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Report on role of accountants in integrated reporting

21 Jan, 2016

The Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) have released a joint report on how accountants can play a key role in the trend toward integrated reporting.

From Share Value to Shared Value emphasises the role of accountants in the integrated reporting framework and discusses how accountants can contribute to the identification of areas for improvement as well as the development of solutions. According to the report, accountants can play a substantial role in the development an integrated report by helping to implementing new accounting methodologies, guidelines, and processes.

Please click to access the report on the IMA website.

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Agenda published for the January 2016 IFRS Foundation Trustees meeting

20 Jan, 2016

The agenda for the public session of the upcoming meeting of the IFRS Foundation Trustees is now available. The Trustees will meet on 28 January 2016 in London.

The agenda for the public session of the meeting, which will include feedback from an earlier (26 January) DPOC meeting, is summarised below:

Thursday, 28 January 2016

IFRS Foundation Trustees meeting (11:00–12:00)

  • Report of the Chair of the IFRS Foundation Trustees
  • Report of the IASB Chair
    • Technical work overview
    • Agenda consultation
    • Engagement strategy
    • Consistency in the application of IFRS globally
  • Report of the Due Process Oversight Committee
    • Technical Activities: Key issues and update
    • Insurance contracts
    • IFRS 16 Leases: Quality Control – the process from permission to ballot to publication
    • Consultative groups: Update
    • Correspondence: Update

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

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We comment on two IFRIC draft Interpretations

19 Jan, 2016

We have published our comment letter to the IFRS Interpretations Committee on IFRIC draft Interpretations DI/2015/1 'Uncertainty over Income Tax Treatments' and DI/2015/2 'Foreign Currency Transactions and Advance Consideration', both issued in October 2015.

In our comment letter on DI/2015/1, we recommend that the scope of the draft Interpretation be extended to cover interest and penalties, at least insofar as they arise directly from uncertain tax treatments already within its scope. Please click to access the full comment letter.

In our comment letter on DI/2015/2, we recommend that the scope of the draft Interpretation be clarified in respect of (1) the transactions that are intended to be excluded due to a requirement to recognise the related asset, expense or income at the fair value of consideration given measured at a date other than the date of initial recognition of a prepayment or deferred liability; and (2) whether a refundable foreign currency deposit would be outside the scope of the draft Interpretation. Please click to access the full comment letter.

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We comment on a number of tentative agenda decisions of the IFRS Interpretations Committee

19 Jan, 2016

We have published our comment letters on IFRS Interpretations Committee agenda decisions on IAS 16, IAS 20, IAS 32, IAS 26, and IFRS 9, as published in the November 2015 IFRIC Update.

More information about the issues is set out below:

IssueAgenda decision supported?More information
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets — Variable payments for asset purchases no
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance — Accounting for recoverable cash payments yes
IAS 32 Financial Instruments: Presentation — Offsetting and cash pooling yes
IAS 36 Impairment of Assets — Recoverable amount and carrying amount of a cash-generating unit yes
IFRS 9 Financial Instruments — Determining hedge effectiveness for net investment hedges yes
IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement — Derecognition of modified financial assets no

You can access all our comment letters to the IASB, IFRS Foundation, and IFRS Interpretations Committee here.

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IASB finalises amendments regarding the recognition of deferred tax assets for unrealised losses

19 Jan, 2016

The International Accounting Standards Board (IASB) has published final amendments to IAS 12 'Income Taxes'. The IASB had concluded that the diversity in practice around the recognition of a deferred tax asset that is related to a debt instrument measured at fair value is mainly attributable to uncertainty about the application of some of the principles in IAS 12. Therefore the amendments consist of some clarifying paragraphs and an illustrating example.

 

Background

The proposals in ED/2012/1 Annual Improvements to IFRSs: 2010-2012 Cycle included proposals to amend IAS 12 Income Taxes to clarify when a deferred tax asset should be recognised for unrealised losses. However, in response to constituent feedback on the proposals, the IASB decided that the accounting for deferred tax assets for unrealised losses on debt instruments should be clarified by a separate narrow-scope project to amend IAS 12.

 

Changes

The amendments in Recognition of Deferred Tax Assets for Unrealised Losses clarify the following aspects:

  • Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.
  • The carrying amount of an asset does not limit the estimation of probable future taxable profits.
  • Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences.
  • An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

 

Transition requirements and effective date

The amendments are effective for annual periods beginning on or after 1 January 2017. Earlier application is permitted. As transition relief, an entitiy may recognises the change in the opening equity of the earliest comparative period in opening retained earnings on initial application without allocating the change between opening retained earnings and other components of equity. The Board has not added additional transition relief for first-time adopters.

 

Additional information

Please click for:

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ESMA comments on DI/2015/2

18 Jan, 2016

The European Securities and Markets Authority (ESMA) has issued its comment letter on the IFRS Interpretations Committee exposure draft DI/2015/2 'Foreign Currency Transactions and Advance Consideration'.

The IFRS Interpretations Committee observed some diversity in practice regarding the exchange rate used when reporting transactions that are denominated in a foreign currency in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates in circumstances in which consideration is received or paid in advance of the recognition of the related asset, expense or income. As a consequence, the Interpretations Committee decided to develop an interpretation.

The ESMA “welcomes and supports” the guidance proposed in the Draft Interpretation.  However it recommends that the IFRS IC clarifies “how the proposed Interpretation would apply to situations in which there is a significant financing component due to a consideration being received before the transfer of goods or services”.

The full comment letter is available on the ESMA website. 

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ESMA comment letter on DI/2015/1

18 Jan, 2016

The European Securities and Markets Authority (ESMA) has issued its comment letter on the IFRS Interpretations Committee exposure draft DI/2015/1 'Uncertainty over Income Tax Treatments'.

The IFRS Interpretations Committee observed diversity in practice regarding the recognition and measurement of current tax, deferred tax liabilities and deferred tax assets as defined by paragraph 5 of IAS 12 Income Taxes, when there are uncertainties in the amount of income tax payable (recoverable). As a consequence, the Interpretations Committee decided to develop an interpretation.  The draft interpretation proposes that the interpretation be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.

The ESMA agrees with the Draft Interpretation.  It comments that it “addresses the existing diversity in practice” and “would enhance consistent application and enforceability of requirements of IAS 12”.

The full comment letter is available on the ESMA website.

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FRC to withdraw Practice Note 20(I)

18 Jan, 2016

The Financial Reporting Council (FRC) has announced that it is to withdraw Practice Note 20(I) 'The Audit of Insurers in the Republic of Ireland' on 29 January as it is “very dated” and “no longer supports the FRC’s objective of providing standards and guidance which deliver high-quality audit”.

The FRC will develop a revised Practice Note 20(I) with Chartered Accountants Ireland at a similar time that it revises Practice Note 20 The Audit of Insurers in the United Kingdom.

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European consultation on non-financial reporting guidelines

15 Jan, 2016

The European Commission has launched a public consultation to collect views from stakeholders on non-binding guidance on the methodology for reporting of non-financial information by certain large companies across all sectors.

The Directive on disclosure of non-financial and diversity information by large companies and groups addressing environmental, social, and governance (ESG) issues was published in the Official Journal of the EU on 15 November 2014. EU Member States should transpose the rules on non-financial reporting into national legislation by 6 December 2016. In this context, the European Commission is organising transposition workshops to assist national authorities and prepares non-binding guidelines on the methodology for reporting non-financial information by end-2016.

Please click to access the consultation page on the European Commission website.

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Recording of the IASB web presentation on the new leases standard

15 Jan, 2016

On 13 January 2016, the day IFRS 16 'Leases' was issued, the staff of the IASB introduced the new standard in a web presentation. A recording of the presentation and the presentation slides are now available on the IASB website.

The 45-minute web presentation provided an overview of the new requirements and allowed participants to ask questions. Please click to access the recording and the slides here on the IASB website. Note that there is no charge to listen to the web presentation but a registration is required.

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