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2015

IPSASB establishes advisory body

09 Dec 2015

The International Public Sector Accounting Standards Board (IPSASB) has announced that it will establish a consultative group to offer advice to the board on setting financial reporting standards for the public sector.

The formation of the new body — the IPSASB Consultative Advisory Group (CAG) — responds to a key recommendation in the governance review group’s report and is intended to further strengthen the IPSASB’s standard-setting processes by enabling additional dialogue with key stakeholders.

The CAG will provide advice to the IPSASB on:

  • The IPSASB’s strategy and work plan;
  • IPSASB’s projects, including views on technical issues or matters that may impede adopting and implementation of International Public Sector Accounting Standards (IPSAS); and
  • Other matters relevant to the IPSASB standard-setting activities.

An inaugural chair of the IPSASB CAG has been appointed but the membership of the group still has to be determined. The IPSASB has issued a call for nominations and is especially encouraging users of public sector financial reports and representatives of governments and other public sector entities, including preparers, to apply. Nominations are also encouraged from parliamentarians, public sector auditors, regulators, non-governmental organisations, and other regional and international organisations.

The inaugural meeting of the CAG is currently planned for June 2016 in Toronto, Canada.

Please click for the following information on the IPSASB website:

AOSSG points out specific aspects of Islamic financial reporting in connection with the Conceptual Framework

09 Dec 2015

In an appendix to the general comment letter of the Asian-Oceanian Standard-Setters Group (AOSSG) on the IASB's exposure draft ED/2015/3 'Conceptual Framework for Financial Reporting' the AOSSG's Islamic Finance Working Group (IF WG) points out some specific aspects relevant to Islamic accounting.

The IF WG especially welcomes the explicit 'substance over form' statement in the proposed Conceptual Framework as stakeholders in Islamic finance place high importance on the legal form(s) used to achieve a particular economic phenomenon (the legal form determines whether a transaction is permissible or prohibited). Nevertheless, given the importance of the underlying contracts in determining the permissibility of an Islamic financial transaction, the IF WG considers it appropriate to disclose information in the financial statements about the legal form of an economic phenomenon as part of the faithful representation of that phenomenon.

The comment letter also notes that the ED’s discussion on the reporting entity and the boundary of the reporting entity may be useful to current discussions on Islamic arrangements, where an entity is responsible for the economic activities of another non-legal entity, where it is important to comply with both the shariah assertion of separate entities and the IFRS requirement for consolidated financial statements, or where the presentation of related financial statements may be necessary to provide relevant and faithful representative information even in instances where control is not present.

On liability and equity the comment letter notes that the ED seems to focus more on the legal aspect in determining whether or not an entity has a present obligation to transfer economic resource while in the context of Islamic finance the concept of constructive obligations is of great importance as entities are often much more bound by societal expectations than by legal obligations. The IF WG suggests to retain the current definition of liability until the project on financial instruments with characteristics of equity has been completed and the definition of equity and its relation to liabilities is clear as the underlying principle that differentiates liability and equity is important in the context of Islamic finance products that contain elements of liability and equity such as Islamic bonds and profit-sharing accounts.

Please click to access the full letter of the IF WG on the AOSSG website.

IASB publishes editorial corrections

08 Dec 2015

The IASB has published a batch of editorial corrections to stand-alone standards.

Editorial corrections to stand-alone Standards:

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The editorial corrections can be viewed on the editorial corrections page of the IASB's website.

IFRS Foundation publishes second update to IFRS Taxonomy 2015

08 Dec 2015

The IFRS Foundation has published 'Update 2 to the IFRS Taxonomy 2015 - Common Practice'.

The taxonomy updates contain additional taxonomy concepts that reflect new IFRSs and improvements to IFRSs, technical updates, and corrections. This update includes taxonomy elements for entities in the information technology, media, chemicals and utilities industries. The IFRS Foundation published Update 1 to the IFRS Taxonomy on 1 December 2015.

For more information, see the press release on the IASB’s website.

EDTF publishes report on expected credit losses and disclosures and 2015 progress report on implementation of the general EDTF principles and recommendations

07 Dec 2015

The Financial Stability Board (FSB) has published two reports by its Enhanced Disclosure Task Force (EDTF). The first report considers the changes banks will need to make to their financial disclosures with the implementation of a new expected credit loss accounting standard. The second report is shows the progress that has been made towards implementing the 2012 EDTF recommendations regarding enhancing the risk disclosure of banks.

The expected credit loss (ECL) approach included by the IASB in IFRS 9 Financial Instruments and also expected to be announced by the US FASB soon will have a significant impact on bank's impairment accounting and the reporting on it. Given the importance of these changes for the industry, the FSB requested the EDTF to consider disclosures that may be useful to help the market understand the upcoming changes (whether under IFRSs or US GAAP) and to promote consistency and comparability. The EDTF used its priciples and general recommendations contained in its 2012 report Enhancing the Risk Disclosures of Banks, considered their applicability on diclosures in the context of an an ECL approach and included additional considerations in two classes: temporary considerations that will cease to apply following the transition to an ECL framework and permanent considerations that will continue to apply following the adoption of the new accounting standards. A special section of the report is devoted to IFRS 9 specific considerations (see pp. 10-11 of the report). Recommendations include additional disclosures on:

  • Key concepts of the expected loss approach;
  • differences and similarities between IAS 39 and IFRS 9;
  • default and whether the 90 day rebuttable presumption is intended to be used and in what circumstances;
  • the concept of credit-impaired exposures;
  • significant increase in credit risk and the policies and approaches applied;
  • initial recognition of exposures where it may be difficult to determine credit risk; and
  • treatment of modifications.

Please click to access the full report and a corresponding press release on the FSB website. A press release on the IASB website welcomes the publication of the report.

The second report published today is a follow-up on the implementation on the level and quality of the implementation of all seven fundamental principles for enhancing risk disclosure and the  32 specific recommendations included in the 2012 report. Similar progress reports were already published in 2013 and 2014. The report includes self-assessments by banks, plus assessments by users of financial disclosures, on the extent to which they believe the recommendations have been implemented. Based on results from bank self-assessments 82% of firms say they have fully implemented the recommendations, up from 75% the year before. The report concludes that most progress implementing the 2012 recommendations has been made by Canadian and UK banks. In jurisdictions where efforts to follow the EDTF recommendations are more recent (e.g. China, Japan), implementation rates are lower and differences between the bank and user assessments are wider. Please click to access the 2015 progress report and a corresponding press release on the FSB website.

For more information, see this paper from Deloitte (UK), which discusses how banks should consider the EDTF guidance for their next annual reports.

Recent sustainability and integrated reporting developments

07 Dec 2015

A summary of recent developments at the FSB, the SASB, and CSR Netherlands.

The Financial Stability Board (FSB) has announced that it will create an industry-led disclosure task force on climate-related financial risks. The Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders. The first stage of work of the TCFD, expected to be completed by end-March 2016, will be to determine the objectives and scope of its work. The second stage, expected to be completed the end of 2016, will focus on delivering recommendations for voluntary disclosure principles. Please click for more information in the press release on the FSB website.

The US Sustainability Accounting Standards Board (SASB) has released an implementation guide providing structure and key considerations for companies seeking to implement sustainability accounting standards within their existing business functions and processes. The guide helps companies to select sustainability topics, assess the current state of disclosure and management, embed SASB standards into the financial reporting and management processes, support disclosure and management with internal control, and present information for disclosure. For more information, see the implementation guide on the SASB’s website.

Commissioned by the Dutch Ministry of Foreign Affairs, MVO Nederland (CSR Netherlands) has developed the CSR Risk Check aimed at companies who purchase internationally produced products, export products or produce abroad. The tool analyses the international corporate social responsibility (CSR) risks after a short input of product/service, country, and sector and groups them by kind of risk. The results with further analysis and suggested actions can be downloaded as a customisable PDF file. Please click for more information on the MVO Nederland website.

December 2015 IASB meeting agenda posted

04 Dec 2015

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 15–16 December 2015.

A large portion of the meeting will be devoted to the clarification of IFRS 15 where the comment period ended in October. This topic will see three hours of discussions by the IASB alone and two hours together with the FASB. Also, the IASB will give some in-depth attention to its research project on discount rates where the staff will update the IASB on their findings regarding the components of present value measurement and measurement methodology.  The IASB is also expected to confirm the indefinite deferral of the amendments to IFRS 10 and IAS 28 that it issued in August 2015. 

The full agenda for the meeting can be found here. We will post any updates to the agenda, as well as our Deloitte observer notes from the meeting, on this page as they become available.

EFRAG repeats that the IFRS 9/insurance issue needs to be solved quickly

04 Dec 2015

In September 2015, the European Financial Reporting Advisory Group (EFRAG) finalised the long-awaited endorsement advice on IFRS 9 ‘Financial Instruments’ and recommended endorsement of IFRS 9, but withheld comments on insurance industry.

In its endorsement advice, EFRAG committed to sending an update on the IASB's progress in addressing concerns relevant to the insurance industry. The final letter to the European Commission, which follows a draft letter in November, has now been made available on the EFRAG website.

EFRAG states that stakeholders have reaffirmed that bringing a solution to the insurance issue should not be a cause of delay of endorsement of IFRS 9, that the solution to the insurance issue should ideally be found in amendments to IFRS issued by the IASB, and that all companies in Europe, including those involved in insurance activities, need clarity as a matter of urgency on how and when they have to apply IFRS 9.

EFRAG goes on to analyse the two approaches the IASB intends to propose shortly (the overlay approach and the deferral approach) and - on basis of the limited information available yet - believes that the deferral approach offers more advantages than the overlay approach but that there potential restrictions in its use. EFRAG notes that it would be worth exploring whether different criteria can be identified that would support the application of the deferral approach to as many relevant entities as possible.

Please click to download the full letter from the EFRAG website.

IASB publishes updated list of IFRS learning resources

04 Dec 2015

The IASB maintains a list of IFRS Learning Resources available to accounting academicians, students and others - most of them free of charge. The list has recently be updated.

The 16-page list, maintained by former Board member Paul Pacter, includes learning resources available from the International Accounting Standards Board (IASB) and the IFRS Foundation, international audit firms, professional bodies and regulators. The list also includes recent IFRS textbooks and histories.

We are proud that the IASB acknowledges IAS Plus as an important resource and especially notes these aspects:

Please click to access the full list of resources on the IASB website.

EFRAG draft comment letter on the proposed amended IFRS Taxonomy due process

04 Dec 2015

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IFRS Foundation's invitation to comment on proposed amendments to the due process for the development and maintenance of the IFRS Taxonomy, which would give the IASB greater involvement and responsibility.

In the draft comment letter on the November 2015 proposals, EFRAG acknowledges that it is important to continue to develop and maintain an IFRS Taxonomy in order to control the quality of the taxonomy and the use of the 'IFRS' brand name. EFRAG clearly supports the IFRS Foundation’s goal of having the IFRS Taxonomy recognised as the globally agreed standard for tagging and structuring IFRS financial information within a digital report.

However, EFRAG is worried that the proposed amendments might give the IFRS Taxonomy too much prominence in the IASB's activities and also feels that the proposed involvement of IASB members in approving the taxonomy content might lead to the taxonomy actually driving the disclosure requirements in standards, which would mean the IASB would move away its principles-based approach. EFRAG also warns against additional tasks for Board members as these could only come at the cost of spending less time on the tasks they already have.

Comments are requested by 30 January 2016. For more information, see the press release and the draft comment letter on the EFRAG 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.