Agenda for December 2013 IASB meeting

29 Nov 2013

The International Accounting Standards Board (IASB) is meeting at its offices in London on 12 December 2013. The IASB will receive an update from the Interpretations Committee and will consider the post-implementation review of IFRS 3, amendments to IAS 28, IAS 16/IAS 38 and IAS 19), possible amendments to IFRS 1 (short-term exemptions) and financial instruments impairment, the due process followed as well as impairment and classification and measurement.

The full agenda for the meeting, dated 29 November 2013, can be found here.  We will post any updates to the agenda, and our Deloitte observer notes from the meeting, on this page as they are available.

EFRAG strives to enlarge General Assembly

29 Nov 2013

In reaction to the Maystadt report released earlier this month, which received the unanimous support of the European Union's Economic and Financial Affairs Council (ECOFIN) to transform EFRAG, EFRAG is beginning to implement the changes concerning its own governance.

Enlarging EFRAG's General Assembly to include National Funding Mechanisms (NFM) and welcome other European organisations is aimed at satisfying an earlier request of NFM (more particularly those set in France, Germany, Italy and the UK) to gain greater ownership and responsibility in EFRAG and it is also intended as an encouragement for Member States that do not yet have such a mechanism to set up one up.

NFM (national systems that collect contributions to fund EFRAG) exist in Denmark, France, Germany, Italy, Norway, Sweden and the UK and until 2010, EFRAG was entirely funded by its Member Organisations and the NFM. Since 2010, the European Commission contributes to the funding through a grant but Mr Maystadt warned in his report that "due to budgetary constraints, the EU grant for 2014 will [...] be decreased".

The final report had therefore recommended to analyse the legal possibility of establishing a system of compulsory contributions/ levies paid by listed companies that use and benefit from IFRS. Pending the implementation of such a levy system, Mr Maystadt recommended for the meantime that Member States organise a National Funding Mechanism (NFM) if it has not yet been done.

EFRAG still needs to secure its funding for 2014. European funding for the whole year 2014 has not been confirmed as the draft regulation supporting such funding is still being debated by European institutions. EFRAG expects that it will continue to benefit from European funding but delays in issuing the final regulation are likely to delay the payments. Therefore, the EFRAG Supervisory Board has decided to call upon NFM to formalise their financial commitment to EFRAG in 2014 "so that EFRAG can face without any concern any potentially delayed payment of the EC contribution".

Please click for the press release on the EFRAG website.

EFRAG updates endorsement status report for IAS 19 amendments

28 Nov 2013

The European Financial Reporting Advisory Group has released an updated endorsement status report to reflect the recent issue by the International Accounting Standards Board (IASB) of amendments to IAS 19 'Employee Benefits'.

Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) was issued on 21 November 2013 and clarifies the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. In addition, the amendments permit a practical expedient if the amount of the contributions is independent of the number of years of service, in that contributions, can, but are not required, to be recognised as a reduction in the service cost in the period in which the related service is rendered. 

The amendments are effective for annual periods beginning on or after 1 July 2014, however the endorsement status report indicates that the endorsement process is currently expected in the third quarter of 2014.

The endorsement status report, dated 27 November 2013, is available here.

Sustainability and integrated reporting update

27 Nov 2013

A brief overview of recent topics related to sustainability reporting and integrated reporting, focused on a 'FAQ' on sustainability reporting, International Integrated Reporting Council (IIRC) developments, and a recent United Nations Environment Programme Finance Initiative (UNEP FI) conference.

Highlights of news and developments include:

  • FAQ on sustainability reporting. The United Nations Environment Programme (UNEP), Global Reporting Initiative (GRI) and Climate Disclosure Standards Board (CDSB) have collaborated to produce Frequently Asked Questions on Corporate Sustainability Reporting (link to CDSB website). The report seeks to provide context to the work of the 'Group of Friends of Paragraph 47' (formed by the governments of Brazil, Denmark, France and South Africa, and supported by UNEP and the Global Reporting Initiative (GRI) after the Rio+20 conference) and address key questions around sustainability reporting. The questions discuss the context and background to corporate sustainability reporting, the current practices of business, governments and others in sustainability reporting, and opportunities for the further development and increased uptake of corporate sustainability reporting
  • IIRC yearbook. The International Integrated Reporting Council (IIRC) has published its IIRC Pilot Programme Yearbook 2013 (link to IIRC website), providing insights into how those responsible for sustainability within organisations are moving towards integrated reporting as part of the IIRC's pilot programme. The document provides insights on how entities have considered the 'capitals' concept in integrated reporting, how integrated reporting impacts the way organisations define value, the critical nature of an entity's business model, the impact of integrated reporting on investors, and the developing regional networks supporting integrated reporting
  • UNCTAD and IIRC MoU. The United Nations Conference on Trade and Development (UNCTAD) has signed a Memorandum of Understanding with the International Integrated Reporting Council (IIRC), formalising ongoing collaboration between the UNCTAD and IIRC to to promote the global harmonisation and clarity of reporting frameworks. More information is available in the IIRC newsletter for November 2013 (link to IIRC website)
  • UNEP FI roundtable. The United Nations Environment Programme Finance Initiative (UNEP FI) held a global roundtable in Beijing on 12-13 November 2013 focusing on how the finance sector can contribute to global sustainability efforts. The session included the launch of the Online Guide to Banking and Sustainability (link to UNEP FI website), a tool designed to assist financial institutions to understand and implement sustainability based on the UNEP 'Statement of Commitment by Financial Institutions on Sustainable Development' (financial institutions joining the UNEP FI are required to adhere to the statement, which includes requirements around reporting). More information about the roundtable is available at the dedicated UNEP FI website for the event.

IASB work plan updated

26 Nov 2013

Following its recent meeting, the International Accounting Standards Board (IASB) has updated its work plan. The redeliberations on insurance contracts have been deferred to the first quarter of 2014 and the discussion paper on rate regulation is now expected in the second quarter of 2014. Next steps in the narrow scope project on put options will be determined in the first quarter of 2014.

Current status

The revised time table for the major projects is now as follows:


Current status

Next project step

Expected timing

Conceptual Framework — Comprehensive IASB project

Discussion paper


Q1/Q2 2014

Financial instruments — Impairment


Finalised IFRS

Q1/Q2 2014

Financial instruments — Macro hedge accounting


Discussion paper

Q1 2014

Financial instruments — Limited reconsideration of IFRS 9 (classification and measurement)


Finalised IFRS

Q1/Q2 2014

Insurance contracts



Q1 2014*




Q4 2013

Rate-regulated activities — interim IFRS

Exposure draft

Finalised IFRS

Q1 2014

Rate-regulated activities — Comprehensive project


Discussion paper

Q2 2014*

Revenue recognition


Finalised IFRS

Q1 2014

* Indicates a change since the prior work plan update.

Next steps in the narrow scope project IAS 32 — Put options over non-controlling interests will be determined in the first quarter of 2014. The conceptual framework discussion paper published in July 2013 contains a proposal which would provide a solution that could be applied to this project. Comments on the discussion paper close on 14 January 2014 and constituent feedback will probably figure in determining how to proceed with the narrow scope project on put options.

Click for the IASB work plan dated 26 November 2013 (link to IASB website). We have updated our project pages to reflect the updated work plan and other known developments.

IFRS Foundation appoints Trustees

26 Nov 2013

The IFRS Foundation has announced the appointment of Maria Helena Santana and Lynn Wood as Trustees of the IFRS Foundation. Both replace retiring Trustees with similar background. The appointments will begin on 1 January 2014 and will expire on 31 December 2016.

Mrs Santana was Chair and President of the Comissao de Valores Mobiliarios (CVM), the Brazilian Securities and Exchange Commission, from 2007 until 2012. In that position, she oversaw the successful transition and adoption of IFRS in Brazil. Mrs Santana also served as Chair of IOSCO's Executive Committee and a member of the International Integrated Reporting Council (IIRC). She replaces Pedro Malan, former Finance Minister of Brazil and former President of the Central Bank of Brazil. Mr Malan's term expires 31 December 2013.

Ms Wood has served as Chairman of the Australian Financial Reporting Council (FRC) and as a member of the New Zealand External Reporting Board (XRB) since 2011. Ms Wood follows Jeffrey Lucy, former Chairman of the FRC and former Chairman of the Australian Securities and Investments Commission (ASIC). Mr Lucy's term also expires 31 December 2013.

Please click for the IFRS Foundation press release on the IASB website.

November 2013 IASB meeting notes — Part 3 (concluded)

25 Nov 2013

The IASB's meeting was held in London on 20-22 November 2013, some of it a joint meeting with the FASB. We have posted the final Deloitte observer notes from the meeting, covering the discussions on classification & measurement and impairment.

Click through for direct access to the notes:

Wednesday, 20 November 2013

Thursday, 21 November 2013

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

IFRS Advisory Council membership update

25 Nov 2013

The Trustees of the IFRS Foundation have announced the appointments of 14 new members to the IFRS Advisory Council.

The new Advisory Council members are:

    1. Peter Chambers - Investment Management Association
    2. Micheline Dionne - International Actuarial Association
    3. Egbert Eeftink - KPMG
    4. Stephenie Fox – International Federation of Accountants
    5. Dr Jens Freiberg - BDO
    6. Jake Green - Grant Thornton
    7. Markus Grund - International Association of Insurance Supervisors (re-appointment)
    8. John Hitchins – PwC (re-appointment)
    9. Igor Kozyrev - Lukoil
    10. Goro Kumagai - The Securities Analysts Association of Japan
    11. Danita Ostling - EY
    12. Lynda Sullivan - HUB Global Insurance Group
    13. Stephen Taylor - Deloitte
    14. Dr Lothar Weniger - Corporate Reporting Users' Forum

The new members will replace retiring members Norbert Barth, Andrew Buchanan, Gerard Ee, Sei-Ichi Kaneko, April Mackenzie, Liz Murrall, Joel Osnoss, Francis Ruygt, Jerry de St. Paer, Jim Sylph, Leo van der Tas and Mark Vaessen as of 1 January 2014.

From the Deloitte point of view, Stephen Taylor, Leader of Deloitte's Asia Pacific IFRS Centre of Excellence in Hong Kong, will replace retiring Advisory Council member Joel Osnoss, Deloitte's Global Leader IFRS Clients and Markets.

The press release on the IASB's website announcing the new appointments also states that additional appointments to the Advisory Council to replace members whose terms expire at the end of 2013 as well as a new Chair of the Advisory Council will be announced by the Trustees in due course.

Accounting and Islamic finance in the Middle East and North Africa

25 Nov 2013

The Asian-Oceanian Standards Setters Group (AOSSG) has published the results of a survey distributed by the AOSSG's Islamic Finance Working Group in 24 countries in the Middle East and North Africa to understand about accounting requirements for Islamic financial transactions in these jurisdictions. The survey showed a high degree of co-existence of International Financial Reporting Standards (IFRSs) and the accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

60% of respondents claimed that IFRSs or standards substantially converged with IFRSs are applied in their jurisdiction while 64% also responded that the AAOIFI standards are applied.

As IFRSs and AAOIFI standards differ, two methods have been developed for their co-existence: (1) AAOIFI standards are generally applied and IFRSs are used to fill the gaps where AAOIFI requirements are absent or (2) IFRSs are applied but for certain accounting issues there are exemptions from complying with IFRSs and AAOIFI standards are applied instead.

For the accountants and auditors who replied to the survey, the co-existence of IFRS and AAOIFI standards is not in conflict with IFRS convergence and most stated they would accept the preparation of financial statements that comply with IFRS for some items and with AAOIFI standards for others. This 'pragmatic' approach to convergence contrast sharply with the standard-setters' views in these jurisdictions. In 2011, the AOSSG conducted a similar survey amongst national accounting standard-setters, in which 78% of the respondents stated that having differential financial reporting standards for Islamic finance is not compatible with IFRS convergence.

The survey also showed that there is no great appetite for switching to IFRSs completely. 75% of respondents in jurisdictions where AAOIFI standards are applied thought that their jurisdiction should retain them in spite of the global IFRS trend. One of the reasons for the reluctance is that the IASB has not publicly announced if or how it plans to address accounting for Islamic financial transactions.

Please click for access to the survey results on the AOSSG website. They will be discussed at the upcoming fifth annual AOSSG meeting later this week.

The conceptual framework should be 'aspirational'

23 Nov 2013

Former IASB member Warren McGregor has coauthored a recent paper on the conceptual framework arguing that the conceptual framework is the cornerstone of high quality financial reporting and claiming that the new framework should be 'aspirational'.

The paper offers an overview of the history of frameworks from standard-setting before the advent of frameworks to the present state of play in the IASB's project on the conceptual framework. The authors explain that the introduction of frameworks has a disciplining effect on standard-setters leading to improved consistency by providing them with a common frame of reference for their decision-making, but also to the fact that standard-setters can now be held accountable for their decisions. They have also given practitioners deeper understanding of standard-setters' decision-making and a fallback solution for issues not dealt with in standards.

However, to fulfil such an important role a framework must be complete and up-to-date, which, as the reactivation of the IASB's project has shown, is not the case with the current IASB Framework. In their paper, the authors list the areas where the framework is incomplete or needs revisions. They especially discuss the following areas which are mostly commonly agreed by constituents (and the IASB):

  • Reporting entity,
  • Definition of elements,
  • Measurement of elements,
  • Scope of financial reporting, and
  • Presentation and disclosure.

Yet while identifying specific areas and even specific desirable qualities, the most urgent call of the paper is for the new framework to be aspirational and not just a confirmation of the status quo of standard-setting and of the current application of the standards.

Conceptual frameworks have traditionally been viewed by standard setters as aspirational documents, setting the direction for reform of financial reporting while acknowledging that at any point in time the ‘conceptually correct’ approach may not be achievable at a standards level. If financial reporting is to continue to evolve and meet the needs of the users of financial statements, it is important that this continues to be the case. There will always be a temptation when standard setters revisit the conceptual framework to see it as an opportunity to justify previous decisions at a standard setting level that, at the time, were driven more by compromise and pragmatic solutions than underlying concepts. Such re-engineering would undermine the integrity of the conceptual framework both as a vehicle for facilitating the development of new ideas by the standard setter at a standards level and as vehicle for holding the standard setter accountable for its decisions.

We are grateful to Mr McGregor and his co-author Ms Jan McCahey for allowing us to host this paper on IAS Plus. Please click for access to the full paper.

Mr McGregor is also the author of the recent AASB Occasional Paper No. 1 Liabilities – the neglected element: a conceptual analysis of the financial reporting of liabilities, which will form the basis of discussion of liabilities in the context of the conceptual framework at the upcoming ASAF meeting.

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