February

Insurance contracts transition resource group - meeting summary, podcast, IFRS in Focus

14 Feb 2018

The Transition Resource Group (TRG) for Insurance Contracts held its first technical meeting on 6 February 2018. The IASB has now made available a summary and a podcast of the meeting and Deloitte has published an IFRS in Focus newsletter reflecting the discussions.

India to adopt IFRS 17, proposes slightly earlier application date

13 Feb 2018

The Accounting Standards Board of the Institute of Chartered Accountants of India (ICAI) has published ED/Ind AS/2018/03 'Insurance Contracts'. Changes in comparision to IFRS 17 'Insurance Contracts' are few.

In an appendix, the ED lists these two changes in comparison to IFRS 17:

Comparison with IFRS 17, Insurance Contracts

  1. IFRS 17, Insurance Contracts, is applicable globally with effect from 1st January 2021. However, in India, it has been decided to implement Ind AS with effect from 1st April 2020 . In case of insurance companies, early application of the said standard will be permitted for consolidation purposes only.
  2. Paragraph 7(b) of IFRS 17 mentions that this standard shall not be applicable to retirement benefit obligations reported by defined benefit retirement plans and reference to IAS 26, Accounting and Reporting by Retirement Benefit Plans, has been made. Though this scope exclusion is retained but reference to IAS 26 has been omitted in Ind AS 117 considering Ind AS corresponding to IAS 26 has not been notified in India.

Please click to access the ED on the ICAI website. Comments are requested by 31 March 2018.

EC publishes evaluation roadmap for fitness check on public reporting by companies

12 Feb 2018

The European Commission (EC) has published an evaluation roadmap 'Fitness check on public reporting by companies (Accounting Directive, Transparency Directive, Non-financial reporting Directive, Bank Accounts Directive et Insurance Accounts Directive and IAS Regulation)'.

The purpose of the fitness check exercise will be to assess whether the public reporting obligations including financial and non-financial reporting requirements for EU companies are meeting their objectives (effectiveness, relevance and EU added value). It will cover various reporting requirements including the Accounting Directive including the Non-Financial Reporting Directive, the Regulation on International Accounting Standards (IAS Regulation), the Transparency Directive (TD), the Banks Accounts Directive, and the Insurance Accounts Directive.

The Commission aims to assess whether the EU financial reporting framework is still fit for purpose. Aspects in this context are cross border businesses in a more integrated Single Market and well-functioning capital markets, the emergence of new business models, the increasing importance of intangibles in the digital economy, and the role of IFRSs and their interaction with the broader EU accounting framework. The Commission also notes the increased demand for public reporting on a broader range of topics as for example reporting on sustainability issues and long term value creation. Interaction and integration of the different sets of public reporting by companies (financial, non-financial and other reports) will also be looked at. And finally, the Commission will look at digitalisation and its long-term challenges and opportunities.

The first step in this fitness check will be an open public consultation that is expected to be launched in 1st quarter of 2018 and will last for a period of at least 12 weeks. In particular, participants will be asked for their views on the following:

  1. Whether the current financial reporting framework meets its objectives and will continue to do so in the digital economy, whether the level of harmonisation and simplification meets the needs of respectively the large cross border groups and the SMEs, the role of IFRS for non-listed and listed companies including governance aspects to ensure these are not detrimental to long term and sustainable investments, and the coherence of sectoral accounting legislation for banks and insurance companies with other EU reporting and prudential legislations;
  2. Whether the financial and non-financial disclosures in the area of Environmental, Social and Governance (ESG) reporting by companies are fit for purpose, including as regards sustainability disclosures;
  3. Whether to encourage experimentation with integrated reporting as a way to make the EU reporting framework more effective and efficient and if yes how;
  4. Whether public corporate reporting does take enough consideration of – and at least is not a hindrance to – technological progress and how to make the best use of these new tools to do more with less.

Please click to access the full fitness check roadmap on the EC website. Note that roadmaps can also be commented on - feedback on this roadmap is requested by 8 March 2018.

The High-Level Expert Group (HLEG) on Sustainable Finance, established by the EC, has also suggested in its final report setting out strategic recommendations for a financial system that supports sustainable investments that changes to the IAS Regulation might be warranted.

Agenda for the February 2018 IFRS Advisory Council meeting

12 Feb 2018

An agenda has been released for the upcoming meeting of the IFRS Advisory Council, which is being held in London on 27–28 February 2018.

A summary of the agenda is set out below:

Tuesday 27 February 2018

Morning session (09:00-12:35)

  • Welcome and Chair's preview
  • Tee-up re effects analysis
    • Breakout session on effects analysis
  • Tee-up re conference strategy
    • Breakout session on conference strategy

Afternoon session (13:50-17:20)

  • Trustees and IFRS Foundation activities
  • Feedback on the Board’s approach to effects analysis
  • Feedback on the Board’s conference strategy
  • Update on the Board and the Foundation
  • Communications strategy

Wednesday 28 February 2018

Morning session (8:30-12:00)

  • Tee-up re academic liaison strategy
    • Breakout session on the Board’s academic liaison strategy
  • Update on changes to the Emerging Economies Group
  • 2018 Review of A ccounting Standards Advisory Forum
  • Feedback on the Board’s academic liaison strategy
  • Sum up discussions

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

Compendium of Ind AS Clarification Bulletins

12 Feb 2018

India is currently in its process of implementating the Indian Accounting Standards (Ind AS), which are largely converged with International Financial Reporting Standards (IFRSs). For addressing transition related queries, an Ind AS Transition Facilitation Group (ITFG) has been set up that issues clarification bulletins addressing implementation issues from time to time. For ease of reference, the 14 bulletins issued so far have now been condensed into one compendium.

The Compendium of ITFG Clarification Bulletins addresses 104 issues and is indexed by standard. It is available on the website of the Institute of Chartered Accountants of India (ICAI).

February 2018 IASB meeting agenda posted

09 Feb 2018

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 20 and 22 February 2018. There are eight topics on the agenda.

The Board will discuss the following:

  • Disclosure initiative: Principles of disclosures
    • Summary of feedback received
  • Primary financial statements
    • Clarifying requirements for management performance measures (MPMs)
    • Management-defined adjusted earnings per share (EPS)
    • Presentation of the cash flows of 'integral' and 'non-integral' associates and joint ventures
  • Dynamic risk management
    • Role of asset profile
  • Business combinations under common control
  • Research Programme
  • Insurance contracts
    • Update on TRG meeting and activities for investors and analysts
  • Discussion papers and exposure drafts
  • Rate-regulated activities
    • Unit of account and asset/liability definitions

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries as well as observer notes from the meeting on this page as they become available.

Two videos from the stakeholder event in connection with the last meeting of the IFRS Foundation Trustees

09 Feb 2018

In conjunction with the IFRS Foundation Trustees meeting in Hong Kong on 31 January, the IFRS Foundation and the Hong Kong Institute of Certified Public Accountants (HKICPA) organised a stakeholder dinner for companies, investors, regulators and others in Hong Kong with an interest in financial reporting. The event saw a welcome speech by Michel Prada and a panel discussion on 'Hong Kong and IFRS Standards: past, present and future'.

Video recordings of the welcome speech and the panel discussion are now available:

 

Recent sustainability and integrated reporting developments

09 Feb 2018

A summary of recent developments at the Center for ESG Research, WBCSD, and GRI.

The think tank Center for ESG Research has released the Integrated Ratio Guideline, which aims to be a practical formula collection for companies, investors and analysts, to help them calculate a number of non-financial and integrated ratios, and notably what investors and analysts can use these ratios for to evaluate companies’ performance and risk profiles. You can find the Center for ESG Research's Integrated Ratio Guideline here.

The World Business Council for Sustainable Development (WBCSD) has released a new report, compiling data that offers a closer look into the reporting landscape of the United States and Canada. This first report in a series of case studies across different countries that looks at significant developments in ESG reporting seeks to address the challenges, opportunities and next steps for corporate reporting and disclosure. Please click to access the report here.

The Global Reporting Initiative (GRI) and the WBCSD have launched the 'Materiality Roundtable Series', a platform for companies and investors that helps organisations to identify and integrate sustainability information into their corporate reporting. Please click for more information on the GRI website.

GRI also announces that the GRI Standards now available in Simplified Chinese. Please click for access to the press release and the download centre on the GRI website.

IASB member discusses the importance of financial reporting when investing

08 Feb 2018

At the ICAEW’s Information for Better Markets event on 18 December 2017, IASB member Nick Anderson gave a response to Professor Baruch Lev speech, 'Financial reporting for Investors—do the financial statements give them what they need?'

Mr Anderson’s response provided his views related to the important role analysis reports play when making investment decisions as well as arguments to Professor Lev’s comments regarding the (1) growth of intangibles, (2) impact of financial reporting, and (3) role of standard-setters. In addition, he commented on two proposed accounting changes Professor Lev believed will ‘restore the income statement matching.’ These proposals were to capitalize selected intangibles and the treatment of ‘one-off’ costs.

For more information, see Mr Anderson’s response on the IASB’s website.

Summary of the December 2017 ASAF meeting now available

08 Feb 2018

The staff of the International Accounting Standards Board (IASB) have made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 7 and 8 December 2017.

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

  • Primary financial statements (1–15): ASAF members discussed (1) introducing additional defined subtotals in the statement(s) of financial performance ('profit before investing, financing and income tax’ and ‘profit before financing and income tax’), (2) an ‘income and expenses from investments’ category presented between these two subtotals and a ‘finance income and expenses’ category presented below the ‘profit before financing and income tax’ subtotal, and (3) better ways to communicate other comprehensive income (OCI). Most ASAF members were generally supportive of introducing additional defined subtotals in the statement(s) of financial performance. As regards OCI, ASAF members noted that relabelling OCI without clarifying the distinction between profit or loss and OCI, and without clarifying the principles for recycling, would only cause confusion.
  • Disclosure initiative — Definition of material (16–22): ASAF members commented on the September 2017 Exposure Draft. Most of them expressed concerns with the reference to ‘obscuring’ information in the proposed definition of material. Some members also made additional suggestions to improve the application of the definition of material.
  • Disclosure initiative — Principles of disclosure (23–35): ASAF members discussed the feedback received on the Priciples of Disclosure Discussion Paper and provided feedback on: (1) technology and digital reporting considerations, (2) development of disclosure principles, (3) standards-level review of disclosures, and (4) project direction and focus.
  • Post-implementation Review of IFRS 13 (36–41): ASAF members received an overview of the feedback received in response to the request for information, which they generally agreed with (especially the fact that IFRS 13 is perceived to be working well). ASAF members provided advice on how the Board could respond to that feedback.
  • Wider Corporate Reporting (42–47): ASAF members commented on the Wider Corporate Reporting project the Board has added to its agenda. Most ASAF members supported the Board’s decision to revise and update the Practice Statement Management Commentary and also provided suggestions for the Board to consider in moving the project forward.Several ASAF members commented on the current nonmandatory status of the statement.
  • Academic liaison (48–50): ASAF members explained about their experience in liaising with academics, and offered their views on whether the activities they engaged in with academics would work in the broader international context of the Board.
  • Information deficiencies and consolidated financial statements (51–53): Andreas Barckow, German ASAF member, presented on the perceived information deficiencies of consolidated financial statements, in particular, the loss of information about subsidiary entities through the elimination procedures in preparing consolidated financial statements (see our earlier announcement of his paper in November 2017).
  • Proposed improvements to IFRS 8 (54–70): The IASB staff summarised the feedback on the March 2017 Exposure draft, which had been mixed. Therefore, the staff sought ASAF members’ views on some ideas on how the proposals in the Exposure Draft could be improved.
  • Business Combinations Under Common Control (71–91): ASAF members received an update on the Board’s discussions in this research project and commented on: (1) clarifications of the scope of the project and (2) methods of accounting for transactions in the scope of the project. ASAF members supported the clarification of the scope of the project made by the Board in October 2017.
  • Project updates and agenda planning (92–93): ASAF members were updated on the IASB technical projects and how the IASB used the ASAF advice from previous meetings.

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

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