iasb update - jane pike, ifrs

The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation.

International Financial Reporting Standards

IASB UpdateProgress and plans

© IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Jane Pike, Technical PrincipalMarch 2016

2Recent IFRSs


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


• 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


5Major Standards-level projects


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


7IFRS 4 / 9 interaction

© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

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?


• 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?


• 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


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


14Research programme March 2016


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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http://go.ifrs.org/IASB-Work-Plan



16Thank You


iasb update - jane pike, ifrs

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