IFASS meeting with detailed analysis of responses to the EC fitness check on public reporting by companies

29 Mar, 2019

At the meeting of the International Federation of Accounting Standard Setters (IFASS) currently held in Buenos Aires, Peter Sampers, Chairman of the Dutch Accounting Standards Board (DASB) and Professor of Financial Accounting at Maastricht University, provided an update on the outcome of the public consultation on the EU framework for pubic reporting by companies.

For his detailed analysis, Mr Sampers drew on the summary report of the EU and on further analysis of individual responses to the consultation that were made public by the EU. The focus of his research was on the IFRS-related questions in the consultation.

Mr Sampers noted that stakeholders from 23 Member States and 25 third countries submitted 338 responses with 82% of the responses being from organisations and companies, 9% from public authorities and international organisations and 9% from private individuals. In this context, Mr Sampers especially noted the high number of responses from private individual that would show that stakeholders were really concerned about developments. He also noted the high number of responses from Germany.

In discussing the responses to individual questions, Mr Sampers noted the confusing design of certain elements of the consultation document that led to some false positives and contradictory answers and that only allowed additional comments in case of support for what seemed to be the EC Commission's preliminary view. He summarised the following insights:

  • Regarding the question of whether the EU should be able modify the content of IFRSs on adoptions, the majority of respondents was clearly against "carve-ins", however, clear regional differences became obvious with 75% of respondents in France supporting the possibility of carve-ins against only 15% in Germany, the UK and the Netherlands doing so.
  • A clear majority of respondents (68%) is convinced that the EU endorsement process is appropriate to ensure that IFRS do not pose an obstacle to broader EU policy objectives such as sustainability and long-term investments. This correlates with the answers to the question of how the EU could ensure that IFRS do not pose an obstacle to sustainability and long-term investments, where only 11% of respondents believed the possibility of modifications to IFRS was needed to ensure this.
  • On the question of whether an EU conceptual framework should underpin the IFRS endorsement process, the answer was clearly negative, however, a surprising number (not a majority, though) supported adopting the IASB's Conceptual Framework for use in the EU. (Discussing this point, participants made clear that adopting a pronouncement that is not binding for the IASB would lead to a legally difficult situation, especially since some of the IASB's standards are not aligned with the Conceptual Framework. Therefore, outright adoption would not seem to be an option.)

Overall, Mr Samper's presentation showed that it can be concluded that there is little support for changes to the current endorsement process and for the introduction of an ability for Europe to modify the content of IFRS. This is in line with the overall summary in the EC Commission's summary of responses which stated that the EU framework overall brings added value, is effective and relevant for achieving its objectives and is coherent.

Mr Sampers kindly gave us permission to make his presentation slides available on IAS Plus. They can be accessed here.

April 2019 IASB meeting agenda posted

29 Mar, 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 9–11 April 2019. There are ten topics on the agenda.

The Board will discuss the following:

  • Amendments to IFRS 17 Insurance Contracts:
    • Overview
    • Due process steps and permission for balloting
    • Sweep issues
    • Annual improvements
  • Business combinations under common control:
    • Update on the staff’s approach
    • Update on lenders and other creditors in BCUCC
  • Accounting policies and accounting estimates (Amendments to IAS 8):
    • Analysis of feedback — definition of accounting estimates
    • Analysis of feedback — other aspects
    • Project direction
  • Implementation matters
  • Disclosure Initiative:
    • Accounting policies — proposed amendments to IAS 1 and IFRS Practice Statement 2: due process steps and permission to begin the balloting process
  • Research programme update
  • Management commentary
  • Primary financial statements:
    • Amending proposals for management performance measures (MPMs)
    • Outstanding issues for financial entities
  • Goodwill and impairment:
    • Interconnecting issues
    • Better disclosures for business combinations
    • Better disclosures — feedback from consultative groups
  • Dynamic risk management:
    • Summary of decisions to date
    • Presentation
    • Determination of the target profile

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries as well as observer notes from the meeting on this page as they become available.

EFRAG Board Meeting April 2019

29 Mar, 2019

The European Financial Reporting Advisory Group (EFRAG) will hold a Board meeting on 4 April 2019 in Brussels.

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

IASB updates IFASS on IFRS 17, IASB meeting papers available

29 Mar, 2019

At the meeting of the International Forum of Accounting Standard Setters (IFASS) currently held in Buenos Aires, IASB Board member Darrel Scott updated the IFASS members on the status of the project regarding potential amendments to IFRS 17 'Insurance Contracts'. In addition, the IASB has made available the papers for discussing the project at the upcoming IASB meeting.

In his presentation, Mr Scott first discussed where the project on possible amendments currently is, the envisioned timeline for the project and next steps:

  • The IASB expects to issue an exposure draft of proposed amendments to IFRS 17 by the end of June 2019.
  • A shortened comment period is likely in order to speed up the process.
  • The IASB expects the finalisation of the amendments in early to mid 2020.
  • The comparative period would begin in 2021.
  • The amended standard would become effective in 2022 (Mr Scott reminded IFASS members that the postponed effective date is still only an amendment to the standard the IASB intends to propose).

Mr Scott then went on to explain the amendments the IASB intends to propose. These comprise 12 amendments that fall into 7 broad areas:

  • Effective date;
  • Acquisition cash flows for renewals;
  • Profit allocation for some contracts;
  • Reinsurance contracts held;
  • Balance sheet presentation;
  • Transition; and
  • Loans that transfer insurance risks.

There will also be minor amendments to IFRS 17 that will be proposed as part of the annual improvements.

At its April 2019 meeting, the Board plans to consider the package of amendments tentatively decided by the Board as a whole. The following agenda papers were made available on the IASB website:

  • AP2: Cover note
  • AP2A: Overview of the amendments to IFRS 17
    • considering the proposed amendments as a whole;
    • evaluating each of the proposed amendments against the criteria the Board set in October2018; and
    • considering the likely effects of the proposed amendments to IFRS 17
  • AP2B: Due process steps and permission for balloting
    • asking the Board to confirm its tentative decisions from the November 2018 meeting relating to the mandatory effective date of IFRS 17;
    • considering the due process steps undertaken by the Board in completing the narrow-scope project on the amendments to IFRS 17 and asking the Board to confirm that it wishes to proceed with an exposure draft; and
    • asking if there are any planned dissents at this stage
  • AP2C: Sweep issues
    • discussing additional stakeholder concerns relating to IFRS 17 that have arisen in the project on the amendments to IFRS 17; and
    • recommending that the effective date of proposed amendments should be aligned with the effective date of IFRS 17
  • AP2D: Annual improvements
    • including recommendations for other minor changes that would fall within the scope of the annual improvements process but could also be addressed in the exposure draft of proposed amendments to IFRS 17

FRC draft plan and budget highlights key areas of focus for 2019/20

29 Mar, 2019

The Financial Reporting Council (FRC) has published its draft Plan and Budget for 2019/20, which sets out its priorities for 2019/20.

The FRC have indicated that 2019/20 will be a year of transition for the FRC. In response to the recommendations of Sir John Kingman’s Independent Review, the Department for Business, Energy and Industrial Strategy (BEIS) is consulting on proposals to replace the FRC in its current form with a new statutory regulator to be called the Audit, Reporting and Governance Authority (ARGA). The FRC indicates that it recognises the need for change and “believe the speedy implementation of the recommendations of the Independent Review can help increase public confidence in audit, reporting and governance in the UK”.

During 2019/20 the FRC’s strategic priorities include:

  • Supporting the transition to the new Audit, Reporting and Governance Authority (“ARGA”).
  • Driving a step change in audit quality through the use of its powers to set audit standards and its monitoring and supervision of auditors.
  • Promoting the quality and usefulness of corporate reporting through increasing the number of corporate reporting reviews undertaken and focusing on those areas that it believes boards and preparers needs to address. These reviews will also cover the whole of a company’s annual report.
  • Promoting corporate governance and investor stewardship that contribute to trust in business. The FRC will extend its monitoring of practice and reporting on corporate governance and assess how effectively companies are implementing the new UK Corporate Governance Code.
  • Working with Government to implement an effective regulatory framework following EU exit:

The FRC also sets out its proposed budget for 2019/20 for expenditure and funding. Overall, the funding requirement is expected to increase by 11% and this increase is expected to fund an expansion in audit quality reviews, audit firm monitoring and supervisory approach and enforcement work.

Comments are requested until 08 May 2019. 

The press release and Draft Plan and Budget 2019/20 are available on the FRC website.

Government approves the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019

28 Mar, 2019

The International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/685) have been approved by the government.

The regulations set out some of the changes to be made to statutory requirements in relation to the application of IFRS in the UK after exit day, although the timing of when they become effective is dependent on other agreements made in the broader scheme of the UK’s exit from the EU.

In particular, they repeal the IAS Regulation so that it will not apply to the UK and introduce a new legal term ‘UK-adopted international accounting standards’ for IFRS as adopted by the UK. This will apply to UK companies that choose this framework, or which are required to use this framework, for accounting periods commencing on or after exit day. IFRS as adopted by the EU immediately before exit day is preserved as the initial set of IFRS as adopted by the UK on exit day. The regulations also provide for a UK mechanism for the adoption of IFRSs; endorsement will be by the Secretary of State but allows for delegation of this function.

Please click to access the regulations here.

Our related Need to know publication is available here.

Updated IPSAS-IFRS alignment dashboard

28 Mar, 2019

The International Public Sector Accounting Standards Board (IPSASB), which develops the of International Public Sector Accounting Standards (IPSAS) for financial reporting by governments and other public sector entities, has released an updated IPSAS-IFRS alignment dashboard showing how far individual IPSAS are aligned with corresponding IFRSs.

The alignment dashbord was updated for the March 2019 IPSASB meeting and now also includes IPSAS 42 Social Benefit issued in January 2019.

Please click to access the updated dashboard on the IPSASB website.

In this context, please also so our 2019 edition of IPSAS in your pocket published yesterday.

IFRS conference in London

28 Mar, 2019

The IFRS Foundation has announced that its next IFRS conference in Europe will be held in London on 20–21 June 2019.

The main conference programme includes:

Day 1

  • Chairman’s keynote
  • Keynote address
  • IASB update
  • Break-out sessions:
    • Business combination under common control
    • Goodwill and impairment
    • Management commentray
    • Implementation and application of standards

Day 2

  • Better Communication — What the Board is doing to improve communication in financial reporting
  • Electronic reporting – Why everyone should care about the IFRS Taxonomy
  • Break-out sessions (repeated from day 1)
  • Getting the best from IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers
  • Q&A session with IASB Members and staff

There are also three pre-conference special interest workshops.

More details, including registration information, are available on the conference website

EFRAG issues final endorsement advice on amendments to IFRS 3 regarding the definition of a business.

28 Mar, 2019

The European Financial Advisory Group (EFRAG) has issued its final endorsement advice letter relating to the use in the European Union of ‘Definition of a Business (Amendments to IFRS 3)’ (“the Amendments”).

The Amendments, published in October 2018 aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets.

EFRAG recommends the endorsement of the Amendments. EFRAG’s assessment is that the Amendments meet all the technical endorsement criteria of the IAS Regulation and are conducive to the European public good.

EFRAG also considers that the overall benefits of the amendments are likely to outweigh the associated costs to implement them.

A press release and the endorsement advice letter to the European Commission are available on the EFRAG website. EFRAG has also updated its endorsement status report.

2019 IFRS XBRL taxonomy issued

27 Mar, 2019

The IFRS Foundation has issued its 2019 IFRS Taxonomy. The IFRS Taxonomy is a translation of IFRS Standards into XBRL (eXtensible Business Reporting Language).

The IFRS Taxonomy 2019 is consistent with IFRSs as issued by the IASB at 1 January 2019 and includes changes to the IFRS Taxonomy 2018 such as:

  • disclosure requirements in IFRS 13 Fair Value Measurement; and
  • improvements including (1) the introduction of implementation notes and duration type elements, (2) the removal of entry points without documentation labels, and (3) other improvements.

The IFRS Foundation has also published IFRS Taxonomy 2018—Update 1 Common Practice (IFRS 13 Fair Value Measurement) and IFRS Taxonomy 2018—Update 2 General Improvements. The IFRS Taxonomy 2019 incorporates the changes resulting from these two updates.

For more information, see the press release and the IFRS Taxonomy 2019 page on the IASB's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.