March

Trustees welcome EU decision to continue to contribute to the global funding of the IFRS Foundation

19 Mar 2014

The Trustees of the IFRS Foundation have issued a press release welcoming last week's decision by the European Parliament to continue the EU co-financing of the International Financial Reporting Standards (IFRS) Foundation, the European Financial Reporting Advisory Group (EFRAG), and the Public Interest Oversight Board (PIOB).

The Parliament voted on a package that includes an annual contribution to the work of the IFRS Foundation of approximately 4.3 million euro. There were 474 votes in favour of continued co-financing and 28 against.

Michel Prada, Chairman of the Trustees, commented:

We will continue to work in close cooperation with the European Commission, to fully support its evaluation of Europe’s experience of IFRS and give consideration to any recommendations related to enhancements of the governance arrangements of the Foundation as part of our public consultation on the structure and effectiveness of the IFRS Foundation, due to begin in 2015.

Please click for access to the full press release on the IASB website.

New Technical Director for EFRAG

18 Mar 2014

The European Financial Reporting Advisory Group (EFRAG) has announced that Patricia McBride will follow Pieter Dekker as Technical Director, effective end of April 2014.

Patricia McBride, who is a citizen of both the UK and Australia, has previously held technical roles supporting the standard-setters in Australia, New Zealand and Hong Kong on IFRS issues. Part of her career was also spent in academia. She will succeed Pieter Dekker who will leave EFRAG in early April, after four years with the organisation.

The current reform of EFRAG's governance and mandate as result of the Maystadt review will probably also lead to enhanced responsibilities of EFRAG's Technical Director.

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

Canadian report on interim reporting

18 Mar 2014

Chartered Professional Accountants Canada (CPA Canada) and the Canadian Investor Relations Institute (CIRI) have published a draft 'discussion brief' on interim reporting strategies. The report takes the view that choices involved in interim reporting should be considered as a strategic matter, designed to maximise the credibility of interim communications, and stakeholder confidence in those communications.

The draft discussion brief is based on a review of quarterly and annual financial statements of various listed Canadian companies, and was focused on developing observations for management and directors to consider in discussing and review interim financial reports, rather than compliance with reporting requirements such as IAS 34 Interim Financial Reporting and Canadian continuous disclosure rules.

The report notes that the requirements for interim reporting are not extensive as those applying to annual reporting and so leave room for judgement, both in financial statements and management discussion and analysis (MD&A). The report outlines some of these areas of judgement, including:

  • The nature of the entity's operations assisting in determining the level of detail and amount of repetition from previous interim reports, e.g. development stage entities may provide greater detail period to period than stable industrial entities with predictable operating cycles
  • Some entities may benefit from including comparative information in relation to the income statement items against the immediately preceding period in addition to information required by IAS 34 (corresponding periods in the preceding year). Similarly, the report recommends that some entities strongly consider providing a statement of cash flows for the current and comparative quarter
  • Although not required by IAS 34 or regulatory requirements, entities may consider issuing separate fourth-quarter financial reports, or increasing the prominence and completeness of fourth-quarter information that is included in annual reports

The report suggests that choices and judgements made extend to quarterly earnings conference calls, considerations about the confidentiality of information, and whether supplementary information should be provided. The need for well-articulated policy frameworks and sufficient communication of the approach taken to the preparation and presentation of interim financial information is also discussed.

In terms of the MD&A, the report focuses on three additional considerations: user expectations for an "outlook" section, the need for discussion of progress against the organisation's strategy, and the issues surrounding supplementary performance measures such as 'EBITDA' and 'interest coverage'.

The report concludes by considering the impact of materiality assessments on information disclosed, considerations around external auditor reviews of interim information, and the need for a continual assessment of the optimal choices in interim reporting.

The draft discussion brief is open for comment until 30 April 2014. Click for access to the report (link to CPA Canada website).

Report on the February IFRS Advisory Council meeting

18 Mar 2014

A report on the IFRS Advisory Council meeting held in London on 24-25 February 2014 has been posted to the IASB's website. Topics discussed in addition to the usual updates on the IASB’s and IFRS Foundation Trustees’ activities included the governance review of the International Public Sector Accounting Standards Board (IPSASB), the leases project, the future of corporate reporting in light of integrated reporting and digital reporting, and updates on the Trustee's education initiative and investor engagement strategy.

We have previously posted Deloitte observer notes from the meeting.

Highlights from the meeting include:

  • IPSASB governance review.  Whilst there was broad consensus that public sector accounting was in need of improvement, it was not considered feasible, at least in the short term, to extend the remit of the IFRS Foundation and Monitoring Board to encompass the IPSASB.  Discussion included funding issues, undesirable organisation impacts and the risk of increased political pressure and influence
  • Leases project.  There was overwhelming support for including all leases 'on balance sheet', but there was a feeling that convergence with US GAAP, whilst very important, should not interfere with the completion of the project
  • Future of corporate reporting. There was strong support for the current approach of involvement of the IASB with Integrated Reporting (<IR>), under which the IASB does not aim for being the owner of the developments but rather collaborates with the International Integrated Reporting Council (IIRC) and other standard-setters and stakeholders, while continuing its focus on its competencies. In relation to digital reporting, the Council advised the IASB to 'stay current on technological developments'. More broadly, the possibility of research projects on non-GAAP measures and further enhancements on management commentary were raised.

The next meeting of the IFRS Advisory Council is scheduled for 9-10 June 2014 in London.

The full IASB report on the IFRS Advisory Council meeting is available on the IASB web site.

Agenda for the March 2014 IFRS Interpretations Committee meeting

18 Mar 2014

The IFRS Interpretations Committee is meeting at the IASB's offices in London on Tuesday, 25 March 2014. The agenda for the one day meeting is now available.

The Committee will:

  • Continue discussions on issues related to IAS 1, IAS 12, IAS 34 and IFRS 11
  • Consider the finalisation of tentative agenda decisions on IAS 8, IAS 17, IAS 39, IFRS 10 and IFRIC 21
  • Consider new issues on IAS 16, IAS 19 and IFRIC 17.

The full agenda for the meeting, as of 17 March 2014, can be found here.  We will update this page for any changes to the agenda, and our Deloitte observer notes from the meeting as they become available.

European Parliament votes to back financing of IFRS Foundation, EFRAG, and PIOB

13 Mar 2014

The European Parliament has voted in its plenary session in Strasbourg today to back the EU co-financing of the International Financial Reporting Standards (IFRS) Foundation, the European Financial Reporting Advisory Group (EFRAG), and the Public Interest Oversight Board (PIOB).

The vote follows a trilogue agreement of the European Parliament, the Council and the Commission reached in early December 2013.

The regulation passed by the Parliament today will form the legal basis for the continuation of financing the IFRS Foundation and PIOB for the period 2014-2020 and of EFRAG for the period 2014-2016. The agreement limits the financing period of EFRAG to three years in view of prospective reforms that might arise from the Maystadt Report.

In financial terms, the regulation proposes to contribute annually approximately the following sums:

  • 4.3 million euro to the IFRS Foundation (17% of its budget),
  • 3.4 million euro to EFRAG (43% of its budget), and
  • 0.3 million euro to PIOB (22% of its budget).

Internal Market and Services Commissioner Michel Barnier welcomed the vote in a press release:

The support of the European Parliament to renew the financing programme of the IFRS Foundation, EFRAG and the PIOB is an important step towards ensuring that these organisations continue to play a key role in the development of accounting and auditing standards and that the EU’s interests are properly taken into account in that process.

As far as EFRAG is concerned, I am particularly keen that, following last year's recommendation by Philippe Maystadt, its governance reforms are implemented adequately and without delay. I will also make sure that Parliament is properly informed on the progress achieved by EFRAG in this respect.

Please click for access to the full press release on the European Commission website. The full text adopted by the Parliament today is available on the Parliament's website (please refer to Part 2, pp 146-177).

IASB working group invites papers on the application of IFRS 9 principles to Islamic products

13 Mar 2014

The IASB's Consultative Group for Shariah-Compliant Instruments and Transactions has issued a request for papers on challenges that may arise in the application of IFRS 9 classification and measurement principles to instruments and transactions commonly referred to as Islamic finance.

The request for papers states that the group does not judge whether products are compliant with the requirements of Shariah law as this is beyond the group's remit. Rather, the members of the group intend to focus on challenges that may arise in applying IASB pronouncements to Islamic products and to make recommendations to the Board about steps that it might take.

The working group was formed as a result of the IASB's 2011 agenda consultation and held an initial meeting in Kuala Lumpur in July 2013. During the meeting, the group identified four areas that it wants to address and invite papers on. These areas are identified in the request for papers as follows:

  • The application of IFRS 9's classification and measurement principles;
  • the application of the IASB's proposed lease standard to Ijarah;
  • whether restricted and unrestricted investment accounts are to be presented on- or off-balance sheet; and
  • profit equalization reserves (PER) because of significant differences in practice.

The request for papers published today addresses the first of the four issues. Respondents are asked to answer whether some or all of the Islamic products typically owned by Islamic banks qualify for amortised-cost classification.  If they believe the answer is "yes," they are asked to provide the basis for their conclusion. If they believe the answer is "no," they are asked to explain what steps, if any, the Board should take to either clarify the classification of these contracts or to amend IFRS 9 Financial Instruments. Papers should be submitted by 1 August 2014.

Additional information available on the IASB's website:

Please see also our IAS Plus page with general information on Islamic accounting.

EFRAG issues final endorsement advice on amendments to IFRSs

12 Mar 2014

The European Financial Reporting Advisory Group (EFRAG) has completed its due process for the IASB’s Annual Improvements to IFRSs (2010-2012 cycle) and (2011-2013 cycle). In both cases, the EFRAG has expressed their support of the amendments and has recommended their adoption to the European Commission.

The annual improvements for the 2010-2012 cycle provides amendments to seven Standards (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38), while the 2011-2013 cycle amends four standards (IFRS 1, IFRS 3, IFRS 13, IAS 40).

For more information, see (links to EFRAG website):

In addition, the EFRAG has updated its endorsement status report to reflect these final endorsements.

Argentine Banks will apply standards converged with IFRSs from 2018

12 Mar 2014

The Central Bank of Argentina (BCRA) has announced that it will converge the accounting standards for banks with IFRSs and that the new standards will have to be applied from 2018.

Currently, listed companies in Argentina that are regulated by the Comisión Nacional de Valores (CNV, the National Securities Commission) have to prepare their financial statements using IFRSs. Companies with regulators other than the CNV are currently not permitted to use IFRSs. Banks must apply the accounting regulations enforced by the BCRA. However, on 12 February 2014, the BCRA issued a communication announcing a plan to converge the BCRA accounting standards with IFRSs. The converged standards would become mandatory on 1 January 2018.

In the road map setting out the convergence plan the BCRA motivates is decision as follows:

Several international organisations have issued recommendations regarding the adoption of high quality international accounting standards. Argentina, as a member of the Group of 20 (G20 ) and the Financial Stability Board (FSB), is committed to converge with international standards in financial reporting.

Please click for access to the road map (Comunicación “A” 5541) on the BCRA website (available in Spanish only).

IFRS 2014 'Red Book' now available

12 Mar 2014

The International Accounting Standards Board (IASB) has announced that the 2014 edition of the Bound Volume of International Financial Reporting Standards (the 'Red Book') is now available.

The 'Red Book' contains all official pronouncements issued at 1 January 2014, including all pronouncements with an effective date after 1 January 2014, but not the pronouncements that will be replaced or superseded. Accordingly, the 2014 edition contains pronouncements as a result of amendments from IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39), amendments to IAS 19, IAS 36, and IAS 39, two sets of Annual Improvements to IFRSs (2011-2013 and 2010-2012), one new Interpretation (IFRIC 21 Levies), and the IFRS Foundation Constitution and Due Process Handbook.

eIFRS and Comprehensive subscribers can now access the electronic files of the 2014 IFRS (Red Book) via the Latest Additions section of eIFRS (you will be required to provide your login details).

The Red Book is also available through the IASB's Web Shop. Copies are priced at £68 each, plus shipping. Discounts are available for multiple copies, academics/students and residents of middle and low-income countries.

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