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ESMA (European Securities and Markets Authority) (dark gray) Image

ESMA updates ESEF Reporting Manual

15 Jul 2019

The European Securities and Markets Authority (ESMA) has published an update of its European Single Electronic Format (ESEF) Reporting Manual. The manual is aimed at all market participants involved in the implementation of the requirements set out in the ESEF Regulation, and in particular in the first-time preparation of IFRS consolidated financial statements in Inline XBRL.

The manual was originally published by ESMA in December 2017. It is intended to provide guidance on issues commonly encountered when generating Inline XBRL instance documents in compliance with the ESEF Regulation. Following feedback from market participants, ESMA decided to publish a revised version of the manual to expand existing guidance and update the guidance included in the original publication.

Please click to access the updated manual on the ESMA website.

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EFRAG publishes a feedback statement on its early-stage analysis of the FICE discussion paper

15 Jul 2019

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement on its early-stage analysis of some possible effects of the IASB Discussion Paper DP/2018/1 'Financial Instruments with Characteristics of Equity'.

The EFRAG analysis offered an assessment of the potential effects of the proposals in the discussion paper. It could inform and be one of the inputs to a more comprehensive impact analysis if the IASB were to further proceed with the project on financial instruments with characteristics of equity (FICE) in its current form. The early-stage analysis was also a pilot study into the assessment of potential wider effects during the development of new IFRS requirements.

The feedback statement describes the main comments received by EFRAG in response to its analysis.

Please click to access the feedback statement on the EFRAG website.

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July 2019 IASB meeting agenda posted

12 Jul 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 22–25 July 2019, which includes a joint educational session with the FASB on 23 July.

The Board(s) will discuss the following:

  • SME Standard review and update
  • Implementation matters: IFRIC Update
  • Classification of liabilities as current or non-current (amendments to IAS 1)
  • Goodwill and impairment
  • Management commentary
  • Business combinations under common control
  • Segments
  • Primary financial statements
  • Financial instruments with characteristics of equity
  • IBOR reform
  • Disclosure initiative
  • Implementation of revenue and leases
  • Rate regulated activities
  • Dynamic risk management

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries as well as observer notes from the meeting on this page as they become available.

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IFRS Foundation issues Formula Linkbase 2019

11 Jul 2019

The IFRS Foundation has issued the 2019 IFRS Taxonomy Formula Linkbase. The Formula Linkbase is updated from the 2018 version; it is designed to help improve the data quality of IFRS Taxonomy filings and to provide additional guidance for both technical and financial reporting audiences so that they can better understand the IFRS concepts and their meanings.

For more information, see the press release on the IASB's website.

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FASB consults on the amortisation of goodwill

11 Jul 2019

The US standard-setter FASB has issued an invitation to comment 'Identifiable Intangible Assets and Subsequent Accounting for Goodwill', which notes that the FASB has been considering whether to change the subsequent accounting for goodwill for cost-benefit reasons. US GAAP currently requires a goodwill impairment model.

The IASB has also been discussing restoring amortisation of goodwill. In December 2017, the Board decided tentatively not to reintroduce amortisation and to focus on improving the impairment model instead. It confirmed this decision at its June 2019 meeting. However, the paper was the most heavily debated paper during the session as improving the impairment model has turned out to be very difficult, and the final decision was very close. The Board finally decided by a vote of 8 to 6 to confirm its preliminary view not to reintroduce amortisation and to retain an impairment-only model.

The FASB's invitation to comment offers a comprehensive analysis of the subsequent accounting for goodwill as well as a comparison with the IASB approach and the approach of the Japanese standard-setter ASBJ.

Comments on the the FASB's invitation to comment are due by 7 October 2019. For more information, please see the press release, a short explanatory video, and the invitation to comment on the FASB website.

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EFRAG publishes a feedback statement on its discussion paper on non-exchange transfers

10 Jul 2019

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement on its 2018 discussion paper on non-exchange transfers.

The discussion paper Non-exchange transfers: A role for societal benefit? explored the accounting for transfers in which an entity received (or gives) value without directly giving (or receiving) approximately equal value in exchange.

The feedback statement describes the main comments received by EFRAG in response to its discussion paper.

Please click to access the feedback statement on the EFRAG website.

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Recent sustainability and integrated reporting developments

09 Jul 2019

A summary of recent developments at IOSCO, UNCTAD/IIRC, IIRC, ANC, the UK Government, METI, JPX, ECA, and the EC.

The Growth and Emerging Market Committee (GEMC) of the International Organization of Securities Commissions (IOSCO) has published a report Sustainable finance in emerging markets and the role of securities regulators, which provides 10 recommendations for emerging market member jurisdictions to consider when issuing regulations or guidance regarding sustainable financial instruments. Among other things, the recommendations include requirements for reporting and disclosure of material Environmental, Social and Governance (ESG) specific risks, aimed at enhancing transparency. Please plick to access the report on the IOSCO website.

The United Nations Conference on Trade and Development (UNCTAD) and the International Integrated Reporting Council (IIRC) have signed an updated Memorandum of Understanding to reaffirm their commitment to integrating the United Nation’s Sustainable Development Goals (SDGs) into the corporate reporting cycle. Please click to access the press release on the IIRC website.

The IIRC has announced that its Chief Executive Officer Richard Howitt has stepped down after nearly three years’ service. Charles Tilley OBE has been appointed interim CEO. For more information, please see the press release on the IIRC website.

The President of the French standard-setter Autorité des Normes Comptables (ANC), Mr Patrick de Cambourg, has released a report on corporate non-financial reporting, at the request of the French Minister of Economy and Finance. The report entitled Ensuring the relevance and reliability of non-financial corporate information: an ambition and a competitive advantage for a sustainable Europe analyses ways of consolidating the development of extra-financial reporting by companies, so that, in the long run, it gradually takes on a status comparable to that of financial information. The report aims to define the conditions for the development of high-quality extra-financial information. In addition, the report aims to encourage greater harmonisation and comparability of extra-financial information. After an overview of the various existing standards and initiatives, the report assesses the relevance of extra-financial information in terms of quality, reliability, presentation, implementation cost and verifiability, as well as its association with financial data. Please click to access the report on the ANC website.

The UK Government has launched its first Green Finance Strategy, outlining a wide range of actions to support financial system that supports and reaps the opportunities of a low-carbon and environmentally sustainable economy. As part of its strategy, the UK will take action by setting expectations and ensuring a coordinated approach on TCFD, supporting high quality TCFD disclosure and reviewing progress, and building on TCFD to broaden action on transparency. Please click to access the strategy paper on the website of the UK Government.

The Japanese Ministry of Economy, Trade and Industry (METI) has announced the inauguration of a new body called the “TCFD Consortium” as an opportunity for holding discussions on effective corporate information disclosure and efforts for leading disclosed information to appropriate decision making on investment by financial institutes and other entities. The Meti itself, the Financial Services Agency (FSA) and the Ministry of the Environment (MOE) will participate in the consortium as observers. Please click for more information on the METI website.

The Japan Exchange Group (JPX) has published a Japanese translation of the SSE Model Guidance on reporting ESG information to investors and encourages listed companies to make use of this resource. Please click to access the press release and the translation on the SSE website.

The European Court of Auditors (ECA) has published a review taking stock of the status of reporting on the achievement of the SDGs and sustainability at EU level as well as reporting by individual EU institutions and agencies. There is no specific legal obligation for the Commission or other EU institutions to produce sustainability reports. However, since the EU has committed itself to the SDGs and to achieving sustainable development in general, sustainability reporting would be expected to be an integral part of reporting on performance and results. Please click to access the report on the ECA website.

The European Commission welcomes the latest step to drive forward sustainable finance in the EU, with the launch of a call for feedback on a classification system – or “taxonomy” – for environmentally-sustainable economic activities. The consultation is being launched by the Technical Expert Group (TEG) on Sustainable Finance.

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Recent financial reporting developments in India

09 Jul 2019

Ind AS application has once again been deferred for Indian banks, a new Ind AS 116 'Leases' has been notified, and several new publications by the ICAI are available.

The Reserve Bank of India (RBI) has announced that it has again deferred the implementation of Ind AS. According to the notice, the deferment was necessary as amendments to the Banking Regulation Act of 1949 have still not been made. This is the second delay after the new rules were originally scheduled to be implemented by 1 April 2018. The deadline was extended for one year last April, and now the implementation has been deferred without an implementation date being specified, pending new legislation. Therfore, banking, insurance and non-banking finance companies are still exempt from applying Ind AS. Please click for the notice on the RBI website.

The Indian Ministry of Corporate Affairs (MCA) has notified Ind AS 116 Leases, applicable from 1 April 2019. The new standard replaces the existing standard Ind AS 17 Leases and interpretation/guidance contained in its appendices. Ind AS 116 is based on IFRS 16 Leases. Please click to access the notification, which includes the full text of the standard, on the MCA website.

The Institute of Chartered Accountants of India (ICAI) has published the following updated and new publications (all links to the ICAI website):

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Keynote address at the stakeholder event at the meeting of the Trustees of the IFRS Foundation

08 Jul 2019

At the stakeholder event at the meeting of the Trustees of the IFRS Foundation in Munich on 26 June 2019, Dr Nicolas Peter, Chief Financial Officer of BMW AG, gave the keynote address.

In his speech, Dr Peter lauded the work of the IFRS Foundation/IASB and the German standard-setter DRSC, which he noted has become a strong voice in Europe in recent years.

He then went on to state that BMW decided in 2001 to follow IFRSs and that looking back that was "definitely the right decision" as uniform accounting standards are more valuable today than ever before.

He admitted that such a comprehensive set of rules also raises certain challenges for ongoing business operations and that BMW had to spend a substantial amount of money on personnel and IT costs. And he also noted that not all reported figures are truly comparable and that increasingly earnings are being adjusted permanently for one-time effects - which, as he said, BMW does not do.

Dr Peter also noted while companies are busy implementing new standards, stakeholders' interest in forecasts is increasing - as is the interest in non-financial information. However, he noted, he sees limited possibilities for standardisation in this area.

Concluding his speech, Dr Peter turned to Europe again and noted growing efforts by the European Commission to regulate European companies even more closely and even to discuss the possibility of “EU-IFRS” yet again. He stated:

We firmly believe in the benefits of a globally standardised body of rules — which has always been the core idea of IFRS. For that reason, we oppose the concept of special EU-IFRS. In the volatile global political environment in which we currently find ourselves, it is more important than ever to stress the importance of a common regulatory space. It is easy to forget how far the introduction of common standards has brought us. We now take many of these things for granted.

Please click to access the full transcript of the speech of Dr Peter on the IASB website.

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IASB presentation slides

08 Jul 2019

The IASB has posted to its website the slides of two full presentations and one breakfast talk given by IASB members at the recent annual congress of the European Accounting Association (EAA).

The presentations were given by IASB Board member Ann Tarca and IASB Technical Staff Anne McGeachin. They covered the following topics (links to the slides on the IASB website):

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