FASB proposes guidance on principal-versus-agent considerations

31 Aug 2015

The FASB has issued a proposed ASU, "Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net).”

The amendments, which are being proposed in response to feedback received by the FASB–IASB joint revenue recognition transition resource group, intend to clarify certain guidance related to principal versus agent considerations.

Comments on the proposed ASU are due by 15 October 2015.

The IASB has also issued an ED on this topic; the proposed amendments in the IASB’s ED are the same as those in the FASB’s ASU.

For more information, see Deloitte's related Heads Up as well as the press release and proposed ASU on the FASB’s Web site.

CPA Canada publication discussing the evolving corporate reporting landscape

31 Aug 2015

Chartered Professional Accountants of Canada (CPA Canada) has published a briefing discussing the evolving corporate reporting landscape, especially as it relates to addressing sustainability issues.

Topics covered in the briefing include:

  • discussion of the evolving corporate reporting landscape in a Canadian and global context and
  • overview of three types of voluntary reporting and reporting frameworks:
    • sustainability reporting and the Global Reporting Initiative (GRI) guidelines,
    • integrated reporting and the International Integrated Reporting Council (IIRC) integrated reporting framework, and
    • environmental, social and governance disclosures in SEC filings and Sustainability Accounting Standards Board’s (SASB) standards.

For each of the three types of voluntary reporting and reporting frameworks the briefing describes the reporting subject matter and its related purpose, outlines the intended users of this reported information, provides the source of the guidance/framework/standard, outlines at a high level the structure and key features of the reporting guidance, and describes the level of acceptance and uptake of the guidance. In addition, the publication compares the three voluntary types of reporting guidance at a high level.

Please click to access Evolving corporate reporting landscape: Integrated reporting, sustainability reporting and ESG reporting on the CPA Canada website.

Agenda for the October 2015 ASAF meeting

28 Aug 2015

The International Accounting Standards Board (IASB) has released the tentative agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 1-2 October 2015. The meeting will discuss the agenda consultation and a number of the IASB's active projects, including the conceptual framework, clarifications to IFRS 15, measuring quoted investments in subsidiaries, joint ventures and associates at fair value, pollutant pricing mechanisms, and the equity method of accounting.

The agenda for the meeting is summarised below:

Thursday, 1 October 2015 (9:30-18:00)

  • Agenda consultation 2015
    • Feedback from the World Standard Setters (WSS) meeting (to be held 28-29 September 2015)
  • Conceptual framework
    • Feedback rom the WSS meeting on:
      • IAS 37
      • Measurement
    • Guidance proposed in the Conceptual Framework exposure draft on selecting a measurement basis
    • Implications of the exposure draft for the project on rate-regulated activities
  • Clarifications to IFRS 15
  • Measuring quoted investments in subsidiaries, joint ventures and associates at fair value (proposed amendments to IFRS 10, IFRS 12, IAS 27, IAS 28 and IAS 36 and illustrative examples for IFRS 13)

Friday, 2 October 2015 (9:00-12:30)

  • Pollutant pricing mechanisms
  • Equity method of accounting
  • Project update and agenda planning (including the interaction between IFRS 4 Insurance Contracts and IFRS 9 Financial Instruments)

Agenda papers for the meeting will be made available on the IASB's website closer to the meeting.

EFRAG ready to send out qualified endorsement advice on IFRS 9

27 Aug 2015

As reported earlier, the European Financial Reporting Advisory Group (EFRAG) intends to finalise the long-awaited endorsement advice on IFRS 9 ‘Financial Instruments’ next week. The draft of the final endorsement advice to be adopted has now been made available.

As in the draft endorsement advice published in May 2015, EFRAG continues to believe that IFRS 9 meets the technical endorsement criteria, would be conducive to the European public good and should be adopted for the use in the European Union. However, EFRAG notes that the mismatch in timing of the future insurance contracts standard and IFRS 9 will lead to disruptions in the reporting by insurers making their financial reporting less understandable for users while increasing costs for preparers. As earlier, EFRAG states that this mismatch in timing makes “a strong case for having the IASB defer the effective date of IFRS 9, so as to align it with the effective date of the future insurance contracts standard, albeit only for insurers and as an option”. EFRAG notes that the IASB has started investigating various approaches that would address the issue, including a deferral. However, as the IASB has just started on these explorations, EFRAG states that it is unable to assess whether these actions will mitigate the negative effects of the timing mismatch:

However, the IASB is at the early stages of its work and therefore we are not in a position today to assess whether their initiative will remove the concerns created by the non-alignment of the effective dates of IFRS 9 and the future insurance contracts standard.

EFRAG advises the European Commission to request the IASB to proceed with the necessary IFRS amendments as quickly as possible and notes that any solution (deferral or other) remains sub-optimal and should be of a very temporary nature.

In summary, EFRAG states in its endorsement advice that IFRS 9 should generally be adopted, however, does not include final advice on the insurance standard matter and therefore leaves open how the European Commission should react – go forward with endorsing IFRS 9 for all companies in the hope that the IASB will come up with a sustainable solution to the timing mismatch problem or the hope that IASB will defer the effective date of IFRS 9 for insurers or whether even an EU-only deferral should be chosen.

Please click to access the press release on the EFRAG website announcing the next Board meeting, which offers access to the updated set of meeting papers.

Fourth instalment of the IASB's Conceptual Framework webcast series

27 Aug 2015

In August 2015, the IASB launched a webcast series on the proposed changes to its Conceptual Framework. Eight pre-recorded webcasts will be posted to the IASB's website weekly. The fourth instalment was posted today.

The on-demand webcasts provide detailed discussions of each part of the IASB's May 2015 Exposure Draft ED/2015/3 Conceptual Framework for Financial Reporting.

The webcast on Chapter 7 — Classification of income and expenses (profit or loss vs. OCI) is available today. For information about the upcoming webcasts and a complete archive, see the webcast page on the IASB's website.

Summary of the July ASAF meeting now available

27 Aug 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 16-17 July 2015.

The topics covered during the meeting included:

  • Insurance contracts. ASAF members discussed two papers by the AASB and NZASB (on the recognition pattern for the contractual service margin in profit or loss and on the rate used for interest accretion on the contractual service margin) and an update on the IASB’s tentative decisions since the last ASAF meeting.
  • Discount rates. The IASB staff provided a summary of findings from the research project on present value measurements and sought ASAF members’ views on the findings. The staff also sought ASAF members’ views on the next steps in the project.
  • Conceptual Framework. ASAF members discussed the recognition and derecognition proposals in the Conceptual Framework ED. They were also invited to share their views on an EFRAG paper on the reporting of income or expense in profit or loss or OCI.
  • Provisions and contingent liabilities (IAS 37). The staff provided an overview of the IASB's research project on project on IAS 37 and sought initial views of the ASAF on whether the IASB should start an active project to amend IAS 37 and, if so, what the scope of that project should be.
  • Disclosure initiative. The IASB staff introduced a paper describing the content of the Principles of Disclosure discussion paper and sought the ASAF members’ views on whether there were any other issues that should be included in the discussion paper. The staff also introduced a paper discussing proposed changes to the IFRS Taxonomy due process, which were recently trialled on the exposure draft of amendments to IAS 7 as a result of the disclosure initiative.
  • Dynamic risk management. The IASB staff gave an overview of the feedback received on the discussion paper and asked for the ASAF members’ comments on any additional information needs relating to an entity’s dynamic risk management of interest rates that are not included in the summarised feedback received.
  • Pollutant pricing mechanisms. ASAF members discussed a cap-and-trade type of emissions trading scheme and provided views about possible accounting approaches.
  • Rate-regulated activities. ASAF members provided views about possible accounting approaches that could be developed to reflect the financial effects of the ‘defined rate regulation’ introduced in the discussion paper published in September 2014.
  • IFRS 15. The IASB staff provided an overview of the recent developments relating to the new revenue standard, including activities of the Transition Resource Group, feedback from the comment letters on the exposure draft on the effective date of IFRS 15, and an overview of the forthcoming exposure draft of clarifications of IFRS 15.

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

Report from spring 2015 IFASS meeting

26 Aug 2015

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held in Dubai on 23 and 24 March 2015.

Highlights from the meeting included:

IASB workplan and IFRS Foundation developments

Participants discussed current projects on the IASB agenda and IFRS Foundation activities and  activities that national standard-setters may wish to undertake to support the IASB in achieving its work. Projects discussed were:

  • Conceptual framework,
  • Disclosure initiative,
  • Insurance contracts,
  • Leases,
  • Business combinations under common control,
  • Financial instruments with characteristics of equity,
  • Equity method of accounting,
  • Discount rates, and
  • Post‐employment benefits.

Participants also discussed the agenda consultation, research and implementation projects in general, and interpretation of standards by regulators.

Part of the discussions around IASB projects were also the transition resource groups for revenue and impairment, bundling of issues that arise in the discussions, the question of how long they should be kept operating, and whether standard-setters should encourage regulators to back off from having one right answer on a particular issue.

Reports from regional groups

Representatives from the Asian-Oceanian Standard-Setters Group (AOSSG), the European Financial Reporting Advisory Group (EFRAG), the Group of Latin-American Accounting Standard Setters (GLASS), and Pan-African Federation of Accountants (PAFA) explained recent developments in each of the groups.

IPSASB matters

Participants were updated on IPSASB developments since October 2014. One focus of attention was the public consultation on IPSASB’s strategy and work plan and the need find the right balance between public sector specific and IFRSs convergence projects.

EU Expert Group on IAS Regulation

Participants were provided with some context and an update on this topic. The positive outcome of the IAS Regulation evaluation was stressed, and the expectation was voiced that the EC was “neutral or relatively happy” with the preliminary feedback.

Post-implementation Review of IFRS 3 Business Combinations

During this session, participants discussed how to improve the IAS 36 impairment test, subsequent accounting for goodwill, identification and measurement of intangible assets, useful life of goodwill, bargain purchase and non-controlling interests, and the definition of a business.

Administrative matters

The next IFASS meeting will be held in London on 29 and 30 September 2015. The first meeting in 2016 will be held in Toronto on 4-5 April. Taiwan has offered to host the first meeting in 2017.

The IFASS Chairman noted that she proposes to step down after the Toronto IFASS meeting in 2016. A call for nominations will be made after the September 2015 meeting.

Conceptual Framework

Participants discussed the business model and P&L/OCI presentation, measurement, the definition and recognition of liabilities, and the reporting entity.

Topical Issues

Participants then discussed two topical issues: Application of IFRS 10 – Concerns arising from paragraph 4(a)(iv) and Classification of non-Current liabilities in the event of default – IAS 1 and the new ED on liability classification.

Effects Analysis Study Report

The IASB Vice-Chairman presented the topic and participants took away from the presentation that with all projects, they need to consider the effects of proposals in their jurisdictions and report these effects to the IASB during the lifecycle of the project and not just when asked to do so.

New IFASS member projects

Two new projects were introduced during this meeting. The Korean Accounting Standards Board presented "Costs and Benefits of IFRS Adoption in Korea – Preparers’ Perspectives" and the Italian standard-setter is conducting a project on "Disclosures related to the Application of IAS 8". The latter forms part of the IASB's disclosure initiative.

Please click for the full report from the meeting.

EFRAG plans project on accounting implications of the current interest rate environment

25 Aug 2015

The European Financial Reporting Advisory Group (EFRAG) has released the agenda and first meeting papers for the next EFRAG Board meeting, which will not only see the finalisation of the long-awaited endorsement advice on IFRS 9 but also discussions on a new pro-active project on accounting implications of low or negative interest rates.

While many standards require some form of discounting in the measurement of assets and liabilities, the implicit assumption is that there is a positive time value of money so the present value of an asset to be recovered or a liability to be settled in future is lower than the nominal amount. As the Eurozone has recently experienced negative interest rates with the result that the present value of assets or liabilities is higher than the future inflow or outflow of cash, EFRAG is considering a proactive project on accounting issues arising from low or negative interest rates with special focus on financial instruments.

The EFRAG Board still needs to determine the scope of the project. The agenda paper for the next meeting therefore lists all aspects that can or should be considered in connection with low or negative interest rates and the question whether a low interest environment would produce accounting information that does not appropriately represent the underlying economic phenomena in accordance with the business model.

Please click to access the press release on the EFRAG website announcing the next Board meeting. It offers access to the full agaenda and the meeting papers, including the one on accounting implications of low or negative interest rates.

Agenda posted for the September ITG meeting

21 Aug 2015

The agenda has been released for the upcoming meeting of the Transition Resource Group for Impairment of Financial Instruments (ITG), which is being held at the IASB's office in London on 16 September 2015.

The ITG was created to keep the IASB informed on issues occurring during implementation of the new impairment requirements in IFRS 9 Financial Instruments, to assist in determining what action may be needed to resolve diversity in practice and to provide a public forum for stakeholders to learn about the new impairment requirements from others involved with implementation.

The agenda for the upcoming meeting is as follows:

Wednesday, 16 September 2015, 10.00-14.15

  • Introductory remarks
  • Significant increases in credit risk
  • Use of changes in the risk of a default occurring over the next 12 months when assessing for significant increases in credit risk
  • Measurement of expected credit losses for revolving credit facilities
  • Forward-looking information
  • Update on BCBS guidance on expected credit losses

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

Summary of the joint CMAC/GPF June 2015 meeting

21 Aug 2015

The IASB has released a summary of the Capital Markets Advisory Committee (CMAC) joint meeting with the Global Preparers Forum (GPF), which was held in London on 11–12 June 2015.

The topics discussed at the meeting included:

  •  IASB Update 
  • Conceptual Framework
    • Reporting financial performance
    • Measurement
  • Provisions, Contingent Liabilities and Contingent Assets
    • About the research project
    • Recognition criteria
    • Measurement requirements
  • Pollutant Pricing Mechanisms
    • Recognising the allowances and obligation
    • Measuring the allowances
    • Reporting gains and losses
  • Disclosure Initiative
  • IFRS Interpretations Committee Update
    • Variable payments on purchase of PP&E and intangible assets
    • IFRIC 12 Service Concession Arrangements: variable payments by operator to grantor

The next GPF meeting will take place on 4 November 2015 and the next CMAC meeting will occur on 6 November 2015.

The full meeting summary is available on the IASB's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.