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ASCG issues draft interpretation following an agenda decision on IAS 12

  • Accounting Standards Committee of Germany (ASCG) (lt blue) Image

16 Jul 2018

At its meeting in Taipei on 2 and 3 March 2017, the International Forum of Accounting Standard Setters (IFASS) discussed the problem of there possibly being local interpretations of IFRSs at national level other standard-setters (and the IASB) are not aware of. This might be due to the fact that there are problems or that there might be expertise that might, or might not, be available in other jurisdictions. The Accounting Standards Committee of Germany (ASCG) has now issued its first draft interpretation making the draft available in the English language as well after also having reached out to the IFRS Foundation. The interpretation was developed following a negative agenda decision by the IFRS Interpretations Committee on a matter where diversity in practice is observed in Germany.

The Exposure Draft of ASCG Interpretation (IFRS) No. 1 Accounting for Interest and Penalties Related to Income Taxes under IFRSs (ED ASCG Interpretation 1) addresses the accounting for interest and penalties related to taxes within the meaning of section 3(4) of the AO (Abgabenordnung, Fiscal Code of Germany) that relate to current income taxes within the meaning of IAS 12.5 (interest and penalties related to income taxes) in financial statements prepared in accordance with IFRSs, as adopted by the EU.

According to the Exposure Draft, interest and penalties related to income taxes shall be accounted for in accordance with IAS 37.

If an entity changes its accounting treatment because of this interpretation, the lack of previous guidance means that this does not constitute the correction of an error, but rather a change in accounting policy within the meaning of IAS 8.

Comments on the exposure draft are requested by 31 August 2018. The English language translation of the draft is available here on the ASCG website.

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