We comment on the post-implementation review of IFRS 3

30 May 2014

We have published our comment letter on the IASB's 'Post-implementation Review: IFRS 3 Business Combinations'.

We believe the review of IFRS 3 deserves careful consideration, since the standard frequently presents conceptual and practical issues in preparing and auditing financial statements. It also addresses highly significant transactions that might frequently be an area of focus for users.

One item in particular that we believe should be considered is the subsequent measurement of goodwill and indefinite life intangible assets acquired in a business combination. We recognise that a full consideration of this issue may be outside the scope of a post-implementation review of IFRS 3, but we believe the issue is significant and that the post-implementation review provides an appropriate opportunity to begin its consideration

Click for the full comment letter.

Singapore accounting standards to be fully converged with IFRSs in 2018

30 May 2014

The Singapore Accounting Standards Council (ASC) has announced that Singapore-incorporated companies listed on Singapore Exchange (SGX) will have to apply a financial reporting framework fully identical with International Financial Reporting Standards (IFRSs) in 2018.

The announcement was made in the ASC Chairman's keynote address at the IFRS Foundation's IFRS Conference currently held in Singapore.

Singapore has been following a path of converging Singapore Financial Reporting Standards (SFRS) with IFRS for Singapore listed companies for many years and Singapore has adopted substantially all IFRSs issued by the IASB as SFRSs, albeit at times with different effective dates and transition requirements. However, the timeline for full convergence was adjusted to await developments in the major projects on revenue recognition, financial instruments and the impairment loss model, all of which are of significance to Singapore entities. Given the mandatory or expected mandatory effective date of 1 January 2017 and 2018 for the revenue recognition and financial instruments projects, respectively, the ASC has now decided to introduce a new financial reporting framework that is identical to IFRS for Singapore listed companies for annual periods beginning on or after 1 January 2018. This framework will also be made available for voluntary application by all non-listed Singapore-incorporated companies at the same time.

The ASC argues that aligning full convergence with IFRSs with the effective date of major new IASB pronouncements would mean that Singapore companies would not have to close existing differences in transition requirements between SFRSs and IFRSs while transitioning to a fundamentally new standard shortly afterwards and would minimise the restatement of comparatives on transition to the new framework. The implementation lead time of more than three years would also enable enable stakeholders to appreciate the potential impact of, and prepare for, the transition to the new framework.The ASC also comments:

[Full convergence with IFRSs] will also place Singapore-listed companies on a level playing field with their counterparts in the IFRS community and eliminate any perception that they may be applying standards that are different from IFRS, even though they have been IFRS-compliant in a substantive manner for more than a decade.

Please click for the following information on the ASC website:

May 2014 IASB meeting notes — Part 3

29 May 2014

The IASB's meeting was held on 20–22 May 2014, some of it a joint meeting with the FASB. We have posted Deloitte observer notes from the joint session on leases as well as the IASB's session on IAS 12 — Recognition of deferred tax assets for unrealised losses.

Click through for direct access to the notes:

Thursday, 22 May 2014

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting. Notes from the remaining conceptual framework session will be posted in due course.

Joint webcast on revenue recognition

29 May 2014

On 5 June 2014, the IASB and FASB will hold a joint webcast on the boards’ final standard on revenue from contracts with customers.

Speakers include FASB Member Larry Smith and IASB Member Patricia McConnell, who will discuss the new revenue model and answer questions about it. The presentation starts at 3:00 p.m. (BST) and is scheduled to last one hour. Registration information is available on the FASB website.

Hans Hoogervorst discusses the IASB work programme

29 May 2014

IASB Chairman, Hans Hoogervorst gave a speech today at the IFRS Conference in Singapore titled 'Charting progress towards global accounting standards'. He provided an overview of the current use of IFRS around the world and discussed the IASB's work programme, specifically providing insight into the joint leases project.

Mr Hoogervorst began his speech by talking about the successful spread of IFRS around the world and noted that "[a]lthough some big economies are still missing, the countries where IFRS is used already cover more than half of the world's GDP."

His speech focussed on the IASB's work programme; he began by highlighting yesterday's issuance of the joint revenue recognition standard with the FASB. Mr Hoogervorst went on to discuss the joint leases project. He emphasised that the leases standard will only affect significantly fewer than 10% of listed companies. He noted that the use of operating leases is highly concentrated and explained that approximately 50% of listed companies report material operating leases, and that of the 12,000 entities that the IASB analysed, less than 10% accounted for 80% of all operating leases. He stated "We calculated that inclusion of the lease liability would lead to an increase of the long-term debt-to-equity ratio from 13 percentage points in Europe through 20 percentage points in Asia." Mr Hoogervorst also acknowledged the cost to preparers to implement the leases standard, saying that the IASB is 'motivated' to find ways to make the standard less costly to implement and apply. He mentioned that the IASB and FASB hope to finalise its work on the leases project "in the next couple of months".

Moving on to financial instruments, Mr Hoogervorst summarised the IASB's deliberations on IFRS 9 Financial Instruments and said that the new standard will be issued in July. He highlighted two "improvements over current accounting": (1) 'own credit' fix and (2) loan loss provisioning.

Mr Hoogervorst then discussed the steps the IASB is taking to simplify disclosures. He noted that in June 2013 he presented a 10-point plan to improve disclosures in financial reporting and the IASB published an Exposure Draft in March 2014 which clarifies immaterial information. Looking forward, Mr Hoogervorst mentioned the IASB's research project to develop clearer principles of disclosures and subsequent review of all standards in an effort to make disclosure requirements more consistent and easier to apply.

Please click for access to the full text of Mr Hoogervorst's speech on the IASB website.

IASB work plan update for May 2014

29 May 2014

Following its recent meeting and the issue of IFRS 15 'Revenue from Contracts with Customers' yesterday, the International Accounting Standards Board (IASB) has updated its work plan. A final pronouncement in the narrow scope project on 'Sales or contributions of assets between an investor and its associate/joint venture’ is now expected in Q3 2014 instead of Q2 2014. The updated work plan also confirms that the narrow scope on 'Share of other net asset changes' has been stopped due to a lack of support.

Current status

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

Project Current status Next project step Expected timing
Conceptual Framework — Comprehensive IASB project Redeliberations Exposure draft Q4 2014
Financial instruments — Impairment Redeliberations Finalised IFRS Q2 2014
Financial instruments — Macro hedge accounting Discussion paper Public consultation Q2 and Q3 2014
Financial instruments — Limited reconsideration of IFRS 9 (classification and measurement) Redeliberations Finalised IFRS Q2 2014
Insurance contracts Re-exposure Redeliberations Q2 2014
Leases Re-exposure Redeliberations Q2 2014
Disclosure initiative — Amendments to IAS 1 Exposure draft Redeliberations Q3 2014
Disclosure initiative — Reconciliation of liabilities from financing activities Redeliberations Exposure draft Q4 2014

* Indicates a change since the prior work plan update.

Changes concerning narrow scope projects are:

Click for the IASB work plan dated 28 May 2014 (link to IASB website). We have updated our project pages to reflect the updated work plan and other known developments.

IASB and FASB issue new, converged revenue standards

28 May 2014

The International Accounting Standard Board (IASB) has today published its new revenue Standard, IFRS 15 'Revenue from Contracts with Customers'. At the same time, the US-based Financial Accounting Standards Board (FASB) has published its equivalent revenue standard, ASU 2014-09 'Revenue from Contracts with Customers' (Topic 606).The standards are the result of a convergence project between the two Boards. IFRS 15 specifies how and when an IFRS reporter will recognise revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard supersedes IAS 18 'Revenue', IAS 11 'Construction Contracts' and a number of revenue-related interpretations. Application of the standard is mandatory for all IFRS reporters and it applies to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts.



The joint revenue project commenced in 2002 and the key objectives of the project were to:

  • remove inconsistencies and weaknesses in existing revenue requirements;
  • provide a more robust framework for addressing revenue issues;
  • improve comparability of revenue recognition practices across entities, jurisdictions and capital markets;
  • provide more useful information to users of financial statements through improved disclosure requirements; and
  • simplify the preparation of financial statements by reducing the number of requirements to which preparers must refer.

The first discussion paper was published in December 2008, and the first Exposure Draft was issued in June 2010. Subsequent to the comment period, a decision was made by the Boards to re-expose the updated proposals. A second Exposure Draft was published in November 2011. The Boards received many comments from respondents and engaged in extensive outreach on their proposals, all of which was taken into account in their re-deliberations. These have resulted in some important changes in the final standards.



IFRS 15 Revenue from Contracts with Customers applies to all contracts with customers except for: leases within the scope of IAS 17 Leases; financial instruments and other contractual rights or obligations within the scope of IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures; insurance contracts within the scope of IFRS 4 Insurance Contracts; and non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers.



  • The new standard provides a single, principles based five-step model to be applied to all contracts with customers. The five steps are:
    • Identify the contract with the customer,
    • Identify the performance obligations in the contract,
    • Determine the transaction price,
    • Allocate the transaction price to the performance obligations in the contracts,
    • Recognise revenue when (or as) the entity satisfies a performance obligation.
  • There is new guidance on whether revenue should be recognised at a point in time or over time, which replaces the previous distinction between goods and services.
  • Where revenue is variable, a new recognition threshold has been introduced by the standard. This threshold requires that variable amounts are only included in revenue if, and to the extent that, it is highly probable that a significant revenue reversal will not occur in the future as a result of re-estimation. However, a different approach is applied for sales and usage-based royalties from licences of intellectual property; for such royalties, revenue is recognised only when the underlying sale or usage occurs.
  • The standard provides detailed guidance on various issues such as identifying distinct performance obligations, accounting for contract modifications and accounting for the time value of money.
  • Detailed implementation guidance is included on topics such as sales with a right of return, customer options for additional goods or services, principal versus agent considerations, licensing, and bill-and hold arrangements.
  • The standard also introduces new guidance on costs of fulfilling and obtaining a contract, specifying the circumstances in which such costs should be capitalised. Costs that do not meet the criteria must be expensed when incurred.
  • The standard introduces new, increased requirements for disclosure of revenue in an IFRS reporter’s financial statements.


Effective date

IFRS 15 must be applied in an entity's first annual IFRS financial statements for periods beginning on or after 1 January 2017. Application of the Standard is mandatory and early adoption is permitted. An entity that chooses to apply IFRS 15 earlier than 1 January 2017 must disclose this fact.

The 2017 effective date has been chosen, in part, to allow time for entities to make changes to systems and processes that may be needed in order to comply with the new Standard.


Additional information

IASB website

FASB website

  • Press release
  • ASU 2014-09:
    • Section A — Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers
    • Section B — Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables
    • Section C — Background Information and Basis for Conclusions
  • FASB in Focus introducing the new standard
  • Three-part video series discussing the objectives, changes, and disclosure requirements in the new standard
  • Joint webcast: Being held 5 June 2014 at 3:00 p.m. BST

IAS Plus

Additional Deloitte guidance

Adopting the new standard will involve a significant amount of work for many entities. Moreover, the impacts of the standard may be very different for different industries and different entities. In some cases, the profile of revenue and profit recognition may change significantly. However, even where this is not the case, the process of reviewing the impact of the new guidance for a particular entity, including the required disclosures, should not be underestimated. In particular, if changes to systems or processes are required, these may take time to implement, making it important that the associated analysis is performed on a timely basis.

Deloitte has produced guidance relating to the new standard, and further guidance will be issued over the next few months.

Further guidance to be issued in due course will include:

  • IFRS industry implementation guides – a more in-depth analysis of the potential implications for various industries

Summary of the EFRAG Supervisory Board meeting details timing of new EFRAG structure

28 May 2014

The summary of the European Financial Reporting Advisory Group (EFRAG) Supervisory Board meeting held on 22 May 2014 has been published on the EFRAG website. One of the points discussed was the effective date of the new EFRAG structure that results from considerations after the publication of the Maystadt report.

During its meeting, the EFRAG Supervisory Board finalised the revised EFRAG Statutes and EFRAG Internal Rules. After a final fatal flaw review by existing and future members these will be submitted to the EFRAG General Assembly for approval on 16 June 2014.

The effective Date of the new documents and thus of the new governance structure is linked to the appointment of the president of the new EFRAG Board. The meeting summary states that the European Commission will only be able to nominate the President of the EFRAG Board after having heard the European Parliament and the Council of Ministers. Given the recent European Parliament elections, the effective date will therefore be at earliest a date in September 2014. In the interim period between 16 June and the effective date the members of the new EFRAG Board will be nominated.

Until the effective date the existing governance structure remains operational under the existing EFRAG Statutes and EFRAG Internal Rules.

Please click for access to the full meeting summary on the EFRAG website.

Agenda for the inaugural meeting of the IFRS Taxonomy Consultative Group

27 May 2014

The agenda is available for the inaugural meeting of the IFRS Taxonomy Consultative Group (ITCG), which be held in London on 29 May 2014. The two major discussion blocks will focus on governance questions and a first batch of content questions.

The agenda is summarised below:

Thursday 29 May 2014 (09:00-17:00)

  • Welcome and introduction of members
  • IFRS Taxonomy Overview - current and future activities
  • Adoption - review of a IFRS Taxonomy jurisdictional survey
  • Governance
    • The IFRS Taxonomy Due Process
    • ITCG working practices
    • Content Transparency – IFRS Taxonomy update document
  • Content
    • Review of proposed common practice additions
      • Pharmaceuticals & Biotechnology
      • Transport
    • Review of revenue recognition and other issues
  • Technology - Data Modelling IFRSs
  • ITCG member updates
  • Wrap-up and administrative matters

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

GRI proposes governance reform

27 May 2014

The Global Reporting Initiative (GRI) has announced a series of proposed governance changes which are designed to strengthen its role as a standard setter for sustainability reporting and enhance global acceptance of its role. The proposed changes include the creation of a separate standard setting side of GRI, including a new Sustainability Reporting Standards Board (SRSB), reforms to due process including a new Due Process Oversight Committee (DPOC), and the creation of an independent appointment process through an Independent Appointments Committee (IAC).

The overall governance structure proposed by the GRI includes the new standard setting arrangements, new protocols for due process and transparency, and the establishment of an independent public funding base for the standard setting activities.

Some of the key features of the proposed standard setting arrangements are set out below:

Sustainability Reporting Standards Board (SRSB)
  • An independent operating entity under the auspices of GRI (and solely funded by it) with sole responsibility for setting globally accepted standards for sustainability reporting, including complete responsibility for all SRSB technical matters
  • Creates Sustainability Reporting Standards (SRSs), related interpretations and guidance, and frequently asked questions (FAQs) which are considered authoritative pronouncements
  • Creates authoritative pronouncements in the public interest, and is sole judge of whether such pronouncements are in the public interest
  • Comprised of 15 members drawn from various identified stakeholder constituencies and appointed for three year terms (renewable once) by the Independent Appointments Committee (IAC)
  • Required to follow due process under a Due Process Protocol (also subject to consultation), including setting its technical agenda, publishing and considering feedback on exposure drafts, considering project working groups, public hearings and field tests (as considered necessary), publishing basis for conclusions with SRSs, and ensuring meetings are open to the public (including making agenda papers and other documents available in advance of meetings)
Due Process Oversight Committee (DPOC)
  • An independent committee under the auspices of GRI (and funded by it) with primary responsibility for ensuring that the standard setting activities of the SRSB are conducted in accordance with its due process
  • Comprised of four ordinary members, plus a Chair, appointed by the Independent Appointments Committee (IAC) for three year terms (renewable once)
  • Confirms due process has been followed before an authoritative pronouncements can be issued, but does not consider any technical assessment of proposed SRSs when forming an opinion on due process
Independent Appointments Committee (IAC)
  • An independent committee under the auspices of GRI (and solely funded by it) with primary responsibility for appointing qualified, competent, disinterested persons, of independent mind, to the Sustainability Reporting Standards Board (SRSB) and the Due Process Oversight Committee (DPOC)
  • Comprised of five members (one elected as a Chair), appointed by the GRI Board on recommendation of the GRI Global Nominations Committee
  • Meets annually or as necessary to fill vacancies in accordance with outlined criteria and other requirements

The GRI governance proposals are open for comment until 9 July 2014. Click for GRI announcement and access to the detailed proposals on the GRI website.

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