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IASB announces IFRS 16 release date

06 Jan 2016

The IASB has announced that it will publish its long-awaited leases standard, IFRS 16 on 13 January 2016. The IASB also announced two live web presentations introducing the new standard which will occur on the same day.

The IASB will present a morning and an afternoon web presentation discussing IFRS 16 Leases, to accommodate stakeholders in time zones around the world. Both 45-minute web presentations will provide an overview of the new requirements and will allow participants to ask questions. Registration is required (on the IASB's website) for the 13 January web presentations:

Stay tuned to IAS Plus for information on IFRS 16; we will have timely, comprehensive coverage of the new leases standard to help readers understand the requirements and implications.

FASB issues final standard on classification and measurement of financial instruments

05 Jan 2016

The US Financial Accounting Standards Board (FASB) has issued ASU 2016-01, 'Recognition and Measurement of Financial Assets and Financial Liabilities', which contains limited amendments to the guidance in US GAAP on the classification and measurement of financial instruments. The new standard significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

The FASB had been working jointly with the IASB to converge their respective recognition and measurement models, but after performing a cost-benefit analysis, the FASB ultimately decided to make only limited changes to existing US GAAP. The amendments in the ASU do not reduce the differences between US GAAP and IFRSs. However, the ASU notes that it "achieves convergence" with IFRS 9 in several areas, but there are still differences in the detailed guidance:

  • Both require the portion of changes in the fair value of fair-value-option financial liabilities attributable to instrument-specific credit risk to be presented in OCI. However, the guidance about whether ever to reclassify fair value gains and losses from accumulated OCI to profit or loss differs between IFRS 9 and the ASU.
  • Both the new ASU and IFRS 9 require most equity investments (other than equity method investments and consolidated investments) to be measured at fair value with changes in fair value recognized in profit or loss. However, IFRS 9 has an option to recognize gains and losses on certain equity investments in OCI, which is not available under the ASU. Further, unlike the ASU, IFRS 9 does not have an elective practical expedient for measuring equity investments without a readily determinable fair value.
  • The IASB currently has a project to address the accounting for deferred tax assets on available-for-sale financial assets and have proposed a solution similar to the one in the ASU. Unlike US GAAP, however, the available-for-sale category is being eliminated under IFRSs by IFRS 9.

For details about the ASU's major changes and effective date, see the Heads Up newsletter and journal entry published by Deloitte (United States).

For more information, see the ASU, press release, and FASB in Focus newsletter on the FASB's website. 

Three reappointments made to the IFRS Interpretations Committee

05 Jan 2016

The IFRS Foundation has announced the reappointment of three members to the IFRS Interpretations Committee. The Interpretations Committee is the interpretative body of the IFRS Foundation.

Current Committee members Tony de Bell, Reinhard Dotzlaw, and Martin Schloemer have been reappointed to second three-year terms, beginning 1 July 2016.

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

IASB member discusses the forthcoming leases standard

05 Jan 2016

In an article for ‘ Compliance Week’, IASB member Gary Kabureck talks about the forthcoming standard on lease accounting and concludes that there is "little to fear".

Mr Kabureck picks up four points.

The business benefits of leasing would remain unchanged

He stresses that the forthcoming changes are about accounting for leases only; the benefits of leases - such as the ability to pay for and use only the portion of an asset’s life the lessee requires, predictable payments, use of assets without legal ownership, an alternative source of financing, and simplified asset disposals - would remain as they are.

Being off-balance had never meant that leases were out of sight

Mr Kabureck explains credit providers have always known about material operating lease commitments and have routinely adjusted entity financial statements. As long as information was not and will not be intentionally distorted, there was no reason to assume that a company's credit rating will be affected.

The reporting entity would still be the exact same company

He admits that a company’s balance sheet for a lease intensive company will look different, yet the leases that were part of the off-balance sheet arrangements were still part of the company’s essence and will continue to be so.

The world would adjust just fine

Mr Kabureck concludes that even though sometimes changes are controversial and meet resistance and sometimes even lead to transitional impacts, the new requirements would operationally be little more than adopting another mandatory accounting change that provides enhanced transparency about what already exists.

Please click to access the full text of Mr Kabureck's article on the IASB website.

IASB establishes procedure for receiving implementation issues on the 'IFRS for SMEs'

04 Jan 2016

The IASB announced today that it has developed a procedure for small companies to submit for consideration implementation issues on the 'IFRS for SMEs'.

During its comprehensive review of the IFRS for SMEs, the IASB decided to establish a procedure for constituents to submit implementation issues. Submitted issues will be either:

  • Referred to the SME Implementation Group (SMEIG) — The SMEIG will review major issues that meet the criteria in paragraph 15 of the Terms of Reference and Operating Procedures for the SMEIG. The SMEIG will consider whether to develop non-mandatory implementation guidance.
  • Retained by the staff — The staff will consider other, non-major issues when (1) updating educational material or (2) during the next periodic review of the IFRS for SMEs.

For more information, see the IASB's website for the press release as well as information on submitting implementation issues.

Agenda for the January 2016 IFRS Interpretations Committee meeting

04 Jan 2016

The IFRS Interpretations Committee will meet at the IASB's offices in London on 12 January 2016. The agenda for the meeting was published today.

The Interpretations Committee will continue its discussions on IFRIC 12 — Payments made by an operator to a grantor in a service concession arrangement. The Interpretations Committee is also expected to finalise six agenda decisions, all of which — except for issues around IFRS 5 — will only see very short discussions (15–20 minutes each).

The full agenda for the meeting can be found here. We will update this page for our pre-meeting summaries of the staff papers, any changes to the agenda, and our Deloitte observer notes from the meeting as they become available.

We comment on the IASB agenda consultation

04 Jan 2016

We have responded to Request for Views document that the IASB published in August 2015 to launch its second public consultation to seek broad public input on the strategic direction and overall balance of its future work programme.

We support the emphasis the consultation places on completing the remaining major projects. We also note that the Board should allocate sufficient resources to the implementation of these standards, of the forthcoming IFRS 16 Leases, and of the recently published standards IFRS 9 and IFRS 15. We welcome the attention given to research projects.

However, we miss a sense of context how the Board sees its current standard-setting priorities in relation to a wider and more long-term view of financial and corporate reporting.

Please click to access the full comment letter.

IFRS Foundation publishes additional framework-based teaching material

04 Jan 2016

The IFRS Foundation has published the fourth and fifth parts of its comprehensive, framework-based IFRS teaching material for its education initiative. The material is free to download and is designed to enhance educators’ teaching about IFRSs and to help students develop their abilities to make the necessary estimates and judgments when applying IFRSs and the IFRS for SMEs.

Part 4 of the material made available now focusses on accounting for business combinations and consolidated financial statements. Part 5 focusses on changing accounting policies and accounting estimates, correcting prior period errors and reflecting changes in circumstances.

Please click to access all batches of the teaching material on the IASB website.

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