EFRAG publishes pre-consultation document on IBOR ED

31 Mar 2020

The IASB expects to​​ issue an exposure draft on its project on the IBOR reform Phase 2 during April 2020 with a comment period of 45 days.​​ In order to maximise the period during which its constituents can comment on its draft comment, the European Financial Reporting Advisory Group (EFRAG) has now published pre-consultation document on the exposure draft.

The views in the document are based on the IASB tentative decisions available on 31 March 2020. They will form the basis for EFRAG’s draft comment letter that will be published as quickly as possible once the IASB has published its exposure draft.

In the document, EFRAG welcomes the tentative decisions taken by the IASB during its deliberations on the second phase of its project on the IBOR reform. In particular, EFRAG supports providing a practical expedient allowing an entity to apply paragraph B.5.4.5 of IFRS 9 Financial Instruments to account for mod​ifications related to IBOR reform; supports the tentative decisions taken on hedge accounting; and observes that the proposed disclosures will assist users of financial statements in understanding the effects of IBOR reform on an entity.​

Please click for more information on the EFRAG website:

Updated IPSAS-IFRS alignment dashboard

31 Mar 2020

The International Public Sector Accounting Standards Board (IPSASB), which develops the International Public Sector Accounting Standards (IPSAS) for financial reporting by governments and other public sector entities, has released an updated IPSAS-IFRS alignment dashboard showing how far individual IPSAS are aligned with corresponding IFRSs.

Please click to access the updated alignment dashboard prepared for the March 2020 IPSASB meeting on the IPSASB website.

In this context, please also so our 2020 edition of IPSAS in your pocket published in January.

Seventh IASB research forum — Call for papers extended

30 Mar 2020

The International Accounting Standards Board (IASB) will host its seventh Research Forum on 2–3 November 2020 in Oxford. The deadline for submitting papers has now been extended to 28 May 2020.

Decisions on submitted papers will be made by 20 July 2020. Please click for the press release and more information on the research forum on the IASB website.

CARES Act would provide optional temporary relief from CECL accounting

30 Mar 2020

On 27 March 2020, US President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides relief from certain accounting and financial reporting requirements under U.S. GAAP. However, until actions are taken by the SEC or the FASB, the provisions of the CARES Act are not amendments to US GAAP.

Section 4014 of the CARES Act offers optional temporary relief from applying the FASB’s current expected credit losses (CECL) standard (ASU 2016-13) for certain entities. Any guidance developed by the SEC or FASB to address the CARES Act’s impact on US GAAP would most likely take into account both the scope and length of any optional deferral, will likely take into account whether any deferral should apply to all entities that were otherwise required to adopt the CECL, and would more clearly define the date of adoption if an entity chose the deferral. For more information, see Deloitte's related Heads Up newsletter as well as the CARES Act, which is available on the US Senate's website.

Other than US Senate and Congress, the IASB has concluded that the existing requirements within IFRS 9 Financial Instruments (including the IASB's CECL model) need not be changed, removed nor added to. On Friday, the IASB only released a statement to support the consistent application of requirements in IFRS 9.

The IASB's position is supported by several other communications on the application of IFRS 9 during the COVID-19 crisis.

  • The Office of the Superintendent of Financial Institutions (OSFI) in Canada has released a statement that includes guidance on Applying IFRS 9 in extraordinary circumstances that will allow companies to remain compliant with IFRS as issued by the IASB;
  • the Prudential Regulation Authority (PRA) of the Bank of England has released a statement Covid-19: IFRS 9, capital requirements and loan covenants that offers an annex with guidance consistent with IFRS 9 to assist firms in making well-balanced and more consistent ECL estimates and in determining how to treat payment holidays and similar schemes for accounting and regulatory purposes;
  • the French Autorité des Marchés Financiers (AMF) has released guidance (in the French language only) noting that the general measures implemented allowing, among other things, payment suspensions or deferrals or the granting of additional appropriations do not mechanically constitute an indicator of a significant increase in the credit risk of the financial assets concerned;
  • the German Institut der Wirtschaftsprüfer (IDW) has released comprehensive guidance on IFRS 9 that is also available in an (abridged) English language translation; and
  • the Malaysian Accounting Standards Board (MASB) has countered calls for a temporary exemption from MFRS 9 (the Malaysian equivalent of IFRS 9) with a statement reassuring its constituents "that the principle-based nature of the Malaysian Financial Reporting Standards (MFRS) Framework requires and allows for judgement in addressing the accounting challenges arising from COVID-19".

All statements agree that IFRS 9 is principles-based and requires the use of experienced credit judgement and that the current situation does not lead to an undifferentiated, automatic transfer of financial instruments from Level 1 to Level 2 or even Level 3.

Earlier last week, ESMA hat already concluded that the principles-based nature of IFRS 9 includes sufficient flexibility to faithfully reflect the specific circumstances of the COVID-19 outbreak and the associated public policy measures.

IFRS Foundation issues statement on its work during the COVID-19 pandemic

27 Mar 2020

The IFRS Foundation has issued a statement, ‘The coronavirus and the Foundation’s work,’ which acknowledges that this is a difficult time for stakeholders and provides information on what work they are doing to support their stakeholders.

In particular, the statement notes that its projects on IBOR reform and amendments to IFRS 17 are still on schedule; however, timelines will be discussed on specific projects during its April meeting. In addition, the publication of several narrow-scope amendments to IFRS Standards have been postpone to May 2020 (see our updated IASB work plan analysis).

The IFRS Foundation has also issued educational materials to support the application of IFRS 9 during the economic uncertainity arising from the coronavirus pandemic and has shifted to virtual meetings.

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

EFRAG requests the IASB extend consultation period

27 Mar 2020

The EFRAG have sent a letter to the IASB requesting an extension to the public consultation phase of recent or soon-to-be issued publications due to the affects of the coronavirus disease pandemic. In addition, the EFRAG suggests the amendment to IFRS 9 (IBOR Phase 2) should be published quickly after the publication of the exposure draft in April 2020 in order to avoid any potential complications.

For more information, see the press release and letter on the EFRAG’s Web site.

IASB updates work plan in view of COVID-19 developments

27 Mar 2020

The IASB has postponed to May 2020 the publication of several narrow-scope amendments to IFRS Standards originally planned for March and April 2020. This consolidation of publications is intended to facilitate more efficient post-publication procedures by the stakeholders. The work plan has been updated accordingly.

Below is an analysis of all changes made to the work plan since our last analysis on 21 March 2020. We also note the projects the IASB intends to move forward with in April 2020.

Standard-setting projects

  • No changes

Maintenance projects

  • Annual improvements — 2018-2020 cycle — Final amendments are now expected in May 2020 (formerly April 2020). The following projects are part of the annual improvements:
    • 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 (Amendment to IFRS 1)
    • Taxation in Fair Value Measurements (Amendment to IAS 41)
  • IBOR Reform and its Effects on Financial Reporting — Phase 2 — An exposure draft is still expected in April 2020
  • Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) — An IFRS amendment is now expected in May 2020 (formerly Q2 2020)
  • Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) — An IFRS amendment is now expected in May 2020 (formerly March 2020)
  • Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) — An IFRS amendment is now expected in May 2020 (formerly April 2020)

Research projects

  • Post-implementation Review of IFRS 10, IFRS 11 and IFRS 12 — The rescheduled research review is still expected to take place in April 2020

Other projects

  • Due Process Handbook Review — Final amendments are still expected in April 2020

The above is a faithful comparison of the IASB work plan at 21 March 2020 and at 27 March 2020. For access to the current IASB work plan at any time, please click here.

IASB publishes statement on IFRS 9 and COVID-19

27 Mar 2020

The International Accounting Standards Board (IASB) has published a document responding to questions regarding the application of IFRS 9 'Financial Instruments' during the period of enhanced economic uncertainty arising from the COVID-19 pandemic.

The document is intended to support the consistent application of requirements in IFRSs. Therefore, it highlights requirements within IFRS 9 Financial Instruments that are relevant for companies considering how the pandemic affects their accounting for expected credit losses; it does not change, remove nor add to, the requirements of IFRS 9.

Please click to access the document on the IASB website.

New IAS Plus resource page

27 Mar 2020

We have set up an IAS Plus resource page on accounting considerations related to COVID-19. The page includes news items and resources in connection with COVID-19 developments that highlight some of the key accounting and disclosure issues to be considered by entities that may arise as a result of COVID-19 in preparing financial statements applying IFRS Standards.

Please click to access our new resource page.

IFRS Foundation Trustees and Due Process Oversight Committee hold February 2020 meeting

26 Mar 2020

The IFRS Foundation Trustees and the Due Process Oversight Committee (DPOC) met in Brussels on 19–20 February 2020.

Meeting ac­tiv­i­ties included the following:

  • Executive session:
    • Report of the Executive Director — The Trustees received a report from the Executive Director Lee White on ac­tiv­i­ties since the last meeting.
    • Strategy review — The Trustees discussed non-fi­nan­cial reporting including sus­tain­abil­ity reporting and climate change.
    • Gov­er­nance issues — The Trustees approved a change to (1) the IFRS Foundation Constitution regarding the IFRS Advisory Council’s role and (2) amendments to the IFRS Foundation’s Bylaws.
    • Op­er­a­tions analysis — The Trustees received pre­sen­ta­tions on the analysis of jurisdictional compliance with IFRS Standards.
    • Committee reports — The Trustees discussed reports from the Business Process and Tech­nol­ogy Committee, the Audit and Finance Committee, the Human Capital Committee, the Nom­i­nat­ing Committee, and the DPOC. (A report of the DPOC meeting is attached to the meeting summary.)
  • IASB Chairman’s report — The Chair of the IASB provided the Trustees with a general update on the IASB’s technical ac­tiv­i­ties, es­pe­cially on the proposed amend­ments to IFRS 17 and the project to revise IFRS Practice Statement 1 Management Commentary.
  • External en­gage­ment — The Trustees met with IFRS Foundation Monitoring Board. In addition, they held a stake­holder event with the EFRAG entitled Financial reporting: remaining relevant in a changing environment.

For more in­for­ma­tion, see the press release, which also offers an article on the stake­holder event, and the full summary on the IFRS Foun­da­tion Trustees’ and DPOC meeting on the IASB’s website. Our own report of the stakeholder event is available here.

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