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March

Agenda for the Management Commentary Consultative Group

21 Mar 2019

The agenda for the IASB's Management Commentary Consultative Group created to support the project to update the IFRS Practice Statement 'Management Commentary' is now available.

The meeting is scheduled for 3 April 2019 in London and will focus on the business model, strategy, operating environment and risks of management commentary.

Agenda papers for the meeting are available on the IASB's website.

IASB issues podcast on latest Board developments

21 Mar 2019

The IASB has released a podcast featuring Chair Hans Hoogervorst, Vice-Chair Sue Lloyd, and technical staff member Matt Tilling to discuss the deliberations at the March 2019 IASB meeting.

The podcast features dis­cus­sions of the following topics in more detail (length of the podcast: 15 minutes):

  • Recent appointments to IASB Board
  • Clas­si­fi­ca­tion of li­a­bil­i­ties as current or non-current
  • Narrow-scope amendments to IAS 1
  • Subsidiaries that are SMEs
  • Comprehensive review of the IFRS for SMEs Standard
  • Discussion paper on financial instruments with characteristics of equity
  • Primary financial statements

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 March IASB meeting.

IASB concludes its research project on principles of disclosure

21 Mar 2019

The IASB has published ‘Disclosure Initiative — Principles of Disclosure project summary' which summarises the work performed and conclusions reached in the principles of disclosure research project.

In March 2017, the IASB issued a discussion paper (DP) on possible approaches to address disclosure issues, such as the lack of relevant information, too much irrelevant information, and ineffective communication of the information provided. Feedback for the DP revealed that “improving the way disclosure requirements are developed and drafted in IFRS Standards is the most effective way it can help to address the disclosure problem.” This lead the Board to prioritise its project on targeted Standards-level review of disclosure. The Board also addressed other findings during its research related to accounting policy disclosures, the implications of technology on financial reporting, and use of performance measures in financial statements. Other topics in the DP will not be pursued and this project summary closes the research project.

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

Updated IASB work plan — Analysis

21 Mar 2019

Following the IASB's March 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 February.

Below is an analysis of all changes that were made to the work plan since our last analysis on 11 February 2019.

Stan­dard-set­ting projects

  • No changes.

Main­te­nance projects

  • Accounting Policies and Accounting Estimates (Amendments to IAS 8) — The expected date when the Board will decide on the project’s direction was removed.
  • Classification of Liabilities as Current or Non-current (Amendments to IAS 1) — An IFRS amendment is now expected in the second half of 2019.
  • Disclosure initiative — Accounting policies — An exposure draft is now expected in the second half of 2019.
  • IBOR reform and its effects on financial reporting — An exposure draft is now expected in May 2019.
  • Improvements to IFRS 8 Operating Segments (Amendments to IFRS 8 and IAS 34) — This maintenance project is no longer on the work plan.

Research projects

  • Disclosure initiative — Principles of disclosure — This research project is no longer on the work plan.
  • Discount rates — This research project is no longer on the work plan.
  • Financial instruments with characteristics of equity — The decision to decide this research project’s direction is now expect in the second half of 2019.
  • Subsidiaries that are SMEs — This research project has been added to the work plan and a review of the research conducted is expected in the second half of 2019.

Other projects

  • IFRS taxonomy update — 2018 general improvements — A final update is expected in March 2019.

The above is a faithful com­par­i­son of the IASB work plan at 11 February 2019 and at 15 March 2019. For access to the current IASB work plan at any time, please click here.

Chair of the IFRS Interpretations Committee clarifies timing of implementing agenda decisions

20 Mar 2019

Sue Lloyd, Vice-Chair of the IASB and Chair of the IFRS Interpretations Committee, has published an article on the IASB’s website on the timing of stakeholders’ compliance with IFRS Interpretations Committee agenda decisions.

At its December 2018 meeting, the IASB decided to update its Due Process Handbook to allow companies “suf­fi­cient time” to implement changes in accounting policy that result from the IFRS Interpretations Committee’s agenda decisions.

In the new article, Ms Lloyd reminds readers that the IFRS Interpretations Committee publishes agenda decisions after it decides a stakeholder issue does not require standard-setting measures. Instead, the Committee explains how existing IFRS Standards apply to the stakeholder’s issue. Ms Lloyd notes:

[T]he Board has acknowledged that agenda decisions often provide new information that should be seen as helpful and persuasive (for example, by integrating requirements in the Standards with material in the Basis for Conclusions and Illustrative Examples). This means that a company does not have an error simply because its application of IFRS Standards was inconsistent with an agenda decision.

She goes on to acknowledge that “it may take time to implement such an accounting policy change” and further discusses the IASB’s concept of “sufficient” implementation time:

[I]t depends on the particular facts and circumstances. It will depend on the accounting policy change and the reporting entity. Preparers, auditors and regulators will need to apply judgement to determine what is sufficient. But as a rule of thumb I think it is fair to say that we had in mind a matter of months rather than years.

Ms Lloyd emphasises that companies should consider agenda decisions — and begin implementing necessary accounting policy changes — on a more timely basis. She underscores that judgement is required, just as it is with applying IFRS Standards.

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

AASB research into the application of IAS 36

19 Mar 2019

The Australian Accounting Standards Board (AASB) has published its Research Report No. 9 'Perspectives on IAS 36: A case for standard setting activity'.

The research report states that it has been widely observed that application of the existing version of IAS 36 Impairment of Assets is problematic in practice, causing significant issues at all stages in the financial reporting cycle. The authors conclude that the ongoing application issues demonstrate consistent divergence in understanding between preparers, users, auditors and regulators as to the procedures that should be applied in ensuring that assets are carried at no more than their recoverable amount. They are convinced that IAS 36 requires holistic reconsideration rather than piecemeal changes focussedon disclosure. The research report therefore recommends:

Review IAS 36 in its entirety with a view to issuing a new standard that provides principles that enable users, preparers, auditors and regulators to develop a common understanding of the practical aspects of undertakingthe procedures applied toensure that assets are carried at no more than their recoverable amount.

Other themes and recommendations coming out of the research include:

  • There is an overall lack of clarity on the purpose of the impairment test;
  • the application guidance does not align with internal decision-making; and
  • diversity in disclosure reduces usefulness.

Please click to download the full research report from the AASB website.

Summary of the February 2019 ITCG meeting

19 Mar 2019

The IASB has published a summary of the IFRS Taxonomy Consultative Group (ITCG) meeting held via conference call on 20 February 2019.

The ITCG discussed the following:

  • Proposed Taxonomy Update — Common Practice (IFRS 13): Amendment to analysis of comment received
  • Proposed Taxonomy Update — General Improvements: Analysis of comments received

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

March 2019 IASB meeting notes posted

15 Mar 2019

The IASB met on Tuesday 12, Wednesday 13 and Thursday 14 March 2019. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board considered the remaining topics in its review of concerns raised by stakeholders in relation to IFRS 17 Insurance Contracts: credit cards that provide insurance cover; transition requirements—risk mitigation option; implications for disclosure; and transition requirements. The Board decided to propose changes be made to IFRS 17 and IFRS 9 Financial Instruments. The Board will consider the package of amendments as a whole in its April 2019 meeting.

The Board decided to proceed to publish an Exposure Draft (in April or May) with proposed amendments to IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement to address the uncertainty introduced by IBOR reformThe Board also decided that application of the relief should be mandatory and irrevocable.

Because this is an urgent matter, the comment period would be 45 days.

As part of the Disclosure Initiative the Board decided to add two examples to the Materiality Practice Statement to help those preparing financial statements avoid explaining their accounting polices using boilerplate or generic descriptions or simply repeating the requirements of IFRS Standards. .

The Board discussed two remaining issues in relation to the Exposure Draft Classification of Liabilities (as current or non-current). The Board decided to make some refinements to the proposal in relation to classification of liabilities with equity-settlement features and classification of loans for which the right to defer settlement is subject to lending conditions that will not be tested until after the end of the reporting period.

The Board continued its discussions of Business Combinations under Common Control by considering whether to develop a current value approach for all or some transactions that affect non-controlling interest (NCI) in the receiving entity (discussed in the December 2018 Agenda Paper 23) and a different approach, such as a predecessor approach, for transactions that affect lenders and other creditors in the receiving entity but do not affect NCI. No decisions were made.

In the Primary Financial Statements project the Board decided to require the separate presentation of several items in the primary financial statements (such as, in the statement of financial position, goodwill and investment in “integral” and “non-integral” associates and joint ventures accounted for using the equity method). However, they decided that entities not be required to present amortisation, depreciation and research and development expenditure in the statement(s) of financial performance. They also decided that entities be required to provide information about unusual items presented in the statement(s) of financial performance.

The staff gave an overview of the feedback it has analysed in relation to the Discussion Paper on Financial Instruments with Characteristics of Equity.

The 2015 Agenda Consultation led to a project to consider whether subsidiaries that are SMEs should be permitted to apply IFRS standards with reduced disclosures. The Board discussed the objective of the project.

The Board discussed progress in the Extractive Activities project, setting out the more significant developments in extractive activities since the publication of a Discussion Paper by the IASB in 2010. 

The Board discussed whether in reviewing and revising the IFRS for SMEs Standard, that it should continue to be aligned with full IFRS Standards. This would mean updating the IFRS for SMEs Standard for new and amended IFRS Standards, while considering whether the changes to IFRS Standards are relevant to SMEs, if the requirements should be simplified.  

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

AcSB framework for reporting performance measures – one-page summary and video

15 Mar 2019

In December 2018, the Canadian standard-setter Accounting Standards Board (AcSB) published a framework for reporting performance measures. As part of its ongoing efforts to continue to review and revise the framework as needed, to interact with groups and associations interested in leveraging the framework, and to provide additional resources as needed, the AcSB has now released a one-page summary of the framework and a video explaining how the framework is a useful tool and how it was developed.

Please click to access he summary and the video on the AcSB website. Our earlier news item on the framework is here.

IASB decides on last round of potential amendments to IFRS 17

14 Mar 2019

At its meeting held in London, the IASB discussed the last of the 25 concerns regarding the standard that were identified in October 2018 as candidates for potential amendments.

Applying the criteria for evaluating proposed amendments agreed on in October 2018, the staff asked the Board to consider the following recommendations:

Issue identified at the October IASB meeting Agenda paper with detailed description (link to IASB website) Staff recommendation Board decision
2 — Level of aggregation of insurance contracts Agenda paper 2A
  1. To retain the IFRS 17 requirements on the level of aggregation unchanged
 14 Yes
1 — Scope of IFRS 17 Agenda paper 2D
  1. To amend IFRS 17 to exclude from the scope of the standard certain credit card contracts that provide insurance coverage
 14 Yes
25 — Transition: Risk mitigation option Agenda paper 2E
  1. To amend the requirements of IFRS 17 to permit an entity to apply the risk mitigation option prospectively from the IFRS 17 transition date
  2. To amend the requirements of IFRS 17 to permit an entity that can apply IFRS 17 retrospectively to a group of insurance contracts with direct participating features to use the fair value transition approach for the group under certain circumstances
 14 Yes
1 — Scope of IFRS 17 Agenda paper 2F
  1. To maintain the transition requirements in IFRS 17 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 17 to a portfolio of such loans
  2. To maintain the transition requirements in IFRS 9 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 9 to a portfolio of such loans and initially applies IFRS 17 and IFRS 9 at the same time
  3. To amend the transition requirements in IFRS 9 for loans that transfer significant insurance risk if an entity elects to apply the requirements in IFRS 9 to a portfolio of such loans and has applied IFRS 9 before it initially applies IFRS 17
  4. If the Board supports recommendation 3., to amend IFRS 9 to require an entity to apply the transition requirementsin IFRS 9 necessary for applying the proposed amendments
  5. If the Board supports recommendation 3., to permit an entity to newly designate, and to require an entity to revoke its previous designations of, a financial liability under the fair value option at the date the entity first applies the proposed amendments if a new accounting mismatch is created or a previous accounting mismatch no longer exists as a result of applying the proposed amendments
  6. If the Board supports recommendation 3., not to require an entity to restate prior periods to reflect the application of the proposed amendments but to permit an entity to restate prior periods under particular conditions
  7. If the Board supports recommendation 3., to exempt an entity from presenting the quantitative information required by IAS 8.28(f) and to require an entity to disclose specific information in addition to the disclosures that any other IFRS Standard would require
 14 Yes
Amendments to disclosure requirements resulting from the Board’s tentative decisions to date Agenda paper 2G
  1. To amend IFRS 17 to require quantitative disclosure of the expected recognition in profit or loss of the contractual service margin remaining at the end of the reporting period and specific disclosure of the approach to assessing the relative weighting of the benefits provided by insurance coverage and investment-related services or investment return service
  2. To amend IFRS 17 to require a reconciliation of the asset created by insurance acquisition cash flows not yet included in the measurement of a group of insurance contracts at the beginning and the end of the reporting period and quantitative disclosure of the expected inclusion of these acquisition cash flows in the measurement of related insurance contracts when the related insurance contracts are recognised
 14 Yes
Overall disclosure and transition requirements Agenda paper 2H
  1. To amend IFRS 17 as discussed in Agenda Papers 2E, 2F and 2G and retain all other disclosure and transition requirements in IFRS 17
 14 Yes

The Board has now considered all 25 topics identified in October 2018. At its April 2019 meeting, the Board plans to consider the package of amendments tentatively decided by the Board as a whole.

In addition, the IASB has issued a podcast on the dis­cus­sion at the March 2019 meeting of the Board about IFRS 17 which can be accessed through the press release on the IASB website. Also, our Deloitte meeting notes of the session are available here.

Correction list for hyphenation

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