May

Recent sustainability reporting developments

10 May 2016

A summary of recent developments at the CDSB & CDP and GRI.

The Climate Disclosure Standards Board (CDSB) and the CDP (previously the ' Carbon Disclosure Project') have commented on the Phase I report of the Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB). In their joint response CDSB and CDP highlight among other things new accounting rules by the IASB, which may be relevant to reporting climate-related transition risks as well as IFRS 9 requires entities to measure expected credit losses of a financial instrument using factors that are specific to the entity, general economic conditions and an assessment of both the current and forecasted direction of conditions at the reporting date. Please click to access the full response on the CDSB website.

The Global Reporting Initiative (GRI) has published questions and answers about transitioning from the GRI G4 Guidelines to the modular, interrelated GRI Sustainability Reporting Standards (GRI Standards): the new format, the public comment process, and ultimately how the transition will benefit reporting organisations and report users. Please click to access the Q&A document on the GRI website.

Current financial reporting practices do not impede long-term investment

09 May 2016

The Institute of Chartered Accountants in England and Wales (ICAEW) has published ‘Long-Term Investment and Accounting: Overcoming Short-Term Bias’.

The report looks at the evidence on whether financial reporting encourages short-termism and asks whether it would be possible for financial reporting to provide better information on long-term performance. In particular, it looks at five areas in which current financial reporting has been accused of encouraging short-termism:

  • use of fair values;
  • no information on long-term performance;
  • excessive frequency of reporting;
  • writing off of spending on long-term assets; and
  • no information on long-run effects on the natural world or on society as a whole.

The paper concludes that current evidence does not suggest that current financial reporting practices impedes long-term investment, except in relation to the frequency of reporting where there can be a trade-off between the benefits of transparency and the costs of ensuring that investors’ expectations of performance are met at the frequent intervals required.

The full research paper is available from the ICAEW website.

May 2016 IASB meeting agenda posted

09 May 2016

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 17–19 May 2016.

Again, a large part of the meeting will be dedicated to the agenda consultation with over seven hours of discussion spread over all three days. Other major topics on the agenda are Insurance/IFRS 9 and financial instruments with characteristics of equity (both on Tuesday afternoon) and the Consceptual Framework (Wednesday morning).

The full agenda for the meeting and first pre-meeting summaries can be found here. We will post any updates to the agenda, as well as the remaining pre-meeting summaries as well as observer notes from the meeting, on this page as they become available.

IASB posts sixth webinar on insurance contracts standard

06 May 2016

The IASB has posted the sixth 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. (issued 6 May)
  • 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.

IASB posts webcast featuring Sue Lloyd on IFRS 16 exemptions

03 May 2016

As part of the IASB's webcast series on IFRS 16 implementation, the IASB staff has made available a webcast on recognition exemptions for lessees, featuring IASB board member Sue Lloyd.

The webcast discusses the IFRS 16 requirements relating to the recognition exemptions and provides Ms. Lloyd's insight on the scope exemptions, practical examples, and implementation information.

The new webcast and all previous webcasts of the series available on the IFRS 16 implementation page on the IASB’s website.

ECON report criticises current accounting standard-setting

03 May 2016

The Committee on Economic and Monetary Affairs (ECON) of the European Parliament has initiated a report that is rather critical of the activities of the IFRS Foundation, EFRAG and the PIOB. The report will not be legally binding but will possibly be voted on in a plenary session of the European Parliament in May and if agreed will be used as guidance and reference in future EU law-making processes.

The report stresses that ECON members see shortcomings in the governance of the IFRS Foundation and the IASB, notably in terms of transparency, prevention of conflicts of interest and diversity of Board members. The report also calls for also a more diversified and balanced financing structure also based on fees and public sources. The report's authors feel that their position is backed by the high degree of funding of the IASB's budget (14%) and of EFRAG (60%) by the European Union and conclude that this means that both organisations have to follow the European Parliament standards of democratic legitimacy, transparency, accountability and integrity.

The following documents are publicly available (all on the European Parliament website):

Economic consequences of disclosure and financial reporting regulation

02 May 2016

New joint research from the University of Chicago and the University of Miami suggests that further research into market-wide effects and externalities from regulation is still needed.

A new paper published in the Journal of Accounting Research looks into the economic consequences of disclosure and financial reporting regulation (including IFRS adoption), drawing on U.S. and international evidence. The authors highlight the challenges with quantifying regulatory costs and benefits, measuring disclosure and reporting outcomes, and drawing causal inferences from regulatory studies, but come to the following conclusions:

  • There is a general lack of evidence on market-wide effects and externalities from regulation even though such evidence is central to the economic justification of regulation.
  • Evidence on causal effects of disclosure and reporting regulation is still relatively rare.
  • There is also a lack of evidence on the real effects of such regulation.

The article concludes with several specific suggestions for future research. It can be downloaded (for a charge) through the Wiley Online Library or accessed free of charge through SSRN.


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