IFRS Foundation publishes proposed IFRS Taxonomy for issues identified in the context of annual improvements

30 Nov 2017

The IFRS Foundation has published a proposed IFRS Taxonomy update 'IFRS Taxonomy 2017 — Annual Improvements'.

The proposed Taxonomy Update contains proposed improvements to the IFRS Taxonomy 2017 relating to:

  • enhancements to the data model to support consistent tagging of reporting related to continuing and discontinued operations;
  • changes to better reflect the disaggregation of disclosures in IAS 19 Employee Benefits; and
  • changes to better reflect disclosures in IFRS 7 Financial Instruments: Disclosures relating to the initial application of IFRS 9 Financial Instruments.

Comments on the proposed Taxonomy Update are requested by 29 January 2018.

For more information, see the press release and proposed Taxonomy Update on the IASB’s website.

Summary of the October 2017 GPF meeting

30 Nov 2017

Representatives of the IASB met with the Global Preparers Forum (GPF) in London on Wednesday, 4 October 2017. Notes from the meeting have now been released.

The topics discussed at the meeting included:

  • IASB Update. Members discussed goodwill and impairment, transition resource groups in general, and investor feedback on the post-implementation review of IFRS 13. The IASB staff also provided an update on how GPF members’ feedback on educational materials during the November 2016 meeting was addressed.
  • Proposed amendments to IAS 16 on property, plant and equipment. GPF members expressed mixed views on the proposed amendments, with some supporting them and some disagreeing with them. It was questioned whether the benefits from the change would outweigh the costs and it was noted that dealing with such changes would be unwelcome when entities are implementing several new IFRSs.
  • Reputation survey. The staff sought feedback from the GPF members on how the IFRS Foundation can improve its engagement with its stakeholders, how the members think the GPF could be better utilised as ambassadors for the Foundation, and how they think the Foundation can improve timeliness without adversely affecting the quality of IFRSs.
  • Proposed amendments to IAS 1 and IAS 8 regarding materiality. The GPF members generally agreed with the Board’s intention to align and refine the definition of material in IFRSs and the Conceptual Framework, although some GPF members expressed concerns about the practical implications of some proposed changes to the definition.
  • Proposed amendments to IAS 8 on accounting policies and accounting estimates. Overall, GPF members tentatively supported the proposals in the exposure draft and said that it would provide clarity on the distinction between accounting policies and accounting estimates. However, some detailed points were raised.

The next GPF meeting will be held on 6 March 2018.

The full meeting summary is available on the IASB's website.

Papers and presentations at the second AASB Research Forum

30 Nov 2017

The second research forum of the Australian Accounting Standards Board (AASB) was held at the University of Melbourne on 24 November 2017. The event focused on effective communication of financial and narrative reporting.

Three research papers were presented followed by panel discussions and questions from the audience. The papers are available for download from the AASB website now:

In addition there were three presentations on the linkage between standard-setting and research. As last year, IASB Vice-Chair Sue Lloyd spoke about Research and Standard Setting – how to contribute to the IASB's work. This was followed by a presentation by the new AASB's Research Director Christine Helliar on Influencing, collaborating and engaging with standard setters. The third presentation regarded Overcoming challenges in Australian Research settings.

Fourth IASB Research Forum - report

29 Nov 2017

The International Accounting Standards Board (IASB) hosted its fourth Research Forum on 28 and 29 November 2017 in Brussels. We have put together a short report that provides you with an overview of the papers presented and topics discussed.

On 28 and 29 November 2017 the IASB held its annual Research Forum in association with the European Accounting Review and Accounting in Europe, both journals of the European Accounting Association. This year’s Research Forum took place in Brussels with the participations of 50 academics and 50 practitioners from various countries. On the first day, five academic papers were presented by the authors and after each presentation the papers were commented by two discussants, one from the academic world and one from the IASB. Following these discussions, all participants had the opportunity to ask questions and challenge the approach and the findings presented. The participants have actively done so and lively discussions took place on the different topics.

After some introductory remarks by an IASB member, the authors of the first paper presented an empirical study on the impact of the change of pension accounting on the investment decisions of affected companies in Germany. Specifically, they examined IAS 19R, which increased expected pension-induced equity volatility by eliminating the so-called “corridor method”, a smoothing device for actuarial gains and losses. Supported by interview evidence, the findings suggest that IAS 19R led companies to reconsider their pension investment decisions, shifting their pension assets from equity instruments into bonds, relative to control companies. Thus, the study analyzed some important “real” effects of accounting standards within the context of defined benefit pension plans.

The next agenda item was the IFRS Conceptual Framework and two presenters dealt with this topic. In the first paper, the authors identified gaps in the Conceptual Framework that according to their understanding are still present in the Exposure Draft currently discussed by the IASB. The authors argued that the Conceptual Framework does surprisingly little to help the IASB (or preparers) determine which assets, liabilities, income and expenses should be recognized, and how they should be measured. The Framework’s focus on assets and liabilities, the presenters continued, implies that the accounting can, and should, be determined from the balance sheet although many current financial reporting requirements focus initially on the income statement. In the second paper presented, the authors look at the mixed valuation and transactions approach to income determination that can be found in the current Framework Exposure Draft and critically point out that the Framework does not clearly choose between single or dual concepts of profit, which renders the Framework Exposure Draft’s financial accounting model somewhat incoherent.

In the fourth paper of the day, the authors analyzed conceptual problems in current accounting for deferred taxes. In order to make IFRS deferred tax numbers more relevant, they suggest, that deferred taxes should only be recognized for temporary differences that will result in actual future tax payments and/or tax receipts. The presenters critically dealt with the various exceptions in IAS 12 and further argued that a probability threshold should apply for both deferred tax assets and liabilities and that discounting should be introduced into deferred tax accounting. The first day of the Research Forum was concluded by a paper discussing the question, if more IFRS principles of disclosures would improve the currently sometimes poor disclosure practice. Based on a comprehensive review of the literature, the authors argued that introducing more principles of disclosure must be accompanied by a clarification of the role of the specific disclosure requirements in IFRS.

On the second day of the IASB Research Forum, no papers were presented but instead the participants were introduced to two topics that are currently on the IASB’s agenda and approached related questions by working on case studies. The morning was dedicated to financial instruments with the characteristics of equity and the participants were asked to discuss five examples. Among others, the questions to be answered were, what were the features of the respective financial instrument and if it should be classified as liability or equity. In the afternoon the participants tried to identify what is “interest” in EBIT and approached this question by dealing with seven scenarios.

This Research Forum was the fourth organized by the IASB. The fifth IASB Research Forum will take place in 2018 and be held in Sydney in association with the accounting journal Abacus.

Report on the October 2017 IFRS Advisory Council meeting

27 Nov 2017

The IFRS Advisory Council met in London on 17–18 October 2017. Significant topics on the agenda included (1) the effect of technology on the future of accounting and corporate reporting, (2) better communication, and (3) the Trustees’ reputation survey.

The discussion on the reputation survey was held in private session. On the other two significant topics, the report — prepared by the Chair of the IFRS Advisory Council, Joanna Perry — notes the following discussions:

  • The effect of technology on the future of accounting and corporate reporting — Members of the Council were convinced that massive changes in relation to technology will have an impact upon accounting, corporate reporting and the IFRS Foundation. However, they also thought that there was a clear, future role for some form of financial reporting and for some form of principle-based accounting standards and, therefore, for the IFRS Foundation. They noted that stakeholders will need to deal with unstructured data and with judgements being made in a real-time environment in the future and that the IFRS Foundation needs to consider early how to respond to the changes. Members considered that it would be useful to include further sessions on technology on the Council’s future agenda .
  • Better communication — Members commended the Board on the publication of the report Better Communication in Financial Reporting and provided various suggestions for both how the Board could promote the document and how Council members (and therefore others) could use the document.

Members also received updates from the Basel Committee on Banking Supervision, from the IASB Chairman, and on the Trustees’ activities.

The next meeting of the IFRS Advisory Council is scheduled for 27–28 February 2018, in London. The full report on the council’s April meeting is available on the IASB's website.

Fourth IASB Research Forum - papers and case studies

24 Nov 2017

The International Accounting Standards Board (IASB) will host its fourth Research Forum on 28 and 29 November 2017 in Brussels. The papers to be presented and case studies to be discussed are available on the IASB website.

The first day will see the presentation of five academic papers, followed by a response of an academic and an IASB representative, again followed by a discussion with the audience. The papers are the following (all links to the IASB website):

On the second day, IASB staff will present case studies for discussion by the audience. The case studies will be (all links to the IASB website):

Agenda for the November 2017 ITCG meeting

24 Nov 2017

The agenda is available for the next meeting of the IFRS Taxonomy Consultative Group (ITCG), which will be held by conference call on 30 November 2017.

The agenda is summarised below:

Thursday 30 November 2017 (12:00-13:00)

  • ITCG technical review of Inline XBRL Illustrative Examples
  • Overview of upcoming IFRS Taxonomy content updates
  • A preparer's guide to using the IFRS Taxonomy
  • Technical review of the IFRS Taxonomy

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

HKICPA and OIC investor survey

24 Nov 2017

The Standard Setting Department of the Hong Kong Institute of Certified Public Accountants (HKICPA) and staff of the Organismo Italiano di Contabilità (OIC) are conducting a survey to understand whether investors evaluate the underlying substance of mergers and acquisitions under common control and mergers and acquisitions with third parties differently.

The survey aims to understand how investors/analysts view mergers and acquisitions with third parties and mergers and acquisitions under common control, in particular, what determines the substance of the transactions. The project was first introduced and discussed at the autumn 2017 IFASS meeting in September. The findings of the survey will help determine whether all mergers and acquisitions should be accounted and reported in the same way. Targeted users are institutional or retail investors, analysts, and other users of financial statements.

Please click to access the survey here. The cut-off date for participation is 28 February 2018. 

AAOIFI issues final standard on impairment and credit losses

24 Nov 2017

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is an Islamic international autonomous non-for-profit corporate body that prepares accounting, auditing, governance, ethics and Sharia'a standards for Islamic financial institutions and the industry. The newest standard published by the AAOIFI deals with impairment and credit losses covering current and expected losses.

The new standard FAS 30 Impairment, Credit Losses and Onerous Commitments is not converged with the corresponding requirements in IFRS 9 Financial Instruments as it was concluded that "the impairment and credit losses approaches taken by the generally accepted accounting principles recently set by various accounting standard setters and regulatory standard setters, as well as, the regulators, cannot be applicable on Islamic finance transactions in a similar manner".

The standard is effective from the financial periods beginning on or after 1 January 2020. Earlier adoption is permitted.

The issued standard can be accessed exclusively by subscribers, however, free subscription is available through the AAOIFI website. Please see the press release on the AAOIFI website for more information.

IASB issues podcast on latest Board developments

23 Nov 2017

The IASB has released a podcast featuring Chair Hans Hoogervorst, Board members Nick Anderson and Ann Tarca, and education director Matt Tilling to discuss the deliberations at the November 2017 IASB meeting.

The 15 minute podcast features discussions of the following topics:

  • Primary financial statements
  • Wider corporate reporting
  • Improvements IFRS 8 Operating Segments
  • Dynamic risk management

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 November 2017 Meeting.

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