Previously, Mr Liikanen has worked in various leadership positions which included serving as Governor of the Bank of Finland, Governor of the International Monetary Fund, and member of the Governing Council of the European Central Bank.

For more information, see the press release on the IASB’s website.

One of the questions in the fitness check relates to whether it is still appropriate that the IAS Regulation prevents the European Comission (EC) from modifying the content of IFRS as issued by the IASB. ESMA notes that the EC has only recently sought feedback on this question twice (2013 and 2015) and both times the great majority of stakeholders cautioned against introducing such a possibility. The letter adds:

In line with its prior positions, ESMA strongly disagrees with this recommendation, most notably because any European-specific adjustments to IFRS would defy one of the key objectives of the IAS Regulation, namely that financial reporting standards applied by listed issuers are accepted internationally and are truly global standards. In addition, we believe that modifications to IFRS at the European level would hinder the capacity of European companies to compete for financial resources on equal terms in global capital markets. In our view, the different levels of commitment to require IFRS as issued by the IASB around the globe is not a justification for introducing carve-ins. On the contrary, Europe should show leadership in reaffirming its commitment to IFRS. This in turn would increase its ability to influence the development of IFRS, which the EU should continue to actively do as part of the IASB’s due process. 

ESMA also states that the current endorsement criteria should not be changed as the current endorsement process already provides the necessary safeguards to the European public good, by providing the possibility for the non-endorsement of a standard, which is not conducive to European public good.

Please click to access the press release on the ESMA website, which offers a quick overview over ESMA's position as well as access to the letter of response and the completed questionnaire.

The 18 minute video Research and Standard setting—How to contribute to the IASB's work can be accessed here.

The decision strikes a balance between calls to delay the effective date to 2022 (mainly because it is considered to be burdensome to SMEs) and the wish to keep the effect on the banking industry in terms of investor confidence or credit ratings small as the deferral is just one year. Also, early adoption remains possible.

For more information please see the press release on the FAP website (in the Thai language only).

The consultation document, including proposed changes and indicative questions, can be downloaded here from the IVSC website.

Comments are requested by 16 October 2018.

The webinar provides background information, an overview of changes, supporting materials, and upcoming changes to the IFRS Taxonomy.

For more in­for­ma­tion, see press release on the IASB's website.

As reported earlier, the document seems oddly tilted against the use of IFRSs as issued by the IASB asking for example whether European listed companies are still best served by applying IFRS or whether the European Commission should be given the power to modify IFRSs as issued by the IASB. Accountancy Europe clearly warns against this. The response states:

It is still appropriate that the IAS Regulation prevents the Commission from modifying the content of IFRS. We call for great caution in permitting the EU to change specific aspects of IFRS standards published by the IASB ('carve-in') before transposing them into EU law.

The reasons the response cites are:

• Fear of an uncontrollable and unpredictable trend that would lead to EU-IFRS;
• isolating the EU from global capital markets would hinder investments (including long-term investments), create confusion, and increase the cost of capital;
• concerns regarding the current position of foreign private issuers in the US;
• decrease of EU influence on the international standard-setter, which would in turn make the issuance of international standards that do not meet the EU endorsement criteria more likely;
• loss of all benefits that result from international comparability and transparency.

As additional points on international financial reporting Accountancy Europe also states that listed entities without subsidiaries should also be required to apply IFRSs, the option to apply IFRSs should be available at company level (not member state level), the EU endorsement criteria should not be changed, and the IASB's Conceptual Framework should be endorsed for use in the EU.

Please click to access to the letter of response and the completed consultation questionnaire on the Accountancy Europe website.

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.

The first webcasts offers an 11 minute overview of the discussion paper. The webcast can be accessed here.

Future webcasts in the series will cover:

• the Board’s preferred approach and classification of non-derivative financial instruments;
• classification of derivatives on own equity;
• classification of compound instruments and redemption obligation arrangements;
• presentation of equity instruments; and
• presentation of financial liabilities.

Tuesday 17 July

Rate-regulated Activities

At this meeting the Board will discuss the staff’s recommendations for the measurement of regulatory assets that are recognised in the model as well as the staff’s initial views on a high-level presentation and disclosure objective for the model and possible presentation formats for the statement(s) of financial performance.

Management Commentary

The staff will provide an update on the project to revise the Management Commentary Practice Statement. The membership of the Management Commentary Consultative Group was announced on 10 July 2018. An Exposure Draft for a revised Practice Statement can be expected in 2020.

Business Combinations under Common Control

The staff will give an oral update of the project.

Conceptual Framework

This session focuses on when and how preparers of financial statements should refer to the new Conceptual Framework for assistance in developing accounting policies. The paper includes some analysis but not any recommendations.

Implementation

The Board will be asked for feedback on the proposal of the IFRS Interpretations Committee to propose narrow-scope amendments to IAS 37 to specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’.

In January 2018 the IASB discussed commodity loans and related transactions, including cryptocurrencies. The staff are recommending that the Board consider the feasibility of a narrow-scope project to address commodity loans. However, they recommend that the Board not do any more work at this time on developing an investment standard. They recommend that the Interpretations Committee be asked to consider how an entity should apply existing IFRS requirements to holdings of cryptocurrencies and ICOs.

Wednesday 18 July

Goodwill and Impairment

The Board will consider how to focus its work on the Goodwill and Impairment research project.

Disclosure Initiative

This session covers five topics: Definition of Material; Targeted Standards-level Review of Disclosures – Guidance for the Board – Drafting Disclosure Requirements; Accounting Policy Disclosure; Location of Information; Technology and Digital Reporting Considerations.

• The staff are recommending that the Board complete the proposal to amend the definition of material so as to make the changes effective for periods beginning on or after 1 January 2020.
• In relation to the guidance for the Board on how to draft disclosure requirements, the recommendations relate to when to use prescriptive language and ways to improve consistency of wording. They also have recommendations about how to organise the disclosure requirements within a Standard. The staff are recommending that the Board use IAS 19 Employee Benefits and IFRS 13 Fair Value Measurement to test the new approach.
• The staff are recommending that the Board amend IAS 1:117 – 124 to require entities to disclose their material accounting policies rather than their significant accounting policies and develop related guidance and examples for inclusion in the Materiality Practice Statement.
• The staff are recommending that the Board not develop requirements about IFRS information outside the financial statements or non-IFRS information inside the financial statements.
• The staff are recommending that the Board include relevant considerations in the Guidance for the Board to use when developing and drafting disclosure objectives and requirements but to consider the broader implications of technology on financial reporting as part of the IFRS Foundation’s Technology Initiative.

Accounting Policies and Accounting Estimates

This session is to update the Board of progress on its Exposure Draft Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8). While some respondents to the ED said the proposed amendments would improve clarity others questioned whether the benefits of finalising the proposed amendments would outweigh the costs of doing so. The staff have consulted with the Accounting Standards Advisory Forum and, as a next step, will seek the advice of the IFRS Interpretations Committee.

Emerging Economies Group Update

The meeting concludes with an update of the most recent meeting of the IASB’s Emerging Economies Group.

More information

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