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.


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

EFRAG publishes August 2019 issue of 'EFRAG Update'

23 Aug 2019

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during August 2019.

The update reports on the EFRAG Technical Expert Group (TEG) meeting on 13 August 2019 and written procedures during August 2019 including the approval of the EFRAG Board's final comment letter on the IASB Exposure Draft ED/2019/2 Annual Improvements to IFRS Standards 2018-2020. This was also the only publication issued by EFRAG in August 2019.

The update also notes that the EFRAG Board is expected to approve the following document using written procedures:

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

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

EFRAG publishes its final comment letter on the Annual Improvements to IFRS Standards 2018-2020 Cycle

23 Aug 2019

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter on the IASB's Exposure Draft ED/2019/2 Annual Improvements to IFRS Standards 2018-2020 Cycle.

EFRAG "generally agrees with the proposals in the ED and considers that these minor changes will improve the consistency and understandability of the IFRS standards concerned", with the following comments:

  • EFRAG suggests that the IASB should clarify that the amendment to paragraph D16 does not prevent a first-time adopter from using the exemption enabling it to set the cumulative translation differences at zero at the date of transition to IFRSs;
  • EFRAG recommends that IAS 39 Financial Instruments: Recognition and Measurement be amended in the same way as the amendment proposed to IFRS 9 Financial Instruments. It also considers that the phrase "including fees paid or received by either the borrower or the lender on the other's behalf" is unclear and recommends that an example of such fees is provided; and

  • EFRAG advises that additional guidance should be added to IFRS 16 on where the reimbursement of leasehold improvements may be considered as a lease incentive.

For more information, see the press release and final comment letter on the EFRAG site.

IASB meeting (blue) Image

Pre-meeting summary for the additional IASB meeting on IBOR

21 Aug 2019

The IASB, which normally does not meet in August, will hold an additional meeting on 28 August to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. We have posted our pre-meeting summary of the two papers to be discussed where we point out the main issues to be discussed by the IASB and the staff recommendations.

The staff are recommending that the amendments include an exception to the requirement in IAS 39 for retrospective assessment when a hedge is temporarily outside the 80–125% range solely due to uncertainties arising from the reform;  provide relief from the separately identifiable requirement for ‘macro hedges’; clarify when the relief ceases to apply to a group of items designated as the hedged item; clarify that the amendments would apply to hedges of both interest rate and foreign currency risks; and simplify the disclosure requirements.

Our detailed pre-meeting summary is available on our August meeting notes page and will be supplemented with our popular meeting notes after the Meeting.

Deloitte document (mid gray) Image

We comment on seven IFRS Interpretations Committee tentative agenda decisions

20 Aug 2019

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 1, IAS 7, IAS 41, IFRS 9, IFRS 15, and IFRS 16, as published in the June 2019 IFRIC Update.

More information about the issues is set out below:

Issue Agenda decision supported? More information
IAS 1 — Presentation of liabilities or assets related to uncertain tax treatments Yes
IAS 7 — Disclosure of changes in liabilities arising from financing activities Yes
IAS 41 — Subsequent expenditure on biological assets Yes
IFRS 9 — Fair value hedge of foreign currency risk on non-financial assets Yes, we agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision. However, we have some concerns with the articulation of the agenda decision in the case where an entity is intending to consume the non-financial item.
IFRS 15 — Compensation for delays or cancellations Yes
IFRS 16 — Lease term and useful life of leasehold improvements No, we disagree with the Committee decision not to take the issue of how to determine the lease term of a cancellable lease or a renewable lease onto its standard-setting agenda. This issue highlights a key difficulty that entities and their auditors face in the application of IFRS 16 which is the assessment of whether a contract continues to be enforceable if both parties have termination rights but at least one of the parties would suffer a more than insignificant penalty if they were to exercise their right (i.e., whether economic disincentive to the exercise of a termination right is relevant to the assessment of whether a lease contract continues to be enforceable).
IFRS 16 — Lessee’s incremental borrowing rate No, we do not agree with the Committee’s conclusion that a lessee is not required to determine an incremental borrowing rate that reflects the interest rate in a loan with a similar payment profile to the lease payments. We do not believe that it is appropriate to infer that the reference to “a similar term” should be read as simply meaning over the “lease term” as defined in Appendix A.

Click to access all our comment letters to the IASB, IFRS Foundation, and IFRS Interpretations Committee. 

IASB meeting (blue) Image

Additional IASB meeting on IBOR

20 Aug 2019

The IASB, which normally does not meet in August, will hold an additional meeting on 28 August to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. The agenda and the papers for the meeting are now available.

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries as well as observer notes from the meeting on this page as they become available.

Deloitte document (mid gray) Image

We comment on two IASB exposure drafts

20 Aug 2019

We have responded to the IASB’s exposure drafts ED/2019/2 'Annual Improvements to IFRS Standards 2018–2020' and ED/2019/3 'Reference to the Conceptual Framework (Proposed amendments to IFRS 3)'.

As regards the proposed annual improvements, we agree with the proposed amendments to IFRS 9, IFRS 16, and IAS 41, however, we do not believe that the proposed amendment to IFRS 1 should be a requirement - we believe it should be an option. Our full comment letter is available here.

As regards the proposed amendments to IFRS 3, we agree with the proposed amendments to IFRS 3 to replace a reference to an old version of the Conceptual Framework. We also agree with the proposed addition of an exception for the recognition principles in IFRS 3 with respect to liabilities and contingent liabilities in the scope of IAS 37 and of IFRIC 21 and of the clarification of the IFRS 3 requirements for contingent assets. However, we believe that an exception to the recognition principles in IFRS 3 is also required with respect to uncertain current tax positions within the scope of IFRIC 23. Our full comment letter is available here.

FRC Image

FRC publishes draft response to proposed amendments to IFRS 17

16 Aug 2019

The Financial Reporting Council (FRC) has published a staff draft of its response to the International Accounting Standards Board (IASB)’s Exposure Draft ED/2019/4 Amendments to IFRS 17 ("the exposure draft").

The draft response outlines the FRC staff’s tentative conclusions on issues raised in the IASB's exposure draft. Although the FRC agrees with the majority of the proposals in the exposure draft, it raises some concerns regarding proposals to address accounting mismatches between reinsurance contracts held and onerous underlying insurance contracts. The FRC also highlights some practical challenges of implementing the annual cohort requirement, especially for contracts that share risk.

The FRC has stated that it welcomes stakeholders’ views on its staff draft to inform its final response to the IASB.

The draft response can be accessed on the FRC website.


IASB (International Accounting Standards Board) (blue) Image

IASB adds second phase of IBOR reform project to its work plan

15 Aug 2019

Recent market developments have brought into question the long-term viability of Interbank offered rates (IBORs) and the IASB is currently looking into the potential effects of financial reporting.

The first phase of the project deals with pre-replacement issues (issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark). It was added to the standard-setting agenda of the IASB in December 2018 and saw the publication of an exposure draft of propoed amendments in May 2019. The IASB is currently working towards the finalisation of the amenments with an additional Board meeting scheduled for 28 August 2019.

The second phase of the project now added to the work plan deals with replacement issues (issues that might affect financial reporting when an existing interest rate benchmark is replaced). Deliberations have not begun yet and are currently expected to be taken up in Q3 2019.

ASAF meeting (mid blue) Image

Summary of the July 2019 ASAF meeting now available

12 Aug 2019

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 11 and 12 July 2019.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

  • Business combination under common control (1–12): The ASAF provided views related to the application of alternative approaches as well as how to apply a current value approach and predecessor approach.
  • Man­age­ment com­men­tary (13–26): The ASAF provided views on the staff’s proposals related to the notion of narrative coherence and identifying and reporting matters that could affect the entity’s long-term success.
  • IBOR reform (27–43): The ASAF provided information on the current state of interest rate benchmark reform in their jurisdictions and discussed their views on financial reporting issues discovered. The members also discussed how they should address the issues in phase II of the project.
  • Better communication — Primary financial statements (44–59):  The ASAF commented on possible approaches to structuring the new requirements. In addition, the members planned outreach events during the comment period.
  • Variable and contingent consideration (60–65) — The ASAF discussed the FRC’s project on the conceptual basis for transactions involving variable and contingent consideration.
  • Business reporting of intangibles: realistic proposals (66–70): The ASAF provided views on the FRC’s discussion paper and gave suggestions for developing FRC’s analysis on intangible assets.
  • Discussion Paper Accounting for Pensions Plans with an Asset-return Promise (71–73): The ASAF commented on the EFRAG’s discussion paper where they had mix views on the three accounting alternatives.
  • Updated and agenda plan (74–76): The ASAF discussed items to be added to the proposed agenda for the October 2019 ASAF meeting.

A full summary of the meeting is available on the IASB's website.

IASB (International Accounting Standards Board) (blue) Image

Interviews with new IASB members

08 Aug 2019

The IASB has released two short interviews introducing Tadeu Cendon and Rika Suzuki. Mr Cendon and Ms Suzuki were appointed to the IASB board by the Trustees of the IFRS Foundation in March 2019 for terms which began on 1 July 2019.

For more information, see the interviews with Mr Cendon and Ms Suzuki on the IASB website.

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.