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2017

Year in review — 2017

29 Dec 2017

2017 was another successful year for the IAS Plus family with over 15 million page views. We've devoted significant resources to bring you comprehensive coverage of all things IFRS and broader financial reporting and other relevant topics and are pleased that our readers appreciate our efforts.

Communiqué from latest China-Japan-Korea accounting standard-setters meeting

27 Dec 2017

A communiqué has been issued from a meeting of the standard-setters from China, Japan and the Republic of Korea held in Hangzhou on 27 November 2017.

Representatives were present from the China Accounting Standard Committee (CASC), the Accounting Standards Board of Japan (ASBJ), the Korea Accounting Standards Board (KASB), and the International Accounting Standards Board (IASB), together with guests from Hong Kong and Macao.

The meeting saw a discussion of applications of IFRSs and the developments of local accounting standards in the respective jurisdictions. Participants also had in-depth discussions of the IASB’s major projects.

Delegates agreed to have more frequent communication among the three countries to contribute to the development of IFRSs and to play a leading role in the Asia-Oceania region and to increase the prominence of the Asian-Oceanian Standard Setters Group (AOSSG) in the global accounting standard-setting community.

The next meeting will be held in Seoul in October 2018. Please click for the full communiqué (link to ASBJ website).

Free download of Sharia'a standards, new exposure draft on risk reserves

27 Dec 2017

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) announces that the Arabic and English online versions of AAOIFI’s Sharia’a Standards have been made freely available on the AAOIFI website. In addition, the AAOIFI has published an exposure draft of a Financial Accounting Standard “Risk Reserves” and invites opinion from the Islamic finance industry.

The Saudi-British Bank (SABB) in Riyadh has signed an agreement with the AAOIFI whereby the content of all Sharia’a standards in issue at November 2017 in both, Arabic and English, will be accessible and downloadable for personal use through AAOIFI’s website and social media portals. The SABB sponsorship also includes any yet to-be issued, reviewed or updated Sharia’a standards, in both languages, up to 1 January 2020. Please click for more information and access to the standards on the AAOIFI website.

The proposed AAOIFI accounting standard on risk reserves intends to define the accounting principles for risk reserves maintained for the benefit of participatory stakeholders such as investment account holders and Sukuk-holders. It is intended to encourage a financial reporting environment that is risk averse and transparent but that also ensures better safeguarding of the interest of such stakeholders and providing better stability to the Islamic finance industry. Please click for more information and access to the exposure draft on the AAOIFI website.

Season's greetings

22 Dec 2017

We wish all our readers a peaceful holiday and all the best for the New Year.

We look forward to seeing you again after the holidays and to continue to be your preferred accounting website in 2018.

IASB issues podcast on latest Board developments

22 Dec 2017

The IASB has released a podcast featuring Chair Hans Hoogervorst, Board member Amaro Gomes, and education director Matt Tilling to discuss the deliberations at the December 2017 IASB meeting and take a brief look back at the year as a whole.

The 20 minute podcast features discussions of the following topics:

  • Primary financial statements
  • Rate-regulated activities
  • Business combinations under common control
  • Goodwill and impairment
  • IFRS implementation issues
  • Disclosure initiative: Principles of disclosure
  • Highlights of 2017

The podcast can be accessed through the press release on the IASB website. More information on the topics discussed is available through our comprehensive notes taken by Deloitte observers of the December 2017 Meeting.

Recent sustainability and integrated reporting developments

22 Dec 2017

A summary of recent developments at WBCSD, GRI, TCFD/CDSB, IRC, and NZX.

The World Business Council for Sustainable Development (WBCSD) released the CEO Guide to climate-related financial disclosures. The new guide, written in partnership with the CEOs of 25 WBCSD member-companies, sets out clear actions that CEOs can take to align their organisations with the recommendations of the Taskforce for Climate-related Financial Disclosure (TCFD). The guide can be accessed through the press release on the WBCSD website.

​The Global Reporting Initiative (GRI) has published a short series of articles that looks back at GRI’s efforts in 2017 and at what 2018 has in store. The articles are (all links to the GRI website):

The Climate Disclosure Standards Board (CDSB) is working with the TCFD to develop a knowledge hub to better support companies interested in implementing the TCFD recommendations. The Hub will go live in the first quarter of 2018 and will be available via www.tcfdhub.org. Please see the press release on the CDSB website announcing the cooperation.

The Integrated Reporting Committee (IRC) of South Africa has developed a Information Paper to assist organisations in the disclosure of information that shows how governance supports the organisation’s value creation process. Disclosure of Governance Information in the Integrated Report is available on the IRC website.

The New Zealand Stock Exchange (NZX) has published a guidance note for issuers on environmental, social and governance (ESG) reporting, designed to accompany the updated New Zealand Corporate Governance Code which includes voluntary reporting on ESG information.  As a partner exchange of the Sustainable Stock Exchanges (SSE) initiative, NZX committed to produce guidance on ESG reporting in early 2017. Please click to access the guidance note on the NZX website.

ESMA publishes guidance setting out the new European Single Electronic Format

19 Dec 2017

One of the requirements of the amended European Transparency Directive is that issuers listed on regulated markets in the EU must prepare their annual financial reports in a European Single Electronic Format (ESEF) from 1 January 2020. The European Securities and Markets Authority (ESMA) has now published the final regulatory technical standards (RTS) on the ESEF together with some other helpful guidance.

To allow for structured electronic reporting using XBRL, ESEF uses an extension of the IFRS Taxonomy, issued by the IFRS Foundation. Where the annual financial report of an entity contains IFRS consolidated financial statements, these shall be labelled with XBRL tags which make the labelled disclosures structured and machine-readable. This allows for instance the analysis of large amounts of financial information without extensive and burdensome manual processing. Furthermore, as XBRL taxonomies can contain labels in several languages, users can compare numeric information in the financial statements across issuers even though the issuers prepare their financial statements in different languages.

Please click for the following items on the ESMA website:

The publication of the RTS is accompanied by the launch of a new webpage on the ESEF.

Updated IASB work plan — Analysis

18 Dec 2017

Following the IASB's December 2017 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments in December. Changes are numerous.

Below is an analysis of all changes made to the work plan since our last analysis on 17 November 2017.

Maintenance projects

  • Accounting policies and accounting estimates (amendments to IAS 8) — exposure draft feedback is now expected March 2018 (previously set to Q1 2018).
  • Accounting policy changes (amendments to IAS 8) — an exposure draft is now expected March 2018 (previously set to Q1 2018).
  • Property, plant and equipment: proceeds before intended use (amendments to IAS 16) — next milestone is now an IFRS amendment. No expected date provided.

Standard-setting projects

  • Conceptual framework — issuance is now expected March 2018 (previously set to Q1 2018).
  • Definition of material (amendments to IAS 1 and IAS 8) — Discussions on feedback of the exposure draft are now expected March 2018 (previously set to February 2018).
  • Rate-regulated activities — a discussion paper or exposure draft is now expected in 2019 (previously set to H1 2018).

Research projects

  • Dynamic risk management — discussion paper pushed to 2019 (previously set to H2 2018).
  • Post-implementation review of IFRS 13 Fair Value Measurement — request for information feedback is now expected in January 2018 (previously set to December 2017).
  • Principles of disclosure — Discussions on feedback of the discussion paper are now expected March 2018 (previously set to Q1 2018).

Other projects

  • IFRS Taxonomy Update — 2017 Annual Improvements — issued the proposed update in November 2017. The project is now in the feedback stage with comments due by 29 January 2018. Discussions on feedback of the exposure draft are expected in February 2018
  • IFRS Taxonomy Update — IFRS 17 Insurance contracts — final update is now expected in January 2018 (previously December 2017).
  • IFRS Taxonomy Update — Prepayment features with negative compensation (amendment to IFRS 9) — Discussions on feedback of the proposed update are now expected February 2018 (previously set to Q1 2018).

The IASB has also added two new projects to its website as a result of discussions at its December meeting, although these don't show in the work plan yet:

In addition, changes to the work plan due to the issuance of the Annual Improvements to IFRS Standards 2015–2017 include the roll-off of (1) borrowing costs eligible for capitalisation, (2) income tax consequences of payments on instruments classified as equity (amendments to IAS 12), and (3) previously held interests in a joint operation (amendments to IFRS 3 and IFRS 11).

The above is a faithful comparison of the IASB work plan at 17 November 2017 and at 18 December 2017. For access to the current IASB work plan at any time, please click here.

December 2017 IASB meeting notes posted

15 Dec 2017

The IASB met at its offices in London on 13 and 14 December 2017. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board discussed seven topics.

Wednesday 13 December

The meeting started with a continuation of the discussion on the Primary Financial Statements. There were three topics: objective of, and suitable locations for, the management performance measure; classification of interest and dividends in the statement of cash flows; and initial thoughts on other targeted improvements to the statement of cash flows. The staff had recommended that the Board:

  • explore how to present unusual or infrequently occurring items; and
  • require that the management performance measure be presented as a subtotal in the statement of financial performance, or in a separate reconciliation directly following the statement of financial performance.

The Board decided that the management performance measure would need to be reconciled to the IFRS sub-totals unless it “fits naturally within the statement of financial performance”. The Board discussed the other issues at length, including where such a number should be presented, but made no other decisions.

In relation to the cash flow statement, the Board approved recommendations to:

  • prescribe that interest paid on financing activities, regardless of whether it is capitalised, be classified as financing cash flows, dividends paid be classified as financing cash flows and interest and dividends received be classified as investing cash flows; and
  • not seek to align the operating sections of the income and cash flow statements; but
  • rejected a suggestion to explore further improvements to the statement of cash flows on the grounds that there are no widespread calls to address other issues.

The Board began considering feedback on its Discussion Paper Disclosure Initiative—Principles of Disclosure. The Board received 108 comment letters, and the staff provided a high-level overview of the views expressed on those letters. The overall impression is that respondents think the DP lacked focus and depth. There was also concern over a lack of cohesiveness between the different Disclosure Initiative projects. As an education session, the Board was not being asked to make any decisions. However, some Board members were sceptical about objective-based disclosure requirements and about using less prescriptive language.

Thursday 14 December

The Board continued its discussions on accounting for Goodwill. The Board voted 11-3 to explore the updated headroom approach further and, by the same margin, rejected a reintroduction of amortisation. 

The Board was given a project plan for the development of an accounting model for Dynamic Risk Management (DRM). The staff intend to focus on developing the areas that are core to the model (target profile, asset profile, DRM derivative instruments and performance assessment and recycling) which they will test with external stakeholders before addressing extensions of the concepts. No significant comments were made by Board members. The Staff expect that the discussion of the core model will take between six to eight sessions.

The Consultative Group for Rate Regulation met on 26 October 2017.  The staff summarised the Board the feedback from this meeting. The consultative group encouraged the Board to develop an exposure draft as the next consultative document. There was no discussion of this paper.

The Board considered four IFRS Implementation Issues. The Board:

  • was updated on the IFRS Interpretation Committee’s decision to add to its agenda a project to clarify which costs should be considered in assessing whether a contract is onerous;
  • supported a recommendation that the ED proposing to lower the threshold for relief from retrospective application of a change in accounting policy arising from agenda decisions also propose that the change to IAS 8 would be applied prospectively.
  • supported a recommendation from the IFRS Interpretation Committee to amend IFRS 1 to subsidiaries that apply adopt IFRS later than their parent with additional relief for measuring cumulative translation differences; and
  • discussed a summary of feedback on the proposed amendments to IAS 16 in relation to accounting for the proceeds from sales from testing—many respondents disagreed with the proposed amendments, considering them to be ineffective, costly to apply and require significant judgement.

During this session some concerns were raised that the agenda decisions of the IFRS Interpretations Committee are getting longer and are starting to answer specific fact patterns. These Board members were concerned about the risks that this poses to the Interpretations Committee.

The meeting concluded with a continuation of the Board’s discussions on the Business Combinations Under Common Control (BCUCC) project. The Board supported including within the project scope transactions that are preceded by an external acquisition and/or followed by an external sale of one or more of the combining entities and transactions that are conditional on a future sale such as in an IPO. Board members also indicated that one method should be used to account for BCUCCs and no choice should be given.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

Preparer’s guide to the IFRS Taxonomy

15 Dec 2017

The IFRS Foundation has released 'Using the IFRS Taxonomy—A preparer’s guide' to help companies understand the IFRS Taxonomy content.

The IFRS Foundation points out that the IFRS Taxonomy facilitates the digital creation and consumption of financial information and improves investors’ access to financial information by listing and defining specific codes, or elements, that can be used to tag items of data.

For the years 2017-2021 the IASB has chosen "Better communication" as its central theme, and in addition to the primary financial statements project and the disclosure initiative this also includes the IFRS Taxonomy. This guide is therefore intended to support the use of the IFRS Taxonomy around the world by regulators, companies and other users of financial information.

Please click to access the guide on the IASB website.

 

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.