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News

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IASB issues podcast on IFRS 17 discussions at the May IASB meeting

17 May 2019

A podcast has been recorded by Darrel Scott, IASB member, and Andrea Pryde, technical staff, reporting on the discussion at the May 2019 meeting of the Board about IFRS 17 'Insurance Contracts'.

The 10-minute podcast can be accessed through the press release on the IASB website. Our Deloitte meeting notes of the session are available here.

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Programme for the World Standard-setters meeting in September available

17 May 2019

A programme has been released for the World Standard-setters meeting, which is being held in London on 30 September and 1 October 2019.

A summary of the programme is set out below:

Monday, 30 September 2019 (09:00 - 18:20)

  • Opening remarks
  • Welcome address
  • IASB technical programme update
  • Primary financial statements — Overview of the consultation and how it aligns with discussions at previous World Standard-setters conferences
  • Goodwill and impairment – Q&A on the project proposals
  • Breakout sessions
    • Project overview — Disclosure initiative
    • 2019 Comprehensive review of the IFRS for SMEs
    • Financial instruments — what next?
    • Hot topics: IFRS Interpretation Committee
    • Electronic reporting — Why everyone should care about the IFRS Taxonomy
    • Business combinations under common control
  • Breakout sessions
    • Project overview — Disclosure initiative
    • 2019 Comprehensive review of the IFRS for SMEs
    • Financial Instruments — what next?
    • Hot topics: IFRS Interpretation Committee
    • Electronic reporting — Why everyone should care about the IFRS Taxonomy
    • Islamic finance

Tuesday, 1 October 2018 (09:00 - 13:00)

  • Q&A and breakout sessions
  • Working together
  • Rate-regulated activities — preview of forthcoming consultative document

The WSS meeting will be immediately followed by a meeting of the International Forum of Accounting Standard Setters (IFASS).

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IASB publishes editorial corrections

16 May 2019

The IASB has published its second batch of editorial corrections in 2019.

The new set of editorial corrections affect the Red Book and the annotated Red Book 2019 as well as the Blue Book and the annotated Blue Book 2019 and regard IAS 1 Presentation of Financial Statements and the IFRS Foundation Due Process Handbook.

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The editorial corrections can be viewed on the editorial corrections page of the IASB's website.

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We comment on four IFRS Interpretations Committee tentative agenda decisions

15 May 2019

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 19, IFRS 15, IFRS 16, and cryptocurrencies, as published in the March 2019 IFRIC Update.

More in­for­ma­tion about the issues is set out below:

Issue

Agenda decision supported?

More in­for­ma­tion

IAS 19 — Effect of a potential discount on plan classification

Yes; we agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision, however we do not believe that the tentative agenda decision adequately identifies the principles applicable to an analysis of the fact pattern. In addition, we do not believe that the terms and conditions of the plan as presented in the tentative agenda decision are sufficiently detailed to permit a conclusion on the classification of the plan as a defined contribution plan or defined benefit plan.

o Deloitte comment letter

o Committee dis­cus­sion

IFRS 15 — Costs to fulfil a contract

Yes.

o Deloitte comment letter

o Committee dis­cus­sion

IFRS 16 — Subsurface rights

Yes.

o Deloitte comment letter

o Committee dis­cus­sion

Cryptocurrencies

Yes; we agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision, but believe that the usefulness of the agenda decision could be enhanced by addressing two recurring issues related to cryptocurrencies that are accounted for under IAS 38. We also note that the tentative agenda decision highlights the poor definition of cash provided in IFRS Standards.

o Deloitte comment letter

o Committee dis­cus­sion

Click to access all our comment letters to the IASB, IFRS Foun­da­tion, and IFRS In­ter­pre­ta­tions Committee.

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EFRAG publishes discussion paper on pension plans with an asset-return promise

15 May 2019

The European Financial Reporting Advisory Group (EFRAG) has published a discussion paper (DP) 'Accounting for Pension Plans With an Asset-Return Promise'. The DP explores alternative accounting treatments for post-retirement employee benefits, promising the higher of the return on an identified item or group of items and a minimum guaranteed return.

The DP considers three alternatives for accounting for pension plans in the scope of the project:

  • capped asset return approach;
  • fair-value based approach;
  • fulfilment value approach.

The DP and a press release are available on the EFRAG website. Comments are due by 15 November 2019.

 

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Summary of the April 2019 MCCG meeting

14 May 2019

The IASB has published a summary of the Management Commentary Consultative Group (MCCG) meeting held on 3 April 2019.

The MCCG discussed the following topics:

  • Overall proposed approach to reporting business model, strategy, operating environment and risks including cross-cutting issues;
  • Business model;
  • Strategy; and
  • Operating environment and risks.

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

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Webcast on research and the comparability of financial reporting

14 May 2019

The IASB has released a webcast featuring IASB Board member Ann Tarca discussing the results of research into the comparability of companies reporting using IFRSs.

Professor Tarca's 24 minute webcast discusses:

  • Definition and importance of comparability;
  • research evidence in four research areas:
    • Policy choice;
    • Measuring compliance;
    • Comparing numbers derived in accounting systems; and
    • Comparability and market outcomes;
  • Tools the IFRS Foundation uses to promote comparability; and
  • IASB achievements and challenges.

Please click to access the webcast on the IASB website.

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EFRAG draft comment letter on proposed amendments to the interest rate benchmark reform

13 May 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2019/1 'Interest Rate Benchmark Reform (proposed amendments to IFRS 9 and IAS 39)'.

EFRAG ​welcomes the IASB’s proposals to provide relief on hedge accounting requirements and to split the work in two phases. As stated in the draft comment letter, the ‘EFRAG supports the proposals for providing relief on hedge accounting requirements in these periods until the uncertainty ceases to exist regarding how the reform of IBOR rates will affect the cash flows of the hedged item and of hedging instrument because the details of the replacement of interest rate benchmarks are unknown’. In addition, the EFRAG believes that the second phase related to replacement issues should be addressed as soon as possible.

Comments on EFRAG's draft comment letter are requested by 31 May 2019. For more in­for­ma­tion, see the press release and the draft comment letter on the EFRAG website.

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Paper on the new leasing standard and top ten considerations for investors

13 May 2019

The CFA Institute, a global association of investment professionals, has published 'Leases: What Investors Need to Know About the New Standard'.

Companies' lease obligations are moving front and center onto the balance sheet, as a new leasing standard wnet into effect for both US GAAP and IFRS companies effective 1 January 2019. Because US GAAP and IFRS have decided on different solutions and transition methods, investors need to carefully consider the impacts of the new standards on the companies in which they invest. The CFA Institute has therfore prepared a guide to help investors understand the change they are about to witness. It provides the top ten considerations for investors as they evaluate the impact of the change to the new standard. As the most significant change and the greatest comparability challenges arise from lessee accounting, the report focuses on lessee accounting.

The top 10 considerations identfied in the report are:

  1. The Basics – Helping investors understand the basics of the new US GAAP and IFRS standards and their differences.
  2. Transition Methods – Explaining the methods and implications of transitioning to the new standards under US GAAP and IFRS – as well as the comparability challenge brought about by the differing methods.
  3. Transition Impact Disclosures – The transition disclosures to expect, some examples to illustrate, and how investors should evaluate the transition impact.
  4. Financial Statement Captions – The implications, and differences, of the new US GAAP and IFRS standard on financial statement captions. Including a quick illustration for those analytically inclined to visualize the effects and differences of the new standard on the income statement.
  5. Non-GAAP Measures – The implications of the different US GAAP and IFRS treatment of leases on the most notable non-GAAP measures. Most importantly, alerting investors to the fact that net income will likely be lower for IFRS companies while measures of operating income such as EBITDA and EBIT will be higher than the past and relative to US GAAP companies.
  6. Cash – Explaining how cash doesn’t change, but the statement of cash flows will change, for IFRS companies.
  7. Ratios – An analysis of the implications, and differences, of the US GAAP and IFRS standard on solvency, liquidity, profitability, earnings per share, return on equity, performance and coverage ratios. The comparability challenges abound and investors need to understand them.
  8. Disclosures – Why disclosures are more important than ever to investors now that the lease liabilities are measured in the financial statements. Considerations for investors as they analyze these new liabilities and value the company.
  9. Industries Impacted – A quantitative analysis of those companies in the S&P 500 expected to be most significantly impacted.Spoiler:  retail, transports and some sleepers.
  10. Market Expectations – Consideration of how the market might react to the newly visible leverage.

Please click to access the report on the website of the CFA Institute.

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FRC guide to help smaller listed companies improve financial reporting

13 May 2019

The Financial Reporting Council (FRC) has published 'Smaller Listed and AIM Quoted Companies — A Practical Guide for Audit Committees on Improving Financial Reporting'.

In June 2015 the FRC published a discussion paper on the same topic and found that ‘whilst the system of financial reporting is not fundamentally flawed, there is a higher incidence of poorer quality annual reports by smaller quoted companies than by their larger counterparts’. Therefore, the FRC has deveopled a guide that offers practical, cost-effective suggestions on how smaller quoted companies can improve the quality of their financial reporting and suggested questions for audit committees to ask themselves and those associated with the financial reporting process that are designed to encourage the smaller quoted companies to reflect on current practices and consider areas for improvement. The guide not only builds on the 2015 discussion paper but also includes more recent developments such as three new international accounting standards, on revenue (IFRS 15), leases (IFRS 16) and financial instruments (IFRS 9), coming into effect in the last three years.

Please click to access the guide on the FRC website.

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