The Canadian Accounting Standards Board (AcSB) staff has now prepared a research update to identify accounting challenges faced and any developments since 2010 in the extractive sector as well as how those changes affect the research findings in the discussion paper.

Key research findings include:

• A weak commodity price environment and pipeline capacity constraints are placing additional pressures on the extractive sector.
• The decline in commodity prices reduces the profitability prospects and attractiveness of the sector.
• These pressures have caused a decrease in the number of publicly traded entities as a result of mergers, acquisitions and bankruptcies.
• Other than that, there have been no significant changes or developments in the Canadian extractive sector since 2010.
• Many preparers, practitioners and regulators say that there are areas of accounting complexity both within and outside of the scope of IFRS 6.
• However, non-authoritative guidance on many of these challenges are available, e.g. by CPA Canada Mining and the CPA Canada Oil and Gas Task Forces.

Please click to read the AcSB press release offering access to a short In Brief overview of the research update.

Members are expected to attend approximately six two-day meetings each year held in London. Terms of membership will begin on 1 July 2019 and will expire on 30 June 2022. Membership is unpaid, but the IFRS Foundation meets members' expenses of travel on IFRS IC business.

Applications are accepted until 8 March 2019.

Please click for more information on the IASB's website.

Mr Anderson notes that investors will consider questions such as

• How much capital has the business deployed to generate its level of profit?
• How persistent are earnings likely to be into the future?
• Does net profit include gains or expenses that are unlikely to reoccur?
• Is the pattern of future profits likely to exhibit volatility or cyclicality?
• To what extent are profits supported by cash flow generation?
• What are the long-term risks faced by the business, including material environmental and social factors?

when assessing the sustainability of future profits of an entity. And while they draw on the financial statements, management commentary and multiple other information sources, "no number in isolation can adequately capture corporate performance".

He goes on to discuss cash flows, dividend regulations, and accounting requirements, noting that while accounting is an important piece of information it is just ’one piece of the jigsaw’. Dividend policy reflects many other factors such as reinvestment opportunities, financing needs, the risks faced by the company, legal constraints and incentive arrangements - and all of these factors differ by company, by jurisdiction and over time. Therefore, Mr Anderson notes, responsibility to determine whether dividend payments are appropriate is beyond the remit of the IASB. But he concludes:

However, there is no impediment to complementing high quality financial statements prepared in accordance with IFRS Standards by providing additional disclosures about dividend policies and dividend payments, including any disclosures needed to meet jurisdiction requirements.

Please click to access the full text of Mr Anderson's contribution on the IASB website.

In addition to giving updates on their respective standard-setting activities at the meeting, the two boards exchanged views on technical topics in which they both have an interest, including business combinations and goodwill, performance reporting and disclosures, leases, and the distinction between liabilities and equity.

The next meeting between the FASB and ASBJ is expected to be held in the Second half of 2019 in Norwalk. For more information about the latest meeting, see the press release on the ASBJ website.

Applying the criteria for evaluating proposed amendments agreed on in October 2018, the Board came to the following conclusions:

Please click to access our full meeting notes from the session.

The staff notes that the only outstanding topics are now the level of aggregation of insurance contracts and a question about a risk mitigation option for general model contracts related to the December 2018 Board discussion on risk mitigation. The staff intend to present papers on the remaining topics and on possible sweep issues at the March 2019 Board meeting.

In addition, the IASB has issued a podcast, featuring IASB member Darrel Scott and Technical Staff Laura Kennedy, on the IFRS 17 discussion at the February IASB meeting.

The FRC notes that there are frequent calls to reform the accounting for intangible assets, partly in response to the move to a knowledge-based economy. Therefore, the FRC paper published today considers the case for radical change to the accounting for intangible assets and the likelihood of such change being made in the near future.

It suggests that:

• relevant and useful information could be provided without the need to recognise more intangible assets in companies’ balance sheets;
• such information could cover a range of factors, broader than the definition of intangible assets in accounting standards, that are relevant to the generation of value;
• improvements could be made on a voluntary basis within current reporting frameworks (such as the strategic report); and
• participants in the reporting supply chain could collaborate to bring about improvements.

The paper is structured into five sections:

• Section 1 introduces the subject and notes the objectives of the paper.
• Section 2 discusses the implications of the IASB's Conceptual Framework for the reporting of intangibles. It relates its conclusions to the economic features of intangibles that are identified in the literature.
• Section 3 considers possible improvements to the reporting of expenses incurred to develop intangibles that cannot be capitalised in financial statements but are expected to benefit future periods.
• Section 4 discusses how narrative reporting, including the use of metrics, might be used to provide better information for investors on intangibles.
• Section 5 notes that further consideration is required of the implementation of the suggestions made in the paper and the role of preparers, investors, and standard-setters in that process.

Please click to access the consultation paper on the FRC website. Comments are requested by 30 April 2019.

The response to the report stresses that it is important to clarify the two directions of impacts: the Non-Financial Reporting Directive (NFRD) addresses the impact of the company’s activities on the environment and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) the physical impact of the environment on the company. Accountancy Europe notes that the report is not entirely clear which approach is applied in which instance.

The response also notes that while the concept of materiality is an element of both the TCFD and the NFRD, they may be seen as differing in their interpretation. Accountancy Europe suggests clarifying both concepts and how they can be aligned to each other - which will also help to avoid boilerplate disclosures.

While the Accountancy Europe response expresses understanding for the urgency to focus firstly on climate change related issues, it also stresses the importance of addressing social aspects. Climate-related matters should not be treated in isolation as this could have a negative impact elsewhere.

Finally, the response notes that more and more stakeholders including investors want to know whether or not they can trust reported information by companies and therefore ask for independent assurance over the reported information. Therefore, Accountancy Europe believes that it may be necessary to discuss assurance over non-financial information.

Please click to download the full response from the Accountancy Europe website.

The IFRS Standards Required 1 January 2019 pub­li­ca­tion contains all official pro­nounce­ments that are mandatory on 1 January 2019. It does not include IFRSs with an effective date after 1 January 2019. The Annotated IFRS Standards Required 2019 includes the same content as IFRS Standards Required 1 January 2019 but with ad­di­tional an­no­ta­tions containing extensive cross-references, explanatory notes and IFRS Interpretations Committee agenda decisions.

In addition, the IFRS Foundation has released a video describing the differences in the four volumes it publishes each year.

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

The module focuses on the accounting of leases applying Section 20 Leases of the IFRS for SMEs.

Please click to access all 33 IFRS for SMEs modules available so far (free registration required).

IPSAS 42 Social Benefits provides guidance on accounting for social benefits expenditure. It defines social benefits as cash transfers paid to specific individuals and/or households to mitigate the effect of social risk. The standard requires an entity to recognise an expense and a liability for the next social benefit payment. IPSAS 42 establishes principles and requirements for:

• Recognising expenses and liabilities for social benefits;
• Measuring expenses and liabilities for social benefits;
• Presenting information about social benefits in the financial statements; and
• Determining what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the social benefits provided by the reporting entity.

In order to extend IPSASB’s guidance to public services as well as cash transfers, ED 67 Collective and Individual Services and Emergency Relief proposes new requirements for accounting for collective services (such as defense at national-levels), individual services (such as healthcare) and emergency relief. For collective and individual services, ED 67 proposes that an expense is recognised at the point of service delivery. ED 67 also proposes that an expense and liability is recognised for some emergency relief, but not where emergency relief is delivered as an ongoing activity of government. The IPSASB notes that the distinction between social benefits and collective and individual services is important, but the accounting treatment of these transactions should be conceptually consistent. Comments on the ED are requested by 31 May 2019.

The following additional information is available on the IPSASB website:

• Press release
• IPSAS 42:
  • Access to the standard, introductory webinar and At a Glance summary
  • Supporting resources
• ED 67:
  • Access to the exposure draft, introductory webinar and At a Glance summary