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News

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IFRS Interpretations Committee holds November 2017 meeting

21 Nov 2017

The IFRS Interpretations Committee met in London on Monday 20 November 2017. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The Committee discussed six issues, including three new interpretation requests.

Finalisation of draft agenda decisions

The Committee consider the public feedback on a request related to IFRS 3 Business Combinations on the acquisition of a group of assets, and decided to finalise the decision not to add to its agenda. However the IASB will monitor this issue and proactively seek feedback from stakeholders on the significance of the issue after the revised definition of a business takes effect.

Continued discussions

In its September 2017 meeting, the IC tentatively decided to add a project to clarify the meaning of the term ‘unavoidable costs’, which is used in the definition of an onerous contract in IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The staff recommended that the clarification be by way of an amendment to IAS 37 and that the scope of the project be limited to clarifying the meaning of ‘unavoidable costs’, and not consider broader issues related to identifying or measuring an onerous contract. The Committee agreed with the Staff’s recommendation but decided to leave open what form the clarification should take until the project is more mature.

In its September 2017 meeting, the IC asked the Staff to research into the scope of a potential narrow-scope amendment to IFRS 1 First Time Adoption of International Financial Reporting Standards with the aim of reducing compliance costs when a subsidiary becomes a first-time adopter later than its parent. The Staff recommended amending IFRS 1 to allow a subsidiary that applies paragraph IFRS 1.D16(a) to measure cumulative translation differences using the amounts reported by the parent based on the parent’s date of transition to IFRS. The Committee supported that recommendation but the Staff will provide further analysis on whether IFRS 1 should require or permit the subsidiary to measure CTD based on the parent’s reported amounts.

New issues

There were three new issues. Two relate to IFRS 15 Revenue from Contracts with Customers:

  • Revenue recognition in a real estate contract that includes the transfer of land
  • Right to payment for performance completed to date

The third relates to IAS 1 Presentation of Financial Statements and IFRS 9 Financial Instruments:

  • Presentation of interest revenue for particular financial instruments

For all three issues the Committee tentatively decided not to add the issue to its agenda. The draft Agenda Decisions will be published in IFRIC Update.

Future items

The Staff are analysing requests received on whether a dual currency bond meets the solely payments of principal and interest condition in IFRS 9; whether an instrument for which the notional amount varies depending on the outcome of a transaction can be a hedging instrument applying IFRS 9; and how the initial recognition exemption in paragraphs 15 and 24 of IAS 12 applies to the recognition of right-of-use assets and lease liabilities arising under IFRS 16.

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

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We comment on two IFRS Interpretations Committee tentative agenda decisions

20 Nov 2017

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions on IFRS 15 and IAS 28, as published in the September 2017 IFRIC Update.

More in­for­ma­tion about the issues is set out below:

Issue

Agenda decision supported?

More in­for­ma­tion

IFRS 15Revenue recognition in a real estate contract 

Yes, however, we recommend an amendment to the wording in the tentative agenda decision to highlight the distinction between control of an asset and of a right to sell or pledge that asset in the future.  

IAS 28Contributing property, plant and equipment to an associate

Yes.

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

IASB (International Accounting Standards Board) (blue) Image

IASB discusses investors’ reactions to IFRS 17

20 Nov 2017

The IASB has issued an article by IASB board member Nick Anderson that discusses the top five question investors and analysts have on IASB’s new insurance contracts standard, IFRS 17.

The five questions discussed include:

  1. Will IFRS 17 affect dividend payouts?
  2. How can a principle-based Standard like IFRS 17 improve comparability between insurers?
  3. Will IFRS 17 bring global comparability to the insurance sector?
  4. What are the main differences between IFRS 17, regulatory reporting and embedded value reporting?
  5. How will removing insurance premiums from the income statement improve comparability?

For more information, see the article on the IASB’s website.

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Agenda for the December 2017 ASAF meeting

20 Nov 2017

The International Accounting Standards Board (IASB) has released an agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 7 and 8 December 2017.

The agenda for the meeting is sum­marised below:

Thursday, 7 December 2017 (9:00-17:15)

  • Primary financial statements.
    • Introduction of an investing category into the statement of financial performance.
    • Defining finance income/expenses.
    • Improving the presentation of OCI.
  • Disclosure initiative — Definition of material (proposed amendments to IAS 1 and IAS 8).
  • Disclosure initiative — Principles of disclosure — Overview and next steps.
  • Post-implementation review of IFRS 13 Fair Value Measurement — Overview on feedback and next steps.
  • Wider corporate reporting — Update from IASB discussions.
  • Academic liaison — Strategy session.
  • Information deficiencies and consolidated financial statements — Impact of consolidation on information content.

Friday, 8 December 2017 (10:10-13:45)

  • Improvements to IFRS 8 Operating Segments (Proposed amendments to IFRS 8 and IAS 34) — Explore possible alternative approaches and next steps.
  • Business combinations under common control — Update on the project and discussions on the scope and the appropriate accounting method for transactions.
  • Project updates and agenda planning.

Agenda papers for the meeting are available on the IASB's website.

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ASCG paper on information gaps in group financial statements and the role of consolidation

20 Nov 2017

The Accounting Standards Committee of Germany (ASCG) has submitted a paper 'Information deficiencies of today’s group f/s and the specific role of consolidation regarding these' for discussion at the upcoming meeting of the Accounting Standards Advisory Forum (ASAF) at the IASB's offices in London on 7-8 December 2017.

The paper states that whilst it is widely acknowledged that transactions with and between members of the same group should not influence the outside appearance of that group and therefore be eliminated, such eliminations do result in a loss of information which is definitely and finally lost for outside users of financial statements. It goes on to note that, furthermore, much of today’s complexity in the environment is not captured in the group’s financial statements although it could highly influence the position, performance and cash flows of the group.

The paper can be accessed on the IASB website.

An agenda for the meeting is not yet available, however, papers are in the process of being posted here.

IFASS (International Forum of Accounting Standard Setters) (dark green) Image

Report on the autumn 2017 IFASS meeting

20 Nov 2017

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held in London on 26 and 27 September 2017.

As reported earlier, a major topic of the meeting was wider corporate reporting and the way forward for the IASB. Please see our detailed summary of that discusssion. (The IASB has just recently added a project to its agenda that seeks to review and update the Management Commentary Practice Statement issued in 2010 to help address the lack of alignment and integration between wider corporate reporting and financial reporting.)

The IFASS members also discussed:

  • Cooperation of IFASS participants;
  • BCUCC: Mergers & Acquisitions – The premise for separate accounting methods;
  • Research on pensions: Hybrid plans; and
  • Interpretation issues regaring IAS 24 Related Party Disclosures and IAS 12 Income Taxes.

The next meeting of the IFASS will take place in Mumbai on 12 and 13 April 2018.

Please click for the full report from the meeting.

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EBA stress test methodology

20 Nov 2017

The European Banking Authority (EBA) has published its 2018 EU-wide stress test methodology. The exercise will cover 70% of the EU banking sector and will, for the first time, incorporate IFRS 9 'Financial Instruments'.

For banks starting to report under IFRS 9 in 2018, the 2018 EU-wide stress test takes into account the impact of the implementation of IFRS 9 on 1 January 2018 both in terms of starting point and projections.

The stress test exercise will be formally launched in January 2018 and the results to be published by 2 November 2018.

Please click for more information on the EBA website.

IASB (International Accounting Standards Board) (blue) Image

Updated IASB work plan — Analysis

17 Nov 2017

Following the IASB's November 2017 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments in November. Changes mostly relate to a new project on management commentary and the fact that the direction of the Board project adressing issues identified during the PIR of IFRS 8 needs to be decided.

Below is an analysis of all changes made to the work plan since our last analysis on 27 October 2017.

Major projects

  • A new project Management commentary (Wider corporate reporting) has been added to the IASB's agenda. The aim of the project is to review and update the Management Commentary Practice Statement issued in 2010 to help address the lack of alignment and integration between wider corporate reporting and financial reporting. The next project step will be an exposure draft, however, the Board is still considering the timetable for the publication of the ED.
  • Definition of material - feedback on the ED is now expected in February 2018 (was: first quarter of 2018)

Main­te­nance projects

  • Improvements arising from the post-implementation review of IFRS 8 — The feedback received on the ED revealed that respondents had mixed views on the proposals, and Board member views were also mixed. It was suggested during the Board's discussions at the November meeting that if the proposals ended up creating more problems, then the Board should consider not finalising them. If it was decided to reject only some of the proposals, the staff should then assess the costs and benefits of proceeding with finalising the remaining proposals. A decision on the project direction is expected in January 2018.

Research projects

  • no changes

Other projects

  • IFRS Taxonomy update for the annual improvements 2017 — new entry added to work plan. A proposed update is expected in November 2017.

The above is a faithful com­par­i­son of the IASB work plan at 27 October 2017 and at 16 November 2017. For access to the current IASB work plan at any time, please click here.

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November 2017 IASB meeting notes posted

16 Nov 2017

The IASB met at its offices in London on Tuesday 14 November 2017. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board discussed four topics.

Primary Financial Statements

The Board supported refining the definition of investing income and expenses, providing a list of items that would be included or excluded from the investing category and renaming the investing category as ‘income from investments’. However, the Board did not support Labelling the subtotal above the ‘income from investments’ section as ‘operating profit’. 

There was an extended discussion about where the share of profit or loss from associates and joint ventures should be reported, and whether that should depend on whether the associate or joint venture is ‘integral’ to the reporting entity. No clear view emerged. The planned Discussion Paper will set out the pros and cons of different approaches.

The Board supported recommendations simplifying the composition of finance income/expense, clarifying what constitutes financing activities and using cash and cash equivalents as a proxy for excess cash. 

The Board narrowly agreed with renaming the two categories of OCI which would mean abandoning the use of the term ‘other comprehensive income’.

Wider Corporate Reporting

The Board decided to add a new project to its work programme called Wider Corporate Reporting. The focus of the project will be the Practice Statement issued in 2010 on Management Commentary which the Board will review and update to help address the lack of alignment and integration between wider corporate reporting and financial reporting.

Improvements IFRS 8 Operating Segments

The Board published Exposure Draft Improvements IFRS 8 Operating Segments (Proposed amendments to IFRS 8 and IAS 34) in March 2017. The Board had a preliminary discussion of the feedback received, but did not make any decisions. Respondents had mixed views on the proposals, and Board member views were also mixed. Several Board members cautioned against broadening the scope of the project in the light of the feedback received on the IFRS 8 PIR which indicated that IFRS 8 was generally working well.  The staff will provide recommendations at a future meeting.

Dynamic Risk Management

The Board generally supported developing a cash flow hedge accounting model for accounting for dynamic risk management.  Board members emphasised the need to test the model with stakeholders early in the process and get early feedback on its feasibility before the Board invests more time and resources in developing it.

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

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ACCA report on current status of IPSAS adoption

16 Nov 2017

The Association of Chartered Certified Accountants (ACCA) has released a report on the current status and challenges in connection with the adoption of International Public Sector Accounting Standards (IPSASs).

The report examines progress across a sample of developing countries and aims to give select insights into the current status quo of IPSAS adoption, identifying commonalities and emerging issues. Specifically the study considers the adoption of IPSAS focusing on the date of announcement and date of adoption, an overview of progress to date, success factors, and challenges experienced.

The report can be downloaded from the ACCA website.

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