May

Updated research report reviewing academic research into the effects of mandatory adoption of IFRS in the EU

07 May 2015

The Institute of Chartered Accountants in England and Wales (ICAEW) has updated its report reviewing academic research papers that have looked at the impact of IFRS adoption both in the EU and in other countries.

The main conclusions of the updated and expanded report are unchanged, but it is now based on a review of about 200 research papers and reflects research and other publications up to 28 February 2015. As in the earlier version, the analysis shows that there is evidence of benefits following IFRS adoption in relation to financial reporting transparency and comparability, the cost of capital, market liquidity, corporate investment efficiency and cross-border capital flows. However, the evidence on some of these matters is disputed and it is unclear how far the benefits identified are attributable to the adoption of IFRS or to other concurrent institutional changes, particularly in enforcement. What is clear is that the benefits found are uneven, varying with the institutions and incentives that apply for different companies in different countries.

The report is intended to assist interested parties in the debate on the future of IFRS in the EU, by looking at what can be learned from empirical academic research on the costs and benefits of its implementation to date. It also provides a case study of the challenges involved in using empirical research to review the effects of major policy changes.

Please click to access the report on the ICAEW website.

CRD releases landscape map providing clarity across frameworks and standards

06 May 2015

The Corporate Reporting Dialogue (CRD), which brings together organisations that have significant international influence on the corporate reporting landscape, has published a landscape map that provides a snapshot of a comparison of their frameworks, standards and related requirements through the lens of integrated reporting. Among the CRD members are the IASB and the FASB.

The CRD was introduced in June 2014 with the aim to work together to respond to market calls for better alignment and reduced burden in corporate reporting by promoting proactive engagement between the key organisations. As an initial unified response, the Dialogue has now developed an online map to show how the frameworks, standards and related requirement of its participants are seen through the lens of integrated reporting. The map has three levels:

  • Purpose. Offering a brief description of the purpose of each standard or framework.
  • Scope. Explaining how each reporting initiative relates to the six capitals of integrated reporting.
  • Content. Explaining each reporting initiative relates to the content elements of integrated reporting.

The map is intended to be a simple navigational tool providing insights into the degree of coverage of the capitals and content elements in each of the standards or frameworks. It lists all applicable standards, however, source documents are not included as the main purpose is to demonstrate how frameworks, standards and related requirements could be used together to enhance corporate reporting.

Please click to access the map on the CRD website.

IFRS Foundation adds 2 new jurisdiction profiles on the use of IFRS around the world

06 May 2015

The IFRS Foundation (IFRSF) has added 2 new jurisdiction profiles on the use of IFRS, bringing the total number of profiles completed to 140 jurisdictions.

The two new jurisdiction profiles cover Palestine and Syria.

The IFRSF has been using information from various sources to develop the profiles about the use of IFRSs in individual jurisdictions. We are proud that IAS Plus with the assistance of our Deloitte member firms has been able to help the IFRS Foundation with this ambitious project, which is led by Paul Pacter, former IASB member and former webmaster of IAS Plus who originally set up our popular table on the use of IFRSs around the world which has been supplemented recently by the more detailed table on the use of IFRSs by the G20 jurisdictions.

The profiles and analyses are available on the IASB's website.

IASB issues latest edition of ‘The Essentials’ newsletter

05 May 2015

The IASB has issued the third edition of its newsletter “The Essentials,” which is intended to increase investors’ awareness of IFRSs and enhance their insights into IFRS financial statements.

This issue discusses how investors can leverage the notes to the financial state­ments to compare banks’ balance sheets and U.S. GAAP–IFRS dif­fer­ences related to the treatment of off­set­ting arrange­ments.

Issue 3 of The Essentials, as well as an archive of previous issues, is available on the IASB’s website.

IASB issues work plan update

05 May 2015

After its April meeting, the IASB has updated its work plan. The revised plan narrows the expected issuance of the leases standard to the fourth quarter of 2015, shifts the expected issuance of an exposure draft for annual improvements 2014-2016 and redeliberations for classification and measurement of share-based payment transactions to the third quarter of 2015, and shows redeliberations for the disclosure initiative (amendments to IAS 7) project to occur in the second quarter of 2015. In addition, two projects have been added on the transfer of investment property, which has a target ED in the third quarter of 2015, and uncertainties in income taxes, which has a target draft interpretation in the second quarter of 2015.

Current status

The revised timetable for the major pro­jects is now as follows:

Project Current status Next project step Ex­pected timing
Con­cep­tual Frame­work — Com­pre­hen­sive IASB project Re­de­lib­er­a­tions Ex­po­sure draft Q2 2015
Fi­nan­cial in­stru­ments — Macro hedge ac­count­ing Comment letter analy­sis Re­de­lib­er­a­tions Q2 2015
In­sur­ance con­tracts Re­ex­po­sure Re­de­lib­er­a­tions Q2 2015
Leases Re­ex­po­sure Target IFRS Q4 2015*
Dis­clo­sure ini­tia­tive — Prin­ci­ples of dis­clo­sure Board dis­cus­sion Target dis­cus­sion paper Q4 2015
Dis­clo­sure ini­tia­tive — Rec­on­cil­i­a­tion of li­a­bil­i­ties from fi­nanc­ing ac­tiv­i­ties ED Redeliberations Q2 2015*
IFRS for SMEs — Com­pre­hen­sive review Re­de­lib­er­a­tions Target IFRS Q2 2015
Rate-reg­u­lated ac­tiv­i­ties Dis­cus­sion paper Board dis­cus­sion Q2 2015

* In­di­cates a change since the pre­vi­ous work plan update on 24 March 2015.

Minor updates re­gard­ing the research pro­jects include:

  • Renaming of the general disclosure review project to “Standards—level review of disclosures” and setting board discussions to the fourth quarter of 2015.
  • Moving the target draft practice statement for the materiality project to the third quarter of 2015.

The revised IASB work plan is avail­able on the IASB's Web site. We have updated our project pages to reflect the updated work plan and other known de­vel­op­ments.

Agenda for the May 2015 IFRS Interpretations Committee meeting

05 May 2015

The IFRS Interpretations Committee will meet at the IASB's offices in London on 12 May 2015. The agenda for the meeting is now available.

The Committee will:

  • continue discussion of issues arising on IAS 21, IAS 16, IFRS 5, IAS 32, IFRS 13, and IFRS 10;
  • consider finalising a tentative agenda decision on IAS 24;
  • consider new issues on IFRS 12 and IAS 23.

The full agenda for the meeting can be found here. We will update this page for any changes to the agenda, and our Deloitte observer notes from the meeting as they become available.

IFRS Foundation Annual Report 2014

05 May 2015

The IFRS Foundation (IFRSF) under which the IASB operates has published its Annual Report for 2014, titled 'Financial reporting standards for the world economy'.

The report for 2014 incorporates the Foundation's newly developed mission statement as well as reports from the Chair of the IFRS Foundation Monitoring Board, the Chair of the Trustees of the IFRS Foundation, and the Chair of the International Accounting Standards Board (IASB).

The report also sets out the organisation's strategic priorities for 2015-2017, broken down into four strategic goals:

  • develop a single set of high quality, globally enforceable accounting standards,
  • pursue the goal of global adoption of IFRS,
  • support consistent application and implementation of IFRS, and
  • ensure continued independence, stability and accountability of the IFRS Foundation

Please click to download the report from the IASB's website.

EFRAG concludes that adoption of IFRS 9 is conducive to the European public good

05 May 2015

The European Financial Reporting Advisory Group (EFRAG) has published a draft endorsement advice on IFRS 9 'Financial Instruments'. Endorsement of IFRS 9 had been "postponed" in the European Union, however, following the publication of the final version of IFRS 9 in July 2014 the European Commission requested the EFRAG to deliver its opinion on the new standard.

In the draft endorsement advice published now for comment, EFRAG states that it has come to the following overall conclusion:

IFRS 9 meets the qualitative characteristics of relevance, reliability, comparability and understandability required to support economic decisions and the assessment of stewardship, leads to prudent accounting, and therefore is not contrary to the true and fair view principle. We have also concluded that IFRS 9 is conducive to the European public good.

In assessing whether IFRS 9 Financial Instruments is conducive to the European public good EFRAG came to the following conclusions:

  • Except for classification and measurement of financial assets where a clear conclusion cannot be made, IFRS 9 is an improvement over IAS 39 for all other areas.
  • In the area of convergence with US GAAP which has not been achieved, IFRS 9 will lead to higher quality financial reporting than the equivalent US GAAP standards.
  • There are certain requirements of IFRS 9 that may have potential impacts on investor and issuer behaviour.
  • There are reasonable grounds to believe that a deferral of the effective date of IFRS 9 for insurers until the future insurance contracts standard is effective would be conducive to the European public good.
  • The EU carve-out for macro hedging from IAS 39 will continue to be available for the purposes it was intended.
  • One-off costs connected with IFRS 9 implementation are likely to be significant both for preparers and users whereas only preparers are likely to incur significant ongoing costs. Both users and preparers are likely to benefit from IFRS 9. Overall, the benefits are likely to outweigh the costs.

As regards the conclusion that a deferral of the effective date of IFRS 9 for insurers until the future insurance contracts standard is effective would be conducive to the European public good, EFRAG has come to the preliminary conclusion to recommend to the European Commission to ask the IASB to globally open an option to defer the effective date of IFRS 9 for insurance businesses and align it with the effective date of the future insurance contracts standard. EFRAG stresses that it is ready to assist the IASB in designing the scope of such an option. In the invitation to comment EFRAG expressly invites all quantitative evidence that can supplement this assessment, including evidence gathered by those who oppose the deferral.

Please click to access the following information on the EFRAG website:

Comments on the draft endorsement advice are requested by 30 June 2015.

EFRAG has updated its endorsement status report to reflect the issuance of the draft endorsement advice. Final endorsement of IFRS 9 is currently expected in the second half of 2015.

IFRS Foundation Trustees hold April 2015 meeting

01 May 2015

The Trustees of the IFRS Foundation met in Toronto, Canada, on 14–16 April 2015.

Meeting ac­tiv­i­ties in­cluded the fol­low­ing:

  • Ex­ec­u­tive session The Trustees agreed to respond to the European Commission’s Green Paper, Building a Capital Market Union, and to draft a consultation document on the review of structure and effectiveness of the IFRS Foundation. In ad­di­tion, updates were given on (1) the review of the ASAF’s op­er­a­tions, (2) developments in the United States, (3) Canada’s perspective on financial reporting issues, (4) commercial opportunities, and (5) other administrative matters.
  • IASB chair­man’s report — IASB Chair­man Hans Hooger­vorst gave an update on the IASB’s progress related to its leases project and the work of the Revenue Transition Resource Group.
  • Report of the Due Process Over­sight Com­mit­tee (DPOC) — Michael Prada, chair­man of the IFRS Foun­da­tion Trustees, led a dis­cus­sion about the DPOC’s April 2015 meeting with the IASB. For more in­for­ma­tion, see our related news item.
  • Re­gional out­reach ac­tiv­ity — The IFRS Foun­da­tion jointly hosted an event with the AcSOC, the AcSB and CPA Canada.

The full report on the IFRS Foun­da­tion Trustees’ meeting is avail­able on the IASB’s website.

Due Process Oversight Committee holds April 2015 meeting

01 May 2015

The Due Process Oversight Committee (DPOC) of the IFRS Foundation trustees met in Toronto, Canada, on 14 April 2015.

Meeting ac­tiv­i­ties in­cluded the fol­low­ing:

  • Updates on tech­ni­cal ac­tiv­i­ties — The DPOC was updated on (1) a due-process issue related to post­ings of papers about IASB meet­ings, (2) some of the IASB’s major pro­jects, in­clud­ing in­sur­ance con­tracts, leases, the con­cep­tual frame­work, macro hedging, rate-reg­u­lated ac­tiv­i­ties, and the dis­clo­sure ini­tia­tive, (3) research projects on the IASB’s work plan, (4) progress of the IFRS Taxonomy due process trials, and (5) other implementation and maintenance projects.
  • Leases — The DPOC an­a­lyzed a report on the due-process steps in the IASB’s review of its project on leases and con­firmed that all steps have been com­pleted.
  • Post-Implementation Review of IFRS 3 — The DPOC an­a­lyzed a report on the due-process steps in the IASB’s post-implementation review of IFRS 3 and con­firmed that all steps have been com­pleted.
  • Education material — The DPOC reviewed the levels of peer review planned by the staff for its educational material.
  • Con­sul­ta­tive group meet­ings — The DPOC was pro­vided with a sched­ule of future IASB con­sul­ta­tive group meet­ings and asked which group meet­ings should be pri­or­i­tized for ob­ser­va­tion.
  • Cor­re­spon­dence — No new correspondence has been received since its previous meeting.

The full report on the DPOC meeting is avail­able on the IASB’s website.

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