July

Article on IFRS 17

05 Jul 2018

IASB member Gary Kabureck has contributed an article to the IASB website 'Reducing the gap between insurance and other industries'.

The article outlines the similarities between IFRS 17 and other IFRSs as regards the measurement of obligations at current value and the recognition of revenue as a company provides services to its customers. It concludes that the changes introduced by IFRS 17 will enable a wider range of users to understand insurers’ financial statements and compare them with the financial statements of companies within and outside the insurance industry.

Please click to access the article on the IASB website.

Webinar on the IFRS Taxonomy 2018

05 Jul 2018

The IASB announces that it will offer two free live webinar sessions on 12 July 2018 to introduce the IFRS Taxonomy 2018 and highlight changes from the IFRS Taxonomy 2017.

For the convenience of participants in different time zones the IASB has scheduled two sessions, one at 9:00 BST and one at 15:00 BST. Each session will last approximately one hour and will include the possibility to ask questions.

Please see the press release on the IASB website in order to register for the webinar.

IASB issues podcast on latest Board developments

04 Jul 2018

The IASB has released a podcast featuring Vice-Chair Sue Lloyd and education director Matt Tilling to discuss the deliberations at the June 2018 IASB meeting and the recent IFRS Foundation conference held in Frankfurt.

The 19-minute podcast features discussions of the following topics:

  • Overview of the conference,
  • IASB consultation on financial instruments with the characteristics of equity,
  • Joint FASB and IASB education meeting,
  • IFRS Taxonomy,
  • Definition of material,
  • Business combinations under common control, and
  • Dynamic risk management.

The podcast can be accessed on the IASB website. More information on the topics discussed is available through our comprehensive notes taken by Deloitte observers of the June 2018 meeting.

Group of national standard-setters urges IASB to consider hybrid pension plans

04 Jul 2018

At the upcoming meeting of the IASB's Accounting Standards Advisory Forum (ASAF), the Canadian Accounting Standards Board (AcSB) will present the results of research performed to date by Canada, Germany, Japan, the UK and the US on hybrid pension plans, which are neither defined contribution plans nor defined benefit plans. The paper argues that further guidance on accounting for hybrid pension plans is needed to better reflect their economic characteristics and reduce diversity in practice.

A working group of staff from the standard-setters in the five jurisdictions embarked on research to produce evidence demonstrating whether there is a need for accounting guidance addressing hybrid pension plans. The working group's aim was to understand the experiences of jurisdictions around the world with hybrid pension plans and whether common issues arise as well as to determine whether existing standards adequately deal with such plans and identify possible improvements, if needed. The research is on-going and is currently being expanded to other jurisdictions.

The research so far provides evidence from multiple jurisdictions to support a need for guidance on accounting for hybrid pension plans and is sufficiently complete to be brought to the attention of others with a view to encouraging standard-setting action on this topic. Therefore, the working group proposes that the IASB consider the research performed to date and either add it as another dimension to the feasibility study Pension Benefits that Depend on Asset Returns in its research pipeline or take on a project to address hybrid pension plans.

Meanwhile, the working group will expand its research to other jurisdictions by summarising and analysing data collected from IFASS member jurisdictions, will expand outreach to financial statement users and academics within several jurisdictions, and will continue to monitor related activities.

Please click to access the working group's paper on the IASB website.

Report from the May 2018 Emerging Economies Group meeting

04 Jul 2018

The 15th meeting of the IASB's Emerging Economies Group (EEG) was held in Kuala Lumpur, Malaysia on 14 – 16 May 2018. The IASB has published a full report from the meeting.

Participants at the meeting, which was chaired by IASB member Amaro Gomes, discussed IFRS 16 Leases, involuntary common infrastructure cost, digital currencies, accounting for micro-entities, accounting for private entities, accounting for subsidiary entities, initial feedback on the implementation of IFRS 9 in emerging economies, consolidation of not-for-profit entities, and presentation of current/non-current assets.

The next meeting of the EEG will be held 29–31 October 2018 in South Korea.

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

Agenda for the July 2018 ASAF meeting

04 Jul 2018

The International Accounting Standards Board (IASB) has released an agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 9 and 10 July 2018.

The agenda for the meeting is summarised below:

Monday, 9 July 2018 (9:30-17:00)

  • Financial instruments with characteristics of Equity
  • Business combinations under common control
  • Better communication
    • Primary financial statements — overview of the Board’s tentative decisions to date and next steps in the project
    • Reporting performance measures — Draft framework of the AcSB

Tuesday, 10 July 2018 (9:00-15:30)

  • Property, Plant and Equipment – Proceeds before intended use
    • Best course of action to follow on this project
  • Goodwill and impairment
    • How to improve disclosures about business combinations, goodwill and impairment of goodwill
  • Better communication
    • Standards-level review — process for developing and drafting disclosure requirements and standards that could be the subject of the review
  • Accounting for pensions
  • Project updates and agenda planning

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

Results of the HKICPA and OIC investor survey

04 Jul 2018

The Standard Setting Department of the Hong Kong Institute of Certified Public Accountants (HKICPA) and staff of the Organismo Italiano di Contabilità (OIC) conducted 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. They will present the findings of that research at the upcoming meeting of the IASB's Accounting Standards Advisory Forum (ASAF).

The survey revealed that a majority of respondents have the perception that mergers and acquisitions under common control may be different from mergers and acquisitions with third parties. However, when asked to evaluate the substance of mergers and acquisitions with third parties and mergers and acquisitions under common control as an equity investor of the acquirer, respondents indicated that some factors are commonly important in both situations. This implies that from the investors' perspective, mergers and acquisitions under common control could have similar or the same substance as mergers and acquisitions with third parties when certain factors are present in the mergers and acquisitions under common control.

Please click to access the presentation for the ASAF meeting on the IASB website.

Education material on Ind AS 27 and 28, updated overview of Ind AS, and Ind AS disclosure checklist

04 Jul 2018

The Institute of Chartered Accountants of India (ICAI) has issued educational material on Ind AS 27 'Separate Financial Statements' and on Ind AS 28 'Investment in Associates and Joint Ventures'. The ICAI has also published 'Indian Accounting Standards (Ind AS): An Overview (Revised 2018)'. In addition, the ICAI has published 'Indian Accounting Standards (Ind AS): Disclosures Checklist'.

The educational material contains a summaries of Ind AS 27 and Ind AS 28 discussing the key requirements of the standard sand frequently asked questions covering the issues. Please click for access to the education material on the ICAI website.

The overview of Ind AS offers a roadmap for Ind AS application; carve-outs from IFRS/IAS; changes in financial reporting under Ind AS compared to financial reporting under existing Indian accounting standards; and a summary of all the Ind AS including recent amendments to Ind AS. The publication can be downloaded free of charge from the ICAI website.

The disclosure checklist ist the first ever drawn up for Ind AS. It can be accessed here on the ICIA website.

AcSB and OIC hold joint meeting

04 Jul 2018

On 20 June 2018, the Canadian Accounting Standards Board (AcSB) and the Italian standard-setter Organismo Italiano di Contabilità (OIC) held a joint meeting in Toronto. The meeting was the first bilateral meeting between the two standard-setters.

In addition to giving updates on their respective standard-setting activities at the meeting, the two boards exchanged views on implementation activities regarding the standards on financial instruments, revenue, and leases, technical issues on IFRS 17 and the IASB’s current project on rate-regulated activities. In addition, the AcSB and the OIC discussed two projects of individual interest, specifically, relevance of performance measures and business combinations under common control.

For more information about the meeting, see the press release on the OIC website.

Strong messages against EU carve-in carve-out proposal at ASCG anniversary event

03 Jul 2018

On 2 July 2018, the German standard-setter ASCG celebrated 20 years of its existence by hosting a festive event in Berlin that saw official addresses and a keynote speech by representatives from politics, industry and national and international standard-setting as well as two panel discussions on financial reporting in the times of changing values and technological disruption.

The welcome address by Prof Dieter Truxius, Vice-Chair of the Administrative Board of the ASCG and one of Germany's leading experts in accounting and controlling issues related to German family-owned businesses, already revealed a clear message that would resurface in all speeches and discussions. He noted that the German industry is extremely critical of proposals that might lead to modifying IFRSs during the EU endorsement process or even after they have been endorsed. Prof Truxius pointed at the potential of serious negative consequences for all companies based in the EU and operating internationally:

  • European companies could ultimately be threatened with exclusion from the global capital markets.
  • Europe's influence on the development of IFRSs could diminish.
  • European companies whose shares are listed in different trading venues could face higher costs if they have to prepare their financial statements according to IFRS and EU-IFRS in future.

He concluded: "Such trends lead to disparities in international accounting and prevent cross-border comparability of financial statements. Ladies and gentlemen, we should take a firm stand against this trend."

Dr Katarina Barley, Federal Minister of Justice and Consumer Protection, also picked up on the topic and noted how important it is that internationally operating companies have a common accounting language. Jean-Paul Gauzès, President of the European Financial Reporting Advisory Group Board, pointed at the long and trusted relationship between the German standard-setter and EFRAG, who have been working together for the European public good since 2001.

The keynote speech, which took the event into the direction of the motto of the afternoon, was delivered by Melanie Kreis, Chief Financial Officer, Deutsche Post DHL Group. She spoke on "Financial reporting - caught between the poles of entrepreneurial behaviour and social change" and offered insights into the group's early adoption of IFRS 16, non-financial reporting and carbon accounting, accounting for goodwill and impairment of goodwill, as well as digitalisation. Nevertheless, she also picked up on the EU Fitness Check and noted that not only the family-owned businesses but also the large listed groups in Germany oppose potential carve-ins and carve-outs. Her clear message on all the topics she spoke about was "think things through to the end, think of the effects for the companies that finally have to live with the result".

The two ensuing panel discussions showed an interesting combination of panelists. A Member of Parliament, a CFO, an NGO representative, and an auditor discussed "Changing behaviour by requiring ESG information – Where is the boundary of the financial report?". While it was noted by some that a lot of reporting on ESG issues is boilerplate, it was also stated that there was an increased visibility and awareness of information, not only from the outside but also within companies. Whether reporting requirements could and should be used to change behaviour was contested with views ranging from the role financial markets can play to achieve sustainability to the warning against overtaxing reporting with an inflation of additional requirements. Measurability (and therefore auditability) and materiality were also controversely discussed with the difference of materiality to an entity and materiality to society especially noted.

In the concluding panel, the IASB Chairman, a CAO of a digital company, an ESMA representative, and a professor of accounting discussed "Digital reporting vs. Reporting in a digital world". The opening round of questions alone showed the many facets of the topic with some insights of what is already possible proving to be almost scary. Questions around XBRL dominated the discussion on what is currently being done, which saw comments on comparability in connection with block tagging, detailed tagging, and use of XBRL extensions, although it was mentioned that XBRL might not be more than an interim solution. It was also noted that as a result of increasing digitalisation information overload ceases to be so much of a problem and materiality questions might need to be asked differently. However, it was warned that while more and more information can be processed electronically and, therefore, quicker understanding patterns and drivers has not become easier. It was asked whether and when a point comes where we trust machine judgement more than management judgement and whether at some point of time, reporting and consumption of financial information would become a game of "Watson against Watson". One important aspect in the whole discussion was also the question of what is being reported as companies with digital business models have huge amounts of intangibles they cannot show in their financial statements. Accounting for intangibles was clearly identified as an area where current financial reporting needs to evolve.

An informal exchange of opinions between the many national and international guests, which included representatives of the standard-setters from the US, Canada, Australia, Japan, and Hong Kong, concluded the event.

A German language summary of the event is available on the ASCG website.

IASB issues 'Investor Update' newsletter

03 Jul 2018

The IASB has issued the sixteenth edition of its newsletter 'Investor Update', which provides investors with quick access to information about current accounting and financial reporting topics.

This issue features:

  • Spotlight — IFRS 16 Leases
  • Spotlight — ESMA and IFRS Standards
  • In Profile —Selim Gogus, Credit Suisse HOLT
  • Project updates
  • Information on investor materials and current events

The Investor Update newsletter is available on the IASB’s website.

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