The paper states that whilst it is widely acknowledged that transactions with and between members of the same group should not influence the outside appearance of that group and therefore be eliminated, such eliminations do result in a loss of information which is definitely and finally lost for outside users of financial statements. It goes on to note that, furthermore, much of today’s complexity in the environment is not captured in the group’s financial statements although it could highly influence the position, performance and cash flows of the group.

The paper can be accessed on the IASB website.

An agenda for the meeting is not yet available, however, papers are in the process of being posted here.

As reported earlier, a major topic of the meeting was wider corporate reporting and the way forward for the IASB. Please see our detailed summary of that discusssion. (The IASB has just recently added a project to its agenda that seeks to review and update the Management Commentary Practice Statement issued in 2010 to help address the lack of alignment and integration between wider corporate reporting and financial reporting.)

The IFASS members also discussed:

• Cooperation of IFASS participants;
• BCUCC: Mergers & Acquisitions – The premise for separate accounting methods;
• Research on pensions: Hybrid plans; and
• Interpretation issues regaring IAS 24 Related Party Disclosures and IAS 12 Income Taxes.

The next meeting of the IFASS will take place in Mumbai on 12 and 13 April 2018.

Please click for the full report from the meeting.

For banks starting to report under IFRS 9 in 2018, the 2018 EU-wide stress test takes into account the impact of the implementation of IFRS 9 on 1 January 2018 both in terms of starting point and projections.

The stress test exercise will be formally launched in January 2018 and the results to be published by 2 November 2018.

Please click for more information on the EBA website.

Below is an analysis of all changes made to the work plan since our last analysis on 27 October 2017.

Major projects

• A new project Management commentary (Wider corporate reporting) has been added to the IASB's agenda. The aim of the project is to review and update the Management Commentary Practice Statement issued in 2010 to help address the lack of alignment and integration between wider corporate reporting and financial reporting. The next project step will be an exposure draft, however, the Board is still considering the timetable for the publication of the ED.
• Definition of material - feedback on the ED is now expected in February 2018 (was: first quarter of 2018)

Main­te­nance projects

• Improvements arising from the post-implementation review of IFRS 8 — The feedback received on the ED revealed that respondents had mixed views on the proposals, and Board member views were also mixed. It was suggested during the Board's discussions at the November meeting that if the proposals ended up creating more problems, then the Board should consider not finalising them. If it was decided to reject only some of the proposals, the staff should then assess the costs and benefits of proceeding with finalising the remaining proposals. A decision on the project direction is expected in January 2018.

Research projects

• no changes

Other projects

• IFRS Taxonomy update for the annual improvements 2017 — new entry added to work plan. A proposed update is expected in November 2017.

The above is a faithful com­par­i­son of the IASB work plan at 27 October 2017 and at 16 November 2017. For access to the current IASB work plan at any time, please click here.

The Board discussed four topics.

Primary Financial Statements

The Board supported refining the definition of investing income and expenses, providing a list of items that would be included or excluded from the investing category and renaming the investing category as ‘income from investments’. However, the Board did not support Labelling the subtotal above the ‘income from investments’ section as ‘operating profit’. 

There was an extended discussion about where the share of profit or loss from associates and joint ventures should be reported, and whether that should depend on whether the associate or joint venture is ‘integral’ to the reporting entity. No clear view emerged. The planned Discussion Paper will set out the pros and cons of different approaches.

The Board supported recommendations simplifying the composition of finance income/expense, clarifying what constitutes financing activities and using cash and cash equivalents as a proxy for excess cash. 

The Board narrowly agreed with renaming the two categories of OCI which would mean abandoning the use of the term ‘other comprehensive income’.

Wider Corporate Reporting

The Board decided to add a new project to its work programme called Wider Corporate Reporting. The focus of the project will be the Practice Statement issued in 2010 on Management Commentary which the Board will review and update to help address the lack of alignment and integration between wider corporate reporting and financial reporting.

Improvements IFRS 8 Operating Segments

The Board published Exposure Draft Improvements IFRS 8 Operating Segments (Proposed amendments to IFRS 8 and IAS 34) in March 2017. The Board had a preliminary discussion of the feedback received, but did not make any decisions. Respondents had mixed views on the proposals, and Board member views were also mixed. Several Board members cautioned against broadening the scope of the project in the light of the feedback received on the IFRS 8 PIR which indicated that IFRS 8 was generally working well.  The staff will provide recommendations at a future meeting.

Dynamic Risk Management

The Board generally supported developing a cash flow hedge accounting model for accounting for dynamic risk management.  Board members emphasised the need to test the model with stakeholders early in the process and get early feedback on its feasibility before the Board invests more time and resources in developing it.

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

The report examines progress across a sample of developing countries and aims to give select insights into the current status quo of IPSAS adoption, identifying commonalities and emerging issues. Specifically the study considers the adoption of IPSAS focusing on the date of announcement and date of adoption, an overview of progress to date, success factors, and challenges experienced.

The report can be downloaded from the ACCA website.

The agenda for the meeting including a public outreach meeting on the third day is sum­marised below:

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

Finalisation of draft agenda decision

The Committee will consider the public feedback on a request related to IFRS 3 Business Combinations on the acquisition of a group of assets, which the Committee had tentatively decided not to add to its agenda.  The staff are recommending that the Committee finalise this decision.   

Continued discussions

In its September 2017 meeting, the IC tentatively decided to add a project to clarify the meaning of the term ‘unavoidable costs’, which is used in the definition of an onerous contract in IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The staff are recommending that the clarification be by way of an amendment to IAS 37 and that the scope of the project be limited to clarifying the meaning of ‘unavoidable costs’, and not consider broader issues related to identifying or measuring an onerous contract. 

In its September 2017 meeting, the IC asked the Staff to research into the scope of a potential narrow-scope amendment to IFRS 1 First Time Adoption of International Financial Reporting Standards with the aim of reducing compliance costs when a subsidiary becomes a first-time adopter later than its parent. The Staff are recommending the development of an amendment IFRS 1 to allow a subsidiary that applies paragraph IFRS 1.D16(a) to measure cumulative translation differences using the amounts reported by the parent based on the parent’s date of transition to IFRS.

New issues

There are three new issues. Two relate to IFRS 15 Revenue from Contracts with Customers:

• Revenue recognition in a real estate contract that includes the transfer of land
• Right to payment for performance completed to date

The third relates to IAS 1 Presentation of Financial Statements and IFRS 9 Financial Instruments:

• Presentation of interest revenue for particular financial instruments

For all three issues the staff are recommending that the Interpretations Committee not add the issue to its agenda. 

Future items

The Staff are analysing requests received on whether a dual currency bond meets the solely payments of principal and interest condition in IFRS 9; whether an instrument for which the notional amount varies depending on the outcome of a transaction can be a hedging instrument applying IFRS 9; and how the initial recognition exemption in paragraphs 15 and 24 of IAS 12 applies to the recognition of right-of-use assets and lease liabilities arising under IFRS 16.

Further in­for­ma­tion

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

The amendments address the concerns about how IFRS 9 Financial Instruments classifies particular prepayable financial assets. They become effective for annual periods beginning on or after 1 January 2019, with earlier application permitted.

In order to allow European preparers enough time to implement the amendments before their effective date and possibly together with IFRS 9 (which has an effective date of 1 January 2018), the EFRAG moved uncommonly fast in order to allow sufficient time for feedback on the draft endorsement advice, the final EFRAG endorsement advice now published, the ARC vote (expected in 2018), and final endorsement (aimed for in 2018).

The endorsement advice can be found here and a corresponding press release here (both links to the EFRAG website). Please click here for an updated EFRAG status report.

On better communication Mr Hoogervorst offered no new insights but confirmed that the IASB feels that it now have a good suite of standards that cover the vast majority of transactions and would, therefore, prioritise better presentation and formatting of the information in the financial statements in the coming years. Similarly, on support of implementation and application he mainly stressed the importance of the work of the IFRS Interpretations Committee but offered no detailed insights.

Turning then to wider corporate reporting, Mr Hoogervorst stated that the IASB is often asked questions about its role this space and that some constituents would like the IASB to play a more central role in trying to create more uniformity in the multitude of sustainability standards. He admitted:

[T]he IASB knows that financial reporting in the narrow sense has its limitations. There are many elements of value creation which are important to the investor but which are not adequately captured in the financial statements. Investors need to understand a company’s business model and its strategy for long-term value creation. They need to understand the intangibles that are vital to their business model. And, yes, sustainability issues can also be important for long-term value creation in certain industries, just think of mining and car manufacturing.

And yet he also stated:

Let me be clear; we do not plan to get into environmental and sustainability reporting. That is not our area of expertise. There are many other players. Our remit is, and will remain, financial reporting—with focus on the participants in the capital markets. That is investors and potential creditors.

In conclusion, Mr Hoogervorst offered that there has been a lot of development in this area since 2010 when the IASB published its Management Commentary Practice Statement and the therefore, the IASB "is considering" whether to update the practice statement to capture the developments. (This topic is indeed on the IASB's agenda for its meeting next week - see our summary of the agenda paper).

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