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

IFRS Foundation (blue) Image

IFRS Foundation Trustees propose tenure increases for Chair and Vice-Chair

19 Jun 2018

The Trustees of the IFRS Foundation have issued narrow-scope amendments to the IFRS Foundation Constitution that will increase the maximum tenure of the Trustees’ Chair and Vice-Chair.

Specifically, the proposed amendments would:

  • Increase the maximum tenure of the Trustee Chair and Vice-Chair to nine years.
  • Allow the option to appoint a Chair from either internally within the Trustees or externally.
  • Clarify the requirements for Trustee reappointments.

Comments on the proposal are due by 17 September 2018. For more information, see the press release on the IASB’s website.

IIRC (International Integrated Reporting Committee) (green) Image

IIRC launches the ‘Integrated Thinking & Strategy’ special interest group

18 Jun 2018

The International Integrated Reporting Council (IIRC) has launched the ‘Integrated Thinking & Strategy’ special interest group which “offers world-renowned and innovative organizations the opportunity to share thinking about developing strategy across multiple capitals, learn from world leaders and co-create a common world view of integrated thinking that is globally relevant to help build resilient, future-fit businesses”.

The group, a subset of the International <IR>network, is collecting case studies and examples of current thinking and practice in the area of integrated thinking. It aims to “co-creatively craft what we understand best practice to look like, and we will identify adoption pathways that help organizations employ integrated thinking in their own work”.

Information for those interested in joining the group is available on the IIRC website.

FRC Image

FRC publishes a summary of the findings from its panel discussion on IFRS 17

18 Jun 2018

The Financial Reporting Council (FRC) has published a summary of the findings from its panel discussion on IFRS 17 'Insurance Contracts' held in 24 April 2018.

The event provided participants with an opportunity to hear from experts about their key issues and challenges with the standard and enabled them to provide their own views on the standard.

The summary covers:

  • Panel perspectives and observations on IFRS 17.
  • The cost of implementation.
  • Whether implementation should be delayed until the EU has endorsed the standard.
  • Whether Solvency II should be closer aligned with IFRS 17.
  • Whether financial statements prepared under IFRS 17 are comparable and understandable.
  • Whether there are plans to amend UK GAAP for IFRS 17.

The full summary is available on the FRC website.

IASB meeting (blue) Image

Pre-meeting summaries for the June IASB meeting

15 Jun 2018

On Tuesday 19 June the IASB and the US FASB are holding a joint education meeting. That is followed by a two-day meeting of the IASB on 20 and 21 June. 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.

Joint IASB–FASB Education Meeting

The topics being discussed are mainly those related to Standards that the IASB and FASB developed together, or are largely converged, as well as new topics that both boards have on their work programmes.

Segment Reporting

The IASB’s and FASB’s Standards on segment reporting (IFRS 8 Segment Reporting and Accounting Standards Codification Topic 280, Segment Reporting) are largely converged. The IASB will provide a summary of its post-implementation review of IFRS 8 and explain why it decided not to finalise the amendments to IFRS 8 it had exposed. The FASB will outline the targeted changes related to the segment aggregation process that it is considering making to Topic 280.

Primary Financial Statements and Financial Performance Reporting

Both boards are working on projects related to the primary financial statements. The IASB will give an overview of its Primary Financial Statements project and the FASB will update IASB members on the background and scope of its Financial Performance Reporting. The FASB is focusing on two types of improvements: disaggregation of performance information; and the structure of the performance statement (subtotals).

Disclosure Initiative and the Disclosure Framework

Both boards are working on projects related to improving disclosures in the financial statements. The IASB will provide an update on its Disclosure Initiative—in particular the Principles of Disclosure and Targeted Standards-level Review of Disclosures projects. The FASB will give an update on its Disclosure Framework project.

Fair Value

The IASB’s and FASB’s Standards on measuring fair value (IFRS 13 Fair Value Measurement and Accounting Standards Codification Topic 820, Fair Value Measurement) are largely converged.

The FASB has developed amendments to the disclosure requirements for fair value measurements which it plans to finalise, by updating Topic 820, in the third quarter of 2018. The FASB will provide an overview of those changes. The IASB will set out the role of post-implementation reviews and provide some background on IFRS 13, including differences between Topic 820 and IFRS 13. The staff will then summarise the main messages received and how the IASB plans to consider the usefulness of disclosures as part of its work on ‘Better Communication in Financial Reporting’.

Goodwill and Impairment

The IASB and FASB requirements for business combinations were developed jointly. The requirements for the initial recognition and measurement of goodwill are therefore largely converged. The IASB and FASB requirements for the allocation of goodwill to cash-generating units and impairment are similar, but there are differences. Both boards have projects looking at goodwill. The boards will share information about those projects.

Implementation

The boards will share information about their respective implementation support activities undertaken regarding revenue recognition and leases.

Update on all projects not otherwise covered

The boards will provide updates on their projects that will not otherwise be discussed during the Joint Education Session.

IASB Meeting

Disclosure Initiative

This session has three threads: Better Communication in Financial Reporting; Targeted Standards-level Review of Disclosures—Guidance for the Board; and Materiality.

The staff will provide the background to, and current status of, the projects in Better Communication in Financial Reporting (Primary Financial Statements, Principles of Disclosure, Targeted Standards-level Review of Disclosures, Definition of Material, Management Commentary and IFRS Taxonomy) and ask the Board whether it is satisfied with the current interaction and distinction between them.

The staff will present an analysis and recommendations to the Board about the development of ‘Guidance for the Board’ to use when developing and drafting disclosure objectives and requirements. One recommendation is that a member of the IFRS Taxonomy team should be assigned to each projects to assist with developing disclosure objectives and requirements. The staff have identified nine Standards as potential candidates for the targeted Standards-level review.

The IASB will continue to consider the feedback on its proposed amendments to the definition of material. At this session they will consider feedback on effective date, ‘immaterial’ vs. ‘not material’, the materiality practice statement, use of the term ‘material’ and the definition of material of the International Auditing and Assurance Standards Board (IAASB).

Dynamic Risk Management (DRM)

The staff are recommending that the IASB address as part of the first phase of DRM project the derivative financial instruments that may be used as the hedging instruments for DRM and their designation and de-designation. The staff will explain what performance means in the context of DRM and the information that about DRM activities that should be provided in the statement of profit or loss. 

Research programme

The staff will give a general update on the research programme.

IBOR reform

The staff are recommending that the IASB start a research project to consider the effects on financial reporting of potential discontinuation of IBORs (interest reference rates such as LIBOR, EURIBOR and TIBOR).

Primary Financial Statements

In developing the proposals for primary financial statements the staff have been focusing on non-financial entities. At this meeting the staff will present its preliminary analysis and observations about whether the tentative decisions made so far could apply, with little or no change, to financial entities.  Among the topics to be discussed are management performance areas; the principles of disaggregation in the financial statements, disaggregation of expenses by nature and by function; other comprehensive income; EBIT; income and expenses from investments; and the Statement of cash flows. The papers do not include any staff recommendations. The staff are seeking feedback on their preliminary analysis.

Insurance Contracts

The staff are recommending that the IASB propose, as part of its annual improvements cycle, a series of amendments to IFRS 17 Insurance Contracts. This is to address problems where the drafting of IFRS 17 does not achieve what the Board intended.

Implementation

The staff are recommending that the IASB not finalise the amendments it proposed and exposed to IFRIC 14 IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.

Islamic Finance Consultative Group Update

The staff will provide a summary of the March 2018 meeting of the Islamic Finance Consultative Group.

Business Combinations under Common Control 

The staff are seeking feedback on which approach, or approaches, they should pursue for BCUCC that affect non-controlling shareholders. The staff propose exploring the Ceiling approach further as well as assessing the acquisition method as set out in IFRS 3.

More information

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

AcSB (Accounting Standards Board - Canada) Image

AcSB publishes draft framework for reporting performance measures

14 Jun 2018

In order to help enhance the relevance of financial information, the Canadian standard-setter Canadian Accounting Standards Board (AcSB) has developed a framework responding to the needs of stakeholders about the performance measures reported by entities. The framework is aimed at enhancing the usefulness and transparency of performance measures for users when management chooses to report them outside financial statements.

In introducing the framework, the AcSB notes concerns that are often mentioned in connection with performance measures: (1) the quality of performance measures being reported; (2) the lack of consistency, transparency and comparability of performance measures reported period to period; (3) the “expectation gap” about the governance practices of entities over how performance are developed and reported, and whether those measures are subject to assurance, and (4) the limited guidance available on how to develop and report performance measures not usually subject to assurance. Consequently, the framework is intended to be a tool to guide:

  • management in developing and assessing how effectively they report financial and non-financial performance measures;
  • directors and others charged with governance in fulfilling their responsibilities when assessing management’s processes and reporting of performance measures; and
  • investors, contributors, lenders and other resource providers in setting expectations and seeking compliance with the framework as part of obtaining the information they need.

The framework is intended for public companies, not-for-profit organisations, private companies and pension plans and can be applied to financial, non-financial or operational performance measures that are reported separately from and are not part of a set of financial statements (including note disclosures) prepared in accordance with an accounting framework. It is not intended for financial performance measures reported in accordance with GAAP or other accounting frameworks.

The framework notes that characteristics of a high-quality performance measure are that it is relevant and faithfully depicts the value realised or the ability to create value (including being complete, neutral and free from material error). Consistency, comparability, verifiability, timeliness and understandability further enhance the usefulness of a performance measure. A performance measure and information reported about it would be material if misstating it could influence decisions that users make based on that information about the entity. The framework also notes a cost benefit constraint.

The core of the framework is a model for developing and reporting a performance measure. It is visualised as a foundation with four pillars and a roof with the foundation being the entity looking to its strategies, goals and objectives to identify key activities it has undertaken and will undertake to generate value in the short and long term to decide what information an entity may want to report externally – in addition to information reported in financial statements. On this foundation, the pillars are established:

  • Pillar 1 – Selecting a relevant performance measure that can be faithfully depicted 
  • Pillar 2 – Applying materiality and the cost benefit constraint considering the type and size of the entity and the complexity of its activities
  • Pillar 3 – Establishing policies, controls and procedures to ensure consistency, comparability, verifyability, timeliness and understandability
  • Pillar 4 – Reinforcing with governance practices

The roof and final step in the process is effective communication. The framework notes that a performance measure is understandable when information about it is described and reported clearly and concisely and a transparent disclosure provides the information necessary for a user to understand the performance measure.

The draft framework, which also offers three appendices with references and resources, an overview of the framework, as well as disclosure considerations, is available on the AcSB website. Comments are requested by 17 September 2018.

IFRIC meeting (blue) Image

IFRS Interpretations Committee holds June 2018 meeting

14 Jun 2018

The IFRS Interpretations Committee met in London on Tuesday 12 June 2018 and discussed seven issues, including two new interpretation requests. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

Finalisation of a draft Agenda Decision

The Committee finalised a tentative Agenda Decision in relation to the classification of short-term loans and credit facilities and whether a short-term bank arrangement that is always overdrawn can qualify as a component of cash and cash equivalents.

Continuing discussions

The Committee continued its discussions in relation to three matters.

IAS 12 Income Taxes Deferred tax—tax base of assets and liabilities. The Committee decided to develop an amendment to IAS 12 to narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to both deductible and taxable temporary differences to the extent that an entity recognises a deferred tax asset and liability of the same amount in respect of those temporary differences.

IAS 37 Provisions, Contingent Liabilities and Contingent Assets—the meaning of ‘unavoidable costs’. The Committee decided that no new disclosure requirements be added and that on initial application of the proposed amendments entities would be required to use a modified retrospective application with no option for full retrospective application and no specific transition provision for first-time adopters.

IAS 21 The Effects of Changes in Foreign Exchange Rates—foreign exchange restrictions. The Committee decided to publish for public comment a tentative Agenda Decision focusing on the specific circumstances in Venezuela. The Committee also asked the staff to assess whether it would be beneficial to consider amending IAS 21 to provide additional guidance on estimating an exchange rate.

New issues

There were two new issues, both in relation to IAS 23. The Committee received submissions asking whether:

  • in determining the expenditures on which to apply the capitalisation rate, an entity includes expenditures incurred on the qualifying asset before obtaining the general borrowings in the case that the entity incurs expenditures on the qualifying asset both before and after it incurs borrowing costs on the general borrowings.
  • an entity ceases to capitalise borrowing costs in respect of expenditures incurred in developing land once it begins constructing the building on the land or continues to capitalise borrowing costs in respect of the land development while it constructs the building.

The Committee decided that IAS 23 provides an adequate basis for an entity to determine the appropriate accounting and the Committee will publish for public comment tentative Agenda Decisions to that effect.

Advice from the Committee for the IASB

In June 2017, the Board published the Exposure Draft Property, Plant and Equipment––Proceeds before Intended Use (ED). The staff are concerned that the feedback in the comment letters received suggests that there is a risk that in reducing the diversity in the reporting of sale proceeds, the proposed amendments could create new diversity in the costs recognised in profit or loss. The Committee discussed how best to proceed on this project, but was not asked to make any decisions.

Other work in progress

There are three continuing topics that are were not brought to this meeting, plus one new issue that the staff are still analysing.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.
Corporate Governance  Image
FRC Image

FRC publishes consultation on corporate governance principles for large private companies

14 Jun 2018

The Financial Reporting Council (FRC) has published a consultation paper on corporate governance principles for large private companies on behalf of James Wates CBE, Chair of the Coalition Group (the Principles).

In January 2018, The Department for Business, Energy and Industrial Strategy (BEIS) appointed James Wates CBE as Chairman of a Coalition Group, comprising members from the FRC, British Private Equity and Venture Capital Association, the Climate Disclosure Standards Board, the Confederation of British Industry, ICSA: the Governance Institute, the Institute of Business Ethics, the Institute of Directors, the Institute for Family Business, the Investment Association, and the Trades Union Congress.  The Coalition Group was established to develop a voluntary set of corporate governance principles for large private companies

The Chairman and the Coalition Group have now issued the Wates Corporate Governance Principles for Large Private Companies for a 12 week public consultation.

The aim to finalise them for publication in December 2018 to align with the introduction of the Government’s new reporting requirement contained within The Companies (Miscellaneous Reporting) Regulations 2018 which were laid before Parliament on 11 June 2018.  This will require UK registered companies with either 2,000 or more global employees or a turnover over £200 million globally and a balance sheet over £2 billion globally to include a statement as part of their Directors’ Report stating which corporate governance code, if any, has been applied and how. If the company has departed from any aspect of the code it must set out the respects in which it did so, and the reasons. If the company has not applied any corporate governance code, the statement must explain why that is the case and what arrangements for corporate governance were applied.

Companies will be able to voluntarily adopt the Wates Corporate Governance Principles for Large Private Companies and meet this requirement.  It is hoped that the Principles will provide a useful tool for a wide range of companies (not just those covered by this new reporting requirement) to understand and adopt good practice in corporate governance. 

The six principles (taken direct from the consultation) are:

  1. Purpose - An effective board promotes the purpose of a company, and ensures that its values, strategy and culture align with that purpose. 
  2. Composition - Effective board composition requires an effective chair and a balance of skills, backgrounds, experience and knowledge, with individual directors having sufficient capacity to make a valuable contribution. The size of a board should be guided by the scale and complexity of the company.  
  3. Responsibilities - A board should have a clear understanding of its accountability and terms of reference. Its policies and procedures should support effective decision-making and independent challenge.  
  4. Opportunity and risk - A board should promote the long-term success of the company by identifying opportunities to create and preserve value, and establishing oversight for the identification and mitigation of risks.  
  5. Remuneration - A board should promote executive remuneration structures aligned to the sustainable long-term success of a company, taking into account pay and conditions elsewhere in the company.  
  6. Stakeholders - A board has a responsibility to oversee meaningful engagement with material stakeholders, including the workforce, and have regard to that discussion when taking decisions. The board has a responsibility to foster good stakeholder relationships based on the company’s purpose.  

A company which adopts the Principles is expected to apply them fully.  Using an apply and explain approach, large private companies are expected to provide a supporting statement for each principle that gives an understanding of how their corporate governance processes operate and achieve the desired outcomes.  The guidance is not intended to be a check-list.  Rather than requiring a compliance and a ‘tick-box’ approach to reporting, adopters of the Principles will be encouraged to demonstrate, through a written explanation in their directors’ report and on their company’s website, how the application of the Principles has resulted in improved corporate governance outcomes.

Responses to the consultation are requested by 7 September 2018.

Please click here for a press release and the Wates Corporate Governance Principles for Large Private Companies on the FRC website.

Book badge (green) Image

Academic conference sees keynote speech and panel discussion on the future of corporate reporting

13 Jun 2018

The 13th International Conference on Accounting and Management Information Systems (AMIS 2018) currently held at the Bucharest University of Economic Studies was opened today by a keynote address 'The future of corporate reporting - A standard setter's perspective on contents and proliferation' immediately followed by a panel discussion drilling more deeply into some of the messages presented.

The keynote address was delivered by Prof Andreas Barckow, President of the German standard-setter Accounting Standards Committee of Germany and Vice-President of the European Financial Reporting Advisory Group (EFRAG). In his presentation, he took stock of the current situation in financial reporting, other (wider) corporate reporting, and technological aspects (proliferation/dissemination).

His thought-provoking points included the statements that in financial reporting there have been no major developments in Europe since 2005, that the current approach seemed to continue to try to apply a "manufacturing-centric" accounting model to an increasingly service-oriented industry (which might indeed be fostering the use of non-GAAP measures), and that the difficulty of addressing a problem should never be an excuse for not addressing it (this was said in the context of intangibles). Prof Barckow also pointed out that while there is one international accounting standard-setter (the IASB), there are up to 1,000 organisations active in the field of wider corporate reporting. On technology, he stated that the current thinking is still focused on printed reports, which means to ignore the vast posiibilities technological developments offer that could see for example ideas such as the CORE & MORE approach to corporate reporting realised.

The panel discussion following the keynote address was moderated by Prof Katherine Schipper of Duke University and saw as panelists Prof Axel Haller, University of Regensburg, Prof Paul André, HEC Lausanne, and Prof Barckow. They picked up several aspects mentioned in the keynote address:

  • No major developments in financial reporting since 2005. While the point was at first contested in extreme form, the panelists by and by concluded that there was some validity to it. It was even stated that IFRS 9, IFRS 15, and IFRS 16 replaced standards that many in practice saw as working well, i.e. that were not broken. The new standards often also build on ideas that had been around for a long time - in some cases since the 1990s. While moving from incurred losses to expected losses with IFRS 9 was indeed a conceptual change, however, it was stated that in practice even under IAS 39 preparers were already half way to expected loss accounting. In the end, the moderator even questioned whether 2005 was a reporting development or merely a convergence development.
  • Non-GAAP measures. After quickly clarifying what had been meant by the non-GAAP measure problem in the keynote address, panelists discussed whether non-GAAP measures were a problem at all. They concluded that not the non-GAAP measures were a problem in themselves ("non-GAAP measures come and go") but the lack of reconciliation or indeed lack of reconcilability was. Nevertheless, panelists refused to place the fault entirely with the preparers. Comments included that the increased use of non-GAAP measures expressed a management approach and showed that "the true North" was not always where the standard-setters believed it to be. It was also stated that the use of these measures showed that we are on a way away from standardised accounting. It was in this context that the IASB's work on management performance measures was brought up and questioned as it would indeed cling to a broader boundary question that tries to define what gets in and what must be left out. It was noted that trust was about systems and processes, not about printed reports, and that the non-GAAP measure problem could be addressed by moving away from the paper approach.
  • Intangibles. Intangibles were described not only as a concern but as a growing concern as the economy is more and more service-oriented and there are many intangible assets that never show up on a balance sheet although the market clearly sees them. After an intervention from the audience that noted that the logic should not be that the markets see something and then the accounting needs to explain it, the panelists agreed that the problem was not so much in not recognising intangible assets but rather in the question why there was often such a gap between an entity's market capitalisation and the profit (or lack of profitability) shown in the financial statements.There was not necessarily a need to align the two numbers but there should be a way to reconcile them. The new definition of an asset in the revised Conceptual Framework was mentioned and questioned, especially in the context of research and development costs.
  • Sustainability. Panelists were asked which way forward they saw for wider corporate reporting or rather linking sustainability and other wider corporate reporting aspects with financial reporting. The wish was expressed that the many organisations on the sustainability side would combine under the umbrella of (ideally) one, and the clear favourite was the Global Reporting Initiative (GRI). The IASB could then work together with that one organisation and concentrate on areas where the requirements overlap to harmonise them so that for example not several concepts of materiality clash. Again the CORE & MORE concept was brought up where not only the sustainability organisations would combine but also the IASB and the remaining organisation would be brought together under one even larger umbrella that would also include other corporate reporting organisations.
  • Academic contribution to standard-setting. The standard-setter on the panel was asked what he thought researchers could contribute to standard-setting. He replied that he saw two ways he would want research to support standard-setting: (a) by confirming (or refuting) that certain problems (such as mentioned in the keynote address) existed and (b) if indeed the existence of a problem was confirmed to then offer thoughts and solutions. He clearly advocated normative research in this case and expressed disappointment that at least as far as he was aware no research had been contributed to the revision of the Conceptual Framework of the IASB, which would have been a prime opportunity for normative research. His fellow panelists agreed and concluded that research should lead standard-setting and not just try to follow it.

The following additional information is available on the website of the Bucharest University of Economic Studies:

FRC Image

FRC issues a briefing setting out current ‘hot topics’ of its Corporate Reporting Review team

12 Jun 2018

The Financial Reporting Council (FRC) has issued a Briefing setting out the current ‘hot topics’ of its Corporate Reporting Review (CRR) team. The CRR team monitors the quality of corporate reporting in the UK and enforces compliance with accounting standards and relevant company law.

Many of the topics included in the briefing will be relevant to companies preparing their 2018 interim reports. The FRC reminds preparers and auditors that it will be monitoring companies’ disclosure of the effects of IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments – standards that most listed companies will be adopting for the first time in 2018 and for which they will be required to quantify and explain the effects in their 2018 interim reports.

The briefing reminds prepares and auditors about the FRC's expectations in respect of disclosure of the new standards and identifies other areas where its recent activity has identified room for improvement.

New accounting standards

The FRC indicates that materiality should be considered in determining the extent of disclosure in interim reports and disclosures should be clear, concise, company-specific and focused.

Key areas of focus highlighted include:

  • IFRS 9:
    • Impairment for banks.
    • Impact on trade receivables for non-financial services companies particularly where they have long-term balances such as lease commitments, contract assets under IFRS 15 or intercompany receivables.
  • IFRS 15:
    • Full explanation of changes in revenue accounting policies with reference to performance obligations.
  • Disclosure of significant judgements made by the directors in applying the new standards and quantification of the estimation uncertainty.

The FRC will be conducting thematic reviews on the effects of implementation of both IFRS 9 and IFRS 15 based upon a selection of interim reports.

Other areas of focus

Supplier financing arrangements

In response to concerns expressed by stakeholders, the FRC has also indicated that it will focus on the accounting for, and disclosure of, certain types of supplier financing arrangements; for example, reverse factoring. The FRC expects companies to “disclose the nature of any material supplier financing arrangements, the implications for the company’s liquidity and the relevant amounts”. It would also expect any significant accounting judgements to be disclosed and reminds companies of its press release on complex supplier arrangements in December 2014 highlighting that this will be an area of specific FRC focus in 2018.

Asset impairment

The impairment disclosures of companies in the FRC’s priority sectors and market sectors where there have been a number of profit warnings and asset write-downs will be an area that the FRC will pay “particular attention” to.

Issues identified by the CRR’s monitoring activities

The briefing also highlights four areas where the FRC’s recent activity has identified issues and which it draws attention to:

  • Consideration of whether an amount is material;
  • Classification of cash flows between operating, investing or financing activities in the cash flow statement. The FRC reminds companies that only activities resulting in a recognised asset on the balance sheet can be classified as investing activities.
  • Complying with the requirement in IAS 33 Earnings per Share to restate the prior year comparative earnings per share amounts using the new number of shares following a change in the number of a company’s shares outstanding following a share split or consolidation.
  • Potential breaches of the Companies Act 2006 requirements for the payment of dividends. The FRC indicates that companies do not appear to be following the requirements to support a dividend in excess of the distributable profits shown in the relevant accounts by filing interim accounts with the Registrar.

The press release and the briefing is available on the FRC website.

CAQ (US Center for Audit Quality) (light green) Image

Hyperinflationary economies - updated IPTF watch list available

12 Jun 2018

IAS 29 'Financial Reporting in Hyperinflationary Economies' defines and provides general guidance for assessing whether a particular jurisdiction's economy is hyperinflationary. But the IASB does not identify specific jurisdictions. The International Practices Task Force (IPTF) of the Centre for Audit Quality (CAQ) monitors the status of 'highly inflationary' countries. The Task Force's criteria for identifying such countries are similar to those for identifying 'hyperinflationary economies' under IAS 29.

The IPTF's discussion document for the 16 May 2018 meeting is now available and states the following view of the Task Force:

Countries with three-year cumulative inflation rates exceeding 100%:

  • Angola
  • South Sudan
  • Suriname
  • Venezuela

Countries with projected three-year cumulative inflation rates exceeding 100%:

  • Argentina
  • Democratic Republic of Congo

Countries where the three-year cumulative inflation rates had exceeded 100% in recent years:

  • Sudan

Countries with recent three-year cumulative inflation rates exceeding 100% after a spike in inflation in a discrete period:

  • Ukraine

Countries with projected three-year cumulative inflation rates between 70% and 100% or with a significant (25% or more) increase in inflation during the current period

  • Egypt
  • Libya
  • Yemen

The full list, including exact numbers, detailed explanations of the calculation of the numbers, and observations of the Task Force are available on the CAQ website. We also offer an overview of the IPTF's assessment of hyperinflationary jurisdictions at the end of our summary of IAS 29.

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.