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Report from the March 2019 Emerging Economies Group meeting

10 Jun, 2019

The 17th meeting of the IASB's Emerging Economies Group (EEG) was held in Buenos Aires, Argentina on 25–27 March 2019. The IASB has published a full report from the meeting.

Par­tic­i­pants at the meeting, which was chaired by IASB member Amaro Gomes, discussed rate-regulated activities, application of IAS 29 in Argentina, business combinations under common control, goodwill and impairment, extractive activities, IFRS for SMEs Standard, IFRS Interpretations Committee on IAS 21, and an IASB update.

The next meeting of the EEG will be held December 2019 in Xiamen City, China.

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

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June 2019 IASB meeting agenda posted

07 Jun, 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 17–19 June 2019. There are seven topics on the agenda.

The Board will discuss the following:

  • Primary financial statements
  • Rate regulated activities, includes an education session
  • Goodwill and impairment
  • SME Standard review and update
  • Financial instruments with characteristics of equity
  • Business combination under common control
  • 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.

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EFRAG publishes May 2019 issue of 'EFRAG Update'

07 Jun, 2019

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

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ESMA integrates latest IFRS updates in its ESEF taxonomy

07 Jun, 2019

The European Securities and Markets Authority (ESMA) has published a draft amendment to the European Single Electronic format (ESEF) to update the core taxonomy to the latest updates to IFRSs.

The core taxonomy currently included in ESEF is the 2017 IFRS Taxonomy. The draft amendment aims to replace that version with the most recent one published by the IFRS Foundation in March 2019. The ESEF will be amended on a yearly basis to reflect updates to the IFRS Taxonomy published by the IFRS Foundation.

The draft follows the publication of the ESEF in the Official Journal of the EU on 29 May 2019.

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

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Research into assets and liabilities

07 Jun, 2019

In October 2016, the third IASB Research Forum was held in Waterloo, Ontario, Canada. One of the papers presented was 'Assets and Liabilities: When do they Exist?'. IASB discussant of the paper was Board member Mary Tokar. The paper has now been finalised and published together with the discussion by Ms Tokar.

The paper investigates whether the current references to probability in standard setters' conceptual definitions of assets and liabilities cause individuals to believe that the probability of a future transfer of economic benefits must be above some meaningful threshold for an asset or a liability to exist.

Please click for the following additional information:

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ICAEW webinar on the European Single Electronic Format (ESEF)

06 Jun, 2019

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar to help companies prepare for the incoming European Single Electronic Format (ESEF).

In June 2019 the European Commission published a regulation requiring all listed companies across the European Union to submit their annual financial statements digitally as Inline XBRL documents for accounting periods beginning on or after 1 January 2020.

The webinar will explain the new legislation and to what extent it will impact upon the reporting process for companies.

Further details are available on the ICAEW website.
 

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Reporting on climate risk increasing but still needs more financial impact analysis

06 Jun, 2019

The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders has published a second status report providing an overview of the extent to which companies in their 2018 reports included information aligned with the core TCFD recommendations published in June 2017.

The TCFD surveyed disclosures of over 1,100 firms from diverse sectors with broad geographical representation (142 countries). It found that:

  • Disclosure of climate-related financial information has increased since 2016, but is still insufficient for investors.
  • More clarity is needed on the potential financial impact of climate-related issues on companies.
  • Of companies using scenarios, the majority do not disclose information on the resilience of their strategies.
  • Mainstreaming climate-related issues requires the involvement of multiple functions.

The FSB has asked the TCFD to deliver another status report to the FSB in September 2020. The TCFD will undertake further work during the course of the next year to promote and monitor adoption of the TCFD recommended disclosures. It is also considering additional work to: (i) clarify elements of the TCFD’s supplemental guidance, (ii) develop process guidance around how to introduce and conduct climate-related scenario analysis, and (iii) identify business-relevant and accessible climate-related scenarios.

Please click for the press release and the status report on the FSB website.

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EFRAG draft comment letter on proposed annual improvements to IFRS standards 2018-2020

05 Jun, 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2019/2 ‘Annual Improvements to IFRS Standards 2018-2020 Cycle’.

EFRAG generally agrees with the IASB proposal; however, it proposes that IAS 39 should be amended in the same way as the proposed amendments to IFRS 9. In additional, the EFRAG suggests that further guidance be added to IFRS 16 when reimbursement of leasehold improvements maybe be considered as a lease incentive.

Comments on EFRAG's draft comment letter are requested by 5 August 2019. For more in­for­ma­tion, see the press release and the draft comment letter on the EFRAG website.

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IAASB announces new chair

04 Jun, 2019

The International Auditing and Assurance Standards Board (IAASB) has announced the appointment of Thomas Seidenstein as new chair.

Mr Seidenstein will begin his three-year term on 1 July 2019, where he will succeed Arnold Schilder. Mr Seidenstein was recommended for the position by the Interim Nominating Committee, endorsed by the IFAC Board, and approved by the Public Interest Oversight Board.

For more information, see the press release on the IAASB’s website.

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Agenda and pre-meeting summaries for the June 2019 IFRS Interpretations Committee meeting

03 Jun, 2019

The IFRS Interpretations Committee will meet in London on 11 and 12 June 2019 to discuss fourteen issues, including eight new interpretation requests.

New Issues

The Committee will discuss eight new issues.

IFRS 16 Leases—Incremental borrowing rate (Agenda Paper 2). Does the incremental borrowing rate need to reflect the interest rate in a loan with both a similar maturity to the lease and a similar payment profile to the lease payments?

IFRS 16 Leases—Lease term and useful life of leasehold improvement (Agenda Paper 3). (a) Does an entity consider the economics of a contract when determining the enforceable period of the lease, and not only any contractual termination payment (such as the cost of abandoning or dismantling leasehold improvements)?  (b) Is the useful life of any non-removable leasehold improvements limited to the lease term of the related lease? 

IFRS 9 Financial Instruments—Fair value hedge of foreign currency risk on non-financial assets (Agenda Paper 4). Can foreign currency risk be a separately identifiable and reliably measurable risk component of a non-financial asset held for consumption (for example, property, plant and equipment and inventory denominated in a foreign currency) that an entity can designate as the hedged item in a fair value hedge accounting relationship?

IAS 7 Statement of Cash Flows—Changes in liabilities arising from financing activities (Agenda Paper 5). Some investors have expressed concerns about the quality and consistency of disclosures about changes in liabilities arising from financing activities required by IAS 7.

IFRS 10 Consolidated Financial Statements—Sale of a single asset entity containing real estate (Agenda Paper 6). Should an entity account for the sale of real estate through an equity interest in a single asset entity that is a subsidiary by applying IFRS 15 or IFRS 10?

IAS 1 Presentation of Financial Statements—Presentation of an uncertain tax position (Agenda Paper 7). Should an entity present a liability related to uncertain tax treatments as a current (or deferred) tax liability or as a provision?

IFRS 15 Revenue from Contracts with Customers—Compensation for delays or cancellations (Agenda Paper 8). Should an obligation to compensate customers for delayed or cancelled flights (as set out in legislation) be recognised as part of the transaction price or as an obligation in accordance with IAS 37?

IAS 41 Agriculture—Subsequent expenditure (Agenda Paper 9). Should an entity capitalise or expense the costs related to the biological transformation of biological assets?

The staff are recommending that the Committee not develop any Interpretations or amendments but instead publish tentative agenda decisions stating that the requirements provide an adequate basis for addressing each of issues.

Agenda decisions to finalise

The staff are recommending that the Committee finalise four tentative agenda decisions.

IFRS 15 Revenue from Contracts with Customers—Costs to fulfil a contract (Agenda Paper 10).  When revenue is recognised over time (in this case from a property sale, using the output method to measure progress) any costs incurred to fulfil the performance obligation are recognised as an expense when they are incurred.

IFRS 16 Leases—subsurface rights (Agenda Paper 11). When a contract between a land owner and another party gives the other party the right to place an oil pipeline in a specified underground space, with the land owner retaining the right to use the surface area of the land above the pipeline, that contract contains a lease.

IAS 19 Employee Benefits—Effect of a potential discount on plan classification (Agenda Paper 12). The existence of a potential discount on the contribution an entity is obliged to make to a post-employment benefit plan, if the ratio of plan asserts to plan liabilities exceeds a set level, does not preclude the plan from being a defined contribution plan.

Holdings of a cryptocurrency (Agenda Paper 13). A cryptocurrency does not meet the definitions of cash or a financial asset. It meets the definition of an intangible asset is accounted for in accordance with IAS 38, unless it the cryptocurrency is held for sale in the ordinary course of business—in which case IAS 2 applies.

Continuing discussions

The staff are recommending that narrow-scope amendments to IAS 21 be developed to define “exchangeability” and a “lack of exchangeability” and specify the requirements that would apply when there a lack of exchangeability in a currency (Agenda Paper 14).

Work in progress

The staff have received requests in relation to the definition of a lease and foreign operations in consolidated financial statements. The staff are in the process of analysing those matters (Agenda Paper 16).

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.

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