Below is an analysis of all changes made to the work plan since our last analysis on 25 November 2019.

Standard-setting projects

No changes.

Maintenance projects

• 2019 comprehensive review of the IFRS for SMEs Standard — A request for information is now expected in January 2020 (formerly Q1 2020).
• Amendments to IFRS 17 'Insurance Contracts' — A final amendment is now expected in H1 2020 (formerly Q2 2020).
• Annual improvements (2018-2020 cycle) — All projects that are part of this cycle have now been aligned to say that final amendments are now expected in Q2 2020 (formerly some said Q2 2020 and some H1 2020); projects that belong to the annual improvement cycle are:
  • Fees in the ‘10 per cent’ test for derecognition of financial liabilities (Amendments to IFRS 9);
  • Lease incentives (amendments 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).
• Disclosure initiative - Accounting policies — Comments on the Exposure Draft (ED) were due 29 November 2019; feedback on the ED is now expected in February 2020.
• IBOR reform and its effects on financial reporting: phase 2 — An exposure draft is now expected in Q2 2020 (formerly H1 2020).
• Onerous contracts - Cost of fulfilling a contract — A final amendment is now expected in H1 2020 (formerly H2 2020).
• Updating a reference to the Conceptual Framework (amendments to IFRS 3) — A final amendment is now expected in Q2 2020 (previously no date given).

Research projects

• Goodwill and impairment — A discussion paper is now expected in February 2020 (formerly Q1 2020).
• Post-implementation review of IFRS 10, IFRS 11 and IFRS 12 — A review of the research is now expected in February 2020 (previously no date given).

Other projects

• IFRS Taxonomy update: interest rate benchmark reform (amendments to IFRS 9, IAS 39 and IFRS 7) — Comments on the proposed update were due 13 December 2019; there are no further dates given.

The above is a faithful comparison of the IASB work plan at 25 November and at 14 December 2019. For access to the current IASB work plan at any time, please click here.

The podcast discusses the amendments tentatively finalised during the meeting and focuses on the expected recovery of insurance acquisition cash flows and the accounting for reinsurance contracts held.

The podcast can be accessed through the press release on the IASB website. Our summary of the meeting and the results of the IASB's votes is available here.

The DECL Taskforce’s first report consisted of recommendations to describe what a comprehensive set of good ECL disclosures might look like, drawing from and building on existing disclosure recommendations and requirements. The second report now adds guidance and illustrative examples that show how the recommendations in the first report can be presented in a way that enhances comparability between banks.

The second report particularly focuses on disclosures that help users to understand the types and extent of credit risk exposure a bank has and how that risk has evolved; the forward-looking information about macro-economic conditions used in estimating ECL; and the sensitivity of ECL provisions to different macro-economic conditions.  

The guidance is aimed primarily at the biggest UK-headquartered banks and building societies, but is likely to be relevant to a much wider group of preparers.

Please click to download the report from the FRC website.

The DPOC will discuss:

• Correspondence received on due process matters; and
• Due process handbook review — agenda decisions.

The correspondence slot regards two letters received by the DPOC that question whether the full due process was adhered to in an agenda decision of the IFRS Interpretations Committee regarding the lease term and the useful life of leasehold improvements.

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

Mr Volcker led the restructuring of the Foundation, appointed the first Board and garnered widespread international support for its mission of global accounting standards.

Please click for the Statement on the passing of Paul Volcker on the IASB website.

On primary financial statements, Ms Lloyd noted that the IASB's work reflects the fact that while the traditional financial statements continue to remain the core of investment analysis, the way in which that information is consumed has evolved. In this environment proper structure and comparability of the financial information provided by companies is especially important.  She explained the Board's thinking on new subtotals that are to be introduced and  on non-GAAP measures, where the IASB's proposals will reflect the growth in the use of these measures in the market and their relevance for investors. The IASB plans to publish its proposals in an exposure draft around the end of this year.

On management commentary, Ms Lloyd pointed out that wider corporate reporting information can be classified broadly into two types: (i) information about how the company affects the world and (ii) information about how the world affects the company. It is the second area where the IASB has decided it can and should play a larger role. The corresponding project is therefore aimed at updating the IASB's practice statement on management commentary so that investors have visibility of factors that may affect a company’s future cash flows but may not yet be reflected in the financial statements. As a next step in this project the IASB intends to publish an exposure draft proposing changes to the practice statement in 2020.

Finally, on supporting consistent application, Ms Lloyd explained the work of the IASB's IFRS Interpretations Committee, which she chairs.

The full text of the speech is available on the IASB website.

The AICPA conference ran from 9 to 11 December and featured speeches by — as well as panel discussions and question-and-answer sessions with — members of the SEC, PCAOB, FASB, and IASB and professionals from various industries. Our US colleagues have prepared a Heads Up newsletter with highlights from all days of the conference.

The press release on the EFRAG website offers a general analysis of the comments received (proposals that were generally supported, proposals that ed to concerns, calls for reconsideration of certain aspects, and effective date) and access to the full feedback statement (29 pages).

Mr Liikanen explained that today, a major push for innovation in global finance is coming from ‘big techs’, companies that are dominant platform providers that offer ubiquitous digital services. He summarised the impact of these big techs neutrally:

1. The entry of big techs into financial services holds the promise of efficiency gains and can enhance financial inclusion.
2. Regulators need to ensure a level playing field between big techs and banks, taking into account big techs’ wide customer base, access to information and business models.
3. Big techs' entry presents new and complex trade-offs between financial stability, competition and data protection.

Based on this, Mr Liikanen offered three observations. Firstly, policymakers need to decide how much to encourage big tech to enter finance — should policies promote big techs’ entry or restrict it? Secondly, big tech tests the regulatory perimeters of data protection, competition policy and now financial regulation. As such, regulation that is fit-for-purpose will require enhanced cooperation among multiple regulatory bodies. And thirdly, we need to recognise the cross-border nature of the big techs and fintechs challenge and respond appropriately. Mr Liikanen also noted that among the initiatives in the field is the work by the IFRS Foundation to consider the accounting for crypto assets under IFRSs.

Mr Liikanen closed his speech by noting: "Innovation is here to stay, and it will bring benefits and it will bring challenges. We need a balanced approach, where we reap the benefits of financial inclusion and efficiency and ensure a level playing field between big techs and banks."

Please click to access the full text of Mr Liikanen's speech on the IASB website.

Amendments to IFRS 17 Insurance Contracts: The Board is continuing its discussions about ED/2019/4 Amendments to IFRS 17. At this meeting the staff are recommending that the Board make decisions about the amendments that the staff identified in November did not require significant redeliberation. The staff have also made recommendations about insurance acquisition cash flows and reinsurance contracts held.

IBOR Reform and the Effects on Financial Reporting: The staff recommend that IFRS 9 and IAS 39 be amended to allow entities to continue a hedging relationship (i.e. no derecognition) when modifications to the interest rate benchmark on which a financial instrument’s contractual cash flows are based are a direct consequence of IBOR reform and are done on an economically equivalent basis.

Accounting Policies and Accounting Estimates (Amendments to IAS 8): The staff are requesting permission to prepare the final amendments to IAS 8. They will apply to annual periods beginning on or after 1 January 2022 and are expected to be published in the first half of 2020.

Implementation matters:

Onerous Contracts: The Staff are requesting permission to prepare the final amendments to IAS 37. They will apply to annual periods beginning on or after 1 January 2022 and are expected to be published in the first half of 2020.

Annual Improvements: The Staff are requesting permission to prepare the final amendments for annual improvements to IFRS 1 (subsidiary as a first-time adopter), IFRS 9 (fees Included in the ‘10 per cent’ test for derecognition of financial liabilities and IAS 41 (taxation in fair value measurements). The amendments will apply to annual periods beginning on or after 1 January 2022. The amendment to the illustrative example accompanying IFRS 16 takes effect when it is published. Staff do not expect to publish the package of amendments until the second quarter of 2020.

IFRS 3 reference to the Conceptual Framework: The staff recommend that the Board confirm the proposal to add, within the section headed ‘Exception to the recognition principle’, an exception to the recognition principle for liabilities and contingent liabilities within the scope of IAS 37 or IFRIC 21. They also recommend that the Board clarify that updating the reference to the Conceptual Framework does not change IFRS 3 requirements for recognition of assets and liabilities whose fair values are subject to measurement uncertainty.

Subsidiaries that are SMEs: The Chair of the Australian Accounting Standards Board will give a presentation on their proposal for a simplified disclosure standard, similar to the one the IASB is looking to develop. (It is an information-only session).

Business Combinations under Common Control: The staff recommend that the acquisition method, as set out in IFRS 3, be required for transactions that affect non-controlling shareholders of the receiving entity. However, the receiving entity should recognise any excess of the fair value of the acquired identifiable net assets over the consideration transferred as an increase in the receiving entity’s equity (contribution), not as a gain on a bargain purchase in profit or loss.

SME Standard review and update: The staff are seeking approval to prepare the Request for Information, with a comment period of 180 days. 

Financial Instruments with Characteristics of Equity: The Board will begin its discussion about classifying financial instruments that will, or may, be settled in the issuer’s own equity instruments (both derivative and non-derivative instruments). In particular, the staff will explore what clarifications could be made to the underlying principle of the fixed-for-fixed condition.

More information

Our pre-meeting summaries are available on our December meeting notes page and will be supplemented with our popular meeting notes after the meeting.

The report provides a foundational understanding of the current role of auditors in various types of company-prepared and publicly disclosed information and is intended to help investors and audit committees understand how auditors are positioned to help fill existing gaps in enhancing the reliability of decision-useful information. It argues that while today the role of auditors is largely limited to the audit of financial statements, changing business models and investor demand lead to companies increasingly providing information outside the financial statements. The report argues that auditors are poised to meet stakeholders’ needs in enhancing confidence in these other types of company-prepared information, which include non-GAAP financial measures, environmental, social, and governance information, cybersecurity reporting, and other communications about value-creation outside of financial statements.

For more information, see the press release and publication on the CAQ website.