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News

WSS (World Standard Setters) (mid blue) Image

Programme for the World Standard-setters meeting in September available

17 May 2019

A programme has been released for the World Standard-setters meeting, which is being held in London on 30 September and 1 October 2019.

A summary of the programme is set out below:

Monday, 30 September 2019 (09:00 - 18:20)

  • Opening remarks
  • Welcome address
  • IASB technical programme update
  • Primary financial statements — Overview of the consultation and how it aligns with discussions at previous World Standard-setters conferences
  • Goodwill and impairment – Q&A on the project proposals
  • Breakout sessions
    • Project overview — Disclosure initiative
    • 2019 Comprehensive review of the IFRS for SMEs
    • Financial instruments — what next?
    • Hot topics: IFRS Interpretation Committee
    • Electronic reporting — Why everyone should care about the IFRS Taxonomy
    • Business combinations under common control
  • Breakout sessions
    • Project overview — Disclosure initiative
    • 2019 Comprehensive review of the IFRS for SMEs
    • Financial Instruments — what next?
    • Hot topics: IFRS Interpretation Committee
    • Electronic reporting — Why everyone should care about the IFRS Taxonomy
    • Islamic finance

Tuesday, 1 October 2018 (09:00 - 13:00)

  • Q&A and breakout sessions
  • Working together
  • Rate-regulated activities — preview of forthcoming consultative document

The WSS meeting will be immediately followed by a meeting of the International Forum of Accounting Standard Setters (IFASS).

IASB document (blue) Image

IASB publishes editorial corrections

16 May 2019

The IASB has published its second batch of editorial corrections in 2019.

The new set of editorial corrections affect the Red Book and the annotated Red Book 2019 as well as the Blue Book and the annotated Blue Book 2019 and regard IAS 1 Presentation of Financial Statements and the IFRS Foundation Due Process Handbook.

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The editorial corrections can be viewed on the editorial corrections page of the IASB's website.

Deloitte document (mid gray) Image

We comment on four IFRS Interpretations Committee tentative agenda decisions

15 May 2019

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 19, IFRS 15, IFRS 16, and cryptocurrencies, as published in the March 2019 IFRIC Update.

More in­for­ma­tion about the issues is set out below:

Issue

Agenda decision supported?

More in­for­ma­tion

IAS 19 — Effect of a potential discount on plan classification

Yes; we agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision, however we do not believe that the tentative agenda decision adequately identifies the principles applicable to an analysis of the fact pattern. In addition, we do not believe that the terms and conditions of the plan as presented in the tentative agenda decision are sufficiently detailed to permit a conclusion on the classification of the plan as a defined contribution plan or defined benefit plan.

o Deloitte comment letter

o Committee dis­cus­sion

IFRS 15 — Costs to fulfil a contract

Yes.

o Deloitte comment letter

o Committee dis­cus­sion

IFRS 16 — Subsurface rights

Yes.

o Deloitte comment letter

o Committee dis­cus­sion

Cryptocurrencies

Yes; we agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision, but believe that the usefulness of the agenda decision could be enhanced by addressing two recurring issues related to cryptocurrencies that are accounted for under IAS 38. We also note that the tentative agenda decision highlights the poor definition of cash provided in IFRS Standards.

o Deloitte comment letter

o Committee dis­cus­sion

Click to access all our comment letters to the IASB, IFRS Foun­da­tion, and IFRS In­ter­pre­ta­tions Committee.

EFRAG document (dk green) Image

EFRAG publishes discussion paper on pension plans with an asset-return promise

15 May 2019

The European Financial Reporting Advisory Group (EFRAG) has published a discussion paper (DP) 'Accounting for Pension Plans With an Asset-Return Promise'. The DP explores alternative accounting treatments for post-retirement employee benefits, promising the higher of the return on an identified item or group of items and a minimum guaranteed return.

The DP considers three alternatives for accounting for pension plans in the scope of the project:

  • capped asset return approach;
  • fair-value based approach;
  • fulfilment value approach.

The DP and a press release are available on the EFRAG website. Comments are due by 15 November 2019.

 

MCCG meeting Image

Summary of the April 2019 MCCG meeting

14 May 2019

The IASB has published a summary of the Management Commentary Consultative Group (MCCG) meeting held on 3 April 2019.

The MCCG discussed the following topics:

  • Overall proposed approach to reporting business model, strategy, operating environment and risks including cross-cutting issues;
  • Business model;
  • Strategy; and
  • Operating environment and risks.

For more information, see the summary on the IASB website.

IASB webcast Image

Webcast on research and the comparability of financial reporting

14 May 2019

The IASB has released a webcast featuring IASB Board member Ann Tarca discussing the results of research into the comparability of companies reporting using IFRSs.

Professor Tarca's 24 minute webcast discusses:

  • Definition and importance of comparability;
  • research evidence in four research areas:
    • Policy choice;
    • Measuring compliance;
    • Comparing numbers derived in accounting systems; and
    • Comparability and market outcomes;
  • Tools the IFRS Foundation uses to promote comparability; and
  • IASB achievements and challenges.

Please click to access the webcast on the IASB website.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG draft comment letter on proposed amendments to the interest rate benchmark reform

13 May 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2019/1 'Interest Rate Benchmark Reform (proposed amendments to IFRS 9 and IAS 39)'.

EFRAG ​welcomes the IASB’s proposals to provide relief on hedge accounting requirements and to split the work in two phases. As stated in the draft comment letter, the ‘EFRAG supports the proposals for providing relief on hedge accounting requirements in these periods until the uncertainty ceases to exist regarding how the reform of IBOR rates will affect the cash flows of the hedged item and of hedging instrument because the details of the replacement of interest rate benchmarks are unknown’. In addition, the EFRAG believes that the second phase related to replacement issues should be addressed as soon as possible.

Comments on EFRAG's draft comment letter are requested by 31 May 2019. For more in­for­ma­tion, see the press release and the draft comment letter on the EFRAG website.

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Paper on the new leasing standard and top ten considerations for investors

13 May 2019

The CFA Institute, a global association of investment professionals, has published 'Leases: What Investors Need to Know About the New Standard'.

Companies' lease obligations are moving front and center onto the balance sheet, as a new leasing standard went into effect for both US GAAP and IFRS companies effective 1 January 2019. Because US GAAP and IFRS have decided on different solutions and transition methods, investors need to carefully consider the impacts of the new standards on the companies in which they invest. The CFA Institute has therfore prepared a guide to help investors understand the change they are about to witness. It provides the top ten considerations for investors as they evaluate the impact of the change to the new standard. As the most significant change and the greatest comparability challenges arise from lessee accounting, the report focuses on lessee accounting.

The top 10 considerations identfied in the report are:

  1. The Basics – Helping investors understand the basics of the new US GAAP and IFRS standards and their differences.
  2. Transition Methods – Explaining the methods and implications of transitioning to the new standards under US GAAP and IFRS – as well as the comparability challenge brought about by the differing methods.
  3. Transition Impact Disclosures – The transition disclosures to expect, some examples to illustrate, and how investors should evaluate the transition impact.
  4. Financial Statement Captions – The implications, and differences, of the new US GAAP and IFRS standard on financial statement captions. Including a quick illustration for those analytically inclined to visualize the effects and differences of the new standard on the income statement.
  5. Non-GAAP Measures – The implications of the different US GAAP and IFRS treatment of leases on the most notable non-GAAP measures. Most importantly, alerting investors to the fact that net income will likely be lower for IFRS companies while measures of operating income such as EBITDA and EBIT will be higher than the past and relative to US GAAP companies.
  6. Cash – Explaining how cash doesn’t change, but the statement of cash flows will change, for IFRS companies.
  7. Ratios – An analysis of the implications, and differences, of the US GAAP and IFRS standard on solvency, liquidity, profitability, earnings per share, return on equity, performance and coverage ratios. The comparability challenges abound and investors need to understand them.
  8. Disclosures – Why disclosures are more important than ever to investors now that the lease liabilities are measured in the financial statements. Considerations for investors as they analyze these new liabilities and value the company.
  9. Industries Impacted – A quantitative analysis of those companies in the S&P 500 expected to be most significantly impacted.Spoiler: retail, transports and some sleepers.
  10. Market Expectations – Consideration of how the market might react to the newly visible leverage.

Please click to access the report on the website of the CFA Institute.

FRC (United Kingdom Financial Reporting Council) Image

FRC guide to help smaller listed companies improve financial reporting

13 May 2019

The UK Financial Reporting Council (FRC) has published 'Smaller Listed and AIM Quoted Companies — A Practical Guide for Audit Committees on Improving Financial Reporting'.

In 2015, the FRC published a discussion paper on the same topic found that ‘whilst the system of financial reporting is not fundamentally flawed, there is a higher incidence of poorer quality annual reports by smaller quoted companies than by their larger counterparts’. Therefore, the FRC has deveopled a guide that offers practical, cost-effective suggestions on how smaller quoted companies can improve the quality of their financial reporting and suggested questions for audit committees to ask themselves and those associated with the financial reporting process that are designed to encourage the smaller quoted companies to reflect on current practices and consider areas for improvement. The guide not only builds on the 2015 discussion paper but also includes more recent developments such as three new international accounting standards, on revenue (IFRS 15), leases (IFRS 16) and financial instruments (IFRS 9), coming into effect in the last three years.

Please click to access the guide on the FRC website.

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Summary of the April 2019 ASAF meeting now available

13 May 2019

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 1 and 2 April 2019.

The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • Accounting treatment of ICOs and tokens in France (1–14): The ANC member provided an overview of the accounting regulation for Initial Coin Offerings and tokens issued by the ANC in December 2018. Aspects considered by the ASAF members were the application of IFRS, holders, prevalence, and legitimisation.
  • Management commentary (15–36): The objective of the session was to receive the ASAF members' input on the staff's proposals. Aspects considered by the ASAF members were the interaction between management commentary and other reports, providing information 'through the eyes of management' and the interplay with users' information needs and with the concept of neutrality, forward-looking information in management commentary, and information about tax in management commentary.
  • IFRS 17 Insurance Contracts (37–46): The objective of the session was to ask ASAF members’ views on the Board’s tentative decisions on possible amendments to IFRS17 Insurance Contracts. Topics discussed by the ASAF members were loans that transfer insurance risk, acquisition cash flows for renewals, profit allocation for some contracts, the risk mitigation option, balance sheet presentation, transition, and the level of aggregation.
  • Onerous Contracts — Cost of Fulfilling a Contract (47–52): ASAF members provided preliminary views on the exposure draft.
  • Accounting Policy Changes (53–58): ASAF members provided views on how to proceed with this project.
  • Provisions (59–68): ASAF members provided views on research to date and future of this project. Topics discussed by the ASAF members were aligning the liability definition with the Conceptual Framework, clarifying which costs to include, clarifying whether the discount rate should reflect the own credit risk, and several other topics.
  • Subsidiaries that are SMEs (69–74): The objective of the session was to obtain ASAF members’ views on the likelihood of a standard that permits a subsidiary of a parent entity that applies IFRSs to apply the recognition and measurement requirements of IFRSs and the disclosures requirements in the IFRS for SMEs, should the Board proceed with the project, being adopted in the ASAF members' jurisdictions.
  • Application of IFRS Practice Statement 2: Making Materiality Judgements to reporting climate related and other emerging risk issues on financial statements (75–81): The AASB presented its December 2018 guidance Climate-related and other emerging risks disclosures: assessing financial statement materiality using AASB Practice Statement 2. The objective of the session was to obtain ASAF members’ advice on whether the guidance is useful and any similar recent developments in ASAF member jurisdictions.
  • Improving the impairment testing model in IAS 36 Impairment of Assets (82–89): A representative of the AASB presented the AASB Research Report 9 Perspectives on IAS 36: A case for standard setting activity. The objective of the session was for the AASB to share the results of their research and seek feedback from other ASAF members.
  • Business Combinations under Common Control (90–94): ASAF members provided views on the accounting approach to business combination under common control between entities that are wholly owned by the controlling party.
  • Targeted standards-level review of disclosures (95–105): The purpose of the session was to seek ASAF members’ views on potential disclosure requirements identified by users of financial statements during outreach relating to IAS 19 Employee Benefits and IFRS 13 Fair Value Measurement.
  • IFRS Foundation – Due Process Handbook Review (106–113): The staff presented what was at the time of the meeting a preview of the amendments that were proposed on 30 April to the Due Process Handbook. The main amendments relate to effects analysis and agenda decisions.

A full summary of the meeting is available on the IASB's website.

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