The agenda for the meeting is summarised below:

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

The survey revealed that a majority of respondents have the perception that mergers and acquisitions under common control may be different from mergers and acquisitions with third parties. However, when asked to evaluate the substance of mergers and acquisitions with third parties and mergers and acquisitions under common control as an equity investor of the acquirer, respondents indicated that some factors are commonly important in both situations. This implies that from the investors' perspective, mergers and acquisitions under common control could have similar or the same substance as mergers and acquisitions with third parties when certain factors are present in the mergers and acquisitions under common control.

Please click to access the presentation for the ASAF meeting on the IASB website.

The educational material contains a summaries of Ind AS 27 and Ind AS 28 discussing the key requirements of the standard sand frequently asked questions covering the issues. Please click for access to the education material on the ICAI website.

The overview of Ind AS offers a roadmap for Ind AS application; carve-outs from IFRS/IAS; changes in financial reporting under Ind AS compared to financial reporting under existing Indian accounting standards; and a summary of all the Ind AS including recent amendments to Ind AS. The publication can be downloaded free of charge from the ICAI website.

The disclosure checklist ist the first ever drawn up for Ind AS. It can be accessed here on the ICIA website.

In addition to giving updates on their respective standard-setting activities at the meeting, the two boards exchanged views on implementation activities regarding the standards on financial instruments, revenue, and leases, technical issues on IFRS 17 and the IASB’s current project on rate-regulated activities. In addition, the AcSB and the OIC discussed two projects of individual interest, specifically, relevance of performance measures and business combinations under common control.

For more information about the meeting, see the press release on the OIC website.

The welcome address by Prof Dieter Truxius, Vice-Chair of the Administrative Board of the ASCG and one of Germany's leading experts in accounting and controlling issues related to German family-owned businesses, already revealed a clear message that would resurface in all speeches and discussions. He noted that the German industry is extremely critical of proposals that might lead to modifying IFRSs during the EU endorsement process or even after they have been endorsed. Prof Truxius pointed at the potential of serious negative consequences for all companies based in the EU and operating internationally:

• European companies could ultimately be threatened with exclusion from the global capital markets.
• Europe's influence on the development of IFRSs could diminish.
• European companies whose shares are listed in different trading venues could face higher costs if they have to prepare their financial statements according to IFRS and EU-IFRS in future.

He concluded: "Such trends lead to disparities in international accounting and prevent cross-border comparability of financial statements. Ladies and gentlemen, we should take a firm stand against this trend."

Dr Katarina Barley, Federal Minister of Justice and Consumer Protection, also picked up on the topic and noted how important it is that internationally operating companies have a common accounting language. Jean-Paul Gauzès, President of the European Financial Reporting Advisory Group Board, pointed at the long and trusted relationship between the German standard-setter and EFRAG, who have been working together for the European public good since 2001.

The keynote speech, which took the event into the direction of the motto of the afternoon, was delivered by Melanie Kreis, Chief Financial Officer, Deutsche Post DHL Group. She spoke on "Financial reporting - caught between the poles of entrepreneurial behaviour and social change" and offered insights into the group's early adoption of IFRS 16, non-financial reporting and carbon accounting, accounting for goodwill and impairment of goodwill, as well as digitalisation. Nevertheless, she also picked up on the EU Fitness Check and noted that not only the family-owned businesses but also the large listed groups in Germany oppose potential carve-ins and carve-outs. Her clear message on all the topics she spoke about was "think things through to the end, think of the effects for the companies that finally have to live with the result".

The two ensuing panel discussions showed an interesting combination of panelists. A Member of Parliament, a CFO, an NGO representative, and an auditor discussed "Changing behaviour by requiring ESG information – Where is the boundary of the financial report?". While it was noted by some that a lot of reporting on ESG issues is boilerplate, it was also stated that there was an increased visibility and awareness of information, not only from the outside but also within companies. Whether reporting requirements could and should be used to change behaviour was contested with views ranging from the role financial markets can play to achieve sustainability to the warning against overtaxing reporting with an inflation of additional requirements. Measurability (and therefore auditability) and materiality were also controversely discussed with the difference of materiality to an entity and materiality to society especially noted.

In the concluding panel, the IASB Chairman, a CAO of a digital company, an ESMA representative, and a professor of accounting discussed "Digital reporting vs. Reporting in a digital world". The opening round of questions alone showed the many facets of the topic with some insights of what is already possible proving to be almost scary. Questions around XBRL dominated the discussion on what is currently being done, which saw comments on comparability in connection with block tagging, detailed tagging, and use of XBRL extensions, although it was mentioned that XBRL might not be more than an interim solution. It was also noted that as a result of increasing digitalisation information overload ceases to be so much of a problem and materiality questions might need to be asked differently. However, it was warned that while more and more information can be processed electronically and, therefore, quicker understanding patterns and drivers has not become easier. It was asked whether and when a point comes where we trust machine judgement more than management judgement and whether at some point of time, reporting and consumption of financial information would become a game of "Watson against Watson". One important aspect in the whole discussion was also the question of what is being reported as companies with digital business models have huge amounts of intangibles they cannot show in their financial statements. Accounting for intangibles was clearly identified as an area where current financial reporting needs to evolve.

An informal exchange of opinions between the many national and international guests, which included representatives of the standard-setters from the US, Canada, Australia, Japan, and Hong Kong, concluded the event.

A German language summary of the event is available on the ASCG website.

This issue features:

• Spotlight — IFRS 16 Leases
• Spotlight — ESMA and IFRS Standards
• In Profile —Selim Gogus, Credit Suisse HOLT
• Project updates
• Information on investor materials and current events

The Investor Update newsletter is available on the IASB’s website.

The eleven minute webcasts focusses on the 'SPPI test', including the amendments made to the IFRS 9 requirements in October 2017.

Please click to access the webcast on the IASB website (available as full webcast or in a slides only version).

As reported earlier, the motion notes the benefits that IFRS 17 will bring about but also states that ECON members have several concerns regarding the standard.

Please click to access the motion for resolution on the European Parliament website.

In his overview of the current state of IFRS adoption, Hoogervorst also referred to the Brexit, the current transatlantic tensions and the rise of protectionism in general. Hoogervorst then transferred his considerations to accounting. He noted:

In 2011, even before the Trump era, it became clear that the United States would not be adopting IFRS Standards anytime soon. Fortunately, the rest of the world reacted just as it does now in the face of the American challenge to the global trade system: rather than following the United States in retreat, the use of IFRS Standards continued to spread around the world.

In this context, he also addressed the situation in the EU and the fitness check on public reporting by companies. He urgently warned against making local modifications to IFRS:

Acting in ‘enlightened self-interest’ means foregoing a smaller self-interest to achieve a bigger self-interest. Even when our stakeholders may not agree with certain aspects of our Standards, they know it is not in their ‘enlightened self-interest’ to modify them. They know this could set in motion a process of gradual balkanisation of the world of IFRS Standards, undoing the benefits of a single set of global standards.

Following his general observations, Mr Hoogervorst provided an update on the developments in IFRS Standards. The topics he covered included primary financial statements, the implementation of IFRS 17, and wider corporate reporting as well as financial instruments with characteristics of equity, where the IASB has recently issued a discussion paper on this research project.

For more information, see the speech transcript on the IASB’s website. A video recording is also available.

Joint IASB–FASB Education Meeting

The topics being discussed were mainly those related to Standards that the IASB and FASB developed together, or are largely converged, as well as new topics that both boards have on their work programmes.

Segment Reporting

The IASB’s and FASB’s Standards on segment reporting (IFRS 8 Segment Reporting and Accounting Standards Codification Topic 280, Segment Reporting) are largely converged. The IASB provided a summary of its post-implementation review of IFRS 8 and explained why it decided not to finalise the amendments to IFRS 8 it had exposed. The FASB outlined the targeted changes related to the segment aggregation process that it is considering making to Topic 280.

Primary Financial Statements and Financial Performance Reporting

Both boards are working on projects related to the primary financial statements. The IASB gave an overview of its Primary Financial Statements project and the FASB updated IASB members on the background and scope of its Financial Performance Reporting. The FASB is focusing on two types of improvements: disaggregation of performance information; and the structure of the performance statement (subtotals).

Disclosure Initiative and the Disclosure Framework

Both boards are working on projects related to improving disclosures in the financial statements. The IASB provided an update on its Disclosure Initiative—in particular the Principles of Disclosure and Targeted Standards-level Review of Disclosures projects. The FASB gave an update on its Disclosure Framework project.

Fair Value

The IASB’s and FASB’s Standards on measuring fair value (IFRS 13 Fair Value Measurement and Accounting Standards Codification Topic 820, Fair Value Measurement) are largely converged.

The FASB has developed amendments to the disclosure requirements for fair value measurements which it plans to finalise, by updating Topic 820, in the third quarter of 2018. The FASB provided an overview of those changes. The IASB set out the role of post-implementation reviews and provide some background on IFRS 13, including differences between Topic 820 and IFRS 13. The staff summarised the main messages received and how the IASB plans to consider the usefulness of disclosures as part of its work on ‘Better Communication in Financial Reporting’.

Goodwill and Impairment

The IASB and FASB requirements for business combinations were developed jointly. The requirements for the initial recognition and measurement of goodwill are therefore largely converged. The IASB and FASB requirements for the allocation of goodwill to cash-generating units and impairment are similar, but there are differences. Both boards have projects looking at goodwill. The boards shared information about those projects.

Implementation

The boards shared information about their respective implementation support activities undertaken regarding revenue recognition and leases.

Update on all projects not otherwise covered

The boards provided updates on their projects that will not otherwise be discussed during the Joint Education Session.

IASB Meeting

Disclosure Initiative

This session has three threads: Better Communication in Financial Reporting; Targeted Standards-level Review of Disclosures—Guidance for the Board; and Materiality.

The staff provided the background to, and current status of, the projects in Better Communication in Financial Reporting (Primary Financial Statements, Principles of Disclosure, Targeted Standards-level Review of Disclosures, Definition of Material, Management Commentary and IFRS Taxonomy). IASB members indicated that they were satisfied with the current interaction and distinction between them.

The staff presented an analysis and recommendations to the Board about the development of ‘Guidance for the Board’ to use when developing and drafting disclosure objectives and requirements. The IASB decided to assign a member of the IFRS Taxonomy team to each of the Board’s active projects in an advisory capacity when developing disclosure objectives and requirements. The IASB also supported using a five-step approach to develop disclosure objectives and requirements. The Board will select the Standards to review at its July 2018 meeting.

The IASB continued to consider the feedback on its proposed amendments to the definition of material, supporting all of the staff recommendations in relation to the effective date, ‘immaterial’ vs. ‘not material’, the materiality practice statement, use of the term ‘material’ and the definition of material of the International Auditing and Assurance Standards Board (IAASB).

Dynamic Risk Management (DRM)

The IASB decided that it will address as part of the first phase of DRM project the derivative financial instruments that may be used as the hedging instruments for DRM and their designation and de-designation. The IASB also supported the staff analysis of what performance means in the context of DRM and the information about DRM activities that should be provided in the statement of profit or loss.   

Research programme

The staff gave a general update on the research programme.

IBOR reform

The IASB decided to start a research project to consider the effects on financial reporting of potential discontinuation of IBORs (interest reference rates such as LIBOR, EURIBOR and TIBOR).

Primary Financial Statements

In developing the proposals for primary financial statements the staff have been focusing on non-financial entities. At this meeting the staff presented its preliminary analysis and observations about whether the tentative decisions made so far could apply, with little or no change, to financial entities. The IASB did not make any decisions.  

Insurance Contracts

The IASB decided to propose, as part of its annual improvements cycle, a series of amendments to IFRS 17 Insurance Contracts. This is to address problems where the drafting of IFRS 17 does not achieve what the Board intended.

Implementation

The staff had recommended that the IASB not finalise the amendments it proposed and exposed to IFRIC 14 IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. However, the Board voted in favour of the staff performing further work. The issue will be brought back at a future meeting.

Islamic Finance Consultative Group Update

The staff provided a summary of the March 2018 meeting of the Islamic Finance Consultative Group.

Business Combinations under Common Control 

The Board asked the staff to drop the Full Fair Value approach but continue to work on the Ceiling and Revised Ceiling approaches. IFRS 3 should be used as a basis and the staff should explore different overlays to providing the most useful information about BCUCC that affect NCI. 

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