Download - IASB Update - Jane Pike, IFRS
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International Financial Reporting Standards
IASB UpdateProgress and plans
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Jane Pike, Technical PrincipalMarch 2016
2Recent IFRSs
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Major Projects Effective date
IFRS 15 Revenue from Contracts with Customers 1 January 2018
IFRS 16 Leases 1 January 2019
• IFRS 15 Revenue from Contracts with Customers issued concurrently with the FASB in May 2014
• IASB deferred effective date to 1 January 2018 in Sept 2015• Revenue Transition Resource Group supporting
implementation• 37 submissions discussed at 4 meetings; 5 topics subsequently
considered by IASB and FASB• IASB will publish targeted clarifications to 3 topics in IFRS 15
plus additional practical expedients for transition in April 2016
3Revenue Recognition
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• IFRS 16 Leases issued in January 2016• Effective date of 1 January 2019• Main features:
• Lessee: All leases on-balance sheet (except for short-term leases and leases of small assets), interest and amortisation presented separately in income statement
• Lessor: little change to existing accounting• Decisions substantially converged with FASB
• Recognition of leases on-balance sheet; lease definition; liability measurement; little change to lessor accounting
• Main difference: recognition of lease expenses and cash flows
4Leases
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5Major Standards-level projects
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Major Projects
Insurance
Conceptual FrameworkDisclosure InitiativeRate-regulated Activities
• Status: Board completed its discussions on the model for insurance contracts in February 2016
• Existing Standard allows a variety of approaches to be applied• Main decisions:
• A current measurement model for insurance contracts• Based on expected future cash flows• Single model for all contracts with a practical expedient for short
term insurance• The Board is targeting publication in early 2017
6Insurance
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7IFRS 4 / 9 interaction
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Flexibility of both IAS 39* and IFRS 4** results in little volatility in profit or loss
Interaction of IFRS 9*** and IFRS 4 may result in increased volatility in profit or loss
Interaction of IFRS 9 and the new insurance contracts Standard assists in reducing that volatility in profit or loss
IAS 39 + IFRS 4 IFRS 9 + IFRS 4 IFRS 9 + new insurance contracts
Standard
Effective date of IFRS 91 January 2018
Effective date of the new insurance contracts Standard
– not before 2020?
*IAS 39 Financial Instruments: Recognition and Measurement is pre-IFRS 9**IFRS 4 Insurance Contracts sets out the current accounting requirements for insurance contracts***IFRS 9 Financial Instruments
8What is the Conceptual Framework?
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• The Conceptual Framework is a set of concepts that can assist:
– the Board when developing or revising Standards – preparers to develop accounting policies– others to understand and apply Standards
• Not a Standard – does not override any Standard
Conceptual Framework
conceptsIFRS Standards
9What did the Exposure Draft propose?
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• Measurement guidance
• Role of profit or loss and use of OCI
• Presentation and disclosure guidance
• Derecognition• The reporting entity
Fill Gaps
• Recognition criteria• Definitions of
income and expenses
Update
• Definitions of assets and liabilities
• Role of prudence, stewardship and measurement uncertainty in financial reporting
Clarify
The existing Conceptual Framework has proved useful but some improvements are needed
ED comment period ended 25 November 2015
10Disclosure Initiative—Overview
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Materiality
Distinction between
change in policy and estimate
Amendments to IAS 7 ‘debt reconciliation’
Completed projects
Amendments to IAS 1
Implementation projects
Ongoing activities
Digital reporting
Standards level
disclosure review/
drafting guide
Principles of disclosure
Research Projects
Disclosure initiative—overview contd.
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Not enough relevant information
Too much irrelevant information (overload) Poor communication
Disclosure problem?
Disclosure Initiative
Improved disclosures
Enabling preparer
judgement
POD
IAS 1Materiality
Better disclosure req’ments
IASB drafting guide
Technology
Review existing
and proposed Standards
Address individual disclosure
issues
Why
• Concern that materiality is not being applied well in practice.• Key contributor to the ‘disclosure problem’.
Research
• Consulted representatives of IOSCO and the IAASB.• Review of how materiality is applied in different jurisdictions.
Output
• Exposure Draft of an IFRS Practice Statement (PS) – a non-authoritative form of guidance.
• The PS compliments the current guidance on materiality in IFRS Standards.
• The Final PS aims to assist management’s use of judgement in making decisions about materiality when preparing financial statements.
Materiality Practice Statement
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• Status: Developing an accounting model to propose within a further Discussion Paper
• Today there are no standardised requirements for rate-regulated activities
• Interim relief for first-time adopters of IFRS• Issued IFRS 14 Regulatory Deferral Accounts in Jan 2014• Permits grandfathering of previous GAAP accounting practices• Enhanced presentation and disclosure matters
• Current project• Discussion Paper published September 2014• Support for recognising some regulatory deferral account
balances, focusing on a revenue-based approach
13Rate Regulated Activities
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14Research programme March 2016
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Assessment stage Development stage
discount rates business combinations under common control
goodwill & impairment principles of disclosureincome taxes dynamic risk managementpollutant pricing mechanisms equity method
post-employment benefits financial instruments with characteristics of equity
primary financial statements On holdprovisions, contingent liabilities and contingent assets
extractive activities; foreign currency translation and high inflation
share-based payment
IASB work plan
Details of all projects on the IASB work plan can be viewed at http://go.ifrs.org/IASB-Work-Plan
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16Thank You
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