May

May 2015 IFRS Interpretations Committee meeting notes posted — part 1

15 May 2015

The IFRS Interpretations Committee met in London on 12 May 2015. We've posted the Deloitte observer notes for the sessions on IAS 16, IAS 21, IFRS 10, and IFRS 13.

Summary of the April 2015 ITCG meeting

15 May 2015

The IASB's IFRS Taxonomy Consultative Group (ITCG) held its meeting on 21 April 2015. The IASB has now published on its website meeting notes from that meeting.

Topics discussed include:

  • IASB’s disclosure initiative including the IFRS Taxonomy — The ITCG was updated on (1) the significant impact on the content of IFRS Taxomony from upcoming publication, (2) IFRS Taxonomy due process trials, and (3) the June launch of the IFRS Taxonomy jurisdictional profiles.
  • Update by regulators — The ITCG received updates from ESMA, SEC, ASIC, and the Ministry of Finance of China related to the IFRS Taxonomy.
  • IFRS Taxonomy roadmap and strategy — The ITCG received an outlook of planned activities for the next six months and provided views on common practice and activities to support regulators.
  • Management of entity-specific disclosures — The ITCG discussed proposed actions that focused on the IFRS Taxonomy review, preparer documentation and guidance, technical mechanisms connecting entity-specific disclosures with IFRS Taxonomy items, IFRS Taxonomy navigation, and a paper on entity-specific disclosures that includes the staff’s views on improvements.
  • Regulator updates of the IFRS Taxonomy — Break-out sessions discussed factors of providing regular updates to the IFRS Taxonomy.

In addition, updates were given on the XII activities, technology, and content areas for review.

Please click for access to the meeting notes on the IASB website.

CFA Institute issues study on investor views on complexity in corporate financial reporting

14 May 2015

The CFA Institute, a global association of investment professionals, has published 'Addressing Financial Reporting Complexity: Investor Perspectives' featuring results of a member survey on the topic. The report analyses what investors believe are unavoidable (transactional) and avoidable (accounting) sources of complexity and how current standard-setter initiatives should be refocused to eliminate avoidable complexity to increase transparency and bring about meaningful change.

The paper argues that the current dialogue focuses largely on preparers' concerns regarding financial reporting complexity and its associated compliance costs. The investors' perspectives would be missing in the debate. Main focus of the report is differential financial reporting. The results show that:

  • 82% of respondents (170 members of the CFA Institute responded to the survey) believe the creation of separate private company standards would create comparability issues for those investing across public and private companies;
  • 65% say it would result in the loss of information useful to their financial analyses;
  • 73% believe it may actually increase complexity instead of lessening it.

Among the aspects of differential reporting that aim at lessening the reporting burden for non-listed companies the investors believe the following could increase, rather than reduce, avoidable complexity:

  • delayed recognition of transaction and events;
  • greater use of cost-based rather than fair-value measures;
  • greater earnings smoothing versus recognition of market/economic events;
  • substituting presentation on the face of the financial statements with disclosure; less disaggregation of information; and fewer roll-forwards, reconciliations, tables, and charts;
  • greater optionality and potentially less comparability of financial statements;
  • reduced disclosure requirements.

The balance between the needs of companies to cut their compliance costs and the needs of investors to receive valuable, decision-useful information also formed part of the comprehensive review of the IFRS for SMEs (an amended standard is expected in the second quarter of 2015) and is also part of the discussions in the IASB's principles of disclosure project.

Similar views are also included in the CFA Institute's response to the European Commission's public consultation Building a Capital Markets Union. The response is based on a survey of CFA Institute members in the EU and Switzerland and concludes:

In general, CFA Institute does not support the creation of differential accounting standards for different entities, whether based upon size or legal structure. Separate financial reporting for SMEs reduces comparability between the financial statements of SMEs and larger companies. Comparability is essential to those who invest across companies of all sizes. Creating differences in the financial reporting requirements of such companies hinders investors’ financial analysis and investment decision-making processes. [...] In the case of the EU, we therefore encourage all companies to adopt a single standard – IFRS. Should the European Commission decide to provide relief to SMEs in the EU, we urge the Commission to consider any relief from IFRS both cautiously and in limited circumstances, especially since some SMEs in the EU are public companies. If the Commission were to consider providing relief for SMEs, such relief should only be considered in the areas of disclosure requirements and effective dates of new accounting requirements.

Please click to access the following information on the CFA Institute's website:

FASB proposes revenue ASU on licensing and identifying performance obligations

12 May 2015

The FASB has issued proposed ASU, 'Identifying Performance Obligations and Licensing', that would amend certain aspects of the Board’s May 2014 revenue standard, specifically the guidance on identifying performance obligations and the implementation guidance on licensing.

The amendments are being made in response to feedback received by the IASB–FASB joint revenue recognition transition resource group (TRG), which was formed to address potential issues associated with the implementation of ASU 2014-09.

Comments on the proposed ASU are due by 30 June 2015.

The IASB intends to issue a separate exposure draft, Clarifications to IFRS 15 Revenue From Contracts With Customers: Issues Emerging From TRG Discussions, in the late second quarter of 2015. 

For more information, see the related Deloitte Heads Up as well as the proposed ASU on the FASB’s website.

IFRS Foundation responds to EC's Green Paper and advocates for IFRS in a Capital Market Union

12 May 2015

The IFRS Foundation has submitted its response to the European Commission's (EC's) public consultation, 'Building a Capital Markets Union'. The project aims to boost growth in the EU with the creation of a single market for capital and break down the barriers that are blocking cross-border investments in the EU and preventing businesses from getting access to finance.

In its response, the IFRS Foundation noted that "the use of a single set of financial reporting requirements is important to the successful achievement of a Capital Markets Union (CMU). The introduction of IFRS in the EU has been beneficial for those companies whose securities are admitted to trading on a regulated market and the Foundation believes that those benefits will hold true for companies, regardless of size, listed on alternative trading venues such as [Multilateral Trading Facilities]."

The IFRS Foundation also emphasised its willingness to work with the EC in considering the financial reporting implications of the CMU.

Click for more information:

New appointments to the IFRS Interpretations Committee

12 May 2015

The IFRS Foundation, the oversight body of the International Accounting Standards Board (IASB), has announced two appointments to the IFRS Interpretations Committee.

Jongsoo Han, a board member of the Korea Accounting Standards Board (KASB) and Vice-President of the Korea Accounting Association, and Robert Uhl, a US-based Partner and National Director of Accounting Standards and Communications at Deloitte & Touche LLP, have both been appointed for a three-year term, commencing 1 July 2015. Mr Uhl had already been appointed to the Committee in an interim capacity until 30 June 2015 in December 2014 following the departure of Laurence Rivat. In addition to the new appointments, John O’Grady and Sandra Peters have been reappointed to serve a second three-year term on the Committee, also commencing in July 2015.

Please click for the IFRS Foundation announcement (link to IASB website).

Agenda for the May 2015 IASB meeting

09 May 2015

The International Accounting Standards Board (IASB) will meet at its offices in London on 18–20 May 2015. Discussion items include rate-regulated activities, IFRS implementation issues, the approach to the IFRS 2 research project, Insurance contracts, revenue recognition, dynamic risk management, financial Instruments with characteristics of equity, and the disclosure initiative.

The full agenda for the meeting can be found here. We will post any updates to the agenda, as well as our Deloitte observer notes from the meeting, on this page as they become available.

Agenda for the June 2015 IFRS Advisory Council meeting

08 May 2015

An agenda has been released for the upcoming meeting of the IFRS Advisory Council, which is being held in London on 9-10 June 2015. The meeting will focus on IASB activities, leases, the IFRS adoption experience in Japan, the IASB Agenda Consultation, the use of IFRS around the world, Trustee activities, and research activities.

A summary of the agenda (as at 6 May 2015) is set out below:

Tuesday 9 June 2015 (09:15-16:15)

  • Welcome and Chairman's introduction
  • Research Activities
    • Overview
    • Rate-regulated activities – agenda decision
    • High inflation – agenda decision
    • Foreign currency translation – agenda decision
  • IFRS adoption experience in Japan
  • IASB Agenda consultation – consultation on contents of request for views
  • Leases – steps after publication of the Standard
  • Trustee activities
    • Key issues – seeking input from the Council
    • EU Capital markets Union consultation

Wednesday 10 June 2015 (09:15-14:15)

  • IASB activities
    • Chairman's report
    • Work plan update
    • ASAF update
    • Other key issues – seeking input from the Council
  • Use of IFRS – jurisdictional filing requirements
  • Sum up discussions

Agenda papers for the meeting will be available in due course on the IASB website.

Chief Accountant of the SEC comments on IFRS in the United States and convergence

08 May 2015

At a financial reporting conference at Baruch College in New York City, Jim Schnurr, Chief Accountant of the US Securities and Exchange Commission (SEC) gave an update on some of the recent activities of the Office of the Chief Accountant as well as some of the current thinking with respect to convergence and IFRS.

At a US Chamber of Commerce conference in early December 2014, Mr Schnurr had introduced the thought of a potential alternative of allowing domestic issuers to provide IFRS-based information as a supplement to U.S. GAAP financial statements without requiring reconciliation. At the annual American Institute of Certified Public Accountants (AICPA) Conference on Current SEC and PCAOB Developments a week later, Mr Schnurr and Julie Erhardt, Deputy Chief Accountant of the SEC, further discussed this possible option.

Obviously, this new thinking triggered many reactions from constituents, including preparers, investors, auditors, regulators and standard-setters. Reactions revealed three key themes:

  • There is virtually no support to have the SEC mandate IFRS for all registrants.
  • There is little support for the SEC to provide an option allowing domestic companies to prepare their financial statements under IFRS.
  • There is continued support for the objective of a single set of high-quality, globally accepted accounting standards.

However, Mr Schnurr pointed out that although there is still support for the single set of high-quality, globally accepted accounting standards, many constituents tend to see more the lack of convergence and shortfalls in the efforts towards it. Mr Schnurr therefore devoted a large part of his speech to the similarities between IFRS and U.S. GAAP. He cited business combinations and consolidations as well as revenue recognition as cases in point. On the leasing and credit impairment standards he admitted the differences but also stressed that the IASB and FASB were able to achieve convergence in many significant respects.

Mr Schnurr also highlighted that although the FASB has started adding more 'FASB only' projects to its agenda, it still very much considers IFRS in setting its agenda and during its deliberations. He concluded:

It is fair to say the FASB and IASB collaborative relationship is at a critical juncture. How often and what kind of interaction is going to occur after the leasing standard is finalized and issued?  What happens to the Norwalk Agreement? Ultimately, how the boards decide to interact in the future is important. I believe that, for the foreseeable future, continued collaboration is the only realistic path to further the objective of a single set of high-quality, global accounting standards.

Please click to access the full text of Mr Schnurr's speech on the SEC website.

April 2015 IASB meeting notes — Part 2 (concluded)

07 May 2015

The IASB met at its offices in London on 27–29 April 2015. We have posted the Deloitte observer notes from the sessions on revenue, inflation and the disclosure initiative.

Click through for direct access to the notes:

Tuesday, 28 April 2015

Wednesday, 29 April 2015

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

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