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August

IASB issues podcast on latest Board developments (August 2019)

29 Aug 2019

The IASB, which normally does not meet in August, held an additional meeting on 28 August 2019 to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. The IASB has released a podcast featuring IASB Vice-Chair Sue Lloyd and communications team member Kirstina Reitan to discuss the deliberations at the meeting and the timeline of the project.

The 7-minute podcast can be accessed through the press release on the IASB website. More information on the discussions is available through our comprehensive notes taken by Deloitte observers at the August IASB meeting.

Agenda for the October 2019 ASAF meeting

29 Aug 2019

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 3 October 2019.

The agenda for the meeting is summarised below:

Thursday, 3 October (09:30-16:20)

  • Financial instruments with characteristics of equity
    • Update on the Board’s discussion of the project
    • Project direction
  • Dynamic Risk Management
    • Overview of the core model
    • ASAF members' help with obtaining feedback on the model
  • IBOR phase II
    • Update on the draft scope for the project
  • Disclosure initiative – Accounting policies
    • ASAF members’views on the exposure draft published in August
  • Agenda planning
  • Agenda consultation
    • Introduction to the 2020 agenda consultation request for views
  • Accounting estimation
    • Overview of the KASB research project on exploring the definition of accounting estimation

For more information, please see the agenda on the IASB's website.

August 2019 IASB meeting notes posted

28 Aug 2019

The IASB, which normally does not meet in August, held an additional meeting on 28 August 2019 to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. We have posted our comprehensive Deloitte observer notes for this discussion.

The Board decided that the amendments will: include an exception to the requirement in IAS 39 for retrospective assessment when a hedge is temporarily outside the 80–125% range solely due to uncertainties arising from the reform; provide relief from the separately identifiable requirement for ‘macro hedges’; clarify when the relief ceases to apply to a group of items designated as the hedged item; clarify that the amendments would apply to hedges of both interest rate and foreign currency risks; and simplify the disclosure requirements.

The staff will prepare the final amendments for publication.

Please click to access the detailed notes taken by Deloitte observers for this discussion.

IPSASB publishes proposed amendments regarding public sector financial instruments

28 Aug 2019

The International Public Sector Accounting Standards Board (IPSASB) has published an exposure draft 'Public Sector Financial Instruments: Amendments to IPSAS 41 'Financial Instruments'' with proposed amendments that would supplement the IPSASB’s existing guidance in IPSAS 41 for topics that are unique to the public sector and have a significant impact on government finances.

The exposure draft proposes clarification of existing guidance for four public sector instruments:

  • Monetary gold;
  • Currency in circulation;
  • IMF quota subscriptions; and
  • IMF special drawing rights.

The IPSASB has come to the conclusion that monetary gold has similar characteristics to a financial asset and proposes to clarify that it is appropriate to account for monetary gold by applying the financial asset principles in certain circumstances.

As regards currency in circulation, IMF quota subscriptions and special drawing rights, the IPSASB has come to the conclusion that these all meet the definition of a financial instrument and proposes adding implementation guidance and an illustrative example to support stakeholders accounting for these instruments.

Please click to access the exposure draft Public Sector Financial Instruments: Amendments to IPSAS 41 'Financial Instruments', a short introductory webinar and an At a Glance introduction on the IPSASB website. Comments are requested by 31 December 2019.

 

Recent sustainability reporting developments

27 Aug 2019

A summary of recent developments at the CFA Institute, CDP, SSE, and GRI.

The CFA Institute, a global association of investment professionals, has published a report entitled The Case for Quarterly and Environmental, Social, and Governance Reporting that is based on a survey of its global membership on the topic. Respondents to the survey believe that specific ESG and sustainability disclosures should be a regulatory requirement for public companies and that securities regulators should either develop ESG disclosure standards or support an independent standards setter (i.e., a single, global standards setter in this field) to develop such standards. Please click to access the report on the website of the CFA Institute.

The Carbon Disclosure Project (CDP) has released a new report, The Money Trees, that finds that finds that 70% of 1,500 companies with high impact on forests fail to provide data on their impact and that corporate transparency on forests lags behind other environmental issues such as climate change and water security. Please click to access the report through the press release on the CDP website, which offers a first summary of the findings.

The Sustainable Stock Exchanges (SSE) announces that the Abu Dhabi Securities Exchange (ADX) has issued environmental, social and governance (ESG) disclosure guidelines for listed companies. For more information, please see the press release on the SSE website.

The Global Reporting Initiative (GRI) announces that GRI 303 Water and Effluents 2018 and GRI 403 Occupational Health and Safety 2018 have been translated into Japanese. All Japanese translations of GRI Standards can be downloaded free of charge on the GRI website.

EFRAG publishes August 2019 issue of 'EFRAG Update'

23 Aug 2019

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

The update reports on the EFRAG Technical Expert Group (TEG) meeting on 13 August 2019 and written procedures during August 2019 including the approval of the EFRAG Board's final comment letter on the IASB Exposure Draft ED/2019/2 Annual Improvements to IFRS Standards 2018-2020. This was also the only publication issued by EFRAG in August 2019.

The update also notes that the EFRAG Board is expected to approve the following documents in September using written procedures:

Please click to download the August EFRAG Update from the EFRAG website.

EFRAG publishes its final comment letter on the Annual Improvements to IFRS Standards 2018-2020 Cycle

23 Aug 2019

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter on the IASB's Exposure Draft ED/2019/2 Annual Improvements to IFRS Standards 2018-2020 Cycle.

EFRAG "generally agrees with the proposals in the ED and considers that these minor changes will improve the consistency and understandability of the IFRS standards concerned", with the following comments:

  • EFRAG suggests that the IASB should clarify that the amendment to paragraph D16 does not prevent a first-time adopter from using the exemption enabling it to set the cumulative translation differences at zero at the date of transition to IFRSs;
  • EFRAG recommends that IAS 39 Financial Instruments: Recognition and Measurement be amended in the same way as the amendment proposed to IFRS 9 Financial Instruments. It also considers that the phrase "including fees paid or received by either the borrower or the lender on the other's behalf" is unclear and recommends that an example of such fees is provided; and
  • EFRAG advises that additional guidance should be added to IFRS 16 on where the reimbursement of leasehold improvements may be considered as a lease incentive.

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

Pre-meeting summary for the additional IASB meeting on IBOR

21 Aug 2019

The IASB, which normally does not meet in August, will hold an additional meeting on 28 August to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. We have posted our pre-meeting summary of the two papers to be discussed where we point out the main issues to be discussed by the IASB and the staff recommendations.

The staff are recommending that the amendments include an exception to the requirement in IAS 39 for retrospective assessment when a hedge is temporarily outside the 80–125% range solely due to uncertainties arising from the reform;  provide relief from the separately identifiable requirement for ‘macro hedges’; clarify when the relief ceases to apply to a group of items designated as the hedged item; clarify that the amendments would apply to hedges of both interest rate and foreign currency risks; and simplify the disclosure requirements.

Our detailed pre-meeting summary is available on our August meeting notes page and will be supplemented with our popular meeting notes after the Meeting.

We comment on seven IFRS Interpretations Committee tentative agenda decisions

20 Aug 2019

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 1, IAS 7, IAS 41, IFRS 9, IFRS 15, and IFRS 16, as published in the June 2019 IFRIC Update.

More information about the issues is set out below:

Issue Agenda decision supported? More information
IAS 1 — Presentation of liabilities or assets related to uncertain tax treatments Yes
IAS 7 — Disclosure of changes in liabilities arising from financing activities Yes
IAS 41 — Subsequent expenditure on biological assets Yes
IFRS 9 — Fair value hedge of foreign currency risk on non-financial assets Yes, we agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision. However, we have some concerns with the articulation of the agenda decision in the case where an entity is intending to consume the non-financial item.
IFRS 15 — Compensation for delays or cancellations Yes
IFRS 16 — Lease term and useful life of leasehold improvements No, we disagree with the Committee decision not to take the issue of how to determine the lease term of a cancellable lease or a renewable lease onto its standard-setting agenda. This issue highlights a key difficulty that entities and their auditors face in the application of IFRS 16 which is the assessment of whether a contract continues to be enforceable if both parties have termination rights but at least one of the parties would suffer a more than insignificant penalty if they were to exercise their right (i.e., whether economic disincentive to the exercise of a termination right is relevant to the assessment of whether a lease contract continues to be enforceable).
IFRS 16 — Lessee’s incremental borrowing rate No, we do not agree with the Committee’s conclusion that a lessee is not required to determine an incremental borrowing rate that reflects the interest rate in a loan with a similar payment profile to the lease payments. We do not believe that it is appropriate to infer that the reference to “a similar term” should be read as simply meaning over the “lease term” as defined in Appendix A.

Click to access all our comment letters to the IASB, IFRS Foundation, and IFRS Interpretations Committee. 

Additional IASB meeting on IBOR

20 Aug 2019

The IASB, which normally does not meet in August, will hold an additional meeting on 28 August to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. The agenda and the papers for the meeting are now available.

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.

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