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Agenda for the October 2019 DPOC meeting

09 Oct 2019

The Trustees of the IFRS Foundation will be meeting in New York from 15 to 17 October 2019. However, only the meeting of the Due Process Oversight Committee (DPOC) on 15 October will be held in public.

The agenda for the DPOC meeting is summarised below.

Tuesday, 15 October 2019 (10:45–12:20)

  • Introduction and actions from the DPOC meeting held on 25 June 2019
  • Technical activities: Key issues and update
  • Consultative Groups — annual review and DPOC engagement
  • Reporting Protocol — annual general report
  • Education material — review of due process
  • Review of the Due Process Handbook
    • Overview and finalising the amendments
    • Summary and analysis of feedback
    • Overview of comments received on agenda decisions
    • Overview and analysis of other comments received
  • Correspondence
  • Summary

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

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IASB issues podcast on latest Board developments (September 2019)

07 Oct 2019

The IASB has released a podcast, featuring IASB Chair Hans Hoogervorst and Vice-Chair Sue Lloyd as well as communications team member Kasia Gilewska, to discuss the deliberations at the September 2019 IASB meeting and other developments.

The podcast features dis­cus­sions of the following topics in more detail (length of the podcast: 18 minutes):

  • World Standard-Setters Conference.
  • IFRS Advisory Council.
  • Financial in­stru­ments with char­ac­ter­is­tics of equity.
  • IBOR reform and its effects on financial reporting.
  • Business com­bi­na­tions under common control.
  • Agenda consultation.

The podcast can be accessed through the press release on the IASB website. More in­for­ma­tion on the topics discussed is available through our com­pre­hen­sive notes taken by Deloitte observers at the September IASB meeting.

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EFRAG draft comment letter on proposed amendments to IAS 1 and the Materiality Practice Statement

04 Oct 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2019/6 'Disclosure of Accounting Policies (Proposed amendments to IAS 1 and IFRS Practice Statement 2)'.

The proposed amendments are intended to help preparers in deciding which accounting policies to disclose in their financial statements.

EFRAG supports the proposal to replace the undefined reference to 'significance' with the defined concept of 'materiality'. EFRAG believes that this, with other Disclosure Initiative projects, may help entities to identify and disclose accounting policies that provide material information to users and the connection to the application of materiality to other information. However, EFRAG notes the possible inconsistencies of the proposed guidance with the existing disclosure requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors regarding accounting policies choices and changes.

Comments on EFRAG's draft comment letter are requested by 22 November 2019. For more information, see the press release and the draft comment letter on the EFRAG's website.

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Sixth IASB Research Forum — papers available

03 Oct 2019

The International Accounting Standards Board (IASB) in conjunction wit the Journal of International Accounting Research (JIAR) will host its sixth research forum on 28–29 October 2019 in Short Hills, New Jersey. The papers to be presented and discussed are now available on the IASB website.

The forum will see the pre­sen­ta­tion of four academic papers, followed either by a response of an academic and an IASB/NNS rep­re­sen­ta­tive or by a panel dis­cus­sion. In both cases, the audience will be invited to par­tic­i­pate in the dis­cus­sion. The papers are the following (all links to the IASB website):

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Report on the September 2019 IFRS Advisory Council meeting

03 Oct 2019

A summary report has been released of the meeting of the IFRS Advisory Council held in London on 18–19 September 2019.

The participants discussed:

  • Effect of technology on the investment process — Council members advised on the impact technology have on the need for IFRSs and the IFRS Taxonomy in the future and whether market forces are supplanting benefits of an IFRS Taxonomy.
  • Consistent adoption and application of IFRSs — Council members considered to what extent the IFRS Foundation should refresh its approach to monitoring consistent adoption and application.
  • Effective risk management — Council members generally agreed with the risks that had been identified by the Foundation. However, there was a suggestion that risks around financing should be considered for inclusion.
  • Update on Trustees and Foundation activities and Update on the Board’s activities — Council members received updates on recent trustee activities and on recent activities of the Board and the IFRS Foundation.
  • Digital experience for customers and stakeholders — Council members considered how the Foundation’s digital experience should evolve, what developments should be prioritised over the next three years and who the Foundation learn can from.
  • 2020 Agenda Consultation — Proposed approach — The majority of council members supported the proposal to include a shortlist of potential projects and some form of preliminary Board thoughts on the topics, rather than the Board’s full preliminary views of which potential projects from the shortlist it proposes to add to its work plan.

The full meeting summary is available on the IASB's website. There are also recordings of the individual sessions.

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Paper on climate-related risk and financial statements

03 Oct 2019

The Australian Accounting Standards Board (AASB) has announced the availability of a paper 'Climate-related Risk and Financial Statements: Implications for Regulators, Preparers, Auditors and Users'.

The AASB recently published published the bulletin Climate-related and other emerging risks disclosures: assessing financial statement materiality using AASB Practice Statement 2, with AASB Practice Statement 2 being essentially the same as the IASB Practice Statement on Materiality. The paper now released provides an outline of the guidance in the practice statement and motivation behind the issuance of the bulletin on climate‐related risk disclosures, key takeaways and recommendations, and the AASB's suggestions on the type of evidence that would be useful for standard-setters.

Climate-related Risk and Financial Statements: Implications for Regulators, Preparers, Auditors and Users was published in the Australian Accounting Review and can be accessed free of charge in the Wiley Online Library.

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Second podcast in new IASB series

03 Oct 2019

In July 2019, the IASB launched a new series of quarterly podcasts on the work of the IASB and IFRS Interpretations Committee.

The second podcast (23 minutes) focuses on IFRS Interpretations Committee activities and developments between June and September 2019. Among the topics covered are two finalised agenda decisions to do with hedge accounting and disclosures of financial liabilities, and five tentative agenda decisions relating to IFRS 15, IFRS 16, IAS 21, IAS 29 and hyperinflation.

Please click to access the podcast through the press release on the IASB website.

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UK endorsement of IFRSs post EU-exit

01 Oct 2019

At the meeting of the International Forum of Accounting Standard Setters (IFASS) currently held in London, participants received a presentation by representatives of the UK Department for Business, Energy & Industrial Strategy (BEIS) on 'UK audit reforms; and UK endorsement of IFRSs post EU-exit'.

The main messages on the IFRS-related aspects of the presentation were the following:

  • It is in the UK's own interest to stay with IFRSs.
  • After Brexit, IFRSs in the UK will be known as "UK-adopted international accounting standards".
  • There is legislation already in place that will
    • onshore and freeze existing EU-adopted IFRSs on the date of the EU exit;
    • transfer the European Commission's powers to endorse and adopt IFRSs to the Secretary of State; and
    • set out a mechanism for these powers to be sub-delegated to an endorsement and adoption board (currently expected to occur in the new year).
  • The new endorsement board will
    • be hosted by the UK Financial Reporting Council (FRC) but will be sufficiently independent;
    • consist of a full-time Chair, part-time Board members and 12-15 staff; and
    • will also be responsible for upward influence of the pronouncements to be endorsed (for example, submitting comment letters to the IASB).
  • The FRC, the current standard-setter,
    • will eventually be replaced by a new body, the Audit, Reporting and Governance Authority (ARGA);
    • has just recently been given a new leadership;
    • will continue to be responsible for UK GAAP; and
    • will continue to be responsible for the strategic report and, therefore, application guidance on non-financial reporting requirements.

The legislation that is already in place includes the Statutory Instrument (SI) 2019/685, which comes into effect on the day of EU exit, transfers the endorsement powers of the European Commission to the Secretary of State for BEIS. Regulation 7 sets out the endorsement criteria, which are almost identical to the criteria in the IAS Regulation. The SI can be downloaded here. Please note that only article 2 of the IAS Regulation was transferred into UK law unchanged - the definition of IFRSs. All other aspects saw slight adaptations, for example the reference to the European public good.

The SI also has an explanatory memorandum, which is available here.

All legislation refers to the "date of the UK withdrawal from the EU". There is no fixed date mentioned.

Following questions from the audience, two aspects were clarified:

  • The UK withdrawal act limited the UK options for endorsement to what is currently EU law. Therefore, there is the option for "carve-outs" but there is no option for "carve-ins".
  • Endorsement of the recently issued IBOR amendments is on the radar of the BEIS. Endorsement of the amendments will in all likelihood be handled by the Secretary of State and will be swift.
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Updated IASB work plan — Analysis

01 Oct 2019

Following the IASB's September 2019 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments since the work plan was last revised in July.

Below is an analysis of all changes that were made to the work plan since our last analysis on 3 September 2019.

Standard-setting projects

  • No changes

Maintenance projects

  • Annual improvements — 2018-2020 cycle — discussions on feedback received on the exposure draft is expected to occur in November 2019 (previously fourth quarter of 2019); projects that are part of the overall project are:
    • Fees in the ‘10 per cent’ Test for derecognition of financial liabilities (Amendments to IFRS 9)
    • Lease incentives (Amendment to illustrative example 13 accompanying IFRS 16)
    • Subsidiary as a first-time adopter (Amendments to IFRS 1)
    • Taxation in fair value measurements (Amendments to IAS 41)
  • Classification of liabilities as current or non-current (Amendments to IAS 1) — final amendments are now expected in the first quarter of 2020 (previously fourth quarter of 2019)
  • IBOR reform and its effects on financial reporting (Phase 1) — final amendments were published on 26 September 2019; the project has therefore been removed from the work plan
  • Onerous contracts — Cost of fulfilling a contract (Amendments to IAS 37) — the IASB decided on the future project direction and decided to proceed with final amendments (no date given)

Research projects

  • SME Implementation Group draft Q&A — project has disappeared from the work plan
  • Extractive activities — the review of research is now expected in the first half of 2020 (previously fourth quarter of 2019)
  • Goodwill and impairment — a discussion paper is now expected in the first quarter of 2020 (previously fourth quarter of 2019)

Other projects

  • 2020 Agenda Consultation — newly added to the work plan, a request for information is expected in the first half of 2020
  • IFRS Taxonomy Update — Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) — newly added to the work plan, a proposed IFRS Taxonomy Update is expected in October 2019

The above is a faithful comparison of the IASB work plan at 3 September 2019 and at 1 October 2019. For access to the current IASB work plan at any time, please click here.

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Chairman of the Trustees believes IASB needs to be prepared for sustainability

01 Oct 2019

The Chairman of the IFRS Foundation Trustees, Erkki Liikanen, spoke at the WSS meeting about his impressions after one year as Chairman and about three issues he believes the IFRS Foundation must look out for: its gains, consistent application, and sustainability.

Mr Liikanen began his speech by describing the three tasks the IFRS Foundation has (governance, responsibility for strategy, oversight) and noted that the Foundation is there to “ defend the independence of the IASB”. He called the history of the IASB a short but successful one with IFRS having become the de facto global language of financial reporting.

With that Mr. Liikanen turned to the three issues that he sees as the future task of the IFRS Foundation. Firstly, he said, the Foundation must protect its gains in times of  geopolitical tensions, increasing protectionism, and globalisation. He cautioned that “the IFRS Foundation is not immune against pressure”. He also noted that the Foundation cannot sit back and live on its successes but must work to make sure that IFRSs continue to be the global standard in uncertain times in order to continue to maintain the full confidence of the investors. In this context he described the IFRS Foundation as the “custodian of the IFRS product”.

Mr Liikanen then turned to the question of consistent application. He especially noted that in this area the IASB and the national standard-setters need to work together. While, as he said, the IASB can operate alone, it needs everybody else for support. And, as he said earlier, the national standard-setters really impressed him by the level of engagement and level of expertise. So, Mr. Liikanen concluded, for consistent application and the success of IFRS the Foundation always needs to keep an open ear and ask: “What can we do more?”

Mr. Liikanen concluded his speech by turning to the subject of sustainability, an issue investors increasingly ask for. They want pure financials “and more”, which would translate into the usual numbers plus environmental impact and long-term impact. So what would be the role of the IFRS Foundation in this? He noted that it is very difficult to follow the different systems. He said he had come across “many great products with great acronyms”. However, this means that information is not always comparable, while investors ask for comparability and tools to work with. And, he noted, some time in the future investors might come to the IFRS Foundation and ask for that there. Therefore, he concluded, the IASB is currently not moving into the foreground of sustainability reporting, but, when asked, “we must be prepared”.

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