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EFRAG is looking for new TEG members

15 Jul 2019

The European Financial Reporting Advisory Group (EFRAG) is inviting applications for its Technical Expert Group (TEG).

Ten of the sixteen members of EFRAG TEG will reach the end of their current term of ap­point­ment on 31 March 2020 and one of the country liaison members will reach the end of their current term on 31 October 2019. While all members are eligible for reap­point­ment, EFRAG welcomes all ap­pli­ca­tions and in par­tic­u­lar seeks can­di­dates from central and eastern Europe and other countries not yet represented on the EFRAG TEG.

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

IASB will hold additional meeting in August

15 Jul 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)'.

ED/2019/1 was published on 3 May 2019 with comments requested by 17 June 2019. Agenda papers for the meeting will be available in due course on the IASB website.

ESMA answer to the EFRAG questionnaire on alternative accounting treatments for equity instruments

15 Jul 2019

The European Securities and Markets Authority (ESMA) has submitted to EFRAG its response to the current consultation, which addresses (potentially inappropriate) accounting requirements for equity and equity-type instruments that are held in a long-term business model. In the consultation, EFRAG seems to suggest that current measurement requirements under IFRS 9 might be inappropriate - a view that is not supported by ESMA.

In addition to the completed questionnaire, ESMA has included a cover letter that notes the following points:

  • Public financial disclosures should remain focused on depicting economic reality in a neutral way, while avoiding the possibility of giving rise to structuring opportunities.
  • The current provisions in IFRS 9 already cater for an adequate depiction of financial instruments. Particularly, the economic characteristics of equity instruments would generally not be adequately reflected by cost-based measurement, especially when current value information is reliable and available.
  • Concerns with respect to reported volatility are acknowledged, however, IFRS 9 provides an option to mitigate this volatility.
  • It is not yet possible to assess any potential effects of IFRS 9 on long-term investment decisions.
  • ESMA is not currently aware that the application of IFRS 9 has caused any obstacles to or provided disincentives to long-term investment decisions.
  • Elaborating an alternative accounting model for equity and equity-type instruments, in advance of having identifed evidence of any concrete issues regarding long-term investment arising from the application of IFRS 9, may result in a solution that may ultimately not be effective.

ESMA concludes:

In line with the above-mentioned considerations, at this stage, ESMA does not support any of the alternative accounting solutions illustrated in EFRAG's background document.

Please clickt to access the cover letter and completed questionnaire on the ESMA website.

ESMA updates ESEF Reporting Manual

15 Jul 2019

The European Securities and Markets Authority (ESMA) has published an update of its European Single Electronic Format (ESEF) Reporting Manual. The manual is aimed at all market participants involved in the implementation of the requirements set out in the ESEF Regulation, and in particular in the first-time preparation of IFRS consolidated financial statements in Inline XBRL.

The manual was originally published by ESMA in December 2017. It is intended to provide guidance on issues commonly encountered when generating Inline XBRL instance documents in compliance with the ESEF Regulation. Following feedback from market participants, ESMA decided to publish a revised version of the manual to expand existing guidance and update the guidance included in the original publication.

Please click to access the updated manual on the ESMA website.

EFRAG publishes a feedback statement on its early-stage analysis of the FICE discussion paper

15 Jul 2019

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement on its early-stage analysis of some possible effects of the IASB Discussion Paper DP/2018/1 'Financial Instruments with Characteristics of Equity'.

The EFRAG analysis offered an assessment of the potential effects of the proposals in the discussion paper. It could 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. The early-stage analysis was also a pilot study into the assessment of potential wider effects during the development of new IFRS requirements.

The feedback statement describes the main comments received by EFRAG in response to its analysis.

Please click to access the feedback statement on the EFRAG website.

July 2019 IASB meeting agenda posted

12 Jul 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 22–25 July 2019, which includes a joint educational session with the FASB on 23 July.

The Board(s) will discuss the following:

  • SME Standard review and update
  • Implementation matters: IFRIC Update
  • Classification of liabilities as current or non-current (amendments to IAS 1)
  • Goodwill and impairment
  • Management commentary
  • Business combinations under common control
  • Segments
  • Primary financial statements
  • Financial instruments with characteristics of equity
  • IBOR reform
  • Disclosure initiative
  • Implementation of revenue and leases
  • Rate regulated activities
  • Dynamic risk management

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.

IFRS Foundation issues Formula Linkbase 2019

11 Jul 2019

The IFRS Foundation has issued the 2019 IFRS Taxonomy Formula Linkbase. The Formula Linkbase is updated from the 2018 version; it is designed to help improve the data quality of IFRS Taxonomy filings and to provide additional guidance for both technical and financial reporting audiences so that they can better understand the IFRS concepts and their meanings.

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

FASB consults on the amortisation of goodwill

11 Jul 2019

The US standard-setter FASB has issued an invitation to comment 'Identifiable Intangible Assets and Subsequent Accounting for Goodwill', which notes that the FASB has been considering whether to change the subsequent accounting for goodwill for cost-benefit reasons. US GAAP currently requires a goodwill impairment model.

The IASB has also been discussing restoring amortisation of goodwill. In December 2017, the Board decided tentatively not to reintroduce amortisation and to focus on improving the impairment model instead. It confirmed this decision at its June 2019 meeting. However, the paper was the most heavily debated paper during the session as improving the impairment model has turned out to be very difficult, and the final decision was very close. The Board finally decided by a vote of 8 to 6 to confirm its preliminary view not to reintroduce amortisation and to retain an impairment-only model.

The FASB's invitation to comment offers a comprehensive analysis of the subsequent accounting for goodwill as well as a comparison with the IASB approach and the approach of the Japanese standard-setter ASBJ.

Comments on the the FASB's invitation to comment are due by 7 October 2019. For more information, please see the press release, a short explanatory video, and the invitation to comment on the FASB website.

EFRAG publishes a feedback statement on its discussion paper on non-exchange transfers

10 Jul 2019

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement on its 2018 discussion paper on non-exchange transfers.

The discussion paper Non-exchange transfers: A role for societal benefit? explored the accounting for transfers in which an entity received (or gives) value without directly giving (or receiving) approximately equal value in exchange.

The feedback statement describes the main comments received by EFRAG in response to its discussion paper.

Please click to access the feedback statement on the EFRAG website.

Recent sustainability and integrated reporting developments

09 Jul 2019

A summary of recent developments at IOSCO, UNCTAD/IIRC, IIRC, ANC, the UK Government, METI, JPX, ECA, and the EC.

The Growth and Emerging Market Committee (GEMC) of the International Organization of Securities Commissions (IOSCO) has published a report Sustainable finance in emerging markets and the role of securities regulators, which provides 10 recommendations for emerging market member jurisdictions to consider when issuing regulations or guidance regarding sustainable financial instruments. Among other things, the recommendations include requirements for reporting and disclosure of material Environmental, Social and Governance (ESG) specific risks, aimed at enhancing transparency. Please plick to access the report on the IOSCO website.

The United Nations Conference on Trade and Development (UNCTAD) and the International Integrated Reporting Council (IIRC) have signed an updated Memorandum of Understanding to reaffirm their commitment to integrating the United Nation’s Sustainable Development Goals (SDGs) into the corporate reporting cycle. Please click to access the press release on the IIRC website.

The IIRC has announced that its Chief Executive Officer Richard Howitt has stepped down after nearly three years’ service. Charles Tilley OBE has been appointed interim CEO. For more information, please see the press release on the IIRC website.

The President of the French standard-setter Autorité des Normes Comptables (ANC), Mr Patrick de Cambourg, has released a report on corporate non-financial reporting, at the request of the French Minister of Economy and Finance. The report entitled Ensuring the relevance and reliability of non-financial corporate information: an ambition and a competitive advantage for a sustainable Europe analyses ways of consolidating the development of extra-financial reporting by companies, so that, in the long run, it gradually takes on a status comparable to that of financial information. The report aims to define the conditions for the development of high-quality extra-financial information. In addition, the report aims to encourage greater harmonisation and comparability of extra-financial information. After an overview of the various existing standards and initiatives, the report assesses the relevance of extra-financial information in terms of quality, reliability, presentation, implementation cost and verifiability, as well as its association with financial data. Please click to access the report on the ANC website.

The UK Government has launched its first Green Finance Strategy, outlining a wide range of actions to support financial system that supports and reaps the opportunities of a low-carbon and environmentally sustainable economy. As part of its strategy, the UK will take action by setting expectations and ensuring a coordinated approach on TCFD, supporting high quality TCFD disclosure and reviewing progress, and building on TCFD to broaden action on transparency. Please click to access the strategy paper on the website of the UK Government.

The Japanese Ministry of Economy, Trade and Industry (METI) has announced the inauguration of a new body called the “TCFD Consortium” as an opportunity for holding discussions on effective corporate information disclosure and efforts for leading disclosed information to appropriate decision making on investment by financial institutes and other entities. The Meti itself, the Financial Services Agency (FSA) and the Ministry of the Environment (MOE) will participate in the consortium as observers. Please click for more information on the METI website.

The Japan Exchange Group (JPX) has published a Japanese translation of the SSE Model Guidance on reporting ESG information to investors and encourages listed companies to make use of this resource. Please click to access the press release and the translation on the SSE website.

The European Court of Auditors (ECA) has published a review taking stock of the status of reporting on the achievement of the SDGs and sustainability at EU level as well as reporting by individual EU institutions and agencies. There is no specific legal obligation for the Commission or other EU institutions to produce sustainability reports. However, since the EU has committed itself to the SDGs and to achieving sustainable development in general, sustainability reporting would be expected to be an integral part of reporting on performance and results. Please click to access the report on the ECA website.

The European Commission welcomes the latest step to drive forward sustainable finance in the EU, with the launch of a call for feedback on a classification system – or “taxonomy” – for environmentally-sustainable economic activities. The consultation is being launched by the Technical Expert Group (TEG) on Sustainable Finance.

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