We comment on a number of tentative agenda decisions of the IFRS Interpretations Committee

30 Nov 2015

We have published our comment letters on IFRS Interpretations Committee agenda decisions on IAS 32, IAS 39, IFRS 5, IFRS 9, and IFRS 11, as published in the September 2015 IFRIC Update.

More information about the issues is set out below:

Issue Agenda decision supported? More information
IAS 32 Financial Instruments: Presentation — Classification of the liability for a prepaid card in the issuer’s financial statements yes
IAS 39 Financial Instruments: Recognition and Measurement — Separation of an embedded interest rate floor from a floating rate host contract in a negative interest rate environment yes
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations — To what extent can an impairment loss be allocated to non-current assets within a disposal group? yes
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations — How to present intragroup transactions between continuing and discontinued operation no
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations — Various IFRS 5-related issues yes
IFRS 9 Financial Instruments — Transition for hedge accounting yes
IFRS 11 Joint Arrangements — Remeasurement of previously held interests: Various transactions yes

You can access all our comment letters to the IASB, IFRS Foundation, and IFRS Interpretations Committee here.

Agenda for December 2015 Emerging Economies Group meeting

27 Nov 2015

The agenda is available for the tenth meeting of the Emerging Economies Group (EEG) and International Accounting Standards Board (IASB), which is being held in Riyadh on 1-2 December 2015.

The agenda is summarised below:

Tuesday 1 December 2015 (09:00-17:00)

  • Address by hosting country (Saudi Arabia)
  • Address by the EEG Chair
  • Presentation on the IASB Agenda consultation
  • Discussion: IASB Agenda consultation
  • Business combination under common control
  • Discussion (continued) : IASB Agenda consultation
  • Administrative issues (topics and venue for future meetings, video conference test, expanding new members)

Wednesday 2 December 2015 (09:00-12:20)

  • IASB updates
  • IFRIC exposure draft on uncertainty over income tax treatments
  • Open discussion on topics from members
  • Discussion and approval of the communiqué
  • Meeting summary

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

Should the IASB extend its remit beyond the current focus of the organisation to develop standards; in particular for entities in the private, not-for-profit sector?

27 Nov 2015

On 7 July 2015, the Trustees launched the 2015 Constitution review. One of the questions asked was whether the IASB should extend its remit beyond the current focus of private sector, for-profit entities. With the comment letter deadline approaching (next Monday), two major positions emerge.

The proponents (among them AICPA, AASB, and MASB) argue from a conceptual viewpoint:

  • There clearly is a need for international financial reporting standards for private not-for-profit entities.
  • The IASB has the experience necessary for dealing with international standard-setting.
  • Even though circumstances differ between the for-profit and the private not-for-profit sectors, fundamentally the economics are not sector-specific.
  • Standard-setting across sectors and testing new concepts across all of them can result in better quality standards and decisions for the for-profit sector.
  • Some of the proponents even believe public sector standard-setting should be included in the IASB's responsibilities for the same reasons.

The opponents (among them ASCG, ESMA, FRC, IFAC, Keidaren, and XRB) mostly argue from the cost perspective:

  • Even though most acknowledge the existing lack of and the potential need for international financial reporting standards for private not-for-profit entities, they are not convinced that this means the IASB has to step in.
  • There are still significant gaps in financial reporting for listed entities that need to be addressed first.
  • The IASB simply doesn't have the funds and resources to take on additional responsibilites.
  • Changes to scope would also likely mean that changes would need to be made to the oversight arrangements, IASB membership and competencies, staff competencies and resources, and Advisory Council membership.

Please click for access to all comment letters on the 2015 Constitution review made available publicly so far on the IASB website.

Agenda for the December 2015 ASAF meeting changed

27 Nov 2015

The agenda for the upcoming meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 7-8 December 2015, has been updated. On the face of things, the change is minor, however, it could bear significance as it relates to IFRS 9 and the forthcoming standard on insurance contracts.

So far, the different effective dates of IFRS 9 and the new standard on insurance contracts were supposed to be dealt with as part of an omnibus discussion of current IASB projects at the end of the meeting. The issue has now been given a slot in its own right (Monday, 7 December, 16:15-17:30). According to the new agenda, the session is intended to focus only on the overlay approach; the deferral approach will not be discussed. An additional agenda paper for the session has been made available.

We have updated our agenda overview for the entire meeting to reflect the change.

'Five steps to simplifying financial statements — today'

27 Nov 2015

Chartered Professional Accountants of Canada (CPA Canada) has published a guide outlining an approach for simplyfing financial statements by reducing disclosure overload, without the use of significant resources.

The five steps for achieving described in the publication and also explained in a short video are:

  • make financial reporting a strategic matter;
  • focus on materiality;
  • refine formatting and presentation;
  • apply a truly condensed approach to interim reporting; and
  • keep looking ahead.

Please click to access the publication and the video on the CPA Canada website.

EFRAG draft comment letter on the materiality exposure draft

27 Nov 2015

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on IASB exposure draft ED/2015/8 'IFRS Practice Statement - Application of Materiality to Financial Statements'.

In its draft comment letter, EFRAG expresses the view that the proposed guidance could be helpful, in particular in the context of disclosures, in order to provide a common ground for applying judgement in deciding which information is relevant for users and fostering thinking on how materiality is applied. EFRAG also believes that it is appropriate that the guidance takes the form of a practice statement as the essence of the proposed guidance is to foster the exercise of judgement, i.e. work on a mindset. Nevertheless, EFRAG believes that the draft practice statement should be drafted in a more concise and practical way and focus on the key steps of the process necessary to make decisions and exercise judgement on materiality.

Comments are requested by 15 February 2016. For more information, see the press release and the draft comment letter on the EFRAG website.

Recent sustainability and integrated reporting developments

27 Nov 2015

A summary of recent developments at the IIRC, the ACCA, the CFA Institute, and the Natural Capital Coalition.

The International Integrated Reporting Council (IIRC) announces that it will be launching the <IR> Academic Network on Wednesday, 16 December 2015 via a webinar. The session will include a welcome from the IIRC, an overview of current research on, opportunities for further research, and an introduction to the features of the Academic Network – including how to join. Please click to access the press release on the IIRC website.

The Association of Chartered Certified Accountants (ACCA) has published a report into the challenges to providing independent assurance over an integrated report. The report notes that "the big question is not how <IR> can develop to accommodate assurance, but how assurance models can be adapted to incorporate integrated reporting". Please click for the press release on the ACCA website.

The CFA Institute, a global association of investment professionals, has added Environmental Social & Governance Issues in Investments: A Guide for Investment Professionals to its portfolio of environment, social and governance (ESG) resources. The guide was developed in response to growing interest among investment professionals to better incorporate ESG issues in investment analysis, and serves as a comprehensive introduction to ESG considerations. Please click to access the press release on the CFA Institute's website.

The draft Natural Capital Protocol and Sector Guides have been launched for consultation at the World Forum on Natural Capital. The draft protocol and sector guides have been developed by the Natural Capital Coalition as a standardised framework for business to measure and value its impacts and dependencies on natural capital and to help them integrate this into their decision making. For more information, see the press release on the organisation's website.

IFRS Foundation releases training material for IFRS 9 and IFRS 15

27 Nov 2015

The IFRS Foundation's education initiative has releases slide decks to support those teaching IFRSs. The material provided now is for IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers'. Both standards are effective for annual reporting periods beginning on or after 1 January 2018 with early application permitted.

The material for IFRS 9 is four parts: (1) Objective, scope, recognition and derecognition; (2) Classification and measurement; (3) Impairment; and (4) Hedging. For IFRS 15, a synopsis that highlights the main requirements of the standard accompanies the slide presentation. All materials provided as part of the education initiative can be used free of charge. It can be accessed through the press release on the IASB website.

18th ESMA enforcement decisions report released

25 Nov 2015

The European Securities and Markets Authority (ESMA) has published further extracts from its confidential database of enforcement decisions taken by European national enforcers. This batch deals with decisions in relation to IAS 1, IAS 19, IAS 27, IAS 34, IAS 36, IFRS 5, IFRS 10, and IFRS 13.

The European national enforcers of financial information monitor and review financial statements published by issuers with securities traded on a regulated European market and who prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) and consider whether they comply with IFRS and other applicable reporting requirements, including relevant national law.

ESMA has developed a confidential database of enforcement decisions taken by individual European enforcers as a source of information to foster appropriate application of IFRS.

The publication of enforcement decisions is designed to inform market participants about which accounting treatments European national enforcers may consider as complying with IFRS, i.e. whether the treatments are considered as being within the accepted range of those permitted by IFRS. ESMA considers the publication of the decisions, together with the rationale behind them, will contribute to a consistent application of IFRS in the European Union.

Topics covered in the latest batch of extracts, covering the period from February 2014 to May 2015, include:


Standard Topic

IFRS 5Non-current Assets Held for Sale and Discontinued Operations

Presentation of licensed activities as discontinued operations

IAS 34 Interim Financial Reporting

Disclosures in interim financial statements

IAS 19Employee Benefits

Disclosures on post-employment benefit plans

IAS 34 Interim Financial Reporting
IAS 1 Presentation of Financial Statements

Going Concern disclosures

IFRS 10Consolidated Financial Statements

Control of an entity without holding any equity interest

IFRS 10Consolidated Financial Statements

De facto control

IAS 36Impairment of Assets

Impairment of goodwill

IFRS 13 Fair Value Measurement

Fair value measurement for fixed-rate loans

IAS 36Impairment of Assets

Carrying amounts of a cash-generating unit to be tested for impairment

IFRS 5Non-current Assets Held for Sale and Discontinued Operations
IAS 27
Separate Financial Statements

Presentation and disclosure of discontinued operations in separate financial statements

Click for access to the full report (link to ESMA website). The ESMA has also published an updated overview of all enforcement decisions ever published.

Report from autumn 2015 IFASS meeting

25 Nov 2015

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held in London on 29 and 30 September 2015.

Highlights from the meeting included:

Global IFRS issues

Michel Prada, Chairman of the Trustees, IFRS Foundation, delivered the opening remarks. He spoke on the main strategic challenges to IFRS,the current structure and effectiveness review of the IFRS Foundation, and the role and responsibilities of accounting standard-setters in an IFRS world. After his speech when answering questions he spoke at some length about percieved U.S. influence on IFRS standard-setting.

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 March 2015. One focus of attention was the IPSASB’s social benefits project.

Administrative matters

The next IFASS meeting will be held in Toronto on 4 and 5 April 2016.

The IFASS Chairman confirmed that she will step down after the Toronto IFASS meeting in 2016. She summarised the nomination and appointment process of the next IFASS Chairman, including a proposed timetable. A representative from the German standard-setter advised that his jurisdiction would be nominating Liesel Knorr, Past President of the Accounting Standards Committee of Germany, as a candidate for the position of IFASS Chairman.

IASB work and research programmes

IASB staff representatives rprovided an update on the IASB’s current agenda projects and identified activities that representatives could undertake to support the IASB’s project activities and the development of IFRSs. They also noted that the IASB is aware that, while its standards are principles based, many of them are very long. The staff is thinking how to simplify the IASB’s guidance and is examining FASB’s simplification project. Participants noted that simplification is harder for the IASB to accomplish versus the FASB, because of the translation problem.

Report back on IFASS member projects

Representatives from Japan and EFRAG provided an update on the goodwill project being conducted by EFRAG, the Italian standard-setter and the Japanese standard-setter. They also asked for input on the next steps to be undertaken. On an informal show of hands most participants appeared to prefer the amortisation approach.

IFRS implementation issues

The IASB Director of Implementation Activities initiated a discussion on ways of improving the IASB’s knowledge of application issues at the local-jurisdiction level. Participants were doubtful that completely consistent application is possible on each and every issue. Differing tax and other legislation would be a hindrance. The Chairman suggested that helpful hints on contentious issues emanating from local jurisdictions should be shared with IFRIC and the IASB staff. She also added that local jurisdictions could hold education and discussion sessions on issues and send those on which there is no consensus to IASB and IFRIC.

FASB Proposals to Revise Financial Statement Presentation of Not-for-Profit Organisations (NFPO)

FASB representatives provided an overview of the FASB’s April 2015 Exposure Draft proposing several improvements to the financial statement presentation requirements for not-for-profit organisations. On an informal show of hands, participants appeared to indicate that there is a need for international standards for reporting by NFPOs. Many indicated that they favoured customisation of international standards to deal with local situations. The IPSASB incoming Chair said that IPSASB would consider this issue further and report back to the group.

Topical Issues

Participants then discussed three topical issues:

  • Core inventories (presented by India)
  • U.K. GAAP: Adapting IFRS for domestic needs (presented by the UK)
  • Types of reporting frameworks used by entities raising capital in non-traditional markets (presented by Canada)

New IFASS member projects

Three new projects were introduced during this meeting, all undertaken by EFRAG:

  • Reporting income and expense in profit or loss or OCI
  • The statement of cash flows – Issues for financial institutions
  • Use of financial information by investors

Please click for the full report from the meeting.

Correction list for hyphenation

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