New and revised pronouncements as at 31 March 2020
06 Mar 2020
Our popular summary of new and revised financial reporting requirements, updated for financial reporting periods ending on 31 March 2020. This listing can be used to perform a quick check that new financial reporting requirements such as new and revised accounting standards and interpretations, and amendments to standards and interpretations, have been fully considered in the reporting close process. The information below can also be used to assist with the disclosure requirements under paragraph 30 of IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors', which requires entities to disclose any new IFRSs that are in issue but not yet effective and which are likely to impact the entity.
COVID-19 accounting considerations
Below is our usual analysis of new and amended standards, however, we are also aware that most, if not all, entities will have been impacted by the COVID-19 events. Please see our IFRS in Focus — Accounting considerations related to the Coronavirus 2019 Disease highlighting some of the key issues to be considered by the entities in preparing their financial statements and our IAS Plus resource page on accounting considerations related to COVID-19.
This table can be used for all annual accounting periods. A 1st quarter ending on 31 March 2020 would mean that the annual reporting period began on 1 January 2020. Similarly, 2nd quarters ending on 31 March 2020 refer to annual periods that began on 1 October 2019, 3rd quarters ending on 31 March 2020 refer to annual periods that began on 1 July 2019, and 4th quarters ending on 31 March 2020 refer to annual periods that began on 1 April 2019.
The information below reflects developments to 25 June 2020 and will be updated through to June 2020 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 31 March 2020. For accounts approved after March 2020, please also refer to subsequent versions of this document for any new and revised IFRSs that have additionally been issued that might require disclosure in the accounts under IAS 8:30.
The information below is organised as follows:
Summary
Pronouncements applicable to entities applying IFRSs at the IASB effective dates
The table below provides a summary of the pronouncements which will be mandatorily applied by entities for the first time at 31 March 2020, for various quarterly reporting periods:
Pronouncement | Effective date* | Mandatory at 31 March 2020? | |||
---|---|---|---|---|---|
1st qtrs | 2nd qtrs | 3rd qtrs | Full yrs | ||
STANDARDS | |||||
IFRS 16 Leases
|
1 January 2019 | ** | Yes | Yes | Yes |
INTERPRETATIONS | |||||
IFRIC 23 Uncertainty over Income Tax Treatments | 1 January 2019 | ** | Yes | Yes | Yes |
AMENDMENTS | |||||
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
|
1 January 2018 | Optional° | Optional° | Optional° | Optional° |
Prepayment Features with Negative Compensation (Amendments to IFRS 9)
|
1 January 2019 | ** | Yes | Yes | Yes |
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
|
1 January 2019 | ** | Yes | Yes | Yes |
Annual Improvements to IFRS Standards 2015–2017 Cycle
|
1 January 2019 | ** | Yes | Yes | Yes |
Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
|
1 January 2019 | ** | Yes | Yes | Yes |
Amendments to References to the Conceptual Framework in IFRS Standards
|
1 January 2020 | Yes | - | - | - |
Definition of a Business (Amendments to IFRS 3)
|
1 January 2020 | Yes | - | - | - |
Definition of Material (Amendments to IAS 1 and IAS 8)
|
1 January 2020 | Yes | - | - | - |
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
|
1 January 2020 | Yes | - | - | - |
* Generally annual periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see the detailed information for each pronouncement below for full details).
** This pronouncement has already been implemented in previous periods by entities with this reporting date (where it applied to the entity).
° The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
More information about these pronouncements, and all new and revised pronouncements, is set out below.
Financial statement considerations in adopting new and revised pronouncements Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:
Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation. |
New or revised standards
IFRS 16 Leases
IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.
Effective date:
Applicable to annual reporting periods beginning on or after 1 January 2019
First quarters ending 31 March 2020:
Second quarters ending 31 March 2020:
Mandatory
Third quarters ending 31 March 2020:
Mandatory
Annual periods ending 31 March 2020:
Mandatory
IFRS 17 Insurance Contracts
IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2023.
Effective date:
Applicable to annual reporting periods beginning on or after 1 January 2023
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
New or revised interpretations
IFRIC 23 Uncertainty over Income Tax Treatments
The interpretation addresses the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. It specifically considers:
- Whether tax treatments should be considered collectively
- Assumptions for taxation authorities' examinations
- The determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
- The effect of changes in facts and circumstances
Effective date:
Applicable to annual reporting periods beginning on or after 1 January 2019
First quarters ending 31 March 2020:
Second quarters ending 31 March 2020:
Mandatory
Third quarters ending 31 March 2020:
Mandatory
Annual periods ending 31 March 2020:
Mandatory
Amendments
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
- an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
- an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.
The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Effective date:
Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018 and only available for five years after that date. Extension not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Prepayment Features with Negative Compensation (Amendments to IFRS 9)
Amends the existing requirements in IFRS 9 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments.
Effective date:
Annual periods beginning on or after 1 January 2019
First quarters ending 31 March 2020:
Second quarters ending 31 March 2020:
Mandatory
Third quarters ending 31 March 2020:
Mandatory
Annual periods ending 31 March 2020:
Mandatory
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
Clarifies that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
Effective date:
Annual periods beginning on or after 1 January 2019
First quarters ending 31 March 2020:
Second quarters ending 31 March 2020:
Mandatory
Third quarters ending 31 March 2020:
Mandatory
Annual periods ending 31 March 2020:
Mandatory
Annual Improvements to IFRS Standards 2015–2017 Cycle
Makes amendments to the following standards:
- IFRS 3 and IFRS 11 - The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.
- IAS 12 - The amendments clarify that the requirements in the former paragraph 52B (to recognise the income tax consequences of dividends where the transactions or events that generated distributable profits are recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A that only deals with situations where there are different tax rates for distributed and undistributed profits.
- IAS 23 - The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.
Effective date:
Annual periods beginning on or after 1 January 2019
First quarters ending 31 March 2020:
Second quarters ending 31 March 2020:
Mandatory
Third quarters ending 31 March 2020:
Mandatory
Annual periods ending 31 March 2020:
Mandatory
Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
The amendments in Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) are:
- If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement.
- In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.
Effective date:
Annual periods beginning on or after 1 January 2019
First quarters ending 31 March 2020:
Second quarters ending 31 March 2020:
Mandatory
Third quarters ending 31 March 2020:
Mandatory
Annual periods ending 31 March 2020:
Mandatory
Amendments to References to the Conceptual Framework in IFRS Standards
Together with the revised Conceptual Framework published in March 2018, the IASB also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework.
Effective date:
Annual periods beginning on or after 1 January 2020
First quarters ending 31 March 2020:
Mandatory
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Definition of a Business (Amendments to IFRS 3)
The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. They:
- clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;
- narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;
- add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
- remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and
- add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.
Effective date:
Business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020
First quarters ending 31 March 2020:
Mandatory
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Definition of Material (Amendments to IAS 1 and IAS 8)
The amendments in Definition of Material (Amendments to IAS 1 and IAS 8) clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards.
Effective date:
Annual reporting periods beginning on or after 1 January 2020
First quarters ending 31 March 2020:
Mandatory
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
The amendments in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) clarify that entities would continue to apply certain hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform.
Effective date:
Annual reporting periods beginning on or after 1 January 2020
First quarters ending 31 March 2020:
Mandatory
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current.
Effective date:
Annual reporting periods beginning on or after 1 January 2022
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Reference to the Conceptual Framework (Amendments to IFRS 3)
The amendments update an outdated reference to the Conceptual Framework in IFRS 3 without significantly changing the requirements in the standard.
Effective date:
Annual reporting periods beginning on or after 1 January 2022
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)
The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.
Effective date:
Annual reporting periods beginning on or after 1 January 2022
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)
The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
Effective date:
Annual reporting periods beginning on or after 1 January 2022
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Annual Improvements to IFRS Standards 2018–2020
Makes amendments to the following standards:
- IFRS 1 – The amendment permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.
- IFRS 9 – The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
- IFRS 16 – The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.
- IAS 41 – The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique.
Effective date:
Annual reporting periods beginning on or after 1 January 2022
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Covid-19-Related Rent Concessions (Amendment to IFRS 16)
The amendment provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.
Effective date:
Annual reporting periods beginning on or after 1 June 2020
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Amendments to IFRS 17
Amends IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 Insurance Contracts was published in 2017. The main changes are:
- Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023
- Additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk
- Recognition of insurance acquisition cash flows relating to expected contract renewals, including transition provisions and guidance for insurance acquisition cash flows recognised in a business acquired in a business combination
- Clarification of the application of IFRS 17 in interim financial statements allowing an accounting policy choice at a reporting entity level
- Clarification of the application of contractual service margin (CSM) attributable to investment-return service and investment-related service and changes to the corresponding disclosure requirements
- Extension of the risk mitigation option to include reinsurance contracts held and non-financial derivatives
- Amendments to require an entity that at initial recognition recognises losses on onerous insurance contracts issued to also recognise a gain on reinsurance contracts held
- Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts
- Additional transition relief for business combinations and additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach
Effective date:
Annual reporting periods beginning on or after 1 January 2023
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)
The amendment changes the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.
Effective date:
Immediately available.
Not yet endorsed for use in the EU.
First quarters ending 31 March 2020:
Optional
Second quarters ending 31 March 2020:
Optional
Third quarters ending 31 March 2020:
Optional
Annual periods ending 31 March 2020:
Optional
Editorial Corrections (various)
The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2013, such corrections have been made in March 2013, September 2013, November 2013, March 2014, September 2014, December 2014, March 2015, April 2015, September 2015, December 2015, March 2016, May 2016, September 2016, December 2016, September 2017, November 2017, December 2018, February 2019, May 2019, December 2019, and July 2020.
Note: For details of these editorial corrections, see our IASB editorial corrections page.
Effective date:
As minor editorial corrections, these changes are effectively immediately applicable under IFRS
See comment in previous column