Each of the experts made an opening statement.

Mr Hoogervorst noted the expected loss model as the key aspect of the new financial instruments standard. He stated that it allowed for a more timely and more continuous recognition of losses and thus avoided major disruptions at a later point of time. He voiced the belief that IFRS 9 will contribute to economic growth. Mr Hoogervorst also commented on the different effective dates of IFRS 9 and the new standard on insurance contracts. He notes that pure insurance companies can defer the application of IFRS 9 while conglomerates have the option of making adjustments to profit and loss. He stated that the IASB wanted to avoid having two standards applied in the same company as this would be too confusing to investors.

Mr Watchman confirmed the EFRAG endorsement advice regarding IFRS 9 noting that meeting the condition for endorsement was always a threshhold and would not necessarily mean that EFRAG agreed with all aspects of the standard. He also pointed at the fact that the endorsement advice included a qualitative impact assessment; for a quantitative impact assessment there were not enough data yet. Mr Watchman noted that the EFRAG endorsement advice was subject to the IASB solving the issue of the different effective dates of IFRS 9 and the new standard on insurance contracts but noted that the IASB was working on a solution that would include most (although not all) of the suggestions EFRAG made.

Mr Nooteboom stressed the major improvements that IFRS 9 would bring compared to IAS 39 and noted the positive ARC vote on 27 June. He also commented on the different effective dates of IFRS 9 and the new standard on insurance contracts and noted that the EU Commission is currently collecting data on the claim that bank insurers would be at a competitive disadvantage as a result of the deferral option not being available below group level. The Commission would come to a conclusion on this and if it found that the claims were true would act at EU level with a complimentary EU solution.

Questions from the ECON members were to a large part measured and solution focused. They especially asked after the claim that IFRS 9 would introduce more fair value measurement that for some is connected with a fear of stronger procyclicality, the effects on long-term investment, better impact assessments, and questions around the complexity of IFRS 9.

The experts replied that although the somewhat different classification in IFRS 9 in comparison to IAS 39 might lead to more assets measured at fair value it was not really a game changer and depended on the business model - some early adopters had actually reported less assets measured at fair value. On the aspect of long-term investment two points were noted: (1) even long-term investors might want to see real time truth and not just effects smoothed over and (2) IFRS 9 would not bring more volatility, rather, it would spread the volatility over time and avoid peaks of volatility as during the financial crisis. All parties agreed that quantitative impact analysis before an accounting standard has been implemented is impossible. However, they also stated that they all would watch the impacts of IFRS 9 adoption closely and (re)act if necessary. Finally, on complexity, the experts stated (1) complexity in the standard had actually reduced in some areas and the area where it was increased was very much worth it (impairment) and (2) complexity stemmed from the transactions dealt with and the economic reality, not from standard-setting itself. Mr Watchman cited Albert Einstein: "Make things as simple as possible, but not simpler."

A recording of the session is already available here on the European Parliament website (scrutiny slot begins at 11:29:00).

The non-paper on the European public good criterion notes that neither the European legislation nor the case law of the Court of Justice provide a definition of this criterion in the context of the IAS Regulation. It therefore offers some flexibility in practice. The non-paper therefore concludes that assessing whether a standard meets the criterion of public good should in general take into account financial stability, EU economic development, competitiveness of European undertakings, and added value for the EU. However, the non-papers states that the above mentioned should not be considered, in any case, as exhaustive. In the context of the endorsement procedure of international accounting standards it should be decided on a case by case basis which of these particular elements EFRAG should focus on in its analysis when assessing the public good criterion and whether any other factors (e.g. long-term investment) should be considered.

The non-paper on the true and fair view criterion notes that European legislation does not provide a distinct definition of the principle of true and fair, but the Court of Justice has reviewed the principle in its case-law over the years. The Court refers to true and fair as “fundamental principle” and “primary objective” of the Accounting Directives. Therefore, the non-paper concludes that it is reasonable to assume that the true and fair view principle is the overarching principle. The supremacy of the principle means that in exceptional cases other general principles must be departed from in order to give the true and fair view of the assets and liabilities.

Please click to access the two papers on the European Commission website:

• Non-paper on the European public good criterion
• Non-paper on the true and fair view criterion

This issue features:

• Views from Barbara Cohen, Head of European Credit Research at BNP Paribas Investment Partners,
• Essentials and ‘Non-IFRS’ information,
• Current projects that need input from the investment community, and
• Information on investor materials and current events.

The Investor Update newsletter is available on the IASB’s website.

The guidance highlights some key considerations for those preparing financial reports in light of the recent UK vote to leave the EU:

• Business model: disclosure of the company’s business model should include detail of the main markets in which the company operates and enable the reader to assess the company’s exposure to the outcome of the referendum.
• Principal risks and uncertainties: consideration should be given to the nature and extent of risks and uncertainties arising from the referendum result and the impact of these on the future performance and position of the business. There should be a focus on making any disclosures company-specific and on avoiding the use of boilerplate language which is less useful to users of the report. Directors should also consider whether the referendum result gives rise to any solvency, liquidity or other risks that may threaten the long-term viability of the business, including the impact of these on their viability statement.
• Market volatility: balance sheet values as at 30 June 2016 and subsequent reporting dates may be impacted by volatility in the markets following the referendum result. Particular consideration should be given to financial instruments measured at fair value and discount rates that may be affected by changes in foreign exchange rates, interest rates and market prices. Directors are also encouraged to consider whether assets may be impaired or whether any subsequent event disclosure is required.
• Going concern basis of accounting: consideration should be given as to whether the going concern basis of accounting is appropriate.
• True and fair view: in light of the EU referendum result, directors should consider the need for any additional disclosures to ensure that the accounts give a true and fair view.
• Half-yearly financial reports: in their interim reports listed companies must include disclosure of important events that occurred during the first six months of the financial year in addition to an indication of the impact of those events on the interim financial statements.

Click here to access the full guidance on the FRC website.

Click here to access the Deloitte website dedicated to the EU referendum.

The proposed template aims for companies to provide useful information required by stakeholders whilst minimising the costs of preparation and the risk of disclosing economically sensitive information.

Please click to access Public Country-by-Country Reporting: A template for disclosing corporate tax information on the FEE website.

When FRS 101 was originally published, the FRC committed to review the standard on an annual basis and update it to ensure that it maintains consistency with IFRS and remains cost-effective for groups.  The amendments to FRS 101, following FRED 63, arise as a result of the 2015/16 annual review of the standard.    

The amendments provide certain disclosure exemptions in relation to IFRS 15 Revenue from Contracts with Customers and clarify a legal requirement relating to the order in which the notes to the financial statements are presented.  Specifically there are disclosure exemptions from the second sentence of paragraph 110 and from paragraphs 113(a) to 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15 for qualifying entities. 

Comments on FRED 65 are invited until 14 October 2016. 

Click for: (all links to FRC website)

• Press release 
• Amendments to FRS 101 Reduced Disclosure Framework 2015/16 Cycle
• FRED 65 Draft amendments to FRS 101 Reduced Disclosure Framework – notification of shareholders

Mr Thorpe replaces David Loweth, who will step down from his full-time position to take up a part-time role, as off 1 September 2016. He will support the Trustees in developing and executing their work programme and will report to Yael Almog, IFRS Foundation Executive Director.

Please click for the press release on the IASB website.

The meeting will includes sessions on the Conceptual Framework, Agenda Consultation, IFRS implementation issues, financial instruments with characteristics of equity, and research programme.

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.

It will focus particularly on the endorsement of IFRS 9 Financial Instruments and the forthcoming amendments to IFRS 4 regarding the different effective dates of IFRS 9 and the new insurance contracts standard. Representatives from the EU Commission, EFRAG, and the IASB will participate in the meeting. It will be webcast here (slot is scheduled to begin at 11:00 Brussels time).

The key findings in the Cranfield report are:

• The percentage of female-held directorships in FTSE 100 Boards has increased to 26%, up from 23.5% in March 2015.  The figure of 26% is similar to the 26.1% figure reported by Lord Davies in his final report on women on boards in October 2015.
• In order to achieve the 33% target set by Lord Davies, there would need to be an average annual increase of 1.6% women across FTSE 100 boards and would require “approximately 27% of women on FTSE 100 boards in 2016”. 
• The percentage of female-held directorships on FTSE 250 boards has increased to 20.4%, up from 18% in March 2015 and 19.6% in the final Lord Davies report.
• There are now no all-male boards in the FTSE 100 – this figure was 21 in 2011.  The number of all-male boards for FTSE 250 companies stands at 15; down from 23 in March 2015.  

The Cranfield report indicates “steady progress compared to March 2015 but to a relative stagnation of the pace of change since October 2015”.  It also indicates that based upon current trends of new appointments going to women and board turnover rates the target of 33% female representation on FTSE 350 boards by 2020 will only be met “if the pace of change increases to former levels”.  Currently “progress among executive ranks and in the executive pipeline remains very slow”.  The Cranfield report indicates that “this shortage of women in top senior roles will make it difficult to reach and sustain the new target of 33% women on boards by 2020”. 

Due to what the report calls a “concerning trend of stalled progress”, the Cranfield report identifies a number of areas for consideration to increase momentum in the future: 

• Refocus attention on boards.  Board turnover rate should return to 14% with a larger share of new appointments going to women. 
• Greater attention should be paid to the female pipeline.  The report indicates that “future action should consider how organisations can develop talented women more effectively and how they can encourage more of them to take up operational roles”.
• There should be greater robustness and transparency in reporting gender composition at Executive Committee level and below.
• Companies should consider how metrics and targets might help them achieve progress towards gender balance in senior management ranks and below.

It is hoped that the recently announced government-backed Hampden/Alexander review will provide a springboard for renewed progress in this area to achieve the 33% target.  The review will “focus on ensuring the very best of female talent make their way up the pipeline by removing barriers to their success, and continue to drive forward the momentum from Lord Davies’ work”.  The findings of the review are expected to be presented to the government by the end of 2016. 

Click for:

• Press release (link to Cranfield School of management website)
• ‘The Female FTSE Board Report 2016 – Women on Boards – Taking Stock of Where We Are’ (link to Cranfield School of Management website)
• Government Equalities Office press release (link to Government Equalities Office website)
• Our previous UK Accounting Plus story on women on boards