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2019

August 2019 IASB meeting notes posted

28 Aug 2019

The IASB, which normally does not meet in August, held an additional meeting on 28 August 2019 to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. We have posted our comprehensive Deloitte observer notes for this discussion.

The Board decided that the amendments will: include an exception to the requirement in IAS 39 for retrospective assessment when a hedge is temporarily outside the 80–125% range solely due to uncertainties arising from the reform; provide relief from the separately identifiable requirement for ‘macro hedges’; clarify when the relief ceases to apply to a group of items designated as the hedged item; clarify that the amendments would apply to hedges of both interest rate and foreign currency risks; and simplify the disclosure requirements.

The staff will prepare the final amendments for publication.

Please click to access the detailed notes taken by Deloitte observers for this discussion.

IPSASB publishes proposed amendments regarding public sector financial instruments

28 Aug 2019

The International Public Sector Accounting Standards Board (IPSASB) has published an exposure draft 'Public Sector Financial Instruments: Amendments to IPSAS 41 'Financial Instruments'' with proposed amendments that would supplement the IPSASB’s existing guidance in IPSAS 41 for topics that are unique to the public sector and have a significant impact on government finances.

The exposure draft proposes clarification of existing guidance for four public sector instruments:

  • Monetary gold;
  • Currency in circulation;
  • IMF quota subscriptions; and
  • IMF special drawing rights.

The IPSASB has come to the conclusion that monetary gold has similar characteristics to a financial asset and proposes to clarify that it is appropriate to account for monetary gold by applying the financial asset principles in certain circumstances.

As regards currency in circulation, IMF quota subscriptions and special drawing rights, the IPSASB has come to the conclusion that these all meet the definition of a financial instrument and proposes adding implementation guidance and an illustrative example to support stakeholders accounting for these instruments.

Please click to access the exposure draft Public Sector Financial Instruments: Amendments to IPSAS 41 'Financial Instruments', a short introductory webinar and an At a Glance introduction on the IPSASB website. Comments are requested by 31 December 2019.

 

Recent sustainability reporting developments

27 Aug 2019

A summary of recent developments at the CFA Institute, CDP, SSE, and GRI.

The CFA Institute, a global association of investment professionals, has published a report entitled The Case for Quarterly and Environmental, Social, and Governance Reporting that is based on a survey of its global membership on the topic. Respondents to the survey believe that specific ESG and sustainability disclosures should be a regulatory requirement for public companies and that securities regulators should either develop ESG disclosure standards or support an independent standards setter (i.e., a single, global standards setter in this field) to develop such standards. Please click to access the report on the website of the CFA Institute.

The Carbon Disclosure Project (CDP) has released a new report, The Money Trees, that finds that finds that 70% of 1,500 companies with high impact on forests fail to provide data on their impact and that corporate transparency on forests lags behind other environmental issues such as climate change and water security. Please click to access the report through the press release on the CDP website, which offers a first summary of the findings.

The Sustainable Stock Exchanges (SSE) announces that the Abu Dhabi Securities Exchange (ADX) has issued environmental, social and governance (ESG) disclosure guidelines for listed companies. For more information, please see the press release on the SSE website.

The Global Reporting Initiative (GRI) announces that GRI 303 Water and Effluents 2018 and GRI 403 Occupational Health and Safety 2018 have been translated into Japanese. All Japanese translations of GRI Standards can be downloaded free of charge on the GRI website.

Pre-meeting summary for the additional IASB meeting on IBOR

21 Aug 2019

The IASB, which normally does not meet in August, will hold an additional meeting on 28 August to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. We have posted our pre-meeting summary of the two papers to be discussed where we point out the main issues to be discussed by the IASB and the staff recommendations.

The staff are recommending that the amendments include an exception to the requirement in IAS 39 for retrospective assessment when a hedge is temporarily outside the 80–125% range solely due to uncertainties arising from the reform;  provide relief from the separately identifiable requirement for ‘macro hedges’; clarify when the relief ceases to apply to a group of items designated as the hedged item; clarify that the amendments would apply to hedges of both interest rate and foreign currency risks; and simplify the disclosure requirements.

Our detailed pre-meeting summary is available on our August meeting notes page and will be supplemented with our popular meeting notes after the Meeting.

We comment on seven IFRS Interpretations Committee tentative agenda decisions

20 Aug 2019

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 1, IAS 7, IAS 41, IFRS 9, IFRS 15, and IFRS 16, as published in the June 2019 IFRIC Update.

More information about the issues is set out below:

Issue Agenda decision supported? More information
IAS 1 — Presentation of liabilities or assets related to uncertain tax treatments Yes
IAS 7 — Disclosure of changes in liabilities arising from financing activities Yes
IAS 41 — Subsequent expenditure on biological assets Yes
IFRS 9 — Fair value hedge of foreign currency risk on non-financial assets 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 have some concerns with the articulation of the agenda decision in the case where an entity is intending to consume the non-financial item.
IFRS 15 — Compensation for delays or cancellations Yes
IFRS 16 — Lease term and useful life of leasehold improvements No, we disagree with the Committee decision not to take the issue of how to determine the lease term of a cancellable lease or a renewable lease onto its standard-setting agenda. This issue highlights a key difficulty that entities and their auditors face in the application of IFRS 16 which is the assessment of whether a contract continues to be enforceable if both parties have termination rights but at least one of the parties would suffer a more than insignificant penalty if they were to exercise their right (i.e., whether economic disincentive to the exercise of a termination right is relevant to the assessment of whether a lease contract continues to be enforceable).
IFRS 16 — Lessee’s incremental borrowing rate No, we do not agree with the Committee’s conclusion that a lessee is not required to determine an incremental borrowing rate that reflects the interest rate in a loan with a similar payment profile to the lease payments. We do not believe that it is appropriate to infer that the reference to “a similar term” should be read as simply meaning over the “lease term” as defined in Appendix A.

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

Additional IASB meeting on IBOR

20 Aug 2019

The IASB, which normally does not meet in August, will hold an additional meeting on 28 August to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'. The agenda and the papers for the meeting are now available.

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries as well as observer notes from the meeting on this page as they become available.

We comment on two IASB exposure drafts

20 Aug 2019

We have responded to the IASB’s exposure drafts ED/2019/2 'Annual Improvements to IFRS Standards 2018–2020' and ED/2019/3 'Reference to the Conceptual Framework (Proposed amendments to IFRS 3)'.

As regards the proposed annual improvements, we agree with the proposed amendments to IFRS 9, IFRS 16, and IAS 41, however, we do not believe that the proposed amendment to IFRS 1 should be a requirement - we believe it should be an option. Our full comment letter is available here.

As regards the proposed amendments to IFRS 3, we agree with the proposed amendments to IFRS 3 to replace a reference to an old version of the Conceptual Framework. We also agree with the proposed addition of an exception for the recognition principles in IFRS 3 with respect to liabilities and contingent liabilities in the scope of IAS 37 and of IFRIC 21 and of the clarification of the IFRS 3 requirements for contingent assets. However, we believe that an exception to the recognition principles in IFRS 3 is also required with respect to uncertain current tax positions within the scope of IFRIC 23. Our full comment letter is available here.

IASB adds second phase of IBOR reform project to its work plan

15 Aug 2019

Recent market developments have brought into question the long-term viability of Interbank offered rates (IBORs) and the IASB is currently looking into the potential effects of financial reporting.

The first phase of the project deals with pre-replacement issues (issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark). It was added to the standard-setting agenda of the IASB in December 2018 and saw the publication of an exposure draft of propoed amendments in May 2019. The IASB is currently working towards the finalisation of the amenments with an additional Board meeting scheduled for 28 August 2019.

The second phase of the project now added to the work plan deals with replacement issues (issues that might affect financial reporting when an existing interest rate benchmark is replaced). Deliberations have not begun yet and are currently expected to be taken up in Q3 2019.

Summary of the July 2019 ASAF meeting now available

12 Aug 2019

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 11 and 12 July 2019.

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

  • Business combination under common control (1–12): The ASAF provided views related to the application of alternative approaches as well as how to apply a current value approach and predecessor approach.
  • Man­age­ment com­men­tary (13–26): The ASAF provided views on the staff’s proposals related to the notion of narrative coherence and identifying and reporting matters that could affect the entity’s long-term success.
  • IBOR reform (27–43): The ASAF provided information on the current state of interest rate benchmark reform in their jurisdictions and discussed their views on financial reporting issues discovered. The members also discussed how they should address the issues in phase II of the project.
  • Better communication — Primary financial statements (44–59):  The ASAF commented on possible approaches to structuring the new requirements. In addition, the members planned outreach events during the comment period.
  • Variable and contingent consideration (60–65) — The ASAF discussed the FRC’s project on the conceptual basis for transactions involving variable and contingent consideration.
  • Business reporting of intangibles: realistic proposals (66–70): The ASAF provided views on the FRC’s discussion paper and gave suggestions for developing FRC’s analysis on intangible assets.
  • Discussion Paper Accounting for Pensions Plans with an Asset-return Promise (71–73): The ASAF commented on the EFRAG’s discussion paper where they had mix views on the three accounting alternatives.
  • Updated and agenda plan (74–76): The ASAF discussed items to be added to the proposed agenda for the October 2019 ASAF meeting.

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

Interviews with new IASB members

08 Aug 2019

The IASB has released two short interviews introducing Tadeu Cendon and Rika Suzuki. Mr Cendon and Ms Suzuki were appointed to the IASB board by the Trustees of the IFRS Foundation in March 2019 for terms which began on 1 July 2019.

For more information, see the interviews with Mr Cendon and Ms Suzuki on the IASB website.

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