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2019

IFRS Foundation translations

19 Mar 2019

The IFRS Foundation has announced the publication of new Albanian, Azeri, Bulgarian, and Russian translations.

The following new trans­la­tions are now available:

  • Albanian and Azeri trans­la­tion of the 2018 unaccompanied IFRS Standards (Red Book); available on the IASB’s IFRS translation page.
  • Bulgarian trans­la­tion of the Illustrative Examples IFRS 16 Leases; available on the IASB’s eIFRS website (sub­scrip­tion required) and IFRS translation page.
  • Russian translation of Definition of Material (Amendment to IAS 1 and IAS 8); available on the IASB’s eIFRS website (subscription required) and IFRS translation page.

Financial Reporting Lab seeks views on future projects

15 Mar 2019

The Financial Reporting Council's ("FRC's") Financial Reporting Lab ("the Lab") have issued a survey to ask for views on the reporting topics that it should select over the next few years.

As well as understanding what reporting topics should next be in focus, the survey will also enable the Lab to collect views on the effectiveness of projects that have already been completed and the effectiveness of its communication with shareholders. 

The press release and link to the survey, which is open until 12 April 2019, can be found on the FRC website. 

March 2019 IASB meeting notes posted

15 Mar 2019

The IASB met on Tuesday 12, Wednesday 13 and Thursday 14 March 2019. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board considered the remaining topics in its review of concerns raised by stakeholders in relation to IFRS 17 Insurance Contracts: credit cards that provide insurance cover; transition requirements—risk mitigation option; implications for disclosure; and transition requirements. The Board decided to propose changes be made to IFRS 17 and IFRS 9 Financial Instruments. The Board will consider the package of amendments as a whole in its April 2019 meeting.

The Board decided to proceed to publish an Exposure Draft (in April or May) with proposed amendments to IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement to address the uncertainty introduced by IBOR reformThe Board also decided that application of the relief should be mandatory and irrevocable.

Because this is an urgent matter, the comment period would be 45 days.

As part of the Disclosure Initiative the Board decided to add two examples to the Materiality Practice Statement to help those preparing financial statements avoid explaining their accounting polices using boilerplate or generic descriptions or simply repeating the requirements of IFRS Standards. .

The Board discussed two remaining issues in relation to the Exposure Draft Classification of Liabilities (as current or non-current). The Board decided to make some refinements to the proposal in relation to classification of liabilities with equity-settlement features and classification of loans for which the right to defer settlement is subject to lending conditions that will not be tested until after the end of the reporting period.

The Board continued its discussions of Business Combinations under Common Control by considering whether to develop a current value approach for all or some transactions that affect non-controlling interest (NCI) in the receiving entity (discussed in the December 2018 Agenda Paper 23) and a different approach, such as a predecessor approach, for transactions that affect lenders and other creditors in the receiving entity but do not affect NCI. No decisions were made.

In the Primary Financial Statements project the Board decided to require the separate presentation of several items in the primary financial statements (such as, in the statement of financial position, goodwill and investment in “integral” and “non-integral” associates and joint ventures accounted for using the equity method). However, they decided that entities not be required to present amortisation, depreciation and research and development expenditure in the statement(s) of financial performance. They also decided that entities be required to provide information about unusual items presented in the statement(s) of financial performance.

The staff gave an overview of the feedback it has analysed in relation to the Discussion Paper on Financial Instruments with Characteristics of Equity.

The 2015 Agenda Consultation led to a project to consider whether subsidiaries that are SMEs should be permitted to apply IFRS standards with reduced disclosures. The Board discussed the objective of the project.

The Board discussed progress in the Extractive Activities project, setting out the more significant developments in extractive activities since the publication of a Discussion Paper by the IASB in 2010. 

The Board discussed whether in reviewing and revising the IFRS for SMEs Standard, that it should continue to be aligned with full IFRS Standards. This would mean updating the IFRS for SMEs Standard for new and amended IFRS Standards, while considering whether the changes to IFRS Standards are relevant to SMEs, if the requirements should be simplified.  

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

EFRAG TEG meeting March 2019

15 Mar 2019

The European Financial Reporting Advisory Group (EFRAG) will hold a TEG meeting on 20 and 21 March 2019 in Brussels.

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

EFRAG TEG-CFSS meeting March 2019

15 Mar 2019

The European Financial Reporting Advisory Group (EFRAG) will hold its EFRAG TEG-CFSS meeting on 20 March 2019 in Brussels.

An agenda and details on how to register for the meetings can be found on the EFRAG website.

European Union formally adopts amendments resulting from the 2015-2017 cycle of annual improvements

15 Mar 2019

The European Union has published a Commission Regulation endorsing 'Annual Improvements to IFRS Standards 2015–2017 Cycle'.

The amendments affect the following standards:

IFRS Subject of amendment

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 European Union effective date is the same as the IASB in case of all amendments (1 January 2019).

The Commission Regulation amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council was published in the Official Journal of the European Union on 15 March 2019.

As a result of the EU's adoption, the EFRAG has updated its endorsement status report.

We comment on FRED 71 ‘Draft amendments to FRS 102 — Multi-employer defined benefit plans’

14 Mar 2019

We have published our comment letter on the Financial Reporting Council’s (FRC’s) Financial Reporting Exposure Draft (FRED) 71 ‘Draft amendments to FRS 102 – Multi-employer defined benefit plans’

Overall, we recognise that there is currently widespread inconsistency in how entities account for a transition from defined contribution accounting to defined benefit accounting when sufficient information becomes available to do so. Although we believe there is a more compelling argument for recording the resulting adjustment in profit or loss rather than other comprehensive income, we support the FRC’s decision to include specific guidance in FRS 102 to improve consistency in this regard and agree that the proposed approach achieves this.

Further comments and a full response to all questions raised in the invitation to comment are contained within the full comment letter.

IASB decides on last round of potential amendments to IFRS 17

14 Mar 2019

At its meeting held in London, the IASB discussed the last of the 25 concerns regarding the standard that were identified in October 2018 as candidates for potential amendments.

Applying the criteria for evaluating proposed amendments agreed on in October 2018, the staff asked the Board to consider the following recommendations:

Issue identified at the October IASB meeting Agenda paper with detailed description (link to IASB website) Staff recommendation Board decision
2 — Level of aggregation of insurance contracts Agenda paper 2A
  1. To retain the IFRS 17 requirements on the level of aggregation unchanged
 14 Yes
1 — Scope of IFRS 17 Agenda paper 2D
  1. To amend IFRS 17 to exclude from the scope of the standard certain credit card contracts that provide insurance coverage
 14 Yes
25 — Transition: Risk mitigation option Agenda paper 2E
  1. To amend the requirements of IFRS 17 to permit an entity to apply the risk mitigation option prospectively from the IFRS 17 transition date
  2. To amend the requirements of IFRS 17 to permit an entity that can apply IFRS 17 retrospectively to a group of insurance contracts with direct participating features to use the fair value transition approach for the group under certain circumstances
 14 Yes
1 — Scope of IFRS 17 Agenda paper 2F
  1. To maintain the transition requirements in IFRS 17 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 17 to a portfolio of such loans
  2. To maintain the transition requirements in IFRS 9 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 9 to a portfolio of such loans and initially applies IFRS 17 and IFRS 9 at the same time
  3. To amend the transition requirements in IFRS 9 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 9 to a portfolio of such loans and has applied IFRS 9 before it initially applies IFRS 17
  4. If the Board supports recommendation 3., to amend IFRS 9 to require an entity to apply the transition requirementsin IFRS 9 necessary for applying the proposed amendments
  5. If the Board supports recommendation 3., to permit an entity to newly designate, and to require an entity to revoke its previous designations of, a financial liability under the fair value option at the date the entity first applies the proposed amendments if a new accounting mismatch is created or a previous accounting mismatch no longer exists as a result of applying the proposed amendments
  6. If the Board supports recommendation 3., not to require an entity to restate prior periods to reflect the application of the proposed amendments but to permit an entity to restate prior periods under particular conditions
  7. If the Board supports recommendation 3., to exempt an entity from presenting the quantitative information required by IAS 8.28(f) and to require an entity to disclose specific information in addition to the disclosures that any other IFRS Standard would require
 14 Yes
Amendments to disclosure requirements resulting from the Board’s tentative decisions to date Agenda paper 2G
  1. To amend IFRS 17 to require quantitative disclosure of the expected recognition in profit or loss of the contractual service margin remaining at the end of the reporting period and specific disclosure of the approach to assessing the relative weighting of the benefits provided by insurance coverage and investment-related services or investment return service
  2. To amend IFRS 17 to require a reconciliation of the asset created by insurance acquisition cash flows not yet included in the measurement of a group of insurance contracts at the beginning and the end of the reporting period and quantitative disclosure of the expected inclusion of these acquisition cash flows in the measurement of related insurance contracts when the related insurance contracts are recognised
 14 Yes
Overall disclosure and transition requirements Agenda paper 2H
  1. To amend IFRS 17 as discussed in Agenda Papers 2E, 2F and 2G and retain all other disclosure and transition requirements in IFRS 17
 14 Yes

The Board has now considered all 25 topics identified in October 2018. At its April 2019 meeting, the Board plans to consider the package of amendments tentatively decided by the Board as a whole.

In addition, the IASB has issued a podcast on the dis­cus­sion at the March 2019 meeting of the Board about IFRS 17 which can be accessed through the press release on the IASB website. Also, our Deloitte meeting notes of the session are available here.

European Union formally adopts amendments to IAS 19

14 Mar 2019

The European Union has published a Commission Regulation endorsing 'Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)'.

With the amendments the IASB finalised one of two issues relating to IAS 19 submitted to the IFRS Interpretations Committee and exposed together in June 2015.

The European Union effective date is the same as the IASB's (1 January 2019).

The Commission Regulation amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council was published in the Official Journal of the European Union on 14 March 2019.

As a result of the EU's adoption, the EFRAG has updated its endorsement status report.

Government issues consultation on recommendations made by the Independent Review of the Financial Reporting Council

14 Mar 2019

The Department for Business, Energy and Industrial Strategy (BEIS) has issued a consultation to seek views on the recommendations made by the Independent Review of the Financial Reporting Council (FRC) to create a new regulator responsible for audit, corporate reporting and corporate governance.

The review, undertaken by Sir John Kingman, recommends that the FRC be replaced with an independent statutory regulator called the Audit, Reporting and Governance Authority (ARGA). 

The consultation addresses each of the 83 recommendations made in Sir John Kingman's Independent Review of the FRC. The proposed responses to these recommendations are separated into three groups:

  • those requiring immediate action, which the FRC and BEIS will implement as soon as possible;
  • those which require significant policy decisions to be made in deciding how to implement and can be only be implemented once they are further consulted on and legislation made; and
  • those which require primary legislation in order to be implemented.

The deadline for responding to the consultation is 11 June 2019. Please click here to access the consultation on the government website.

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