS Foundation Trustees and Due Process Oversight Committee hold October 2018 meeting

21 Nov 2018

The IFRS Foundation Trustees and the Due Process Oversight Committee (DPOC) met in Johannesburg on 16-18 October 2018.

Meeting activities included the following:

  • Executive session:
    • Report of the Executive Director — The Trustees received a report from the Executive Director Lee White on activities since the last meeting.
    • Governance issues — The Trustees discussed and agreed proposed changes to the Foundation’s Constitution and changes to membership of ASAF.
    • Operations analysis — The Trustees received presentations on the Foundation’s technology and future IT architecture.
    • Future meetings — The Trustees confirmed that their next meeting would be in Kuala Lumpur in January 2019, with later meetings in Munich and New York.
    • Committee reports — The Trustees discussed reports from the Audit and Finance Committee, the Human Capital Committee, the Nominating Committee, the Education and Content Services Committee, and the DPOC. (Recordings from the DPOC meeting were released in October 2018).
  • IASB Chairman’s report — The Chair of the IASB provided the Trustees with a general update on the IASB’s technical activities (especially on financial instruments with characteristics of equity, principles of disclosure, goodwill and impairment, primary financial statements, and IBOR reform) and then discussed the Board's support for the implementation of IFRS 17 and possible amendments to the standard.
  • Meetings in Johannesburg — The Trustees held a stakeholder discussion and dinner entitled The future of financial reporting: an African perspective.

The full report on the IFRS Foundation trustees’ and DPOC meeting is available on the IASB’s website.

Agenda for the December 2018 ASAF meeting

20 Nov 2018

The International Accounting Standards Board (IASB) has released an agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 6 and 7 December 2018.

The agenda for the meeting is sum­marised below:

Thursday, 6 December 2018 (10:30-17:00)

  • Signing of memorandum of understanding
  • Financial Instruments with characteristics of equity
    • Discuss outreach performed in various jurisdictions.
  • Business combinations under common control (BCUCC)
    • ASAF will be asked to provide their views on application of the current value approach to all BCUCC.
  • Pension benefits that depend on asset returns
    • Overview of research project and ASAF will be asked to provide their views.
  • IFRS 17 Insurance Contracts
    • Discuss topics address in the IASB’s October 2018 meeting.

Friday, 7 December 2018 (9:00-15:45)

  • Management commentary
    • Update will be provided and ASAF will be asked for their views on applying materiality and priniciples for preparing management commentary.
  • Goodwill and impairment
    • Summary of feedback received from the CMAC and GPF meeting and ASAF will be asked for their advice on the disclosure objectives and requirements.
  • Update and agenda planning for April 2019 meeting.
  • Better communication – primary financial statements
    • Discussion on the tentative proposals to be included in the consultation document for the primary financial statements project.

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

FRC consults on effectiveness of auditing standards

20 Nov 2018

The Financial Reporting Council (FRC) has launched a consultation to determine how effective the 2016 changes to ethical and auditing standards have been in delivering high quality audit and whether further steps are now needed to strengthen auditor independence, reduce conflicts, improve quality and preserve trust in independent audit.

The standards were introduced to support the implementation of new UK legislation in June 2016 addressing the requirements of the EU's Audit Regulation and Directive.

The aims of the review of the standards are to:

  • gather feedback on whether the changes made to standards have had the desired impact on auditor independence, prevention of conflicts and on audit quality. Responses to the call for feedback will supplement lessons learned from the FRC's own audit inspection and enforcement work;
  • consider whether further measures are needed to address weaknesses, and ensure that audit better meets the expectations of those who rely on it; and
  • consider whether auditor reporting and communication with those charged with governance could be further strengthened to better meet the needs and expectations of users.

The press release and call for feedback document are available on the FRC website and feedback should be received by Friday 15 February 2019.

Our response to this call for feedback can be found by clicking here

FRC announces audit thematic reviews for 2019/20

20 Nov 2018

The Financial Reporting Council (FRC) has announced its audit thematic reviews, priority sectors and audit areas of focus for 2019/20.

The thematic reviews, which will supplement the FRC’s routine AQR monitoring programme are:

  • Audit Quality Indicators: an assessment of development and use of AQIs by the UK audit firms.
  • The use of technology in audits: review of the progress that audit firms have made since the report on the use of data analytics in January 2017 and the potential impact on audit quality.

These thematic reviews will focus on aspects of audit practice across various firms to identify both the scope for improvement and good practice.

The FRC has indicated that the corporate reports and audits selected for review in 2019/20 will have regard to the following priority sectors:

  • Financial Services, with emphasis on banks, other lenders and insurers
  • Oil and Gas (CRR only)
  • General Retailers; and Retail Property
  • Business Support Services
  • Construction and Materials 

As part of the audit monitoring programme in 2019/20, the FRC will pay close attention to the auditor’s work on:

  • Going concern and the viability statement
  • The Other Information in the Annual Report
  • Long-term contracts
  • The impairment of non-financial assets

The FRC will publish its 2018/19 thematic review of “The Auditors Work on Other Information in the Annual Report” later in 2018, followed by a report on Audit Firm Transparency Reporting in the first quarter of 2019.

A press release is available on the FRC website here.

Responses to the EC fitness check on public reporting by companies

18 Nov 2018

In March 2018, the European Commission (EC) published a consultation document 'Fitness Check on the EU Framework for Public Reporting by Companies'. While the document itself seemed oddly against the use of IFRSs as issued by the IASB, responses reveal that the majority of stakeholders are strictly against "EU carve-ins" that could lead to "EU-IFRSs".

Stakeholders from 23 EU Member States and 25 third countries (among them stakeholders from Australia, Canada, China, Japan, South Africa, and the United States) submitted 338 responses to the consultation. Approximately 60% of the responses were submitted by entities located in Germany, the United Kingdom, Belgium, France, and the Netherlands. For the majority of respondents, the EU framework for public reporting works well as it brings added value, is coherent, effective and relevant for achieving its intended objectives.

As regards the IAS Regulation and International Financial Reporting Standards (IFRS), a majority of respondents supported the status quo as regards the EU IFRS endorsement process (“yes-no” endorsement process with no changes to IFRSs as issued by the IASB) and cautioned strongly against “carve-ins” and "carve-outs" that could lead to “EU-IFRSs”, a situation that could be detrimental to EU companies active globally and to foreign investments into the EU. Answers to this question showed respondents from France to be the strongest voice for changes (75% of the respondents located in France would support changes to IFRSs as issued by the IASB (mostly banks and insurers or the organisations representing them)) while respondents from all other major Member States saw a only a 15% support for changes. Similarly, only 2 of the over 40 respondents from third countries supported EU flexibilty in adopting IFRSs. All supporters of flexibility in adoption indicated that “EU carve-ins” should be applied in very limited and well-defined circumstances, under strict conditions and with a sound (public) decision making process.

The responses to the consultation can be accessed in two ways on the EC website:

The Commission notes that it will report on the overall fitness check in a Commission Staff Working Document by mid-2019.

IASB releases podcast on tentative decision to defer IFRS 17 effective date

18 Nov 2018

As reported earlier, the IASB has tentatively decided to defer the effective date of IFRS 17 'Insurance Contracts' the fixed expiry date for the temporary exemption to IFRS 9 in IFRS 4 by one year. The IASB has now released a podcast with IASB Board member Darrel Scott explaining the Board's reasoning behind this decision.

As Mr Scott explains, the IASB had not been very sympathetic to general calls to delay the IFRS 17 effective date, however, the Board's decision to consider possible amendments to the standard has created a situation of uncertainty that justifies a deferral of application.

The podcast (approx. 7 minutes) can be accessed through the press relase on the IASB website.

Updated IASB work plan — Analysis

17 Nov 2018

Following the IASB's November 2018 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments since the work plan was last revised in October. Curiously, a project on IFRS 17 amendments is still missing from the work plan although the IASB has begun discussing possible amendments to IFRS 17 'Insurance Contracts' and has already tentatively decided to defer the effective date of the standard by one year.

Below is an analysis of all changes that were made to the work plan since our last analysis on 26 October 2018.

Standard-setting projects

  • Primary financial statements — a discussion paper or exposure draft is now expected in the second half of 2019 (was: first half of 2019)

Maintenance projects

  • Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12) — newly added to the work plan; an exposure draft is expected in the first half of 2019
  • Disclosure Initiative — Definition of Material (Amendments to IAS 1 and IAS 8) — removed from the work plan as final amendments were published on 31 October 2018
  • Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) — at its November meeting, the IASB decided to move forward with amendments, so the next project step is now an exposure draft (no date given)

Research projects

  • Financial instruments with characteristics of equity — feedback on the discussion paper is now expected in the first quarter of 2019 (was: first half of 2019)
  • Share-based payment — removed from the work plan as a research summary was published on 31 October 2018

Other projects

  • IFRS Taxonomy update — Common Practice (IFRS 13) — an analysis of the feedback received is now expected in January 2019 (was: first quarter of 2019)
  • Revisions to the Preface to IFRSs — newly added to the work plan; finalised wording is expected in December 2018

The above is a faithful comparison of the IASB work plan at 26 October 2018 and at 17 November 2018. For access to the current IASB work plan at any time, please click here.

EFRAG announces European Lab Steering Group membership

16 Nov 2018

The European Financial Reporting Advisory Group (EFRAG) has announced the members to the European Lab Steering Group which will focus on non-financial reporting, including sustainability reporting.

The chairman of the European Lab Steering Group will be Jean-Paul Gauzès and vice-chairman will be Alain Deckers. The group’s membership includes:

  • Hilde Blomme, accountancy profession, Belgian
  • Ossian Ekdahl, company, Swedish
  • Simonetta Ferrari, company, Italian
  • Elisabeth Gambert, company, Austrian
  • Sebastien Godinot, civil society, French
  • Filip Gregor, civil society, Czech
  • Imre Guba, user, Hungarian
  • Albert Hasselmeyer, company, German
  • Nancy Kamp- Roelands, accountancy profession, Dutch
  • Esko Antero Kivisaari, financial services, Finnish
  • Arlene McCarthy, other stakeholders, Irish
  • Flavia Micilotta, user, Italian
  • Jason Mitchell, user, British
  • Linda Nielsen, academic, Danish
  • Steven Marcus Tebbe, civil society, German

The first meeting will occur on 27 November 2018. For more information, see the press release on the EFRAG’s website.

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