Tuesday 13 December

The last meeting for 2016 starts with a brief oral update on IFRS 15 Revenue from Contracts with Customers.

Two implementation issues are being discussed. The first is a proposal to amend IAS 19 Employee Benefits and IFRIC 14 IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The second is to discuss whether or how to address issues that have arisen in the application of IFRS 9 Financial Instruments in relation to prepayment options and the assessment of the SPPI condition.

The Financial Instruments with the Characteristics of Equity Project has a discussion of derivatives on ‘own equity’, assessing how application of the model being proposed would be affected by seven variables.

The Rate Regulated Activities project returns to the Board for its first substantive discussion since July 2015. This is an education session, which means that the Board will not be asked to make any technical decisions. The session includes an analysis of the model being proposed.

Wednesday 14 December

The Wednesday sessions begin with a session on the Conceptual Framework. They will discuss papers on Measurement—redrafting the factors to consider in selecting a measurement basis; Business activities and long-term investment; Concepts of capital and capital maintenance; and Derecognition.

The Board will discuss its project on the Primary Financial Statements, focusing on the scope of the planned discussion paper. The staff are proposing a narrow scope project, with targeted improvements. The main focus will be on the Statement of Comprehensive Income, with some possible changes to the Statement of Cash Flows. The staff are also examining developing templates for a small number of industries.

The Disclosure Initiative has two topics—materiality and disclosures about restrictions on cash and cash equivalents.

The Board will conclude its discussions on the materiality practice statement and are recommending that the final document be prepared. Relatedly, the staff are now recommending that the Board issue a separate exposure draft to amend the definition of materiality in IAS 1 Presentation of Financial Statements. Previously the Board had decided to wait until they had received feedback on the Principles of Disclosure discussion paper.

For disclosures about restrictions on cash and cash equivalents, the staff are now recommending that the Board not proceed with the proposed amendments to IAS 7 Statement of Cash Flows that were exposed in 2014.

The meeting concludes with an education session to inform the Board of the upcoming release of the IFRS Taxonomy Update for the 2015/2016 common practice project, which focused on agriculture, leisure, franchises, retail, and financial institutions.

More information

Our pre-meeting summaries are available on our December meeting note page and will be supplemented with our popular meeting notes after the meeting.

The issue arose from a submission to the IFRS Interpretations Committee related to whether a debt instrument with a symmetric make whole prepayment option or a fair value prepayment option could meet the ‘solely payments of principal and interest on the principal amount’ (SPPI) criterion for measurement at amortised cost under IFRS 9. The IFRS IC discussed the issue at its November 2016 meeting where the majority of members concluded that the prepayment options described in the submission do not meet the requirements in IFRS 9.B4.1.11(b) which states:

As a consequence the IFRS IC concluded that the IASB should consider changing the requirements in IFRS 9 in this respect (taking into account the broader range of prepayment options that exist in practice and not only the options described in the submission) as well as the measurement basis that would provide the most relevant and useful information about particular financial assets that would otherwise meet the SPPI condition, but fail it because of the existence of a symmetric ‘make whole’ prepayment option. Nevertheless, the IFRS IC Chairman cautioned against the extent of the expectation that the Committee should have on how far the Board would take the issue given past decisions on similar issues.

The staff has now prepared a paper for the upcoming IASB meeting detailing the background to the issue, the staff analysis and conclusion, the feedback from the Interpretations Committee, and the original submission received. The staff recommendation is that the Board considers adding a limited-scope project on this issue to its agenda. The Board will discuss this recommendation on 13 December 2016.

Please click to access the staff paper on the IASB website.

The meeting will include discussions on:

• Revenue from contracts with customer — Update.
• IFRS implementation issues.
• Financial instruments with characteristics of equity — Summary of discussions to date.
• Rate-regulated activities
• Conceptual framework — Measurement and concepts of capital and capital maintenance.
• Primary financial statements — Project scope.
• Disclosure initiative — Restrictions on cash and cash equivalents.
• IFRS Taxonomy — Education session.

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

The IFRS Advisory Council provides a forum for the IASB to consult a wide range of interested parties affected by the IASB's work, with the objective of advising the Board on agenda decisions and priorities in the Board's work, informing the Board of the views of the organisations and individuals on the Council on major standard-setting projects, and giving other advice to the Board or to the Trustees. The Council used to meet three times a year, however, yesterday's changes to the constitution of the IFRS Foundation saw the numer of meetings of the Council reduced to two a year.

Ms Perry's second term begins on 1 January 2017. Please see the press release on the IASB website for more information.

In July 2015, the Trustees began its review of the structure and effectiveness of the IFRS Foundation. The review focused on three strategic areas: (1) relevance of IFRS, (2) consistent application of IFRS, and (3) governance and financing of the IFRS Foundation. In June 2016, the Trustees completed its review and issued an exposure draft with the proposed amendments. After reviewing feedback on its amendments, the Trustees agreed in October 2016 to update the Constitution. The updated Constitution is effective on 1 December 2016.

For more information, see the press release and the updated Constitution on the IASB’s website.

The International Integrated Reporting Council (IIRC) has released the latest in its Creating Value series, Creating Value: The cyclical power of integrated thinking and reporting. The publication explores how integrated thinking is an integral component of integrated reporting. For organisations to truly adopt integrated reporting they need to embrace the concept of integrated thinking throughout the organisation. The publication also picks up on the release by the Italian Network for Business Reporting of a handbook on integrated thinking, giving step by step stages for companies to follow in order to 'make integrated thinking concrete and usable'. Please click for for the new creating value publication on the IIRC website and access to the handbook on integrated thinking.

The Federation of European Accountants (Fédération des Experts-comptables Européens, FEE) has released a publication providing practical guidance to companies that will have to comply for the first time with the EU Directive on the disclosure of non-financial and diversity information by certain large undertakings and groups. The publication applies the Directive’s requirements in a ‘mock-up’ management report of a fictional company in the food industry. This will especially help companies without prior experience in reporting on non-financial and diversity information. Please click to access Disclose what truly matters on the FEE website.

Ms Flores served as Chief Executive Officer of the European Financial Reporting Advisory Group (EFRAG) and Chairman of EFRAG’s Technical Expert Group (TEG) until April 2016. Most recently, she had returned to work as a partner at accountancy firm Mazars in Paris, France.

Please click for the announcement on the IASB website.

Commission Regulation (EC) No 2016/2067 of 22 November 2016 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council published in the Official Journal on 29 November 2016 adopts IFRS 9 Financial Instruments. The EU effective date is the same as the IASB's effective date (annual periods beginning on or after 1 January 2018 with earlier appication permitted).

Please click to access the entry in the Official Journal (available in all official languages of the EU).

As a result of the EU's adoption, the EFRAG has updated its endorsement status report.

After a positive opinion by the Accounting Regulatory Committee on 27 June 2016 and after a 3 months scrutiny period by the European Parliament and the Council that ended on 7 October 2016, the Commission has completed the endorsement process of IFRS 9 Financial Instruments.

The decision was made public in the EC's Banking and finance newsletter and a press release on the EC's Company reporting website.

Digital currency – A case for standard setting activity recommends the IASB develop a standard that addresses the accounting for investments in intangible assets or other commodity type assets that are not financial instruments or inventory as the current alternatives to account for digital currencies (IAS 2 or IAS 38) do not provide relevant information to users of financial statements and as this issue highlights a broader issue with IFRSs in that there is no accounting standard that deals with investments in intangible assets or other commodity type assets that are not financial instruments or inventory. Please click to access the paper on the AASB website.

The second paper offers an update on the AASB approach to country-by-country reporting and argues that while much of the tax transparency initiative to date has been driven by the tax authorities, as part of remaining relevant in an ever-changing regulatory environment, it is timely for accounting standard-setters to take a leadership role in improving income tax disclosures for users of financial reports. Please click to access the paper on the AASB website.