We are supportive of the IASB in the development of an approach to account for dynamic risk management activities; however, we do not support the Portfolio Revaluation Approach as stated in the discussion paper because it will (1) conflicts with the accounting principles in the conceptual framework, (2) require risk management activities to be defined in order to determine what is in or out of the revaluation model, and (3) not build on the classification, measurement and general hedge accounting concepts already established in IFRS 9. In addition, we believe that a portfolio hedging solution should be examined for insurers and other non-financial entities.

We also believe that an approach that combines existing thinking in IFRS 9 with the ability to behaviouralise cash flows on a portfolio basis (including core deposits) and allowing bottom layers to be designated has the potential to be more relevant than the existing portfolio fair value hedge accounting model in IAS 39.

Click for the full comment letter.

The paper is structured into five sections:

• Why does the European Commission deal with EU Member States’ public sector accounting?
• Why does the European Commission suggest developing European Public Sector Accounting Standards (EPSAS)?
• How did the EPSAS project proceed?
• The FEE position on EPSAS
• What are the next steps in the EPSAS project?

In the briefing paper, FEE continues to stress that a global solution (which alsready exists in International Public Sector Accounting Standards (IPSAS)) is the preferred solution. In an issues paper published in March 2014 FEE had already outlined a number of significant concerns in connection with EPSAS. Given, however, the urgent need for a reform of public sector accounting with the objective of greater transparency and accountability, FEE states that "EPSAS could be acceptable to encourage EU Member States to move towards accrualsbased accounting and increase the quality of their reporting" if a number of conditions are met.

After recently releasing a study analysing the potential costs and benefits of implementing EPSAS in the Member States and the suitability of IPSAS for developing EPSAS, next steps in the project are a European Commission 'Communication regarding EPSAS' and an 'Impact Assessment regarding an EPSAS Framework Regulation'. Both are expected in October 2014.

Please click for access to the briefing paper on the FEE website.

The website EPSAS.eu - an online project initiated by the University of Hamburg (Germany) and the University of Linz (Austria) - offers comprehensive information about the idea of implementing EPSAS. Please access the site's news section for access to all documents published so far.

The Sustainable Stock Exchanges initiative (SSEI) was founded in 2009 by the United Nations to exchange experience in the development and promotion of corporate social responsibility and responsible investment among investors, listed companies, regulators and capital market infrastructure institutions. The SSEI prepares biennial reports providing a periodic picture of sustainability initiatives implemented by stock exchanges and regulatory bodies around the world. The reports also highlight current best practices, trends, opportunities and challenges. Some key findings of the 2014 report are:

• Over forty per cent of the 55 exchanges reviewed offer at least one index integrating social and/or environmental issues;
• Over one-third of the exchanges provide either sustainability reporting guidance or training to the listed companies on their exchange;
• Twelve of the 55 exchanges require aspects of environmental and social reporting for at least some of their companies, with 7 of those exchanges requiring such reporting for all listed companies;
• 19 members of the G20 have at least one regulation in place requiring disclosure of some social and/or environmental metrics by companies;
• Of the 32 Securities regulators represented on the board of the International Organization of Securities Commissions (IOSCO), more than one-third have introduced a sustainability reporting initiative.

However, the report also notes:

While a 'new mainstream' is emerging among policymakers, regulators and exchanges, the sustainability challenges the world faces remain enormous. Further progress by exchanges and their regulators is particularly important given the wider sustainable development context, and the expected introduction of the UN Sustainable Development Goals in 2015. At present, financial markets are not set up to channel sufficient funds towards sustainable development objectives.

Please click for access to the report and a press release on the SSEI's 2014 Global Dialogue (links to SSEI website). The SSEI currently counts 16 partner exchanges from every continent; most recently, Deutsche Börse joined the initiative (link to Deutsche Börse website).

The objective of the two consultations (one focused on preparers and one focused on users) was to obtain constituents' views on examples of transactions that would qualify as leases under the proposals, but that in the constituents view are in substance services, and the two alternative approaches proposed by the IASB and the FASB (particularly which is more appropriate and/or less costly to apply). The preliminary results of the consultations were discussed at the outreach event.

The main findings of the survey were:

• Respondents provided several examples of transactions that would qualify as leases under the 2013 ED proposals, but in the constituents' view should not be recognised on a lessee's balance sheet.
• Constituents noted that more work had to be done on the scope of application and/or on the definition of a lease.
• Of the two approaches that surfaced during the March 2014 joint meeting where the IASB and FASB did not reach a consensus regarding lessee accounting, users preferred the IASB approach while preparers' views were mixed and only a slight majority preferred the IASB model.

Please click for access to the reports on the EFRAG website:

• Feedback report from the public consultations
• Summary report on the outreach event

The new website was developed as a result of user feedback. The three-tiered subscription levels include:

• eIFRS Professional — Provides access to authoritative, annotated versions of IFRS and supporting materials. A new "standards comparison tool" allows users to view changes to a Standard between current, prior and subsequent years. Existing subscribers to eIFRS will automatically be upgraded to eIFRS Professional.
• eIFRS Comprehensive — Includes a subscription to eIFRS Professional as well as offline, print editions of the Standards and other materials.
• eIFRS Basic — Provides users with limited access to the basic IFRS Standards.

More information is available in the IASB's press release and on the eIFRS website.

Final endorsement of IFRS 15 is currently expected in the second quarter of 2015.

The report also reflects that vote of the Accounting Regulatory Committee (ARC) on three amendments to standards (bearer plants, acceptable methods of depreciation, and acquisitions of interests in joint operations) has been postponed to the first quarter of 2015.

The endorsement status report, dated 15 October 2014, is available here.

Mr Prada made the case for global reporting standards by stressing that these liberate companies from the burden of complying with different, and often incompatible, national accounting requirements, give investors access to revenue and profit numbers all calculated on the same basis regardless of the country they are calculated in, and provide market supervisors and government leaders around the world with a standardised set of performance metrics on which to build globally consistent regulatory initiatives. He noted: "[I]t is in everyone's interest to reduce friction in the global system. That is what IFRS does."

However, Mr Prada also warned that these benefits can only fully be realised when IFRSs are adopted as issued by the IASB:

Of course, global standards only function properly if everyone adheres to them. As tempting as it may be for jurisdictions to pick and choose those standards that appeal and omit those that do not, doing so would undermine the very essence of what we are aiming to achieve. The reality is that if you want to reap the benefits of global standards, then everyone must commit themselves to adopt the same, single set of high quality standards.

Turning to the ISAR meeting's overall topic of monitoring of compliance and enforcement of international corporate reporting standards and codes he admitted that although IFRSs are a success story, adoption of them can only be part of the package. As a next step, it must ensure that the standards are being used correctly and consistently within a strong regulatory and legal framework. In this connection he mentioned that the IASB does not have the mandate nor the resources to enforce and monitor application of the standards that it creates. That would be up to governments, financial regulators, and auditors in individual jurisdictions.

Nevertheless, as Mr Prada pointed out, the IFRS Foundation has undertaken a number of initiatives aimed at promoting the correct use and application of IFRSs. In September 2013 for example, the IFRS Foundation and the International Organization of Securities Commissions (IOSCO) announced that the two organisations will deepen their cooperation in the development and implementation of IFRS on a globally consistent basis. And in July 2014 this was followed by similar agreement with the European Securities and Markets Authority (ESMA). Mr Prada also highlighted the efforts of the IFRS Foundation Education Initiative that produces freely available training material that is also translated into all of the world's most widely spoken languages and offers regional multi-day IFRS teaching workshops, especially in the emerging markets.

Summing up the initiatives of the IFRS Foundation, Mr Prada expressed the hope that these efforts should bring great long-term benefits to the global financial reporting community:

By improving the quality of accounting in every jurisdiction, we are not only working to the benefit of those individual countries. We are also contributing to the overall health of the global financial system.

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

Today's morning session also saw a keynote adress by Gonzalo Ramos, Secretary-General of the Public Interest Oversight Board (PIOB), and presentations by Richard Thorpe, Head of Accounting and Auditing Issues and Policy of the  Financial Stability Board (FSB), Gert Luiting, Advisor at the International Forum of Independent Audit Regulators (IFIAR), Mike Hathorn, Board Member of the International Federation of Accountants (IFAC), Teresa Fogelberg, Deputy Chief Executive of the Global Reporting Initiative (GRI), and Neil Stevenson, Brand Director of the International Integrated Reporting Council (IIRC). All speeches are available on the general homepage of the thirty-first ISAR meeting (under the tab "Presentations").

Highlights included approval of the following documents by EFRAG TEG:

• an invitation to comment relating to the endorsement for use in the European Union and European Economic Area of IFRS 15 Revenue from Contracts with Customers (not published yet);
• final endorsement advice on bearer plants;
• a final comment letter in response to ED/2014/2 Investment Entities: Applying the Consolidation Exception (Proposed amendments to IFRS 10 and IAS 28);
• a final comment letter in response to IOSCO's proposed guidance on the presentation of non-GAAP financial measures.

Additional topics discussed in the newsletter are:

• IFRS 3 - Post-implementation review
• Discount rates
• Disclosure initiative
• Financial instruments with characteristics of equity
• Leases
• Conceptual framework
• IFRS 9
• IASB’s annual improvements to IFRS (2012-2014 cycle)
• Equity Method in Separate Financial Statements (Amendments to IAS 27)
• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
• Insurance contracts
• ED/2014/4 Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value (Proposed amendments to IFRS 10, IFRS 12, IAS 27, IAS 28 and IAS 36 and Illustrative Examples for IFRS 13)
• IASB Discussion Paper on Macro Hedging

Please click for the new issue of the EFRAG Update (link to EFRAG website).

The full agenda for the meeting, dated 13 October 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.