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October

IASB issues summary of share-based payment research project

31 Oct 2018

The International Accounting Standards Board (IASB) has issued 'Share-based Payment — Research on Sources of Accounting Complexity’, which summarises the work performed and conclusions reached in the share-based payment research project.

Specifically, the project summary provides the following information:

  • At a glance — a high-level look at why the board performed this research, summary of findings, and feedback and conclusions.
  • Sources of information — sources used by the staff to conduct their research.
  • Research findings — summaries on variety and complexity of terms and conditions of share-based payments, grant-date fair value measurement, and disclosures.
  • Feedback on research findings and conclusions.
  • Measurement models in IFRS 2.
  • A look at what the information required by IFRS 2 tell users of financial statements.
  • Implications of other projects and IFRS Standards to IFRS2.

For more information, see the press release and project summary on the IASB’s Web site.

IASB finalises amendments to IAS 1 and IAS 8 regarding the definition of materiality

31 Oct 2018

The International Accounting Standards Board (IASB) has issued 'Definition of Material (Amendments to IAS 1 and IAS 8)' to clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves.

 

Background

The materiality project arose as part of the IASB's Disclosure initiative started in 2012. The first document published as part of this project was the May 2013 feedback statement Discussion Forum – Financial Reporting Disclosure, which outlined the IASB's intention to consider a number of further initiatives, including a project on materiality, seeking to develop application guidance or educational material on materiality, with input from an advisory group.

A draft practice statement on materiality was published on 28 October 2015, however, subsequently it became clear that some of the proposed guidance needed to be authoritative to have the desired effect, so the project was split up into a part that would see a practice statement published and a part that was intended to result in amendments to IAS 1 and IAS 8. The finalised Practice Statement Making Materiality Judgements was published in September 2017 at the same time as an exposure draft ED/2017/6 Definition of Material (Proposed amendments to IAS 1 and IAS 8), which is being finalised today.

 

Changes and reasoning behind the changes

The changes in Definition of Material (Amendments to IAS 1 and IAS 8) all relate to a revised definition of 'material' which is quoted below from the final amendments:

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

Three new aspects of the new definition should especially be noted:

  • Obscuring. The existing definition only focused on omitting or misstating information, however, the Board concluded that obscuring material information with information that can be omitted can have a similar effect. Although the term obscuring is new in the definition, it was already part of IAS 1 (IAS 1.30A).
  • Could reasonably be expected to influence. The existing definition referred to 'could influence' which the Board felt might be understood as requiring too much information as almost anything ‘could’ influence the decisions of some users even if the possibility is remote.
  • Primary users. The existing definition referred only to 'users' which again the Board feared might be understood too broadly as requiring to consider all possible users of financial statements when deciding what information to disclose.

During redeliberations, the Board spent a lot of time on discussing what constitutes obscuring information. The amendments stress especially five ways material information can be obscured:

  • if the language regarding a material item, transaction or other event is vague or unclear;
  • if information regarding a material item, transaction or other event is scattered in different places in the financial statements;
  • if dissimilar items, transactions or other events are inappropriately aggregated;
  • if similar items, transactions or other events are inappropriately disaggregated; and
  • if material information is hidden by immaterial information to the extent that it becomes unclear what information is material.

The new definition of material and the accompanying explanatory paragraphs are contained in IAS 1 Presentation of Financial Statements. The defintion of material in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors has been replaced with a reference to IAS 1.

 

Effective date

The amendments are effective for annual reporting periods beginning on or after 1 January 2020. Earlier application is permitted.

 

Additional information

Please click for:

 

AAOIFI to review and revise standards

31 Oct 2018

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has decided to revisit its existing financial accounting standards, with an aim to review and revise these standards, including a detailed analysis of each standard as well as benchmarking against other comparable standards and global best practices to identify and recommend areas of improvement or a complete overhaul, if required.

Stakeholders are invited to participate in a survey that is designed to explore views of financial statements preparers and users with regard to the practices in financial reporting for Islamic financial institutions, thereby helping AAOIFI to better align its standards to the requirements of its present and prospective stakeholders and to keep them close to global best practices and free of confusion and errors.

Please click to access the survey on the AAOIFI website.

IASB issues podcast on latest Board developments

31 Oct 2018

The IASB has released a podcast featuring Chair Hans Hoogervorst, Vice-Chair Sue Lloyd, and education director Matt Tilling to discuss the deliberations at the October 2018 IASB meeting.

The podcast features discussions of the following topics in more detail (length of the podcast: ten minutes):

  • IFRS 17 Insurance contracts
  • Goodwill and impairment
  • Primary financial statements
  • Disclosure initiative
  • Implementation

The podcast can be accessed through the press release on the IASB website. More information on the topics discussed is available through our comprehensive notes taken by Deloitte observers at the October IASB meeting.

New composition of ASAF announced

30 Oct 2018

The IFRS Foundation has announced the new membership of the Accounting Standards Advisory Forum (ASAF) that is designed to formalise and streamline the relationships between the IFRS Foundation and IASB with the global standard-setting community.

The ASAF is comprised of 12 members and a non-voting chair. The new composition is as follows:

Geographical region ASAF member
Africa Pan African Federation of Accountants (PAFA)
Americas Group of Latin American Standard Setters (GLASS)
Canadian Accounting Standards Board
United States Financial Accounting Standards Board (FASB)
Asia/Oceania Accounting Standards Board of Japan (ASBJ)
Accounting Regulatory Department, PRC Ministry of Finance China
Korea Accounting Standards Board (KASB)
Asia Oceania Standard Setters Group (AOSSG)
Europe Autorité des normes comptables (ANC)
United Kingdom Financial Reporting Council (FRC)
Organismo Italiano di Contabilità (OIC)
European Financial Reporting Advisory Group (EFRAG)

Please click for the press release on the IASB website.

Board member talks about the development and activities of the IASB from 2001 to the present

30 Oct 2018

IASB Member Ann Tarca delivered the RJ Chambers Memorial Research Lecture in Sydney yesterday discussing the relationships of the IASB with its primary stakeholders.

Ms Tarca's speech was a tour d'horizon covering:

  • development of a set of global standards for use in the world’s capital markets (2001–2005);
  • the convergence program with the FASB and impact of the global financial crisis (2006–2009);
  • working on the major standards (2010–2013); and
  • implementation of the major standards and the better communication initiative (2014 onwards).

A transcript of her speech is available on the IASB website.

IPSASB publishes finalised 'Improvements to IPSAS, 2018'

30 Oct 2018

The International Public Sector Accounting Standards Board (IPSASB) has published 'Improvements to IPSAS, 2018', which sets out amendments to International Public Sector Accounting Standards (IPSAS) to address issues raised by stakeholders and to converge with amendments to IFRSs.

The IFRS convergence amendments reflect the following IASB amendments:

  • Annual Improvements to IFRSs 2011 – 2013 Cycle (issued December 2013)
  • Disclosure Initiative (Amendments to IAS 7) (issued January 2016)
  • Transfers of Investment Property (Amendments to IAS 40) (issued December 2016)
  • Annual Improvements to IFRSs 2014 – 2016 Cycle (issued December 2016)
  • IFRIC 22 Foreign Currency Transactions and Advance Consideration (issued December 2016)
  • Annual Improvements to IFRS Standards 2015 – 2017 Cycle (issued December 2017)
  • Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) (issued February 2018)

Please click to access the final amendments Improvements to IPSAS, 2018 on the IPSASB website.

First discussion of sixth round of academic research contributions to the IASB's work

30 Oct 2018

Five teams of researchers have presented their accounting research projects to members and technical staff of the IASB. The research projects are independent but are all directly relevant to projects on the Board’s work plan. The involvement with the research programme helps the Board to ensure its standard-setting is evidence-based.

The evidence the IASB is looking for includes

  • responses to consultative documents;
  • fieldwork such as assessing systems changes or the hypothetical application of a proposed new financial reporting requirement;
  • empirical analysis from studies of reported accounting data, share price relationships and analysts’ forecasts;
  • the results of experimental studies;
  • analytical modelling; and
  • collecting and analysing views from surveys.

Topics and presenters of the sixth round of the research programme are available through the press release on the IASB website.

Agenda for the November 2018 GPF meeting

30 Oct 2018

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

The full agenda for the meeting is summarised below:

Tuesday, 6 November 2018 (10:10-17:20)

  • Introduction of new members
  • IASB update
  • Primary financial statements — Overview of the Board’s proposals to be included in the first consultation document
  • Management commentary
    • Objective of management commentary
    • Applying materiality
    • Principles for preparing management commentary
  • Goodwill and impairment — Disclosure objectives and requirements
  • Financial instruments with characteristics of equity — Key proposals of the discussion paper

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

ESMA announces enforcement priorities for 2018 financial statements

27 Oct 2018

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2018 financial statements will focus on.

ESMA considers the following key topics to be especially relevant for the examinations of listed companies' financial statements:

  • application for the first time of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, and
  • disclosure of the implementation and expected impact of IFRS 16 Leases.

In addition, this year’s priorities highlight the requirements to disclose non-financial information, with a focus on environmental matters, and specific aspects of ESMA’s Guidelines on Alternative Performance Measures. ESMA also highlights the importance of disclosures analysing the possible impacts of the decision of the United Kingdom to leave the European Union.

ESMA and European national enforcers will monitor and supervise the application of the IFRS requirements outlined in the priorities, with national authorities incorporating them into their reviews and taking corrective actions where appropriate. ESMA will collect data on how European listed entities have applied the priorities and will publish its findings in a separate report.

Please click for the following documents on the ESMA website:

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