EFRAG reports on possible effects on long-term investments of IFRS 9 requirements

18 Jan 2018

In response to a European Commission request, the European Financial Reporting Advisory Group (EFRAG) is investigating the potential effects on long-term investments in equity instruments of the requirements of IFRS 9 'Financial Instruments'. EFRAG has now concluded the first phase of the project and has submitted a report to the European Commission.

The first phase of the project was an assessment and consisted of collecting quantitative data on the current holdings of equity instruments and their accounting treatment and investigating whether, and to what extent, entities expect the new accounting requirements to affect their decisions in relation to investment in equity instruments.

In its endorsement advice on IFRS 9, based on the limited evidence available at the time EFRAG, assessed that it was unlikely that long-term investors would change their investment strategy as a result of the implementation of IFRS 9. The assessment phase has confirmed that while the majority of respondents do not expect to modify their holding period for equities following the introduction of IFRS 9, some entities expect to modify their asset allocation decisions (while also conceding that their asset allocation decisions are driven by a plurality of factors). EFRAG also stresses that insurance entities are still at an early stage of assessment since they will apply IFRS 9 only in 2021.

Please click to access the full report on the EFRAG website.

IASB publishes a summary of IFRS 17

17 Jan 2018

The IASB has published a one-page summary of the accounting model in IFRS 17 'Insurance Contracts'.

The summary is being published as part of the IASB's initiative to help constituents understand the requirements of IFRS 17. The summary explains different elements of the accounting model and how they will be displayed in certain financial statements.

For more information, see the IASB's website for the following:


IFRS Interpretations Committee holds January 2018 meeting

17 Jan 2018

The IFRS Interpretations Committee met via video conference call on Tuesday 16 January 2018. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The Committee finalised a tentative decision not to add to its agenda a project to interpret how an entity accounts for a transaction in which it contributes property, plant and equipment to a newly-formed associate in exchange for shares in that associate.

The work in progress was discussed and it was noted that the IASB plans to undertake a post-implementation review of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

We comment on the IASB's proposed amendments to IAS 8

16 Jan 2018

We have responded to the IASB's exposure draft ED/2017/5 'Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8)' that was published in September 2017.

While we agree with the Board that there is insufficient guidance in IAS 8 for those that apply IFRS to distinguish between changes in accounting policies and changes in accounting estimates, our assessment is that the proposed changes will not provide the clarity that stakeholders need to distinguish between a change in estimate and a change in accounting policy to the extent expected.

Please download the full comment letter here.

Pre-meeting summaries for the January IASB meeting

15 Jan 2018

The IASB will meet at its offices in London on 24–25 January 2018. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

There are six topics on the agenda.

Wednesday 24 January

The meeting starts with a continuation of the discussion on Primary Financial Statements. There are two topics, the presentation of management performance measures and the presentation of the results of associates and joint ventures.  The staff have recommendations for when a management performance measure should be required, where the reconciliation between the measure and an IFRS-defined measure should be located, what constraints should be placed on the measure, additional disclosure requirements when such a measure is presented and the interaction with segment profit or loss and existing regulatory requirements for non-IFRS measures. In relation to associates and joint ventures, the staff are recommending that entities be required to present the results of ‘integral’ associates and joint ventures separately from ‘non-integral’ associates and joint ventures.

The Board will consider the appropriate accounting for non-derivative instruments with equity hosts with complex payoffs. This type of instruments has not been discussed by the Board before and was identified during the review of a pre-ballot draft of the Financial Instruments with Characteristics of Equity Discussion Paper. The instruments under consideration give rise to claims against the entity that are limited to the entity’s available economic resource, but the claims are also affected by other variables such as a commodity index.  The Board will consider whether the embedded derivative should be accounted for separately, deeply out of the money options should be excluded from the classification assessment or requiring information through attributing particular income and expenses to specific classes of equity.

Thursday 25 January

The staff will give the Board an update on the Conceptual Framework project. The final document is expected to be published in March 2018.

The Board will continue its discussions on accounting for Goodwill. The staff are recommending that the Board remove the requirement in IAS 36 to use pre-tax inputs when calculating value in use. They are also recommending that the Board remove the requirement in IAS 36 to exclude cash flows relating to uncommitted future restructurings and asset enhancements when calculating value in use.

The Board will consider two IFRS Implementation Issues referred to the Board by the IFRS Interpretations Committee. The first is a possible research project on commodity loans and related transactions. The second is a recommended annual improvement to remove the requirement in IAS 41 to use pre-tax cash flows when fair valuing a biological asset.

The Board will start considering the feedback from its Post-implementation review of IFRS 13 Fair Value Measurement. The papers provide a review of academic literature, feedback from the request for information and a summary of other research conducted by the staff.  This is an education session, so there are no questions for the Board.

More information

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

January 2018 IASB meeting agenda posted

13 Jan 2018

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 24 and 25 January 2018. There are six topics on the agenda with the longest slots reserved for primary financial statements and the post-implementation review of IFRS 13 'Fair Value Measurement'.

The Board will discuss the following:

  • Primary financial statements
  • Financial instruments with characteristics of equity
  • Conceptual Framework
  • IFRS implementation issues
  • Goodwill and impairment
  • Post-implementation review of IFRS 13 Fair Value Measurement

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.

IFRS Foundation publishes IFRS Taxonomy update

11 Jan 2018

The IFRS Foundation has published IFRS Taxonomy update 'IFRS Taxonomy 2017 — IFRS 17 'Insurance Contracts''.

This Taxonomy update includes elements to reflect the new presentation and disclosure requirements introduced by the recently-issued standard IFRS 17 Insurance Contracts.

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

Video summary of IPSASB consultation paper on accounting for revenue and non-exchange expenses

10 Jan 2018

In August 2017, the International Public Sector Accounting Standards Board (IPSASB) published a consultation paper on potential recognition and measurement approaches for revenue and non-exchange expenses. The IPSASB has now released a short video highlighting the concepts, proposals and IPSASB preliminary views contained in the consultation paper.

The IPSASB also notes that the deadline for comments on the consultation paper is 15 January 2018.

Please click to access the video (approx. 30 minutes) on the IPSASB website.

ANC Research Forum - recording available

10 Jan 2018

The Autorité des Normes Comptables (ANC), the French standard setter, hosted its 7th Symposium on Accounting Research on 11 December 2017. A recording of the event is now available.

Please note that although the access page is in the French language, you can choose to also listen to the recording in English (or in the original version, which is a mix of English and French) by clicking on the flag icon. Please click to access the recording on the ANC website.

Recent sustainability reporting developments

08 Jan 2018

A summary of recent developments at CDSB, GRI, SASB, CPA Canada, and ClientEarth.

The Climate Disclosure Standards Board (CDSB) has published a discussion paper looking at the application of materiality to climate-related financial disclosures, highlighting the main challenges and potential strategies for materiality determination. The press release on the CDSB website offers a summary of the main topics and access to the full paper.

The Global Reporting Initiative (GRI) notes that sustainability reporting can support companies’ contribution to poverty alleviation. A new paper by GRI explains how the impact of sustainability reporting can be maximised to help reach the Sustainable Development Goal (SDG) of no poverty by 2030 and outlines recommendations and specific disclosures that companies can apply. Please click to access Corporate Reporting on Poverty on the GRI website.

The United States Sustainability Accounting Standards Board (SASB) has released its second annual State of Disclosure Report – An analysis of the effectiveness of sustainability disclosure in SEC filings 2017, which highlights both improving trends as well as opportunities for improvement. The report features SASB's analysis of the top 10 companies in each of 79 industries, by revenue, for which the independent standards-setting organisation has developed standards. Please click to access the report on the SASB website.

Chartered Professional Accountants of Canada (CPA Canada), in collaboration with the University of Toronto’s Environmental Finance Advisory Committee (EFAC), hosted an expert panel session to discuss whether blockchain as a decentralised, peer-to-peer ledger technology could transform carbon markets by providing a transparent and reliable way to track carbon emissions and credits. Please click to access a short video and a report from the session on the CPA Canada website.

ClientEarth, a non-profit environmental law organisation, has published a report that highlights the findings of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) and outlines how climate risk can impact the preparation of financial accounts and the potential professional indemnity risks to Auditors. While the focus of the legal analysis is on the responsibilities of auditors to consider climate-related risks during UK company audits highlights, many of the standards discussed are IFRS standards, and so may also be relevant elsewhere. Please click to access the analysis on the ClientEarth website.

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