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News

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The Annotated IFRS Standards ('Green Book') is now available

21 Sep 2017

The IFRS Foundation has announced that 'The Annotated IFRS Standards (Green Book) July 2017' is now available. This volume (nicknamed the 'Green Book') includes the full text of the Standards and Interpretations and accompanying documents (such as the Basis for Conclusions) issued by the IASB as of 1 July 2017 with extensive cross-references and other annotations. This edition does not contain documents that are being replaced or superseded but remain applicable if a reporting entity chooses not to adopt the newer versions early.

The new re­quire­ments since 1 July 2016 include:

The Green Book sells for £102 plus shipping for the two book set. More in­for­ma­tion and ordering details are available on the IASB's website.

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IASB announces membership of the transition resource group for IFRS 17

21 Sep 2017

The International Accounting Standards Board (IASB) has announced the members of a Transition Resource Group (TRG) that will focus on potential implementation issues associated with their new insurance contracts standard.

The TRG members comprise of auditors and preparers. In addition, there are three observers to the group from international security regulators, insurance supervisors and actuarial organisations. The current mem­ber­ship includes:

  • Vasilka L Bangeova, Grant Thornton UK LLP, Director, head of insurance technical
  • Laurent Cholvy, AXA, Group head of accounting norms and actuarial reporting
  • Jo Clube, Aviva plc, Technical accounting director
  • Anne Driver, QBE Insurance Group, Group head of finance policy and assurance
  • Sai-Cheong Foong, AIA Group Limited, Group chief actuary
  • Jens Freiberg, BDO AG Wirtschaftsprüfungsgesellschaft, Partner, head of accounting advisory group
  • Kevin Griffith, EY, Partner, global IFRS insurance leader
  • Francesco Nagari, Deloitte, Partner, global IFRS insurance leader
  • Jeong Hyeok Park, Samsung Life Insurance, General manager
  • Roman Sauer, Allianz SE, Head of group accounting and reporting
  • Lesley Thomson, Sun Life Financial, Vice president and deputy chief actuary
  • Massimo Tosoni, Assicurazioni Generali SpA, Head of group accounting policy and reporting
  • Mary Helen Trussell, KPMG, Partner and global leader, insurance change
  • Gail Tucker, PricewaterhouseCoopers, Lead global accounting technical partner responsible for insurance
  • Ying (Sally) Wang, China Pacific Life Insurance Co., Ltd, Deputy general manager and chief financial officer

Observers

  • William C. Hines,  International Actuarial Association
  • Thorsten Melcher, International Organization of Securities Commissions
  • Kallol Sen, International Association of Insurance Supervisors

The first TRG meeting is scheduled for 13 November 2017.

For more in­for­ma­tion, see the press release on the IASB website.

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We comment on the IASB's post-implementation review of IFRS 13

21 Sep 2017

We have responded to the IASB's Request for Information, “Post-implementation Review — IFRS 13 Fair Value Measurement,” that was published in May 2017.

We believe IFRS 13 has had a positive effect on financial reporting and applaud the IASB and FASB in achieving convergence between IFRS 13 and the US GAAP equivalent. In addition, we note several areas where further guidance would be beneficial and encourage the IFRS Foundation to work with other interested parties to ensure the consistent application of IFRS 13.

Please click to access the full comment letter.

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IPSASB 2017 Handbook of pronouncements available

20 Sep 2017

The International Public Sector Accounting Standards Board (IPSASB) has made available its 2017 Handbook of International Public Sector Accounting Pronouncements.

In two volumes, the Handbook contains all IPSASB pronouncements published as of 31 January 2017, including the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities. It can be downloaded free of charge in PDF format from the IPSASB website. The IPSASB points out that the print edition is currently in production and will be available for online ordering soon.

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IASB posts webcast on IFRS 17

19 Sep 2017

The 30 minute webcast covers the accounting for reinsurance contracts held in applying IFRS 17 'Insurance Contracts'.

The new webcast can be accessed on the IASB website. Earlier webcasts and webinars on IFRS 17 are available through an archive.

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Accountancy Europe follows up on 'CORE & MORE' and calls for decisive leadership in non-financial reporting

18 Sep 2017

At the 'Shaping the future of corporate reporting' event held today in Brussels, Accountancy Europe launched two publications: a follow-up report on the 2015 paper that put forward the idea of 'CORE & MORE' and a call for action to enhance the coordination of non-financial information initiatives and frameworks.

The Core & More concept introduced in 2015 aims to present corporate reporting in a smarter way, organising financial and non-financial information based on the interests of users. Information relevant for a wide range of stakeholders would be in the Core report, and supplementary details for a more limited audience would form the More reports. The paper presented today develops the concept further and provides ideas on what information could be presented in each of the pillars. It also explores how technology might support the Core & More concept and addresses the relationship between Core & More and integrated reporting. Please click to access the paper Core & More: an opportunity for smarter corporate reporting on the Accountancy Europe website.

The call for action notes that "the overwhelming number of existing disconnected non-financial information reporting frameworks complicates coherent, consistent, and comparable wider corporate reporting, and steadily increases the reporting burden for companies". Accountancy Europa calls on the different standard-setting bodies and initiatives to coordinate their efforts to streamline existing reporting frameworks addressing similar pieces of non-financial information. The organisation believes that the final step in this development should aim at developing a single global framework for non-financial information reporting. (At the very same event IASB Chairman Hans Hoogervorst noted in a speech that the IASB could not and would not take the decisive leadership role Accountancy Europe hints at in the call for action.) Please click to access the Call for action: Enhance the coordination of non-financial information initiatives and frameworks on the Accountancy Europe website.

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IASB Chairman speaks about the IASB and wider corporate reporting

18 Sep 2017

At the Accountancy Europe event 'Shaping the future of corporate reporting' held today in Brussels, IASB Chairman Hans Hoogervorst discussed the relevance of financial reporting in a world where companies provide more and more non-financial information and are seeking a wider audience than investors alone.

Mr Hoogervorst's main message at the beginning of his peech was: "Keep calm and carry on". He explained that he was not at all concerned that the relevance of financial reporting is under threat. He noted that financial statements are primarily backward looking and, therefore, always provide an important reality check. And he also noted that the more information became available, the more need there was for comparability, standardisation and quality control.

Yet Mr Hoogervorst also conceded that times are changing and everybody needs to adapt - including the IASB. In this context he noted two aspects of the IASB's work. Firstly, he stressed the IASB's current effort at better communication in financial reporting. He noted a few projects and initiatives that form part of the effort and he also explained that the IASB may need to give preparers more guidance on how to provide context to their financial statements. And secondly, Mr Hoogervorst mentioned the IASB's non-mandatory Management Commentary Practice Statement and even went so far as to call it "an early foray of the IASB into integrated reporting". As times has moved on, however, he noted that the IASB is currently looking at taking up a project to update practice statement.

As a last aspect, Mr Hoogervorst looked at environmental, social and governance (ESG) reporting and the question of whether the IASB should become active in that field. He noted that audience for sustainability reporting is broader than that of financial reporting and that much of sustainability reporting is primarily focused on the external effects of the performance of a company. Mr Hoogervorst said that he believed that the IASB does not have the expertise to become the standard-setter in this field and that widening the audience and scope of the Board's work would most likely lead to loss of focus and identity. He stated:

If we want to create more clarity in the somewhat chaotic world of wider corporate reporting, we all need to define clearly what our responsibilities and competences are. If we all try to do everything, the most likely outcome is that nothing gets done properly.

However, Mr Hoogervorst did not just leave it at that. He also followed up on the question who should take responsibility for harmonisation of ESG requirements and try to prevent overload. He argued that since so much of ESG reporting is closely intertwined with public policy goals, public authorities would be best equipped to pursue harmonisation.

Please click to access the full text of the speech on the IASB website.

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IASB issues Practice Statement on materiality

14 Sep 2017

The International Accounting Standards Board (IASB) has issued Practice Statement (PS) 2 'Making Materiality Judgements'. The PS aims at assisting management in presenting financial information about the entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity.

 

Background

The materiality project arose as part of the IASB's Disclosure initiative started in 2012. The first document published as part of this project was the May 2013 feedback statement Discussion Forum – Financial Reporting Disclosure, which outlined the IASB's intention to consider a number of further initiatives, including a project on materiality, seeking to develop application guidance or educational material on materiality, with input from an advisory group.

A draft practice statement on materiality was published on 28 October 2015, however, subsequently it became clear that some of the proposed guidance needed to be authoritative to have the desired effect, so the project was split up into a part that would see a practice statement published and a part that was intended to result in amendments to IAS 1 and IAS 8. Both, the final practice statement and the exposure draft of proposed amendments were published today. Please click for more information about ED/2017/6 Definition of Material (Proposed amendments to IAS 1 and IAS 8).

 

Objective and scope

The objective of IFRS Practice Statement Making Materiality Judgements is to assist management in presenting financial information about the entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. It applies to the preparation of financial statements in accordance with full IFRS. It is not intended for entities applying the IFRS for SMEs.

 

General characteristics of materiality

The Practice Statement works with the definition of materiality in the current Conceptual Framework. Similar definitions are contained in IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. However, the IASB is currently working on a new definition of materiality (see ED/2017/6 Definition of Material (Proposed amendments to IAS 1 and IAS 8 published today)) and the IASB notes that if any changes are made to the definition of material in IAS 1 and IAS 8 as a result of the proposals in the ED, the Board will make consequential amendments to the Materiality Practice Statement and the forthcoming revised Conceptual Framework.

The Practice Statement notes that the need for materiality judgements is pervasive in the preparation of financial statements and affects recognition, measurement, presentation, and disclosure. When assessing whether information is material, an entity considers its own specific circumstances and the information needs of the primary users of its financial statements.

 

Four-step process

The Practice Statement notes that an entity may find it helpful to follow a systematic process in making materiality judgements and offers an example of such a process.

  • Step 1. The entity identifies information that has the potential to be material. In doing so it considers the IFRS requirements applicable to its transactions, other events and conditions and its primary users’ common information needs.
  • Step 2. The entity then assesses whether the information identified in Step 1 is material. In making this assessment, the entity needs to consider quantitative (size) and qualitative (nature) factors.
  • Step 3. In a next step, the entity organises the information within the draft financial statements in a manner that supports clear and concise communication.
  • Step 4. In the most important step, the entity then steps back and assesses the information provided in the draft financial statements as a whole. It needs to consider whether the information is material both individually and in combination with other information. This final assessment may lead to adding additional information or removing information that is now considered immaterial, aggregating, disaggregating or reorganising information or even to begin the process again from Step 2.

 

Status and effective date

The Practice Statement is not an IFRS. Consequently, entities applying IFRSs are not required to comply with the Practice Statement. However, it should be noted that materiality is a pervasive principle in IFRSs. The Practice Statement does not have an effective date, it can be applied with immediate effect.

 

Additional information

Please click for:

 

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IASB publishes proposed amendments to IAS 1 and IAS 8 regarding the definition of materiality

14 Sep 2017

The International Accounting Standards Board (IASB) has published an exposure draft 'Definition of Material (Proposed amendments to IAS 1 and IAS 8)' to clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves. Comments are requested by 15 January 2018.

 

Background

The materiality project arose as part of the IASB's Disclosure initiative started in 2012. The first document published as part of this project was the May 2013 feedback statement Discussion Forum – Financial Reporting Disclosure, which outlined the IASB's intention to consider a number of further initiatives, including a project on materiality, seeking to develop application guidance or educational material on materiality, with input from an advisory group.

A draft practice statement on materiality was published on 28 October 2015, however, subsequently it became clear that some of the proposed guidance needed to be authoritative to have the desired effect, so the project was split up into a part that would see a practice statement published and a part that was intended to result in amendments to IAS 1 and IAS 8. Both, the final practice statement and the exposure draft of proposed amendments were published today. Please click for more information about Practice Statement 2 Making Materiality Judgements.

 

Suggested changes and reasoning behind the changes

The changes proposed in ED/2017/6 Definition of Material (Proposed amendments to IAS 1 and IAS 8) all relate to a revised definition of 'material' which is quoted below from the ED:

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of a specific reporting entity’s general purpose financial statements make on the basis of those financial statements.

Three new aspects of the proposed definition should especially be noted:

  • Obscuring. The existing definition only focused on omitting or misstating information, however, the Board concluded that obscuring material information with information that can be omitted can have a similar effect. Although the term obscuring is new in the definition, it was already part of IAS 1 (IAS 1.30A).
  • Could reasonably be expected to influence. The existing definition referred to 'could influence' which the Board felt might be understood as requiring too much information as almost anything ‘could’ influence the decisions of some users even if the possibility is remote.
  • Primary users. The existing definition referred only to 'users' which again the Board feared might be understood too broadly as requiring to consider all possible users of financial statements when deciding what information to disclose.

In addition, the ED proposes some clarifications to the explanation accompanying the definition of material. These proposals include:

  • Relocating some information that explains rather than defines material from the definition into the explanatory paragraphs accompanying the definition;
  • adding a description of the characteristics of the primary users of financial statements;
  • noting that the consideration of the characteristics of users must be judged in the entity’s circumstances;
  • explaining that even well-informed and diligent users may need to seek the aid of an adviser from time to time; and
  • highlighting that the materiality of information is assessed either individually or in combination with other information.

 

Effective date

The exposure draft does not contain a proposed effective date which the IASB intends to decide on after the exposure. However, the Board has already concluded that an entity should apply the amendments prospectively and that earlier application will be permitted.

 

Additional information

Please click for:

 

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IFRS Interpretations Committee holds September 2017 meeting

13 Sep 2017

The IFRS Interpretations Committee met in London on Tuesday 12 September 2017. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

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