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October

Insurance contracts transition resource group releases meeting agenda

31 Oct 2017

The IASB has released the agenda for IFRS 17 transition resource group (TRG) meeting on 13 November 2017.

The purpose of the TRG is to seek feed­back on po­ten­tial issues related to im­ple­men­ta­tion of IFRS 17 Insurance Contracts. By an­a­lyz­ing and dis­cussing po­ten­tial im­ple­men­ta­tion issues, the TRG will help the IASB de­ter­mine whether ad­di­tional action is needed, such as pro­vid­ing clar­i­fi­ca­tion or issuing other guid­ance.

The agenda for the meeting is as follows:

Monday, 13 November 2017

  • In­tro­duc­tory remarks.
  • Overview and operating procedures.

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

ASBJ publishes amendments to 'Japan’s Modified International Standards'

31 Oct 2017

The ASBJ has issued amendments to ‘Japan’s Modified International Standards (JMIS): Accounting Standards Comprising IFRSs and the ASBJ Modifications'.

The amendments reflect the en­dorse­ment process on IFRS 15, Revenue from Contracts with Customers, and the amend­ments to IFRS 12 included in Annual Im­prove­ments to IFRS Standards 2014-2016 Cycle. For more information, see the press release and related documents on the ASBJ website (all documents available in the English language).

In addition, the ASBJ has issued JMIS Exposure Draft No. 5, Proposed amendments to “Japan’s Modified International Standards (JMIS): Accounting Standards Comprising IFRSs and the ASBJ Modifications,” which reflects the endorsement process on the amendments made by IFRS 9 (2014) and the Standards issued by the IASB as of 30 June 2017 and are effective on or after 1 January 2018. However, this endorsement does not include IFRS 16 Leases and IFRS 17 Insurance Contracts. For more information, see the press release and related documents on the ASBJ website (all documents available in the English language).

ESMA expands Q&A document on the implementation of its APM guidance

30 Oct 2017

In June 2015, the European Securities and Markets Authority (ESMA) published its final Guidelines on Alternative Performance Measures (APMs) for listed issuers that became effective in July 2016. Since then, ESMA has published several questions and answers on the guidelines to promote common supervisory approaches and practices in the implementation of them. Six new questions have now been added to the document.

The new questions on the guidelines provide information on the definition of APMs, the scope of the APM guidelines, the application of the scope exemption, the definition of the APM ‘organic growth’, how to carry out reconciliation, and how to apply the fair review principle.

Please click for the following additional information on the ESMA website:

Updated IASB work plan — Analysis

27 Oct 2017

Following the IASB's October 2017 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments in October. Changes mostly relate to pronouncements having been published, comment letter deadlines having ended, and clarifications of upcoming dates of issuing prononouncements.

Below is an analysis of all changes made to the work plan since our last analysis on 22 September 2017.

Main­te­nance project

Research projects

Other projects

  • IFRS Taxonomy update for prepayment features with negative compensation — New entry added to work plan. Feedback statement on the proposed update is expected in the first quarter of 2018.

The above is a faithful com­par­i­son of the IASB work plan at 22 September 2017 and at 27 October 2017. For access to the current IASB work plan at any time, please click here.

ESMA announces enforcement priorities for 2017 financial statements

27 Oct 2017

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2017 financial statements will focus on.

ESMA considers the following key topics to be especially relevant for the examinations of listed companies' financial statements:

  • disclosure of the expected impact of the implementation of major new standards (IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, and IFRS 16 Leases) in the period of their initial application and
  • specific issues relating to IFRS 3 Business Combinations and IAS 7 Statement of Cash Flows.

In addition, this year’s priorities emphasise the importance of measurement and disclosure of non-performing loans by credit institutions, the ongoing relevance of the fair presentation of financial performance and the disclosure on the impact of Brexit.

ESMA also highlights that the 2017 year-end will be the first time that the requirements of the amended Accounting Directive to disclose non-financial and diversity information will become applicable for certain large groups and undertakings.

ESMA and European national enforcers will monitor and supervise the application of the IFRS requirements outlined in the priorities, with national authorities incorporating them into their reviews and taking corrective actions where appropriate. ESMA will collect data on how European listed entities have applied the priorities and will publish its findings in a separate report.

Please click for the following documents on the ESMA website:

Report on stakeholder event on impact analysis and better communication

27 Oct 2017

On 9 October 2017, the European Financial Reporting Advisory Group (EFRAG) and the Italian standard-setter Organismo Italiano di Contabilità (OIC) hosted a joint stakeholders event on impact analysis and better communication in financial reporting in Rome. A comprehensive report from that event is now available.

Participants and panellists were welcomed to the well-attended event by Paolo Gnes (President of the OIC Supervisory Board) and Jean-Paul Gauzès (EFRAG Board President) which then featured a keynote speech on the future focus of financial reporting by IASB member Françoise Flores as well as two roundtables on impact analysis (facilitated by Angelo Casò (Chairman of the OIC)) and on better communication through reporting (facilitated by Andreas Barckow (Vice-President of the EFRAG Board)).

The 17 page summary of the event is available on the EFRAG website.

EFRAG announces new Board members

26 Oct 2017

The EFRAG’s General Assembly has announced the appointment of three new EFRAG Board members and the reappointment of Andreas Barckow as EFRAG Board Vice-President.

The new Board members are Rosa Bruguera (banking sector, Spanish), Luca Cencioni (industrial and trading companies, Italian), and Enrique Ortega (ICAC Board member, Spain). The new members will begin their three-year terms on 1 November 2017. They replace Patrice Marteau, Alphonse Kugeler, and Chris De Noose.

In addition, an observer seat has be created to represent European private investor organisations and will be filled by Jean Medernach.

For more information, see the press release on the EFRAG’s Web site.

October 2017 IASB meeting notes posted

25 Oct 2017

The IASB met at its offices in London on 24 and 25 October 2017. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

On Tuesday 24 October 2017, the meeting started with an education session on goodwill and impairment. As an education session the staff did not ask for decisions from the Board. The Board has been considering how to make the goodwill impairment test more effective but less costly to perform. At this meeting the staff sought feedback on three issues. The first is whether there should be a single model for measuring the recoverable amount of the CGU (fair value less costs to sell or value in use) and whether to factor “dynamic headroom” into the impairment assessment. The second is whether to provide relief from the mandatory annual impairment testing of goodwill and whether to change how value in use is estimated. The third is the adequacy of the information disclosed about goodwill.  Several Board members expressed concerns about the expanding scope of the project and that this was intended to be a narrow scope project responding the post-implementation review. Accordingly, the next step is likely to be an exposure draft and not a discussion paper.

In September the Board tentatively decided to propose amending IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to lower the impracticability threshold for retrospective application of voluntary changes in accounting policies that result from agenda decisions. The Board decided to proceed with the proposal with a 120-day comment period. They expect to issue the proposal in the first quarter of 2018.

The session on rate-regulated activities focused on feedback from the World Standard-Setters Conference held in late September 2017. Although the group was generally supportive, several specific concerns were raised. The project consultative group meets on 26 October.

The Board approved the finalisation of the update to the IFRS Taxonomy for IFRS 17 Insurance Contracts. However, the lack of any formal comment letters was noted.

The day concluded with a discussion of the definition of a business. The staff have been analysing six differences between the proposed IASB definition and the FASB’s revised definition (which has already been finalised).  The Board decided to finalise the amendments which are expected to be published in the first half of 2018, for business combinations that are in an annual reporting period on or after 1 January 2020.

On Wednesday 25 October 2017, the Board supported the staff recommendation to include within the scope of the project on business combinations under common control group restructurings that are not business combinations.

The last agenda item was Conceptual Framework. The current draft underwent a fatal flaw review and the staff have been bringing issues to the Board from that review. There were two issues being discussed at this meeting. The first relates to the definition of a liability and concerns that the words “no practical ability to avoid as a going concern” captures future costs. The Board agreed with the staff analysis that they are from drafting issues rather than a flaw in the Board’s decisions. The second issue is the lack of clarity of the link between stewardship and the objective of financial reporting. The Board rejected the staff recommendation to include a flowchart in Chapter 1 of the revised Conceptual Framework to illustrate the link between the objective of general purpose financial reporting and the information needed to meet that objective.

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

Recent sustainability and integrated reporting developments

25 Oct 2017

A summary of recent developments at WBCSD, the CFA Institute, and CDP.

The World Business Council for Sustainable Development (WBCSD) has released the 2017 edition of Reporting matters. This year’s report also provides insight into the TCFD recommendations, the expanding universe of disclosure requirements and updates on the status of human rights and SDG reporting. The press release on the WBCSD website offers a summary of the key findings and access to the full report.

A survey conducted by the CFA Institute in May 2017 reveals that nearly three-quarters of investment professionals worldwide (73 percent) take ESG factors into consideration in the investment process. The press release on the website of the CFA Institute offers a summary of the key findings and access to the full report.

The Carbon Disclosure Project (CDP) has released to national editions of its 2017 Climate Changge report analysing data disclosed by companies in India and Japan. Both reports can be downloaded from the CDP website. The 2017 report for India is available in the English language; the 2017 report for Japan is in Japanese.

Paper on the transition to full adoption of new revenue recognition requirements

24 Oct 2017

The CFA Institute, a global association of investment professionals, has published 'Revenue Recognition Changes'.

About two months remain until the beginning of 2018 when all public companies reporting on a US GAAP and International Financial Reporting Standards (IFRS) basis adopt the revised revenue recognition requirements. The paper examines reporting patterns that have begun to crystallise in the transition to full adoption although it notes:

Notably, many companies seem to be crawling to the starting line. Very few companies have been early adopters. At the same time, insightful numerical information on anticipated impacts from those that are yet to adopt is limited.

The paper also reviews selected critical judgments that could affect reported revenue.

Please click to access the full paper on the CFA Institute 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.