EFRAG draft comment letter on proposed amendments to IFRS 3 regarding a reference to the Conceptual Framework

28 Jun 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ‘Reference to the Conceptual Framework (Proposed amendments to IFRS 3)'

The exposure draft contains three proposed amendments to IFRS 3 'Business Combinations' that would update an outdated reference in IFRS 3 without significantly changing the requirements of the standard.

EFRAG agrees with all three proposed amendments.

Comments on EFRAG's draft comment letter are requested by 17 August 2019. For more information, see the press release and the draft comment letter on the EFRAG website.

IASB issues podcast on latest Board developments (June 2019)

27 Jun 2019

The IASB has released a podcast featuring IASB members Nick Anderson, Darrel Scott and Ann Tarca to discuss the deliberations at the June 2019 IASB meeting and other developments.

The podcast features dis­cus­sions of the following topics in more detail (length of the podcast: 20 minutes):

  • Goodwill and impairment.
  • Primary financial state­ments.
  • Rate-regulated activities.
  • 2019 review of the IFRS for SMEs Standard.
  • Financial instruments with characteristics of equity.
  • Business combinations under common control.

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 June IASB meeting.

IASB publishes proposed amendments to IFRS 17

26 Jun 2019

The International Accounting Standards Board (IASB) has published an exposure draft 'Amendments to IFRS 17' to address concerns and implementation challenges that were identified after IFRS 17 'Insurance Contracts' was published in 2017. Comments are requested by 25 September 2019.



Since IFRS 17 Insurance Contracts was issued in May 2017, the Board has been monitoring the implementation and has learned about concerns and implementation challenges. The Board had previously indicated that it would consider whether additional action is needed to address matters arising during implementation. At the October 2018 meeting of the Board a list of 25 potential amendments to the standard was identified and the criteria against which any possible amendment would be considered were agreed. 

Subsequent discussions in the project on possible amendments to IFRS 17 led to the proposed amendments that are included in today's exposure draft.


Suggested changes

The main changes proposed in ED/2019/4 Amendments to IFRS 17 are:

  • Deferral of the date of initial application of IFRS 17 by one year to annual periods beginning on or after 1 January 2022 and change the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2022.
  • Additional optional scope exclusion for loan contracts that transfer significant insurance risk and related transition requirements to enable entities issuing such contracts to account for those contracts applying either IFRS 17 or IFRS 9.
  • Additional scope exclusion for credit card contracts that provide insurance coverage.
  • Amendments regarding allocation, recognition, assessment of the recoverability, and disclosure regarding insurance acquisition cash flows relating to expected contract renewals.
  • Amendments regarding the contractual service margin (CSM) allocation relating to investment components and related disclosure requirements so that in the general model the CSM is allocated on the basis of coverage units that are determined by considering both insurance coverage and any investment return service.
  • Extension of the risk mitigation option to include reinsurance contracts held.
  • Amendments to require an entity that at initial recognition recognises losses on onerous insurance contracts issued to also recognise a gain on reinsurance contracts held.
  • Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts.
  • Additional transition relief for business combinations.
  • Additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.

The exposure draft also contains several smaller proposed amendments.

Comments on the proposed changes are requested by 25 September 2019.


Effective date

The proposed effective date for the amendments would be the same as the proposed new effective date for IFRS 17 (1 January 2022) with early application permitted. The amendments would be applied retrospectively.


Additional information

Please click for:


IASB posts webcast on borrowing costs and revenue recognition

24 Jun 2019

The IASB has posted a webcast, by IASB technical staff Jawaid Dossani and Nicolette Lange, that discusses conclusions reach at by the IFRS Interpretation Committee related to the application of IAS 23, ‘Borrowing Costs’ and its interaction with IFRS 15, ‘Revenue from Contracts with Customers’.

At the March 2019 IFRS Interpretation meeting, the Committee determined that borrowing costs would not be capitalised when the borrowings relate to the construction of a residential multi-unit real estate development for which revenue is recognised over time.

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

Updated IASB work plan — Analysis

24 Jun 2019

Following the IASB's June 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. Most changes relate to exposure drafts having been published or comment letter periods having ended.

Below is an analysis of all changes that were made to the work plan since our last analysis on 18 May 2019.

Standard-setting projects

  • Rate-regulated activities — the expected timing of a discussion paper or exposure draft has been moved to H1 2020 (was: H2 2019)

Maintenance projects

  • The IASB published an exposure draft Annual Improvements to IFRS Standards 2018–2020 on 21 May 2019. The following projects are part of the annual improvements 2018-2020 and are therefore now reflected as open to comment in the work plan:
    • 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)
  • IBOR reform and the effects on financial reporting — the work plan reflects that the comment period on the exposure draft has ended; a first discussion of the feedback received is scheduled for Q3 2019
  • Updating a reference to the Conceptual Framework (Amendments to IFRS 3) — The IASB published an exposure draft Reference to the Conceptual Framework (Proposed amendments to IFRS 3) on 30 May 2019 - the work plan reflects that the project is now open for comment

Research projects

  • No changes

The above is a faithful comparison of the IASB work plan at 18 May 2019 and at 24 June 2019. For access to the current IASB work plan at any time, please click here.

June 2019 IASB meeting notes posted

24 Jun 2019

The IASB met in London on 17–19 June 2019. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board came to the following conclusions.

Goodwill and impairment: The staff aim to begin the process for preparing a Discussion Paper in Q3 2019 and to publish it towards the end of this year.  At this meeting the Board decided which preliminary views it wishes to express in the DP:

  • a) New disclosure objectives about the rationale for the business combination and disclosure requirements about how the entity plans to assess whether the combination is meeting its objectives and the measures reported to the CDOM.
  • b) That the amortisation of goodwill not be reintroduced.
  • c) That the requirement to undertake a quantitative impairment test annually be removed and replaced with an impairment-indicator approach (for goodwill and intangible assets with indefinite useful lives or not yet available for use).
  • d)removing the requirement to exclude from the calculation of value-in-use cash flows that are expected to arise from a future restructuring or enhancement.,
  • e) Removing references to pre-tax cash flows and discount rates and instead requiring that the assumptions about cash flows and discount rates be internally consistent.
  • f) A subtotal of total equity before goodwill be required to be disclosed.

Primary Financial Statements: This is the last meeting planned before the staff intend to begin the process of preparing an exposure draft that will propose a replacement of, or revisions to, IAS 1. At this meeting, the Board decided that:

  • a) exchange differences and gains and losses on derivatives be classified into the section (i.e operating, financing or investing) to which they relate, with special guidance for derivatives;
  • b) incremental expenses related to an investment (those expenses that would not have been incurred if the investment had not been made) be classified as investing;
  • c) the income tax effect of MPM adjustments be based on a reasonable pro-rata allocation of the current and deferred tax of the entity in the tax jurisdiction, or another method which achieves more appropriate allocation, and the approach taken disclosed;
  • d) entities not be required to disclose how and why the MPM differs from the total of the measure of profit or loss for the reportable segments; and
  • e) the requirements not be effective for 12 to 24 months after publication and that comparative information would be required to be reclassified.

Proposed amendments to IAS 16: The Board decided to finalise the proposal to require that proceeds generated when testing if an asset is functioning be recognised in income (rather than a reduction of the cost of the asset) and to clarify the meaning of ‘testing’. 

Rate-regulated activities: The staff aim to begin the process for preparing an exposure draft in July or September and to publish it in the first quarter next year. At this meeting, the Board decided that:

  • a) the descriptions of the scope criteria and the definitions of regulatory assets and liabilities be refined, a reference to fines payable be included in the explanation of total allowed compensation and that the Board retain its earlier decisions about recognition and not develop further derecognition requirements;
  • b) regulatory assets and liabilities be measured by discounting the estimated future cash flows arising from the regulatory assets (including the cash flows relating to the regulatory interest or return), using the regulatory interest or return rate unless there is any indication that that rate is not adequate. An exception is regulatory assets and liabilities that relate to expenses or income that will be included in/deducted from the future rate(s) when cash is paid/received. They are adjusted for risks that are not present in the related liability or asset.
  • c) the model not include a separate step to assess whether the effects of the time value of money and risks inherent in the cash flows are significant or a practical expedient that would avoid the need for discounting if the effects of the time and risks are not significant.
  • d) an indicator-based approach be used to assess whether the regulatory interest rate or return rate is adequate. The minimum adequate rate is one that the entity would expect to receive for a stream of cash flows with the same timing and uncertainty as those of the regulatory asset. If the rate provided by the agreement is inadequate the minimum adequate rate is used for initial and subsequent measurement. The same measurement requirements apply to regulatory liabilities and assets, except in the limited circumstances when that rate is affected by an identifiable event or transaction that should be recognised separately.
  • e) Regulatory income and expense that is related to a particular income or expense line item be presented immediately above or below that line item (for both profit or loss and OCI line items) with all other regulatory income and expenses presented immediately below the revenue line in profit or loss. Regulatory interest or returns accrued on regulatory assets or liabilities must be disclosed as a separate caption (either in the breakdown of regulatory income/expense for the period or the regulatory asset and liability reconciliations).

There are also papers summarising the similarities and differences between the proposed model and US GAAP requirements and the Board’s tentative decisions to date.

Business Combinations under Common Control: The Board agreed that distinguishing between combinations in which the non-controlling shareholders of the receiving entity get a residual interest in the transferred entities or businesses is a viable approach to explore in determining when to apply a current value approach, and when to apply a form of a predecessor approach.

Financial instruments with the characteristics of equity: The Board discussed detailed analysis of the comment letter feedback received about the Discussion Paper on a selection of topics: The Board’s preferred approach; Classification of non-derivative financial instruments; Classification of derivative financial instruments; Compound instruments and redemption obligation arrangements; the Puttable exception; and IFRIC 2 instruments. 

Comprehensive review of the IFRS for SMEs Standard: The Board plans to issue a Request for Information (RFI) in the second half of 2019. The Board decided that the RFI propose that IFRS 13 Fair value Measurement, IFRS 9 Financial Instruments and IFRS 16 Leases be incorporated in the SME Standard, with some simplifications but that IFRS 14 Regulatory Deferral Accounts not be incorporated.

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

IASB Chair discusses strengthening the relevance of financial reporting

20 Jun 2019

In a speech at the IFRS Foundation Conference in London, IASB Chair Hans Hoogervorst discussed the Board’s plans to maintain and strengthen the relevance of financial reporting in primary financial statements (PFS) and management commentary.

Mr Hoogervorst began with an overview of the PFS project and provided comments related to subtotals (definition of operating profits and profit before financing and tax), labeling non-GAAP measurement as ‘management performance measures’, improvements to disaggregation, the disclosure of ‘unusual’ items of income or expenses, and the impact the PFS proposals will have to the quality and usefulness of the income statement.

Next, Mr Hoogervorst commented on the importance of management commentary (a topic he also covered in similar speech at the Climate-Related Financial Reporting Conference in April 2019) to provide broader financial information, such as the impact of intangibles. He mentioned the need to update the Management Commentary Practice Statement to accommodate new advances made in the environmental, sustainability and governance reporting space.

For more information, see the transcript of his speech on the IASB’s website.

Agenda for the June 2019 DPOC meeting

20 Jun 2019

The Trustees of the IFRS Foundation will be meeting in Munich from 25 to 27 June 2019. However, only the meeting of the Due Process Oversight Committee (DPOC) on 25 June will be held in public.

The agenda for the DPOC meeting is summarised below.

Tuesday, 25 June 2019 (11:45–12:25)

  • Introduction and actions from the DPOC meeting held on 29 January 2019 and the public calls held on 11 March and 23 April 2019
  • Technical activities: Key issues and update
  • Anonymous comment letters
  • Changes to membership of the IFRS Taxonomy Consultative Group
  • Due Process Handbook review – Update on progress
  • Correspondence
  • Summary

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

Agenda for the July 2019 ASAF meeting

19 Jun 2019

The International Accounting Standards Board (IASB) has released an agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 11 and 12 July 2019.

The agenda for the meeting is sum­marised below:

Thursday, 11 July 2019 (09:30-16:30)

  • Business combinations under common control
    • Alternative measurement approaches.
    • Transactions that do not affect non-controlling shareholders.
  • Man­age­ment com­men­tary
    • Applying the notion of narrative coherence in determining what information should be included in a management commentary.
    • Identifying and reporting factors that affect the entity’s long-term success.
    • Identifying and reporting intangible resources and relationships that are strategically important to the entity.
  • IBOR phase II
    • IBOR reform and its effects on financial reporting.
  • Primary financial statements
    • Structuring Standards and outreach plan.
    • Summary of the Board’s tentative decision.
  • Agenda planning

Friday, 12 July 2019 (9:30-14:00)

  • The Business Reporting of Intangible: Realistic Proposals
    • Overview of proposals in FRC discussion paper.
  • Discussion Paper Accounting for Pension Plan with an Asset-return Promise
    • Summary of discussion paper.
  • Variable and contingent consideration; some fundamental considerations, forthcoming discussion paper

For more in­for­ma­tion, see the agenda on the IASB's website.

Chair of the IFRS Foundation Trustees speaks on digitalisation

19 Jun 2019

On 19 June 2019, Erkki Liikanen, Chair of the Trustees of the IFRS Foundation, gave a speech discussing whether digitalisation will deliver increased productivity to the global economy and how the IFRS Foundation is undertaking its own digital transformation.

In his more general remarks on the global economy, Mr Liikanen noted that the economic growth cycle is now maturing, with various factors that may impede its longevity. In fact, he noted, globalisation itself faces some challenges around the world.

Mr Liikanen then turned to the academic debate on whether digitalisation, the process of leveraging technology and digitisation to improve business performance can take up the slack in productivity. He described two schools of thought that have emerged and concluded that technology is an important enabler, but it needs to work itself through and the real benefits will only come once the procedures can be fully implemented.

Turning then to financial reporting, Mr Liikanen noted that investors seek diversification and investment opportunities. The digitisation of financial information can help them to achieve these goals if it facilitates cross-border transactions and supports transparent, accountable and efficient financial markets in a digital world.

At this point, Mr Liikanen pointed to the IFRS Taxonomy and and its increasing adoption around the world - most recently in Europe. He promised that the IFRS Foundation will continue to explore how technological developments affect the way financial information is consumed and what this means for the Foundation's Taxonomy strategy, as well as how technology-related innovations affect the standard-setting process.

Concluding, Mr Liikanen noted that the IFRS Foundation is about to embark on its own digital transformation. He pointed at a long-term plan for the IFRS Foundation to completely overhaul its technology systems that was signed off at the last meeting of the Trustees (the report from the meeting offers little detail but notes that plan will be discussed again at the next meeting of the Trustees, which will take place on 25-27 June 2019 in Munich).

Please click to access the full text of Mr Liikanen's speech on the IASB website.

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