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

EFRAG draft comment letter on proposed amendments to IAS 37 regarding onerous contracts

25 Jan 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2018/2 'Cost of Fulfilling a Contract (Proposed amendments to IAS 37)'.

EFRAG ​welcomes the IASB’s efforts to clarify the requirements in IAS 37 regarding the assessment of whether, in a contract, the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. However, EFRAG notes that the proposed amendments would affect the onerous assess​ment not only for long-term construction contracts previously in the scope of IAS 11 but for all contracts in the scope of IAS 37. Consequently, EFRAG encourages the IASB to further assess the expected impact of the proposals.

Comments on EFRAG's draft comment letter are requested by 5 April 2019. For more information, see the press release and the draft comment letter on the EFRAG website.

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January 2019 IASB meeting notes posted

25 Jan 2019

The IASB met on Wednesday 23 January 2019 to discuss four topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board continued to assess concerns and implementation challenges raised by stakeholders about the requirements in IFRS 17 Insurance Contracts. At this meeting the Board considered four issues: insurance acquisition cash flows for renewals outside the contract boundary; reinsurance contracts held—onerous underlying insurance contracts; reinsurance contracts held—underlying insurance contracts with direct participation features; and recognition of the contractual service margin in profit or loss in the general model. In all cases the Board decided to propose amendments to IFRS 17.  

The Board decided to proceed with the publication of an Exposure Draft to amend IAS 12 Income Taxes, in relation to the deferred tax on assets and liabilities arising from a single transaction. 

The staff also gave oral updates on the projects on Rate-regulated Activities and Extractive Activities.

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

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IASB decides on further potential amendments to IFRS 17

23 Jan 2019

At its meeting currently held in London, the IASB discussed IFRS 17 'Insurance Contracts' and 5 of the 25 concerns regarding the standard that were identified in October 2018 as candidates for potential amendments.

Applying the criteria for evaluating proposed amendments agreed on in October 2018, the Board came to the following conclusions:

Issue identified at the October IASB meeting

Agenda paper with detailed description (link to IASB website)

Staff recommendation

 Board decision

3 — Acquisition cash flows for renewals outside the contract boundary

Agenda paper 2A

To allocate to any anticipated contract renewals part of the insurance acquisition cash flows directly attributable to newly issued contracts and therefore to capitalise them

13/14 support staff recommendation

12 — Reinsurance contracts held: initial recognition when underlying insurance contracts are onerous

Agenda paper 2B, Agenda paper 2C

To recognise immediate gains on (previously or simultaneously entered) reinsurance contracts, if and to the extent that immediate losses on insurance contracts are recognised; require an entity to apply the expanded exception when the entity
measures insurance contracts applying the PAA

14/14 support staff recommendation

8 — Contractual service margin: limited applicability of risk mitigation exception (some aspects already discussed at the December 2018 meeting)

Agenda paper 2D

To expand the scope of the risk mitigation exception for insurance contracts with direct participation features

14/14 support staff recommendation

13 — Reinsurance contracts held: ineligibility for the variable fee approach

7 — Contractual service margin: coverage units in the general model

Agenda paper 2E

To amend IFRS 17 so that in the general model the contractual service margin should be allocated on the basis of coverage units that are determined by considering both insurance coverage and any investment return service

13/14 support staff recommendation 

The staff notes that papers on the remaining topics from the list of issues presented at the October meeting will be presented to the Board in the first quarter of 2019.

The IASB has published a press release saying it is making progress with its IFRS 17 discussions.

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Updated preparer’s guide to the IFRS Taxonomy

23 Jan 2019

The IFRS Foundation has released an updated version of 'Using the IFRS Taxonomy — A preparer’s guide' that is intended to help companies understand the IFRS Taxonomy content.

The updates in comparison to the 2017 version of the document include:

  • a new section that provides more detail on how to communicate company-specific information;
  • new examples illustrating how to find the correct element when tagging the primary financial statements; and
  • other clarifications and improvements.

Please click to access the updated guide on the IASB website.

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Agenda for the January 2019 DPOC meeting

23 Jan 2019

The Trustees of the IFRS Foundation will be meeting in Kuala Lumpur from 29 to 31 January 2019. However, only the meeting of the Due Process Oversight Committee (DPOC) on 29 January will be held in public.

The agenda for the DPOC meeting is summarised below.

Tuesday, 29 January 2019 (16:25–17:50)

  • Introduction and Actions from DPOC meeting held on 15 October 2018
  • Technical activities: Key issues and update
  • IBOR Reform – Comment letter period for potential narrow-scope amendments
  • Due Process Handbook review
    • Outline of timetable and next steps
    • Explanation of amendments to the Handbook
    • Agenda decisions
    • Effects analysis
    • Education material
  • Correspondence: update
  • Summary

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

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Agenda for the upcoming IASB meeting changed

22 Jan 2019

The agenda for the IASB meeting, which will be held on 23 January 2019 in London, has been changed: The sessions have changed their order - most notably the session on IFRS 17 'Insurance Contracts' has been moved to the afternoon and will now begin at 13:00hrs UK time.

We have updated our meeting note page, which offers access to the agenda and our pre-meeting summaries of the agenda papers to be discussed, accordingly.

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FRC Lab report on artificial intelligence in corporate reporting

22 Jan 2019

A new report from the Financial Reporting Lab of the UK Financial Reporting Council (FRC) considers how technology might impact the production, distribution and consumption of corporate reporting.

The report explains what artificial intelligence (AI) is, where its use might make sense in corporate reporting, and explores some of the possible and current use cases for the technology. For each use case it considers what is currently being achieved and what might be achieved in the future. The report finds:

  • Production – AI can enhance efficiency by replacing mechanistic human processing of underlying transactions and transforming that data into accounting and management information; ultimately feeding into annual reports.
  • Distribution – AI can support auditors and boards in the internal and external validation processes needed to ensure that the annual report is credible and compliant in an efficient and effective way.
  • Consumption – Investors are already using AI to enhance effectiveness of investment analysis by extracting meaning and value, not only from company reporting, but also from various sources of alternative data.

Overall, the report concludes hat it is not a question of whether AI will become important for corporate reporting, but when.

Please click to access Artificial Intelligence – How does it measure up? on the FRC website.

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Additional educational module on the IFRS for SMEs on related party disclosures

22 Jan 2019

The IFRS Foundation has issued an additional new stand-alone educational module, which supports the learning, application, and reading of financial statements prepared with the IFRS for SMEs Standard.

The module focuses on the presentation of related party disclosures in the financial statements applying Section 33 Related Party Disclosures of the IFRS for SMEs.

Please click to access all 30 IFRS for SMEs modules available so far (free registration required).

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IOSCO statement on disclosure of ESG matters by issuers

21 Jan 2019

The International Organization of Securities Commissions (IOSCO) has published a statement setting out the importance for issuers of considering the inclusion of environmental, social and governance (ESG) matters when disclosing information material to investors' decisions.

The statement notes that IOSCO Principle 16 states that issuers should provide full, accurate, and timely disclosure of financial results, risk, and other information which is material to investors’ decisions. In this context, the IOSCO statement emphasises that ESG matters, though sometimes characterised as non-financial, may have a material short-term and long-term impact on the business operations of the issuers as well as on risks and returns for investors and their investment and voting decisions. Therefore, statement notes:

IOSCO encourages issuers to consider the materiality of ESG matters to their business and to assess risks and opportunities in light of their business strategy and risk assessment methodology. When ESG matters are considered to be material, issuers should disclose the impact or potential impact on their financial performance and value creation. In doing so, issuers also are encouraged to give insight into the governance and oversight of ESG-related material risks.

Please click to access the full statement on the IOSCO website.

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Additional educational modules on the IFRS for SMEs on investment property and revenue

18 Jan 2019

The IFRS Foundation has issued two new stand-alone educational modules, which support the learning, application, and reading of financial statements prepared with the IFRS for SMEs.

The modules focus on the requirements for accounting and reporting of investment property and of revenue applying the following sections of the IFRS for SMEs:

  • Section 16 Investment Property
  • Section 23 Revenue

Please click to access all 29 IFRS for SMEs modules available so far (free registration required).

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