February

IPSASB publishes three exposure drafts

24 Feb, 2020

The International Public Sector Accounting Standards Board (IPSASB) has released three interconnected exposure drafts: ED 70 'Revenue with Performance Obligations', ED 71 'Revenue without Performance Obligations', and ED 72 'Transfer Expenses'.

The three exposure drafts are published together to highlight the linkages between the accounting for revenue and transfer expenses.

  • ED 70 is aligned with IFRS 15 Revenue from Contracts with Customers, while extending the income recognition approach in IFRS 15 to address common public sector transactions which include performance obligations, including those where the ultimate beneficiary is a third party.
  • ED 71 is an update of IPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers) that addresses some of the issues encountered in its application. ED 71 also provides public sector-specific guidance on capital transfers for the first time.
  • ED 72 proposes guidance for transfer expenses, where a transfer provider provides resources to another entity without receiving anything directly in return.

The comment period for the EDs has been extended and comments are now requested by 1 November 2020.

Please click to access the following additional information on the IPSASB website:

 

January 2020 IASB meeting notes posted

05 Feb, 2020

The IASB met on 28–30 January 2020 to discuss twelve topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

Provisions: The Board decided to add a project to amend IAS 37 to align the IAS 37 liability definition and requirements for identifying liabilities with the Conceptual Framework (including potentially withdrawing IFRIC 21); clarifying which costs to include in the measure of a provision; and specifying whether the rate at which an entity discounts a provision for the time value of money should reflect the entity’s own credit risk.

Amendments to IFRS 17 Insurance Contracts: The Board discussed some of the topics for which it had decided to consider the feedback from respondents further:

  • the scope exclusion from IFRS 17 for some credit card contracts (decided to confirm the proposed scope exclusion with some changes);
  • Transition—the prohibition from applying the risk mitigation option retrospectively (decided to retain, unchanged);
  • Business combinations—contracts acquired in their settlement period (decided to retain, unchanged);
  • Interim Financial Statements (decided to change the requirements); and
  • Asset for insurance acquisition cash flows—transition and business combinations (decided to change the requirements).

IBOR Reform and the Effects on Financial Reporting: The Board considered, and supported, the  recommendation from the staff in relation to the end of application of the Phase 1 exceptions from specific hedge accounting requirements in IFRS 9 and IAS 39 in the context of interest rate benchmark reform (IBOR reform); the potential effects of IBOR reform on IFRS Standards other than those related to financial instruments accounting; and potential disclosure requirements to accompany the tentative decisions the Board has made during Phase 2 of the IBOR project.

Pension Benefits that Depend on Asset Returns: The Board supported the direction the staff are taking in the project to consider amending IAS 19 to cap the projected cash flows when benefits vary with the level of returns on specified assets, so that they do not exceed the discount rate specified by IAS 19. The change would be to address the inconsistency in IAS 19 that the variability (risk) in the future asset returns is reflected only in the cash flows and not in the discount rate applied to those cash flows.

Disclosure Initiative: The Board continued its discussions of potential revisions to the disclosure requirements in IAS 19 and decided to refine some of its tentative decisions relating to defined benefit plans, multi-employer plans and group plans. 

IFRS 3 reference to the Conceptual Framework: The Board decided to finalise the amendments to update the references to the Conceptual Framework in IFRS 3 with an effective date of the amendments of 1 January 2022. The new references would apply to business combinations that occur in any annual reporting period starting after that date, with earlier application permitted.

Subsidiaries that are SMEs: The Board decided to develop an ED as soon as possible proposing reduced disclosure requirements for subsidiaries that are SMEs.

Business Combinations under Common Control: The Board has decided that the acquisition method, as set out in IFRS 3, should be required for listed acquirers that have NCI. They have received feedback from some sectors that a predecessor approach should apply to all common-control business combinations. The staff recommend no change to the decisions already made.  The staff also set out their recommendations for recognition and measurement applying a predecessor approach.

The staff gave updates on:

  • the feedback received on the proposed update to the IFRS Taxonomy to reflect the amendments made to IFRS Standards in 2019 in response to IBOR reforms;
  • the ED for rate-regulated activities (publication of the ED is now expected in the second half of 2020 rather than in Q2);
  • work being undertaken on research projects and the research pipeline; and
  • recent activities of the IFRS Interpretations Committee.

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

March 2020 IFRS Interpretations Committee meeting agenda posted

21 Feb, 2020

The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held in London on 3 March 2020.

The Committee will discuss the following:

  • Administrative matters
  • IFRS 16 — Sale and leaseback with variable payments
  • IAS 12 — Deferred tax related to a subsidiary's undistributed profits
  • IAS 12/IAS 29 — Translation of hyperinflationary foreign operation
  • IFRS 15 — Training costs to fulfil a contract
  • Work in progress

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.

March 2020 meeting of the ICAEW FRDG

14 Feb, 2020

The next meeting of the Institute of Chartered Accountants in England and Wales (ICAEW) Financial Reporting Discussion Group (FRDG) will be held on 10 March 2020 in London.

The event will discuss the future of corporate reporting in the EU.

Click here for information and details of how to register.

Pre-meeting summaries for the March 2020 IFRS Interpretations Committee meeting

27 Feb, 2020

The IFRS Interpretations Committee will meet on 3 March 2020 to discuss four issues. [Note: The agenda has been updated to reflect an earlier start time by two hours.]

Item for Continuing Discussion

IFRS 16 Leases—Sale and leaseback with variable payments (Agenda Paper 2): As requested by Committee members in the November meeting, the staff analyse the seller-lessee's subsequent accounting for the liability arising from a sale and leaseback transaction. The staff recommend that, regarding the accounting of such a sale and leaseback transaction at the date of the transaction, the Committee not develop an Interpretation. However, they do recommend that the IASB propose an Annual Improvement that clarifies how the seller-lessee measures the lease liability.

New Issue

IAS 12 Income Taxes—Deferred tax related to a subsidiary's undistributed profits (Agenda Paper 3): Should an entity recognise deferred tax for the temporary differences arising from undistributed profits of a subsidiary? The staff think that deferred tax should be recognised and recommend that the Committee publish a tentative agenda decision explaining why neither an interpretation of, or amendment to, IAS 12 is necessary.

Agenda Decisions to Finalise

IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 29 Financial Reporting in Hyperinflationary Economies—Translation of a hyperinflationary foreign operation (Agenda Paper 4): The staff recommend finalising all three agenda decisions, with some amended wording.

IFRS 15 Revenue from Contracts with Customers—Training costs to fulfil a contract (Agenda Paper 5): The staff recommend finalising an amended agenda decision to confirm that training costs incurred by a supplier in relation to revenue contracts are in the scope of IAS 38 and must be expensed as incurred.

Work in progress (Agenda Paper 6)

There are no new matters that have not yet been presented to the Committee.

The full 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 for the meeting as they become available.

Pre-meeting summaries for the February IASB meeting

18 Feb, 2020

The IASB will meet in London on 25–27 February 2020 to discuss six 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.

Amendments to IFRS 17 Insurance Contracts:The Board will continue its discussion of topics for which it had decided to consider the feedback from respondents further, specifically:

  • Contractual service margin attributable to investment services (finalise the amendments proposed, with some changes)
  • Level of aggregation—annual cohorts for insurance contracts with intergenerational sharing of risks between policyholders (recommend retaining the requirement in IFRS 17).
  • Applicability of the risk mitigation option—non-derivative financial instruments at fair value through profit or loss (recommend the that the risk mitigation option be extended for insurance contracts with direct participation features in IFRS 17:B115)
  • Minor editorial and consequential amendments (recommend the Board finalise them with minor changes).
  • Additional specific transition modifications and reliefs (recommend extending, amending and adding modifications to the modified retrospective approach).
  • For other topics raised by respondents to the Exposure Draft Amendments to IFRS 17 the staff recommend an amendment only to resolve an inconsistency between IFRS 17:B65(m) and IFRS 17:B66(f) and not for any of the other matters raised.

IBOR Reform and the Effects on Financial Reporting: The Board will complete its discussions of proposed amendments that respond to IBOR reform. The staff are recommending that the ED:

  • Limit the scope of the amendment to clarify that a change in the basis on which the contractual cash flows are determined that alters what was originally anticipated constitutes a modification of a financial instrument in accordance with IFRS 9 to changes made in the context of IBOR reform;
  • Propose temporary relief for hedging relationships that are amended to reflect modifications directly required by the reform;
  • Set out how the amendments are apply when transition to an alternative benchmark rate occurs for classification and measurement of financial instruments; hedge accounting; lease accounting; and disclosures. The separately identifiable requirement for risk components should cease applying 12 months after the date that the alternative benchmark rate was designated as a risk component for hedge accounting purposes. These amendments should be mandatory and not voluntary.
  • Have an effective date of annual periods beginning on or after 1 January 2021 with earlier application permitted, and be applied retrospectively.

The ED is expected to be published in April, with a comment period of 45 days.

Disclosure Initiative—Targeted Standards-level Review of Disclosures: The Board will continue its discussions of potential revisions to the disclosure requirements in IFRS 13 and recommend that the disclosure requirements in IFRS 13 be amended to:

  • refer to significant drivers of change in the objective;
  • require an entity to disclose a reconciliation from opening to closing balances of recurring fair value measurements categorised within Level 3 of the fair value hierarchy;
  • state that an explanation by an entity of significant drivers of change in fair value measurements other than those classified in Level 3 of the fair value hierarchy might be necessary for it to meet the disclosure objective.

Disclosure Initiative—Accounting Policies: The staff will present a summary of the feedback received on the proposal to amend IAS 1 (or its proposed replacement, see https://www.iasplus.com/en/projects/major/pfs) to require the disclosure of ‘material’ rather than ‘significant’ accounting policies and to add guidance on how to whether an accounting policy is material.

Business Combinations under Common Control: The staff set out the disclosures requirements that they recommend should accompany the acquisition and predecessor approaches for a BCUCC. The staff also recommend that the Board publish a DP as the next step.

The staff will give an updates on recent activities of the IFRS Interpretations Committee and recommend that the Board not finalise the proposed amendments to IFRIC 14 related to Availability of a Refund. 

More information

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

Report from the December 2019 Emerging Economies Group meeting

12 Feb, 2020

The 18th meeting of the IASB's Emerging Economies Group (EEG) was held Xiamen, China on 2–4 December 2019. The IASB has published a full report from the meeting.

Participants at the meeting, which was chaired by IASB member Darrel Scott, discussed primary financial statements, the IBOR reform, the review of the IFRS for SMEs, the Due Process Handbook Review, IAS 16 and proceeds before the intended use, the 2020 Agenda consultation, China’s experience on implementing IFRS 9, and extractive activities.

The next meeting of the EEG will be held in South Africa on 11–13 May 2020.

Please click for access to the full report (eight pages) on the IASB website.

Research into the local implementation of the EU Directive on disclosure of non-financial and diversity information

20 Feb, 2020

Accountancy Europe has published 'Towards reliable non-financial information across Europe'.

The publication sets out how European countries have transposed the Directive on disclosure of non-financial and diversity information into national law and the impact on the role of the statutory auditor and independent assurance services provider. It also looks into the voluntary assurance practice beyond legal requirements across Europe.

Please click to access the publication on the Accountancy Europe website.

Summary of the December 2019 ASAF meeting now available

14 Feb, 2020

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 17 December 2019.

The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • Agenda Consultation (1–11): The ASAF discussed potential financial reporting priorities for the Board to discuss in the request for information. As high-level recommendations ASAF members stated that the Board should communicate its resource capacity in the RFI, that the Board should prioritise post-implementation reviews and the completion of existing major projects, and should also prioritise the effects of technology and digital reporting on standard-setting.
  • Post-implementation review of IFRS 10, IFRS 11, and IFRS 12 (12–18): The ASAF was given an update on the feedback received from outreach in Phase 1 of the post-implementation review and commented on potential issues to be considered in the RFI.
  • Accounting for intangible assets (19–28): The KASB gave a presentation on its research project on exploring a way to complement financial statements with a separate statement that identifies core intangibles and presents their value.
  • IFRS 17 Insurance Contracts (29–35): The ASAF received an overview of the feedback on the exposure draft Amendments to IFRS 17 and was updated on the preliminary decisions of the Board at the November and December 2019 meetings.
  • Agenda planning (36–38) — The ASAF discussed the proposed agenda for its April 2020 meeting.

A full summary of the meeting is available on the IASB's website.

Summary of the January 2020 ITCG meeting

26 Feb, 2020

The IASB has published a summary of the IFRS Taxonomy Consultative Group (ITCG) meeting held on 16 January 2020.

The ITCG discussed the following:

  • IFRS Taxonomy modelling for the Exposure Draft General Presentation and Disclosures.
  • Review of common reporting practice related to:
    • Primary financial statements.
    • IAS 19 Employee Benefits.
    • IFRS 7 Financial Instruments: Disclosures.
  • Review of the IFRS Taxonomy supporting material.
  • Update on the IFRS Taxonomy strategy.

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

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