Stakeholder event in Sydney sees panel discussion on complexity

16 Apr 2014

On 9 April 2014, the Trustees of the IFRS Foundation jointly hosted a stakeholder event in Sydney, Australia in conjunction with CPA Australia and the Institute of Chartered Accountants Australia (ICAA).

The stakeholder event, which also featured a keynote speech by Michel Prada, Chairman of the IFRS Foundation Trustees, included an interactive panel discussion with senior financial reporting stakeholders. Ian Mackintosh, Vice Chairman of the IASB, was a member of the panel.

The panel discussion was titled Global Accounting Standards: Are they fit for purpose? For the largest part the panel members discussed complexity and materiality.

On the question of what introduces complexity into financial reporting, Mr Mackintosh commented users also "assist" in bringing about complexity by asking for more and more information and for interpretations: "Interpretations make the whole system more complex," he stated and added on the frequent requests regarding implementation guidance:

You need to push back when you hear problems and say: 'Are they really problems at all or are they something, if you went away and thought about it properly, you could solve for yourself?'

After the discussion touched briefly on other topics such as the Conceptual Framework project, the leases project, and integrated reporting, it concluded on the topic of public sector accounting. Hans Hoogervorst, Chairman of the IASB, who had already earlier contributed to the discussion from the audience, commented on the IPSASB governance consultation and the question whether the monitoring and oversight of the IPSASB should be given to the IFRS Foundation's Monitoring Board and Trustees:

I would love to do the job – setting financial standards for the public sector – […] but the big danger would be that it would politicise our work even further than is already the case and we would like to retain our independence and if we get thrown into that sea, we might sink.

Please click to access a video recording of the panel discussion on the IASB's website.

European Parliament adopts Directive on disclosure of non-financial and diversity information

16 Apr 2014

The European Parliament has voted in favour of amendments to European accounting legislation in order to require certain large companies to provide additional information on social and environmental matters. These companies will have to disclose information on policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.

The amendments had been proposed by the European Commission in April 2013. The objective of the proposal was to increase EU companies' transparency and performance on environmental and social matters, and, therefore, to contribute effectively to long-term economic growth and employment.

The new rules will only apply to large companies with more than 500 employees, as it was believed that the costs for requiring small and medium-sized enterprises to apply them could outweigh the benefits. The scope now includes approx. 6,000 large companies and groups across the EU. However, the requirements in the Directive need not be applied where a company already includes in its annual report a comprehensive report relying on prescribed frameworks (such as the UN Global Compact, ISO 26000, the German Sustainability Code, or GRI guidelines) covering the information required.

In order to become law, the Commission's proposal needs to be adopted jointly by the European Parliament and by the EU Member States in the Council. The Council is expected to formally adopt the proposal in the coming weeks.

The full text adopted by the Parliament is available on the Parliament's website (please refer to Part 5, pp 312-346).

Results of a limited survey on simplifications of the IASB proposals on leases

15 Apr 2014

The European Financial Reporting Advisory Group (EFRAG) and the national standard-setters of France (ANC), Germany (ASCG), Italy (OIC) and the United Kingdom (FRC) have conducted a limited survey on the proposed simplifications to the accounting for lessees under IASB’s Exposure Draft ED/2013/6 'Leases'.

At the December meeting of ASAF, the IASB confirmed that in its redeliberations it would explore how to provide relief and and alleviate complexities associated with the proposed guidance for leases. The European delegation offered to consult with European constituents to which areas needed to be simplified the most.

Due to time constraints, the standard-setters did not conduct a public survey but contacted respondents to the prior field-test and other preparers directly. 44 respondents from 10 countries took part in the survey; the majority of which were European listed groups. The industries mostly represented were retail, automotive, telecommunication; and transport and logistics:

  • A majority of respondents supported additional recognition exemptions beyond the current short-term exemption; and
  • a majority of respondents indicated their preference for a single type A model for all leases. However, some respondents would support a single model only if the distinction between leases and services was improved in the forthcoming standard.

Please click to access the full report of the EFRAG website.

Latest edition of EFRAG Insider

15 Apr 2014

The European Financial Reporting Advisory Group (EFRAG) has published a new edition of the publicly available newsletter 'EFRAG Insider'.

In addition to discussing IASB Exposure drafts, recent EFRAG publications and stakeholder liaison, the new issue highlights two topical issues:

  • EFRAG reform - in the beginning of April, the EFRAG Supervisory Board approved the proposed amendments to the EFRAG Statutes and the EFRAG Internal Rules for submission to EFRAG's current Member Organisations and EFRAG's additional future members; it is intended that in the first half of June the EFRAG General Assembly will be called to approve the amendments.
  • Separate financial statements - EFRAG, OIC, ICAC and DASB are conducting a joint project aimed at addressing a number of potential problems that have been revealed by the IAS Regulation option enabling Member States to permit or require non-listed companies to prepare their annual accounts in conformity with IFRS; the publication of a discussion paper is expected in the third quarter of 2014.

The April 2014 edition of EFRAG Insider is available on the EFRAG website.

New jurisdiction profile for Yemen on the use of IFRS

14 Apr 2014

The IFRS Foundation (IFRSF) has added a new jurisdiction profile on the use of IFRS for Yemen, to bring the total of profiles completed to 130 jurisdictions.

The IFRSF has been using information from various sources to develop the profiles about the use of IFRSs in individual jurisdictions. We are proud that IAS Plus with the assistance of our Deloitte member firms has been able to help the IFRS Foundation with this ambitious project, which is led by Paul Pacter, former IASB member and former webmaster of IAS Plus who originally set up our popular table on the use of IFRSs around the world which has been supplemented recently by the more detailed table on the use of IFRSs by the G20 jurisdictions.

The profile and analysis for Yemen is available on the IASB website.

EFAA publishes paper on implementing the new European Accounting Directive

12 Apr 2014

The European Federation of Accountants and Auditors for SMEs (EFAA) has published a paper on implementing the new European Accounting Directive 2013/34/EU.

The new Directive came into force on 20 July 2013, and European Member States have until 20 July 2015 to incorporate the rules of the Directive within their national law.

The Directive aims simplifying the accounting requirements for small companies and improves the clarity and comparability of companies' financial statements within the Union. The EFAA paper is designed to support governments, standard-setters, EFAA member organisations and other interested stakeholders in their efforts to transpose the new Accounting Directive into national legislation.

Please click to access Implementing the New European Accounting Directive - Making the right choices on the EFAA website.

EFRAG draft comment letter on disclosure initiative

11 Apr 2014

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB’s Exposure Draft ED/2014/01 ‘Disclosure Initiative (Amendments to IAS 1)’ that was issued on 25 March 2014.

The EFRAG welcomes this initiative by the IASB, which aims to clarify IAS 1 by addressing perceived impediments to preparers when exercising their judgement in presenting their financial reports. The EFRAG supports the changes to the definition of terms in IAS 1 that may have been misinterpreted and believe the changes would put companies in a position to exercise more discretion in the presentation and disclosure of information, and would lead to an improvement of the quality and relevance of information in the notes. However, EFRAG proposes some improvements to the drafting of the proposed changes and recommends consistent use of defined terms relative to the current IASB standards to avoid any future amendments.

Comments are due by 12 May 2014.

Note: On 23 May 2014 the comment deadline was extended to 20 June 2014.

For more information, see:

Agenda for April 2014 IASB meeting

11 Apr 2014

The International Accounting Standards Board (IASB) will be meeting at its offices in London on 22–25 April 2014. Part of the meeting will be held jointly with the Financial Accounting Standards Board (FASB) to discuss the leases project. Additionally, the IASB will be discussing its research programme, bearer plants, issues from the Interpretations Committee, rate-regulated activities, the equity method in separate financial statements, the conceptual framework, insurance contracts, and the disclosure initiative.

The full agenda for the meeting, dated 10 April 2014, 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.

Steve Lim appointed to the IFRS Advisory Council

11 Apr 2014

The Trustees of the IFRS Foundation have announced the appointment of Steve Lim to the IFRS Advisory Council.

Dr Lim is an Advisor to the Korea Accounting Standards Board (KASB). He previously served as Chair and Vice-Chair of the KASB and Vice-Chair of the Asian-Oceanian Standard-Setters Group (AOSSG). Dr Lim is also Professor of Accounting at the University of Seoul. His appointment to the IFRS Advisory Council commenced on 1 April 2014.

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

FASB redefines discontinued operations

10 Apr 2014

Today, the FASB issued Accounting Standards Update (ASU) No. 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." Under the ASU, only disposals that represent a strategic shift that has (or will have) a major effect on the entity’s results and operations would qualify as discontinued operations. In addition, the ASU (1) expands the disclosure requirements for disposals that meet the definition of a discontinued operation, (2) requires entities to disclose information about disposals of individually significant components, and (3) defines “discontinued operations” similarly to how it is defined under IFRS 5, "Non-current Assets Held for Sale and Discontinued Operations."

The ASU notes that “[e]xamples of a strategic shift that has (or will have) a major effect on an entity’s operations and financial results could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity.”

The ASU also requires entities to expand their disclosures about discontinued operations to include more information about assets, liabilities, income, expenses. In addition the ASU would also require entities to disclose the pre-tax income attributable to a disposal of “of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements.”

The new standard is effective in the first quarter of 2015 for public organisations with calendar year ends. For most nonpublic organisations, it is effective for annual financial statements with fiscal years beginning on or after 15 December 2014. Early adoption would be permitted for any annual or interim period for which an entity’s financial statements have not yet been made available for issuance.

For more information, see Deloitte's Heads Up newsletter and the press release, ASU 2014-08, and FASB in Focus, on the FASB website.

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