In her speech entitled "Accountants and Capital Markets in an Era of Digital Disruption", Commissioner Stein discussed many ideas around technological change, transforming business models, and instantaneously available data. One of her points was the effect this might have on financial reporting. She commented that while there has been an effort over the last years to find a globally accepted, single set of high-quality financial reporting standards, which would be attactive in view of borderless business and instantaneous movement of data, the practical challenges of the task seem to be overwhelming: "Quite frankly, it often feels like we are searching for the Holy Grail. But I am not sure it is there." Commissioner Stein even questioned whether the convergence efforts so far have contributed to improved quality at all. She therefore advocated rather than trying to overcome differences to make use of technological developments to further timely access to information and bridge gaps in understanding:

I think we should go back to first principles. Information provided to investors must be relevant, reliable, and timely, to be decision-useful. How that is achieved may vary across cultures and reflect deeply entrenched political and economic structures. And that is appropriate – indeed, unavoidable. Advances in communications, technology, and data analytics can contribute to improvements in financial reporting, and this too can help bridge those gaps. The key in my mind is not necessarily to converge for the sake of convergence, but rather to expand timely access to information and provide for understanding differences.

Please click for access to the full text of the speech on the SEC website.

In the speech, Mr Prada outlined these three criteria as it applies to IFRS. First, he used the IFRS Foundation’s mission statement to present a clear and supported purpose. The mission statement states:

Our mission is to develop IFRS that bring transparency, accountability and efficiency to financial markets around the world. Our work serves the public interest by fostering trust, growth and long-term financial stability in the global economy.

Next, he noted that 116 jurisdictions require the use of IFRS and many other permit the use of IFRS on a voluntary basis. In addition, most of the countries that have adopted IFRS have done so without any modifications. This signifies wide and consistent use around the world.

Lastly, Mr Prada noted the positive results from reviews on the use of IFRS within Europe and other jurisdictions such as Australia, Canada and Korea. The reviews show that the application of IFRS “raised the quality and consistency of financial reporting, and brought benefits to companies and investors."

A transcript of Mr Prada's speech is available on the IASB’s website.

Specifically, members of the panel and participants of the outreach event discussed how profit or loss (P&L) could become more useful and what the role of other comprehensive income (OCI) may be. The main observations from the outreach event included:

• The importance of P&L financial information when initiating an analysis. In addition, non-GAAP metrics based on P&L were considered important.
• Investors often view financial reporting to be more relevant than management performance assessments when determining valuation objectives.
• Sell-side analysts focused on short-term, while buy-side analysts considered a longer-term investment decision.
• OCI is an important consideration when determining an accurate company evaluation.
• P&L is often adjusted and the type of adjustments varies on the analysis performed.
• OCI had a “confirmative role for investors” and it is important to evaluate how OCI performed over time.
• Application of the valuation model needs a number reflecting the underlying performance of a business.
• Prudence was considered by some as a conservative bias in accounting and the level of prudence seemed to depend on the type of investor.

The EFRAG will consider the feedback received from the outreach event for its comment letter to the exposure draft.

For more information, see the press release and the report on the EFRAG’s website.

In August 2015, the IASB published ED/1015/7 with proposed amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The amendments aim at deferring the effective date of the September 2014 amendments to these standards indefinitely until the research project on the equity method has been concluded.

In its draft comment letter, EFRAG supports the proposed amendments as EFRAG believes that this deferral will give the IASB the opportunity to address the application problems arising from the equity method requirements comprehensively, will give the IASB the opportunity to reconsider subsequently identified issues and challenges, and will  reduce the risk of requiring successive rounds of changes to IAS 28 in a short period of time.

EFRAG has also written to the European Commission to further postpone the endorsement of the September 2014 amendments. The endorsement process on these amendments is currently on hold following a February 2015 recommendation by EFRAG.

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

• Draft comment letter:
  • Press release
  • Draft letter
• Recommendation to postpone endorsement:
  • Press release
  • Letter to the European Commission

The MASB voted on the deferral after the IASB decided on 22 July 2015 that it would defer the effective date of IFRS 15 Revenue from Contracts with Customers by one year. In oder to keep full convergence with the IASB standards, the MASB decided to follow suit.

This decision also affects TEs. The MFRS Framework applied to the majority of Malaysian entities for annual periods beginning on or after 1 January 2012. However, TEs, being those within the scope of MFRS 141 Agriculture and IC Interpretation 15 Agreements for Construction of Real Estate, together with parents, significant investors and venturers of those entities, were exempted from the MFRS Framework pending completion of the IASB's projects on revenue recognition and bearer plants. When the IASB completed IFRS 15 in 2014, Malaysia set the transition date for real estate and agricultural entities at 1 January 2017 - in line with the original effective date of IFRS 15 to give TEs sufficient preparation time. Given it is now believed that additional preparation time is needed to implement the revenue requirements, the MASB also believes that TEs may also benefit from additional time for implementing the new framework. The new mandatory transition date is now also 1 January 2018. However, these entities are encouraged to consider early application.

Formal amendments to IFRS 15 confirming the new effective date are expected later this month. Once the IASB has issued the amendment, the MASB intends to follow suit with a formal amendment to MFRS 15.

Please click for more information in the press release on the MASB website.

Highlights of the findings in the paper include:

1. Although the capitals framework is not easily implementable in the banking industry at first sight, there are an increasing number of best practice examples.
2. Of the 20 surveyed banks, eight applied the <IR> 'capitals' terminology as outlined in the <IR> Framework and three others applied a similar concept but used different terms.
3. Banks tend to provide provide key performance indicators for 'output and outcomes' only rather than for 'input' (usage of resource) or net contribution. When 'input' is reported, banks do so to comply with other frameworks such as the GRI guidance.
4. Not surprisingly, the highest consistency of key performance indicators relates to financial capital. It is commonly viewed as the capital most directly relevant to investors, and most easily quantified. Information for the other capitals tends to be more varied.

Please click to access the paper on the IIRC website.

His article first looks at the state of adoption in the jurisdictions the IFRS Foundation has so far compiled 'jurisdiction profiles' for and then analyses them in different groups. Two of the conclusions he arrives at are "Assertions of 'many local flavours' are wrong" and "Not just a goal, but a reality". He also includes "A word about the United States" and comments on "Consistent application and implementation of IFRS". Please click to assess the new assessment on the IASB website.

Mr Pacter, former webmaster of IAS Plus, is also the original author of our popular table on the use of IFRSs around the world.