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EFRAG publishes a feedback statement on proposed amendments to IFRS 3 to update a reference to the Conceptual Framework

18 Oct 2019

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement on the International Accounting Standards Board (IASB's) exposure draft 'Reference to the Conceptual Framework (Proposed amendments to IFRS 3)'

EFRAG published its final comment letter on 24 September 2019.

The feedback statement describes the main comments received by EFRAG in response to its draft comment letter and how these comments were considered by EFRAG in finalising its comment letter to the IASB.

A press release and the feedback statement are available on the EFRAG website.

Financial Reporting Lab publishes quarterly newsletter

18 Oct 2019

The Financial Reporting Lab ("the Lab") has published its Q3 newsletter providing highlights of its activities in the third quarter of 2019.

The newsletter highlights its recently published eport: Disclosures on the sources and uses of cash. The newsletter also provides an update on the Lab's climate and workforce project and UK Digital Annual Report and Accounts field trial event.

The full newsletter is available on the FRC website here.

IFRS Foundation issues compilation of 2019 IFRS Interpretations Committee agenda decisions

18 Oct 2019

The IFRS Foundation has issued, “Compilation of Agenda Decisions — Volume 1” which contains all the agenda decisions made by the IFRS Interpretations Committee from January to September 2019.

The IFRS Foundation plans on issuing this new compilation series biannually in April and October. For more information, see the press release and compilation on the IASB’s Web site.

Pre-meeting summaries for the October 2019 IASB meeting

17 Oct 2019

The IASB will meet in London on 22–23 October 2019 to discuss 10 topics. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed, we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

Implementation matters:

  • Onerous Contracts: The staff recommend that for the planned amendments to IAS 37 the Board replace the examples proposed in the ED with a clarification that the costs that relate directly to the contract consist of both the incremental costs of fulfilling that contract and an allocation of costs that relate directly to fulfilling that and other contracts.
  • PPE—Proceeds before intended use: The staff recommend that the forthcoming amendments to IAS 16 have an effective date of 1 January 2022 and require retrospective application, but only for PPE made available for use on or after the beginning of the earliest period presented in the financial statements in which an entity applies the amendments. The amendments will prohibit the deduction of the proceeds from testing PPE, before it is capable of operating in the manner intended by management, from its cost.
  • Sale of a single asset entity containing real estate: The Board will discuss a matter referred to it by the IFRS Interpretations Committee, involving whether the sale of an entity that has only one asset (real estate) should be in the scope of IFRS 10 or IFRS 15. The staff recommend that the Board consider single-asset entities broadly, as part of the PIR of IFRS 10, rather than addressing this specific and narrow issue.  

Business Combinations under Common Control: The staff recommend that, when applying a predecessor approach for a business combination under common control, the acquirer should recognise and measure assets and liabilities at the carrying amounts included in the financial statements of the transferred entity (rather than at the amounts included in the consolidated financial statements of the common controller). The acquisition would be accounted for prospectively—i.e. the comparative information of the acquirer would not be adjusted.

Management Commentary: The staff recommend that the revised Practice Statement state that the enhancing qualitative characteristics of comparability, verifiability, timeliness and understandability are relevant to management commentary along with guidance on how to apply those characteristics. The Board will also begin its discussions of the business model. 

Accounting Policies and Estimates (amendments to IAS 8): The staff recommend that the Board finalise the proposed amendments to the definition of accounting estimates but not amend the definition of accounting policies.

SME Standard review and update: The staff recommend that the RFI ask whether the IFRS for SMEs Standard should be updated to align the definitions of Section 15 with IFRS 11 and introduce requirements on how an operator accounts for a joint operation and whether to retain the accounting policy election in Section 15 (i.e. cost model, equity method or fair value model). The staff will also ask the Board whether it wants to seek views in the RFI on aligning the definition of ‘control’ but not the definition of ‘joint control’ or if it wants to wait until the completion of the PIR of IFRS 10, 11 and 12 before considering aligning Section 15.

Financial Instruments with Characteristics of Equity: The Board has decided to develop amendments to IAS 32 to address practice issues, clarify the underlying principles in IAS 32 and develop additional application guidance. The Board will discuss the overall objectives of the project and the project timetable, which could lead to an Exposure Draft in 2021.

Dynamic Risk Management: The staff have set out their outreach plan, which will focus on assessing the viability and operability of the DRM model and whether it will reflect an entity’s risk management strategy. The outreach will focus exclusively on financial institution and aim to provide feedback to the Board by June 2020.

Subsidiaries that are SMEs: The staff ask the Board to indicate how it wants to tailor the disclosure requirements of the IFRS for SMEs Standard. 

IBOR Reform and the Effects on Financial Reporting: The staff recommend that the Board amend IFRS 9 to clarify that an entity should apply the IBOR practical expedient first, by updating the effective interest rate based on the alternative benchmark rate, and then apply IFRS 9 current requirements (with an example in IFRS 9 to illustrate this). In the context of the IBOR reform, the staff conclude that the current requirements in IFRS 9 provide an adequate basis to determine if any other modifications to that financial instrument are substantial, and propose no other amendments to IFRS 9.

Amendments to IFRS 17 Insurance Contracts: The Board will be given an update on feedback from outreach. 

More information

Our pre-meeting summaries are available on our October meeting notes page and will be supplemented with our popular meeting notes after the meeting.

IFAC survey shows adoption of international standards to be on the increase

15 Oct 2019

The International Federation of Accountants (IFAC) has published the results of a survey among its members as 'International Standards: 2019 Global Status Report'. The report includes research results on the adoption of IFRSs.

The report includes data from more than 170 IFAC member organisations. The data shows that more than 90% of the jurisdictions examined have adopted or partially adopted IFRSs. Most jurisdictions adopt IFRSs by directly referring to the standards or working to eliminate differences to better align national standards with the international ones. Only 9% do not use international standards as a reference.

The report notes that IFAC has more than 120 member organisations that operate in jurisdictions where English is not an official or a business language. In these jurisdictions, access to local language standards translations is one of the main challenges to successful adoption and implementation of the international standards.

Please click to access the full report on the IFAC website.

IFRS Foundation publishes proposed IFRS Taxonomy update

14 Oct 2019

The IFRS Foundation has published 'IFRS Taxonomy 2019 — Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)'.

The proposed update includes elements to reflect the new disclosure requirements introduced by the amendments to IFRS 9, IAS 39 and IFRS 7, issued by the Board on 26 September 2019.

For more information, see the press release and proposed update on the IASB’s website. Comments are requested by 13 December 2019.

October 2019 IASB meeting agenda posted

11 Oct 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 22–23 October 2019. There are 10 topics on the agenda.

The Board will discuss the following:

  • Implementation matters — Property, plant and equipment, onerous contracts, sale of a single asset entity containing real estate, September 2019 IFRIC update
  • Business com­bi­na­tion under common control
  • Management commentary
  • Amendments to IFRS 17 Insurance Contracts
  • IBOR reform and the effects on financial reporting
  • Financial instruments with characteristics of equity
  • Dynamic risk management
  • SME standard review and update
  • Accounting policies and accounting estimates
  • Im­ple­men­ta­tion matters — Property, plant and equipment: Proceeds before intended use (amend­ments to IAS 16)

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.

Background papers for the 36th annual ISAR meeting

11 Oct 2019

The thirty-sixth session of the United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) will be held in Geneva on 30 October - 1 November 2019. The two main agenda items discussed during the session will be the practical implementation of core indicators for entity reporting and the contribution towards the attainment of the Sustainability Development Goals and a review of current developments in international standards of accounting and reporting in the public and private sectors.

For both agenda items, background notes have been prepared by the UNCTAD secretariat to facilitate deliberations. The papers can be downloaded from the UNCTAD website:

General information on the session including a provisional agenda for the meeting is available here.

Before the meeting, there will be a workshop on "Practical implementation of climate-related financial disclosures and their relationship to the SDGs" on 29 October 2019. More information is available here.

Further publication of interest in the context of the meeting are available on the UNCTAD website:

EFRAG conference on IFRS and regulation

10 Oct 2019

The European Financial Reporting Advisory Group (EFRAG) announces that they will will host a conference 'IFRS & Regulation: Searching for Common Ground' on 28 November 2019 in Brussels.

The conference will include a keynote speech from Michel Prada (former chairman of the IFRS Foundation Trustees and of the French regulator Autorité des Marchés Financiers) and two high-level panels on principles-based standards and regulation.

Please click for more information and registration details on the EFRAG website.

FRC publishes thematic review findings of IFRS 9, IFRS 15, and IAS 36 company disclosures

10 Oct 2019

The Financial Reporting Council (FRC) has published three thematic reviews to help companies improve the quality of their corporate reporting in relation to IFRS 9 'Financial Instruments', IFRS 15 'Revenue from Contracts with Customers' and the impairment of non-financial assets.

The reports analyse the disclosures in a sample of companies’ reports and provide examples of better practice.

The FRC concluded that IFRS 15 disclosures could be improved especially with respect to

  • improving the descriptions of accounting policies and ensuring that these are tailored to their own particular circumstances; and
  • providing more detailed information about the judgements significantly affecting the amount and timing of revenue.

In connection with IFRS 9 the FRC found that there was still room for companies to improve disclosures by

  • analysing the credit quality of trade receivables by non-banking companies; and
  • providing details of the indicators of a significant increase in credit risk particularly by the smaller banks.

As regards IAS 36 and the impairment of non-financial assets, the FRC encourage companies to pay greater attention to:

  • providing relevant information around significant judgements and key assumptions made in estimating the recoverable amount of assets and cash-generating units;
  • explaining the sensitivity to changes in key assumptions, where reasonably possible changes could give rise to impairment of goodwill or material further adjustments to already-impaired assets. 

Please click for the following additional information on the FRC website:

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