Following some general information about the backbround of the SEC and developments at the Office of the Chief Accountant (OCA), Mr Bricker turns to the activities of the OCA that include overseeing the Financial Accounting Standards Board (FASB) and supporting the implementation of the new GAAP standards. In the context of the latter, Mr Bricker especially discusses revenue recognition, leases, and current expected credit losses.

About two thirds into the statement, Mr Bricker also comments on SEC contributions to international accounting, audit, and disclosure work. He especially notes the OCA efforts to promote high-quality IFRSs as he stresses that: 

Reduced differences between U.S. GAAP and IFRS make the preparation and use of financial statements considerably more effective and may lead to higher-quality financial reporting by U.S. registrants. Accordingly, we will continue to encourage the FASB and the IASB to work together to keep converged standards converged, to reduce differences in standards where they continue to exist, and to continually look for opportunities to improve standards in producing decision-useful information for investors. [...] Although U.S. GAAP continues to serve well the interests of investors and other stakeholders and will for the foreseeable future, it does not diminish the need – in the United States and abroad – to continue strongly supporting high quality international standards. [...] Building upon the quality of IFRS is of central importance to U.S. investors and companies as business transactions and investor needs continue to evolve globally. 

Concluding his discussion of international OCA activities, Mr Bricker mentions the SEC efforts to help implementing new IFRSs. He mentions the SEC's consultation process and notes that throughout the year, the OCA consulted on many matters involving the application of U.S. GAAP and IFRS. However, Mr Bricker stresses that the OCA continues to note that the level of consultation activity from foreign private issuers that file with the SEC using IFRS or U.S. GAAP is low compared to what is sees from U.S. domestic companies and encourages foreign private issuers to seek staff views on technical accounting positions, whether involving IFRS or U.S. GAAP.

Mr Bricker's statement offers an appendix with a list of published speeches and statements given by OCA staff members during 2018, which also include other staff speeches at the 2018 AICPA Conference on Current SEC and PCAOB Developments also discussing revenue recognition, leases, current expected credit losses, and LIBOR developments. All speeches can be accessed here.

Tuesday 11 December

On Tuesday afternoon the IASB has an education session for IFRS 17 Insurance Contracts, ahead of the decision-making session on Thursday.

Wednesday 12 December

The Board will consider a recommendation to updating a reference to the Conceptual Framework in IFRS 3.

In the project on Dynamic Risk Management the staff recommend that that an entity can apply the DRM accounting model if two criteria are met. There must be an economic relationship between the target profile, the asset profile and the derivatives designated within the DRM model and any designation must not reflect an imbalance that would create misalignment that could result in an accounting outcome inconsistent with the purpose of the DRM accounting model.

For Business Combinations under Common Control, the Board is developing an approach based on the acquisition method set out in IFRS 3 Business Combinations that would be required for transactions that affect non-controlling interests. The staff think that this should be limited to entities with equity instruments that are traded in a public market and are recommending that the Board explore this approach.

For the Primary Financial Statements project, the staff are recommending that the Board prohibit the use of columns to present information about MPMs in the statement(s) of financial performance. They are also recommending that the Board describe, rather than define, EBITDA and add it to the list of measures that are not considered to be MPMs, and update its decision on EBIT, clarifying that using the EBIT label for performance measures included in the financial statements is potentially misleading.

The staff is recommending that the Board to move the IBOR project to its standard-setting programme and focus on issues affecting financial reporting leading up to IBOR reform and when the reform is enacted.

The staff will also give updates on the projects on Provisions and Pensions Benefits that Depend on Asset Returns as well as the Research Programme.

Thursday 13 December

At the October 2018 meeting, the Board discussed concerns and implementation challenges raised by stakeholders about the requirements in IFRS 17 Insurance Contracts. At this meeting the Board will consider 12 of those issues. The staff are recommending that the Board amend IFRS 17 for presentation of insurance contracts on the statement of financial position but not to make amendments for the other issues. The remaining nine topics will be considered at a future meeting.

In the Disclosure Initiative the staff recommend that the Board amend paragraphs 117-124 of IAS 1 to require entities to disclose their material accounting policies rather than their significant accounting policies. This amendment would be issued together with the guidance and examples being developed for inclusion in the Materiality Practice Statement.

In the Rate-regulated Activities project the Board will consider staff recommendations relating to the discount rate to be used when measuring regulatory timing differences.

More information

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

The proposed changes aim to improve the quality of tagged data and to make the IFRS Taxonomy easier to use by

• introducing implementation notes that explain how to use specific IFRS Taxonomy elements and avoid tagging errors;
• introducing the duration element type for reporting information about a period of time to achieve more consistent tagging; and
• removing entry points without documentation labels to make it easier to access the IFRS Taxonomy.

For more information, see the press release and proposed update on the IASB’s website. Comments are requested by 4 February 2019.

As reported earlier, the meeting saw a lively discussion on the European Commission (EC) consultation document 'Fitness Check on the EU Framework for Public Reporting by Companies'.

The IFASS members also discussed:

• BCUCC: Hong Kong's and Italy's experience with the predecessor method
• Hybrid Pension Plans
• Accounting for stamp duty and other costs relating to PPE acquired in business combination
• Public sector accounting / IPSASB update
• Drawing a conceptual line between accounting policies and accounting estimates
• Meeting of the NFP working group
• IFRS 17 Implementation
• Administrative matters
• Extractive industries
• New IFRS Standards: Improvements and outcomes
• IASB DP on financial instruments with characteristics of equity
• Management commentary: The FRCs approach
• Towards a framework for reporting performance measures

The next meeting of the IFASS will take place in Argentina in March 2019.

Please click for the full report from the meeting.

The topics discussed at the meeting included:

• Primary financial statements:
  
  • Defined subtotals in the statement(s) of financial performance;
  • Management performance measures; and
  • Disaggregation.
• Financial instruments with characteristics of equity (FICE):
  
  • Additional disclosures, including priority of issued financial liabilities and equity instruments on liquidation, the maximum potential dilution of ordinary shares, and terms and conditions that affect the timing and amount of cash flows of the financial instruments issued by the entity;
  • Expanded statement of changes in equity, which will show how total comprehensive income of an entity is attributed between different classes of equity instruments; and
  • Presentation in other comprehensive income (OCI) of income and expenses from particular types of financial liabilities i.e. those that have the amount feature that is not independent of the entity’s available economic resources.
• Management commentary:
  • Objective of management commentary;
  • Applying materiality in preparing management commentary; and
  • Principles for preparing management commentary.
• Goodwill and impairment:
  • Additional disclosures at acquisition date;
  • Why do users need information on the subsequent performance of the acquired business?; and
  • Additional disclosures about subsequent performance.

The next CMAC meeting will take place on 21 March 2019.

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

Please see the press release on the IVSC website for membership of the new Board.

The Climate Disclosure Standards Board (CDSB) and the Carbon Disclosure Project (CDP) have jointly conducted a review of corporate disclosure of climate change and environmental information across Europe. Their report First Steps: Corporate climate & environmental disclosure under the EU Non-Financial Reporting Directive provides evidence of reporting practices of 80 companies, indicates what information companies are currently disclosing and whether companies are implementing the recommendations of the G20 Task Force on Climate-related Financial Disclosures (TCFD). The press release on the CDSB website offers a short summary and access to the full report.

CDP has published a call by European investors urging EU policymakers to upgrade corporate reporting rules. The signatory investors call on EU policymakers to: (i) align corporate reporting with the recommendations of the TCFD to mitigate financial risk; (ii) create a level playing field across the EU by implementing consistent corporate reporting requirements like those of financial reporting; (iii) standardise sector-specific reporting metrics that increase comparability and consistency and enable tracking progress against public policy targets and clearly defined time horizons; and (iv) address the shortcomings of the European corporate reporting legislative framework by stressing policy coherence between investor duties and corporate reporting. Please click to access the statement here.

Principles for Responsible Investing (PRI) and the International Corporate Governance Network (ICGN) have launched a discussion paper on corporate ESG reporting arguing that despite growing consensus that the integration of relevant ESG factors into company value creation models and corporate reporting is important, listed companies and organisations providing reporting standards have yet to coalesce on an approach to the treatment and inclusion of ESG factors in company disclosure and reporting. The press release on the PRI website offers a short summary and access to the full discussion paper.

The United Nations Environment Programme Finance Initiative (UNEP FI) has announced a partnership with 16 of the world’s largest insurers to develop a new generation of risk assessment tools designed to enable the insurance industry to better understand the impacts of climate change on their business. The pilot group will develop analytical tools that they will use to pioneer insurance industry climate risk disclosures that are in line with the recommendations of the TCFD. Please click for more information on the UNEP FI website.

The Global Reporting Initiative (GRI) announces that its free digital reporting tool has been upgraded to make navigation easier and keeping progress more visual. Please click for more information on the GRI website.

GRI also announces that the GRI Standards are now also available in Arabic. More information can be found here.

The Saïd Business School, University of Oxford, offers a debate on "Should FASB and IASB be responsible for setting standards for nonfinancial information?" at the Oxford Union on 11 December 2018. A Green Paper focussing on the arguments for and against the FASB and the IASB setting standards for nonfinancial information has been released in preparation for the debate and can be downloaded here.

The KASB argues that financial statements currently consist of an overly simplified body and an extensive volume of notes that disclose a list of disorderly information necessary in decision-making. As the KASB believes that this inevitably leads to the on-going criticism that users of the financial statements cannot effectively utilise the information which are useful in making decisions, the KASB sought to find ways to better understand the current status of note disclosure preparation in entities and analyse usefulness of disclosed information in the notes through in-depth interviews with financial statement users. The research report The Usefulness of Note Disclosures: Examination and Suggestions for Improvement was issued in the hope of sharing the outcome of the research conducted with a wider range of stakeholders in Korea and overseas.

The research report can be accessed throuh the press release on the KASB website.

Of the list with 25 potential issues around IFRS 17 that were first discussed in October 2018, the staff has grouped 13 into six agenda papers for the meeting. The papers are (all links to the IASB website):

• AP2A: Presentation of insurance contracts on the statement of financial position
• AP2B: Discount rates, risk adjustment and OCI option
• AP2C: Variable fee approach
• AP2D: Business combinations
• AP2E: Future cash flows in the measurement of reinsurance contracts held
• AP2F: The treatment of accounting estimates in interim financial statements

The Staff recommends to amend the requirements in IFRS 17 for the presentation of insurance contracts on the statement of financial position as discussed in AP2A, but not to amend the requirements in IFRS 17 for the other topics discussed in AP2A–2F. 

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.