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February

Paper on the new revenue recognition requirements from the investors' view

27 Feb 2018

The CFA Institute, a global association of investment professionals, has published 'Revenue Recognition: Top Ten Questions Investors Should Be Asking Regarding the Adoption of the New Standard'.

Effective 1 January 2018, revenue for all companies following IFRSs and US GAAP will be recognised under a new accounting standard – IFRS 15 Revenue from Contracts with Customers or the FASB's equivalent revenue standard, ASU 2014-09 Revenue from Contracts with Customers (Topic 606). Much of the discussion so far has centered around it should be applied by preparers, not on how it should be analysed by analysts and investors. The paper now published by the CFA Institute examines the top 10 questions investors should consider as they review year-end 2017 results and consider first quarter 2018 reporting as it relates to the adoption of the new standard.

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

Agenda for March 2018 GPF meeting

26 Feb 2018

Representatives from the International Accounting Standards Board (IASB) will meet with the Global Preparers Forum (GPF) in London on 6 March 2018. The agenda for the meeting has been released.

The full agenda for the meeting is sum­marised below:

Tuesday, 6 March 2018 (10:10-16:20)

  • Introduction.
  • IASB and IFRIC update.
  • Principles of disclosure — the staff will discuss feedback from the discussion paper and potential next steps with the GPF members.
  • Primary financial statements —
    • Management performance measures and management-defined earnings per share.
    • Presentation of the share of profit or loss of associates and joint ventures accounted for using the equity method in the statement of performance.
  • Goodwill and impairment —
    • Simplifying the identification of intangible assets acquired in a business combination separately from goodwill.
    • Improving the effectiveness of impairment testing of goodwill by using the unrecognized headroom of a cash-generating unit as an additional input in the impairment testing of goodwill.

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

Report from the December 2017 Emerging Economies Group meeting

26 Feb 2018

The 14th meeting of the IASB's Emerging Economies Group (EEG) was held in Sao Paulo, Brazil on 4–6 December 2017. The IASB has published a full report from the meeting.

Par­tic­i­pants at the meeting, which was chaired by IASB member Amaro Gomes, discussed business combinations under common control, accounting for micro entities, IAS 12 Income Taxes, initial measurement of payables when payment is deferred, IASB update, and an introduction to IFRS 17 Insurance Contracts.

The next meeting of the EEG will be held 14–16 May 2018 in Kuala Lumpur, Malaysia.

Please click for access to the full report (five pages) on the IASB website.

EFRAG publishes IFRS 17 briefing paper

26 Feb 2018

​The European Financial Reporting Advisory Group (EFRAG) has issued a background briefing paper on the level of aggregation requirements of IFRS 17 'Insurance Contracts'.

​​The paper discusses the requirements regarding the level of aggregation in IFRS 17. The paper is the first in a planned series of three that are intended to provide simplified information on controversial areas of IFRS 17 to enable constituents to understand the issues and be in a position to comment on EFRAG's draft endorsement advice (currently expected in Q3 2018). The other two papers will address the release of the contractual service margin and transition requirements.

Please click to access the briefing paper through the press release on the EFRAG website.

Agenda for the March 2018 CMAC meeting

26 Feb 2018

Representatives from the International Accounting Standards Board (IASB) will meet with the Capital Markets Advisory Council (CMAC) in London on 2 March 2018. The agenda for the meeting has been released.

The full agenda for the meeting is summarised below:

Friday, 2 March 2018 (09:00-15:15)

  • IASB Update
  • Primary financial statements
    • Management performance measures (MPMs)
    • Share of profit or loss of associates and joint ventures accounted for using the equity method
  • Discussion Paper — Principles of Disclosure
    • Potential next steps on the project
  • Goodwill and impairment
    • Identification of intangible assets acquired in a business combination separately from goodwill
    • Effectiveness of impairment testing of goodwill
  • Rate-regulated activities
    • Usefulness of possible disclosure requirements for the new accounting model being developed

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

Updated IASB work plan — Analysis

23 Feb 2018

Following the IASB's February 2018 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments in February. Changes are minor.

Below is an analysis of all changes made to the work plan since our last analysis on 27 January 2018.

Maintenance projects

  • Plan amendment, curtailment or settlement (amendment to IAS 19) — This has been removed from the work plan, as an IFRS Amendment was issued on 7 February 2018.

Research projects

  • Principles of disclosure — Discussions on feedback of the discussion paper occurred at the IASB’s February 2018 meeting; the next milestone is now “decide project direction” in March 2018.

Other projects

  • IFRS Taxonomy Update—2017 Annual Improvements — The next milestone has changed from a Feedback Discussion in February 2018 to a Final Update in March 2018.

The above is a faithful comparison of the IASB work plan at 26 January 2018 and at 23 February 2018. For access to the current IASB work plan at any time, please click here.

February 2018 IASB meeting notes posted

23 Feb 2018

The IASB met at its offices in London on Tuesday 20 and Thursday 22 February 2018. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board discussed the following topics:

Tuesday 20 February

Disclosure initiative

The Board discussed the feedback received on the Disclosure Initiative—Principles of Disclosure Discussion Paper. There were 12 papers for this session, plus a cover note. No decisions were made.

Primary financial statements

The Board decided that entities should distinguish between cash flows from integral and non-integral associates and joint ventures in the investing section of the statement of cash flows.

However, after a 90 minute discussion the Board did not vote on the proposed clarification of what is meant by a ‘key performance measure’ and a measure that is ‘specified or defined in IFRS Standards’, or the related EPS disclosures. The Staff will reconsider their position and bring back further analysis, including researching how IAS 1.85 and 85A are being applied in practice.

Thursday 22 February

Dynamic risk management

The Board discussed the qualifying criteria for designating an item into the asset profile, which defines which items are managed for interest rate risk and are therefore subject to performance assessment under the DRM model. They also discussed some technicalities about designation and situations requiring de-designation, as well as documentation requirements. Some concerns were raised about how operational the proposals are and whether the proposals will allow entities to reflect how they manage risk.

Business combinations under common control

The Board decided to use the acquisition method in IFRS 3 as the starting point in developing proposals for accounting for business combinations for which all of the parties to the combination are under common control. In doing so it noted that the predominant accounting in practice is the predecessor approach and requiring the use of the acquisition method would be a significant change.

Research

The Board decided to start work in the next few months on variable and contingent consideration; provisions activities; pension benefits that depend on asset returns; and SMEs that are subsidiaries. Work on equity method; pollutant pricing mechanisms; high inflation (the scope of IAS 29); and post-implementation reviews of IFRS 10, 11 and 12; and IFRS 5 should commence in 2019 or early 2020. Most of the discussion centred on extractive activities, the equity method and the timing of the IFRS 10, 11 and 12 PIR. It is possible that the Board will undertake a review of IFRS 11 separately, and ahead of, IFRS 10.

Insurance

The staff summarised the first Insurance Contracts TRG meeting held on 6 February 2018 and gave an update on the educational activities for investors and analysts conducted from mid-May 2017 to the end of January 2018 on IFRS 17.

Analysis of due process documents

This Staff set out for the Board the different purposes of Discussion Papers (DP) and Exposure Drafts (ED). This Board will soon need to decide whether it should publish a DP or an ED for the projects on primary financial statements, goodwill and impairment as well as rate-regulated activities. It was suggested that the DPs should be more fully developed, with preliminary views, so that the gap between a DP and ED was not as big as it has been.

Rate-regulated activities

The Board decided that the unit of account for the model being developed be specified as the individual timing differences (as opposed to the net of all timing differences) arising from the regulatory agreement. The Board also concluded that rate-regulated rights and obligations will meet the definitions of assets and a liabilities in the revised Conceptual Framework.

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

SEC issues interpretive guidance on cybersecurity

22 Feb 2018

The increasing number and severity of cybersecurity incidents has led the Securities and Exchange Commission (SEC) to issue interpretive guidance to promote clearer and more robust disclosures by public companies in relation to their cybersecurity risks and incidents.

Previous guidance in this area stated that companies may be obligated to disclose cybersecurity risks and incidents, but it did not provide specific disclosure requirements. The new guidance clarifies that the SEC expects companies to disclose cybersecurity risks and incidents that are material to investors, including financial, legal, or reputational consequences.

For more information, see the press release and interpretation on the SEC’s website.

Agenda for the upcoming IFASS meeting

15 Feb 2018

The International Forum of Accounting Standard Setters (IFASS) will meet in Mumbai on 12 and 13 April 2018. Among the topics to be discussed are the strategy of the IFRS Interpretations Committee regarding tentative agenda decisions as well as approaches and experiences regarding the adoption of new standards (IFRS 15, IFRS 16, IFRS 17).

The full agenda is summarised below:

Thursday, 12 April 2018 (08:45-18:30)

  • Inaugural session - Adresses by various Indian representatives
  • Opening remarks & Administrative matters
  • Continuation of the internal discussions from the last meeting
  • Proposals on the IASB project on goodwill and impairment
  • IFRS IC Strategy - tentative agenda decisions
  • Jurisdictional/Standardsetters' updates
    • Should parent entities and subsidiaries be exempted from preparing individual financial statements where group financial statements are prepared?
    • Q&A on IASB's Work Plan including research project pipeline
    • Recent developments in the work of the Not-for-profit working group
  • Facilitating the adoption of new IFRSs - Approaches and experiences
    • IFRS 15: Enforceable right to payment: Off-plan apartment complex construction contracts
    • IFRS 16: Exchange of lessons learned
  • Two simultaneous optional sessions
    • Facilitating the adoption of new IFRSs - Approaches and experiences: IFRS 17 - Exchange of lessons learned
    • Consolidation of Not-for-profit entities under IFRS 10
  • Two simultaneous optional sessions
    • IFRS Taxonomy update
    • Opportunities, challenges and way forward for the implementation of NFRS and the NFRS for SMEs in Nepal


Friday, 13 April 2018 (09:00-16:15)

  • Equity instruments: Impairment & Recycling
  • A review of IASB’s tentative decisions on primary financial statements
  • BCUCC: Follow-up from London 2017
  • First thoughts on intangibles (FRC research project)
  • Closing remarks

 

Pre-meeting summaries for the February IASB meeting

14 Feb 2018

The IASB will meet at its offices in London on 20 and 22 February 2018. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

There are eight topics on the agenda.

Tuesday 20 February

Disclosure Initiative

The Board will discuss the detailed feedback received on the Disclosure Initiative—Principles of Disclosure Discussion Paper. There are 12 papers for this session, plus a cover note.

Primary Financial Statements

The Staff are responding to the Board’s request in January to clarify what is meant by a ‘key performance measure’ and a measure that is ‘specified or defined in IFRS Standards’. The staff are also recommending that when a management performance measure (MPM) is reported an adjusted EPS that is calculated consistently with the MPM must be presented, together with supporting disclosures.  Finally, the staff are also recommending that, within the investing section of the statement of cash flows, a distinction be made between cash flows arising from integral and non-integral associates and joint ventures.

Thursday 22 February

Dynamic Risk Management

In this paper, the Staff set out the qualifying criteria for designating an item into the asset profile, which defines which items are managed for interest rate risk and are therefore subject to performance assessment under the DRM model. They also discuss some technicalities about designation and situations requiring de-designation, as well as documentation requirements.

Business Combinations under Common Control

The Staff are recommending that the Board use the acquisition method in IFRS 3 as the starting point in developing proposals for accounting for business combinations for which all of the parties to the combination are under common control.

Research

The Staff will give the Board a status update on its research programme. The Staff are recommending that the Board start work in the next few months on variable and contingent consideration; provisions; extractive activities; pension benefits that depend on asset returns; and SMEs that are subsidiaries. Work on equity method; pollutant pricing mechanisms; high inflation (the scope of IAS 29); and post-implementation reviews of IFRS 10-12; and IFRS 5 should commence in 2019 or early 2020.

Insurance

The staff will give the Board a summary of the first Insurance Contracts TRG meeting. 

Analysis of due process documents

This Staff have set out for the Board the different purposes of Discussion Papers (DP) and Exposure Drafts (ED). This session is being held in anticipation of the Board’s decisions about whether it should publish a DP or an ED for the projects on primary financial statements, goodwill and impairment as well as rate-regulated activities.

Rate regulated Activities

The staff are recommending that the model being developed specify the unit of account as the individual timing differences (as opposed to the net of all timing differences) arising from the regulatory agreement. The staff also explain why they consider that rate-regulated rights and obligations meet the revised definitions of assets and a liabilities in the forthcoming Conceptual Framework.

More information

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

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