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News

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June 2019 IASB meeting agenda posted

07 Jun 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 17–19 June 2019. There are seven topics on the agenda.

The Board will discuss the following:

  • Primary financial statements
  • Rate regulated activities, includes an education session
  • Goodwill and impairment
  • SME Standard review and update
  • Financial instruments with characteristics of equity
  • Business combination under common control
  • Implementation matters — Property, plant and equipment: Proceeds before intended use (amendments to IAS 16)

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.

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Research into assets and liabilities

07 Jun 2019

In October 2016, the third IASB Research Forum was held in Waterloo, Ontario, Canada. One of the papers presented was 'Assets and Liabilities: When do they Exist?'. IASB discussant of the paper was Board member Mary Tokar. The paper has now been finalised and published together with the discussion by Ms Tokar.

The paper investigates whether the current references to probability in standard setters' conceptual definitions of assets and liabilities cause individuals to believe that the probability of a future transfer of economic benefits must be above some meaningful threshold for an asset or a liability to exist.

Please click for the following additional information:

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Reporting on climate risk increasing but still needs more financial impact analysis

06 Jun 2019

The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders has published a second status report providing an overview of the extent to which companies in their 2018 reports included information aligned with the core TCFD recommendations published in June 2017.

The TCFD surveyed disclosures of over 1,100 firms from diverse sectors with broad geographical representation (142 countries). It found that:

  • Disclosure of climate-related financial information has increased since 2016, but is still insufficient for investors.
  • More clarity is needed on the potential financial impact of climate-related issues on companies.
  • Of companies using scenarios, the majority do not disclose information on the resilience of their strategies.
  • Mainstreaming climate-related issues requires the involvement of multiple functions.

The FSB has asked the TCFD to deliver another status report to the FSB in September 2020. The TCFD will undertake further work during the course of the next year to promote and monitor adoption of the TCFD recommended disclosures. It is also considering additional work to: (i) clarify elements of the TCFD’s supplemental guidance, (ii) develop process guidance around how to introduce and conduct climate-related scenario analysis, and (iii) identify business-relevant and accessible climate-related scenarios.

Please click for the press release and the status report on the FSB website.

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EFRAG draft comment letter on proposed annual improvements to IFRS standards 2018-2020

05 Jun 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2019/2 ‘Annual Improvements to IFRS Standards 2018-2020 Cycle’.

EFRAG generally agrees with the IASB proposal; however, it proposes that IAS 39 should be amended in the same way as the proposed amendments to IFRS 9. In additional, the EFRAG suggests that further guidance be added to IFRS 16 when reimbursement of leasehold improvements maybe be considered as a lease incentive.

Comments on EFRAG's draft comment letter are requested by 5 August 2019. For more in­for­ma­tion, see the press release and the draft comment letter on the EFRAG website.

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IAASB announces new chair

04 Jun 2019

The International Auditing and Assurance Standards Board (IAASB) has announced the appointment of Thomas Seidenstein as new chair.

Mr Seidenstein will begin his three-year term on 1 July 2019, where he will succeed Arnold Schilder. Mr Seidenstein was recommended for the position by the Interim Nominating Committee, endorsed by the IFAC Board, and approved by the Public Interest Oversight Board.

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

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Agenda and pre-meeting summaries for the June 2019 IFRS Interpretations Committee meeting

03 Jun 2019

The IFRS Interpretations Committee will meet in London on 11 and 12 June 2019 to discuss fourteen issues, including eight new interpretation requests.

New Issues

The Committee will discuss eight new issues.

IFRS 16 Leases—Incremental borrowing rate (Agenda Paper 2). Does the incremental borrowing rate need to reflect the interest rate in a loan with both a similar maturity to the lease and a similar payment profile to the lease payments?

IFRS 16 Leases—Lease term and useful life of leasehold improvement (Agenda Paper 3). (a) Does an entity consider the economics of a contract when determining the enforceable period of the lease, and not only any contractual termination payment (such as the cost of abandoning or dismantling leasehold improvements)?  (b) Is the useful life of any non-removable leasehold improvements limited to the lease term of the related lease? 

IFRS 9 Financial Instruments—Fair value hedge of foreign currency risk on non-financial assets (Agenda Paper 4). Can foreign currency risk be a separately identifiable and reliably measurable risk component of a non-financial asset held for consumption (for example, property, plant and equipment and inventory denominated in a foreign currency) that an entity can designate as the hedged item in a fair value hedge accounting relationship?

IAS 7 Statement of Cash Flows—Changes in liabilities arising from financing activities (Agenda Paper 5). Some investors have expressed concerns about the quality and consistency of disclosures about changes in liabilities arising from financing activities required by IAS 7.

IFRS 10 Consolidated Financial Statements—Sale of a single asset entity containing real estate (Agenda Paper 6). Should an entity account for the sale of real estate through an equity interest in a single asset entity that is a subsidiary by applying IFRS 15 or IFRS 10?

IAS 1 Presentation of Financial Statements—Presentation of an uncertain tax position (Agenda Paper 7). Should an entity present a liability related to uncertain tax treatments as a current (or deferred) tax liability or as a provision?

IFRS 15 Revenue from Contracts with Customers—Compensation for delays or cancellations (Agenda Paper 8). Should an obligation to compensate customers for delayed or cancelled flights (as set out in legislation) be recognised as part of the transaction price or as an obligation in accordance with IAS 37?

IAS 41 Agriculture—Subsequent expenditure (Agenda Paper 9). Should an entity capitalise or expense the costs related to the biological transformation of biological assets?

The staff are recommending that the Committee not develop any Interpretations or amendments but instead publish tentative agenda decisions stating that the requirements provide an adequate basis for addressing each of issues.

Agenda decisions to finalise

The staff are recommending that the Committee finalise four tentative agenda decisions.

IFRS 15 Revenue from Contracts with Customers—Costs to fulfil a contract (Agenda Paper 10).  When revenue is recognised over time (in this case from a property sale, using the output method to measure progress) any costs incurred to fulfil the performance obligation are recognised as an expense when they are incurred.

IFRS 16 Leases—subsurface rights (Agenda Paper 11). When a contract between a land owner and another party gives the other party the right to place an oil pipeline in a specified underground space, with the land owner retaining the right to use the surface area of the land above the pipeline, that contract contains a lease.

IAS 19 Employee Benefits—Effect of a potential discount on plan classification (Agenda Paper 12). The existence of a potential discount on the contribution an entity is obliged to make to a post-employment benefit plan, if the ratio of plan asserts to plan liabilities exceeds a set level, does not preclude the plan from being a defined contribution plan.

Holdings of a cryptocurrency (Agenda Paper 13). A cryptocurrency does not meet the definitions of cash or a financial asset. It meets the definition of an intangible asset is accounted for in accordance with IAS 38, unless it the cryptocurrency is held for sale in the ordinary course of business—in which case IAS 2 applies.

Continuing discussions

The staff are recommending that narrow-scope amendments to IAS 21 be developed to define “exchangeability” and a “lack of exchangeability” and specify the requirements that would apply when there a lack of exchangeability in a currency (Agenda Paper 14).

Work in progress

The staff have received requests in relation to the definition of a lease and foreign operations in consolidated financial statements. The staff are in the process of analysing those matters (Agenda Paper 16).

The full agenda for the meeting can be found here. We will update this page for any changes to the agenda and our Deloitte pre-meeting summaries for the meeting as they become available.

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ESEF becomes European law

03 Jun 2019

The European Commission has published a regulation requiring all listed companies across the European Union to submit their annual financial statements digitally as Inline XBRL documents from 1 January 2020 on.

The new European Single Electronic Format (ESEF) aims at improving accessibility and at making the information much more user-friendly. The move will also facilitate the availability of key financial information in all EU official languages. In support of these new rules, the European Securities and Markets Authority (ESMA) has prepared an ESEF Reporting Manual and ESEF taxonomy files to help companies in their preparation. The new provisions will be updated on a yearly basis to reflect possible updates to the International Financial Reporting Standards (IFRS) taxonomy, which aims to improve communication between preparers and users of financial statements.

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Agenda for June 2019 joint CMAC-GPF meeting

03 Jun 2019

Representatives from the International Accounting Standards Board (IASB) will meet with both the Capital Markets Advisory Council (CMAC) and Global Preparers Forum (GPF) in London on 13 and 14 June 2019. The agenda for the joint meeting has been released.

The full agenda for the meeting is summarised below:

Thursday, 13 June 2019 (10:10-17:15)

  • Welcome
  • IASB update
  • Follow-up on issues discussed at the last meetings
  • Disclosure of sensitive information — staff presentation, breakout sessions, report back
  • Goodwill and impairment — staff presentation, breakout sessions, report back
  • Primary financial statements — staff presentation, breakout sessions, report back

Friday, 14 June 2019 (08:30-12:50)

  • Business combinations under common control — staff presentation, breakout sessions, report back
  • Management commentary — staff presentation, breakout sessions, report back
  • Targeted standards-level review of disclosures — staff presentation, breakout sessions, report back

For more information, see the meeting page on the IASB's website.

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Death of Thomas E. Jones, former Vice-Chairman of the IASB

31 May 2019

The members of the IASB and staff of the IFRS Foundation have released condolences on the death of Thomas E. Jones, former Chair of the IASB's predecessor body, the IASC and the first Vice-Chairman of the IASB.

Mr Jones' work as an accounting standard-setter followed a successful career in investment banking. In 2007, Financial Executives International recognised his career achievements by inducting him into the FEI Hall of Fame.

Please click for the statement on the passing of Mr Jones on the IASB website.

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IASB publishes proposed amendments to IFRS 3 to update a reference to the Conceptual Framework

30 May 2019

The International Accounting Standards Board (IASB) has published an exposure draft 'Reference to the Conceptual Framework (Proposed amendments to IFRS 3)' with three proposed amendments to IFRS 3 'Business Combinations' that would update an outdated reference in IFRS 3 without significantly changing its requirements. Comments are requested by 27 September 2019.

 

Background

In March 2018, the IASB issued the 2018 Conceptual Framework and most references to the Framework included in IFRSs were updated to the 2018 Framework at that time. However, paragraph 11 of IFRS 3 Business Combinations, which still refers to the 1989 Framework, was not updated as this could have caused conflicts for entities applying IFRS 3.

Potential conflicts occur as the definition of assets and liabilities in the 2018 Framework differ to those in the 1989 Framework potentially leading to day 2 gains or losses post-acquisition for some balances recognised.

The IASB has now identified three possible amendments to IFRS 3 that would update IFRS 3 without significantly changing its requirements.

 

Suggested changes

The changes proposed in ED/2019/3 Reference to the Conceptual Framework (Proposed amendments to IFRS 3):

  • update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
  • add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer should apply IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and
  • add to IFRS 3 an explicit statement that an acquirer should not recognise contingent assets acquired in a business combination.

The exposure draft also notes alternative approaches considered by the Board as well as the Board's reasons for not choosing those.

Comments on the proposed changes are requested by 27 September 2019.

 

Effective date

The exposure draft does not contain a proposed effective date for the amendments as the intention is to decide on it after the exposure period. However, it is already clear that early application would be permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier.

 

Additional information

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