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Due Process Oversight Committee holds May 2016 meeting

09 Jun 2016

The Due Process Oversight Committee (DPOC) met in Jakarta on 25 May 2016.

Meeting activities included the following:

  • Updates on technical activities — The DPOC was presented with a report that outlined the due process activities for all projects on the IASB’s current agenda. Specifically, the DPOC discussed (1) the agenda consulation 2015 and specifically the proposal that the interval between agenda consultations should be extended from three to five years (the DPOC reviewed and agreed with the rationale behind the proposal and agreed to amend the Due Process Handbook), (2) the different effective dates of IFRS 9 and the forthcoming insurance contracts standard (the DPOC reviewed the due process steps and the re-exposure assessment and agreed with the IASB's conclusion that re-exposure was not necessary), and (3) other projects on primary financial statements and discount rates.
  • Insurance contracts: due process life-cycle review — The DPOC received a report setting out a lifecycle review of the due process steps completed in the Board’s project on insurance contracts. The DPOC confirmed that all necessary due process steps had been followed but emphasised that given the high profile of the project and controversial nature of at least some of the proposals there was a need for careful and considered drafting of the standard, which would involve preparing drafts for editorial review with external parties as well as preparing an extensive effects analysis.
  • IFRS Taxonomy: due process — The DPOC discussed a proposed change of the due process in the context of the Foundation’s strategy for the IFRS Taxonomy and the need to guard against the IFRS Taxonomy constraining the principle-based approach to standard-setting.
  • Should the DPOC meet in public? The DPOC discussed a staff proposal that in order to increase the visibility of how the Trustees’ oversight role was exercised, in particular in relation to due process oversight, future meetings of the Committee should – for the most part – be held in public session. The DPOC members expressed a range of views, and the debate was continued at the Trustees’ plenary session, where the proposal was supported.
  • Benchmarking — The DPOC discussed a staff paper that outlined the staff’s assessment of how the Foundation and the Board measured up against four particular frameworks that the staff viewed as relevant to the work of the organisation.
  • Review of Consultative groups — The DPOC reviewed the activities of various consultative groups and considered staff proposals for revising the membership of SMEIG.
  • Correspondence — No new correspondence has been received since the DPOC’s previous meeting.

The full report on the DPOC meeting is available on the IASB’s website.

IOSCO issues final statement on non-GAAP financial measures

08 Jun 2016

The International Organization of Securities Commissions (IOSCO) has finalised its guidance setting out IOSCO's expectations for issuers with respect to the presentation of financial measures other than those prescribed by Generally Accepted Accounting Principles (GAAP), so called 'non-GAAP financial measures'.

The IOSCO guidance is contained in the Statement on Non-GAAP Financial Measures, which sets out IOSCO's expectations for the presentation of such measures by issuers, including that sufficient information should accompanying non-GAAP financial measures to aid in their understanding, and that the measures should be presented transparently and with disclosure of how they are calculated.

The statement provides specific expectations in the following broad categories:

  • Defining the non-GAAP financial measure. This encompasses providing a clear explanation of the basis of calculation, clearly labelling measures such that they are distinguished from GAAP measures, explaining why the measures are useful, and explicitly stating the non-GAAP measure does not have a standardised meaning and may not be comparable between entities.
  • Unbiased purpose. This requires that non-GAAP financial measures should not be used to avoid presenting adverse information to the market.
  • Prominence of GAAP measures versus non-GAAP financial measuress. Non-GAAP measures and their most directly comparable GAAP measures should be presented with equal prominence, or the GAAP measure given greater prominence, and non-GAAP measures should not in any way confuse or obscure the presentation of GAAP measures.
  • Reconciliation to comparable GAAP measures. Reconciliations should be provided between non-GAAP financial measures and their most directly comparable GAAP measure presented in the financial statements, with adjustments explained and reconcilable to the financial statements, or information about how they are calculated provided.
  • Presentation of non-GAAP financial measures consistently over time. Measures should generally remain consistent from period to period, include comparative information, with any changes in composition explained and also reflected in comparative information and discontinued use of a non-GAAP measure sufficiently motivated.
  • Recurring items. Items that are reasonably likely to affect past and future periods, such as restructuring costs and impairment losses, should not be described as non-recurring, infrequent or unusual.
  • Access to associated information. The information that issuers provide regarding non-GAAP financial measures should be readily and easily accessible to third parties.

The statement is intended to be used by entities applying International Financial Reporting Standards (IFRSs) and other accounting principles.

Please click for (links to IOSCO website):

Agenda for June 2016 joint CMAC-GPF meeting

07 Jun 2016

Representatives from the International Accounting Standards Board (IASB) will meet with both the Capital Markets Advisory Council (CMAC) and Global Preparers Forum (GPF) in London on 15 and 16 June 2016. The agenda for the joint meeting has been released.

The full agenda for the meeting (as of 6 June 2016) is sum­marised below:

Wednesday, 15 June 2016 (10:00-17:15)

  • IASB and Interpretations Committee Update
  • Materiality — presentation and breakout sessions
  • Statement of cash flows — presentation and breakout sessions
  • Primary financial statements — presentation and breakout sessions

Thursday, 16 June 2016 (09:00-10:45)

  • Financial instruments with characteristics of equity - pre­sen­ta­tion and breakout sessions

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

European Parliament votes on ECON report on current accounting standard-setting

07 Jun 2016

In its plenary sessions currently held in Strasbourg, the European Parliament has discussed and voted on the report on the activities of the IFRS Foundation, EFRAG and the PIOB that the Committee on Economic and Monetary Affairs (ECON) of the European Parliament (EP) has initiated.

The report is not legally binding but is now an EP resolution and will serve as guidance and reference in future EU law-making processes.

The presentation and discussion took place yesterday. There is a video recording of the discussion available (link to EP website, 17 minutes, free choice of language). During the discussion, the only contributions of note were the introduction by the ECON rapporteur (Theodor Stolojan) introducing the report and the response by the representative of the European Commission (Christos Stylianidis). The other contributors merely repeated known sentiments or did not speak to the topic.

In his response, Commissioner Stylianidis, who spoke on behalf of Commissioner Jonathan Hill, pointed at the Commission's own evaluation that had led to an overall positive assessment of the situation, welcomed the intended formation of an EP permanent IFRS team, and mentioned the EC comment letter to the IFRS Foundation (link to IASB website) on their review of the structure and effectiveness of the IFRS Foundation, which had already picked up on many of the items presented in the report. Mr Stylianidis noted that the Commission has concluded that currently there is no need for legislative changes, however, better cooperation, coordination and communication between all parties involved would be beneficial.

In today's vote (by roll call), the European Parliament carried the resolution.

Support of IFRSs by Japanese government continues

06 Jun 2016

On 2 June, the Cabinet in Japan adopted a revised 'Japan Revitalisation Strategy 2016' summarising the nation's growth strategy and policy. Among many other measures IFRSs are included in the document.

On IFRSs, the document makes it clear once again that cabinet intends to promote the voluntary adoption of IFRSs by sharing experience and knowledge of IFRS. The document also refers explicitly to two areas where IFRSs may be improved from Japan's perspective, namely goodwill and recycling.

The document also expresses support for accelerating the efforts by the ASBJ to develop a new Japanese revenue standard that is likely to be modeled on IFRS 15 Revenue from Contracts with Customers.

The new revitalisation strategy does not expressly urge Japanese companies to adpt IFRSs. However, the governments's consistent support of IFRSs sends very encouraging signals, and the planned convergence of the Japanese revenue standard with IFRS 15 might mean that another obstacle to switching to IFRSs will be removed.

The new revitalisation strategy is available on the Japanese government's website in two forms:

IASB posts webinar on IFRS 4 and IFRS 9

03 Jun 2016

The IASB has posted to its website a webinar on the application of the new accounting requirements for financial assets by insurers.

The webinar — hosted by IASB board members Martin Edelmann and Sue Lloyd, along with IASB senior technical manager Joanna Yeoh — responds to some companies’ concerns about the timing of the implementation of IFRS 9 Financial Instruments and the forthcoming insurance contracts standard and the related consequences. The IASB has confirmed that it will issue amendments to IFRS 4 that:

  • give companies that issue insurance contracts the option to remove from profit or loss the volatility that may be caused by certain changes in the measurement of financial assets when applying IFRS 9 before the new insurance contracts standard; and
  • give companies whose predominant activities are insurance-related an optional temporary exemption from applying IFRS 9 until 2021.

The webinar and slides are available on the IASB's website.

Video recordings from the stakeholder event in connection with the Trustee meeting in Indonesia

03 Jun 2016

The IFRS Foundation Trustees met in Jakarta on 25-26 May 2016. On the evening of 25 May, there was a joint stakeholder event to discuss Indonesian convergence with IFRS Standards.

Recordings from the event have been made available on the IASB website:

  • opening remarks by Michel Prada, Chairman of the Trustees of the IFRS Foundation,
  • speech of Etty Retno Wulandari, Deputy Commissioner of Strategic Management of Indonesia Financial Services Authority,
  • speech of Hans Hoogervorst, Chairman of the IASB, and
  • speech of Djohan Pinnarwan, Head of the Financial Accounting Standards Board, Ikatan Akuntan Indonesia.

The main message from the Trustees and the Chairman of of the IASB were the benefits that Indonesia would reap from adopting IFRSs and the support that IFRS Foundation and the IASB would gladly provide. Earlier during the meeting, the Trustees, the Indonesia Financial Services Authority (OJK) and the Institute of Indonesia Chartered Accountants (IAI) had signed a joint agreement that is aimed at a deepened cooperation as Indonesia furthers the convergence of its national GAAP with IFRSs.

Second set of draft GRI Standards available for comment

03 Jun 2016

The Global Reporting Initiative (GRI) has released exposure drafts of a second set of 30 GRI Standards developed by the Global Sustainability Standards Board (GSSB).

The GSSB is currently working on transitioning the G4 Guidelines into a new set of modular, interrelated GRI Standards that can then be updated individually and indepent of each other to ensure that the standards will remain relevant in today’s rapidly-evolving sustainability reporting landscape.

The second set of exposure drafts comprises 30 topic-specific draft standards each covering a separate sustainability topic such as anti-corruption, emissions, biodiversity, or child labor. They are open for comment until 17 July 2016. Please click to access the exposure drafts and a corresponding press release on the GRI website.

IVSC publishes remaining exposure drafts of the chapters that will form IVS 2017

03 Jun 2016

In April 2016, the International Valuation Standards Council (IVSC) issued a first set of exposure drafts of proposed new International Valuation Standards (IVSs). Exposure drafts for the remaining chapters of the 2017 IVS have now also been released.

The eight new proposed IVS are:

  • IVS 101 Scope of Work,
  • IVS 102 Investigation and Compliance,
  • IVS 103 Reporting,
  • IVS 200 Businesses and Business Interests,
  • IVS 300 Plant and Equipment,
  • IVS 400 Real Property Interests,
  • IVS 410 Development Property, and
  • IVS 500 Financial Instruments.

The exposure drafts can be accessed through the press release on the IVSC website and are open for comment until 31 August 2016.

The earlier exposure drafts published in April can also still be commented on (until 7 July 2016).

EFRAG issues feedback statement on the statement cash flows

01 Jun 2016

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement summarising comments received on its July 2015 discussion paper, 'The Statement of Cash Flows: Issues for Financial Institutions'.

EFRAG received eight comment letters in response to its discussion paper, which covered the following topics:

  • Requirements and intended benefits of IAS 7 Statement of Cash Flows;
  • Requirements in IAS 7 specifically relevant to financial institutions, including views on the usefulness to financial institutions;
  • Alternatives related to:
    • liquidity;
    • changes in assets and liabilities;
    • insurance companies;
    • narrower amendments.

According to the feedback statement:

All respondents shared concerns about the relevance of the statement of cash flows for financial institutions and thus were supportive for the EFRAG’s proactive initiative. However, the views on how this issue should be addressed diverged significantly among respondents. Nevertheless the comments received provide valuable inputs for further research.

The feedback statement is available on EFRAG's website.

IFRS Foundation and IOSCO strengthen cooperation

01 Jun 2016

The International Organization of Securities Commissions (IOSCO) and the IFRS Foundation have published a joint Statement of Protocols for cooperation on IFRSs, aiming to "promote and facilitate transparency within capital markets through the development and consistent application of IFRS Standards."

This Statement of Protocols builds upon the protocol arrangement issued by the same organisations in September 2013 by outlining objectives for each of the following interactions between IOSCO and the IFRS Foundation:

  • Strategic discussions — Discussion of broad financial reporting issues between the leadership of IOSCO and the IFRS Foundation;
  • Development of IFRS Standards — Sharing of information and active contribution from IOSCO to the standard-setting process; and
  • Implementation of IFRS Standards — Sharing information to support both parties in their work in the application of IFRS Standards on a globally consistent basis.

For more information, see the press release and Statement of Protocols on the IASB's website.

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