2015

IASB publishes proposals for amendments under its annual improvements project (cycle 2014-2016)

19 Nov 2015

The International Accounting Standards Board (IASB) has published an exposure draft 'Annual Improvements to IFRSs 2014–2016 Cycle'. It contains proposed amendments to three International Financial Reporting Standards (IFRSs) as result of the IASB's annual improvements project. Comments are requested by 17 February 2016.

The IASB uses the annual improvements process to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project.

The ED proposes the following amendments:

IFRS Subject of amendment

IFRS 1 First-time Adoption of International Financial
Reporting Standards

To delete the short-term exemptions in paragraphs E3–E7 of IFRS 1, because they have now served their intended purpose

IFRS 12 Disclosure of Interests in Other Entities

To clarify the scope of the standard by specifying that the disclosure requirements in the standard, except for those in paragraphs B10–B16, apply to an entity’s interests listed in paragraph 5 that are classified as held for sale, as held for distribution or as discontinued operations in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations

IAS 28 Investments in Associates and Joint Ventures

To clarify that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organisation, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition

ED/2015/10 Annual Improvements to IFRSs 2014–2016 Cycle contains no proposed effective dates for any of the proposed amendments. The intention is to decide on these after the exposure period.

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IASB proposes amendments to IAS 40 on transfers of investment property

19 Nov 2015

The International Accounting Standards Board (IASB) has published an Exposure Draft (ED) of proposed amendments to IAS 40 'Investment Property'. The amendments address transfers of investment property. Comments are requested by 18 March 2016.

 

Background

The IFRS Interpretations Committee received a request for clarification of the application of paragraph 57 of IAS 40 Investment Property, which provides guidance on transfers to, or from, investment properties. More specifically, the question was whether a property under construction or development that was previously classified as inventory could be transferred to investment property when there was an evident change in use.

The Interpretations Committee referred the matter to the IASB, and at its April 2015 meeting, the IASB tentatively agreed to amend the paragraph to reinforce the principle for transfers into, or out of, investment property in IAS 40 to specify that such a transfer should only be made when there has been a change in use of the property.

 

Suggested changes

The amendments proposed in ED/2015/9 Transfers of Investment Property (Proposed amendment to IAS 40) are:

  • Paragraph 57 will be amended to state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. The change of use shall consist of the property meeting, or ceasing to meet, the definition of investment property.
  • The list of examples of evidence in paragraph 57(a) – (d) will be presented as a non-exhaustive list instead of an exhaustive list.

 

Effective date and transition requirements

The ED does not contain a proposed effective date. However, the ED proposes that the amendments would be applied retrospectively and that early application should be permitted.

 

Additional information

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IFRS filing information for various jurisdictions

19 Nov 2015

The IFRS Foundation is currently collecting information on IFRS filing requirements around the world, including electronic filing requirements and IFRS Taxonomy adoption.

So far, the IFRS Foundation has collected this information for 19 jurisdictions: Australia, Austria, Canada, China, Hong Kong, Korea (South), Latvia, Lithuania, Macao, Malaysia, Mongolia, Myanmar, New Zealand, Rwanda, Saudi Arabia, Slovenia, Taiwan, Turkey, and Uganda.

Please click to access the IFRS filing profiles on the IFRS Foundation's website.

ESMA believes Conceptual Framework to be incomplete without guidance on liability and equity

18 Nov 2015

The European Securities and Markets Authority (ESMA) has commented on the IASB's exposure drafts ED/2015/3 'Conceptual Framework for Financial Reporting' and ED/2015/4 'Updating References to the Conceptual Framework'.

In its comment letter, ESMA supports the IASB's initiative and agrees with most proposals in the EDs. However, ESMA "regrets that the ED does not provide guidance on some essential issues in financial reporting which leaves the Conceptual Framework incomplete". The two point ESMA particularly stresses are:

  • According to ESMA, the ED does not include sufficient guidance on distinguishing between liability and equity. ESMA agrees with the view that the definition of a liability should be used to distinguish between liability and equity, but is concerned that the IASB has not sufficiently considered the issue yet. ESMA is also worried that dealing with this matter in a separate project might lead to subsequent changes to the definition of a liability.
  • ESMA is concerned that the ED does not attempt to define performance. ESMA concludes that as a result the Conceptual Framework will include neither a clear basis for distinguishing between items that should be recognised in profit or loss and items that should be recognised in other comprehensive income (DCI), nor a principle establishing whether and when recycling is appropriate.

Please click to access the full comment letter on the ESMA website.

SEC Commissioner believes it's time to take step forward

18 Nov 2015

In a speech at the 34th Annual Current Financial Reporting Issues Conference in New York, SEC Commissioner Michael S. Piwowar commented on the potential alternative of allowing domestic issuers in the U.S. to provide IFRS-based information as a supplement to U.S. GAAP financial statements without requiring reconciliation.

The alternative had been introduced by Jim Schnurr, Chief Accountant of the US Securities and Exchange Commission (SEC), at a financial reporting conference in early December 2014. At the annual American Institute of Certified Public Accountants (AICPA) Conference on Current SEC and PCAOB Developments a week later, Mr Schnurr and Julie Erhardt, Deputy Chief Accountant of the SEC, further discussed this possible option. Since then, little has been heard of the proposal or any other proposal or the progress regarding the rule-making process.

In his speech, Commissioner Piwowar has now pointed out an another benefit the proposal might have in addition not taking away anything from investors who currently use and like U.S. GAAP and lowering the cost of providing IFRS financial reporting for companies want to provide IFRS information:

It is difficult to gauge investor demand for financial reporting under IFRS by U.S. domestic issuers. How does one predict investor demand for IFRS reporting when it is largely not available in the domestic context? For instance, twenty years ago, it was difficult to predict the demand for “smart phones” when the product was not available to the general public. […] Our chief accountant has raised an interesting and incremental approach that should provide further insight as to whether there is investor demand for IFRS reporting. His idea – to allow, but not mandate, IFRS financial reporting as a supplement without reconciliation to GAAP – is worthy of serious consideration. […] It would provide useful data on investor demand for us to analyze. Of course, the specific details would still need to be worked out, but I think – eleven months after the idea was first broached – that the Commission should take this additional step forward.

Please click to access the full text of the speech on the SEC website.

ACCA event on the future of financial reporting

17 Nov 2015

On 24–26 November 2015, the Association of Chartered Certified Accountants (ACCA) will host a virtual event on “Accounting for the Future.” The event will focus on what finance professional can expect to change between now and 2020.

The event is broken into three main themes: (1) employability and the economy, (2) corporate perspectives, and (3) practice and the public sector. Participation to the virtual event is free, but registration is required.

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

EFRAG draft comment letter on DI/2015/1

17 Nov 2015

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on IFRS Interpretations Committee exposure draft DI/2015/1 'Uncertainty over Income Tax Treatments'.

In its draft comment letter, EFRAG agrees the guidance proposed in the draft in­ter­pre­ta­tion will help reduce the inconsistencies in the accounting for uncertain income tax treatments when determining taxable profits, tax bases, unused tax losses, and tax rates. However, the EFRAG believes that the proposal may create an inconsistency between uncertainties in income tax treatments and those related to other types of tax or similar positions.

Comments are requested by 13 January 2016. For more information, see the press release and the draft comment letter on the EFRAG website.

Recent sustainability reporting developments

17 Nov 2015

A summary of recent developments at the WBCSD/CDSB, the United Nations, and the GRI.

The World Business Council for Sustainable Development (WBCSD) and the Climate Disclosure Standards Board (CDSB) have joined forces to create The Reporting Exchange, a freely available, multi-lingual, global sustainability reporting knowledge platform. The platform will be available in open beta format at the end of 2016 to enable public users to share their feedback. The platform is planned for global release in mid-2017. Please click to access the press release on the WBCSD website.

The fourth United Nations forum on business and human rights is currently taking place in Geneva. Yesterday saw a session on "Promoting the Guiding Principles on Business and Human Rights in global governance frameworks: Recent developments and opportunities for further alignment" with speakers from a wide range of institutions. A recording of the session is available on the UN website.

During the session, the Global Reporting Initiative (GRI) launched its latest linkage document that highlights the connections between the GRI G4 Reporting Guidelines and key concepts of the United Nations Guiding Principles on Business and Human Rights. For more information, see the press release and Linking G4 and the UN Guiding Principles on the GRI website.

Report on IFRS adoption by Japanese companies — full English version available

16 Nov 2015

In April 2015, the Financial Services Agency of Japan (FSA) released a report studying IFRS adoption by Japanese companies and covering their motivation to adopt IFRSs, the migration process and project management structure, the cost of adoption, and implementation challenges. At that time, the full report was only available in Japanese.

The FSA has now published a full English language version of the report and in doing so has also revised the preliminary translation of the abridged English version made available in April. Please click to access the full English language report on the FSA website.

5th ANC Symposium on Accounting Research — programme available

16 Nov 2015

On 11 December 2015, the Autorité des Normes Comptables (ANC), the French standard setter, will host its 5th Symposium on Accounting Research in Paris. The programme for the symposium has now been made available.

The general theme of the symposium is "The general principles of accounting, European criteria and IASB’s Conceptual Framework" and it will feature roundtables on prudence, on substance over form, on measurements of performance, on historical cost versus fair value, and on the European public good.

Please click to access the full programme on the ANC website.

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