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2019

Final changes to IBOR reform expected next week; EFRAG suggests positive endorsement advice

20 Sep 2019

The European Financial Reporting Advisory Group (EFRAG) has announced that it will issue a positive endorsement advice consultation once final changes have been published by the IASB related to IBOR reform. EFRAG has announced that date to be 26 September 2019.

EFRAG has published a press release with a corresponding announcement and a draft of the endorsement advice to allow for prompt comments by European target groups.

Presentations for the World Standard-setters meeting in September available

20 Sep 2019

The presentations and a slightly updated programme have been released for the World Standard-setters meeting, which is being held in London on 30 September and 1 October 2019.

Participants will discuss:

Monday, 30 September 2019 (09:00 - 18:20)

  • Opening remarks
  • Welcome address
  • IASB technical programme update
  • Primary financial statements — Overview of the consultation and how it aligns with discussions at previous World Standard-setters conferences
  • Goodwill and impairment – Q&A on the project proposals
  • Breakout sessions
    • Project overview — Disclosure initiative
    • 2019 Comprehensive review of the IFRS for SMEs
    • Financial instruments — what next?
    • Hot topics: IFRS Interpretation Committee
    • Business combinations under common control
    • Electronic reporting — Why everyone should care about the IFRS Taxonomy
  • Breakout sessions
    • Project overview — Disclosure initiative
    • 2019 Comprehensive review of the IFRS for SMEs
    • Financial Instruments — what next?
    • Hot topics: IFRS Interpretation Committee
    • Business combinations under common control
    • Islamic finance

Tuesday, 1 October 2018 (09:00 - 13:00)

  • Working together
  • Q&A and breakout sessions
  • Rate-regulated activities — preview of forthcoming consultative document

The presentations for the WSS meeting are available on the IASB website.

The meeting will be immediately followed by a meeting of the International Forum of Accounting Standard Setters (IFASS).

IFRS Interpretations Committee holds September 2019 meeting

18 Sep 2019

The IFRS Interpretations Committee met in London on 17 September 2019 to discuss nine issues, including three new interpretation requests. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

New Issues

The discussed three new issues.

IFRS 15 Revenue from Contracts with Customers—Training costs to fulfil a contract (Agenda Paper 2). Should training costs that are incurred by a supplier, that are necessary to be able to deliver a service to a customer and that are recoverable from the customer, be recognised as a contract asset?

IFRS 16 Leases—Definition of a lease—Shipping contract (Agenda Paper 3). Does a particular type of shipping contract contain a lease? 

IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 29 Financial Reporting in Hyperinflationary Economies—Translation of a hyperinflationary foreign operation (Agenda Paper 4) How does an entity, with a non-hyperinflationary presentation currency, present the information required by IAS 21 and IAS 29 for its interest in a foreign operation which is hyperinflationary?

The Committee decided not develop any Interpretations or amendments but instead publish tentative agenda decisions. 

Agenda decisions to finalise

The Committee finalised six tentative agenda decisions.

IFRS 15 Revenue from Contracts with Customers—Compensation for delays or cancellations (Agenda Paper 5). Should an obligation to compensate customers for delayed or cancelled flights (as set out in legislation) be recognised as part of the transaction price or as an obligation in accordance with IAS 37?

IAS 41 Agriculture—Subsequent expenditure (Agenda Paper 6). Should an entity capitalise or expense the costs related to the biological transformation of biological assets?

IAS 7 Statement of Cash Flows—Changes in liabilities arising from financing activities (Agenda Paper 7). Some investors have expressed concerns about the quality and consistency of disclosures about changes in liabilities arising from financing activities required by IAS 7.

IFRS 16 Leases—Incremental borrowing rate (Agenda Paper 8). Does the incremental borrowing rate need to reflect the interest rate in a loan with both a similar maturity to the lease and a similar payment profile to the lease payments?

IFRS 9 Financial Instruments—Fair value hedge of foreign currency risk on non-financial assets (Agenda Paper 9). Can foreign currency risk be a separately identifiable and reliably measurable risk component of a non-financial asset held for consumption (for example, property, plant and equipment and inventory denominated in a foreign currency) that an entity can designate as the hedged item in a fair value hedge accounting relationship?

IAS 1 Presentation of Financial Statements—Presentation of liabilities or assets related to an uncertain tax position (Agenda Paper 10). Should an entity present a liability related to uncertain tax treatments as a current (or deferred) tax liability or as a provision?

Work in progress (Agenda Paper 11)

There are no new matters that have not yet been presented to the Committee. The staff will present the analysis of comments of the tentative agenda decision 'Lease Term and Useful Life of Leasehold Improvements (IFRS 16 Leases and IAS 16 Property, Plant and Equipment)' at a future meeting.

More information

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

Pre-meeting summaries for the September IASB meeting

18 Sep 2019

The IASB will meet in London on 24–26 September 2019 to discuss 15 topics. 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.

Onerous Contracts: After considering the comment letters received, the staff recommend that the Board finalise its amendments to IAS 37, to clarify that it is the costs that relate directly to the contract which are included in determining the ‘cost of fulfilling’ a contract for the purpose of assessing whether the contract is onerous.

Classification of Liabilities as Current or Non-current (Amendments to IAS 1): The staff recommend that the Board prepare the final amendments to IAS 1, with an effective date of 1 January 2022.

Business Combinations under Common Control: The staff recommend that the forthcoming Discussion Paper propose that an acquiring entity be required to account for a business combination under common control by applying either a current value approach based on the acquisition method or a predecessor approach. The current value approach would be required for transactions affecting non-controlling shareholders of the acquirer, with two exceptions, and the predecessor approach would apply for all other transactions.

Rate-regulated Activities: The Board will discuss the regulatory agreement boundary, whether any additional amendments to other IFRS Standards are necessary and the proposed transition requirements. 

Management Commentary: The staff recommend that the revised Practice Statement discuss faithful representation using three qualities of information—completeness, neutrality and freedom from error.

Disclosure Initiative: The Board is using IFRS 13 as one of the Standards to test the draft guidance on developing and drafting disclosure objectives and requirements and will discuss how the disclosure requirements could be improved.

Primary Financial Statements: The staff are recommending that the ED propose replacing IAS 1 with a new IFRS, rather than amending it, with fewer illustrative examples than previously envisaged.

SME standard review and update: The discussions will focus on the scope of the IFRS for SMEs Standard, IAS 19, IAS 23, IFRS 11, accounting for cryptocurrencies and accounting for financial guarantee contracts of the IFRS for SMEs Standard.

Extractive Activities: The staff will provide an overview of how changes to IFRS Standards and other documents, and other developments since the DP was published may affect the issues and conclusions in the DP. There are no staff recommendations.

Financial Instruments with Characteristics of Equity: After considering the feedback on the Discussion Paper the staff recommend that the Board develop amendments to IAS 32 to address practice, clarifying the underlying principles in IAS 32.

The Board will be given updates on the 2020 Agenda Consultation (the approach being proposed to developing the Request for Information), the planned Post-implementation review of IFRS 10, 11 and 12, the second phase of the project on IBOR Reform and the Effects on Financial Reporting, Subsidiaries that are SMEs and the Research Programme.

More information

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

Agenda for the October 2019 IFASS meeting

18 Sep 2019

The International Forum of Accounting Standard Setters (IFASS) will meet in London on 1–2 October 2019. This will be the first meeting under the new IFASS Chair Mr Yasunobu Kawanishi, Board member of the Accounting Standards Board of Japan (ASBJ).

The full agenda for the meeting is summarised below.

Tuesday, 1 October 2019 (14:00–18:00)

  • Welcome and opening remarks
  • Extractive activities (panel discussion)
  • International financial reporting for non-profit organisations
  • IPSASB update
  • UK developments:
    • Replacement of the FRC by ARGA
    • Proposals for endorsing IFRSs for the UK post-Brexit

Wednesday, 2 October 2019 (08:30-16:45)

  • Government grant receivables and government grant income under IAS 40 (optional)
  • ESG and intangibles (roundtable discussion)
    • KASB research
    • IASB proposals related to ESG and intangibles in the project on management commentary
  • Connecting with stakeholders through use of technology (presentation and roundtable discussion)
  • Goodwill (roundtable discussion)
    • FASB invitation to comment on identifiable intangible assets and subsequent accounting for goodwill
    • Issues identified during KASB and ASBJ research
  • Application of IFRS 16 — Italian experiences
  • Call for volunteers to assist in academic research
  • Closing remarks

IASB announces seventh research forum

17 Sep 2019

The International Accounting Standards Board (IASB) will host its seventh Research Forum on 2–3 November 2020 in Oxford.

The Forum will be held in conjunction with the journal Accounting and Business Research (ABR). The call for papers inviting submissions that can provide evidence to inform the standard-setting activities of the IASB notes the following areas of particular interest:

  • Performance measures, including alternative (management) performance measures
  • Wider financial reporting and management commentary
  • Better disclosure
  • Comparability of financial information
  • Intangibles
  • Goodwill and impairment
  • Equity accounting
  • Financial Instruments, especially effects analyses
  • Revenue from Contracts with Customers, especially effects analyses
  • Leases, especially effects analyses
  • Any other topics on the IASB research agenda or research pipeline

Please click for more information on the IASB website.

September 2019 IASB meeting agenda posted

13 Sep 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 24–26 September 2019. There are 15 topics on the agenda.

The Board will discuss the following:

  • Agenda consultation — Proposed approach to developing the request for information
  • Research programme — Research update
  • Implementation matters — Onerous contracts: Costs that relate directly to the contract
  • Classification of liabilities as current or non-current (amendments to IAS 1) — Completion of due process and permission to begin balloting process
  • Business combinations under common control — When to apply which measurement approach
  • Financial instruments with characteristics of equity — Project direction
  • IBOR reform and the effects on financial reporting (Phase 2) — Project plan and preliminary timing
  • Rate-regulated activities
  • Management commentary — Faithful representation
  • Disclosure initiative — IFRS 13 disclosure objectives
  • Primary financial statements
  • SME standard review and update
  • Subsidiaries that are SMEs — research results
  • Extractive activities
  • Post implementation review of IFRS 10–12 — Project update

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.

EFRAG draft comment letter on proposed amendments to IAS 12

13 Sep 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2019/5 ‘Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction — Proposed amendments to IAS 12'.

The exposure draft addresses the uncertainty in practice about how an entity applies the initial recognition exemption in paragraphs 15 and 24 of IAS 12 Income Taxes to transactions that give rise to both an asset and liability on initial recognition and may result in temporary differences of the same amount.

EFRAG is broadly supportive of the changes proposed; however, it questions whether the IASB's approach ('gross method') that considers the unit of account in IAS 12 as being the asset and the liability rather than as a single transaction is the best approach given the complexity. EFRAG also has concerns with the recogniton 'cap' in paragraph 22A(b) for a deferred tax liability, and the consequences of this proposal in subsequent periods.

Comments on EFRAG's draft comment letter are requested by 25 October 2019. For more information, see the press release and the draft comment letter on the EFRAG's website.

FASB proposes amendments to classification of debt that would bring US GAAP and IFRSs closer together

13 Sep 2019

The US standard-setter FASB has issued a revised version of its proposed Accounting Standards Update (ASU) 'Simplifying the Classification of Debt in a Classified Balance Sheet (Current Versus Noncurrent).'

The proposed amendments would make US GAAP more consistent with IFRSs, especially with IAS 1 Presentation of Financial Statements that includes guidance on the classification of liabilities. The exposure draft notes that FASB leveraged IAS 1 guidance when developing its proposals for the classification of debt. Furthermore, the FASB’s decision on applying the debt classification principle to post-balance-sheet refinancings of debt is consistent with the guidance in IAS 1. However, differences would still remain between US GAAP and IFRSs for classifying debt arrangements with covenant violations.

The IASB currently has a project on its agenda to amend IAS 1 that is specifically related to the classification of liabilities. Final amendments to IAS 1 are currently expected in the fourth quarter of 2019.

The exposure draft can be accessed through the press release on the FASB website. Comments are requested by 28 October 2019.

ESMA continues series of video tutorials on ESEF

11 Sep 2019

The European Securities and Markets Authority (ESMA) has released the third in a series of tutorial videos designed to guide market participants through the new requirements of European Single Electronic Format (ESEF), which will become effective in 2020.

The new video answers ten questions which are frequently asked by market participants to ESMA and National Competent Authorities on the ESEF Regulation.

Please click to access the seven minute video on YouTube.

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