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2019

IASB publishes proposals for amendments under its annual improvements project (cycle 2018-2020)

21 May 2019

The International Accounting Standards Board (IASB) has published an exposure draft ED/2019/2 'Annual Improvements to IFRS Standards 2018–2020'. It contains proposed amendments to four International Financial Reporting Standards (IFRSs) as result of the IASB's annual improvements project. Comments are requested by 20 August 2019.

The IASB uses the annual improvements process to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project.

The ED proposes the following amendments:

Standard Subject of proposed amendment
IFRS 1 First-time Adoption of International Financial Reporting Standards Subsidiary as a first-time adopter. The proposed amendment would require a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.
IFRS 9 Financial Instruments Fees in the ‘10 per cent’ test for derecognition. The proposed amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. Applying the proposed amendment, an entity would include only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
IFRS 16 Leases Lease incentives. The proposed amendment to Illustrative Example 13 accompanying IFRS 16 would remove from the example the illustration of the reimbursement of leasehold improvements by the lessor. The proposed amendment would resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.
IAS 41 Agriculture Taxation in fair value measurements. The proposed amendment would remove the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. The proposed amendment would ensure consistency with the requirements in IFRS 13.

In June 2018, the Board tentatively decided to also propose some amendments to IFRS 17 Insurance Contracts as part of its next cycle of annual improvements. However, these proposed amendments have now been moved the general project regarding proposed amendments to IFRS 17 that will see an exposure draft in June 2019.

ED/2019/2 Annual Improvements to IFRS Standards 2018–2020 does not contain proposed effective dates for the proposed amendments as the intention is to decide on these after the exposure period.

Please click for the following additional information:

IFRS Foundation appoints four IFRS Interpretations Committee members

20 May 2019

The Trustees of the IFRS Foundation have announced the appointment of Lisa Bomba, Karsten Ganssauge, Jake Green, and Brian O'Donovan as IFRS Interpretations Committee members.

In addition to the four new appointments, Bertrand Perrin and Yang Zheng have been reappointed for a second term.

All appointments and reappointments take effect from 1 July 2019 and are for a three-year period.

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

Updated IASB work plan — Analysis

18 May 2019

Following the IASB's May 2019 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments since the work plan was last revised in April. Changes are few, however, not all known developments are reflected in the work plan yet.

Below is an analysis of all changes that were made to the work plan since our last analysis on 12 April 2019.

Standard-setting projects

  • Primary financial statements — at this month's meeting the IASB decided that the next consultation document will be an exposure draft, not a discussion paper; the timing remains unchanged (H2 2019)

Maintenance projects

  • IBOR reform and the effects on financial reporting — an exposure draft of proposed amendments was published on 3 May 2019; a first discussion of the feedback received is scheduled for Q3 2019
  • Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) — at this month's meeting the IASB discussed the feedback received; the next step will now be a decision on the project direction (no date given)

Research projects

  • No changes

Other projects

  • Due Process Handbook Review — an exposure draft of proposed amendments was published on 30 April 2019; a first discussion of the feedback received is scheduled for Q4 2019

Known changes not reflected in the work plan update

The IASB has announced that it expects to publish an exposure draft Annual Improvements to IFRS Standards 2018–2020 on 21 May 2019. In the work plan the projects concerned are still noted as expecting an exposure draft in June 2019. The following projects are part of the annual improvements 2018-2020:

  • Fees in the ‘10 per cent’ Test for Derecognition (Amendments to IFRS 9)
  • Lease Incentives (Amendment to Illustrative Example 13 accompanying IFRS 16)
  • Subsidiary as a First-time Adopter (Amendments to IFRS 1)
  • Taxation in Fair Value Measurements (Amendments to IAS 41)

    The above is a faithful comparison of the IASB work plan at 12 April 2019 and at 18 May 2019. For access to the current IASB work plan at any time, please click here.

    May 2019 IASB meeting notes posted

    17 May 2019

    The IASB met in London on 14–16 May 2019. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

    The Board decided to add some minor amendments “sweep issues” related to its package of amendments to IFRS 17 Insurance Contracts to that package. Additionally, the staff provided a summary of the discussions of the Transition Resource Group for IFRS 17 (TRG) meeting held on 4 April 2019. (See our IFRS in Focus for a summary of the meeting).

    For Goodwill and Impairment the staff responded to issues raised by the Board in April in relation to possible new disclosures that the acquirer of a business would be required to provide to help a user assess whether a business combination was a good investment decision and whether that business is performing as expected. The papers included a discussion of ways to present equity (or net assets) excluding goodwill. The staff are also suggesting that the Discussion Paper propose that the requirement for an annual test for impairment of goodwill and intangible assets with an indefinite life staff be removed and an indicator-only approach be used. The staff will bring their recommendations for preliminary views to be expressed in the Discussion Paper to the meeting in June.

    One of the threads in the Disclosure Initiative is a targeted Standards-level review of disclosure requirements. The Board has been developing internal guidance for setting disclosure requirements which it decided to test on IAS 19 Employee Benefits and IFRS 13 Fair Value Measurement. The staff presented summaries of the outreach they have been undertaking since November 2018 and the different approaches they plan to take when reviewing IAS 19 and IFRS 13 disclosures. The Board was generally supportive of the approach.

    For Primary Financial Statements, the Board decided to develop an Exposure Draft for a new IFRS Standard revising or replacing IAS 1 Presentation of Financial Statements, and that a Discussion Paper is not required.

    The staff presented a summary of the feedback received on the Exposure Draft Onerous Contracts—Cost of Fulfilling a Contract (see our IFRS in Focus for a summary of the ED). Board members noted that the proposals received mixed feedback. No decisions were made.

    Now that the IASB has published a revised Conceptual Framework, the IASB is considering whether IAS 37 Provisions, Contingent Liabilities and Contingent Assets should be revised. The staff are recommending that the Board align the definition of a liability in IAS 37 with the definition in the Conceptual Framework, including potentially replacing IFRIC 21 Levies with new requirements and illustrative examples in IAS 37. They also recommend that the Board clarify which costs to include in the measure of a provision and specify whether the rate at which an entity discounts a provision for the time value of money should include or exclude the entity’s own credit risk. Many Board members expressed a strong preference for keeping any proposed changes as narrow as possible. The staff will bring their recommendations to a future meeting.

    In an an education session for Rate-regulated Activities the Board discussed ways to improve the understanding and clarity of the model that has been developed thus far.

    The staff set out their approach to revising the Management Commentary Practice Statement and that the Board provide additional guidance on the objective of management commentary, how to consider qualitative characteristics of useful financial information when providing management commentary and the content of management commentary. Board members said that it needs to be clear what information is expected to be provided in the financial statements and what information is better presented in the management commentary. No decisions were made.

    The Board decided that the IFRS for SMEs Standard should be aligned with new and amended IFRS Standards. The Board also thinks stability is important and they will consider ways to phase in updates. The Board also discussed IFRS 16 Leases to identify ways to simplify the requirements for SMEs.

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

    IASB issues podcast on IFRS 17 discussions at the May IASB meeting

    17 May 2019

    A podcast has been recorded by Darrel Scott, IASB member, and Andrea Pryde, technical staff, reporting on the discussion at the May 2019 meeting of the Board about IFRS 17 'Insurance Contracts'.

    The 10-minute podcast can be accessed through the press release on the IASB website. Our Deloitte meeting notes of the session are available here.

    Programme for the World Standard-setters meeting in September available

    17 May 2019

    A programme has been released for the World Standard-setters meeting, which is being held in London on 30 September and 1 October 2019.

    A summary of the programme is set out below:

    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
      • Electronic reporting — Why everyone should care about the IFRS Taxonomy
      • Business combinations under common control
    • Breakout sessions
      • Project overview — Disclosure initiative
      • 2019 Comprehensive review of the IFRS for SMEs
      • Financial Instruments — what next?
      • Hot topics: IFRS Interpretation Committee
      • Electronic reporting — Why everyone should care about the IFRS Taxonomy
      • Islamic finance

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

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

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

    IASB publishes editorial corrections

    16 May 2019

    The IASB has published its second batch of editorial corrections in 2019.

    The new set of editorial corrections affect the Red Book and the annotated Red Book 2019 as well as the Blue Book and the annotated Blue Book 2019 and regard IAS 1 Presentation of Financial Statements and the IFRS Foundation Due Process Handbook.

    Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The editorial corrections can be viewed on the editorial corrections page of the IASB's website.

    We comment on four IFRS Interpretations Committee tentative agenda decisions

    15 May 2019

    We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 19, IFRS 15, IFRS 16, and cryptocurrencies, as published in the March 2019 IFRIC Update.

    More in­for­ma­tion about the issues is set out below:

    Issue

    Agenda decision supported?

    More in­for­ma­tion

    IAS 19 — Effect of a potential discount on plan classification

    Yes; we agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision, however we do not believe that the tentative agenda decision adequately identifies the principles applicable to an analysis of the fact pattern. In addition, we do not believe that the terms and conditions of the plan as presented in the tentative agenda decision are sufficiently detailed to permit a conclusion on the classification of the plan as a defined contribution plan or defined benefit plan.

    o Deloitte comment letter

    o Committee dis­cus­sion

    IFRS 15 — Costs to fulfil a contract

    Yes.

    o Deloitte comment letter

    o Committee dis­cus­sion

    IFRS 16 — Subsurface rights

    Yes.

    o Deloitte comment letter

    o Committee dis­cus­sion

    Cryptocurrencies

    Yes; we agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision, but believe that the usefulness of the agenda decision could be enhanced by addressing two recurring issues related to cryptocurrencies that are accounted for under IAS 38. We also note that the tentative agenda decision highlights the poor definition of cash provided in IFRS Standards.

    o Deloitte comment letter

    o Committee dis­cus­sion

    Click to access all our comment letters to the IASB, IFRS Foun­da­tion, and IFRS In­ter­pre­ta­tions Committee.

    EFRAG publishes discussion paper on pension plans with an asset-return promise

    15 May 2019

    The European Financial Reporting Advisory Group (EFRAG) has published a discussion paper (DP) 'Accounting for Pension Plans With an Asset-Return Promise'. The DP explores alternative accounting treatments for post-retirement employee benefits, promising the higher of the return on an identified item or group of items and a minimum guaranteed return.

    The DP considers three alternatives for accounting for pension plans in the scope of the project:

    • capped asset return approach;
    • fair-value based approach;
    • fulfilment value approach.

    The DP and a press release are available on the EFRAG website. Comments are due by 15 November 2019.

     

    Summary of the April 2019 MCCG meeting

    14 May 2019

    The IASB has published a summary of the Management Commentary Consultative Group (MCCG) meeting held on 3 April 2019.

    The MCCG discussed the following topics:

    • Overall proposed approach to reporting business model, strategy, operating environment and risks including cross-cutting issues;
    • Business model;
    • Strategy; and
    • Operating environment and risks.

    For more information, see the summary on the IASB website.

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.