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IASB meeting (blue) Image

March 2017 IASB meeting notes posted

23 Mar 2017

The IASB met at its offices in London on 21 and 22 March 2017. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The IASB considered corporate reporting more broadly. Until now the IASB has been monitoring developments in corporate reporting, including integrated reporting, sustainability and the recent work on climate-related disclosures, and cooperating with other bodies. The Board decided to take a more active role in thinking about broader corporate reporting issues. As a first step, the IASB will investigate whether it should review and update its Practice Statement on Management Commentary.

The IASB had a brief session to review its work on goodwill and impairment, primarily for information and planning purposes.

The IASB reviewed its work on discount rates, one of its research projects. The project is now closed, with no further work required other than to ensure that the analysis is properly documented, preserved on the IASB’s website and referred to by staff on other projects. This does not prevent the IASB discussing low and negative interest rates, which it plans to do later in 2017.

The IASB continued its discussions on Primary Financial Statements. The Board supported the staff recommendation that entities be required to have a subtotal in the income statement for EBIT. They know that this will require future discussion of what constitutes finance income and expense from ordinary activities and how earnings from associates fits in. The Board is also considering requiring entities to present in the income statement a management operating performance measure, with each entity using their own definition. The papers also discussed the general aggregation principles.

The IASB concluded its public discussions on the Conceptual Framework. Entities that have relied on the Framework to develop policies for regulatory account balances be required to continue to use the existing Framework until they apply the future Standard on rate-regulated activities.

There was a brief oral update on the Insurance Contracts project. The post-ballot drafts have been circulated internally and the staff expect to publish the new Standard in the second half of May 2017.

On Wednesday, the IASB had an education session on Dynamic Risk Management. The staff plan is to have the IASB identify a preferred model by about October 2017, which would then be developed further.

The financial instruments with the characteristics of equity project wrapped up its current phase. The IASB discussed how the proposed model would apply to derivatives in an entity’s own equity in a group scenario when the functional currency of the parent differs from that of the subsidiary. They will also assess the implications of the model for other Standards, particularly IFRS 2 Share-based Payments and IAS 33 Earnings per Share. The next step is the preparation of the Discussion Paper, which the staff expect to be published towards the end of 2017.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

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Accountancy Europe follows up on 'CORE & MORE'

23 Mar 2017

Accountency Europe (formerly FEE) has published a follow-up paper to the 2015 FEE paper putting forward the idea of a 'CORE & MORE' model of corporate reporting.

The second paper presents a summary of the responses received to the first paper in writing as well as during several public and private events. From the feedback, Accountancy Europe has identified three main topics for further development and intends to:

  • elaborate the concept as stakeholders requested a clarification of the concept and felt that parts of it could be interpreted incorrectly;
  • support the coordination and development of non-financial information reporting as it believes that it is important that one party (or parties) take(s) firm ownership of a global principles-based non-financial information reporting framework; and
  • further research the impact and opportunities of technology as a driver and enabler of reporting change, including online reporting and social media, both from the perspective of the reporting entity and the users of corporate reporting.

Accountancy Europe’s aim is to provide separate contributions and recommendations in the areas mentioned above and to host an event on these issues in the second half of 2017.

Please click to access the follow-up paper on the Accountency Europe website.

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Canadian regulator limits choices on adoption of IFRS 9

23 Mar 2017

The Canadian Office of the Superintendent of Financial Institutions (OSFI) has issued an advisory regarding a deferral of IFRS 9 application for life insurers.

In September 2016, the IASB issued Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4) providing two options for entities that issue insurance contracts within the scope of IFRS 4: the so-called overlay approach and the so-called deferral approach.

The OSFI has now decided that all regulated insurance companies that are eligible for the IFRS 9 deferral must use it. This way, OSFI ensures that all insurance companies eligible for the IASB deferral will adopt on the same date while fully respecting the IASB's scope. In the past, OSFI has repeatedly used the means of limiting choices or not permitting early adoption as a way of keeping the Canadian reporting landscape homogeneous and financial statements comparable.

Please click to access the notice on the OSFI website.

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Recent sustainability and integrated reporting developments

23 Mar 2017

A summary of recent developments at the CSA, GRI, and SASB.

The Canadian Securities Administrators (CSA) have announced a project to review the disclosure of risks and financial impacts associated with climate change. The project will gather information on the current state of climate change disclosure in Canada and internationally as disclosure practices of public companies in relation to climate-related risks and financial impacts have attracted significant international attention in recent years with several voluntary disclosure frameworks available. Please see the press release on the CSA website for more information.

The Global Reporting Initiative (GRI) has published a linkage document showing how the GRI Standards can be used to comply with all aspects of the European Directive on the disclosure of non-financial and diversity information. The linkage document can be accessed on the GRI website.

The GRI has announced that translations of the GRI Standards into Indonesian, Japanese, Spanish, traditional Chinese, and Vietnamese are under way with final versions expected between April and June 2017. Translations into Arabic, French, German, Italian, Portuguese, and simplified Chinese are planned, however, GRI is still looking for sponsors and/or peer reviewers. More information is available on the GRI translations page.

The GRI Chief Executive and the Founder and CEO of the Sustainability Accounting Standards Board (SASB) have published a joint article explaing that rather than being in competition, GRI and SASB are designed to fulfill different purposes for different audiences with GRI standards designed to provide information to a wide variety of stakeholders and including a very broad array of topics and the SASB standards designed to provide information to investors and focusing on the subset of sustainability issues that are financially material. Please click to access the article on the GreenBiz website.

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EFRAG is looking for new members

22 Mar 2017

The European Financial Reporting Advisory Group (EFRAG) has launched a call for expressions of interest for new member organisations.

The press release states that EFRAG particularly welcomes expressions of interest from organisations representing users of financial statements and from National Organisations in Southern, Central and Eastern European countries.

Member organisations decide on EFRAG’s governance and with EFRAG Board rotation set to take place later this year, new members would also partake in nominating candidates for the EFRAG Board and deciding on the composition of the Board.

Please click to access the press release on the EFRAG website.

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IFRS Foundation conference on implementing IFRS 16

21 Mar 2017

The IFRS Foundation has announced an IFRS conference 'Implementing the IFRS 16 'Leases' requirements' in London on 9 May 2017.

The conference will cover the following:

  • Welcome by IASB Member Stephen Cooper
  • IFRS 16: An Overview
  • Talking about transition – Optons, decisions and what should you be doing now?
  • Panel discussion: Implementation – Hot Topics
  • Ratings and Valuations
  • Towards the effective date
  • Final Q&A and closing comments

More details are available on the conference website.

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G20 (lt green) Image

FSB letter to G20 Finance Ministers and Central Bank Governors stresses importance of climate-related financial disclosures

20 Mar 2017

In a letter to the G20 Finance Ministers and Central Bank Governors who met in Baden-Baden, Germany, on 17-18 March 2017, the Financial Stability Board (FSB) also identified new and emerging vulnerabilities that need to be adressed.

In this context, the FSB noted the work of the Task Force on Climate-related Financial Disclosures (TCFD) and added:

Access to better quality information on climate-related financial risks is essential to enable market participants to better understand and manage these risks. Without the necessary information, market adjustments to climate change could be incomplete, late and potentially destabilising.

The FSB pointed out that the TCFD issued a consultation document with recommendations on climate-related disclosures in December 2016 that would be followed by June 2017 (and thus in time for the July G20 meeting in Hamburg) by the final report offering "a solution by the market for the market".

Please click to access the full letter on the FSB website.

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CAQ publishes report on enhancing financial reporting to fight fraud

20 Mar 2017

The Center for Audit Quality (CAQ) of the American Institute of Certified Public Accountants (AICPA) has released a report on addressing challenges for highly subjective and complex accounting areas as key for stemming fraud and reducing the number of restatements.

The report is based on two workshops held last year and contains several general recommendations as well as recommendations focused on revenue recognition accounting policies.

General accounting policies and procedures:

  • Accounting policies must adhere to technical accounting guidance. It is critical that these policies be understandable to non-accountants who may not be conversant in the nuances of technical accounting.
  • Accounting policies must be reviewed at regular intervals and companies should have a process to identify and monitor changes in activities that have a potential impact on accounting.
  • Policies must be tested in the field prior to implementation, and then monitored for compliance post-implementation.

Revenue recognition accounting policies and procedures:

  • The revenue recognition policy should be granular, because even slight differences in interpretation can have a major impact on revenue recognition.
  • Where possible, contract terms should be standardised and reflect how transactions at a contract level relate to the requirements of accounting standards.
  • Deviations from typical contract terms that have implications for revenue recognition should be well documented.
  • Clear responsibility and communication lines among legal, business, and finance should be created so that all key players understand and approve of transactions.

The report also includes some recommendations about internal control over financial reporting.

Please click to access the report on the CAQ website.

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Finance for the Future Awards — open for entries

17 Mar 2017

The Finance for the Future Awards, founded by ICAEW and The Prince’s Accounting for Sustainability Project (A4S), were first awarded in 2012 to highlight the essential role that finance plays in integrated thinking and building sustainable business models. One of the awards is for ‘Communicating integrated thinking’.

The award is for organisations that are demonstrating clearly, through communicating to their providers of financial capital, how sustainability, in its broadest sense, is embedded into their overall strategy and decision making process and how this ‘integrated thinking’ is contributing to a sustainable business model which delivers long term value. In this context, integrated thinking is seen as coming before reporting with reporting being the end result from this process and a way to communicate progress to the outside world.

In order to be considered for the award, entrants must submit three years of annual reports and financial statements and at least one specific example of communication to demonstrate:

  • How they have communicated to their providers of financial capital that wider factors, such as environmental and social issues, are embedded into their strategy and operations and how they are critical to the long term sustainability of the business, and how this has been done across a range of communications.
  • The communication truly reflects the way their organisation is managed and the integrated thinking within it.
  • What role the finance function played in the process of embedding and communicating integrated thinking.
  • Why they believe that communicating integrated thinking is beneficial to their organisation.

The Finance for Future awards, which are awarded in partnership with Deloitte, are open to all organisations, globally, whether listed, small or public sector.

For further information on the awards and how to enter by 5 May click here.

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.