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January

IPSASB issues amendments to keep IPSASs in line with IFRSs

31 Jan 2019

The International Public Sector Accounting Standards Board (IPSASB) has released 'Long-term Interests in Associates and Joint Ventures (Amendments to IPSAS 36) and Prepayment Features with Negative Compensation (Amendments to IPSAS 41)'.

The amendments to IPSAS 36 converge IPSASs with the narrow-scope amendments to IAS 28 Investments in Associates and Joint Ventures made by the IASB in Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) issued October 2017.

The amendments to IPSAS 41 converge IPSASs with the narrow-scope amendments to IFRS 9 Financial Instruments made by the IASB in Prepayment Features with Negative Compensation (Amendments to IFRS 9) also issued October 2017.

Please click to access the amendments on the IPSASB website.

Recent sustainability reporting developments

31 Jan 2019

A summary of recent developments at WEF, the University of Oxford, NCFA,SSE, and SASB.

The World Economic Forum (WEF) has published a White Paper Seeking Return on ESG: Advancing the Reporting Ecosystem to Unlock Impact for Business and Society, uncovering opportunities for collective action between the complex and diverse set of stakeholder groups that influence ESG reporting, and highlighting where greater action is needed to accelerate system-level progress. Please click to download the paper from the WEF website.

In December, the Saïd Business School, University of Oxford, offered a debate on "Should FASB and IASB be responsible for setting standards for nonfinancial information?". A recording of the debate is available on YouTube.

The Natural Capital Finance Alliance (NCFA) has launched the world’s first step-by-step guide to help financial institutions conduct a rapid natural capital risk assessment. Please click to access the guide on the UNEP FI website.

The United Nation's Sustainable Stock Exchanges (SSE) initiative notes the following developments:

  • The Botswana Stock Exchange has published guidance for its listed companies on reporting ESG information to investors (press release).
  • The Budapest Stock Exchange has become an SSE Partner Exchange (press release).
  • The Abu Dhabi Securities Exchange has become an SSE Partner Exchange (press release).

The US Sustainability Accounting Standards Board (SASB) has appointed former FASB member Marc A. Siegel as a Board member of the SASB. Please see the press release on the SASB website for more information.

Additional IFRS for SMEs educational modules on intangible assets other than goodwill and on business combinations and goodwill

31 Jan 2019

The IFRS Foundation has issued two new stand-alone educational modules, which support the learning, application, and reading of financial statements prepared with the IFRS for SMEs.

The modules focus on the requirements for accounting and reporting of intangible assets other than goodwill and of business combinations and goodwill applying the following sections of the IFRS for SMEs:

  • Section 18 Intangible Assets other than Goodwill
  • Section 29 Business Combinations and Goodwill

Please click to access all 32 IFRS for SMEs modules available so far (free registration required).

Pre-meeting summaries for the February IASB meeting

30 Jan 2019

The IASB will meet in London on 7–8 February 2019 to discuss five 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.

The Board is considering amending IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement to provide relief from the effects of uncertainties caused by the reform of IBOR. The staff are recommending that relief be provided in relation to the highly probable requirement and prospective assessments, but not for designation of risk components that are not separately identifiable. An Exposure Draft is likely to be published in April with a short comment period, enabling any amendments to be finalised and published by December 2019, with an effective date of 1 January 2020.

The Board will continue to assess concerns and implementation challenges raised by stakeholders about the requirements in IFRS 17 Insurance Contracts. The staff are recommending that IFRS 17 and IFRS 9 be amended to allow an entity to apply either IFRS 17 or IFRS 9 to insurance contracts for which the only insurance in the contract is for the settlement of some, or all, of the obligation created by the contract (with consequential amendments to the disclosure requirements). The staff are recommending that the transition requirements in IFRS 17 be retained, except for a liability that relates to the settlement of claims incurred before an insurance contract was acquired. The staff are recommending a change to the modified retrospective approach that would require an entity to classify such liabilities as a liability for incurred claims (to the extent that it does not have reasonable and supportable information to apply a retrospective approach) and to permit an entity applying the fair value approach to choose to classify such liabilities as a liability for incurred claims.

For the Primary Financial Statements project, the staff are recommending that the Board modify some of its earlier decisions. Within the statement of cash flows, the starting point for the reconciliation of operating cash flows should be the operating profit subtotal, for all entities. Additionally, they are recommending that all entities classify cash flows from dividends paid as financing cash flows and cash flows from dividends received from equity-accounted associates and joint ventures as investing cash flows. However, the staff also set out special requirements, for both the statement of cash flows and the statement(s) of profit or loss and other comprehensive income, for entities that have as their main business activity providing financing to customers or investing in assets that generate a return individually and largely independently of other resources held by the entity. The staff also present additional proposals related to aggregation and disaggregation of information in the primary financial statements and in the notes, including a requirement to describe items in a way that faithfully represents the items they aggregate.

The Board will consider a project plan for a comprehensive review of the IFRS for SMEs Standard that proposes the publication of a Request for Information by about July 2019, an Exposure Draft sometime between January 2020 and February 2021 and amendments between July 2021 and May 2022. The IFRS for SMEs Standard does not reflect the current requirements in IFRS 3, 10, 11, 12, 13, 14, 15, 16 or 17.

The staff will also give an oral update on the Management Commentary project (the consultative group met in January).

More information

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

Report from the October 2018 Emerging Economies Group meeting

30 Jan 2019

The 16th meeting of the IASB's Emerging Economies Group (EEG) was held in Seoul, South Korea on 29–31 October 2018. The IASB has published a full report from the meeting.

Participants at the meeting — which was chaired by IASB member Amaro Gomes — discussed the Discussion Paper Financial Instruments with Characteristics of Equity, the next steps in the goodwill and impairment project, accounting for micro-entities in Brazil, the forthcoming review of IFRS for SMEs standard, implementation of IFRS 9 Financial Instruments, the extractive activities project, and a project update.

The next meeting of the EEG will be held 25–27 March 2019 in Argentina.

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

Summary of the December 2018 ASAF meeting now available

30 Jan 2019

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 6–7 December 2018.

The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • Financial instruments with characteristics of equity (1–25): ASAF members provided comments on the Discussion Paper Financial Instruments with Characteristics of Equity based on the outreach in their jurisdictions.
  • Business combinations under common control (BCUCC) (26–32): ASAF members discussed whether a current value measurement approach based on the acquisition method set out in IFRS 3 Business Combinations should be applied to all or some BCUCC that affect non-controlling shareholders in the receiving entity and if not, how the distinction should be made on when to use a current value measurement approach.
  • Pension benefits that depend on asset returns (33–43): ASAF members discussed whether the measurement approach (described in Agenda Paper 7) would be helpful in solving the measurement inconsistency described in that paper when applying IAS 19 Employee Benefits to pension benefits that depend on asset returns.
  • IFRS 17 Insurance Contracts (44–61): ASAF members provided advice on six topics in IFRS 17 Insurance Contracts that the Board is considering for possible amendments to the Standard.
  • Management commentary (62–76):ASAF members were updated on the Board's tentative decision on the objective of management commentary as part of the update to IFRS Practice Statement 1 Management Commentary.
  • Goodwill and impairment (77–87): ASAF members discussed (1) disclosure objective and requirements and (2) amortisation of goodwill, including whether members believe it is feasible to estimate the useful life of goodwill.
  • Update and agenda planning (88–91): ASAF members discussed the proposed agenda for the April 2019 ASAF meeting and considered future discussions on (1) how the ANC has established an accounting framework for crypto-currencies and (2) EFRAG's forthcoming discussion paper Hybrid Pension Schemes.
  • Better communication – primary financial statements (92–108):ASAF members discussed the Board's tentative decisions made to date in the primary financial statements project.

A full summary of the meeting is available on the IASB's website.

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

30 Jan 2019

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

The 7-minute podcast can be accessed through the press release on the IASB website. Our Deloitte meeting notes of the session are available here.

IASB issues podcast on latest Board developments

30 Jan 2019

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 January 2019 IASB meeting.

The 8-minute podcast features discussions of the following topics in more detail:

  • IFRS 17 Insurance Contracts
  • Proposed amendments to IAS 12
  • Meeting of the IFRS Foundation Trustees in Kuala Lumpur

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 January IASB meeting.

Chair of the Trustees speaks about Asia and IFRSs

30 Jan 2019

At a stakeholder event in connection with the meeting of the IFRS Foundation Trustees currently taking place in Kuala Lumpur, the Chair of the Trustees Erkki Liikanen talked about the contribution of Malaysia and the Asia-Oceania region to the IFRS Foundation’s work and outlined the key priorities for the Foundation.

In his speech, Mr Liikanen noted that voices from across the Asia-Oceania region are well represented at all levels of the IFRS Foundation and the various advisory bodies. As an example of valuable contributions from the region, Mr Liikanen cited the MASB’s work on how to value specific biological assets that led to amendments to IAS 16 and IAS 41.

Turning to future challenges for the IFRS Foundation, Mr Liikanen made out three key priorities:

  • The Foundation needs to consolidate and build upon the achievements of recent years. He warned against movements away from global achievements and in this context mentioned the recent European Commission's Fitness Check (which, however, showed that a large majority of respondents were against an EU set of standards).
  • The Foundation also needs to ensure that IFRSs remain relevant in a changing world. In this context, Mr Liikanen noted that investors are not only interested in the pure financial statements anymore but also want to know about non-financial information.
  • And finally the Foundation is faced with the question of remaining relevant in a digital world. Mr Liikanen notes that the Foundation will continue to explore how technological developments affect the way financial information is consumed and how technology-related innovations affect the standard-setting process.

Please click to access the full transcript of the speech on the IASB website. A recording of the speech is available through the press release on the MASB website.

IASB member discusses materiality

28 Jan 2019

IASB member Gary Kabureck has issued an article discussing the development of disclosure materiality.

Mr Kabureck began by discussing how the December 2014 amendments to IAS 1 marked the ‘first foray into addressing disclosure materiality’. He stated IFRS disclosure requirements used phrases, such as ‘At a minimum an entity shall disclose . . .’, which were interpreted in practice in a way that was not intended by the IASB and actions were taken to clarify that materiality concept always overrules these certain phrases.

Next, he discussed key messages in the September 2017 IFRS Practice Statement Making Materiality Judgements, which provides an outline for making materiality judgements and assessing their implications. He noted that the Practice Statement helps preparers define who the target audience for a company’s financial reporting is and what information is needed. Also, the Practice Statement makes it clear that ‘materiality is assessed in the context of the financial statement taken as a whole…’.

Further, Mr Kabureck commented on the revised definition of ‘material’ issued in October 2018. The amendments conformed the definition of material among various IFRS Standards. He mentioned that the revision to the definition from ‘could influence’ to ‘could reasonably be expected to influence’ provided a more accurate representation of the Board’s intention.

Lastly, he expressed the need to analyse how Standards are drafted and how to amend certain Standards with known issues.

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

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