On 11 August 2015, the IASB launched its second public consultation to seek broad public input on the strategic direction and overall balance of its future work programme.

In its comment letter, the ESMA believes that the main priorities for the IASB in the early period covered by the Agenda Consultation should be (1) completing the insurance contract standard and (2) revising its conceptual framework.

While ESMA “agrees with the factors identified for prioritisation” in the IASB’s work programme it recommends that the IASB identifies “an underlying theme for the Agenda Consultation that would be linked to the IASB’s Strategy Overview”.  ESMA suggests that the IASB directs its focus on “strengthening the fundamental pillars of the financial reporting”.    

ESMA also highlights the importance of the maintenance and implementation projects “in order to facilitate consistent application of IFRS and ensure sufficient level of investor protection” and suggests that the IASB should “strike the right balance between the need to provide timely guidance to application issues identified in practice”.  It also comments on the importance of post implementation reviews (PIRs), suggests that “the overall standard setting process does not properly consider” the role of these and indicates that the IASB should, where relevant “act on the findings of a PIR on a timely basis when developing its standard-setting agenda without the need of delaying the process by waiting for the results of subsequent Agenda Consultation(s)”.

The full comment letter is available on the ESMA website.

Commission Regulation (EC) No 2015/2231 of 2 December 2015 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council published in the Official Journal on 3 December 2015 adopts Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) issued by the IASB in May 2014. The EU effective date is the same as the IASB's effective date (annual periods beginning on or after 1 January 2016 with earlier appication permitted).

EFRAG has updated its endorsement status report to reflect that the European Union has adopted these amenments

The hearing featured an introduction by the ECON Chair Roberto Gualtieri followed by short presentations by the invited experts:

• Andreas Barckow, President of the Accounting Standards Committee of Germany (ASCG)
• Nicolas Véron, Bruegel and Peterson Institute
• Andreas Haaker, German Cooperative and Raiffeisen Confederation (DGRV)
• Mike Ashley, Vice-Chair of EFRAG TEG and Chairman of Financial Instruments Working Group

The presentations were followed by a joint discussion with ECON members, which focused on the following issues:

• divergence between IASB and FASB on the new impairment model,
• different effective dates of IFRS 9 and the new standard on insurance and overlay vs. deferral approach,
• differences between IAS 39 and IFRS 9 and comments on fair value accounting in general,
• 12-month expected credit losses,
• principles-/rules-based accounting and the question of judgement,
• complexity,
• impact analyses at EFRAG and the IASB, and
• whether the differences between IAS 39 and IFRS 9 are improvements or whether IAS 39 should be retained and IFRS 9 not endorsed.

Opening the session, the ECON Chair as well as the Chair of the IFRS Permanent Team of ECON had stated that they had received overwhelming support by virtually all stakeholders arguing for a swift endorsement. During the presentations and the discussion it turned out that three of the experts were of the same opinion while only one expert expressed doubt (of IFRS reporting in general).

Please click for the following additional information on the European Parliament website:

• Presentation by Mr Barckow
• Presentation by Mr Véron
• Presentation by Mr Haaker
• Presentation by Mr Ashley
• Recording of the public hearing (please be aware that you can change the language to all official languages of the European Union)

A number of FTSE 350 companies will be contacted prior to their year-end informing them that the FRC’s Corporate Reporting Review Team will review the tax disclosures in their next published reports.  The FRC highlights that the aim of its monitoring activity “is to drive continuous improvements in the quality of corporate reporting”.

The FRC will place a particular focus on:

• the transparency of tax reconciliation disclosures and how well the sustainability of the effective tax rate is conveyed; and
• uncertainties relating to tax liabilities (and assets) where the value at risk in the short term is not identified.

The FRC indicate that its review “will consider the totality of the companies’ reporting including relevant disclosures in the strategic and other narrative reports as well as the detailed accounting disclosures”.

The press release is available on the FRC website.

In responding to the IASB's 2015 Agenda Consultation, the FRC makes the following key points.

• Once the revised IFRS Conceptual Framework is issued, they strongly urge the IASB to continue to update specific areas of the Framework.
• They support the IASB's Disclosure Initiative and consider that the main focus of the project should be on the upcoming Discussion Paper on Principles of Disclosure.
• In terms of research projects, they believe that priority should be given to performance reporting research as part of the Primary financial sstatements project.
• In the context of maintenance and implementation projects, they note that a large number of changes can be burdensome for preparers to implement and users to understand. They recommend that the IASB should consider this burden when assessing the merits of proposed amendments.

In response to the IFRS Foundation's Review of Structure and Effectiveness, the FRC makes the following broad observations.

• They agree that the IFRS Foundations's current three-tier governance structure remains appropriate, although in their view it is important for the composition of the Monitoring Board to change to reflect both the balance of global financial activity and the adoption of (or commitment to adopt) IFRSs.
• They consider that the Trustees should provide more direct oversight of both the strategic direction of the IASB's standard setting and its output. In particular, they should work to address the perception that the IASB's standards are too theoretically-based and not focussed on commercial reality by increasing their scrutiny of cost-benefit analyses.
• They do not agree with the proposed increase in the number of "at large" Trustees, believing that the geographic distribution of Trustees should focus, though not exclusively, on those jurisdictions that apply IFRS or are committed to their adoption.
• They support the goal of the IFRS Foundation being publicly funded and believe it is a positive step for the Foundation to be working to increase the number of accounting firms contributing to its funding.

The full response to the IASB consultation and the full response to the IFRS Foundation consultation can be found on the FRC website.

The letter does not provide additional elements of assessment on the subject but brings together in one place the elements, contained in the appendices to EFRAG’s endorsement advice on IFRS 9 Financial Instruments, that are relevant for the assessment of 'true and fair'.

Please click to access the letter with the explanations on the EFRAG website.