February

IFRS Foundation conference in Paris announced

11 Feb 2015

The IFRS Foundation announced the dates for its conference in Europe, which will be held in Paris on Monday 29 June 2015 and Tuesday 30 June 2015. The conference will feature presentations by Hans Hoogervorst, Chairman of the IASB, and Michel Prada, Chairman of the Trustees of the IFRS Foundation.

Substantial break-out sessions will focus on implementing major new IFRSs - IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

The conference will also feature:

Plenum meeting: Interactive break-out sessions led by IASB members and senior staff:
  • Welcome address: Hans Hoogervorst, Chairman, IASB
  • Keynote address: Michel Prada, Chairman of the Trustees, IFRS Foundation
  • Keynote address: Gérard Rameix, Chairman, Autorité des Marchés Financiers (AMF)
  • IASB update
  • Principles of disclosure
  • Panel discussion - IFRS disclosure innovations
  • Financial instruments: accounting for macro hedging
  • Leases
  • Rate-regulated activities and emissions trading schemes
  • Conceptual Framework (two sessions)
  • Insurance contracts
  • Financial instruments with characteristics of equity
  • Business combinations under common control

Additional conference details, including registration, are available on the IASB website.

IASB proposes amendments to IAS 1 to clarify the classification of liabilities

10 Feb 2015

The International Accounting Standards Board (IASB) has published an Exposure Draft (ED) of proposed amendments to IAS 1 'Presentation of Financial Statements'. The amendments aim at a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. Comments are requested by 10 June 2015.

 

Background

The issue was originally adressed as part of the annual improvements project 2010 -2012 cycle. Exposure Draft ED/2012/1 Annual Improvements to IFRSs (2010—2012 Cycle), published in May 2012, proposed amendments to IAS 1.73 to clarify that a liability is classified as non-current if an entity expects, and has the discretion, to refinance or roll over an obligation for at least twelve months after the reporting period under an existing loan facility with the same lender, on the same or similar terms. During 2013, however, the IASB decided not to finalise the amendment, but instead pursue a narrow-scope project to refine the existing guidance in IAS 1 on when liabilities should be classified as current.

 

Suggested changes

The amendments proposed in ED/2015/1 Classification of Liabilities (Proposed amendments to IAS 1) aim at:

  • clarifying that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period by amending IAS 1.69(d) and IAS 1.73 so that both paragraphs refer to the "right" to defer settlement and both make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability;
  • making the link clear between the settlement of a liability and the outflow of resources from an entity by adding to IAS 1.69 that settlement refers to the "transfer to the counterparty of cash, equity instruments, other assets or services"; and
  • reorganising the guidance in IAS 1 with respect to classification of liabilities as current or non-current by deleting IAS 1.74–76 and moving their content to the expanded and renumbered paragraphs IAS 1.72R and IAS 1.73R so that similar examples are grouped together.

 

Effective date and transition requirements

The ED does not contain a proposed effective date. However, the ED proposes that the amendments would be applied retrospectively and that early application should be permitted.

 

Additional information

Please click for:

Summary of the December ASAF meeting now available

10 Feb 2015

The staff of the International Accounting Standards Board (IASB) have made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 4-5 December 2014. The meeting saw discussion on the disclosure initiative, emissions trading schemes, rate-regulated activities, leases, post-employment benefits, dynamic risk accounting, the equity method of accounting, foreign currency translation, inflation accounting, insurance contracts, current projects and research, the 2015 agenda consultation, and the IASB's agenda.

The topics covered during the meeting included:

  • Disclosure initiative. The meeting considered the principles of disclosure in connection with the statement of cash flows and related disclosures. Some ASAF members suggested that the objective of the statement of cash flows needs to be identified. In addition, some ASAF members also suggested to also undertake research into the statement of financial position and the statement(s) of profit or loss and other comprehensive income (OCI) at the same time as researching the statement of cash flows.
  • Emissions trading schemes. As the project is still in the preliminary stages of research, the discussion consisted mainly of seeking ASAF members' views on the scope of, and approach to, the project.
  • Rate-regulated activities. ASAF members were invited to share their preliminary views on the Discussion Paper on rate regulation and to seek clarification from the staff of any issues related to the DP. A FASB representative provided a summary of the guidance in US GAAP to provide some background about why regulatory balances are recognised as assets and liabilities. The EFRAG representative provided a summary of targeted outreach EFRAG has undertaken with users of the financial statements.
  • Leases. The IASB staff presented an update on the project on leases and provided a summary of the most important tentative decisions reached to date. Convergence was discussed at length with some members stating that convergence was critical to the project and IASB and FASB should discuss again their tentative decisions on the lessee accounting model. The FASB representative explained that the FASB is not considering changing its tentative decision. Other members stated that achieving a higher quality solution was more important than achieving convergence.
  • Inflation accounting. GLASS presented a paper considering inflation accounting and how IAS 29 Financial Reporting in Hyperinflationary Economies could be improved. It was argued that the current threshold for hyperinflation was late in recognising hyperinflation conditions. ASAF members recommended that the IASB should consider a short-term project in order to review changing the threshold in IAS 29. In addition, the IASB might also consider a longer-term project on the accounting concepts for inflation accounting in general.
  • Foreign currency translation. The IASB staff explained that the IASB has decided to reclassify the research project on foreign currency translation from short-term to longer-term. Depending on feedback during the agenda consultation, the IASB might even consider removing it from the research programme altogether. The staff noted that the IASB would consider specific narrow-scope issues in respect of IAS 21 that are brought to its attention separately from any research project.
  • Post-employment benefits. The IASB staff introduced the research project on post-employment benefits and sought ASAF members’ views on the scope and approach. The IASB staff has the preliminary idea to explore conceptually a single measurement model for pension plans. ASAF members supported scope and approach of the project.
  • Dynamic risk accounting. The IASB staff provided a summary of the feedback received during outreach meetings on the Discussion Paper and CASB and AASB presented their findings from outreach conducted. Views were mixed. While there is support for developing a new model that reflects dynamic risk management activities, there is also a preference for improvements to the existing accounting models. It was also noted that views differ between preparers and users. ASAF members pointed out that non-financial entities tend to think the dynamic risk accounting is not applicable to them as the analysis in the DP is focused on banks. ASAF members also stressed that disclosures would play a significant role regardless of the direction of the project.
  • Equity method of accounting. The KASB presented a research report on the equity method and the ASBJ presented the results from a survey it has undertaken on the topic.
  • 2015 Agenda consultation. The meeting discussed the next agenda consultation, which is due to take place in 2015. ASAF members agreed with the proposal that the consultation should seek input on how and which projects that are part of the research programme should be prioritised. However, there should also be the opportunity to recommend new projects or the removal of projects. The consultation should identify the available resources of the IASB and its staff and it should be explained that ambitions need to be matched to the resources available. ASAF members also warned of too many narrow-scope projects and reminded the IASB of the desired period of calm.
  • Insurance contracts. The meeting discussed recent developments in the insurance contracts project, including the IASB’s tentative decisions on transition as well as the accounting for contracts with participating features and disclosures.

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

IASB podcast on progress in the insurance project

10 Feb 2015

The IASB has published a podcast that summarises the IASB's tentative decisions on transition reliefs in the IFRS on insurance contracts that is currently being developed. The earliest possible mandatory effective date of this new standard will be after 1 January 2018, the mandatory effective date of IFRS 9 'Financial Instruments'.

The tentative IASB decisions discussed in the podcast are:

  • to confirm the transition relief proposals in the 2013 ED;
  • to consider providing further transition relief to permit or require an entity to reassess the business model for financial assets at the date of initial application of the new standard; and
  • not to consider deferring the mandatory effective date of IFRS 9 for entities that issue insurance contracts.

Please click here to listen to the podcast (link to IASB website). In addition, Deloitte has followed the redeliberations of the IASB and all tentative decisions to date; see our insurance contracts project page for details.

IASB publishes update on the conceptual framework project

09 Feb 2015

The staff of the IASB has published a document setting out the key tentative decisions made by the IASB up to the end of January 2015 that affect the proposals in the discussion paper on the conceptual framework.

On 18 July 2013, the IASB issued Discussion Paper A Review of the Conceptual Framework for Financial Reporting to consider areas where revisions and amendments of the existing conceptual framework was needed. This project update summarises the effects of the redeliberations on various topics which have been substantially completed. An exposure draft is expected in the first quarter of 2015.

For more information, see the document on the IASB’s website. In addition, Deloitte has followed the re­de­lib­er­a­tions of the IASB and all tentative decisions to date; see our conceptual framework project page for details.

'EFRAG Update' for January

09 Feb 2015

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during January 2015.

The Update reports on the meeting of the EFRAG Board on 14 January and the meeting of the EFRAG Technical Expert Group (EFRAG TEG) on 28 - 30 January as well as written procedures of the EFRAG Board in January and two EFRAG TEG conference calls. The Update also lists EFRAG publications issued in January:

  • a letter to the Trustees of the IFRS Foundation as part of their review of the Accounting Standards Advisory Forum (ASAF),
  • a letter to the IFRS Interpretations Committee regarding tentative agenda decisions on the application of IFRS 11 Joint Arrangements,
  • final comment letters in response to the IASB Exposure Drafts ED/2014/3 Recognition of Deferred Tax Assets for Unrealised Losses and ED/2014/4 Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value and the IASB Discussion Paper DP/2014/2 Reporting the Financial Effects of Rate Regulation,
  • a feedback statement summarising constituent input and how it was taken into account in the finalisation of the comment letter in response to the IASB Discussion Paper DP/2014/1 Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging.

Agenda for the February 2015 IASB meeting

06 Feb 2015

The International Accounting Standards Board (IASB) will meet at its offices in London on 18–20 February 2015. Part of the meeting will be held jointly with the Financial Accounting Standards Board (FASB) to discuss revenue recognition. Additionally, the IASB will discuss the IFRS for SMEs, rate-regulated activities, insurance contracts, disclosure initiative, dynamic risk management, leases, IFRS implementation issues, and post-implementation review of IFRS 3.

The full agenda for the meeting, dated 6 February 2015, 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.

Hans Hoogervorst speaks about Ind AS as a 'stepping stone towards full IFRS adoption'

05 Feb 2015

At an IFRS Foundation conference in Mumbai, IASB Chairman Hans Hoogervorst commended India for the progress with the new Indian Accounting Standards (Ind AS) that are converging with IFRS, but also pointed at the benefits of full IFRS adoption.

In January 2015, the Indian Ministry of Corporate Affairs (MCA) released a revised road map for the adoption of Ind AS and said that the notification of the standards themselves would follow "shortly". Mr Hoogervorst called the Indian IFRS developments "impressive achievements" and commented that "the new Ind AS should be considered as a very important stepping-stone on the path to adoption of IFRS". He also listed the benefits of embracing IFRS:

  • a public commitment to high standards in corporate governance and reporting,
  • a most likely fall in the cost of capital,
  • a passport to access almost every capital market in the world, and
  • acquisition of a skill set that is internationally recognised and highly sought after.

Yet Mr Hoogervorst warned that stopping at convergence without in the end fully adopting IFRS might mean that India will not reap the full benefits:

At the same time, we have to acknowledge that the new Ind AS will not be the same as IFRS. The current proposals contain one major and several minor differences. Even if the final differences with full IFRS turn out to be small, their effect in terms of international recognition could be big.

Foreign investors do not have the time or the resources to study the intricacies of accounting standards. They want to see the well-known brand of IFRS: anything else makes them raise their eyebrows. So for India to draw the full benefits of IFRS, it is very important that the Indian carve-outs should not only be small; they should also have a limited lifetime. It is important that investors see them as only an intermediate step on the way to full IFRS.

Indeed, the danger would otherwise be that Indian companies would incur the full cost of transition to a new standard without receiving the full benefits and international recognition that come with IFRS adoption.

Mr Hoogervorst also spoke about the fear that adoption of IFRS leads to a loss of national sovereignty in accounting standard-setting. He pointed at the many other jurisdictions that have adopted IFRS and commented: "I do not believe that all these jurisdictions have simply rescinded their sovereignty in accounting standards. They have instead made a free choice to pool their standard-setting in an international organisation." He also stressed the IASB's ability and willingness to listen carefully to its stakeholders and promised to continue the close working relationship with India that sprang up in the recent months in the years to come.

The full transcript of Mr Hoogervorst's speech is available on the IASB's website.

GRI document on linking G4 Guidelines and the new EU Directive on disclosure of non-financial and diversity information

05 Feb 2015

The Global Reporting Initiative (GRI) has published 'Making headway in Europe', a new linkage document that shows how companies can use GRI's G4 Guidelines to comply with the European Directive on disclosure of non-financial and diversity information.

According to the new Directive, which entered into force in December 2014 and must be transposed into national law by the Member States by December 2016, large public-interest companies with more than 500 employees are required to disclose relevant and material environmental and social information in their annual reports. The linkage document specifies how G4 can be used to gather information, and formulate responses, to each element of the European Directive. Making headway in Europe can be downloaded for free from the GRI website.

EFRAG issues final endorsement advice on annual improvements 2012-2014

04 Feb 2015

The European Financial Reporting Advisory Group (EFRAG) has submitted to the European Commission its endorsement advice letter on the amendments resulting from the 2012–2014 cycle of annual improvements.

EFRAG supports the amendments. The EFRAG's assessment is that benefits for preparers and users implementing the amendments outweigh the costs and therefore EFRAG recommends that the European Commission (EC) endorses the amendments.

Click for the following information on the EFRAG website:

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