October

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European Union will not adopt IFRS 14

30 Oct 2015

The European Commission (EC) will not propose for endorsement the interim standard on rate regulated activities, IFRS 14.

The EC argues that IFRS 14 Regulatory Deferral Accounts is a temporary standard offering an accounting option to companies that adopt IFRS for the first time. Therefore the EC will not propose IFRS 14 for endorsement in the EU as very few European companies would fall within its scope. The Commission will consider any future standard on rate regulated activities for endorsement in the EU under its normal process.

The EC's decision is reflected in an updated EFRAG endorsement status report.

IASB (International Accounting Standards Board) (blue) Image

Third work plan update for October

30 Oct 2015

The IASB has updated its work plan yet again. The update of note is an Exposure Draft on the definition of a business that is expected "within three months".

Following the post-implementation review of IFRS 3, several projects related to IFRS 3 were added to IASB’s research agenda. At their joint meeting in September, the IASB and FASB discussed their respective projects related to their Business Combinations Standards, and how the boards could work together on these projects. At its October meeting, the IASB decided to follow a staff recommendation to propose changes to IFRS 3 that are the same as the amendments proposed by the FASB, and to issue an Exposure Draft rather than a Discussion Paper.

Consequently, the new version of the work plan shows the definition of a business project no longer as a research project but as an implementation project with an Exposure Draft expected in the next three months.

One small additional update regards yet again the practice statement on materiality. Although ED/2015/8 IFRS Practice Statement - Application of Materiality to Financial Statements was published on 28 October, the work plan published later that day still had it as "upcoming". This has now been rectified.

For a full analysis any other changes please see our news item dated 27 October. The newly revised IASB work plan is available on the IASB's website.

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IFRS Advisory Council membership update

30 Oct 2015

The Trustees of the IFRS Foundation have announced 16 appointments and re-appointments to the IFRS Advisory Council.

The Advisory Council is the formal advisory body to the Trustees and the IASB. It advises the IFRS Foundation on its strategic direction, technical work plan and priorities.

The new Advisory Council members are:

    1. William Coen - Basel Committee on Banking Supervision
    2. Aziz Dieye - La Fédération Internationale Des Experts-Comptables Francophones (FIDEF)
    3. Isabelle Ferrand - International Co-operative Alliance (ICA)
    4. Yibin Gao - Ministry of Finance, People’s Republic of China
    5. Andrew Marshall - KPMG
    6. Colin McDonald - The Investment Association
    7. Melanie McLaren - Group of European National Standard-setters
    8. John Stanford - International Federation of Accountants (IFAC)

With the exception of Isabelle Ferrand, who is representing an organisation newly admitted to the Advisory Council, the new members will replace retiring members Peter Chambers, Egbert Eeftink, Stephenie Fox, Alberto Giussani, Daniel McMahon, René van Wyk, and Min Yang.

The following members of the Advisory Council have been reappointed: Linda Diaz del Barrio, Gavin Francis, Jake Green, Igor Kozyrev, Ghiath Shabsigh, Anne Simpson, Lynda Sullivan, and Stephen Taylor.

Ernesto López Mozo and Maarika Paul are stepping down from the Council.

All appointments take effect 1 January 2016 and are for a three-year period.

The press release announcing the new appointments can be found on the IASB's website.

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Agenda posted for the November 2015 Global Preparers Forum meeting

29 Oct 2015

Representatives of the International Accounting Standards Board (IASB) will meet with the Global Preparers Forum (GPF) in London on Wednesday, 4 November 2015. The agenda for the meeting has been released, which includes updates from the IASB and IFRS Interpretations Committee, discussions on specific topics including the conceptual framework, role and activities of the IFRS Advisory Council, the 2015 Agenda Consultation and the Review of Structure and Effectiveness, fair value measurement, and the disclosure initiative.

The full agenda for the meeting is sum­marised below:

Wednesday, 4 November 2015 (09:30-17:45)

  • IASB update:
    • Major standards.
    • Research activities.
    • Other activities.
  • IFRS In­ter­pre­ta­tions Committee update:
    • IFRS 9 Financial Instruments and IAS 28 Investments in Associates and Joint Ventures — Measurement of long-term interests.
    • IAS 16 Property, Plant and Equipment — accounting for proceeds and costs of testing of PPE.
    • Overview of Interpretations Committee activities.
  • Conceptual framework.
  • IFRS Advisory Council: Role and recent activities.
  • IASB Agenda Consultation and Trustees’ Review of Structure and Effectiveness of the IFRS Foundation.
  • Fair Value Measurement: Unit of Account.
  • Disclosure Initiative: Materiality Practice Statement.

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

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IFRS Foundation Trustee speaks on the relevance of IFRSs

29 Oct 2015

Lynn Wood, IFRS Foundation Trustee, gave a keynote speech at a conference in Melbourne, Australia today. She focussed on 'Financial reporting in the global economy: Facilitating better business and investor decision-making'.

Ms Wood, who herself served as Chairman of the Australian Financial Reporting Council, was convinced that in the 21st century, capital markets are mutually dependent and globally interconnected and that as a country that looks both East and West, Australian capital markets were the perfect example of this. This was the reason international standards were needed.

She noted that one of the most frequent criticisms she heard was the ongoing concern about complexity in financial reporting. However, she also voiced the conviction that people do understand that there are many root causes of complex financial reporting, including increasingly complex business operations. She also conceded that IFRS and financial reporting in general are a long way from being perfect.

Therefore she urged the members of her audience to a) familiarise themselves with developments in IFRS and how they may affect their company and b) to get involved in the process at an early stage. Because she believed that there was no way back or around IFRSs:

I strongly believe that the momentum is now unstoppable towards every country in the world adopting IFRS, and so the question is no longer ‘if’ but ‘when’ we will have truly global accounting standards.

Please click to download the manuscript of Ms Lynn's speech from the IASB website.

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IASB publishes update on the definition of a lease

29 Oct 2015

The IASB staff have published a short project update providing an overview of how a lease will be defined in the IASB's new standard on leases. It also includes a working draft of the application guidance and accompanying illustrative examples to be included in the forthcoming standard on the definition of a lease.

The staff are providing the update to help stakeholders prepare for the implementation of the new standard. They point out that it is likely that the first step to be undertaken in implementing the standard will be to determine the population of contracts to which the standard applies - which will be determined by the definition of a lease. Please note that although the IASB has completed its decision making for the leases project, the final standard is still in drafting and is subject to possible further refinements.

Please click to download the update from the IASB website.

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New IFRS for SMEs training module available

29 Oct 2015

The IFRS Foundation Education Initiative has developed a training module for Section 12 of the IFRS for SMEs.

Section 12 Other Financial Instruments Issues of the IFRS for SMEs specifies the accounting for other, more complex financial instruments and transactions that are not covered by Section 11 Basic Financial Instruments. All trainig modules are available here on the IASB website.

The IFRS Foundation also notes that the education staff are currently updating the complete suite of 35 training modules to reflect the IASB's in May 2015 amendments to the IFRS for SMEs.

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Summary of the October ASAF meeting now available

29 Oct 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 1-2 October 2015.

The first two discussions also featured feedback from the World standard-setters meeting held earlier that week. The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • 2015 Agenda consultation (1-22). ASAF members discussed (a) the factors used to allocate resources between standards-level projects, research and maintenance and implementation, (b) the prioritisation of the research programme, (c) the level and mix of implementation support provided, (d) the pace of change and the level of detail given in IFRS, and (e) a proposal to extend the interval between agenda consultations to five years.
  • Conceptual Framework (23-54). ASAF members discussed (a) possible implications for IAS 37 Provisions, Contingent Liabilities and Contingent Assets of the proposals in the Conceptual Framework exposure draft, (b) the proposals on measurement in the ED, and (c) possible implications of the ED for the rate-regulated activities project.
  • Clarifications to IFRS 15 (55-58). The IASB staff provided an overview of the exposure draft of clarifications to IFRS 15 and asked the ASAF members (a) to comment on the high hurdle applied by the IASB when considering whether and how to amend IFRS 15 and (b) to provide their preliminary views on the questions in the ‘Invitation to comment’ section of the ED.
  • Measuring quoted investments in subsidiaries, joint ventures and associates at fair value -unit of account (59-82). ASAF members were asked to provide their views on the relevance of the proposed measurement model included in the exposure draft Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value published in September 2014.
  • Pollutant pricing mechanisms (83-96). ASAF members considered a possible model to account for a cap-and-trade type of emissions trading scheme that reflected the feedback received from ASAF members at the July 2015 meeting.
  • Equity method of accounting (97-104). The FASB briefly outlined its simplification project on the equity method of accounting, which includes eliminating the requirement for an entity to measure at fair value its share of the investee’s identifiable assets and liabilities. The IASB staff then sought the views of the ASAF’s members on the IASB staff’s preliminary proposals to amend the equity method of accounting.
  • IASB project update including insurance contracts (105-113). The IASB staff provided an overview of the recent IASB’s tentative discussions on the insurance contracts project, which focussed on (a) requirements for insurance contracts with participation features and (b) the different effective dates of IFRS 9 and the new insurance contract. The staff then presented an overview of the IASB’s current projects, a summary of the actions taken on the advice provided by the ASAF in previous meetings and the suggested agenda topics for the December 2015 and April 2016 ASAF meetings .

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

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Second IASB work plan update for October with minimal change

29 Oct 2015

The IASB updated its work plan for the second time this month to reflect yesterday's issuance of its proposed Practice Statement on materiality.

The publication of ED/2015/8 IFRS Practice Statement - Application of Materiality to Financial Statements means that the project on materiality is now in public consultation phase, no longer in exposure draft drafting phase. All other entries remain as reported two days ago. The newly revised IASB work plan is available on the IASB's website.

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2016 IFRS Blue Book — Coming soon

29 Oct 2015

The IFRS Foundation has announced that the '2016 IFRS Consolidated without early application' will be published in December 2015. This volume (nicknamed the "Blue Book") will contain all official pronouncements that are mandatory on 1 January 2016. It does not include IFRSs with an effective date after 1 January 2016. The Blue Book differs from the traditional Bound Volume (the "Red Book"), which includes all pronouncements issued at the publication date, including those that do not become mandatory until a future date.

The Blue Book will sell for £72 plus shipping (academic, developing country, and volume discounts apply). You will find more information and ordering details here.

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