New Vice-Chair of IFRS Foundation Trustees

29 May 2015

The IFRS Foundation has announced that the Monitoring Board has approved the appointment of Sheila Fraser as Vice-Chair of the Trustees. In addition, three other Trustees have been reappointed.

Ms Fraser replaces Harvey Goldschmid, who passed away in February this year, with immediate effect. Ms Fraser is serving her first three-year term as a Trustee ending 31 December 2015. She has been reappointed to serve a second term beginning 1 January 2016 together with three other Trustees who have also been reappointed: Abdulrahman Al-Humaid, Wiseman Nkuhlu and Joji Okada.

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IASB issues work plan update

29 May 2015

Following its May meeting, the IASB has updated its work plan. The revised plan adds a new project on 'Changes in accounting policies and estimates', moves the Exposure Draft on 'Clarifications to IFRS 15' and the Draft Interpretation on 'Uncertainties in income taxes' back by one quarter, and introduces a new format for reporting on the progress in research projects.

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 Exposure draft*
Financial instruments — Macro hedge accounting Comment letter analysis Redeliberations Q2 2015
Insurance contracts Revised exposure draft Redeliberations Q2 2015
Leases Revised exposure draft Target IFRS Q4 2015
Disclosure initiative — Principles of disclosure Board discussion Target discussion paper Q4 2015
Disclosure initiative — Changes in accounting policies and estimates Board discussion ED Q4 2015*
Disclosure initiative — Materiality Board discussion Draft Practice Statement Q3 2015
Rate-regulated activities Discussion paper Board discussion Q2 2015

* Indicates a change since the previous work plan update on 5 May 2015.

Updates regarding the implementation and research projects include:

  • The target Exposure Draft on clarifications to IFRS 15 is now expected in the third quarter of 2015 (was second quarter).
  • The Draft Interpretation on uncertainties in income taxes is now expected in the third quarter of 2015 (was second quarter).
  • The research projects have been reordered in the following categories:
    • Development phase
    • Assessment phase
    • Exploratory phase
    • PIR follow-up work
    • Completed work
    The PIR follow-up work contains two research projects that the IASB has identified as a consequence of the post-implementation review of IFRS 3 (Definition of a business and Goodwill); the next step in these projects has yet to be determined. Completed work contains two projects where the IASB has completed its initial assessment and has no current plans to undertake additional work (Foreign currency translation and High inflation). During reordering, the project on a standards-level review of disclosures (part of the Disclousre initiative) has gone missing from the work plan.

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.

IASB publishes Exposure Draft of a new Conceptual Framework

28 May 2015

The International Accounting Standards Board (IASB) has published a comprehensive Exposure Draft (ED) containing proposals for topical areas where it considers a revision and amendment of the existing Conceptual Framework necessary. Included in the ED are proposals to revise the definitions of an asset and a liability, to introduce guidance on measurement and derecognition, and to set a framework for presentation and disclosure. The main ED is accompanied by an ED containing proposals regarding references to the Conceptual Framework in other IASB pronouncements. Comments on both EDs are due 26 October 2015.



The current Conceptual Framework has been left largely unchanged since its inception in 1989. In 2004, the IASB and the FASB decided to review and revise the conceptual framework, however, changed priorities and the slow progress in the project led to the project being abandoned in 2010 after only Phase A of the original joint project had been finalised and introduced into the existing framework as Chapters 1 and 3 in September 2010. Phase D saw the publication of a discussion paper and an exposure draft but was never finalised. The Boards discussed Phases B and C quite extensively without any consultation document ever being issued, and Phases E to H largely remained untouched.

During the 2011 agenda consultation many participants called for the IASB to reactivate and finalise the conceptual framework project given the multitude of open conceptual issues it is facing in many of its current projects. As a result, the IASB officially added the project to its agenda again in September 2012, this time as an IASB-only project and no longer aimed at a substantial revision of the framework but focused on those topics that are not yet covered (e.g. presentation and disclosure) or that show obvious shortcomings that need to be dealt with. As a first step, a Discussion Paper covering all aspects of the framework project was published in July 2013, followed now by two EDs - one covering the Conceptual Framework itself, one covering references to the Conceptual Framework in other IASB pronouncements.


Summary of main proposals

ED/2015/3 Conceptual Framework for Financial Reporting sets out the revised Conceptual Framework structured into an introduction, eight chapters, and two appendices:

Chapter Topic
1 The objective of general purpose financial reporting
2 Qualitative characteristics of useful financial information
3 Financial statements and the reporting entity
4 The elements of financial statements
5 Recognition and derecognition
6 Measurement
7 Presentation and disclosure
8 Concepts of capital and capital maintenance
Appendix A Cash-flow-based measurement techniques
Appendix B Glossary

The key proposals in each chapter are summarised below:

Introduction. The first section offers background information. It also describes the purpose of the conceptual framework and its status within the hierarchy of IASB pronouncements. The ED explains that the Conceptual Framework's primary purpose is to assist the IASB in developing and revising IFRSs (even though it may be useful to parties other than the IASB) and that the framework does not override any specific IFRS. Should the IASB decide to issue a new or revised pronouncement that is in conflict with the framework, the IASB will highlight the fact and explain the reasons for the departure going forward.

Chapter 1 - The objective of general purpose financial reporting. This is the first of the two chapters that were finalised as part of the joint project with the FASB in 2010, so there are only limited changes. In essence, the IASB's proposals in this chapter aim at giving prominence to the importance of providing information that is needed to assess management's stewardship of the entity's resources.

Chapter 2 - Qualitative characteristics of useful financial information. This is the second of the two chapters that were finalised as part of the joint project with the FASB in 2010 (published as Chapter 3 in the 2010 Conceptual Framework). Again, proposed changes are limited. However, the IASB proposes to reintroduce an explicit reference to the notion of prudence and states that the exercise of prudence supports neutrality. Prudence is defined as the exercise of caution when making judgements under conditions of uncertainty. The chapter also contains a proposed addition that would clarify that faithful representation means representation of the substance of an economic phenomenon instead of representation of its legal form only.

Chapter 3 - Financial Statements and the reporting entity.The ED states the objective of financial statements (to provide information about an entity's assets, liabilities, equity, income and expenses that is useful to financial statements users in assessing the prospects for future net cash inflows to the entity and in assessing management's stewardship of the entity's resources) and sets out the going concern assumption. Interestingly, the ED only mentions two statements explicitly: the statement of financial position and the statement(s) of financial performance (the latter being the former statement of comprehensive income); the statement of cash flows and the statement of changes in equity go unmentioned. The chapter also discusses the definition of a reporting entity and the boundary of a reporting entity. It also states the IASB's conviction that, generally, consolidated financial statements are more likely to provide useful information to users of financial statements than unconsolidated financial statements.

Chapter 4 - The elements of financial statements. The main focus of this chapter is on the definitions of assets, liabilities, and equity as well as income and expenses. The definitions are quoted below:
Asset. An asset is a present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.
Liability. A liability is a present obligation of the entity to transfer an economic resource as a result of past events.
Equity. Equity is the residual interest in the assets of the entity after deducting all its liabilities.
Income. Income is increases in assets or decreases in liabilities that result in increases in equity, other than those relating to contributions from holders of equity claims.
Expenses. Expenses are decreases in assets or increases in liabilities that result in decreases in equity, other than those relating to distributions to holders of equity claims.
Note that, other than in the DP, the IASB has backed away from changes in the definitions liabilities and equity that would address the problems that arise in classifying instruments with characteristics of both liabilities and equity. Exploring those problems has been transferred to the IASB's research project on financial instruments with the characteristics of equity.

Chapter 5 - Recognition and derecognition. The ED states that only items that meet the definition of an asset, a liability or equity are recognised in the statement of financial position and only items that meet the definition of income or expenses are to be recognised in the statement(s) of financial performance. However, their recognition depends on three criteria: their recognition provides users of financial statements with (1) relevant information about the asset or the liability and about any income, expenses or changes in equity, (2) a faithful representation of the asset or the liability and of any income, expenses or changes in equity, and (3) information that results in benefits exceeding the cost of providing that information. Nevertheless, the ED also maintains that whether the information provided is useful to users depends on the item and the specific facts and circumstances and requires judgement and possibly varying recognition requirements between standards. Derecognition requirements as presented in the ED are driven by two aims: the assets and liabilities retained after the transaction or other event that led to derecognition must be presented faithfully and the change in the entity's assets and liabilities as a result of that transaction or other event must also be presented faithfully. The ED also describes alternatives when it is not possible to achieve both aims.

Chapter 6 - Measurement. This chapter is dedicated to the description of different measurement bases (historical cost and current value (fair value and value in use/fulfilment value)), the information that they provide and their advantages and disadvantages. A table offers an overview of the information provided by various measurement bases. The ED also sets out factors to consider when selecting a measurement basis (relevance, faithful representation, enhancing qualitative characteristics, and factors specific to initial measurement) and points out that consideration of the objective of financial reporting, the qualitative characteristics of useful financial information and the cost constraint are likely to result in the selection of different measurement bases for different assets, liabilities and items of income and expense. Appendix A of the ED supplements Chapter 6 and describes cash-flow-based measurement techniques for cases when a measure determined using a measurement basis cannot be observed.

Chapter 7 - Presentation and disclosure. In this chapter, the ED discusses concepts that determine what information is included in the financial statements and how that information should be presented and disclosed. The statement of statement of comprehensive income is newly described as "statement of financial performance", however, the ED does not specify whether this statement should consist of a single statement or two statements, it only requires that a total or subtotal for profit or loss must be provided. Notably, the ED does not define profit or loss, thus the question of what goes into profit or loss or into other comprehensive income is still unanswered.

Chapter 8 - Concepts of capital and capital maintenance. The proposals in this chapter were taken over from the existing Conceptual Framework with minor changes for consistency of terminology. The IASB states that it would consider revising the description and discussion of capital maintenance if it were to carry out a future project on accounting for high inflation. However, it also states that no such work is currently planned.

ED/2015/4 Updating References to the Conceptual Framework contains proposed amendments to IFRS 2, IFRS 3, IFRS 4, IFRS 6, IAS 1, IAS 8, IAS 34, SIC-27 and SIC-32 in order to update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. As the Conceptual Framework will mainly affect the IASB and its work while the proposals regarding the other pronouncements could also affect preparers, the IASB considers granting a transition period of approximately 18 months for the amendments proposed in ED/2015/4 in order to give preparers time to identify, understand and adjust to possible implications.


Comment deadline and next steps

The IASB allows constituents an extended six months period to work their way through the document and to respond to the questions raised; hence, comment letters are to be submitted by 26 October 2015. The IASB will consider the comments received when developing the final version of the revised Conceptual Framework. The IASB aims to finalise the revised Conceptual Framework in 2016.

Note: On 22 September 2015, the IASB decided to extend the comment letter deadline to 25 November 2015.


Additional information

On 17 June 2015, the IASB will give a live web presentation introducing the Exposure Draft and offering the public an opportunity to ask questions. More information on the webinar is available on the IASB website.


Seven lessons learned from the IFRS adoption in the EU

28 May 2015

The Institute of Chartered Accountants in England and Wales (ICAEW) has published a report setting out some practical insights and recommendations for policy makers, regulators, standard-setters and other interested parties in jurisdictions that have recently adopted IFRS or are considering doing so.

The insights were gleaned while preparing the ICAEW's response to the European Commission's public consultation on the impact of International Financial Reporting Standards (IFRSs) in the EU, which built on a consultation among ICAEW members and was supplemented by a report reviewing 170 academic research papers (the report has recently been updated).

As the results of the ICAEW's consultation and review exercises indicated among other things that lessons might be learned by jurisdictions outside Europe contemplating or in the early stages of IFRS adoption from the experience of the UK and other EU member states, the lessons have now been published in a succinct and accessible report that places them in a global context.

The lessons are:

  • The benefits of IFRS outweigh the costs as in a relatively short time there were improvements in transparency, comparability, cost of capital and market liquidity.
  • Companies listed on regulated markets should be required to use IFRS as the report finds that the EU's decision not to extend the use of IFRS to listed entities that are not groups and other public interest entities is "questionable".
  • Local variants of IFRS should be kept to a minimum as the full benefits of IFRS can only be reaped if the standards are adopted in full.
  • Sometimes complexity is unavoidable as a complex world and complex business transactions can necessitate complex accounting.
  • National standard-setters and regional groupings are important as they have a central role to play in undertaking coordinated research, field testing and outreach activities.
  • Strong national enforcement is critical and experience in Europe has also demonstrated the vital importance of mechanisms for sharing and co-ordinating enforcement decisions.
  • Endorsement underpins legitimacy and has proved a critical means of establishing the political legitimacy of IFRS in Europe.

The lessons presented in the report are supplemented by three appendices: The future of IFRS – perspectives and progress; IFRS and the global financial crisis; and US GAAP – looking ahead.

Please click to access the report on the ICAEW website - this page offers you access to a short video introducing the report, the full report itself and executive summaries of the lessons.

May 2015 IASB meeting notes posted — part 1

27 May 2015

The IASB met at its offices in London on 18–20 May 2015. We have posted the Deloitte observer notes from the sessions on insurance contracts.

Click through for direct access to the notes:

Wednesday, 20 May 2015

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

IFRS conference in Hong Kong announced

26 May 2015

The IFRS Foundation has announced that its next IFRS conference in Asia will be held in Hong Kong on 12-13 October 2015. The conference will include discussions on the implementation plans for new standards (IFRS 9, IFRS 15) and on the forthcoming requirements for leases and insurance contracts. There will also be panel discussions on IFRS disclosures and IFRS measurements and other cross-cutting issues.

Some of the topics to be covered at the conference include:

  • The future of financial reporting
  • IASB update
  • Panel discussion on implementing the forthcoming lessee accounting requirements
  • Conceptual framework
  • IFRS - truly global accounting standards
  • IFRS disclosure issues
  • Panel discussion on IFRS disclosures - innovations
  • IFRS measurements and other cross-cutting issues
  • Panel discussion on IFRS measurements and other cross-cutting issues

The conference will also have break-out sessions on the afternoon of day 1. Participants can choose between the following topics:

  • Implementing IFRS 9 Financial Instruments: financial institutions
  • Implementing IFRS 9 Financial Instruments: other than financial institutions
  • Implementing IFRS 15 Revenue from Contracts with Customers
  • IASB project: Insurance contracts

Following the conference, a half-day workshop on implementing the IFRS for SMEs will be held.

More details, including registration information, are available on the IASB website.

Former Chairmen of IASB and FASB share thoughts on convergence

24 May 2015

On Wednesday 1 April 2015, former IASB Chair Sir David Tweedie and former FASB Chair Robert Herz discussed their vision of 'Accounting Standards for Global Capital Markets: Past, Present, and Future' at Baruch College in New York City. A recording of their exchange has now been made available.

While Mr Herz stated that "I think right now, for good or for bad, in the U.S. we have become very comfortable with the idea that we’ll have U.S. GAAP. If there are things in IFRS that we kind of like or the markets like, maybe we’ll consider adopting those, but there’s no systematic program to further converge at this point", Mr Teedie replied that “You can have international standards without the U.S., but you can’t have global standards without the U.S.”.

Please click to access the recording of the discussion, which lasted about one hour, on the Baruch college website.

Agenda for May 2015 Emerging Economies Group meeting

22 May 2015

The agenda is available for the ninth meeting of the Emerging Economies Group (EEG) and International Accounting Standards Board (IASB), which is being held in Mexico City on 25-26 May 2015. Topics being discussed at the meeting include present value measurements, other non-financial assets and related matters, and enhanced inflation disclosures. In addition, there will be an update on the IASB's current projects and discussion on topics to consider for the next meeting.

The full agenda is sum­marised below:

Monday 25 May 2015 (09:00-20:30)

  • Address by hosting country (Mexico)
  • Address by the EEG Chair and Vice-Chair
  • Presentation on discount rates — present value measurements
  • Discussion on discount rates — present value measurements
  • Ad­min­is­tra­tion issue — topics for next meeting
  • Welcome dinner

Tuesday 26 May 2015 (10:10-14:00)

  • IASB updates
  • Other non-financial assets and related matters
  • Enhanced disclosures about inflation
  • Discussion and approval of the Communiqué
  • Meeting summary
  • Working lunch

 Agenda papers from this meeting are available on the IASB's website.

IVSC consults on recommendations of external review group

22 May 2015

The International Valuation Standards Council (IVSC) has issued an engagement paper seeking comment and feedback on a number of recommendations and proposals that result from an external review of the IVSC. One of the recommendations had been that the IVSC should discontinue work on all its financial instruments projects until it has been ensured that they serve the public interest and fulfil a market need.

In November 2014, the IVSC Trustees commissioned an independent assessment of their organisation. To this end, an external review group was formed that submitted its final report in April 2015. The review group called on the Trustees to take rapid action to enhance the organisational structure and capabilities and to define its strategic direction. Key immediate priorities should be to improve the organisation's credibility among key stakeholders and improve the quality of its standards. Regarding technical recommendations, the review group stated that especially regarding the valuation of financial instruments, stakeholders and regulators had expressed the need for caution. Their concerns did not negate the need for standards in this area, but they emphasised the need for a well thought out approach. Therefore, the review group recommended:

Recommendation 4: The IVSC should withdraw current proposals and exposure drafts related to Financial Instruments and work to first bring key stakeholders together to agree on solutions that serve the public interest and fulfil a market need.

The IVSC Trustees now propose:

  • to discontinue work on its current financial instruments projects and to withdraw any existing proposals or exposure drafts;
  • to bring the various financial instruments stakeholders together in a series of roundtables to seek broad support on a direction to address issues regarding the development of financial instruments standards and potential solutions; and
  • to develop a conceptual framework for Financial Instruments valuation standards along with a detailed work plan to implement this initiative that reflect the input of the proposed stakeholder roundtable meetings.

The IVSC also considers setting up a permanent working group for financial instruments in addition to the permanent working groups on real estate and business valuation that had been recommended in the review group's report.

Comments on the IVSC Trustees' proposals and questions, which also include structural changes and the development of a robust consultation process with maybe looking at the IASB or the FASB as an example, are invited before 1 September 2015. Please click to access the following information on the IVSC website:

May 2015 IFRS Interpretations Committee meeting notes posted — part 2 (concluded)

21 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 23, IAS 24, IFRS 5, IFRS 11 and the administrative session.

The following topics were discussed at the meeting (click the links to access detailed Deloitte observer notes for each topic):

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