The scope of the guidance is accounting for expected credit losses broadly, so it is intended to cover IFRS 9 Financial Instruments as well as all other accounting frameworks (including impending changes to US GAAP).

The guidance is structured around 11 principles:

• A bank's board of directors and senior management are responsible for ensuring appropriate credit risk practices.
• A bank should adopt, document and adhere to methodologies that allow for appropriately assessing and measuring the level of credit risk on all lending exposures.
• A bank should have a process in place to appropriately group lending exposures on the basis of shared credit risk characteristics.
• A bank's aggregate amount of allowances should be adequate and consistent with the objectives of the relevant accounting requirements.
• A bank should have policies and procedures in place to appropriately validate its internal credit risk assessment models.
• A bank's use of experienced credit judgment is essential to the assessment and measurement of expected credit losses.
• A bank should have a sound credit risk assessment and measurement process that provides it with a strong basis for assessing and pricing credit risk, and accounting for expected credit losses.
• A bank's public reporting should promote transparency and comparability by providing timely, relevant and decision-useful information.
• Banking supervisors should periodically evaluate the effectiveness of a bank's credit risk practices.
• Banking supervisors should be satisfied that the methods employed by a bank to determine allowances produce a robust measurement of expected credit losses under the applicable accounting framework.
• Banking supervisors should consider a bank's credit risk practices when assessing a bank's capital adequacy.

The guidance also includes an appendix specifically dealing with IFRS 9. The appendix provides guidance on certain aspects of the ECL requirements in the impairment sections of IFRS 9 that are not common to other ECL accounting frameworks and covers (i) the loss allowance at an amount equal to 12-month ECL, (ii) the assessment of significant increases in credit risk, and (iii) the use of practical expedients.

The Basel Committee stresses that the guidance is intended to set forth supervisory requirements on accounting for expected credit losses that do not contradict applicable accounting standards established by standard-setters. The IASB had prior access to the guidance and has not identified any aspects of it that would prevent a bank from meeting the impairment requirements of IFRS 9.

Please click for access to the draft guidance and a corresponding press release on the website of the Bank for International Settlements (BIS). Comments on the draft guidance close on 30 April 2015.

Chairman Hoogervorst began by noting that 114 out of 138 jurisdictions surveyed have adopted IFRSs and another 12 have allowed the use of IFRSs. In Europe, a consultation is underway to evaluate companies’ experiences with IFRSs. Most of the feedback received has indicated that IFRSs have resulted in improvements to financial reporting. Chairman Hoogervorst also provided an update on the increasing use of IFRSs in Japan and China as well as the recent convergence efforts with India.

In addition, he touched on the reasons why some Swiss companies have changed their reporting methods from IFRSs or U.S. GAAP to Swiss GAAP. He stated that the main reason this change is occurring is to reduce complexity and disclosure requirements. Further, he indicated that the IASB is “constantly confronted with trade-offs between [its] desire to give as much information as possible on the one hand, and [its] wish to keep costs for preparers manageable on the other hand.” However, he mentioned that one of the objectives of the IASB’s disclosure initiative project is to make complexity more manageable.

The full transcript and a video recording of Chairman Hoogervorst’s speech are available on the IASB’s website.

The topics discussed were as follows (click through to access detailed Deloitte observer notes for each topic):

TUESDAY, 27 JANUARY 2015

Items for con­tin­u­ing con­sid­er­a­tion

• IAS 16 — Accounting for proceeds and costs of testing PPE
• IAS 39 — Income and expenses of FI with a negative interest rate

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

The agenda for the meeting is sum­marised below:

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

The new International Public Sector Accounting Standard (IPSAS) addresses the transition from either a cash basis, or an accrual basis under another reporting framework, or a modified version of either the cash or accrual basis of accounting. Consequently, the IPSASB states that the new IPSAS is not aimed at IFRS convergence. Nevertheless, the IPSASB did consider the transitional exemptions included in IFRS 1 First-time Adoption of International Financial Reporting Standards in developing the standard.

Main feature of IPSAS 33 is that allows first-time adopters three years to recognise specified assets and liabilities in order to give preparers sufficient time to develop reliable models for recognising and measuring assets and liabilities during the transition period. These assets and liablilties include inventories, investment property, property, plant and equipment, defined benefit plans and other long-term employee benefits, biological assets and agricultural produce, intangible assets, service concession assets and the related liabilities, and financial instruments.

The IPSASB is aware that where a first-time adopter takes advantage of the exemptions above, fair presentation and compliance with accrual basis IPSASs will be affected and the first-time adopter will not be able to make an unreserved statement of compliance with accrual basis IPSASs until the exemptions have expired or the relevant items are recognised and measured in accordance with the applicable IPSASs. Still, the IPSASB believed that the transition period meets the needs of both preparers and users of financial statements and might be a further incentive for entities to make the decision to apply IPSASs. Nevertheless, the IPSASB encourages first-time adopters to comply in full with all the requirements of the applicable IPSASs as soon as possible.

IPSAS 33 shall be applied if a first-time adopters first IPSAS financial statements are for a period beginning on or after 1 January 2017. Earlier application is permitted. Please access the new standard and a corresponding press release on the IPSASB website.

The topics discussed were as follows (click through to access detailed Deloitte observer notes for each topic):

TUESDAY, 27 JANUARY 2015

The article opens with a reflection on the Accounting Standards Advisory Forum (ASAF), which the Accounting Standards Board of Japan (ASBJ) is a member of. Mr Ochi explains that since the IASB has switched to an 'all-participating-type' of standard-setting, the ASBJ has contributed well-received papers on Is OCI Unnecessary? and Should Goodwill still not be Amortised? - Accounting and Disclosure for Goodwill.

Mr Ochi also points out that Japan is sending several staff to support the organisation, including actively supporting the IASB's Asia-Oceania office. This, to Mr Ochi, is another point supporting the statement that the IASB's standard-setting has become 'all-participating' and that Japan is using the opportunity.

At the same time, Mr Ochi claims that to regard Japan as an outsider should become an attitude of the past vis-à-vis Japan's ongoing expansion of the use of IFRSs. He states:

Japan, who is promoting the expansion of the voluntary application of IFRS and who is one of the countries that actually uses IFRS, has begun participating in standard-setting with its feet on ground, taking root from practical experiences. 

Please click for access to Mr Ochi's article on the IASB website.

Current status

The revised time table for the major projects is now as follows:

In addition, board discussions related to the research project on business combinations under common control now extend into the second quarter of 2015.

The revised IASB work plan (dated 27 January 2015) is available on the IASB's website. We have updated our project pages to reflect the updated work plan and other known developments.