The paper explores the possibility of abolishing or minimising the use of other comprehensive income (OCI) in the financial statements. It does so by considering the usefulness of financial information if the same measurement basis must be used for measuring an asset or a liability both from the perspective of the entity's financial performance and its financial position (abolishing the use of OCI would mean that it would be impossible to use two measurement bases to measure the same asset or liability).

The paper comes to the conclusion that always using the same measurement basis would be unrealistic as users have increasingly called for more information to measured at current value on the face of the balance sheet. Moreover, the ASBJ points out that the Conceptual Framework itself indicates that the purposes of balance sheets and income statements are not necessarily congruent with each other, and that the use of two different measurement bases could increase the usefulness of the financial information presented. Overall, the paper concludes setting the goal of abolishing or minimising the use of OCI "would be inappropriate or unfeasible", and that on the contrary the continued use of OCI is necessary to maintain the usefulness of financial information.

Please click for access to the paper on the ASBJ's website.

The full agenda is summarised below:

Agenda papers from this meeting are available on the IASB's website.

We support the objective of achieving a set of commonly shared guidelines on the presentation of, and information about, supplementary financial measures (SFMs), whose objective would be ensuring the quality, transparency and usefulness of the financial information provided to users, regardless of whether such supplementary financial measures are included within or outside of financial statements. We believe this objective is important given the widespread use of such measures and existing diversity in presentation and explanation of such measures around the world.

However, we note that there are various initiatives in the area of supplementary financial measures in addition to the IFAC PAIB proposals, including:

• Existing guidance in some jurisdictions, e.g. Australia, New Zealand and Canada
• Separate proposals on this topic from the European Securities and Markets Authority (ESMA)
• Expected guidelines from the International Organization of Securities Commissions (IOSCO)
• The International Accounting Standards Board's (IASB) indicated intention to research the presentation and disclosure of non-IFRS financial information as part of its disclosure initiative project.

In light of the above, our comment letter makes the following observations:

Therefore, due to the global nature of the subject and the varied placement of SFMs (i.e. inside/outside financial statements), care should be taken that actions or guidance targeted at a global audience do not conflict with global initiatives undertaken by global accounting standard-setters and regulators. We therefore strongly suggest that the IFAC PAIB liaises in particular with the IASB and IOSCO so as to coordinate its actions, as well as obtain input from them on any proposed IGPG on SFMs. In this way, we believe that the IFAC PAIB can most effectively contribute to the aim of high quality financial reporting applied without regional variation.

The full comment letter can be downloaded here.

EFRAG’s draft comment letter was issued on 11 April 2014 with a comment period until 12 May 2014.  The comment deadline has been extended to 20 June 2014 “to allow all interested stakeholders more time to respond”.

The press release can be accessed on the EFRAG website.

The presentation will include an overview of the proposed amendments and a question and answer session. It will start at 11:30 UK time and will last approximately 30 minutes. Please click for more information and for registering on the IASB's website.

The IAASB issued an Exposure Draft for a revised International Standard on Auditing, ISA 720 ‘The auditor’s responsibilities relating to other information in documents containing or accompanying audited financial statements and the auditor’s report thereon’ in November 2012.  The revised Exposure Draft responds to significant concerns raised in response to the IAASB's original proposals.

The FRC’s equivalent ISAs (UK and Ireland) are largely developed from the ISAs published by the IAASB.  The FRC consider that some of the IAASB proposals are consistent with revisions made to ISA (UK and Ireland) 720 (Revised October 2012) Section A – 'The auditor’s responsibilities relating to other information in documents containing audited financial statements' (link to FRC website).  The FRC also comments that a number of the IAASB proposals would be new in the UK.

The invitation to comment seeks to:

describe and distinguish the proposed changes that the FRC has already incorporated into ISA (UK and Ireland) 720 Section A (Revised October 2012) and the proposed changes that would be required to be made to ISA (UK and Ireland) 720 Section A, if the revised ISA were to be adopted for application in the UK and Ireland.

The FRC are keen to understand from respondents whether, and if so how, the proposed changes should be adopted in the UK through amendments to ISA (UK and Ireland) 720 (Revised October 2012) Section A “having regard to the inter-relationship between the IAASB’s proposals and the changes previously made by the FRC”. 

Comments are invited by the FRC until 18 June 2014.

Click for:

• FRC Invitation to Comment on the IAASB Exposure Draft (April 2014) – ISA 720 (Revised) ‘The Auditor’s Responsibilities Relating to Other Information’ (link to FRC website).
• Our previous UK Accounting Plus news item on the IAASB's revised Exposure Draft.

ESMA discharges of the responsibility of monitoring of compliance of financial information with International Financial Reporting Standards (IFRS) and taking of appropriate enforcement action mainly through the European Enforcers Co-ordination Sessions (EECS) which co-ordinate the enforcement activities of Member States in order to increase convergence amongst European enforcer’s activities. The EECS also provide feedback to the International Accounting Standard Board (IASB) on issues related to the application of IFRSs identified as part of the enforcement process.

In 2013, European enforcers performed full reviews of around 1050 interim and annual IFRS financial statements covering around 14 % of listed entities accounts in Europe. In addition, around 850 financial statements were subject to partial review, representing coverage of 11 % of the population of listed entities.

During 2013, ESMA also considered the application of the 2012 European Common Enforcement Priorities in the 2012 annual IFRS financial statements. In order to ensure a relevant assessment at European level, ESMA selected a sample of 185 issuers from 25 European countries for review by national enforcers. The 2012 priorities related to recognition, measurement and disclosure of impairment of non-financial assets, measurement of defined benefit obligations, and disclosures related to provisions for non-financial liabilities. (An analysis of issues related to financial instruments was performed separately as part of ESMA's review of accounting practices of financial institutions and resulted in the publication a separate report in November 2013.)

As a result of review of the sample of 185 financial statements, national enforcers took 46 enforcement actions (either required public corrective notes or a different form of public announcement or required corrections in future financial statements). 43% of those enforcement actions related to the disclosure of operational assumptions, growth and discount rates (IAS 36), 20% to sensitivity analyses (IAS 36), and 13% to provisions (IAS 37). Nevertheless, ESMA and the national enforcers identified improvement in the quality of elements of disclosure in 2012 IFRS financial statements in comparison with the results of their enforcement activities in the prior year.

Please click for access to the full report on the ESMA website.

The release of the report follows papers and discussions considered at the thirtieth session of the UNCTAD Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) which has held in Geneva on 6-8 November 2013 and also focused on the human resource development challenges that arise in high-quality corporate reporting. The report builds on the ISAR discussion and also includes the outcomes of country case studies conducted by the UNCTAD secretariat studies in Chile, Denmark, Malaysia, the Russian Federation and the United Republic of Tanzania.

The report considers the benefits and human resource development challenges of globally recognised corporate reporting standards, including International Financial Reporting Standards (IFRS), International Standards on Auditing (ISAs) and various codes on environmental, social and corporate governance such as the Global Reporting Initiative (GRI) 'G4' guidelines and earlier ISAR guidance. It provides the following introduction:

There are a number of human capacity related challenges that countries face when implementing corporate reporting standards and codes developed at a global level. These challenges occur to a varying extent in all countries regardless of their level of economic development. Reorientation of existing national education systems to integrate globally developed standards and codes could take a considerable amount of time – in some cases an entire generation. Transition to a new accounting framework is challenging and a critical integral component of managing such a transition period is developing the necessary competencies in relation to implementation of the global standards. Thus, developing human resources capacity for corporate reporting in a sustainable manner requires regulatory and institutional support as well as reliable sources of funding.

The report includes many observations and recommendations, including the following:

• The benefits of global corporate reporting standards can only be realised if they are properly implemented, which in turn depends on properly trained human resources developed through education, training and experience
• There is an increasing need for the harmonisation of internationally accepted qualifications for accountants and auditors, through the International Education Standards (IESs) published by the International Accounting Education Standards Board (IAESB) and programmes such as the IFRS Foundation education initiative and various regional programmes
• The development of professional accounting organisations (POAs) operating at full capacity is critical to train qualified professional accountants, with problems cited including a lack of capacity and shortage of accountants, excessive numbers of professional associations in some countries, regulatory framework hurdles, and a need to constantly update programmes in light of rapid and continuous changes in international standards - regional collaboration is seen a critical response in addressing these areas
• High-quality education relies on courses taught by qualified professors in the context of an increasingly complex content of teaching materials, growing numbers of accountants to train, language barriers and lack of English proficiency, an ageing academic population in some countries, and a lack of coordination and harmonisation of curricula
• Challenges are often more difficult in the public sector than the private sector, with low adherence to relevant IFAC Statements of Membership Obligations (SMOs) by many professional organisations, low adoption of International Public Sector Accounting Standards (IPSAS) worldwide, and more severe shortages of professional accountants
• The case studies provide various indications that efforts towards full convergence with IFRSs have been hampered by insufficient knowledge of international standards and difficulties in adjusting the national system of accounting to adapt international standards. Language barriers and the need for collaboration with universities to introduce international accounting aspects into curricula were also evident.

The full report is available on the UNCTAD website.

The revised agenda for the meeting is summarised below:

* Indicates a change in order from the initial agenda.

Agenda papers for the meeting are available on the IASB's website.