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News

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Agenda and pre-meeting summaries available for the November 2018 IFRS Interpretations Committee meeting

23 Nov 2018

The IFRS Interpretations Committee will meet in London on 27 November 2018 to discuss seven issues, including five new interpretation requests.

Continuing discussions

The Committee will continue the discussions it had in September on whether, some, cloud computing arrangements create an intangible asset. The staff recommend that the Committee not take the matter onto its Agenda and issue a tentative Agenda Decision to that effect.

In September, the Committee finalised an Agenda Decision IAS 21 The Effects of Changes in Foreign Exchange Rates—foreign exchange restrictions. At this meeting the Committee is being asked for its feedback on a proposal by the staff to amend IAS 21 to provide additional guidance on estimating an exchange rate.

New issues

IFRS 11 Joint Arrangements—Output received by a joint operator. How should a joint operator account for output arising from a joint operation when the output it receives in a reporting period is different from the output to which it is entitled?

IFRS 9 Financial Instruments—Physical settlement of contracts to buy or sell a non-financial item. When an entity contracts to buy or sell a non-financial item in the future at a fixed price, is it appropriate at the time of physical settlement for an entity to (a) reverse the accumulated gain or loss previously recognised in profit or loss on the derivative, and (b) recognise a corresponding adjustment to either revenue (in the case of a sale contract) or inventory (in the case of a purchase contract)?

IAS 23 Borrowing Costs—Revenue recognised over time. Should borrowing costs be capitalised when the borrowings relate to the construction of a residential multi-unit real estate development for which revenue is recognised over time?

IFRS 9 Financial Instruments—Credit enhancement in ECL measurement. Can the cash flows expected from a financial guarantee contract or any other credit enhancement that is integral to the contractual terms of a loan be included in the measurement of ECL if the credit enhancement would otherwise be required to be separately recognised (for example the lender obtained a guarantee from a guarantor)?

IFRS 9 Financial Instruments—Presentation of contractual interest. How should unrecognised interest be presented when a credit-impaired (stage 3) financial asset is subsequently paid in full or is no longer credit-impaired?

The staff recommend that the Committee not take any of these issues onto its agenda and have drafted tentative Agenda Decisions to that effect.

Other work in progress

The staff are analysing a request in relation to subsurface rights.

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.

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AcSB publishes first research paper on rate-regulated activities

22 Nov 2018

The Canadian Accounting Standards Board (AcSB) has published a research paper that explores the decision-usefulness of financial information that reflects the economics of rate-regulated activities by assessing data taken from the practical experiences of users of the financial statements of entities with such activities.

The data presented in the paper is intended to assist an understanding of the following:

  1. The presence of rate-regulated entities in the capital markets in Canada and other jurisdictions;
  2. The regulatory framework that governs the relationship between the rate regulator and the rateregulated entity;
  3. The similarities and differences in the design of regulatory frameworks across jurisdictions;
  4. The degree to which the regulatory framework can influence the enforceability, and value, of an entity’s rights and obligations arising from the performance of rate-regulated activities; and
  5. The information that users such as debt and equity analysts, and credit rating agencies, consider when making investing and lending decisions.

The AcSB notes that the research paper contributes to the work of the IASB and national standard-setters as the observations drawn from the data gathered are relevant and of value to the consideration of accounting for rate-regulated activities under IFRSs.

Please click to access a short overview and the full research paper through the press release on the AcSB website.

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Full programme for the 8th ANC Symposium on Accounting Research

22 Nov 2018

As already pointed out, the Autorité des Normes Comptables (ANC), the French standard setter, will host its 8th Symposium on Accounting Research on 10 December 2018 in Paris. The full programme for the event, which takes place under the general theme "Accounting and and extra-financial information", is now available.

Monday 10 December 2018, 9:00 - 18:00

  • Opening remarks
  • Accounting and extra-financial information: an overview of the current status and practices
  • Benefits... and challenges of a sustainable company: discussion around ESG reporting
  • Perspectives... and what is at stake for a global high-performing company: taking into account intangibles
  • Moving towards a comprehensive company report? For whom, which objectives, by whom...
  • Final roundtable: European public interest and company reporting
  • Closing remarks

The topics will be addressed in various forms: presentations of academic papers, overview of the academic research, testimonials, addresses by key speakers, and roundtables.

Details on the presenters, roundtable participants and speakers are available in the programme on the ANC website.

Deloitte document (mid gray) Image

We comment on six IFRS Interpretations Committee tentative agenda decisions

22 Nov 2018

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 27, IAS 37, IFRS 9, IFRS 11, and IFRS 15, as published in the September 2018 IFRIC Update.

More information about the issues is set out below:

Issue

Agenda decision supported?

More information

IAS 27 — Investment in a subsidiary accounted for at cost — partial disposal

Yes; although we do not find the analogies to IAS 28 Investments in Associates and Joint Ventures and to the investment entity requirements of IAS 27 persuasive in terms of the recognition of any difference between cost and fair value when IFRS 9 Financial Instruments is first applied

IAS 27 — Investment in a subsidiary accounted for at cost — step acquisition

Yes

IAS 37 — Payments relating to taxes other than income tax

Yes

IFRS 9 — Application of the highly probable requirement in a cash flow hedge relationship

Yes

IFRS 11 — Liabilities in relation to a joint operator’s interest in a joint operation

Yes; however, we believe additional clarity could be added by specifying that (a) in the circumstances described in the tentative agenda decision, the lead operator has primary responsibility for the lease liability; and (b) the Committee did not opine on the accounting for any contractual arrangements which may exist between joint operators in respect of a leased asset.

IFRS 15 — Assessment of promised goods or services

Yes 

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

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IASB issues podcast on latest Board developments

21 Nov 2018

The IASB has released a podcast featuring Vice-Chair Sue Lloyd, Board member Darrel Scott, and education director Matt Tilling to discuss the deliberations at the November 2018 IASB meeting.

The podcast features discussions of the following topics in more detail (length of the podcast: 15 minutes):

  • IFRS 17 Insurance contracts
  • Primary financial statements
  • Management commentary
  • Classification of liabilities as current or non -current
  • Rate-regulated activities
  • Implementation issues the IFRS Interpretations Committee is considering
  • Cryptocurrencies

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 November IASB meeting.

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November 2018 IASB meeting notes posted

21 Nov 2018

The IASB met on 14 and 15 November 2018 to discuss seven topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board decided to propose an amendment to defer the effective date of IFRS 17 Insurance Contracts (and the related temporary exemption to IFRS 9 Financial Instruments) by a year.  

In the Primary Financial Statements discussion the Board decided that EBITDA not be a required sub-total but that more research was necessary before it could decide whether, or how, to define it as “operating profit before depreciation and amortisation.”  The Board also decided to develop non-mandatory illustrative examples to accompany a revised IAS 1 Presentation of Financial Statements, remove the requirement in IAS 1:82(b) to present “finance costs” in the statement(s) of financial performance and clarify how the minimum line items are presented.

The Board discussed three implementation issues. The Board decided to proceed with the amendments to IAS 16 Property, Plant and Equipment, with some modifications, rather than support the staff recommendation that the proceeds continue to be deducted from the cost of the asset. The Board decided not to start a project on accounting for cryptocurrencies or ICOs, but they will continue to monitor developments in these areas. The Chairman used his casting vote to ask the IFRS Interpretations Committee to consider issuing an Agenda Decision on the accounting for cryptocurrency holdings. The Board decided that the Exposure Draft proposing amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets in relation to costs of fulfilling a contract also propose that early application be permitted.

The staff explained how they expect to manage the Management Commentary project using three work streams. The Board discussed the recommended objective of management commentary.

The Board decided to make some small changes to the proposed amendments to IAS 1 in relation to Classification of Liabilities as Current or Non-current.

The Board decided to update a reference to the Conceptual Framework in IFRS 3 Business Combinations

The proposed model for Rate-regulated Activities supplements the information provided by applying current IFRS Standards. The Board discussed how the proposed model interacts with those other Standards. The Board also supported the recommendations about what information should be presented about rate-regulated activities, except for one related to OCI.

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

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IFRS Advisory Council membership update

21 Nov 2018

The Trustees of the IFRS Foundation have announced appointments and re-appointments to the IFRS Advisory Council effective 1 January 2019.

The Advisory Council is the formal advisory body to the Trustees and the IASB. It advises the IFRS Foundation on its strategic direction, technical work plan and priorities.

The new and reappointed members of the Advisory Council are:

  • Andreas Barckow - Accounting Standards Committee of Germany
  • Garth Jones - AIA Group
  • Maria Ángeles Peláez Morón - Banco Bilbao Vizcaya Argentaria, SA
  • Sergey Epifanov - Lukoil
  • Tessa Kuijl - Ortec Finance
  • M P Vijar Kumar - South Asian Federation of Accountants
  • James Andrus - Council of Institutional Investors
  • Trevor Derwin - Deloitte & Touche
  • Daniel Civit - Grant Thornton
  • Russell Guthrie - International Federation of Accountants (IFAC)
  • Ellen Gaston - International Monetary Fund (IMF)
  • George Iguchi - The Securities Analysts Association of Japan
  • William Coen - Basel Committee on Banking Supervision
  • Aziz Dieye - Fédération Internationale des Experts-Comptables Francophones
  • Isabelle Ferrand - International Co-operative Alliance
  • Andrew Marshall - KPMG
  • Yibin Gao - Ministry of Finance, People’s Republic of China

All appointments take effect 1 January 2019 and are for a three-year period.

In addition, the Trustees noted that the following members are stepping down from the Council at the end of 2018 or have stepped down already: Gavin Francis, Jake Green, Igor Kozyrev, Ghiath Shabsign, Anne Simpson, Lynda Sullivan, Stephen Taylor, Goro Kumagai, and Colin McDonald.

The press release announcing the new appointments can be found on the IASB's website.

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IFRS Foundation Trustees and Due Process Oversight Committee hold October 2018 meeting

21 Nov 2018

The IFRS Foundation Trustees and the Due Process Oversight Committee (DPOC) met in Johannesburg on 16-18 October 2018.

Meeting activities included the following:

  • Executive session:
    • Report of the Executive Director — The Trustees received a report from the Executive Director Lee White on activities since the last meeting.
    • Governance issues — The Trustees discussed and agreed proposed changes to the Foundation’s Constitution and changes to membership of ASAF.
    • Operations analysis — The Trustees received presentations on the Foundation’s technology and future IT architecture.
    • Future meetings — The Trustees confirmed that their next meeting would be in Kuala Lumpur in January 2019, with later meetings in Munich and New York.
    • Committee reports — The Trustees discussed reports from the Audit and Finance Committee, the Human Capital Committee, the Nominating Committee, the Education and Content Services Committee, and the DPOC. (Recordings from the DPOC meeting were released in October 2018).
  • IASB Chairman’s report — The Chair of the IASB provided the Trustees with a general update on the IASB’s technical activities (especially on financial instruments with characteristics of equity, principles of disclosure, goodwill and impairment, primary financial statements, and IBOR reform) and then discussed the Board's support for the implementation of IFRS 17 and possible amendments to the standard.
  • Meetings in Johannesburg — The Trustees held a stakeholder discussion and dinner entitled The future of financial reporting: an African perspective.

The full report on the IFRS Foundation trustees’ and DPOC meeting is available on the IASB’s website.

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Agenda for the December 2018 ASAF meeting

20 Nov 2018

The International Accounting Standards Board (IASB) has released an agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 6 and 7 December 2018.

The agenda for the meeting is sum­marised below:

Thursday, 6 December 2018 (10:30-17:00)

  • Signing of memorandum of understanding
  • Financial Instruments with characteristics of equity
    • Discuss outreach performed in various jurisdictions.
  • Business combinations under common control (BCUCC)
    • ASAF will be asked to provide their views on application of the current value approach to all BCUCC.
  • Pension benefits that depend on asset returns
    • Overview of research project and ASAF will be asked to provide their views.
  • IFRS 17 Insurance Contracts
    • Discuss topics address in the IASB’s October 2018 meeting.

Friday, 7 December 2018 (9:00-15:45)

  • Management commentary
    • Update will be provided and ASAF will be asked for their views on applying materiality and priniciples for preparing management commentary.
  • Goodwill and impairment
    • Summary of feedback received from the CMAC and GPF meeting and ASAF will be asked for their advice on the disclosure objectives and requirements.
  • Update and agenda planning for April 2019 meeting.
  • Better communication – primary financial statements
    • Discussion on the tentative proposals to be included in the consultation document for the primary financial statements project.

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

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Responses to the EC fitness check on public reporting by companies

18 Nov 2018

In March 2018, the European Commission (EC) published a consultation document 'Fitness Check on the EU Framework for Public Reporting by Companies'. While the document itself seemed oddly against the use of IFRSs as issued by the IASB, responses reveal that the majority of stakeholders are strictly against "EU carve-ins" that could lead to "EU-IFRSs".

Stakeholders from 23 EU Member States and 25 third countries (among them stakeholders from Australia, Canada, China, Japan, South Africa, and the United States) submitted 338 responses to the consultation. Approximately 60% of the responses were submitted by entities located in Germany, the United Kingdom, Belgium, France, and the Netherlands. For the majority of respondents, the EU framework for public reporting works well as it brings added value, is coherent, effective and relevant for achieving its intended objectives.

As regards the IAS Regulation and International Financial Reporting Standards (IFRS), a majority of respondents supported the status quo as regards the EU IFRS endorsement process (“yes-no” endorsement process with no changes to IFRSs as issued by the IASB) and cautioned strongly against “carve-ins” and "carve-outs" that could lead to “EU-IFRSs”, a situation that could be detrimental to EU companies active globally and to foreign investments into the EU. Answers to this question showed respondents from France to be the strongest voice for changes (75% of the respondents located in France would support changes to IFRSs as issued by the IASB (mostly banks and insurers or the organisations representing them)) while respondents from all other major Member States saw a only a 15% support for changes. Similarly, only 2 of the over 40 respondents from third countries supported EU flexibilty in adopting IFRSs. All supporters of flexibility in adoption indicated that “EU carve-ins” should be applied in very limited and well-defined circumstances, under strict conditions and with a sound (public) decision making process.

The responses to the consultation can be accessed in two ways on the EC website:

The Commission notes that it will report on the overall fitness check in a Commission Staff Working Document by mid-2019.

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