The participants discussed the following topics:

• Building regional capacity where members especially noted the progress of the AOSSG's pilot IFRS Centre of Excellence project in Nepal that is intended to help Nepal to build its standard-setting capacity.
• Update and discussion on IASB projects - general, in particular, progress on the projects concerning revenue recognition, leases, agriculture and IFRS 3 post-implementation review as well as on the IASB research programme.
• Update and discussion on IASB projects - detailed, in particular, progress on the projects concerning the Conceptual framework, insurance contracts, financial instruments and rate-regulated activities.
• Islamic Finance where members especially discussed the findings of the AOSSG Islamic Finance Working Group’s survey of the accounting and auditing practices in the Middle East and North Africa.
• IFRS for SMEs where the meeting discussed the IASB's Exposure Draft of proposed amendments to the IFRS for SMEs.
• IFRS in the region where AOSSG members from India and Nepal provided updates on the progress of adopting IFRS in their respective jurisdictions.

Click for the comminiqué from the meeting (link to AOSSG website)

In joint deliberations at an earlier meeting, the FASB and the IASB had proposed classifying and measuring financial assets on the basis of their contractual cash flow characteristics and the business model in which those assets are managed. Under the proposals issued by both boards, a financial asset would meet the requirements of the contractual cash flow characteristics assessment if the contractual terms of the instrument “give rise on specified dates to cash flows that are solely payments of principal and interest [SPPI] on the principal amount outstanding.“

At yesterday’s meeting, however, the FASB discussed the complexity associated with the proposed contractual cash flow test and decided to reject the SPPI assessment. According to Board members, requiring an SPPI test would be swapping known complexity (i.e., the bifurcation guidance in ASC 815-15) for unknown complexity (SPPI). Instead, in a 5 to 2 decision, the FASB voted to retain the requirement to bifurcate financial assets under the “clearly and closely related” guidance in ASC 815-15 on assessing whether an embedded derivative feature should be bifurcated from a hybrid financial asset. The FASB directed the staff to analyse whether the contractual cash flow characteristics test should be based solely on the “clearly and closely related” criterion in ASC 815-15 or whether to use that criterion to further develop the test. The FASB will consider the results of the staff’s analysis at a future meeting.

At the same meeting — when deciding the future of its impairment project — the FASB elected to proceed with its Current Expected Credit Loss (CECL) model for impairments, choosing not to pursue the IASB's expected credit loss model.

For more information, see Deloitte's Accounting Journal Entry or the Summary of Board Decisions on the FASB's website.

The paper leads through the chapters

1. Background
2. The business model in IFRS
3. Assumed meaning and examples of business models
4. The conceptual discussion and
5. Implications of the business model for financial statements

to the conclusions that the business model should continue to play a role in financial reporting, that it is time for a change to the current ad-hoc use and that the concept of the business model should be included in the Conceptual Framework with appropriate guidance for standard-setting.

A Conceptual Framework bulletin on the role of the business model in financial reporting published in July 2013 also considered whether financial reporting based on the business model notion provides useful information.

The following information is available on the EFRAG website:

• Press release
• Research paper
• Presentation on the contents of the paper

The research paper is open for comment until 31 May 2014.

Financial Reporting Disclosures: Market and Regulatory Failures argues that the current disclosure overload is to a large degree an outcome of the regulatory framework. At the same time, the report also states that this framework is a response to failures in the market for financial reporting information. And both market and regulatory failures in part reflect the inherent limitations of financial reporting.

The most important point of the report is, that the problems are created by a 'one size fits all' approach to disclosures that fails to recognise the conflict between regulation and standardisation of financial reporting disclosures on the one hand and the diversity of firms and user needs on the other. This approach has led to regulation requiring firms to disclose the same information to all users, irrespective of the question whether all users will benefit in the same way from long and complex disclosures. Standardisation of disclosures has also led to a large proportion of immaterial disclosures being published as part "an ever-growing list of required disclosures that have been recognised as important at one time or another for at least some firms".

In its report the Financial Reporting Faculty recommends a programme of reform consisting of four ways in which the causes of the problem can be addressed:

The ICAEW points out that these recommendations are interdependent and "no one group is in a position on its own to reform financial reporting disclosures and their regulation; a coordinated approach is needed". This comment reflects the main message that came out of the IASB's disclosure discussion forum in January: that users, preparers, standard-setters, auditors and regulators all contribute to the perceived problems about disclosure, and that each of these parties can contribute to improvements. Only recently, the Danish regulator overseeing non-financial entities (Erhvervsstyrelsen or Danish Business Authority (DBA)) was one of the first regulators to actively encourage companies to omit any immaterial information and disclosures in the financial statements.

Further information on the ICAEW website:

• Full report Financial Reporting Disclosures: Market and Regulatory Failures
• Short briefing paper setting out the report's recommendations Financial Reporting Disclosures: A Programme for Reform

The jurisdiction profiles have been updated for the following:

• Hong Kong: Updated to clarify the application of the HKFRS equivalent of IFRS 1.
• Korea (South): Updated to reflect (a) expiry of a disclosure that had been added to IAS 34 and (b) adoption of accounting standards for unlisted companies that are not subject to external audit.

The profiles and analyses are available on the IASB website.

Click through for direct access to the notes:

Thursday, 12 December 2013

• Post-implementation Review of IFRS 3 Business Combinations
• IFRIC Update
• IAS 28 Investments in Associates and Joint Ventures — Equity method: Share of other net asset changes
• IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets — Clarification of Methods of Depreciation and Amortisation — Due Process consideration
• IAS 19 Employee Benefits — Determination of discount rate
• IFRS 1 First-time Adoption of International Financial Reporting Standards — short term exemptions from IFRSs
• Financial Instruments — Impairment
• Financial Instruments — Limited amendments to IFRS 9 (classification and measurement)
• IFRS 13 Fair Value Measurement — Portfolios

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.