As stated in the comment letter, we agree with the IFRS In­ter­pre­ta­tions Committee's analysis of the IAS 12 requirements included in the tentative agenda decision; however, we note that purchases and sales of ‘single-asset’ entities give rise to a number of issues around not only deferred tax accounting, but also fair value measurement and the distinction between asset purchase and business combination accounting. We recommend that the wider accounting issues arising from such transactions be considered by the Board as it develops its agenda for the next three years.

Please click to access the full comment letter.

At the last EFRAG Board meeting on 10 November, the EFRAG Board members agreed that although the amendments do not address all of the concerns voiced they would like to send a positive endorsement signal. Therefore, the draft endorsement advice states:

Without qualifying our advice, we note that the Amendments address many of the concerns raised in our endorsement advice on IFRS 9 but do not address the cost concerns of entities undertaking insurance activities that are not predominant insurers.

Please click to access the press release on the EFRAG website. EFRAG has also updated its endorsement status report, which can be downloaded here.

The Board of Directors of the Saudi Organization for Certified Public Accountants (SOCPA) has approved the fourth and final stage of the Saudi IFRS convergence project and has adopted the remaining standards, including IFRS 1 First-time Adoption of IFRSs. As the Board of Directors had decided that the application of the new standards should begin immediately after the completion of the transition project, the transition date of 1 January 2017 for listed companies and 1 January 2018 (with earlier application permitted) for all other entities has now been officially confirmed. Please click for the announcement on the SOCPA website (Arabic language only).

As another important step, the SOCPA has reached a licence agreement with the IFRS Foundation giving it the right to publish the official Arabic translation of IFRSs and the IFRS for SMEs for the purpose of adoption into law. An announcement on signing the agreement is available on the IASB website.

The national standard-setters agree that increased cooperation between the standard-setters around the world including the IASB is not only nice to have but an absolute must. They state that the cooperation with the IASB has improved over the last years with increased and more open dialog. However, while IASB Chairman Hans Hoogervorst seems to be satisfied with the situation as is and with the standard-setters being the ear on the ground for the IASB, the standard-setters believe that there is still room for improvement and that the dialog should not only be going one way.

Please click to access the short video (slightly over five minutes) on the IASB website.

Meeting ac­tiv­i­ties included the following:

• Executive session — The Trustees discussed a number of important strategic issues:
  • Feedback on the Constitutional review — The Trustees review feedback on the Exposure Draft IFRS Foundation Review of Structure and Effectiveness: Amendments to the Constitution and made conclusions on 10 proposals.  
  • Agenda con­sul­ta­tion — The Trustees were updated on the progress on the Board’s Agenda Con­sul­ta­tion and the near-final draft of the 2015 agenda consultation feedback statement.
  • Pre­sen­ta­tion on IFRS in India — The Trustees received a pre­sen­ta­tion on the status of IFRSs in India and the development of Indian Accounting Standards.
  • Other issues — The Trustees discussed progress on the Foundation’s new website, the UK referendum on leaving the EU, intellectual property, fundraising activities in the USA, developments in Asia-Oceania, and the preparations for the Trustees’ next meeting in January 2017.
  • Committee reports — The Trustees discussed reports from the Due Process Oversight Committee, Audit and Finance Committee, the Human Capital Committee, and the Nom­i­nat­ing Committee.
• IASB Chairman’s report — The Chair of the IASB provided the Trustees with an update on a number of the IASB’s technical ac­tiv­i­ties, agenda consultation, IFRS 9 endorsement, and other issues.
• Events in Delhi — The Institute of Chartered Accountants of India (ICAI) hosted a stakeholder event with the Trustees.

The full report on the IFRS Foun­da­tion trustees’ meeting is available on the IASB’s website.

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) outreach conducted on performance reporting and debt/equity presentation for the conceptual framework project and (2) the decision on an issue regarding the interaction of IAS 28 and IFRS 9.
• 2015 Agenda Consultation: summary of the consultation process — The DPOC confirmed that the requirements of the Due Process Handbook have been meet.
• Effect Analysis — The DPOC discussed the challenges of assessing insurance products and macroeconomic consequences of applying the expected loss model under IFRS 9.
• Strategic Work Plan 2016 — The DPOC discuss benchmarking of its due process procedure against other organisations.
• Consultative groups — The DPOC agreed that the annual review of consultative groups was in accordance with the Due Process Handbook.
• Reporting protocol — The DPOC discussed the annual review and the handling of comment letters.
• IFRS education initiative due process report — The DPOC agreed that the development and level of review for the IFRS education initiative was consistent with the Due Process Handbook.
• 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.

The Conceptual Framework session will focus on:

• Summary of tentative decisions
• Liability definition and supporting concepts
• Testing the proposed asset and liability definitions — illustrative examples
• Effects of the proposed changes to the Conceptual Framework on preparers

The insurance contracts session will discuss:

• Methodology - external testing of draft IFRS 17
• Results - external testing of draft IFRS 17
• Level of aggregation
• Experience adjustments
• Transition issues
• Mitigating financial risks reflected in insurance contracts
• Other sweep issues
• Mandatory effective date of IFRS 17

Please click for the updated agenda.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

• Research report Information Needs of Users of New Zealand Capital Markets Entity Reports (1-20): This was a research report from New Zealand. In addition to the research results the ASAF members also discussed the research methodology (small sample, limitations regarding the questions asked), which does not necessarily make the research results applicable in other jurisdictions. ASAF members supplemented the results with insights from their own jurisdictions.
• Rate-regulated activities (20-36): ASAF members discussed to agenda papers on this topic: (i) Research on the economic value of financial information on rate-regulated activities (prepared by Canada) and (ii) Accounting for rate-regulated activities from a conceptual perspective (prepared by Korea). During the discussion of the Canadian paper, ASAF members explained the situation in their respective jurisdictions. ASAF members agreed that it is important for users of financial statements to receive information about the entity’s rights and obligations created by the rate regulation. Where that information should be made availabe (primary financial statements or notes) remained contentious. The Korean paper explored how the Conceptual Framework and IFRS 15 could be used as a starting point for developing a new accounting model to report the financial effects of rate regulation. ASAF members agreed that developing a new accounting model might be useful and thought the Korean approach promising. However, concerns and comments were also voiced.
• Conceptual Framework (37-62): ASAF members discussed the Conceptual Framework project comprehensively. Several papers had been submitted for discussion: (i) a paper on measurement prepared and presented by EFRAG (different ASAF memebrs supported different points raised in this paper), (ii) an IASB staff draft of proposed revisions to the discussion of factors to be considered in selecting a measurement basis (the new wording rather met with resistance from ASAF members), (iiI) an update on the Board’s tentative decisions on presenting info rmation about financial performance, and (iv) a paper on financial performance and measurement prepared by the ASBJ.
• Definition of a business (63-71): ASAF members were informed about the corresponding FASB project and compared it with the IASB exposure draft. They encouraged IASB and FASB to align the wording of their amendments as much as possible and suggested that IASB clarify in the basis for conclusions that even though the IASB wording is different from the FASB wording, it is intended to have the same outcome. Regarding the IASB exposure draft, some inconsistencies and unintended consequences were pointed out.
• Project updates and agenda planning (72-73): ASAF members were updated on current IASB projects. Topics suggested for the agenda of the next meeting were cryptocurrencies, an update on the forthcoming insurance contracts standard, and a general discussion on their research activities.
• Working with National standard-setters (74-78): Discussion of this topic was short and onesided as ASAF members were only asked to identify entities in their jurisdictions that have improved how they communicate in their financial statements and would be willing to be included as examples in a report of the IASB staff. ASAF members asked clarifying questions and pointed out other reports that have been published in this area.
• Feasibility Studies (79-80): This point merely clarified what the IASB staff calls feasibility studies: An informal label to reflect that the staff is looking into whether limited amendments can be achieved with a given approach where implementing the approach is not expected to require extensive drafting.

A full report of the meeting is available on the IASB's website.

On Monday 14 November, the IASB will discuss topics raised by respondents and to consider what changes, if any, should be made to the final Practice Statement (‘PS’) related to its project on disclosure initiative: materiality.

On Tuesday 15 November, the IASB will discuss elements of the draft IFRS 17, Insurance Contracts, which include level of aggregation, experience adjustments, transition issues, mitigating financial risks reflected in insurance contracts, sweep issues, and effective date. In addition, the IASB will be provided with a summary of research work on primary financial statements and discuss IFRS implementation issues.

On Wednesday 16 November, the IASB will discuss its financial instruments with characteristics of equity project. Specifically, the IASB will receive a summary of discussions to date and discuss the exception of paragraphs 16A–16D of IAS 32. In addition, the IASB will discuss topics related its conceptual framework project, which include liability definition and support concepts as well as the effects of the proposed changes to the conceptual framework on preparers.

Our pre-meet­ing summaries are available on our meeting note page and will sup­ple­ment them with our popular meeting notes after the meeting.

In light of the expected impact and importance of the implementation of IFRS 9, ESMA highlights the need for consistent and high-quality implementation of IFRS 9 and the need for transparency on its impact to users of financial statements. The statements addresses the following topics:

• Transparency on implementation and effects of IFRS 9;
• Specific considerations for financial institutions/credit institutions;
• Illustrative timeline and good practices of disclosures for financial institutions; and
• Next steps.

Please click to download the IFRS 9 public statement from the ESMA website.

In July 2016, ESMA published a similar statement on the application of IFRS 15. ESMA expects that the statements will be taken into account and reflected in the 2016 and 2017 annual and 2017 interim financial statements.