The three revised IESs are:

• IES 2, Initial Professional Development-Technical Competence. The revised IES 2 replaces IES 2, Content of Professional Accounting Education Programs and prescribes the learning outcomes for technical competence (ability to apply professional knowledge to perform a role to a defined standard) that aspiring professional accountants are required to demonstrate by the end of Initial Professional Development (IPD)
• IES 3, Initial Professional Development-Professional Skills. This replaces IES 3, Professional Skills and General Education and prescribes the learning outcomes for professional skills (intellectual, interpersonal and communication, personal and organisational) that aspiring professional accountants are required to demonstrate by the end of IPD
• IES 4, Initial Professional Development-Professional Values, Ethics, and Attitudes. Replaces IES 4, Professional Values, Ethics, and Attitudes and prescribes the learning outcomes related to professional behaviour and characteristics that identify professional accountants as members of a profession.

The new pronouncements are part of an IAESB initiative to improve the clarity of IESs. In addition, these new standards ensure consistency with the IAESB's Framework for International Education Standards for Professional Accountants and revise the education requirements such as reconsidering the level and depth of knowledge required as a core competency of a professional accountant. The finalised pronouncements respond to constituent comment on earlier exposure drafts that were issued in July and August 2012, particularly in the areas of title and scope, specific requirements and explanatory material and terminology.

The new standards are effective from 1 July 2015 and are designed to be applied by member bodies of the International Federation of Accountants (IFAC), as they have the primary responsibility for ensuring their Initial Professional Development programmes meet the requirements.

Click for IAESB announcement (link to IFAC website).

Paul Cherry was appointed Chairman of the (then) Standards Advisory Council (SAC) in December 2008.  His initial three year term commenced on 1 January 2009 and was extended in June 2011 for a further two years to end on 31 December 2013. During his term, the SAC was renamed the IFRS Advisory Council and underwent a number of changes.

In his article, Mr Cherry notes the following:

• A number of important changes made to the structure and role of the IFRS Advisory Council, including most members now being appointed as representatives of organisations rather than as individuals
• The appropriateness of the size and composition of the Council, including broad geographic and constituent diversity and efforts to increase representation of financial statement users
• Improvements in feedback from constituents on the performance of the Council
• A change in focus from technical matters to more a strategic and cross-cutting matters, which has been facilitated by the establishment of the Accounting Standards Advisory Forum (ASAF)
• Future changes in the operation of the Council, including topics such as whether the Council should have a higher profile, how the Council should assist the IASB in the promotion and adoption of International Financial Reporting Standards (IFRS), and the consultation process and interaction of the Council's activities with the IASB's current agenda.

In relation to the last two points above, Mr Cherry provides the following assessment:

The strategic focus will need to be a conscious approach in the future, including (i) a longer-term view of the IASB’s agenda beyond the current agenda, (ii) a wider view of the financial reporting environment, including corporate reporting trends and the issues that are likely to affect financial reporting in the future, and (iii) the broader context of corporate reporting and of developments related to corporate reporting. These developments include integrated reporting, technological/digital developments and other areas that are likely to affect financial reporting in the future.

In December 2013, the Trustees announced the appointment of Joanna Perry as Chairman of the IFRS Advisory Council with effect from 1 January 2014.

The full text of Paul Cherry's article is available on the IASB website.

The MoU seeks to assist both organisations in reaching their mutual interests, which include the following:

• The development of their respective reporting frameworks, guidelines and standards to be complementary and compatible with each other.
• Transparency and sharing of relevant and significant information.

The MoU is effective from the date of signing on 17 December 2013 until 31 December 2016, but may be extended by mutual agreement.

For more information, see the press release and the full text of the MoU on the IIRC website.

EFRAG-SDS-paper on the equity method

Currently, the guidance in IAS 28 relating to the application of the equity method lacks clarity and is causing diversity in practice. It is not always clear whether the measurement basis or one-line consolidation concept should be applied to situations and issues that are not specifically addressed in IAS 28. The objective of this SDS paper is to gather feedback from constituents on their views regarding the equity method, which the EFRAG will consider when addressing this issue with the IASB and thus assisting the IASB to develop a clear set of principles for the basis of the equity method.

Comments are requested by 15 May 2014.

For more information, see the press release and the Short Discussion Series paper on the EFRAG website.

EFRAG-SDS-paper on the implications for standard setting following from the results of a literature review on the use of information by captial providers

The academic literature review was published by the EFRAG and the ICAS in December 2013. It examined how capital providers use financial statements. As a second step in its proactive project, EFRAG discusses in this SDS paper the implications for standard setting following from the findings of the academic literature review. While it seems not to be possible to meet the needs of all types of users simultaneously, the findings may, however, provide some directions for, for example, measurement, other comprehensive income, the importance of the statement of profit or loss, and other topics.

For more information, see the press release and the Short Discussion Series paper on the EFRAG website.

In the assessment, he stated that of the 122 jurisdictions profiled by the IASB, 115 have made public statements in support of a single set of global accounting standards. Many of the jurisdictions believe that IFRS should be the global accounting standard. In addition, 101 of the 122 jurisdictions require use of IFRS for most or all domestically listed companies with most the remaining 21 jurisdictions using IFRS to some extent. Further, 57 of the 122 jurisdictions require or permit the use of the IFRS for SMEs.

The article also provides the examples where modifications to IFRS were made by jurisdictions; however, the number of modifications remain limited.

Looking ahead, the report noted that the IFRS Foundation Trustees is conducting research to expand on the number of jurisdictions profiled. Also, the Trustees intend to issue a follow-up survey in early 2014 to (1) review current data for any updates, (2) clarify some information in the original survey, and (3) gather more information on the adoption of IFRS.

For more information, see Paul Pacter’s article, Global Accounting Standards — From Vision to Reality, on the IASB website.

The material was developed to support those teaching IFRS, helping them to progressively develop students' abilities to make the necessary estimates and judgements when applying IFRS and IFRS for SMEs. The material is presented in three stages, to accommodate students at different levels in their learning process:

• Stage 1 — A student’s first financial reporting course.
• Stage 2 — A financial reporting course midway to qualifying as a CA or CPA.
• Stage 3 — A course immediately before qualifying as a CA or CPA.

The additional educational material is presented in four parts:

• Stage 3 material covering the IAS 8 hierarchy.
• Multimedia presentations introducing IFRS teachers to Framework based teaching and other material.
• Updates to non-financial assets (2014 edition) material in Stages 1 through 3.
• Chinese, Portuguese, and Spanish translations are updated for IAS 8 hierarchy and non-financial assets.

For more information, see (links to IASB website):

• Press release on the IASB website with links to the teaching material.
• Upcoming IFRS teaching sessions being held worldwide.

After the IASB had published its revised Exposure Draft Insurance Contracts on 20 June 2013 EFRAG and the National Standard Setters from France, Germany, Italy and the UK, in coordination with the IASB staff, carried out a field-test on the proposed new requirements from July to October 2013.

The focus of the field test was the practical application of the new requirements and was intended to gather solely facts and objective data, rather than views and opinions.

The most commonly stated areas of concern related to: 

Applying the 'mirroring approach' to contracts that specify a link to the returns on underlying items.

Applying the revenue proposals to life insurance contracts.

The mandatory requirement to use other comprehensive income for presenting the effects of changes in the discount rate on insurance.

More information on the results of the field test are available on the EFRAG website.

The new Advisory Council members are:

• Olav Jones — Insurance Europe.
• Anne Simpson — Council of Institutional Investors.
• Surya Subramanian — Emirates NBD.

This is the second wave of appointments for 2014 (see previous article), which leaves two remaining appointments to be made.

The press release is available on the IASB’s website.

Some key suggestions made in the comment letter include:

To serve its intended purpose, the Board should treat the Framework as a living document to be updated as necessary to keep pace with changes in thinking on conceptual matters. There should be an established process for reviewing the Framework on a recurring basis. Unless the Framework is kept up to date, there is a risk of tension and conflicts between the Framework and conclusions that the Board reaches in individual projects. As the IASB develops new standards, it should have such a process to evaluate whether decisions it makes are consistent with the Framework. Departures should be identified and justified.

The IASB should have a plan for identifying and addressing any conflicts between the concepts and guidance in a revised Framework and existing IFRSs. It should identify any existing requirements that are contrary to the revised Framework and an action plan for resolving such conflicts. It would be unhelpful and potentially confusing to permit conflicts to exist for an extended period of time, in particular since those who apply and interpret existing IFRS requirements do so in the context of the Framework as it exists at any given time (see, for example, IAS 8.11).

The IASB should not amend the Framework to include new ideas and concepts that have not been fully deliberated and tested. This is another reason that the Framework should be a living document and amended only as work in different areas is completed.

The IASB should provide an appropriate level of detail in the Framework. The Framework should provide sufficient detail in its discussion of concepts such that it is clear how they are intended to be applied. However, the Framework should not to go into excessive detail about the accounting for particular transactions or events (e.g., how to measure or present particular transactions or when to derecognise elements of the financial statements). The IASB should not ‘hardwire’ views on accounting issues that would more suitably be resolved in individual standard-setting projects. In some areas, the discussion paper is too general and does not go into sufficient detail to be helpful (e.g., in Section 9 related to unit of account). In other areas, the discussion paper goes into more detail than seems suitable for a framework document (e.g., in Section 5 on distinguishing between liabilities and equity).

Click for access to the full comment letter.