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

The report Trailblazing Transparency: Mending the Gap seeks to answer some of those questions.  It shares the latest thinking from business and government on gender pay information that employers will need to publish and also provides best practice examples as to how companies are practically reporting this information.

In July 2015, the UK Government launched a consultation on how to address the discrepancy between the average earnings of men and women employed by the largest UK employers (referred to as the 'Gender Pay Gap').  Specifically the consultation proposed that private and voluntary sector employers in Great Britain with at least 250 employees would be required to publish information about the pay of their male and female employees and asked what would be the best medium for such disclosure including what form it should take and how often it should be published.  The government has announced (link to government website) that full details of new gender pay gap regulations and a consultation thereon will be published shortly.

The press release and full report is available on the UK Government website.

ESMA is supportive of the IFRS Foundation’s work related to the IFRS Taxonomy and believes that “it will improve the analysis and comparability of financial information of issuers”. 

Commenting on the role of the IASB, ESMA comments:

giving a stronger role to the IASB Board members in the approval of the IFRS Taxonomy would not only provide additional oversight but also increase the acceptance and legitimacy of the taxonomy. As this due process would necessarily play an important role in Europe if the IFRS Taxonomy were to be used for [European Single Electronic Format] ESEF purposes, ESMA believes that incorporating IFRS Taxonomy related activities in the technical programme of the IASB and strengthening the respective roles of the IASB Board and the IFRS Taxonomy Review Panel in the approval of the updates of the IFRS Taxonomy would be beneficial to enhance its credibility.

However, ESMA does highlight that the IASB’s main focus and priority should be to set financial reporting standards for listed entities and that the IFRS Foundation should ensure that the IFRS Taxonomy is only be a “by-product of the standard-setting process” and does not influence the way principles-based standards are developed.

The full comment letter is available on the ESMA website.

In its comment letter, EFRAG welcomes the guidance proposed in the draft interpretation, as it will “clarify the accounting for foreign currency transactions in which consideration was received or paid in advance of the recognition of the related asset, expense or income".  EFRAG also agrees with the proposed consensus and believes the guidance is consistent with the underlying principles in IAS 21 The Effects of Changes in Foreign Exchange Rates.

The press release, comment letter and feedback statement are available on the EFRAG website. 

The amendments were published by the International Accounting Standards Board (IASB) in December 2015 and propose to amend IFRS 4 Insurance Contracts to address the concerns expressed about the different effective dates of IFRS 9 Financial Instruments and the new insurance contracts standard.  The amendments are intended to provide two options for entities that issue insurance contracts within the scope of IFRS 4:

• an option that would permit entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach; and
• an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.

The FRC “appreciates the IASB’s work in addressing concerns raised by the insurance industry about the misalignment of the effective dates of IFRS 9 and the new insurance contracts standard” and “commends” the IASB in proposing the solutions it has.  However, the FRC believes that “further amendments are required to ensure that the temporary exemption from the application of IFRS 9 is a pragmatic and effective solution”.

The FRC comments:

In summary, we consider the ED requirements – the application of the temporary exemption at the reporting entity level only, together with the eligibility condition – create too blunt an instrument to achieve the intended objective of the deferral approach.

In its comment letter the FRC recommends that the IASB amends the predominance assessment for the temporary exemption such that:

• The predominant activity is primarily determined by reference to a liability ratio test with some adjustments required to “ensure the test is effective”.
• Whilst the liability ratio should be the primary test for the application of the exemption its conclusion should be rebuttable, if there are clear contrary indicators providing strong evidence that the predominant activity is that of an insurer and vice versa.
• The application of the predominance criteria should be permitted at the reporting entity level or below at sub-group levels.

Additionally the FRC “fully support the proposal that IFRS 9 be mandatory for all companies for years commencing on or after 1 January 2021” and would not support any extension of the deferral period. 

Further comments are contained in the full comment letter which is available on the FRC website.

The video follows on from the publication last year of the organisation’s Mission Statement, which sets out what the IFRS Foundation aims to achieve. The video is currently available in English and Spanish and can be accessed on the IASB website.

The amendments were published by the International Accounting Standards Board (IASB) in December 2015 and propose to amend IFRS 4 Insurance Contracts to address the concerns expressed about the different effective dates of IFRS 9 Financial Instruments and the new insurance contracts standard.  The amendments are intended to provide two options for entities that issue insurance contracts within the scope of IFRS 4:

• an option that would permit entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach; and
• an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral (temporary exemption from applying IFRS 9) approach.

ESMA “appreciates the efforts of the IASB to address any concerns and possible difficulties caused by the different effective dates of IFRS 9 and the new insurance contracts standard”.  It supports both the overlay approach and the temporary exemption from applying IFRS 9 and feels that both approaches should be available on an optional basis.  

Considering the overlay approach, ESMA comments that “the IASB should provide additional guidance on which assets are ‘related to contracts that are in the scope of IFRS 4’ and mandate additional disclosures in this respect”.  ESMA is also of the view that the IASB should limit the amount of presentation options allowed for the overlay approach and should require “the presentation on the face of the statement of profit or loss in accordance with IFRS 9 with a subsequent overlay adjustment from profit or loss to other comprehensive income”. 

ESMA “agrees that eligibility for the temporary exemption from applying IFRS 9 should be based on whether the entity’s predominant activity is the issuance of contracts within the scope of IFRS 4”.  ESMA is of the view that the predominant activity criterion “reflects most appropriately the objective to address the misalignment between the effective dates between IFRS 9 and the new insurance contracts standard” and will provide the most relevant information for the users of the financial statements.

ESMA does not support the assessment of the predominance criterion (for the temporary exemption from IFRS 9) at a level below the reporting entity level and comments that the predominance criterion should be amended “to capture all types of liabilities an insurer is expected to carry for its insurance activities linked to issuance of insurance contracts within the scope of IFRS 4”.  ESMA comments that where the temporary exemption is used, there should be sufficient disclosure about its effects.  

Additionally ESMA “agrees that the temporary exemption from applying IFRS 9 should have an expiry date no later than reporting periods beginning on or after 1 January 2021” and urges the IASB to finalise the new insurance contracts standard in time to meet this deadline.

The full comment letter is available on the ESMA website.

Check out the summaries for the forth­com­ing dis­cus­sions on insurance contracts, goodwill and impairment, IFRS implementation issues, and financial instruments with characteristics of equity. We have added them to our meeting note page and will sup­ple­ment them with our popular meeting notes after the meeting.

FRED 62 proposes to amend paragraphs 34.22 and 34.42 of FRS 102 to require disclosure of financial instruments held at fair value on the basis of a fair value hierarchy consistent with EU-adopted IFRS as follows:

A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.

Level 3: Inputs are unobservable (ie for which market data is unavailable) for the asset or liability.

Overall we support the proposals.  Our key comments are as follows:

• the proposals will reduce the costs of complying with FRS 102 for many financial institutions and enable them to present information on a basis consistent with International Financial Reporting Standards (IFRSs); and
• it is important that the amendments are issued in final form as early as possible in 2016 and in particular in time for financial institutions with 31 December 2015 year ends to approve their accounts and meet regulatory filing deadlines without having to incur unnecessary costs in complying with the existing FRS 102 requirements for only one year.

Further comments and a full response to all questions raised in the invitation to comment are contained within the full comment letter.