This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

News

IASB document (blue) Image

IASB publishes editorial corrections

12 Dec 2018

The IASB has published its first batch of editorial corrections in 2018.

The editorial corrections contain corrections to amendments, corrections to stand-alone standards, and corrections to the various versions of the red and blue book 2018. The following pronouncements are affected:

  • IFRS 16 Leases
  • Classification and Measurement of Share-based Payment Transactions
  • IFRS 9 Financial Instruments
  • IFRS 13 Fair Value Measurement
  • IFRS Practice Statement 2 Making Materiality Judgments
  • IFRS 1 First-time Adoption of International Financial Reporting Standards

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.

IASB meeting (blue) Image

Agenda for the IASB meeting changed

12 Dec 2018

The agenda for the IASB meeting, which is currently being held in London, has been changed: Tomorrow's sessions have changed their order - most notably the session on IFRS 17 'Insurance Contracts' has been moved to the afternoon and will now begin at 13:00hrs UK time.

We have updated our meeting note page, which offers access to the agenda and our pre-meeting summaries of the agenda papers to be discussed, accordingly.

IASB speeches (blue) Image

IASB Chairman doubts we are ready for the next crisis but sees great improvements in financial reporting

12 Dec 2018

At the 2018 AICPA Conference on Current SEC and PCAOB Developments, IASB Chairman Hans Hoogervorst gave a thoughtful speech that looked at lessons learned from the global financial crisis, sketched the enormous risks in the global economy and admitted doubt as to whether the financial system as a whole is ready for the next financial crisis.

Mr Hoogervorst began his speech by outlining the global situation financial situation regarding global debt, interest rates and the debt trap as well as the capitalisation of the banking system. Against that backdrop, he analysed whether accounting standards are fit for purpose in a possible new financial crisis.

Mr Hoogervorst first turned to IFRS 9 and the expected loss models the IASB and the FASB have developed. He commented on the fear that IFRS 9 would lead to overreaction as economic expectations might be overly pessimistic during a recession, which might strengthen the downward turn of the economic cycle. However, he believed those fears not to be justified for three reasons:

  • The fact that IFRS 9 leads to a much quicker crystallisation of loan losses should have a preventative effect.
  • Timely loan loss recognition should contribute to limiting imprudent dividend distribution and remuneration policies.
  • Quick loan loss recognition should lead to timely clean-up of banks’ balance sheets, which in turn will contribute to much quicker restoration of credit flows to healthy companies.

Mr Hoogervorst then turned to IFRS 17 and its contributions to financial stability. The slides that supported the speech noted six of these:

  • Insurance liabilities properly measured
  • Transparent costs of options and guarantees
  • Updated information on risk margins
  • Immediate recognition of onerous contracts
  • End of up-front profit taking
  • Less earnings management

Finally, Mr Hoogervorst turned to goodwill and the risk that goodwill just keeps on accumulating over time even when the economics do not justify this. He did not believe that the accounting for goodwill poses a significant risk in terms of triggering a financial crisis, however, he noted that in the next financial crisis, a lot of goodwill that has been building up since the last one would be impaired all at once, which might add to unrest in the capital markets. Mr Hoogervorst pointed out the discussion paper on this topic the IASB plans to publish that will present some new approaches to goodwill. The paper will look at is whether it will be possible to improve disclosures that will help investors to judge whether an acquisition has been successful, will consider a disclosure that shows what a company’s balance sheet will look like without goodwill, and include a discussion on the reintroduction of amortisation of goodwill.

Mr Hoogervorst closed his speech noting that he was not sure whether the financial system as a whole is ready for the next financial crisis. However, he added: "What I am sure of is that the recent improvements in our accounting standards will provide much more transparency that will help investors and regulators identify risks at a much earlier stage. That is the best contribution that accounting can give to financial stability."

Please click for the full text of the speech (with slides embedded) on the IASB website.

FRC Image

FRC publishes an Audit Quality Thematic Review

10 Dec 2018

The Financial Reporting Council (FRC) has published the results of its '2018 Audit Quality Thematic Review on Other Information in the Financial Report'.

The review of six audit firms focused on the auditor’s work in respect of other information in the financial report. ’Other information’ is all financial and non-financial information included in an entity’s report other than the financial statements and audited parts of the directors’ remuneration report.

Investors and other stakeholders use a wide variety of financial and non-financial information to assess the performance of the company, which comes from a variety of sources in addition to the audited financial statements.

The auditor's opinion on the financial statement does not cover this other information. Instead, as part of an audit of the financial statements, the auditor is required to consider whether the other information is materially inconsistent with the audited financial statements or the auditor's knowledge and report on this in the auditor's report. Auditing standards are not prescriptive around what procedures auditors are required to do.

The report identifies areas of better practice as well as some areas for development for audit firms.  Additionally, the FRC has suggested areas of improvement for Audit Committees in relation to other information.

The press release and full report are available on the FRC website.

FRC Image

FRC launches consultation on the effectiveness of Client Asset Audit Standard

10 Dec 2018

The Financial Reporting Council (FRC) has launched a consultation on the effectiveness of the Client Asset Audit Standard (CASS Standard).

The CASS Standard was introduced in 2015 to support the Financial Conduct Authority’s regulatory activity and oversight of the CASS sector. 

Now that the standard has been used by auditors for three years, the FRC is seeking stakeholder feedback to determine whether further measures are needed to support audit quality in this area. In the consultation, the FRC is also seeking views as to whether it should seek to develop a monitoring regime to provide a mechanism for better assessing the quality of CASS audit work undertaken in the UK. Feedback is requested by 4 March 2019.  

The press release and consultation can be found on the FRC website.

 

Financial Reporting Lab Image

Financial Reporting Lab calls for participants for a new project on the sources and uses of cash

10 Dec 2018

The Financial Reporting Lab (the Lab) is calling for participants for its next project which will seek to explore best practice disclosures around the sources and uses of cash.

The project which will follow on from the Lab's reports on risk and viability and dividend policy reporting. The project will consider how reporting on the location, nature and availability of cash within a group, as well as future uses of cash, can be presented in a way that is most useful to investor decision-making.

The project will develop from the contributions of participants but is most likely to examine disclosures in annual reports and other public communications that help investors to understand:

  • What is the make-up, nature and location of cash within a group?
  • What is the availability of cash and what restrictions are in place concerning its access and use?
  • What are the plans in place for the use of the cash?

The project is expected to include two phases:

  • Phase 1 (Q1 2019) - Consider current practice and how this meets the needs of investors.
  • Phase 2 (Q2 2019) - Company interviews and roundtables to address identified gaps in the reporting of cash.

A report is expected to be published in Q3, 2019 combining both phases.

Investors and companies are invited to register their interest by 15 January 2019.

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

 

IASB meeting (blue) Image

Pre-meeting summaries for the December IASB meeting

07 Dec 2018

The IASB is meeting in London on 11–13 December 2018 to discuss twelve topics. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

Tuesday 11 December

On Tuesday afternoon the IASB has an education session for IFRS 17 Insurance Contracts, ahead of the decision-making session on Thursday.

Wednesday 12 December

The Board will consider a recommendation to updating a reference to the Conceptual Framework in IFRS 3.

In the project on Dynamic Risk Management the staff recommend that that an entity can apply the DRM accounting model if two criteria are met. There must be an economic relationship between the target profile, the asset profile and the derivatives designated within the DRM model and any designation must not reflect an imbalance that would create misalignment that could result in an accounting outcome inconsistent with the purpose of the DRM accounting model.

For Business Combinations under Common Control, the Board is developing an approach based on the acquisition method set out in IFRS 3 Business Combinations that would be required for transactions that affect non-controlling interests. The staff think that this should be limited to entities with equity instruments that are traded in a public market and are recommending that the Board explore this approach.

For the Primary Financial Statements project, the staff are recommending that the Board prohibit the use of columns to present information about MPMs in the statement(s) of financial performance. They are also recommending that the Board describe, rather than define, EBITDA and add it to the list of measures that are not considered to be MPMs, and update its decision on EBIT, clarifying that using the EBIT label for performance measures included in the financial statements is potentially misleading.

The staff is recommending that the Board to move the IBOR project to its standard-setting programme and focus on issues affecting financial reporting leading up to IBOR reform and when the reform is enacted.

The staff will also give updates on the projects on Provisions and Pensions Benefits that Depend on Asset Returns as well as the Research Programme.

Thursday 13 December

At the October 2018 meeting, the Board discussed concerns and implementation challenges raised by stakeholders about the requirements in IFRS 17 Insurance Contracts. At this meeting the Board will consider 12 of those issues. The staff are recommending that the Board amend IFRS 17 for presentation of insurance contracts on the statement of financial position but not to make amendments for the other issues. The remaining nine topics will be considered at a future meeting.

In the Disclosure Initiative the staff recommend that the Board amend paragraphs 117-124 of IAS 1 to require entities to disclose their material accounting policies rather than their significant accounting policies. This amendment would be issued together with the guidance and examples being developed for inclusion in the Materiality Practice Statement.

In the Rate-regulated Activities project the Board will consider staff recommendations relating to the discount rate to be used when measuring regulatory timing differences.

More information

Our pre-meeting summaries are available on our December meeting note page and will be supplemented with our popular meeting notes after the meeting.

UKGAAP Image

UK GAAP application for reporting periods ending 31 December 2018

06 Dec 2018

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 31 December 2018.

As the new UK GAAP regime has now been in place for a number of years, preparation of either parent company or subsidiary accounts under either FRS 101 or FRS 102 should now have become a more routine exercise. The FRC has made several changes to FRS 102 as part of its first triennial review of the Standard to deal with issues highlighted in its implementation. The amendments were published in December 2017.

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 31 December 2018. For those reporters who want to understand new UK GAAP application for earlier periods please select one of the following:

Pronouncement Effective date Application for quarters ending 31 December 2018?
1st qtrs.* 2nd qtrs.** 3rd qtrs.*** Full yrs****
FRS 100
Amendments to FRS 102 (first triennial review) Effective 1 January 2019. Early application is permitted provided that all the amendments to FRS 101 as a result of the triennial review are applied at the same time. Optional Optional Optional Optional
FRS 101
The amendments are available from when an entity applying FRS 101 first applies IFRS 15. However the change in company law to permit the equity method in individual financial statements is effective from 1 January 2016 (or from 1 January 2015 if it is adopted early). Disclosure exemptions in relation to IFRS 15 Mandatory(see note 1)/Choice permitted by change in company law optional Disclosure exemptions in relation to IFRS 15 Mandatory(see note 1)/Choice permitted by change in company law optional Disclosure exemptions in relation to IFRS 15 Mandatory(see note 1)/Choice permitted by change in company law optional Disclosure exemptions in relation to IFRS 15 Mandatory(see note 1)/Choice permitted by change in company law optional
The amendments are available from when an entity applying FRS 101 first applies IFRS 16. Optional- The amendments are available from when an entity applying FRS 101 first applies IFRS 16. Note 2 Optional - The amendments are available from when an entity applying FRS 101 first applies IFRS 16.Note 2 Optional - The amendments are available from when an entity applying FRS 101 first applies IFRS 16.Note 2 Optional - The amendments are available from when an entity applying FRS 101 first applies IFRS 16.Note 2
Amendments to FRS 102 (first triennial review)

Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted provided that all the amendments to FRS 101 as a result of the triennial review are applied at the same time

 

Optional Optional Optional Optional
Amendments to the Basis for Conclusions FRS 101 Reduced Disclosure Framework

No effective date. No amendments to FRS 101 have been made

N/A (see effective date column) N/A (see effective date column) N/A (see effective date column) N/A (see effective date column)
FRS 102
Amendments to FRS 102 (first triennial review) The effective date for most of the amendments to FRS 102 is for accounting periods beginning on or after 1 January 2019, with early application permitted provided all amendments are applied at the same time. The only exceptions to this are the amendments relating to directors’ loans and the tax effects of gift aid payments, for which early application is permitted separately. Limited transitional provisions are also available. The amendments to disclosure requirements under Section 1A for small entities in the Republic of Ireland are effective for accounting periods beginning on or after 1 January 2017. However, early application is permitted for companies in the Republic of Ireland that apply the Companies (Accounting) Act 2017 is applied from the same date.

Optional (most amendments so long as all other amendments are applied at the same time - exception for the amendments relating to directors’ loans and the tax effects of gift aid payments where this is not the case).

Section 1A disclosure requirements for ROI small entities - already applied in the prior period (1 Oct 2017)

Optional (most amendments so long as all other amendments are applied at the same time - exception for the amendments relating to directors’ loans and the tax effects of gift aid payments where this is not the case).

Section 1A disclosure requirements for ROI small entities - already applied in the prior period (1 July 2017)

Optional (most amendments so long as all other amendments are applied at the same time - exception for the amendments relating to directors’ loans and the tax effects of gift aid payments where this is not the case).

Section 1A disclosure requirements for ROI small entities - already applied in the prior period (1 April 2017)

Optional (most amendments so long as all other amendments are applied at the same time - exception for the amendments relating to directors’ loans and the tax effects of gift aid payments where this is not the case).

Section 1A disclosure requirements for ROI small entities - already applied in the prior period (1 January 2017)

FRS 103
Amendments to FRS 102 (first triennial review) Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted provided that all the amendments to FRS 103 as a result of the triennial review are applied at the same time. Optional Optional Optional Optional
FRS 104
Amendments to FRS 102 (first triennial review) Effective for accounting periods beginning on or after 1 January 2019. Early application is permitted if an entity also applies the Triennial review 2017 amendments to FRS 101 or FRS 102 for an accounting period beginning before 1 January 2019. Optional Optional Optional Optional
FRS 105
Amendments to FRS 102 (first triennial review)
The changes to disclosure requirements in FRS 105 for micro entities in the UK are applicable for accounting periods beginning on or after 1 January 2017; all other amendments to FRS 105 as a result of the triennial review are applicable for accounting periods beginning on or after 1 January 2019. Early application for UK micro-companies is permitted provided that all the amendments to FRS 105 are applied at the same time.

With respect to the Republic of Ireland, the changes to incorporate FRS 105 are applicable to accounting periods beginning on or after 1 January 2017. Earlier application is permitted for companies in the Republic of Ireland that apply the Companies (Accounting) Act 2017 is applied from the same date. All other amendments to FRS 105 as a result of the triennial review are applicable for accounting periods beginning on or after 1 January 2019. Early application of the other amendments is permitted provided that all of these other amendments are applied at the same time.

UK disclosure requirements - already applied in prior year (1 Oct)/other amendments - optional

ROI changes to incorporate FRS 105 - already applied in prior year (1 Oct 2017)/other amendments - optional

UK disclosure requirements - already applied in prior year (1 July 2017)/other amendments - optional

ROI changes to incorporate FRS 105 - already applied in prior year (1 Julyl 2017)/other amendments - optional

UK disclosure requirements - already applied in prior year (1 April 2017)/other amendments - optional

ROI changes to incorporate FRS 105 - already applied in prior year (1 April 2017)/other amendments - optional

UK disclosure requirements - already applied in prior year (1 January 2017)/other amendments - optional

ROI changes to incorporate FRS 105 - already applied in the prior year (1 January 2017)/other amendments - optional

* 1st quarter ending on 31 December 2018 (accounting period began on 1 October 2018).

** 2nd quarter ending 31 December 2018 (accounting period began 1 July 2018).

*** 3rd quarter ending 31 December 2018 (accounting period began 1 April 2018.

**** 4th quarter ending 31 December 2018 (accounting period began 1 January 2018).

Note 1 - IFRS 15 is applicable to an entity's first annual IFRS financial statements for a period beginning on or after 1 January 2018.

Note 2 - IFRS 16 is applicable to an entity's first annual IFRS financial statements for a period beginning on or after 1 January 2019.

 

Calendar Image

New and revised pronouncements as at 31 December 2018

06 Dec 2018

Our popular summary of new and revised financial reporting requirements, updated for financial reporting periods ending on 31 December 2018. This listing can be used to perform a quick check that new financial reporting requirements such as new and revised accounting standards and interpretations, and amendments to standards and interpretations, have been fully considered in the reporting close process.

The information below reflects developments to 6 December 2018 and will be updated through to March 2019 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 31 December 2018. For accounts approved after March 2019, please also refer to subsequent versions of this document for any new and revised IFRSs that have additionally been issued that might require disclosure in the accounts under IAS 8:30.

The information below is organised as follows:

Summary

The table below provides a summary of the pronouncements which will be mandatorily applied by entities for the first time at 31 December 2018, for various quarterly reporting periods. Where an EU entity chooses to prepare financial statements in accordance with IFRSs as issued by the IASB, as well as in compliance with IFRSs as adopted by the EU, that entity should comply with the earlier IASB effective date for those items. The table below provides a summary of these pronouncements, and which reporting periods they apply to:

Pronouncement IASB Effective date* EU effective date* EU Mandatory at 31 December 2018?
1st qtrs.** 2nd qtrs.*** 3rd qtrs.**** Full yrs*****
IFRS 9 Financial Instruments (2014) 1 January 2018 1 January 2018 Yes Yes Yes Yes
IFRS 15 Revenue from Contracts with Customers 1 January 2018 1 January 2018 Yes Yes Yes Yes
NEW OR REVISED INTERPRETATIONS
IFRIC 22 Foreign Currency Transactions and Advance Consideration 1 January 2018 1 January 2018 Yes Yes Yes Yes
Annual Improvements to IFRS Standards 2014–2016 Cycle – Amendments to IFRS 1 and IAS 28 1 January 2018 1 January 2018 Yes Yes Yes Yes
Clarifications to IFRS 15 'Revenue from Contracts with Customers' 1 January 2018 1 January 2018 Yes Yes Yes Yes
Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) 1 January 2018 1 January 2018 Yes Yes Yes Yes
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4) 1 January 2018 1 January 2018 Optional ~ Optional ~ Optional ~ Optional ~
'Transfers of Investment Property (Amendments to IAS 40)' 1 January 2018 1 January 2018 Yes Yes Yes Yes

* Generally annual reporting periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see below for full details).

** 1st quarter ending on 31 December 2018 (accounting period began on 1 October 2018).

*** 2nd quarter ending 31 December 2018 (accounting period began 1 July 2018).

**** 3rd quarter ending 31 December 2018 (accounting period began 1 April 2018).

***** 4th quarter ending 31 December 2018 (accounting period began 1 January 2018).

~ The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

More information about these pronouncements, and all new and revised pronouncements, is set out below.

Financial statement considerations in adopting new and revised pronouncements

Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:

  • Updates to accounting policies. The terminology and substance of disclosed accounting policies may need to be updated to reflect new recognition, measurement and other requirements, e.g IAS 19 Employee Benefits may impact the measurement of certain employee benefits.
  • Impact of transitional provisions. IAS 8 Accounting Policies, Changes in Estimates and Errors contains a general requirement that changes in accounting policies are retrospectively applied, but this does not apply to the extent an individual pronouncement has specific transitional provisions.
  • Disclosures about changes in accounting policies. Where an entity changes its accounting policy as a result of the initial application of an IFRS and it has an effect on the current period or any prior period, IAS 8 requires the disclosure of a number of matters, e.g. the title of the IFRS, the nature of the change in accounting policy, a description of the transitional provisions, and the amount of the adjustment for each financial statement line item affected
  • Third statement of financial position. IAS 1 Presentation of Financial Statements requires the presentation of a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements in a number of situations, including if an entity applies an accounting policy retrospectively and the retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period
  • Earnings per share (EPS). Where applicable to the entity, IAS 33 Earnings Per Share requires basic and diluted EPS to be adjusted for the impacts of adjustments result from changes in accounting policies accounted for retrospectively and IAS 8 requires the disclosure of the amount of any such adjustments.

Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation.

 

New or revised standards

The information below can be used to assist with the disclosure requirements under paragraph 30 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which requires entities to disclose any new IFRSs that are in issue but not yet effective and which are likely to impact the entity

New or revised pronouncement When EU effective Application at 31 December 2018 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

IFRS 9 Financial Instruments (2009)

IFRS 9 introduces new requirements for classifying and measuring financial assets, as follows:

  • Debt instruments meeting both a 'business model' test and a 'cash flow characteristics' test are measured at amortised cost (the use of fair value is optional in some limited circumstances)
  • Investments in equity instruments can be designated as 'fair value through other comprehensive income' with only dividends being recognised in profit or loss
  • All other instruments (including all derivatives) are measured at fair value with changes recognised in the profit or loss
  • The concept of 'embedded derivatives' does not apply to financial assets within the scope of the Standard and the entire instrument must be classified and measured in accordance with the above guidelines.

* IFRS 9 (2014) was issued on 24 July 2014 and supersedes IFRS 9 (2009), but this version of the standard remains available for application if the relevant date of initial application is before 1 February 2015.

Issued: 12 November 2009 (article, newsletter)

No stated effective date (see notes in prior column). Optional Optional Optional Optional

IFRS 9 Financial Instruments (2010)

A revised version of IFRS 9 incorporating revised requirements for the classification and measurement of financial liabilities, and carrying over the existing derecognition requirements from IAS 39 Financial Instruments: Recognition and Measurement.

The revised financial liability provisions maintain the existing amortised cost measurement basis for most liabilities. New requirements apply where an entity chooses to measure a liability at fair value through profit or loss – in these cases, the portion of the change in fair value related to changes in the entity's own credit risk is presented in other comprehensive income rather than within profit or loss.

* IFRS 9 (2014) was issued on 24 July 2014 and supersedes IFRS 9 (2009), but this version of the standard remains available for application if the relevant date of initial application is before 1 February 2015.

Issued: 28 October 2010 (article, newsletter)

No stated effective date (see notes in prior column). Optional Optional Optional Optional

IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (2013)

A revised version of IFRS 9 which:

  • Introduces a new chapter to IFRS 9 on hedge accounting, putting in place a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures
  • Permits an entity to apply only the requirements introduced in IFRS 9 (2010) for the presentation of gains and losses on financial liabilities designated as at fair value through profit or loss without applying the other requirements of IFRS 9, meaning the portion of the change in fair value related to changes in the entity's own credit risk can be presented in other comprehensive income rather than within profit or loss
  • Removes the mandatory effective date of IFRS 9 (2013), IFRS 9 (2010) and IFRS 9 (2009), leaving the effective date open pending the finalisation of the impairment and classification and measurement requirements. Notwithstanding the removal of an effective date, each standard remains available for application.

* IFRS 9 (2014) was issued on 24 July 2014 and supersedes IFRS 9 (2009), but this version of the standard remains available for application if the relevant date of initial application is before 1 February 2015.

Issued: 19 November 2013 (article, newsletter)

No stated effective date (see notes in prior column). Optional Optional Optional Optional

IFRS 9 Financial Instruments (2014)

A finalised version of IFRS 9 which contains accounting requirements for financial instruments, replacing IAS 39 Financial Instruments: Recognition and Measurement. The standard contains requirements in the following areas:

  • Classification and measurement. Financial assets are classified by reference to the business model within which they are held and their contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a 'fair value through other comprehensive income' category for certain debt instruments. Financial liabilities are classified in a similar manner to under IAS 39, however there are differences in the requirements applying to the measurement of an entity's own credit risk.
  • Impairment. The 2014 version of IFRS 9 introduces an 'expected credit loss' model for the measurement of the impairment of financial assets, so it is no longer necessary for a credit event to have occurred before a credit loss is recognised
  • Hedge accounting. Introduces a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures
  • Derecognition. The requirements for the derecognition of financial assets and liabilities are carried forward from IAS 39.

Note: Depending on the chosen approach to applying IFRS 9, the transition can involve one or more than one date of initial application for different requirements.

Note: IFRS 9 (2014) supersedes IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013), but these standards remain available for application if the relevant date of initial application is before 1 February 2015.

Issued: 25 July 2014 (Summary of IFRS 9,article, newsletter)

Effective for annual period beginning on or after 1 January 2018. Mandatory Mandatory Mandatory Mandatory

IFRS 15 Revenue from Contracts with Customers

IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.

The five steps in the model are as follows:

  • Identify the contract with the customer
  • Identify the performance obligations in the contract
  • Determine the transaction price
  • Allocate the transaction price to the performance obligations in the contracts
  • Recognise revenue when (or as) the entity satisfies a performance obligation.

Guidance is provided on topics such as the point in which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.

Issued: 28 May 2014 (Summary of IFRS 15, article, newsletter, revenue resources)

Applicable to an entity's first annual IFRS financial statements for a period beginning on or after 1 January 2018. See related news article. Mandatory Mandatory Mandatory Mandatory

IFRS 16 Leases

IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.
Issued: 13 January 2016 (Summary of IFRS 16, article, IFRS 16 resources)
Applicable to annual reporting periods beginning on or after 1 January 2019

Optional Optional Optional Optional

IFRS 17 Insurance Contracts

IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2021.

Issued: 18 May 2017 (Summary of IFRS 17, Article, Newsletter).

Applicable to annual reporting periods beginning on or after 1 January 2021

Not yet endorsed for use in the EU.

 

New or revised interpretations

New or revised interpretation When effective Application at 31 December 2018 to:
1st qtrs. 2nd qtrs. 3rd qtrs 4 qtrs.

IFRIC 22 Foreign Currency Transactions and Advance Consideration

The interpretation addresses foreign currency transactions or parts of transactions where:

  • there is consideration that is denominated or priced in a foreign currency;
  • the entity recognises a prepayment asset or a deferred income liability in respect of that consideration, in advance of the recognition of the related asset, expense or income; and
  • the prepayment asset or deferred income liability is non-monetary.

The Interpretations Committee came to the following conclusion:

  • The date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability.
  • If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.

Issued: 8 December 2016 (article)

Effective for annual reporting periods beginning on or after 1 January 2018. Earlier application is permitted. Mandatory Mandatory Mandatory Mandatory

IFRIC 23 Uncertainty over Income Tax Treatments

The interpretation sets out how to determine 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 Income Taxes.

The Interpretation requires an entity to:

  • determine whether uncertain tax positions are assessed separately or as a group; and
  • assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings:
    • If yes, the entity should determine its accounting tax position consistently
      with the tax treatment used or planned to be used in its income tax filings.
    • If no, the entity should reflect the effect of uncertainty in determining its accounting tax position.

Issued: 7 June 2017 (article)

Effective date: annual periods beginning on or after 1 January 2019. Entities can apply the Interpretation either on a fully retrospective or modified retrospective approach (where comparatives are not permitted or required to be restated).

 

Optional

Optional

Optional

Optional

Amendments

New or revised pronouncement When effective Application at 31 December 2018 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

Editorial Corrections (various)

The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2012, such corrections have been made in February 2012, July 2012, March 2013, September 2013, November 2013 and March 2014, September 2014, December 2014, March 2015, April 2015, September 2015, December 2015, March 2016, May 2016, September 2016, December 2016, September 2017 and November 2017.

Note: For details of these editorial corrections, see our IASB editorial corrections page.

As minor editorial corrections, these changes are effectively immediately applicable under IFRS See comment in previous column
Clarifications to IFRS 15 'Revenue from Contracts with Customers'
Amends IFRS 15 in three areas:
  • Identification of performance obligations – changes clarify the application of the concept of 'distinct‘ in this context.
  • Whether an entity is acting as principal or agent – changes clarify the application of the principal of ‘control’ in making this determination.
  • Licensing – changes assist in determining whether an entity’s activities ‘significantly affect’ intellectual property during the period for which it has been licensed to a customer.
The amendments also provide some transition relief for modified contracts and completed contracts.
Issued: 12 April 2016 (article, newsletter)
Effective for annual periods beginning on or after 1 January 2018 Mandatory Mandatory Mandatory Mandatory
Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)
Amends IFRS 2 to clarify the classification and measurement of share-based payment transactions with respect to:
  • the accounting for cash-settled share-based payment transactions that include a performance condition;
  • the classification of share-based payment transactions with net settlement features; and
  • the accounting for modifications of share-based payment transactions from cash-settled to equity-settled.

Issued: 20 June 2016 (article, newsletter)

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted. Mandatory Mandatory Mandatory Mandatory
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
  • an option that permits 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;
  • 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 application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Issued: 12 September 2016 (article, newsletter)

Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018 and only available for three years after that date.

 

Optional

Optional

Optional

Optional

Annual Improvements 2014-2016 Cycle - amendments to IFRS 1 and IAS 28
Makes amendments to the following standards:
  • IFRS 1 - Deletes the short-term exemptions in paragraphs E3–E7 of IFRS 1, because they have now served their intended purpose
  • IFRS 12 - Clarifies the scope of the standard by specifying that the disclosure requirements in the standard, except for those in paragraphs B10–B16, apply to an entity’s interests listed in paragraph 5 that are classified as held for sale, as held for distribution or as discontinued operations in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
  • IAS 28 - Clarifies that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organisation, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition

Issued: 8 December 2016 (article)

 

The amendments to IFRS 1 and IAS 28 are effective for annual periods beginning on or after 1 January 2018, the amendment to IFRS 12 for annual periods beginning on or after 1 January 2017

Amendments to IFRS 1 and IAS 28 - mandatory Amendments to IFRS 1 and IAS 28 - mandatory Amendments to IFRS 1 and IAS 28 - mandatory Amendments to IFRS 1 and IAS 28 - mandatory
Annual Improvements 2015-2017 Cycle
Makes amendments to the following standards:
  • IFRS 3 Business Combinations and IFRS 11 Joint Arrangements - The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

  • IAS 12 Income Taxes - The amendments clarify that the requirements in the former paragraph 52B (to recognise the income tax consequences of dividends where the transactions or events that generated distributable profits are recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A that only deals with situations where there are different tax rates for distributed and undistributed profits.
  • IAS 23 Borrowing Costs - The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

The amendments published today are all effective for annual periods beginning on or after 1 January 2019. Not yet endorsed for use in the EU.

'Transfers of Investment Property (Amendments to IAS 40)'
The amendments to IAS 40 Investment Property:
  • Amends paragraph 57 to state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. A change of use occurs if property meets, or ceases to meet, the definition of investment property. A change in management’s intentions for the use of a property by itself does not constitute evidence of a change in use.
  • The list of examples of evidence in paragraph 57(a) – (d) is now presented as a non-exhaustive list of examples instead of the previous exhaustive list.

Issued: 8 December 2016 (article)

The amendments are effective for periods beginning on or after 1 January 2018. Earlier application is permitted. An entity applies the amendments to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. Retrospective application is also permitted if that is possible without the use of hindsight.

Mandatory

Mandatory

Mandatory

Mandatory
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
The amendments clarify that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
The amendments in Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) are:
  • Paragraph 14A has been added to clarify that an entity applies IFRS 9 including its impairment requirements, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
  • Paragraph 41 has been deleted because the Board felt that it merely reiterated requirements in IFRS 9 and had created confusion about the accounting for long-term interests.
Issued:12 October 2017 (article)

The amendments are effective for periods beginning on or after 1 January 2019. Earlier application is permitted. This will enable entities to apply the amendments together with IFRS 9 if they wish so but leaves other entities the additional implementation time they had asked for.

The amendments are to be applied retrospectively but they provide transition requirements similar to those in IFRS 9 for entities that apply the amendments after they first apply IFRS 9. They also include relief from restating prior periods for entities electing, in accordance with IFRS 4 Insurance Contracts, to apply the temporary exemption from IFRS 9. Full retrospective application is permitted if that is possible without the use of hindsight.

Not yet endorsed for use in the EU.

Prepayment Features with Negative Compensation (Amendments to IFRS 9)
The amendments address concerns about how IFRS 9 Financial Instruments classifies particular prepayable financial assets. In addition, the IASB has clarified an aspect of the accounting for financial liabilities following a modification.
The amendments are:

Changes regarding symmetric prepayment options

Under the current IFRS 9 requirements, the SPPI condition is not met if the lender has to make a settlement payment in the event of termination by the borrower (also referred to as early repayment gain).

Prepayment Features with Negative Compensation amends the existing requirements in IFRS 9 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments.

Under the amendments, the sign of the prepayment amount is not relevant, i. e. depending on the interest rate prevailing at the time of termination, a payment may also be made in favour of the contracting party effecting the early repayment. The calculation of this compensation payment must be the same for both the case of an early repayment penalty and the case of a early repayment gain.

Clarification regarding the modification of financial liabilities

The final amendments also contain (in the Basis for Conclusions) a clarification regarding the accounting for a modification or exchange of a financial liability measured at amortised cost that does not result in the derecognition of the financial liability. The IASB clarifies that an entity recognises any adjustment to the amortised cost of the financial liability arising from a modification or exchange in profit or loss at the date of the modification or exchange. A retrospective change of the accounting treatment may therefore become necessary if in the past the effective interest rate was adjusted and not the amortised cost amount.
Issued: 12 October 2017 (article)

 

The amendments are to be applied retrospectively for fiscal years beginning on or after 1 January 2019, i. e. one year after the first application of IFRS 9 in its current version. Early application is permitted so entities can apply the amendments together with IFRS 9 if they wish so. Additional transitional requirements and corresponding disclosure requirements must be observed when applying the amendments for the first time.

Optional

Optional

Optional

Optional

Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
The amendments in Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) are:
  • If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement.
  • In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.

Issued: 7 February 2018 (article)

Annual periods beginning on or after 1 January 2019. Not yet endorsed for use in the EU.

Amendments to References to the Conceptual Framework in IFRS Standards


Together with the revised Conceptual Framework published in March 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework.

Issued: 29 March 2018 (article)

Annual periods beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

Definition of a Business (Amendments to IFRS 3)

The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. They:

  • clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;
  • narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;
  • add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
  • remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and
  • add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

Issued: 22 October 2018 (article/newsletter)


Business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

Definition of Material (Amendments to IAS 1 and IAS 8)

The amendments in Definition of Material (Amendments to IAS 1 and IAS 8) clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards.

Issued: 31 October 2018 (article)

 

Annual reporting periods beginning on or after 1 January 2020
Not yet endorsed for use in the EU.

 

IFRS Foundation (blue) Image
XBRL (eXtensible Business Reporting Language) (mid blue) Image

IFRS Foundation publishes proposed general improvements to the IFRS Taxonomy

06 Dec 2018

The IFRS Foundation has published 'IFRS Taxonomy 2018 — Proposed Update 2 'General Improvements''.

The proposed changes aim to improve the quality of tagged data and to make the IFRS Taxonomy easier to use by

  • introducing implementation notes that explain how to use specific IFRS Taxonomy elements and avoid tagging errors;
  • introducing the duration element type for reporting information about a period of time to achieve more consistent tagging; and
  • removing entry points without documentation labels to make it easier to access the IFRS Taxonomy.

For more information, see the press release and proposed update on the IASB’s website. Comments are requested by 4 February 2019.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.