News

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG issues endorsement advice letter on amendments to IAS 12

08 Jun, 2016

The European Financial Reporting Advisory Group (EFRAG) has submitted to the European Commission its endorsement advice letter for the use of the amendments to International Accounting Standard (IAS) 12 ‘Income Taxes’ in the European Union (EU).

In January 2016 the International Accounting Standards Board (IASB) published Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12).  The objective of the amendments is to clarify the requirements on recognition of deferred tax assets for unrealised losses in order to address diversity in practice in the application of IAS 12 Income Taxes.

EFRAG supports the adoption of the amendments and recommends their endorsement.  EFRAG’s assessment is that the amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.   

EFRAG also considers that the overall benefits of the amendments are likely to outweigh the associated costs to implement them.

EFRAG has also updated its endorsement status report to reflect the issuance of the endorsement advice.

Click for (all links to EFRAG website):

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EFRAG issues endorsement advice letter on amendments to IAS 7 under the IASB’s disclosure initiative

08 Jun, 2016

The European Financial Reporting Advisory Group (EFRAG) has submitted to the European Commission its endorsement advice letter for the use of the amendments to International Accounting Standard (IAS) 7 ‘Statement of Cash Flows’ in the European Union (EU).

In January 2016 the International Accounting Standards Board (IASB) published Disclosure Initiative (Amendments to IAS 7).  The objective of the amendments is to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

EFRAG supports the adoption of the amendments and recommends their endorsement.  EFRAG’s assessment is that the amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.   

EFRAG also considers that the overall benefits of the amendments are likely to outweigh the associated costs to implement them.

EFRAG has also updated its endorsement status report to reflect the issuance of the endorsement advice.

Click for (all links to EFRAG website):

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Financial Reporting Lab call for participants for its Digital Future: Data project

08 Jun, 2016

The Financial Reporting Lab is calling for participants for its next project, Digital Future: Data, which will look at how the use of technology to communicate corporate reporting to the investment community might evolve.

The project will investigate:

How technology trends might drive future change in corporate reporting and provide opportunities for improvements in the access to, and analysis of, corporate reporting data; and

How transformation of reporting formats, potentially driven by regulatory change (such as the expected implementation of a European Single Electronic Format for corporate reporting by 2020), might be optimised for investors and companies. 

Participants are sought for the broader project.  Interested parties are also invited to take part in a short survey on Digital Future: Data.  The survey is open until 20 July 2016.  The FRC indicates that themes arising from the survey will be explored further as part of the project. 

It is expected that the Financial Reporting Lab will undertake work on the project during 2016 with initial results published at the end of the year. 

Further information including the press release is available on the FRC website.

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EFRAG Board meeting June 2016

08 Jun, 2016

The European Financial Reporting Advisory Group (EFRAG) will hold a Board meeting on 16 June 2016 in Brussels.

An agenda with supporting papers and details on how to register for the public meeting can be found on the EFRAG website.

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IOSCO issues final statement on non-GAAP financial measures

08 Jun, 2016

The International Organization of Securities Commissions (IOSCO) has finalised its guidance setting out IOSCO's expectations for issuers with respect to the presentation of financial measures other than those prescribed by Generally Accepted Accounting Principles (GAAP), so called 'non-GAAP financial measures'.

The IOSCO guidance is contained in the Statement on Non-GAAP Financial Measures, which sets out IOSCO's expectations for the presentation of such measures by issuers, including that sufficient information should accompanying non-GAAP financial measures to aid in their understanding, and that the measures should be presented transparently and with disclosure of how they are calculated.

Thestatement provides specific expectations in the following broad categories:

  • Defining the non-GAAP financial measure. This encompasses providing a clear explanation of the basis of calculation, clearly labelling measures such that they are distinguished from GAAP measures, explaining why the measures are useful, and explicitly stating the non-GAAP measure does not have a standardised meaning and may not be comparable between entities.
  • Unbiased purpose. This requires that non-GAAP financial measures should not be used to avoid presenting adverse information to the market.
  • Prominence of GAAP measures versus non-GAAP financial measuress. Non-GAAP measures and their most directly comparable GAAP measures should be presented with equal prominence, or the GAAP measure given greater prominence, and non-GAAP measures should not in any way confuse or obscure the presentation of GAAP measures.
  • Reconciliation to comparable GAAP measures. Reconciliations should be provided between non-GAAP financial measures and their most directly comparable GAAP measure presented in the financial statements, with adjustments explained and reconcilable to the financial statements, or information about how they are calculated provided.
  • Presentation of non-GAAP financial measures consistently over time. Measures should generally remain consistent from period to period, include comparative information, with any changes in composition explained and also reflected in comparative information and discontinued use of a non-GAAP measure sufficiently motivated.
  • Recurring items. Items that are reasonably likely to affect past and future periods, such as restructuring costs and impairment losses, should not be described as non-recurring, infrequent or unusual.
  • Access to associated information. The information that issuers provide regarding non-GAAP financial measures should be readily and easily accessible to third parties.

The statement is intended to be used by entities applying International Financial Reporting Standards (IFRSs) and other accounting principles.

Please click for (links to IOSCO website):

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GPF (Global Preparers Forum) (mid blue) Image

Agenda for June 2016 joint CMAC-GPF meeting

07 Jun, 2016

Representatives from the International Accounting Standards Board (IASB) will meet with both the Capital Markets Advisory Council (CMAC) and Global Preparers Forum (GPF) in London on 15 and 16 June 2016. The agenda for the joint meeting has been released.

The full agenda for the meeting (as of 6 June 2016) is sum­marised below:

Wednesday, 15 June 2016 (10:00-17:15)

  • IASB and Interpretations Committee Update
  • Materiality — presentation and breakout sessions
  • Statement of cash flows — presentation and breakout sessions
  • Primary financial statements — presentation and breakout sessions

Thursday, 16 June 2016 (09:00-10:45)

  • Financial instruments with characteristics of equity - pre­sen­ta­tion and breakout sessions

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

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European Parliament votes on ECON report on current accounting standard-setting

07 Jun, 2016

In its plenary sessions currently held in Strasbourg, the European Parliament has discussed and voted on the report on the activities of the IFRS Foundation, EFRAG and the PIOB that the Committee on Economic and Monetary Affairs (ECON) of the European Parliament (EP) has initiated.

The report is not legally binding but is now an EP resolution and will serve as guidance and reference in future EU law-making processes.

The presentation and discussion took place yesterday. There is a video recording of the discussion available (link to EP website, 17 minutes, free choice of language). During the discussion, the only contributions of note were the introduction by the ECON rapporteur (Theodor Stolojan) introducing the report and the response by the representative of the European Commission (Christos Stylianidis). The other contributors merely repeated known sentiments or did not speak to the topic.

In his response, Commissioner Stylianidis, who spoke on behalf of Commissioner Jonathan Hill, pointed at the Commission's own evaluation that had led to an overall positive assessment of the situation, welcomed the intended formation of an EP permanent IFRS team, and mentioned the EC comment letter to the IFRS Foundation (link to IASB website) on their review of the structure and effectiveness of the IFRS Foundation, which had already picked up on many of the items presented in the report. Mr Stylianidis noted that the Commission has concluded that currently there is no need for legislative changes, however, better cooperation, coordination and communication between all parties involved would be beneficial.

In today's vote (by roll call), the European Parliament carried the resolution.

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IASB posts webinar on IFRS 4 and IFRS 9

03 Jun, 2016

The IASB has posted to its website a webinar on the application of the new accounting requirements for financial assets by insurers.

The webinar — hosted by IASB board members Martin Edelmann and Sue Lloyd, along with IASB senior technical manager Joanna Yeoh — responds to some companies’ concerns about the timing of the implementation of IFRS 9 Financial Instruments and the forthcoming insurance contracts standard and the related consequences. The IASB has confirmed that it will issue amendments to IFRS 4 that:

  • give companies that issue insurance contracts the option to remove from profit or loss the volatility that may be caused by certain changes in the measurement of financial assets when applying IFRS 9 before the new insurance contracts standard; and
  • give companies whose predominant activities are insurance-related an optional temporary exemption from applying IFRS 9 until 2021.

The webinar and slides are available on the IASB's website.

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Charity Commission consults on revised guidance on the external scrutiny of charity accounts

03 Jun, 2016

The Charity Commission ("CC") has issued a consultation on changes to its guidance on the external scrutiny of charity accounts. In particular, it proposes extending the scope of independent examination to consolidated accounts. Comments are requested by 30 September 2016.

The CC is consulting on these changes for several reasons. These include the recent changes in thresholds for audit and the preparation of consolidated group accounts; the results of the consultation on matters of material significance that must be reported to regulators; and changing expectations of the charity sector following the 2015 collapse of Kid's Company.

The proposals include:

  • three new Directions about:
       - examiner independence;
       - conflicts of interest and disclosure of related party transactions; and
       - financial sustainability and going concern;
  • new simpler guidance for each Direction;
  • extending independent examination to consolidated (group) accounts;
  • a new simpler format for the examiner’s report;
  • changes to the reporting of matters of material significance (in a separate consultation);
  • new guidance on the reporting of ‘relevant matters’; and
  • a plain English approach which makes it clearer that the guidance is expected practice not simply recommended practice.

The proposed changes are intended to come into force for periods ending on or after 31 March 2017. Comments are requested by 30 September 2016.

The full consultation and press release can be obtained from the Charity Commission website.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG publishes May 2016 issue of 'EFRAG Update'

03 Jun, 2016

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during May 2016.

The Update reports on the EFRAG Board meeting on 13 May and the EFRAG Technical Expert Group (EFRAG TEG) meeting on 26-27 May.  The Update also lists EFRAG publications issued in May:

Please click to download the May EFRAG Update from the EFRAG website.

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