The topics covered during the meeting included:

• Leases. The meeting considered an update on the IASB's leases project, an overview of the feedback received from an additional consultation undertaken by the European Financial Reporting Advisory Group (EFRAG). ASAF members had mixed views on the EFRAG paper and the definition of a lease (including defining a lease as a financing arrangement) and noted the importance of achieving convergence between the IASB and FASB
• Discount rates. The ASAF members generally supported the IASB's intended scope and research approach in this project, made a number of suggestions on topics to be considered, and emphasised the importance of the interaction of this project with the IASB's projects on the conceptual framework and insurance contracts
• Post-implementation review of IFRS 3. The meeting received a number of updates and reports and highlighted the critical issues of the subsequent accounting for goodwill (where mixed views were expressed) and the definition of a business
• Conceptual framework. The meeting received an update on the IASB's progress in this project and expressed support for the direction being taken, whilst noting a number of concerns. The meeting also considered the tentative decisions made by the IASB on measurement and the implications of long-term investment for the conceptual framework
• Disclosure initiative. The meeting discussed the purpose of notes to the financial statements, the ordering of notes to the financial statements, the role of materiality in addressing the disclosure problem, and the nature of significant accounting policies and improving accounting policy disclosures
• Insurance contracts. The IASB sought feedback from the ASAF members on accounting for contracts with participating features and transition (most preferring retrospective application at the date of transition)
• Financial instruments with characteristics of equity. The meeting discussed whether the project could proceed as a fundamental review of IAS 32 Financial Instruments: Presentation, or whether IAS 32 should be maintained with improvements to presentation and disclosure requirements. Many ASAF members noted the necessity of a fundamental review to provide a better foundation focused on identifying the objectives of the distinction between liabilities and equity, but considered that the IASB "should not necessarily start from an entirely blank sheet of paper".

A full report of the meeting is available on the IASB's website.

Topics discussed during the DPOC meeting were:

Update on technical activities

Updates were given on the progress of the major projects as well as research, implementation and maintenance projects on the IASB's work plan.

• The DPOC noted the issuance of IFRS 9 as the most significant development since its last meeting in July 2014.
• On insurance contracts the DPOC was updated on progress following the responses, outreach and fieldwork that had been undertaken on the proposals in the IASB's revised Exposure Draft. The DPOC noted that, while there was broad support for the proposals, there remained some significant areas of concern, in particular around complexity and accounting mismatches. The DPOC questioned the IASB representatives on the diverse views of constituents on the proposals and how the concerns were being considered and reported on by the Board.
• The DPOC noted that the comprehensive review of the IFRS for SMEs was continuing, and that the IASB at its October 2014 meeting was scheduled to start discussing the issues raised in the responses to the ED.
• A brief discussion on convergence and what had been achieved led to noting that the most notable success had been the issue in May 2015 of IFRS 15.
• On the conceptual framework project, the DPOC was informed that there had been some slight slippage in the timetable and that an ED was now scheduled to be published in early 2015 rather than by the end of 2014. The DPOC noted some preliminary decisions the IASB has made and advised that the rationale for the IASB's view should be set out clearly in the Basis of Conclusions in the forthcoming ED.

The DPOC was also updated on the progress of the projects on macro hedge accounting, the disclosure initiative, and on rate-regulated activities. Further, the DPOC was updated on the progress of a number of the research projects on the IASB's work plan. The DPOC questioned whether the IASB was undertaking all the work itself on the programme, given the resource constraints, and the IASB stated that it has recognised that it needed to consider more the prioritisation and resource allocation. Other updates provided concerned various implementation and maintenance projects and the XBRL Taxonomy.

Leases

At this meeting, the DPOC paid particular attention to the progress on the leases project, in particular considering the concerns raised by some stakeholders and comments that stakeholder views were not always given due weight.The technical staff's view was that the due process requirements had been fully adhered to and had been applied in an appropriate manner for such an important and controversial project. The DPOC acknowledged that the IASB could not respond to each individual comment letter or submission received, especially on projects such as leases that generated a very high level of response, but noted it was important that there was communication from the IASB summarising the major issues raised with the Board and the rationale for the Board's tentative decisions. Following the discussions with the DPOC, the IASB committed to review its public disclosure of the rationale used to reach tentative decisions and conclusions, with special attention to issues that received substantial debate in the exposure process.

Effects Analysis Consultative Group

The DPOC received a progress report on the work of the Effects Analysis Consultative Group (EACG), which had been set up to advise the IASB in developing an agreed methodology for field testing and effects analyses. The DPOC was content with the near final draft report. The DPOC also agreed that it was important that the report was finalised and published as soon as possible, so that the proposals could be embedded into the IASB's process as quickly as possible, to the extent that they were not already reflected in the due process.

Update on consultative groups

The DPOC noted an update on the meetings of a number of the IASB's consultative groups since July 2014 and a forward schedule of group meetings. The Chairman reminded the DPOC that it had a responsibility to monitor the effectiveness of the bodies and consultative groups that supported the IASB and encouraged that a representative of the DPOC should observe at least part of the meetings of each of the major groups once a year and report back to the Committee to validate the breadth of attendance and an appreciation of the quality of dialogue.

Correspondence

The DPOC considered an EFRAG letter proposing that a public 'fatal flaw' review prior to finalising a new Standard or major amendment should be included as a formal step in the IASB's due process. The staff and the IASB will review the suggestion and to revert to the DPOC with the results.

Please click for the full summary of the meeting on the IASB's website.

Click through for direct access to the notes:

Thursday, 23 October 2014

• IFRS for SMEs
• Insurance contracts

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

Current status

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

* Indicates a change since the previous work plan update on 26 September 2014.

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

The summary of the meeting includes the following reports:

Report of the Trustees’ Executive session

• Funding arrangements. Discussion included the need for jurisdictions who benefit from the use of IFRS to contribute towards the cost.
• Self-evaluation exercise. Discussions revolved around the feedback received from the self-assessment exercise perform during the summer of 2014.
• Structure and effectiveness review. The Trustees continued discussions on the upcoming review of the organisation, which included discussions on the theme of the review. Also, the Trustees considered a timetable for the review and chose to use the Executive Committee as the review’s Review Committee.
• ASAF review. Discussion included the terms of reference and what process should be taken for the upcoming review of the ASAF. Further, the Trustees agreed that an extension of current members’ terms is necessary to allow for enough time to complete the review.
• International IFRS developments. Discussion included a number of significant events in Europe (including the European Commission's review of the use of IFRS), a current assessment of the United States environment and the Foundation's approach, and the positive developments in the Asia-Oceania region.
• Advisory Council update. Discussion included the role of the Council and its relevance.
• IASB Chairman report. Hans Hoogervorst provided an update on the IASB's activities, noting issues arising from the insurance contracts and leases projects
• Group of Latin-American Standard-Setters (GLASS). The Trustees were shown the development GLASS has made since the support for IFRS.
• Appointments. The Trustees made appointments to account for retiring members.
• Establishment of an Alumni Network.
• Presentations. The Trustees received presentations from:
  • The Education and Content Services Committee
  • The Audit and Finance Committee

Report of the Vice-Chair of the IASB

Ian Mackintosh, Vice-Chair of the IASB, provided the Trustees with an update on the IASB’s activities including the issuance of IFRS 9, the consultation on Sharia-compliant instruments and transaction and its projects on leases, insurance contracts, conceptual framework, macro-hedging, the review of IFRS for SMEs, and disclosure initiative.

Other developments discussed included the review of the investor engagement strategy and the global use / consistent application of IFRS.

Report of the Chairman of the Due Process Oversight Committee

Scott Evans, Chairman of the Due Process Oversight Committee (DPOC) reported on the recent activities of the DPOC.

Regional outreach activity

As part of the Trustees’ meeting, the IFRS Foundation hosted a joint event with the Consejo Mexicano de Normas de Información Financiera and the Comisión Nacional Bancaria y de Valores to exchange views with Mexican stakeholders.

The full summary of conclusions of the IFRS Foundation Trustees' meeting is available on the IASB website.

In July 2014, three agenda papers were issued to guide the SMEIG in its development of this final report. The agenda papers covered (1) background information, (2) issues addressed by specific questions in the ED, and (3) other issues raised by respondents. The final report contains a summary of all substantive comments made by SMEIG members concerning the questions raised in the agenda papers.

The full report is available on the IASB’s website.

In his keynote speech, Mr Kono shared some of his thoughts on the importance of capital markets in finance for growth, and the critical role that exchanges can and must play in the global capital marketplace. He stressed: "Efforts for strengthening corporate governance and work towards convergence of accounting standards with the ultimate goal of achieving a single set of high quality global accounting standards should be an increasing focus of attention for exchange operators."

Japan's BAC, which concluded its deliberations about the use of International Financial Reporting Standards (IFRSs) in Japan by publishing a final report in June 2013 recommending greater, but not mandatory, use of IFRSs or IFRS-based standards, met again to review the state of use of IFRSs in Japan. There was no substantive decision made, however, the BAC reaffirmed the aim to increase voluntary adoption of IFRSs in Japan and announced that additional measures to this efffect would be considered by the BAC.

The following information is available on the FSA website:

• Keynote address of Mr Kono at the WFE annual meeting
• Notes from the BAC meeting (Japanese only)

In December 2013, EFRAG and ICAS published the results of a literature review on the use of information by capital providers. One of the conclusions of the literature review was that not much direct evidence exists on how financial statements are used by major capital providers. Therefore, EFRAG and ICAS have decided to sponsor an empirical study on the use of financial information by professional investors. The study aims to inform the debate on the IASB Conceptual Framework by assessing professional investors' opinions of financial reporting information. For the study, EFRAG and ICAS are looking for users who are either currently working, or have had experience in the recent past, as buy-side analysts, fund managers or, by other means, have had experience with investment decisions.

Please click for more information on the EFRAG website.

Note: On 16 December 2014 EFRAG and ICAS have extended the interview period for the study to the end of February 2015.

In August 2014, the EC initiated a public consultation where it asked interested parties to provide their thoughts on the impact of IFRS in the EU. In particular, the EC looked for views concerning the scope, relevance, and the cost/benefits of the IAS Regulation; the current EU endorsement mechanism and criteria; quality of IFRS financial statements; and enforcement of IFRSs. The IFRSF letter provides its view on those concerns as well as emphasising two key points.

First, IFRS should be considered as a “global language” for accounting and explains that “jurisdictions have made very few modifications to IFRS, and the few that have been made are generally regarded as temporary steps in the jurisdiction’s plans to adopt IFRS. If jurisdictions such as the EU were to make modifications, they would not be adopting IFRS and so would lose the benefits of using the globally-accepted language of IFRS. EU companies would no longer have the benefit of the global financial reporting passport that IFRS provide, including their ability to access international capital markets using their IFRS financial statements, without reconciliation to local standards. Investors would be deprived of comparable accounts and therefore essential information.”

Second, the IFRSF noted that IFRS is critical in achieving the objectives of the new Commission. The letter states that “[g]iven the global nature of capital markets and the need for comparability within the EU market to mirror internationally-accepted best practice, only IFRS can provide those requirements. The transparent financial reporting provided by companies reporting under IFRS helps participants in capital markets to make more efficient and informed resource allocation and other economic decisions, and makes investment more attractive to capital providers. Having a comparable and familiar financial reporting language is, therefore, a vital feature to encourage the investment that is so necessary for the growth that the Commission seeks for the EU."

The response letter is available on the IASB's website.