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December 2017 IASB meeting notes posted

15 Dec 2017

The IASB met at its offices in London on 13 and 14 December 2017. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board discussed seven topics.

Wednesday 13 December

The meeting started with a continuation of the discussion on the Primary Financial Statements. There were three topics: objective of, and suitable locations for, the management performance measure; classification of interest and dividends in the statement of cash flows; and initial thoughts on other targeted improvements to the statement of cash flows. The staff had recommended that the Board:

  • explore how to present unusual or infrequently occurring items; and
  • require that the management performance measure be presented as a subtotal in the statement of financial performance, or in a separate reconciliation directly following the statement of financial performance.

The Board decided that the management performance measure would need to be reconciled to the IFRS sub-totals unless it “fits naturally within the statement of financial performance”. The Board discussed the other issues at length, including where such a number should be presented, but made no other decisions.

In relation to the cash flow statement, the Board approved recommendations to:

  • prescribe that interest paid on financing activities, regardless of whether it is capitalised, be classified as financing cash flows, dividends paid be classified as financing cash flows and interest and dividends received be classified as investing cash flows; and
  • not seek to align the operating sections of the income and cash flow statements; but
  • rejected a suggestion to explore further improvements to the statement of cash flows on the grounds that there are no widespread calls to address other issues.

The Board began considering feedback on its Discussion Paper Disclosure Initiative—Principles of Disclosure. The Board received 108 comment letters, and the staff provided a high-level overview of the views expressed on those letters. The overall impression is that respondents think the DP lacked focus and depth. There was also concern over a lack of cohesiveness between the different Disclosure Initiative projects. As an education session, the Board was not being asked to make any decisions. However, some Board members were sceptical about objective-based disclosure requirements and about using less prescriptive language.

Thursday 14 December

The Board continued its discussions on accounting for Goodwill. The Board voted 11-3 to explore the updated headroom approach further and, by the same margin, rejected a reintroduction of amortisation. 

The Board was given a project plan for the development of an accounting model for Dynamic Risk Management (DRM). The staff intend to focus on developing the areas that are core to the model (target profile, asset profile, DRM derivative instruments and performance assessment and recycling) which they will test with external stakeholders before addressing extensions of the concepts. No significant comments were made by Board members. The Staff expect that the discussion of the core model will take between six to eight sessions.

The Consultative Group for Rate Regulation met on 26 October 2017.  The staff summarised the Board the feedback from this meeting. The consultative group encouraged the Board to develop an exposure draft as the next consultative document. There was no discussion of this paper.

The Board considered four IFRS Implementation Issues. The Board:

  • was updated on the IFRS Interpretation Committee’s decision to add to its agenda a project to clarify which costs should be considered in assessing whether a contract is onerous;
  • supported a recommendation that the ED proposing to lower the threshold for relief from retrospective application of a change in accounting policy arising from agenda decisions also propose that the change to IAS 8 would be applied prospectively.
  • supported a recommendation from the IFRS Interpretation Committee to amend IFRS 1 to subsidiaries that apply adopt IFRS later than their parent with additional relief for measuring cumulative translation differences; and
  • discussed a summary of feedback on the proposed amendments to IAS 16 in relation to accounting for the proceeds from sales from testing—many respondents disagreed with the proposed amendments, considering them to be ineffective, costly to apply and require significant judgement.

During this session some concerns were raised that the agenda decisions of the IFRS Interpretations Committee are getting longer and are starting to answer specific fact patterns. These Board members were concerned about the risks that this poses to the Interpretations Committee.

The meeting concluded with a continuation of the Board’s discussions on the Business Combinations Under Common Control (BCUCC) project. The Board supported including within the project scope transactions that are preceded by an external acquisition and/or followed by an external sale of one or more of the combining entities and transactions that are conditional on a future sale such as in an IPO. Board members also indicated that one method should be used to account for BCUCCs and no choice should be given.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

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Preparer’s guide to the IFRS Taxonomy

15 Dec 2017

The IFRS Foundation has released 'Using the IFRS Taxonomy—A preparer’s guide' to help companies understand the IFRS Taxonomy content.

The IFRS Foundation points out that the IFRS Taxonomy facilitates the digital creation and consumption of financial information and improves investors’ access to financial information by listing and defining specific codes, or elements, that can be used to tag items of data.

For the years 2017-2021 the IASB has chosen "Better communication" as its central theme, and in addition to the primary financial statements project and the disclosure initiative this also includes the IFRS Taxonomy. This guide is therefore intended to support the use of the IFRS Taxonomy around the world by regulators, companies and other users of financial information.

Please click to access the guide on the IASB website.


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SMEIG issues guidance on IFRS for SMEs Standard

14 Dec 2017

The SME Implementation Group (SMEIG) has issued Q&A guidance on financial guarantee contracts. The guidance aims to support entities during the implementation of the IFRS for SMEs Standard.

Specifically, the guidance discusses how a reporting entity would account for the financial guarantee contract issued to the bank in its separate or individual financial statement.

For more information, see the press release and Q&A on the IASB’s website.

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New Trustees of the IFRS Foundation appointed, Chair Michel Prada continues in his post for the time being

14 Dec 2017

The IFRS Foundation announces that it has appointed seven new Trustees, but that the identification of a successor of the Chair of the Trustees has taken longer than anticipated and therefore Michel Prada has agreed to remain in place until the appointment process is completed.

The following seven new Trustees have been appointed for three-year terms beginning on 1 January 2017:

  • Dame Colette Bowe
  • Larry Leva
  • Michel Madelain
  • Ross McInnes
  • Vinod Rai
  • Lucrezia Reichlin
  • Teresa Ko

In addition, Sheila Fraser’s term as Vice-Chair has been extended until December 2019, and Takafumi Sato replaces Ronald Arculli as the second vice-chair from 1 January 2018, following Mr Arculli’s retirement as a Trustee at the end of 2017.

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

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Video recording of panel discussion with Chairs of IASB, FASB, and AcSB

13 Dec 2017

The Canadian Accounting Standards Board (AcSB) has made available a video recording of a panel discussion at the November 2017 IFRS Conference: Americas featuring Hans Hoogervorst, Russ Golden, and Linda Mezon.

Topics discussed included the global financial reporting landscape, how the world has changed in recent years, the future for US GAAP/IFRS convergence, and how financial accounting fits with a broader reporting framework.

The video recording of the panel discussion (approx. one hour) is available on the AcSB website.

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FRC Lab report notes digital future of corporate reporting

13 Dec 2017

A new report from the Financial Reporting Lab of the UK Financial Reporting Council (FRC) concludes that XBRL (eXtensible Business Reporting Language) is an important technology in the path to digitisation of company reporting.

The Lab considered how XBRL could be used in the production, distribution and consumption of listed company annual reports. The Lab identified gaps between the characteristics that users and preparers desired from digital reporting and the expected implementation of XBRL for listed company reporting. To close these gaps, the report recommends a series of actions for regulators, technology companies, preparers and investors and notes:

We are at a turning point for the use of technology in corporate reporting. The paper-based way of reporting is likely to change with the European requirement to prepare digital financial information by 2020. The changing demands of users, supported by upcoming regulatory changes mean that boards can no longer ignore digitisation of listed company reporting. This report urges all those involved in corporate reporting to help shape the future.

Please click to access the report on the FRC website.

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IASB concludes the 2015-2017 annual improvements cycle

12 Dec 2017

The IASB has issued 'Annual Improvements to IFRS Standards 2015–2017 Cycle'. The pronouncement contains amendments to four International Financial Reporting Standards (IFRSs) as result of the IASB's annual improvements project.

Annual Improvements to IFRS Standards 2015–2017 Cycle makes amendments to the following standards:

IFRS Subject of amendment

IFRS 3 Business Combinations and IFRS 11 Joint Arrangements

The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. 

IAS 12 Income Taxes

The amendments clarify that all income tax consequences of dividends (i.e. distribution of profits) should be recognised in profit or loss, regardless of how the tax arises.

IAS 23 Borrowing Costs The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

The Amendments to IFRS 3 and IFRS 11 were originally included in Exposure Draft ED/2016/1 Definition of a Business and Accounting for Previously Held Interests. However, the Board believed that these amendments meet the criteria for annual improvements and therefore included them in this cycle.

Furthermore, the Exposure Draft ED/2017/1 Annual Improvements to IFRS Standards 2015-2017 Cycle included amendments to IAS 28 regarding long-term interests in an associate or joint venture. Those amendments have been finalised separately as a narrow-scope amendment to IAS 28.

The amendments published today are all effective for annual periods beginning on or after 1 January 2019.

Please click for the following additional information:

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IASB posts webcast on IFRS 17

12 Dec 2017

The IASB has posted a webcast on the transition requirements in IFRS 17 'Insurance Contracts'.

The new webcast is available on the IASB website in two parts - an overview as first part and a deep dive as second. It is part of a series on the implementation of IFRS 17. Earlier webcasts and webinars on IFRS 17 are available through an archive.

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EFRAG TEG appointments and reappointments

11 Dec 2017

The Board of the European Financial Reporting Advisory Group (EFRAG) has announced the appointment of Emmanuelle Guyomard and Jed Wrigley to its Technical Experts Group (TEG).

In addition, EFRAG has reappointed Nicklas Grip as EFRAG TEG Vice-Chairman and reappointed the following members: Ana Cortez, Guenther Gebhardt, Heinz Hense, Soren Kok Olsen, and Andrew Spooner. The EFRAG TEG composition becomes effective on 1 April 2018.

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

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ANC Research Forum - Live broadcast and papers

11 Dec 2017

The Autorité des Normes Comptables (ANC), the French standard setter, will host its 7th Symposium on Accounting Research today. The event will be broadcast live and the policy papers can be downloded from the ANC website.

The papers are the following (for the presentation times please see the programme of the event):

  • Elements for a European conceptual framework (cover note and proposed framework) (available in English)
  • Using proforma to predict future cash-flows: the impact of income statement (available in English and French)
  • The value relevance of IFRS earnings totals and sub-totals and non-GAAP performance measures  (available in English and French (executive summary))
  • L’impact du numérique sur l’information financière: quel enjeu stratégique pour la normalisation comptable international? Le cas du langage XBRL comme «Standard Business Reporting Language» (available in English (executive summary) and French)
  • Quel impact de l’économie numérique sur la comptabilité ? l’enjeu de la reconnaissance des actifs immatériels (available in English and French)

The live broadcast of the event can be accessed here from 9:00 Paris time.

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