The Committee will consider recommendations from the staff to finalise the following:

1. IAS 37 Provisions, Contingent Liabilities and Contingent Assets: whether a voluntarily payment made by an entity to a tax authority in relation to a disputed assessment (to avoid possible penalties or interest) is an asset.
2. IFRS 15 Revenue from Contracts with Customers: whether fees for admitting an entity to a stock exchange and fees for an ongoing listing service are distinct or relate to only one service.
3. IAS 27 Separate Financial Statements: when an entity loses control of a subsidiary as a result of disposing some of its interest, can the entity elect to measure the retained interest at FVOCI and can any gain or loss on initial disposal be presented in profit or loss.
4. IAS 27 Separate Financial Statements: whether the cost of a subsidiary acquired in stages is the fair value of the tranches (as deemed cost) or the sum of the consideration actually paid.

Other work in progress

The Committee will discuss feedback on tentative agenda decisions in relation to the application of the highly probable requirement in a cash flow hedge relationship and the recognition of a lease liability by a joint operator at a future meeting. 

The staff are working on potential amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates to provide more guidance when a spot exchange rate is not observable.

The staff are analysing requests in relation to (a) whether an entity applies IFRS 16 Leases or IAS 38 Intangible Assets to a contract that gives it rights to space below the ground for a period of time; and (b) whether the right to potential discounts affects the classification of an entity’s pension plan as defined benefit or defined contribution.

The full agenda for the meeting and our pre-meet­ing summaries can be found here. We will update this page for any changes to the agenda and our Deloitte observer notes from the meeting as they become available.

The IVSC's project on the valuation of non-financial liabilities resulted from feedback received during its agenda consultation process conducted in 2017 and 2018.

In the introductory comments, the IVSC notes that the determination of whether a liability is financial or non-financial may be difficult. While non-financial liabilities have limited accounting and valuation guidance, financial liabilities are often subject to specific accounting, valuation, and regulatory requirements (the exposure draft contains extensive references to both IFRSs and US GAAP). Therefore, the IVSC warns that valuers must use judgement and rely on the applicable accounting and/or regulatory guidance when defining the subject liability as non-financial or financial.

Please click to access the exposure draft on the IVSC website. Comments are requested by 1 April 2019.

The meeting starts at 12 noon London time and is scheduled to last 70 minutes.

The agenda for the meeting can be found here. We will update this page for any changes to the agenda and our Deloitte pre-meeting summaries and observer notes from the meeting as they become available.

FAS 33, which supersedes FAS 25, sets out improved principles for classification, recognition, measurement, presentation and disclosure of investment in Sukuk, shares and other similar instruments of investments made by Islamic financial institutions in line with Sharia’a principles. It defines the key types of instruments of Sharia’a compliant investments and defines the primary accounting treatments commensurate to the characteristics and business model of the institution under which the investments are made, managed and held.

FAS 34 aims to establish the principles of accounting and financial reporting for assets and businesses underlying the Sukuk to ensure transparent and fair reporting to all relevant stakeholders, particularly including Sukuk-holders.

The two standards are effective for financial periods beginning on or after 1 January 2020 with earlier adoption permitted. The press release on the AAOIFI website offers more information and access to the new standards.

The Integrated Reporting Committee (IRC) of South Africa has released its latest technical paper Achieving Balance in the Integrated Report. The Paper discusses the role of the governing body, the meaning of balanced reporting, challenges and weaknesses, and lists some key considerations in achieving a balanced integrated report. Please click for access to the report on the IRC website.

The United Nation's Sustainable Stock Exchanges (SSE) initiative has launched a new searchable database of stock exchanges’ sustainability activities. to provide easier access to sustainability information on over 90 stock exchanges worldwide. The new database interface allows users to filter the SSE’s Fact Sheets for particular activities, and gives users a quick view of what markets provide particular sustainability instruments such as mandatory ESG disclosure or a sustainability themed bond segment. Please click for more information on the SSE website.

In addition, the SSE notes the following developments:

• Saudi Arabia’s stock exchange, Tadawul, has announced its voluntary commitment to promoting sustainable and transparent capital markets in becoming an SSE partner stock exchange (press release).
• The Nigerian Stock Exchange has published sustainability disclosure guidelines for the Nigerian market (press release).
• The National Stock Exchange of Costa Rica has created sustainable voluntary guidance to help issuers in preparing and disclosing information about ESG criteria (press release).

The Global Reporting Initiative (GRI) has announced a draft standard on tax and payments to governments for public comment. The draft standard is expected to make a pioneering stride in tax transparency by combining management approach disclosures on tax strategy, with country-by-country reporting of an organisation’s business activities and taxes paid. Please click for more information on the GRI website.

The first report, Public reporting by charities in their trustees’ annual report and accounts, focuses on whether the set of accounts reviewed “met the basic requirements of the users of those accounts rather on strict technical compliance with the Statement of Recommended Practice (SORP) and other reporting requirements”. The review assessed whether each set of accounts contained:

• a trustees’ annual report, explaining what activities the charity had carried out during the year to achieve its purposes;
• the report of an independent scrutiny of the charity’s accounts, with an audit carried out if required due to the charity’s size;
• the accounts themselves, prepared on an accruals (or SORP) basis if required due to the charity’s size or because it is a company.

In addition the Charity Commission checked whether the accounts were complete, containing both a statement of financial activities (SOFA), that analyses the charity’s expenditure, and a balance sheet (or the equivalent if receipts and payments accounts were prepared) and that these documents were consistent with each other.

Samples of charity accounts, with incomes over £25,000, were taken from the register of charities in May 2018. 105 charities were reviewed for accounting years ending during the 12 months to 31 December 2016.

It was found that 70% (74% in the prior year) of charity accounts reviewed “met the basic benchmark”. For those charities that did not meet the required standard reasons included:

• For 12% of the sample, although all of the required documents were submitted, one of them was not considered adequate. These charities’ sets of accounts met most of the required criteria, but many of them provided little or no information on the charity’s purposes and/or activities carried out to achieve them.
• For 9% of the sample, although all of the required documents were submitted, at least two of them were not considered adequate. As with the first group of charities, most of these sets of accounts provided little or no information on the charity’s purposes and/or activities carried out to achieve them. However, this was coupled with other issues, such as incomplete accounts, an independent scrutiny report that did not have the required wording or an overall lack of transparency.
• For 9% of charities at least one of the required documents was missing. None of these charities submitted any form of independent scrutiny report. In addition, all of them were either missing at least one of the trustees’ annual report and accounts or the documents submitted were inadequate

The Charity Commission reminds charities that “the trustees’ annual report and accounts provide an important opportunity for trustees to reflect on what their charity has achieved and demonstrate to the charity’s supporters, potential funders and the public that they have managed its resources effectively and are meeting its purpose”. It also highlights to charities that there are a number of resources to assist trustees and independent examiners on the preparation and scrutiny of the annual report and accounts including pro-formas of the trustees’ annual report, independent examiners report and both receipts and payments and accruals accounts. Guidance can be downloaded at GOV.UK here.

Public benefit reporting

The second report, Public benefit reporting by charities, looked at the quality of public benefit reporting.   All registered charities are required to publish a trustees’ annual report which sets out the activities that the charity has undertaken for the public benefit. Charities are also required to include a statement as to whether they have had due regard to the Charity Commission’s guidance on public benefit.

The focus of the review was on whether each trustees’ annual report demonstrated a clear understanding of the public benefit reporting requirement. The review considered whether the trustees’ annual report contained:

• An explanation of the activities undertaken by the charity to further its purposes for the public benefit.
• A statement by the trustees as to whether they have had due regard to the Charity Commission’s guidance on public benefit, known as ‘the public benefit statement’

The report reviewed public benefit reporting of 105 charities with incomes over £25,000 for financial years ending in the 12 months to 31 December 2016.

Findings indicate that the percentage of charities’ annual reports that demonstrated a clear understanding of the public benefit reporting requirement was similar to the prior year (51%) at 52%.

The Charity Commission reminds trustees of the resources that are available to assist with public benefit reporting including its pro-forma trustees’ annual reports.   Guidance can be downloaded at GOV.UK here.

Click for (all links to Charity Commission website):

• Press release
• Public reporting by charities in their trustees’ annual report and accounts
• Public benefit reporting by charities

Auditors of UK charities have a duty to report any matters of material significance that they identify in the course of their work to their respective charity regulator as soon as they become aware of it.

With effect from 1 May 2017, the list of reportable matters to the Charities Commission includes where an auditor intends to give a modified audit opinion and/or an audit opinion that includes paragraphs about an emphasis of matter or material uncertainty regarding going concern.

An initial review was undertaken by the Charity Commission in February 2018. Results indicated that of the 114 audit reports that should have been reported to the Charity Commission as a matter of material significance, only 28 reports were given.

The Charity Commission undertook action in response to the low level of compliance and the results of this action are summarised in the follow up report.

The Charity Commission review reminds trustees of the list of matters of material significance that they need to be aware of and the duty placed upon an auditor to report these to the regulator.

The press release and follow up report are available on the Charity Commission website.

The Update Reports on the EFRAG Board meeting held on 18 December, the EFRAG Board and EFRAG TEG meeting on 19 December and the EFRAG TEG meeting on 20 December.  The Update also lists EFRAG publications issued in December which included:

• EFRAG's draft endorsement advice letter and separate invitation to comment relating to the endorsement for use in the EU of Definition of Material (Amendments to IAS 1 and IAS 8).
• EFRAG's summaries of Financial Instruments with Characteristics of Equity (FICE) outreach events:
  • EFRAG and the Accounting Standards Committee of Germany;
  • EFRAG and the Financial Reporting Council;
  • EFRAG and FSR - Danish Auditors;
  • EFRAG, in collaboration with EFFAS, ABAF-BVFA and the IASB; and
  • EFRAG, the DASB and Eumedion.

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

The Government Financial Reporting Manual (FReM) is the technical accounting guide to the preparation of financial statements. It complements guidance on the handling of public funds published separately by the relevant authorities in England and Wales (HM Treasury and the Welsh Government respectively), Scotland (the Scottish Government) and Northern Ireland (the Executive Committee of the Northern Ireland Assembly). The FReM is prepared following consultation with the Financial Reporting Advisory Board (FRAB) and is issued by the relevant authorities.
 
The FReM applies to “all entities, and to funds, flows of income and expenditure and any other accounts that are prepared on an accruals basis and consolidated within Whole of Government Accounts (with the exception of the accounts of any reportable activities that are not covered by an Accounts Direction)”. It does not apply to Local Government, those Public Corporations that are not Trading Funds, and NHS Trusts, NHS Foundation Trusts and Clinical Commissioning Groups.
 
The press release, latest version of the FReM and application guidance are available on the HM Treasury website.

Mr Kawanishi became Director of International Activities at the ASBJ in 2013. From 2013-2016 he was Visiting Fellow at the IASB. In 2016 he became a full-time Board member of the ASBJ.

Mr Kawanishi follows Ms Liesel Knorr, former President of the German standard-setter ASCG, who was elected IFASS Chair in 2016 and who will hand over responsibilities to her successor in March 2019.

The ASCG and the ASBJ have issued press releases announcing the upcoming change in IFASS chairmanship.