Tuesday, 10 November 2015

• Items for continuing consideration:
  • IAS 16/IAS 38/IFRIC 12 — Variable payments for asset purchases and payments made by an operator to a grantor.
  • IFRS 9/IAS 39 — Derecognition of modified financial assets.
  • IFRS 9/IAS 28 — Is measurement of long-term interests in associates and joint ventures, including impairment, in accordance with IFRS 9, IAS 28, or both?
• Agenda decisions to finalise:
  • IAS 2 — Prepayments in long-term supply contracts.
• New issues:
  • IAS 12 — Income tax consequences of interest payments on, and issuing costs of, financial instruments that are classified as equity.

The pre­lim­i­nary and un­of­fi­cial notes taken by De­loitte ob­servers for the entire meeting are also avail­able.

In its endorsement advice, EFRAG committed to sending an update on the IASB's progress in addressing concerns relevant to the insurance industry. A draft letter to be send to the European Commission has now been made available on the EFRAG website. EFRAG notes that the IASB has decided to propose a deferral approach and an overlay approach, both aimed at addressing the mismatch, in December this year, but states:

The IASB is progressing options to address the issues facing the insurance industry. However, as of the date of this letter, we are not in a position to amend our recommendation that “all businesses other than those carrying out insurance activities are required to account for their financial instruments in compliance with IFRS 9 in 2018 and businesses carrying out insurance activities are permitted to do so in compliance with IFRS 9 from the same date”.

EFRAG explains that any final decisions in the project will be made at the earliest in six to nine months from now and that uncertainty exists as to whether the IASB will provide an appropriate remedy when it makes these final decisions:

EFRAG assesses, on a very preliminary basis, that the IFRS 4 amendments, if finalised on the basis of current IASB tentative decisions, would not allow EFRAG to lift the reservations included in its endorsement advice of IFRS 9.

Please click to access the draft letter on the EFRAG website. Comments are requested by 20 November 2015 as the intention is to finalise the letter during the meeting of the EFRAG Board on 24 November 2015.

The final report discusses “audit firm transparency reporting,” which is a practice “employed by audit firms to be transparent in their own reporting to investors and other stakeholders about the firm itself, notably, with respect to firm governance and elements of their system of quality control for their financial statement audits.”

According to the final report, an au­dit firm trans­parency re­port should contain in­for­ma­tion that is:

• “[C]lear, use­ful and pre­sented in suf­fi­cient de­tail to be mean­ing­ful to the dif­fer­ent groups of likely users of the re­port.”
• “[F]act-based and not po­ten­tially mis­lead­ing.”
• “[U]n­bi­ased and not ori­ented to­ward mar­ket­ing or sell­ing ser­vices.”
• “[C]on­cise, spe­cific to the firm and avoids the use of boil­er­plate lan­guage.”
• “[T]imely, ac­cu­rate and com­plete.”
• “[B]al­anced in com­mu­ni­cat­ing the au­dit firm’s out­put mea­sures of au­dit qual­ity in ad­di­tion to any in­put mea­sures.”
• “[S]uf­fi­cient in terms of ex­plain­ing the lim­i­ta­tions of the in­di­ca­tors of au­dit qual­ity, in­clud­ing that the in­di­ca­tors may not be com­pa­ra­ble across au­dit firms.”

For more information, see the press release and final report on IOSCO’s Web site.

The finalised perliminary views only differ slightly from the position published in July. These changes concern the position on stewardship and on users of general purpose financial statements. EFRAG has published a document explaning the changed position, which can be downloaded from the EFRAG website.

Given it took EFRAG four months to finilase its preliminary views after publishing the first consultation document, the deadline for submitting comments on EFRAG's final preliminary position is now very short. Comments are requested by 18 November 2015. Please click for the press release on the EFRAG website.

The most sig­nif­i­cant items on the agenda include:

• Insurance contracts — Similarities and differences between the general measurement model and the variable fee approach for insurance contracts as well as three narrow issues arising from the variable fee approach will be considered.
• Goodwill and impairment — Identification and measurement of intangible assets in a business combination will be discussed.

In addition, the IASB will discuss fair value measurements, post-employment benefits, IFRS implementation issues, and the research project on share-based payment.

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.

Speakers from the IASB will present on the agenda consultation and on the conceptual framework project; speakers from ICAS will then give their views on these projects and will present the results of new research, jointly funded by ICAS and EFRAG, on professional investors’ views of the decision-usefulness of financial reporting.

Topics to be discussed include:

• Has the IASB correctly identified the right issues for the future?
• Is there anything missing from the agenda?
• Have the IASB struck the right balance between fundamental improvements to IFRS versus fine tuning the standards to keep them fit for purpose?
• Can financial reporting be considered in isolation from wider corporate reporting initiatives?
• How will the revised Conceptual Framework drive changes in future?
• How can research help to shape the future of financial reporting?

Please click for more information and registration on the ICAS website.

In his speech, Mr Golden discussed the important role high-quality financial reporting has within capital markets around the world and noted that high-quality accounting standards should “promote truth-telling in financial reporting”.

Mr Mackintosh presented on major trends and challenges towards high-quality corporate reporting and focused on the IASB's mission and the future agenda of the IASB.

Michael Stewart, Director of Implementation Activities at the IASB, explained how principle-based standards support consistent application across diverse facts and circumstances and how the IASB Education Initiative promotes IFRS judgement capacity-building by developing cohesive IFRS understanding and capacity to make, audit, regulate, and analyse IFRS judgements.

Please click for direct access to these speeches on the UNCTAD website:

• Mr Golden's keynote address
• Mr Mackintosh's presentation
• Mr Stewart's presentation

All presentations given at the meeting (including presentations from representatives of the PIOB, IFAC, IAASB, Basel Committee, FSB, World Bank, IIRC, CDSB) can be accessed through this website.

The ITG was created to keep the IASB informed on issues occurring during implementation of the new impairment requirements in IFRS 9 Financial Instruments, to assist in determining what action may be needed to resolve diversity in practice and to provide a public forum for stakeholders to learn about the new impairment requirements from others involved with implementation.

The agenda for the meeting is as follows:

Agenda papers are available on the ITG December meeting page on the IASB's website.

The main proposed amendments would require:

• IASB approval of IFRS content reflecting new or amended standards;
• review by three to five members of the IASB of content reflecting common practice;
• formalisation of the enhancements that were implemented in January 2014 (creation of the IFRS Taxonomy Consultative Group and establishment of a process that seeks public consultation on IFRS Taxonomy updates that are released during the year); and
• inclusion of enhancements that reflect current practices and processes, but are not documented in the Due Process Handbook for XBRL Activities.

Please click to access the press release and the invitation to comment on the proposed amendments on the IASB website. Comments are requested by 3 February 2016.