The research report assesses whether current financial reporting requirements for parent/subsidiary structures meet user needs in a cost-effective way.

The report concludes that users most dependent on general purpose financial statements in the for-profit sector are generally satisfied with summary financial information about parent entities which is currently required in the consolidated financial statements. However, they state that they need more information disclosed about subsidiaries in consolidated financial statements than is currently required, particularly if complete sets of subsidiary financial statements were to be no longer available to them. Some also state that they need to know whether other financial statements pertaining to group entities (including the group itself) exist and, where they do, those users need to see cross-references to them.

While the report is mainly intended to provide input to the process through which the AASB will work with regulators, users, preparers and other stakeholders in Australia, the users’ views on the additional disclosures needed will also provide important input to the IFRS 12 Disclosure of Interests in Other Entities post-implementation review of the IASB.

Please click to access the research report on the AASB website.

The agenda for the DPOC meeting is summarised below.

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

The podcast features dis­cus­sions of the following topics in more detail (length of the podcast: 18 minutes):

• World Standard-Setters Conference.
• IFRS Advisory Council.
• Financial in­stru­ments with char­ac­ter­is­tics of equity.
• IBOR reform and its effects on financial reporting.
• Business com­bi­na­tions under common control.
• Agenda consultation.

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 September IASB meeting.

The proposed amendments are intended to help preparers in deciding which accounting policies to disclose in their financial statements.

EFRAG supports the proposal to replace the undefined reference to 'significance' with the defined concept of 'materiality'. EFRAG believes that this, with other Disclosure Initiative projects, may help entities to identify and disclose accounting policies that provide material information to users and the connection to the application of materiality to other information. However, EFRAG notes the possible inconsistencies of the proposed guidance with the existing disclosure requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors regarding accounting policies choices and changes.

Comments on EFRAG's draft comment letter are requested by 22 November 2019. For more information, see the press release and the draft comment letter on the EFRAG's website.

The forum will see the pre­sen­ta­tion of four academic papers, followed either by a response of an academic and an IASB/NNS rep­re­sen­ta­tive or by a panel dis­cus­sion. In both cases, the audience will be invited to par­tic­i­pate in the dis­cus­sion. The papers are the following (all links to the IASB website):

• Standard Precision and Aggressive Financial Reporting—The Influence of Incentive Horizon
• Real Effects of Intangibles Capitalization—Empirical Evidence from Voluntary IFRS adoption in Japan
• Mandatory IFRS and Corporate Governance in Peruvian Corporations
• The impact of IFRS 10 on consolidated financial reporting

The participants discussed:

• Effect of technology on the investment process — Council members advised on the impact technology have on the need for IFRSs and the IFRS Taxonomy in the future and whether market forces are supplanting benefits of an IFRS Taxonomy.
• Consistent adoption and application of IFRSs — Council members considered to what extent the IFRS Foundation should refresh its approach to monitoring consistent adoption and application.
• Effective risk management — Council members generally agreed with the risks that had been identified by the Foundation. However, there was a suggestion that risks around financing should be considered for inclusion.
• Update on Trustees and Foundation activities and Update on the Board’s activities — Council members received updates on recent trustee activities and on recent activities of the Board and the IFRS Foundation.
• Digital experience for customers and stakeholders — Council members considered how the Foundation’s digital experience should evolve, what developments should be prioritised over the next three years and who the Foundation learn can from.
• 2020 Agenda Consultation — Proposed approach — The majority of council members supported the proposal to include a shortlist of potential projects and some form of preliminary Board thoughts on the topics, rather than the Board’s full preliminary views of which potential projects from the shortlist it proposes to add to its work plan.

The full meeting summary is available on the IASB's website. There are also recordings of the individual sessions.

The AASB recently published published the bulletin Climate-related and other emerging risks disclosures: assessing financial statement materiality using AASB Practice Statement 2, with AASB Practice Statement 2 being essentially the same as the IASB Practice Statement on Materiality. The paper now released provides an outline of the guidance in the practice statement and motivation behind the issuance of the bulletin on climate‐related risk disclosures, key takeaways and recommendations, and the AASB's suggestions on the type of evidence that would be useful for standard-setters.

Climate-related Risk and Financial Statements: Implications for Regulators, Preparers, Auditors and Users was published in the Australian Accounting Review and can be accessed free of charge in the Wiley Online Library.

The second podcast (23 minutes) focuses on IFRS Interpretations Committee activities and developments between June and September 2019. Among the topics covered are two finalised agenda decisions to do with hedge accounting and disclosures of financial liabilities, and five tentative agenda decisions relating to IFRS 15, IFRS 16, IAS 21, IAS 29 and hyperinflation.

Please click to access the podcast through the press release on the IASB website.

The main messages on the IFRS-related aspects of the presentation were the following:

• It is in the UK's own interest to stay with IFRSs.
• After Brexit, IFRSs in the UK will be known as "UK-adopted international accounting standards".
• There is legislation already in place that will
  • onshore and freeze existing EU-adopted IFRSs on the date of the EU exit;
  • transfer the European Commission's powers to endorse and adopt IFRSs to the Secretary of State; and
  • set out a mechanism for these powers to be sub-delegated to an endorsement and adoption board (currently expected to occur in the new year).
• The new endorsement board will
  
  • be hosted by the UK Financial Reporting Council (FRC) but will be sufficiently independent;
  • consist of a full-time Chair, part-time Board members and 12-15 staff; and
  • will also be responsible for upward influence of the pronouncements to be endorsed (for example, submitting comment letters to the IASB).
• The FRC, the current standard-setter,
  
  • will eventually be replaced by a new body, the Audit, Reporting and Governance Authority (ARGA);
  • has just recently been given a new leadership;
  • will continue to be responsible for UK GAAP; and
  • will continue to be responsible for the strategic report and, therefore, application guidance on non-financial reporting requirements.

The legislation that is already in place includes the Statutory Instrument (SI) 2019/685, which comes into effect on the day of EU exit, transfers the endorsement powers of the European Commission to the Secretary of State for BEIS. Regulation 7 sets out the endorsement criteria, which are almost identical to the criteria in the IAS Regulation. The SI can be downloaded here. Please note that only article 2 of the IAS Regulation was transferred into UK law unchanged - the definition of IFRSs. All other aspects saw slight adaptations, for example the reference to the European public good.

The SI also has an explanatory memorandum, which is available here.

All legislation refers to the "date of the UK withdrawal from the EU". There is no fixed date mentioned.

Following questions from the audience, two aspects were clarified:

• The UK withdrawal act limited the UK options for endorsement to what is currently EU law. Therefore, there is the option for "carve-outs" but there is no option for "carve-ins".
• Endorsement of the recently issued IBOR amendments is on the radar of the BEIS. Endorsement of the amendments will in all likelihood be handled by the Secretary of State and will be swift.

Below is an analysis of all changes that were made to the work plan since our last analysis on 3 September 2019.

Standard-setting projects

• No changes

Maintenance projects

• Annual improvements — 2018-2020 cycle — discussions on feedback received on the exposure draft is expected to occur in November 2019 (previously fourth quarter of 2019); projects that are part of the overall project are:
  
  • Fees in the ‘10 per cent’ Test for derecognition of financial liabilities (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)
• Classification of liabilities as current or non-current (Amendments to IAS 1) — final amendments are now expected in the first quarter of 2020 (previously fourth quarter of 2019)
• IBOR reform and its effects on financial reporting (Phase 1) — final amendments were published on 26 September 2019; the project has therefore been removed from the work plan
• Onerous contracts — Cost of fulfilling a contract (Amendments to IAS 37) — the IASB decided on the future project direction and decided to proceed with final amendments (no date given)

Research projects

• SME Implementation Group draft Q&A — project has disappeared from the work plan
• Extractive activities — the review of research is now expected in the first half of 2020 (previously fourth quarter of 2019)
• Goodwill and impairment — a discussion paper is now expected in the first quarter of 2020 (previously fourth quarter of 2019)

Other projects

• 2020 Agenda Consultation — newly added to the work plan, a request for information is expected in the first half of 2020
• IFRS Taxonomy Update — Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) — newly added to the work plan, a proposed IFRS Taxonomy Update is expected in October 2019

The above is a faithful comparison of the IASB work plan at 3 September 2019 and at 1 October 2019. For access to the current IASB work plan at any time, please click here.