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June

EFRAG draft comment letter on proposed amendments to IFRS 3 regarding a reference to the Conceptual Framework

28 Jun 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ‘Reference to the Conceptual Framework (Proposed amendments to IFRS 3)'

The exposure draft contains three proposed amendments to IFRS 3 'Business Combinations' that would update an outdated reference in IFRS 3 without significantly changing the requirements of the standard.

EFRAG agrees with all three proposed amendments.

Comments on EFRAG's draft comment letter are requested by 17 August 2019. For more information, see the press release and the draft comment letter on the EFRAG website.

EFRAG publishes June 2019 issue of 'EFRAG Update'

28 Jun 2019

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during June 2019.

IASB issues podcast on latest Board developments (June 2019)

27 Jun 2019

The IASB has released a podcast featuring IASB members Nick Anderson, Darrel Scott and Ann Tarca to discuss the deliberations at the June 2019 IASB meeting and other developments.

The podcast features dis­cus­sions of the following topics in more detail (length of the podcast: 20 minutes):

  • Goodwill and impairment.
  • Primary financial state­ments.
  • Rate-regulated activities.
  • 2019 review of the IFRS for SMEs Standard.
  • Financial instruments with characteristics of equity.
  • 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 at the June IASB meeting.

UK GAAP application for reporting periods ending 30 June 2019

27 Jun 2019

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2019.

As the new UK GAAP regime has now been in place for a number of years, preparation of either parent company or subsidiary accounts under either FRS 101 or FRS 102 should now have become a more routine exercise. The FRC has made several changes to FRS 102 as part of its first triennial review of the Standard to deal with issues highlighted in its implementation. The amendments were published in December 2017.

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2019. For those reporters who want to understand new UK GAAP application for earlier periods please select one of the following:

Pronouncement Effective date Application for quarters ending 30 June 2019?
1st qtrs.* 2nd qtrs.** 3rd qtrs.*** Full yrs****
FRS 100
Amendments to FRS 102 (first triennial review) Effective 1 January 2019. Early application is permitted provided that all the amendments to FRS 101 as a result of the triennial review are applied at the same time. Mandatory Mandatory Optional Optional
FRS 101
The amendments are available from when an entity applying FRS 101 first applies IFRS 15. However the change in company law to permit the equity method in individual financial statements is effective from 1 January 2016 (or from 1 January 2015 if it is adopted early). Disclosure exemptions in relation to IFRS 15 already applied in prior year (April 2018)/Choice permitted by change in company law optional Disclosure exemptions in relation to IFRS 15 already applied in prior year (January 2018)/Choice permitted by change in company law optional Disclosure exemptions in relation to IFRS 15 Mandatory(see note 1)/Choice permitted by change in company law optional Disclosure exemptions in relation to IFRS 15 Mandatory(see note 1)/Choice permitted by change in company law optional
The amendments are available from when an entity applying FRS 101 first applies IFRS 16. Mandatory  Mandatory Optional - The amendments are available from when an entity applying FRS 101 first applies IFRS 16.Note 2 Optional - The amendments are available from when an entity applying FRS 101 first applies IFRS 16.Note 2
Amendments to FRS 102 (first triennial review)

Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted provided that all the amendments to FRS 101 as a result of the triennial review are applied at the same time

 

Mandatory Mandatory Optional Optional
Amendments to the Basis for Conclusions FRS 101 Reduced Disclosure Framework

No effective date. No amendments to FRS 101 have been made

N/A (see effective date column) N/A (see effective date column) N/A (see effective date column) N/A (see effective date column)
Amendments to FRS 101 - 2018/19 cycle issued

The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time.

# # # #
FRS 102
Amendments to FRS 102 (first triennial review) The effective date for most of the amendments to FRS 102 is for accounting periods beginning on or after 1 January 2019, with early application permitted provided all amendments are applied at the same time. The only exceptions to this are the amendments relating to directors’ loans and the tax effects of gift aid payments, for which early application is permitted separately. Limited transitional provisions are also available. The amendments to disclosure requirements under Section 1A for small entities in the Republic of Ireland are effective for accounting periods beginning on or after 1 January 2017. However, early application is permitted for companies in the Republic of Ireland that apply the Companies (Accounting) Act 2017 is applied from the same date.

Mandatory

 

Mandatory

 

Optional (most amendments so long as all other amendments are applied at the same time - exception for the amendments relating to directors’ loans and the tax effects of gift aid payments where this is not the case).

 

Optional (most amendments so long as all other amendments are applied at the same time - exception for the amendments relating to directors’ loans and the tax effects of gift aid payments where this is not the case).

 

Amendments to FRS 102: Multi-employer defined benefit plans

The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.

Optional

Optional

Optional

Optional

FRS 103
Amendments to FRS 102 (first triennial review) Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted provided that all the amendments to FRS 103 as a result of the triennial review are applied at the same time. Mandatory Mandatory Optional Optional
FRS 104
Amendments to FRS 102 (first triennial review) Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted if an entity also applies the Triennial review 2017 amendments to FRS 101 or FRS 102 for an accounting period beginning before 1 January 2019. Mandatory Mandatory Optional Optional
FRS 105
Amendments to FRS 102 (first triennial review)
The changes to disclosure requirements in FRS 105 for micro entities in the UK are applicable for accounting periods beginning on or after 1 January 2017; all other amendments to FRS 105 as a result of the triennial review are applicable for accounting periods beginning on or after 1 January 2019. Early application for UK micro-companies is permitted provided that all the amendments to FRS 105 are applied at the same time.

With respect to the Republic of Ireland, the changes to incorporate FRS 105 are applicable to accounting periods beginning on or after 1 January 2017. Earlier application is permitted for companies in the Republic of Ireland that apply the Companies (Accounting) Act 2017 is applied from the same date. All other amendments to FRS 105 as a result of the triennial review are applicable for accounting periods beginning on or after 1 January 2019. Early application of the other amendments is permitted provided that all of these other amendments are applied at the same time.

Requirements (other than disclosure requirements for micro entities)- mandatory

Amendments other than ROI changes to incorporate FRS 105 - mandatory

Requirements (other than disclosure requirements for micro entities)- mandatory

Amendments other than ROI changes to incorporate FRS 105 - mandatory

Requirements (other than disclosure requirements for micro entities)-optional

Amendments other than ROI changes to incorporate FRS 105 - optional

Requirements (other than disclosure requirements for micro entities)-optional

Amendments other than ROI changes to incorporate FRS 105 - optional

* 1st quarter ending on 30 June 2019 (accounting period began on 1 April 2019).

** 2nd quarter ending 30 June 2019 (accounting period began 1 January 2019).

*** 3rd quarter ending 30 June 2019 (accounting period began 1 October 2018).

**** 4th quarter ending 30 June 2019 (accounting period began 1 July 2018).

# - The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time.  IFRS 17 has not yet been endorsed for use in the EU.

Note 1 - IFRS 15 is applicable to an entity's first annual IFRS financial statements for a period beginning on or after 1 January 2018.

Note 2 - IFRS 16 is applicable to an entity's first annual IFRS financial statements for a period beginning on or after 1 January 2019.

 

New and revised pronouncements as at 30 June 2019

27 Jun 2019

Our popular summary of new and revised financial reporting requirements, updated for financial reporting periods ending on 30 June 2019. This listing can be used to perform a quick check that new financial reporting requirements such as new and revised accounting standards and interpretations, and amendments to standards and interpretations, have been fully considered in the reporting close process.

The information below reflects developments to 30 September 2019 and will be updated through to September 2019 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2019. For accounts approved after September 2019, please also refer to subsequent versions of this document for any new and revised IFRSs that have additionally been issued that might require disclosure in the accounts under IAS 8:30.

The information below is organised as follows:

Summary

The table below provides a summary of the pronouncements which will be mandatorily applied by entities for the first time at 30 June 2019, for various quarterly reporting periods. Where an EU entity chooses to prepare financial statements in accordance with IFRSs as issued by the IASB, as well as in compliance with IFRSs as adopted by the EU, that entity should comply with the earlier IASB effective date for those items. The table below provides a summary of these pronouncements, and which reporting periods they apply to:

Pronouncement IASB Effective date* EU effective date* EU Mandatory at 30 June 2019?
1st qtrs.** 2nd qtrs.*** 3rd qtrs.**** Full yrs*****
IFRS 9 Financial Instruments (2014) 1 January 2018 1 January 2018 Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Yes Yes
IFRS 15 Revenue from Contracts with Customers 1 January 2018 1 January 2018 Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Yes Yes
IFRS 16 Leases 1 January 2019 1 January 2019 Yes Yes No No
NEW OR REVISED INTERPRETATIONS
IFRIC 22 Foreign Currency Transactions and Advance Consideration 1 January 2018 1 January 2018 Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Yes Yes
IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019 1 January 2019 Yes Yes No No
Annual Improvements to IFRS Standards 2014–2016 Cycle – Amendments to IFRS 1 and IAS 28 1 January 2018 1 January 2018 Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Yes Yes
Clarifications to IFRS 15 'Revenue from Contracts with Customers' 1 January 2018 1 January 2018 Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Yes Yes
Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) 1 January 2018 1 January 2018 Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Yes Yes
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4) 1 January 2018 1 January 2018 Optional ~ Optional ~ Optional ~ Optional ~
'Transfers of Investment Property (Amendments to IAS 40)' 1 January 2018 1 January 2018 Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Yes Yes
Annual Improvements 2015-2017 Cycle 1 January 2019 1 January 2019 Yes Yes No No
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) 1 January 2019 1 January 2019 Yes Yes No No
Prepayment Features with Negative Compensation (Amendments to IFRS 9) 1 January 2019 1 January 2019 Yes Yes No No
Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) 1 January 2019 1 January 2019 Yes Yes No No

* Generally annual reporting periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see below for full details).

** 1st quarter ending on 30 June 2019 (accounting period began on 1 April 2019).

*** 2nd quarter ending 30 June 2019 (accounting period began 1 January 2019).

**** 3rd quarter ending 30 June 2019 (accounting period began 1 October 2018).

***** 4th quarter ending 30 June 2019 (accounting period began 1 July 2018).

~ The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

More information about these pronouncements, and all new and revised pronouncements, is set out below.

Financial statement considerations in adopting new and revised pronouncements

Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:

  • Updates to accounting policies. The terminology and substance of disclosed accounting policies may need to be updated to reflect new recognition, measurement and other requirements, e.g IAS 19 Employee Benefits may impact the measurement of certain employee benefits.
  • Impact of transitional provisions. IAS 8 Accounting Policies, Changes in Estimates and Errors contains a general requirement that changes in accounting policies are retrospectively applied, but this does not apply to the extent an individual pronouncement has specific transitional provisions.
  • Disclosures about changes in accounting policies. Where an entity changes its accounting policy as a result of the initial application of an IFRS and it has an effect on the current period or any prior period, IAS 8 requires the disclosure of a number of matters, e.g. the title of the IFRS, the nature of the change in accounting policy, a description of the transitional provisions, and the amount of the adjustment for each financial statement line item affected
  • Third statement of financial position. IAS 1 Presentation of Financial Statements requires the presentation of a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements in a number of situations, including if an entity applies an accounting policy retrospectively and the retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period
  • Earnings per share (EPS). Where applicable to the entity, IAS 33 Earnings Per Share requires basic and diluted EPS to be adjusted for the impacts of adjustments result from changes in accounting policies accounted for retrospectively and IAS 8 requires the disclosure of the amount of any such adjustments.

Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation.

 

New or revised standards

The information below can be used to assist with the disclosure requirements under paragraph 30 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which requires entities to disclose any new IFRSs that are in issue but not yet effective and which are likely to impact the entity

New or revised pronouncement When EU effective Application at 30 June 2019 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

IFRS 9 Financial Instruments (2009)

IFRS 9 introduces new requirements for classifying and measuring financial assets, as follows:

  • Debt instruments meeting both a 'business model' test and a 'cash flow characteristics' test are measured at amortised cost (the use of fair value is optional in some limited circumstances)
  • Investments in equity instruments can be designated as 'fair value through other comprehensive income' with only dividends being recognised in profit or loss
  • All other instruments (including all derivatives) are measured at fair value with changes recognised in the profit or loss
  • The concept of 'embedded derivatives' does not apply to financial assets within the scope of the Standard and the entire instrument must be classified and measured in accordance with the above guidelines.

* IFRS 9 (2014) was issued on 24 July 2014 and supersedes IFRS 9 (2009), but this version of the standard remains available for application if the relevant date of initial application is before 1 February 2015.

Issued: 12 November 2009 (article, newsletter)

No stated effective date (see notes in prior column). Optional Optional Optional Optional

IFRS 9 Financial Instruments (2010)

A revised version of IFRS 9 incorporating revised requirements for the classification and measurement of financial liabilities, and carrying over the existing derecognition requirements from IAS 39 Financial Instruments: Recognition and Measurement.

The revised financial liability provisions maintain the existing amortised cost measurement basis for most liabilities. New requirements apply where an entity chooses to measure a liability at fair value through profit or loss – in these cases, the portion of the change in fair value related to changes in the entity's own credit risk is presented in other comprehensive income rather than within profit or loss.

* IFRS 9 (2014) was issued on 24 July 2014 and supersedes IFRS 9 (2009), but this version of the standard remains available for application if the relevant date of initial application is before 1 February 2015.

Issued: 28 October 2010 (article, newsletter)

No stated effective date (see notes in prior column). Optional Optional Optional Optional

IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (2013)

A revised version of IFRS 9 which:

  • Introduces a new chapter to IFRS 9 on hedge accounting, putting in place a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures
  • Permits an entity to apply only the requirements introduced in IFRS 9 (2010) for the presentation of gains and losses on financial liabilities designated as at fair value through profit or loss without applying the other requirements of IFRS 9, meaning the portion of the change in fair value related to changes in the entity's own credit risk can be presented in other comprehensive income rather than within profit or loss
  • Removes the mandatory effective date of IFRS 9 (2013), IFRS 9 (2010) and IFRS 9 (2009), leaving the effective date open pending the finalisation of the impairment and classification and measurement requirements. Notwithstanding the removal of an effective date, each standard remains available for application.

* IFRS 9 (2014) was issued on 24 July 2014 and supersedes IFRS 9 (2009), but this version of the standard remains available for application if the relevant date of initial application is before 1 February 2015.

Issued: 19 November 2013 (article, newsletter)

No stated effective date (see notes in prior column). Optional Optional Optional Optional

IFRS 9 Financial Instruments (2014)

A finalised version of IFRS 9 which contains accounting requirements for financial instruments, replacing IAS 39 Financial Instruments: Recognition and Measurement. The standard contains requirements in the following areas:

  • Classification and measurement. Financial assets are classified by reference to the business model within which they are held and their contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a 'fair value through other comprehensive income' category for certain debt instruments. Financial liabilities are classified in a similar manner to under IAS 39, however there are differences in the requirements applying to the measurement of an entity's own credit risk.
  • Impairment. The 2014 version of IFRS 9 introduces an 'expected credit loss' model for the measurement of the impairment of financial assets, so it is no longer necessary for a credit event to have occurred before a credit loss is recognised
  • Hedge accounting. Introduces a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures
  • Derecognition. The requirements for the derecognition of financial assets and liabilities are carried forward from IAS 39.

Note: Depending on the chosen approach to applying IFRS 9, the transition can involve one or more than one date of initial application for different requirements.

Note: IFRS 9 (2014) supersedes IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013), but these standards remain available for application if the relevant date of initial application is before 1 February 2015.

Issued: 25 July 2014 (Summary of IFRS 9,article, newsletter)

Effective for annual period beginning on or after 1 January 2018. Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Mandatory Mandatory

IFRS 15 Revenue from Contracts with Customers

IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.

The five steps in the model are as follows:

  • Identify the contract with the customer
  • Identify the performance obligations in the contract
  • Determine the transaction price
  • Allocate the transaction price to the performance obligations in the contracts
  • Recognise revenue when (or as) the entity satisfies a performance obligation.

Guidance is provided on topics such as the point in which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.

Issued: 28 May 2014 (Summary of IFRS 15, article, newsletter, revenue resources)

Applicable to an entity's first annual IFRS financial statements for a period beginning on or after 1 January 2018. See related news article. Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Mandatory Mandatory

IFRS 16 Leases

IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.
Issued: 13 January 2016 (Summary of IFRS 16, article, IFRS 16 resources)
Applicable to annual reporting periods beginning on or after 1 January 2019

Mandatory Mandatory Optional Optional

IFRS 17 Insurance Contracts

IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2021.

Issued: 18 May 2017 (Summary of IFRS 17, Article, Newsletter).

Applicable to annual reporting periods beginning on or after 1 January 2021

Not yet endorsed for use in the EU.

 

New or revised interpretations

New or revised interpretation When effective Application at 30 June 2019 to:
1st qtrs. 2nd qtrs. 3rd qtrs 4 qtrs.

IFRIC 22 Foreign Currency Transactions and Advance Consideration

The interpretation addresses foreign currency transactions or parts of transactions where:

  • there is consideration that is denominated or priced in a foreign currency;
  • the entity recognises a prepayment asset or a deferred income liability in respect of that consideration, in advance of the recognition of the related asset, expense or income; and
  • the prepayment asset or deferred income liability is non-monetary.

The Interpretations Committee came to the following conclusion:

  • The date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability.
  • If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.

Issued: 8 December 2016 (article)

Effective for annual reporting periods beginning on or after 1 January 2018. Earlier application is permitted. Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Mandatory Mandatory

IFRIC 23 Uncertainty over Income Tax Treatments

The interpretation sets out how to determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments under IAS 12 Income Taxes.

The Interpretation requires an entity to:

  • determine whether uncertain tax positions are assessed separately or as a group; and
  • assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings:
    • If yes, the entity should determine its accounting tax position consistently
      with the tax treatment used or planned to be used in its income tax filings.
    • If no, the entity should reflect the effect of uncertainty in determining its accounting tax position.

Issued: 7 June 2017 (article)

Effective date: annual periods beginning on or after 1 January 2019. Entities can apply the Interpretation either on a fully retrospective or modified retrospective approach (where comparatives are not permitted or required to be restated).

 

Mandatory

Mandatory

Optional

Optional

Amendments

New or revised pronouncement When effective Application at 30 June 2019 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

Editorial Corrections (various)

The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2012, such corrections have been made in February 2012, July 2012, March 2013, September 2013, November 2013 and March 2014, September 2014, December 2014, March 2015, April 2015, September 2015, December 2015, March 2016, May 2016, September 2016, December 2016, September 2017, November 2017, December 2018, March 2019 and May 2019.

Note: For details of these editorial corrections, see our IASB editorial corrections page.

As minor editorial corrections, these changes are effectively immediately applicable under IFRS See comment in previous column
Clarifications to IFRS 15 'Revenue from Contracts with Customers'
Amends IFRS 15 in three areas:
  • Identification of performance obligations – changes clarify the application of the concept of 'distinct‘ in this context.
  • Whether an entity is acting as principal or agent – changes clarify the application of the principal of ‘control’ in making this determination.
  • Licensing – changes assist in determining whether an entity’s activities ‘significantly affect’ intellectual property during the period for which it has been licensed to a customer.
The amendments also provide some transition relief for modified contracts and completed contracts.
Issued: 12 April 2016 (article, newsletter)
Effective for annual periods beginning on or after 1 January 2018 Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Mandatory Mandatory
Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)
Amends IFRS 2 to clarify the classification and measurement of share-based payment transactions with respect to:
  • the accounting for cash-settled share-based payment transactions that include a performance condition;
  • the classification of share-based payment transactions with net settlement features; and
  • the accounting for modifications of share-based payment transactions from cash-settled to equity-settled.

Issued: 20 June 2016 (article, newsletter)

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted. Already adopted in prior year (1 April 2018) Already adopted in prior year (1 January 2018) Mandatory Mandatory
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
  • an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
  • an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.
The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Issued: 12 September 2016 (article, newsletter)

Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018 and only available for three years after that date.

 

Optional

Optional

Optional

Optional

Annual Improvements 2014-2016 Cycle - amendments to IFRS 1 and IAS 28
Makes amendments to the following standards:
  • IFRS 1 - Deletes the short-term exemptions in paragraphs E3–E7 of IFRS 1, because they have now served their intended purpose
  • IFRS 12 - Clarifies the scope of the standard by specifying that the disclosure requirements in the standard, except for those in paragraphs B10–B16, apply to an entity’s interests listed in paragraph 5 that are classified as held for sale, as held for distribution or as discontinued operations in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
  • IAS 28 - Clarifies that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organisation, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition

Issued: 8 December 2016 (article)

 

The amendments to IFRS 1 and IAS 28 are effective for annual periods beginning on or after 1 January 2018, the amendment to IFRS 12 for annual periods beginning on or after 1 January 2017

Amendments to IFRS 1 and IAS 28 - already applied in prior year (1 April 2018) Amendments to IFRS 1 and IAS 28 - already applied in prior year (1 January 2018) Amendments to IFRS 1 and IAS 28 - mandatory Amendments to IFRS 1 and IAS 28 - mandatory
Annual Improvements 2015-2017 Cycle
Makes amendments to the following standards:
  • 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 the requirements in the former paragraph 52B (to recognise the income tax consequences of dividends where the transactions or events that generated distributable profits are recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A that only deals with situations where there are different tax rates for distributed and undistributed profits.
  • 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.

The amendments are all effective for annual periods beginning on or after 1 January 2019.

Mandatory Mandatory Optional Optional
'Transfers of Investment Property (Amendments to IAS 40)'
The amendments to IAS 40 Investment Property:
  • Amends paragraph 57 to state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. A change of use occurs if property meets, or ceases to meet, the definition of investment property. A change in management’s intentions for the use of a property by itself does not constitute evidence of a change in use.
  • The list of examples of evidence in paragraph 57(a) – (d) is now presented as a non-exhaustive list of examples instead of the previous exhaustive list.

Issued: 8 December 2016 (article)

The amendments are effective for periods beginning on or after 1 January 2018. Earlier application is permitted. An entity applies the amendments to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. Retrospective application is also permitted if that is possible without the use of hindsight.

Already adopted in prior year (1 April 2018)

Already adopted in prior year (1 January 2018)

Mandatory

Mandatory
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
The amendments clarify that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
The amendments in Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) are:
  • Paragraph 14A has been added to clarify that an entity applies IFRS 9 including its impairment requirements, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
  • Paragraph 41 has been deleted because the Board felt that it merely reiterated requirements in IFRS 9 and had created confusion about the accounting for long-term interests.
Issued:12 October 2017 (article)
Annual periods beginning on or after 1 January 2019
Annual periods beginning on or after 1 January 2019

Annual periods beginning on or after 1 January 2019

Mandatory

Mandatory

Optional

Optional

Prepayment Features with Negative Compensation (Amendments to IFRS 9)
The amendments address concerns about how IFRS 9 Financial Instruments classifies particular prepayable financial assets. In addition, the IASB has clarified an aspect of the accounting for financial liabilities following a modification.
The amendments are:

Changes regarding symmetric prepayment options

Under the current IFRS 9 requirements, the SPPI condition is not met if the lender has to make a settlement payment in the event of termination by the borrower (also referred to as early repayment gain).

Prepayment Features with Negative Compensation amends the existing requirements in IFRS 9 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments.

Under the amendments, the sign of the prepayment amount is not relevant, i. e. depending on the interest rate prevailing at the time of termination, a payment may also be made in favour of the contracting party effecting the early repayment. The calculation of this compensation payment must be the same for both the case of an early repayment penalty and the case of a early repayment gain.

Clarification regarding the modification of financial liabilities

The final amendments also contain (in the Basis for Conclusions) a clarification regarding the accounting for a modification or exchange of a financial liability measured at amortised cost that does not result in the derecognition of the financial liability. The IASB clarifies that an entity recognises any adjustment to the amortised cost of the financial liability arising from a modification or exchange in profit or loss at the date of the modification or exchange. A retrospective change of the accounting treatment may therefore become necessary if in the past the effective interest rate was adjusted and not the amortised cost amount.
Issued: 12 October 2017 (article)

 

The amendments are to be applied retrospectively for fiscal years beginning on or after 1 January 2019, i. e. one year after the first application of IFRS 9 in its current version. Early application is permitted so entities can apply the amendments together with IFRS 9 if they wish so. Additional transitional requirements and corresponding disclosure requirements must be observed when applying the amendments for the first time.

Mandatory

Mandatory

Optional

Optional

Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
The amendments in Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) are:
  • If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement.
  • In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.

Issued: 7 February 2018 (article)

Annual periods beginning on or after 1 January 2019.

Mandatory

Mandatory

Optional

Optional

Amendments to References to the Conceptual Framework in IFRS Standards


Together with the revised Conceptual Framework published in March 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework.

Issued: 29 March 2018 (article)

Annual periods beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

Definition of a Business (Amendments to IFRS 3)

The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. They:

  • clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;
  • narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;
  • add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
  • remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and
  • add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

Issued: 22 October 2018 (article/newsletter)


Business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

Definition of Material (Amendments to IAS 1 and IAS 8)

The amendments in Definition of Material (Amendments to IAS 1 and IAS 8) clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards.

Issued: 31 October 2018 (article)

 

Annual reporting periods beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

The amendments in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) clarify that entities would continue to apply certain hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform.

Issued: 26 September 2019 (article)

Annual reporting periods beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

 

IASB publishes proposed amendments to IFRS 17

26 Jun 2019

The International Accounting Standards Board (IASB) has published an exposure draft 'Amendments to IFRS 17' to address concerns and implementation challenges that were identified after IFRS 17 'Insurance Contracts' was published in 2017. Comments are requested by 25 September 2019.

 

Background

Since IFRS 17 Insurance Contracts was issued in May 2017, the Board has been monitoring the implementation and has learned about concerns and implementation challenges. The Board had previously indicated that it would consider whether additional action is needed to address matters arising during implementation. At the October 2018 meeting of the Board a list of 25 potential amendments to the standard was identified and the criteria against which any possible amendment would be considered were agreed. 

Subsequent discussions in the project on possible amendments to IFRS 17 led to the proposed amendments that are included in today's exposure draft.

 

Suggested changes

The main changes proposed in ED/2019/4 Amendments to IFRS 17 are:

  • Deferral of the date of initial application of IFRS 17 by one year to annual periods beginning on or after 1 January 2022 and change the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2022.
  • Additional optional scope exclusion for loan contracts that transfer significant insurance risk and related transition requirements to enable entities issuing such contracts to account for those contracts applying either IFRS 17 or IFRS 9.
  • Additional scope exclusion for credit card contracts that provide insurance coverage.
  • Amendments regarding allocation, recognition, assessment of the recoverability, and disclosure regarding insurance acquisition cash flows relating to expected contract renewals.
  • Amendments regarding the contractual service margin (CSM) allocation relating to investment components and related disclosure requirements so that in the general model the CSM is allocated on the basis of coverage units that are determined by considering both insurance coverage and any investment return service.
  • Extension of the risk mitigation option to include reinsurance contracts held.
  • Amendments to require an entity that at initial recognition recognises losses on onerous insurance contracts issued to also recognise a gain on reinsurance contracts held.
  • Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts.
  • Additional transition relief for business combinations.
  • Additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.

The exposure draft also contains several smaller proposed amendments.

Comments on the proposed changes are requested by 25 September 2019.

 

Effective date

The proposed effective date for the amendments would be the same as the proposed new effective date for IFRS 17 (1 January 2022) with early application permitted. The amendments would be applied retrospectively.

 

Additional information

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EFRAG publishes its final comment letter on proposed amendments to the interest rate benchmark reform

26 Jun 2019

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter on the IASB exposure draft ED/2019/1 'Interest Rate Benchmark Reform (proposed amendments to IFRS 9 and IAS 39)'.

EFRAG considers the IASB proposals to be a "step in the right direction in addressing the inability to meet specific forward-looking hedge accounting requirements due to uncertainty that exists around the transition of interbank offered rates (IBORs) in the periods before the transition".  

Whilst supporting the proposals EFRAG is of the view that a number of changes are necessary most notably

  • EFRAG suggests that relief from including the uncertainties of IBOR reform in the retrospective assessment is needed.
  • EFRAG disagrees with not applying the proposed amendments retrospectively to hedges that were discontinued because entities were unable to apply the proposed reliefs, and suggests to assess whether structuring opportunities would not arise as a result of the ED not allowing reinstatement of such hedges.
  • EFRAG finds that the objective of the proposed disclosures "lacking explicit justification, especially because the aim of the Amendments is to neutralise the impacts from IBOR transition".  EFRAG highlights that the proposed disclosures will be will require costly changes to the current reporting systems and is "not convinced" that the level of disclosures proposed will, in this stage, provide sufficient additional information to justify the increased cost.

With regards the second phase, EFRAG believes that it should be "addressed as soon as possible and in parallel to the finalisation of the first phase , without hindering the finalisation of the relief for the issues addressed in the first phase".  EFRAG suggests in an appendix a number of topics that could potentially be addressed in the second phase.

For more information, see the press release and final comment letter on the EFRAG site.

EFRAG Board President and Vice-President reappointed

25 Jun 2019

​Following the recommendation from the European Commission, the General Assembly of the European Financial Reporting Advisory Group (EFRAG) has reappointed Jean-Paul Gauzès and Andreas Barckow as Board President and Vice President, respectively.​

Jean Paul Gauzès is a French lawyer and former Member of the European Parliament. Andreas Barckow is President of the German standard-setter ASCG.

IASB posts webcast on borrowing costs and revenue recognition

24 Jun 2019

The IASB has posted a webcast, by IASB technical staff Jawaid Dossani and Nicolette Lange, that discusses conclusions reach at by the IFRS Interpretation Committee related to the application of IAS 23, ‘Borrowing Costs’ and its interaction with IFRS 15, ‘Revenue from Contracts with Customers’.

At the March 2019 IFRS Interpretation meeting, the Committee determined that borrowing costs would not be capitalised when the borrowings relate to the construction of a residential multi-unit real estate development for which revenue is recognised over time.

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

Updated IASB work plan — Analysis

24 Jun 2019

Following the IASB's June 2019 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 April. Most changes relate to exposure drafts having been published or comment letter periods having ended.

Below is an analysis of all changes that were made to the work plan since our last analysis on 18 May 2019.

Standard-setting projects

  • Rate-regulated activities — the expected timing of a discussion paper or exposure draft has been moved to H1 2020 (was: H2 2019)

Maintenance projects

  • The IASB published an exposure draft Annual Improvements to IFRS Standards 2018–2020 on 21 May 2019. The following projects are part of the annual improvements 2018-2020 and are therefore now reflected as open to comment in the work plan:
    • Fees in the ‘10 per cent’ Test for Derecognition (Amendments to IFRS 9)
    • Lease Incentives (Amendment to Illustrative Example 13 accompanying IFRS 16)
    • Subsidiary as a First-time Adopter (Amendments to IFRS 1)
    • Taxation in Fair Value Measurements (Amendments to IAS 41)
  • IBOR reform and the effects on financial reporting — the work plan reflects that the comment period on the exposure draft has ended; a first discussion of the feedback received is scheduled for Q3 2019
  • Updating a reference to the Conceptual Framework (Amendments to IFRS 3) — The IASB published an exposure draft Reference to the Conceptual Framework (Proposed amendments to IFRS 3) on 30 May 2019 - the work plan reflects that the project is now open for comment

Research projects

  • No changes

The above is a faithful comparison of the IASB work plan at 18 May 2019 and at 24 June 2019. For access to the current IASB work plan at any time, please click here.

Correction list for hyphenation

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