December

Report from recent IFASS meeting released

04 Dec 2014

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held in London on 30 September and 1 October 2014.

Highlights from the meeting included:

IASB research programme

Participants discussed the role of research in the standard‐setting process, the role of national standard setters and the priority and longer‐term projects on the IASB's research programme. Projects discussed were:

  • Dynamic risk management,
  • Business combinations under common control,
  • Discount rates,
  • Equity method of accounting,
  • Financial instruments with characteristics of equity,
  • Foreign currency translation,
  • Income taxes,
  • Liabilities – amendments to IAS 37,
  • Performance reporting,
  • Rate‐regulated activities,
  • Post‐employment benefits, and
  • Extractive activities / Intangible assets / R&D activities.

The Chairman also asked participants to advise the IASB of potential research topics not on the list yet.

IPSASB matters

Participants discussed the IPSASB's Conceptual Framework project as the IPSASB's main strategic project at present and other current projects. It was stated stated that guidance on social benefits is a big gap in IPSASB's literature. In connection with the question of IPSASB governance it was mentioned that it is likely that IPSASB will remain under the aegis of IFAC with a separate oversight board.

Administrative matters

The next IFASS meeting's location was moved from Jordan to Dubai; the timing (23-24 March 2015) was not changed.

Report back on IFASS member projects

Participants discussed four projects run by IFASS members: 'Goodwill impairment and amortisation' (OCI, EFRAG, ASBJ), 'The equity method' (EFRAG), 'Cash flow statement issues' (FRC), and 'Separate Financial Statements' (EFRAG, ICAC, OIC, RJ).

Economic consequences of IFRS adoption in Korea

The Chairman of the Korea Accounting Standards Board explained that the adoption of IFRSs in Korea was proceeding well. He provided details of the IFRS adoption process in Korea, compared Korean GAAP with IFRSs and gave details of a relevant literature review.

Changes to the Interpretations Committee processes

The IASB representative explained that the IASB is seeking better evidence of diversity in practice and asked participants to share examples of such diversity with the IASB staff. He also mentioned that the IASB is seeking to get a local perspective on how jurisdictions gather feedback and asked asked to be advised if there is an overlap as to whom the IASB asks for feedback as the IASB relies on feedback from many sources. Participants discussed NIFRICs (negative IFRIC agenda decisions) at length, which are seen by some as being equivalent to authoritative literature. The IASB representative explained that in some instances, NIFRICs could be regarded as educational material in nature. Participants felt that the discussion was in danger of undermining the concept of principle‐based standards as it was important to be sure what is authoritative and what is educational. The IFASS Chairman commented that the Interpretations Committee could indicate in the NIFRICs that the Committee's comments should be viewed as being educational in nature but are not authoritative.

Topical Issues

Participants then discussed several topical issues:

  • Retirement benefit plans,
  • Presentation of reversals of acquisition step‐ups,
  • Income recognition during the construction phase in the case of service concession
    arrangements, and
  • EU Expert Group on the evaluation of the IAS Regulation.

New IFASS member projects

Participants discussed three new projects taken up by IFASS members: 'The Financial Reporting Lab' (FRC) including information on the Lab's purpose, structure and current projects; 'Not‐for‐profit reporting in the private and public sectors' (AcSB), which was supplemented by participants with information about the reporting regimes in various jurisdictions; and 'Classification of claims' (EFRAG), which was greeted by participants as "very helpful in dealing with an age‐old problem".

Please click for the full report (link to the website of the Malaysian Accounting Standards Board).

Responses to the European Commission consultation on the impact of IFRSs in the EU

03 Dec 2014

The European Commission has made available the responses received to the public consultation on the impact of IFRSs in the EU.

The consultation had been launched in August 2014 to examine whether the adoption of IFRS improved the efficiency of EU capital markets by increasing the transparency and comparability of financial statements.

Access to the responses received is available here. The European Commission is expecting to publish a summary results of the consultation soon.

Leading investment firms join a new IASB feedback programme

02 Dec 2014

The International Accounting Standards Board (IASB) has announced the launch of a new 'Investors in Financial Reporting' programme designed to foster greater investor participation in the development of International Financial Reporting Standards (IFRS).

At the heart of the programme is statement of shared beliefs, signed by all participants, that:

  • highlights the importance of high quality, transparent reporting for building trust in the capital markets and for making investment decisions;
  • publicly reaffirms the IASB's commitment to continue to seek and consider investor views in the development of new accounting standards; and
  • documents the investors community's commitment to the development of high quality financial reporting standards by working with the IASB to ensure that the investor perspective is articulated clearly and is considered in the standard-setting process.

As part of the programme, the investment firms commit to an ongoing dialogue, executive level support of the programme and access to analysts and portfolio managers. In return, the IASB has committed to providing an improved channel through which to influence standard development, developing investor-tailored webcasts, providing investor-friendly articles on proposed changes, providing access to IASB members and staff, and providing investor-focused education sessions.

Please click for more information on the new programme on the IASB's website.

Hans Hoogervorst discusses the impending European evaluation of IFRS

01 Dec 2014

IASB Chairman, Hans Hoogervorst gave a speech today at the European Parliament Committee for Economic and Monetary Affairs in Brussels titled 'Building a credible Capital Markets Union'. He welcomed Europe's ambition, noted the importance of proper regulation, and emphasised the importance of IFRS in attracting capital from around the world. Mr Hoogervorst also discussed the European Commission's impending evaluation of IFRS in the EU.

Mr Hoogervorst stated:

As you know, the Commission is currently evaluating the impact of IFRS in the EU. We do not expect this evaluation to say that IFRS is perfect, because we know it is not. Still, we feel pretty confident that the verdict will be that, overall, IFRS has had a positive impact on the European economy.

The IASB Chairman also discussed some potential 'critical remarks' that the Commission's report may contain and noted that the IASB will take the feedback constructively:

We acknowledge financial statements may have become too long. We are reviewing our disclosure requirements to reduce the overload of boilerplate disclosures. We understand the concerns of investors who fear unwarranted profit taking on the basis of flimsy valuations. In our new Conceptual Framework for Financial Reporting, we will make clear that prudence should be exercised to prevent overstatement of assets and profits. We are also against understatement of liabilities, which is why lease commitments need to brought to the balance sheet.

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

Introductory conference call of the IASB's ITG

01 Dec 2014

The Transition Resource Group for Impairment of Financial Instruments (ITG) will hold an introductory conference call on 3 December 2014.

The ITG was created to keep the IASB informed on issues occurring during implementation of the new impairment requirements in IFRS 9 Financial Instruments, to assist in determining what action may be needed to resolve diversity in practice and to provide a public forum for stakeholders to learn about the new impairment requirements from others involved with implementation. The first face-to-face meeting of the group was planned for the last quarter in 2014. However, the agenda papers for the conference call state: "We have yet to receive many substantive technical implementation issues on the impairment requirements of IFRS 9 that meet the submission criteria." Therefore, the first physical meeting will be replaced by a conference call to discuss operating procedures and the status of implementation. Please click for access to a detailed agenda and the agenda papers for the call on the IASB website.

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