2015

IASB podcast on progress in the insurance project

10 Feb 2015

The IASB has published a podcast that summarises the IASB's tentative decisions on transition reliefs in the IFRS on insurance contracts that is currently being developed. The earliest possible mandatory effective date of this new standard will be after 1 January 2018, the mandatory effective date of IFRS 9 'Financial Instruments'.

The tentative IASB decisions discussed in the podcast are:

  • to confirm the transition relief proposals in the 2013 ED;
  • to consider providing further transition relief to permit or require an entity to reassess the business model for financial assets at the date of initial application of the new standard; and
  • not to consider deferring the mandatory effective date of IFRS 9 for entities that issue insurance contracts.

Please click here to listen to the podcast (link to IASB website). In addition, Deloitte has followed the redeliberations of the IASB and all tentative decisions to date; see our insurance contracts project page for details.

IASB publishes update on the conceptual framework project

09 Feb 2015

The staff of the IASB has published a document setting out the key tentative decisions made by the IASB up to the end of January 2015 that affect the proposals in the discussion paper on the conceptual framework.

On 18 July 2013, the IASB issued Discussion Paper A Review of the Conceptual Framework for Financial Reporting to consider areas where revisions and amendments of the existing conceptual framework was needed. This project update summarises the effects of the redeliberations on various topics which have been substantially completed. An exposure draft is expected in the first quarter of 2015.

For more information, see the document on the IASB’s website. In addition, Deloitte has followed the re­de­lib­er­a­tions of the IASB and all tentative decisions to date; see our conceptual framework project page for details.

'EFRAG Update' for January

09 Feb 2015

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during January 2015.

The Update reports on the meeting of the EFRAG Board on 14 January and the meeting of the EFRAG Technical Expert Group (EFRAG TEG) on 28 - 30 January as well as written procedures of the EFRAG Board in January and two EFRAG TEG conference calls. The Update also lists EFRAG publications issued in January:

  • a letter to the Trustees of the IFRS Foundation as part of their review of the Accounting Standards Advisory Forum (ASAF),
  • a letter to the IFRS Interpretations Committee regarding tentative agenda decisions on the application of IFRS 11 Joint Arrangements,
  • final comment letters in response to the IASB Exposure Drafts ED/2014/3 Recognition of Deferred Tax Assets for Unrealised Losses and ED/2014/4 Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value and the IASB Discussion Paper DP/2014/2 Reporting the Financial Effects of Rate Regulation,
  • a feedback statement summarising constituent input and how it was taken into account in the finalisation of the comment letter in response to the IASB Discussion Paper DP/2014/1 Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging.

Agenda for the February 2015 IASB meeting

06 Feb 2015

The International Accounting Standards Board (IASB) will meet at its offices in London on 18–20 February 2015. Part of the meeting will be held jointly with the Financial Accounting Standards Board (FASB) to discuss revenue recognition. Additionally, the IASB will discuss the IFRS for SMEs, rate-regulated activities, insurance contracts, disclosure initiative, dynamic risk management, leases, IFRS implementation issues, and post-implementation review of IFRS 3.

The full agenda for the meeting, dated 6 February 2015, can be found here.  We will post any updates to the agenda, and our Deloitte observer notes from the meeting, on this page as they are available.

Hans Hoogervorst speaks about Ind AS as a 'stepping stone towards full IFRS adoption'

05 Feb 2015

At an IFRS Foundation conference in Mumbai, IASB Chairman Hans Hoogervorst commended India for the progress with the new Indian Accounting Standards (Ind AS) that are converging with IFRS, but also pointed at the benefits of full IFRS adoption.

In January 2015, the Indian Ministry of Corporate Affairs (MCA) released a revised road map for the adoption of Ind AS and said that the notification of the standards themselves would follow "shortly". Mr Hoogervorst called the Indian IFRS developments "impressive achievements" and commented that "the new Ind AS should be considered as a very important stepping-stone on the path to adoption of IFRS". He also listed the benefits of embracing IFRS:

  • a public commitment to high standards in corporate governance and reporting,
  • a most likely fall in the cost of capital,
  • a passport to access almost every capital market in the world, and
  • acquisition of a skill set that is internationally recognised and highly sought after.

Yet Mr Hoogervorst warned that stopping at convergence without in the end fully adopting IFRS might mean that India will not reap the full benefits:

At the same time, we have to acknowledge that the new Ind AS will not be the same as IFRS. The current proposals contain one major and several minor differences. Even if the final differences with full IFRS turn out to be small, their effect in terms of international recognition could be big.

Foreign investors do not have the time or the resources to study the intricacies of accounting standards. They want to see the well-known brand of IFRS: anything else makes them raise their eyebrows. So for India to draw the full benefits of IFRS, it is very important that the Indian carve-outs should not only be small; they should also have a limited lifetime. It is important that investors see them as only an intermediate step on the way to full IFRS.

Indeed, the danger would otherwise be that Indian companies would incur the full cost of transition to a new standard without receiving the full benefits and international recognition that come with IFRS adoption.

Mr Hoogervorst also spoke about the fear that adoption of IFRS leads to a loss of national sovereignty in accounting standard-setting. He pointed at the many other jurisdictions that have adopted IFRS and commented: "I do not believe that all these jurisdictions have simply rescinded their sovereignty in accounting standards. They have instead made a free choice to pool their standard-setting in an international organisation." He also stressed the IASB's ability and willingness to listen carefully to its stakeholders and promised to continue the close working relationship with India that sprang up in the recent months in the years to come.

The full transcript of Mr Hoogervorst's speech is available on the IASB's website.

GRI document on linking G4 Guidelines and the new EU Directive on disclosure of non-financial and diversity information

05 Feb 2015

The Global Reporting Initiative (GRI) has published 'Making headway in Europe', a new linkage document that shows how companies can use GRI's G4 Guidelines to comply with the European Directive on disclosure of non-financial and diversity information.

According to the new Directive, which entered into force in December 2014 and must be transposed into national law by the Member States by December 2016, large public-interest companies with more than 500 employees are required to disclose relevant and material environmental and social information in their annual reports. The linkage document specifies how G4 can be used to gather information, and formulate responses, to each element of the European Directive. Making headway in Europe can be downloaded for free from the GRI website.

EFRAG issues final endorsement advice on annual improvements 2012-2014

04 Feb 2015

The European Financial Reporting Advisory Group (EFRAG) has submitted to the European Commission its endorsement advice letter on the amendments resulting from the 2012–2014 cycle of annual improvements.

EFRAG supports the amendments. The EFRAG's assessment is that benefits for preparers and users implementing the amendments outweigh the costs and therefore EFRAG recommends that the European Commission (EC) endorses the amendments.

Click for the following information on the EFRAG website:

Feedback statement on the Discussion Paper on the accounting treatment for goodwill

04 Feb 2015

In July 2014, a research group of the Accounting Standards Board of Japan (ASBJ), the European Financial Reporting Advisory Group (EFRAG) and the Italian standard setter Organismo Italiano di Contabilità (OIC) published a Discussion Paper (DP) 'Should Goodwill still not be Amortised? - Accounting and Disclosure for Goodwill' that argued that the reintroduction of amortisation of goodwill would be appropriate. A feedback statement summarising the comments received on the DP is now available.

In response to the paper, the research group received twenty nine comment letters.

The majority of respondents supported reintroducing the amortisation of goodwill. Nonetheless, these respondents provided mixed views on whether the IASB should indicate a maximum amortisation period. Some respondents also acknowledged the subjectivity and high level of judgement in determining the useful life of goodwill, but they believed the level of subjectivity and judgement to be not higher than that in the impairment test. In general, respondents who supported the amortisation of goodwill believed that the IASB should develop guidance to help preparers to determine the useful life of the acquired goodwill.

A minority of respondents, mostly users, were supportive of the current impairment-only approach. These respondents explained that the amortisation model was fairly meaningless and it would not be beneficial to users of financial statements.

The full feedback statement is available on the EFRAG website.

Summary of the discussions at the IFRS Foundation's stakeholder event in Zurich

04 Feb 2015

The 'IFRS in Continental Europe' stakeholder event jointly organised by the IFRS Foundation and TREUHAND-KAMMER, the Swiss Institute of Certified Accountants and Tax Experts, on 2 February in Zurich not only saw a speech by IASB Chairman Hans Hoogervorst but also a lively debate on the motivation of Swiss listed companies moving away from IFRS and turning towards Swiss GAAP FER.

As Mr Hoogervorst had pointed out in his keynote address preceding the panel discussion, the high complexity IFRSs in comparison to Swiss GAAP FER, particularly regarding goodwill, pension accounting and disclosures, is one reason often cited for turning away from IFRSs. Panelists discussed (a) whether companies leaving IFRSs were exceptional cases or whether more were to be expected in the future (especially in connection with the upcoming Leases standard), (b) the reaction of capital markets to companies moving from IFRSs to Swiss GAAP FER, and (c) the topic of 'one size does not fit all' and the appropriate cost-benefit ratio for smaller listed entities.

In conclusion, all panelists agreed that rivaling accounting standards would lead to an ideas competition. However, they all also agreed that IFRS ensure a good international comparability, which is important to investors.

The complete summary of the discussion (including a list of panelists) and the event in general is available on the TREUHAND-KAMMER website.

Chair of the Monitoring Board reappointed

03 Feb 2015

The Monitoring Board of the IFRS Foundation has announced that it has agreed to reappoint Masamichi Kono, incumbent Chair of the Monitoring Board, as the next Chair.

In March 2013, the Monitoring Board had announced its final membership criteria and the appointment of Mr Kono, then Acting Chair of the Monitoring Board, to serve as its Chairman. Mr Kono's first first term as Chair will therefore expire in February 2015. He will now serve a second term with effect from 1 March 2015, expiring in February 2017.

Please click for the Monitoring Board's press release availabe on the Financial Services Agency of Japan's website.

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