April

IASB posts fifth webinar on insurance contracts standard

29 Apr 2016

The IASB has posted the fifth instalment of its weekly webinar series on the upcoming insurance contracts standard.

The series, hosted by IASB member Darrel Scott, will discuss the following topics related to the upcoming insurance contracts standard:

  • The need for change and the history of the project. (issued 1 April)
  • What is an insurance contract? (issued 8 April)
  • Initial measurement of insurance contracts. (issued 15 April)
  • Subsequent measurement of insurance contracts. (issued 22 April)
  • Modifications to the general model: variable fee contracts. (issued 29 April)
  • Other modifications to the general model.
  • Presentation and disclosure.
  • Applying the Standard for the first time.

For more information as well as presentation slides, see the webinar page on the IASB’s website.

Agenda and pre-meeting summaries for the May 2016 IFRS Interpretations Committee meeting

29 Apr 2016

The IFRS Interpretations Committee will meet at the IASB's offices in London on 10 May 2016. The agenda for the meeting is now available. We have also posted our pre-meeting summaries for the meeting that allow you to follow the decision making more closely.

The committee will be considering papers related to 10 topics. Three of those topics (Agenda items 6, 8 and 10) were originally scheduled for discussion in the March meeting but the Committee did not have sufficient time to deal with these matters. The staff papers for those topics are unchanged from those posted in March.

For eight of the matters being discussed the staff are recommending that the Interpretations Committee not take them onto the agenda. If the Committee agrees with these recommendations it will finalise three items and issue tentative decisions for the other five:

  • Recommended final agenda decisions: Government assistance on research activities; derecognition of modified financial assets; and the recoverable and carrying amounts of a cash-generating unit in an impairment assessment.
  • Recommended tentative agenda decisions: impairment of an investment in an associate or joint venture; service concession arrangements with leased infrastructure; written puts over NCI; recovery of deferred tax on indefinite life intangible assets; and fees and costs included in the derecognition test for financial liabilities.   

The meeting will also include a discussion the comments received on a proposal to amend IAS 40 Investment Property in relation to the conditions for reclassifying property to, or from, investment property. The Interpretations Committee has been developing the amendment for the IASB. The staff are recommending that, subject to some modifications to the proposal, the Interpretations Committee ask the Board to finalise the amendments. 

The remaining item is the draft interpretation of IAS 21 The Effects of Changes in Foreign Exchange Rates, when there is advance consideration. Discussion of this item is likely to continue at future meetings of the committee.   

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

IFRS Foundation publishes first update to IFRS Taxonomy 2016

28 Apr 2016

The IFRS Foundation has published 'Update 1 to the IFRS Taxonomy 2016'.

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 the January 2016 final amendments to IAS 7 under the disclosure initiative.

For more information and access to the update, see the press release on the IASB’s website.

IFRS Foundation appoints Director of Education

28 Apr 2016

The IFRS Foundation has appointed Mr Matt Tilling as its new Director of Education responsible for the development of the organisation's educational activities.

Support of the consistent application of IFRSs through developing a wider range of educational activities is part of the Foundation's part strategic plan for 2016 and beyond. As of May 2016, Mr Tilling will be part of the newly-formed integrated team covering interpretations of standards, implementation, adoption support and educational activities. He was was previously based in Perth, Australia, where he split his time between professional accounting and academia.

Please click for the press release on the IASB website.

FASB discusses credit impairment at April 27 meeting

27 Apr 2016

At its 27 April 2016, meeting, the FASB discussed its credit impairment project and the progress of the transition resource group (TRG) on credit losses. The Board authorized the staff to draft a final standard and also made tentative decisions related to (1) credit quality disclosures, (2) the effective date of the final standard and whether the guidance can be early adopted, and (3) the costs and benefits of the final standard.

The final ASU is expected by the end of the second quarter of 2016. The FASB staff will continue to assess and present to the Board any additional issues identified during the drafting of the final ASU.

Until June 2012, the FASB and the IASB jointly deliberated an expected-loss impairment model, which was broadly similar to the IFRS 9 impairment approach issued by the IASB on 24 July 2014. In response to feedback from U.S. constituents on the joint model, however, the FASB decided to develop an alternative expected credit loss model. Accordingly, the FASB’s new credit impairment approach differs from that under IFRSs.

For more information, see Deloitte’s related journal entry as well as the press release on the FASB’s Web site.

IASB's investor programme gains three new members

27 Apr 2016

In December 2014, the International Accounting Standards Board (IASB) launched a new 'Investors in Financial Reporting' programme designed to foster greater investor participation in the development of International Financial Reporting Standards (IFRS). The number of investment organisations participating in the programme has now risen to 18.

As part of the programme, the investment firms commit to an ongoing dialogue, executive level support of the programme and access to analysts and portfolio managers. In return, the IASB has committed to providing an improved channel through which to influence standard development, developing investor-tailored webcasts, providing investor-friendly articles on proposed changes, providing access to IASB members and staff, and providing investor-focused education sessions.

Please click for press release announcing the increased membership on the IASB's website.

Agenda for the May 2016 Emerging Economies Group meeting

27 Apr 2016

The agenda is available for the eleventh meeting of the IASB's Emerging Economies Group (EEG), which is being held in Istanbul on 3-4 May 2016.

The agenda is summarised below:

Tuesday 3 May 2016 (09:00-17:00)

  • Address by hosting country (Turkey)
  • Address by the EEG Chair
  • Presentations on Government grants
  • Discussion: Government grants
  • Administrative issues (topics for future meetings)

Wednesday 4 May 2016 (09:00-12:50)

  • IASB updates
  • IAS 16: Accounting for proceeds and costs of testing PPE
  • IAS 32: Classification of the liability for a prepaid card in the issuer’s financial statements
  • IAS 16 and IAS 38: Variable payments for asset purchases
  • Open discussion on topics from members
  • Discussion and approval of the communiqué
  • Meeting summary

 Agenda papers from this meeting are available on the IASB's website.

Korean preparers state that costs of IFRS adoption outweigh benefits

26 Apr 2016

Korea adopted IFRS in full in 2011 to enhance accounting transparency of Korean entities and usefulness of their financial information as well as to maximise the value of domestic entities by improving their accessibility to global capital markets. There have been numerous analyses carried out on the costs and benefits of Korea’s IFRS adoption, however, so far they were conducted exclusively from the users’ point of view. The Korean Accounting Standards Board (KASB) has now made available research into the costs and benefits from the preparers’ perspective.

The main result of this research is that approximately one half of the surveyed preparers replied that the costs of IFRS adoption exceed the benefits, and only around 10% of the respondents replied that the benefits exceed the costs.

According to the research, high costs seem to arise from difficulties in dealing with certain aspects of IFRS financial statements. The preparers especially mentioned the following five aspects:

  • preparation of notes to the financial statements,
  • preparation of consolidated financial statements,
  • fair value measurement,
  • making discretional judgments for application of principle-based accounting, and
  • accounting for financial instruments.

As a result of these difficulties they also felt that understandability had deteriorated, that comparability had decreased and that there was an increase of excessive interference by external organisations.

The KASB has analysed the difficulties and has concluded that the following measures can help to improve the IFRS implementation environment:

  • The technical inquiry service should be strengthened by providing information on general IFRS implementation issues to the public in Q&A format and providing more detailed information grouped by industry.
  • The accounting education, which has seen little change since the adoption of IFRS, should be reformed. It seems especially desireable to move the focus from items of financial statements to standards and accounting principles and to help students to develop the ability to make necessary judgments.
  • Relevant laws and regulations should be amended to bridge the gap that has arisen between accounting standards and the accounting requirements under the commercial law.
  • Improvements need to be made in relation to notes to the financial statements to improve the level of understanding of and usefulness for the users of financial statements by encouraging entities to focus on preparing notes considering materiality or use of easy-to-understand expressions.

Please click to download the full research paper, which is a slightly abridged translation of an earlier Korean version, from the KASB website.

Harmonisation of accounting standards improves cross-border mobility

25 Apr 2016

New joint research from the University of Chicago and the Humboldt University of Berlin shows that the recent EU harmonisation of accounting and auditing standards had a discernible positive effect on accountants’ cross-border migration relative to other professions when compared with pre-harmonisation levels.

The analysis uses the fact that over the past decade, national accounting and auditing standards have to a large extent been replaced by international standards now common across the EU member states. This enabled the authors to study the extent to which professional standards constitute an economically significant barrier to cross-border migration and also whether harmonising standards can have a meaningful effect on cross-border mobility.

The authors find that after accounting and auditing standards were harmonised, there was a 17-24% increase in the movement of accountants relative to comparable professions, relative to pre-harmonisation mobility rate. They conclude that accounting harmonisation can have a meaningful effect on cross-border migration and thus can be used as a tool to improve the efficiency of the labour market.

A summary of the research with references to underlying papers is available free of charge through VoxEU portal of the Centre for Economic Policy Research. There is also an SSRN version of the main research paper that forms the backbone of the VoxEU article, likewise available free of charge.

The different effects of the adoption of IFRSs has been the object of extensive research. We'd especially like to point out the research of Professor Christian Leuz of the Booth School of Business of the University of Chicago (one of the authors of the article highlighted above) around the ‘Global Player Segment’ (GPS), which we reported on earlier.

IASB updates work plan

22 Apr 2016

Following its April 2016 meeting, the IASB has updated its work plan. As mentioned before, directly tracing the Board's progress on the individual projects has become impossible since the change of the work plan format in July 2015, unless the Board makes definite progress or has to make larger corrections. Of these, only a few can be identified since the previous work plan. However, the IASB has begun to indicate the month which issuance of exposure drafts or final standards may occur.

Changes to the work plan include:

Major projects

  • Conceptual framework is now expected to be issued after 6 months. Previously, no timeline was set for issuance.

Im­ple­men­ta­tion projects

The revised IASB work plan is available on the IASB's website.

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