February

IASB concludes two projects by publishing project summaries

28 Feb 2019

The IASB has published 'Improvements to IFRS 8 'Operating Segments' — Proposed amendments to IFRS 8 and IAS 34 project summary' and 'Discount rates in IFRS Standards project summary'. The IASB will not conduct any further work regarding these projects.

In 2012, the IASB started a post-implementation review of IFRS 8 Operating Segments and subsequently published a report and feedback statement summarising the findings of the review. In March 2017, the IASB proposed to address the findings from the review in the exposure draft ED/2017/2 Improvements to IFRS 8 'Operating Segments' (Proposed amendments to IFRS 8 and IAS 34). However, feedback to the ED revealed that some of the Board's proposals could be dealt with by existing requirements, that other proposals would not be effective in addressing the findings from the review, and that the remaining proposals would not result in sufficient improvements in information to investors to justify the additional costs. Therefore, the Board decided not to proceed with the amendments proposed in the ED. Thus, the project summary published today concludes the project.

The project on discount rates resulted from feedback in the Agenda consultation 2011 where constituents had commented that the reasons for differences in discount rate requirements under various IFRSs is not well understood and could be considered inconsistent. Therefore, the IASB conducted a research project from 2014 to 2017 to investigate reasons for inconsistencies between requirements relating to discount rates in IFRSs and to assess whether the Board should consider addressing those inconsistencies. The Board’s investigation found that, in some cases, inconsistencies arise between requirements relating to discount rates in IFRSs because different standards adopt different measurement bases. There are also some inconsistencies because different standards were developed at different times and with different areas of focus. The Board will use those findings in other projects but has no plans to conduct a separate project on discount rates. This project is, therefore, also conluded by publishing a project summary.

The following information is available on the IASB website:

IFRS Foundation seeks Trustee applications

28 Feb 2019

The IFRS Foundation announces that it is seeking applications for the role of Trustee.

The IFRS Foundation are seeking three Trustees: one from Asia Oceania and two from the Americas. Trustees’ responsibilities include oversight of the organisation in the public interest, its strategic direction, appointments to the Board, the IFRS Interpretations Committee and the IFRS Advisory Council, and ensuring the financing of the organisation and approving its budget. The role description notes:

Qualified candidates should have top-level experience in an organisation with an interest in accounting standards. They should demonstrate a firm commitment to serving the public interest, to the work of the Foundation and to the Board as a high quality global standard-setter. They should be financially knowledgeable and be able to meet the time commitment, which includes, but is not limited to, up to four two-day meetings each year. Trustees should have an understanding of, and be sensitive to, the challenges associated with the adoption and application of high quality global accounting standards developed for use in the world’s capital markets and by other users.

Please click to access the press release on the IASB website.

Standard-setters from Hong Kong and Japan continue bilateral meetings

28 Feb 2019

Representatives of the Hong Kong Institute of Certified Public Accountants (HKICPA) and of the Accounting Standards Board of Japan (ASBJ) met on 25 and 26 February 2019 in Hong Kong to discuss higher quality accounting standards by collaboration.

The HKICPA and the ASBJ provided updates on their respective activities and exchanged views on how to improve the accounting for goodwill, business combinations under common control and intangible assets. They also discussed the quality of fair value measurement and the implementation of major new IFRSs in their jurisdictions.

HKICPA and ASBJ plan to continue these meetings.

Please click for the press release on the ASBJ website.

EFRAG early-stage analysis of FICE discussion paper

28 Feb 2019

The European Financial Reporting Advisory Group (EFRAG) Secretariat has issued a working paper that provides an early-stage analysis of some possible effects of the IASB Discussion Paper DP/2018/1 'Financial Instruments with Characteristics of Equity'.

The analysis offers an assessment of the potential effects of the proposals in the discussion paper. It can inform and be one of the inputs to a more comprehensive impact analysis if the IASB were to further proceed with the project on financial instruments with characteristics of equity (FICE) in its current form.

This early-stage analysis is also a pilot study into the assessment of potential wider effects during the development of new IFRS requirements. The evidence gathering and analysis has been carried out at a level of detail appropriate to the proposals put forward in the IASB discussion paper.

Comments on the working paper are requested by 17 May 2019.

Please click to access the following information on the EFRAG website:

IASB issues latest edition of ‘The Essentials’ newsletter

27 Feb 2019

The IASB has issued the fifth edition of its newsletter “The Essentials,” which is intended to increase investors’ awareness of IFRSs and enhance their insights into IFRS financial statements.

This issue highlights attributes of free cash flow (FCF) measures reported by lessees that limit comparability with FCF measures reported by companies that buy assets.

Issue 5 of The Essentials, as well as an archive of previous issues, is available on the IASB’s website.

Summary of the January 2019 ITCG meeting

27 Feb 2019

The IASB has published a summary of the IFRS Taxonomy Consultative Group (ITCG) meeting held via conference call on 31 January 2019.

The ITCG discussed the following:

  • Proposed Taxonomy Update – Common Practice (IFRS 13): analysis of comments received
  • Updates to the Preparer’s Guide

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

Agenda for the March 2019 IFASS meeting

26 Feb 2019

The International Forum of Accounting Standard Setters (IFASS) will meet in Buenos Aires on 28–29 March 2019. The meeting will see the handover official duties to 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.

Thursday, 28 March 2019 (09:00–17:30)

  • Welcome and opening remarks
  • EFRAG's discussion paper on non-exchange transfers
  • FRC's research project on ‘Variable and contingent consideration’
  • Proposals for the NFP accounting technical advisory group
  • Financial instruments with characteristics of equity: Preferred approach and IFRIC 2
  • Follow-up on AcSB's project on performance measures reporting
  • Climate related and other emerging risk issues on financial statements and the impact of practice statement 2 on materiality
  • Optional breakout sessions:
    • Inline XBRL and blockchain
    • IFRS for SMEs: Standard review; Relief for subsidiaries

Friday, 29 March 2019 (09:00-16:15)

  • IFRS 17 (I): Tentative views of the IASB on upcoming amendments to IFRS 17
  • IFRS 17 (II): Implementation activities, insights, experience
  • Financial reporting in an electronic format
  • The Fitness check on the EU framework for public reporting by companies: Result of the consultation
  • Presentation of finance cost - IAS 1, IFRS 7, IAS 23
  • Improving the impairment testing model in IAS 36 Impairment of Assets
  • Handover of official duties

Annual ECON exchange of views with Hans Hoogervorst and Erkki Liikanen

26 Feb 2019

At the annual exchange of views this morning between the Committee on Economic and Monetary Affairs (ECON) of the European Parliament and representatives of the IASB and the IFRS Foundation, IASB Chairman Hans Hoogervorst and Erkki Liikanen, Chairman of the IFRS Foundation Trustees, stood ready to answer questions of the Parliamentarians. IFRS 17 'Insurance Contracts' and wider corporate reporting dominated the exchange.

On IFRS 17, Mr Hoogervorst stressed the IASB's efforts to support implementation. He noted that the IASB had always said it was willing to consider addressing problems that become obvious during the implementation phase as long as addressing them would not disrupt the implementation process. He explained about the list of issues the IASB is looking into and also about the IASB's tentative decision to defer the effective date of IFRS 17 by one year.

On wider corporate reporting, Mr Liikanen noted that the IFRS Foundation and the IASB are well aware of the fact that investors want more information about long-term risks and environmental, social and governance (ESG) matters. Mr Hoogervorst pointed to the IASB's project to update the management commentary practice statement and noted that management commentary provided the space for information that does not naturally fit into the financial statements but can have a financial effect nonetheless. He also used the opportunity to follow up on a question from an earlier exchange of views regarding country-by-country reporting and explained that while there was no direct fit with IFRSs, information on for example risky tax strategies could also very well be reported in the management commentary.

Questions from the almost empty room were few and were mostly focused on extra financial reporting. In response, Mr Hoogervorst explained that the IASB does not see itself as a sustainability standard-setter as it a) lacks the expertise in the area and b) as there are already many standard-setters ("too many") active in the field. Therefore, the updated management commentary practice statement will include guidelines how sustainability information can be included in the management commentary and will provide space for such information, but it will not contain any standards for doing so. He also agreed that insurance is an industry very much exposed to effects of the climate change, but he noted that between the information resulting from the forward-looking standard itself and the management commentary there is enough space to report on these effects. Finally, he noted that the management commentary is also the place to report on intangibles and crypto currencies that are not caught by the financial statements.

A recording of the exchange of views is available on the European Parliament website (begins at 09:11, ends at 09:54). There are intermittent problems with the English language and original language soundtrack, all other translations work well.

Additional educational module on the IFRS for SMEs on specialised activities

26 Feb 2019

The IFRS Foundation has issued an additional new stand-alone educational module, which supports the learning, application, and reading of financial statements prepared with the IFRS for SMEs Standard.

The module focuses on the general requirements for accounting and reporting by small and medium-sized entities (SMEs) that are involved in agriculture, extractive activities and service concession, applying Section 34 Specialised Activities of the IFRS for SMEs.

Please click to access all 34 IFRS for SMEs modules available so far (free registration required).

EFRAG and ICAS issue survey on discount rates as applied to pension accounting

22 Feb 2019

As part of a research project on discount rates in financial accounts, the European Financial Reporting Advisory Group (EFRAG) and Institute of Chartered Accountants of Scotland (ICAS) have issued a survey seeking views on discount rates as applied to pension liabilities for accounting purposes and alternative approaches.

The survey will be available for a couple of weeks and is applicable to all interested parties, including, preparers and users of financial accounts, auditors, and others.

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

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