PUBLICATIONS AND ANNOUNCEMENTS
Release of the clarifications to the new Revenue Standard IFRS 15
The amendments published by the IASB on 12 April 2016 (effective from 1 January 2018 simultaneously to IFRS 15) provide additional transitional relief when the Standard is first applied and clarify some requirements of IFRS 15 (without changing its underlying principles), in particular how to identify a performance obligation, determine whether a company is a principal or an agent, and determine whether the revenue from granting a licence should be recognised at a point in time or over time.
INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)
LATEST DECISIONS SUMMARY
The following is a summarised update on the main provisional decisions taken by the IASB at its meeting on 19-21 April 2016. Other discussions of the Board covered its 2015 Agenda Consultation and research projects on Financial Instruments with Characteristics of Equity, Business Combinations under Common Control, and Goodwill and Impairment.
For more detailed and comprehensive information on the Board’s discussions: https://s3.amazonaws.com/ifrswebcontent/2016/IASB/April/IASB_April_Update.html
Insurance and IFRS 9 (amendments to IFRS 4 due September 2016)
- For the overlay approach (i.e. adjusting profit or loss (P/L) and other comprehensive income to remove from P/L the effect of newly measuring financial assets at fair value through P/L in accordance with IFRS 9):
- The proposals in the exposure draft Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (‘the ED’) are to be confirmed, in particular those dealing with the conditions for a financial asset to qualify for the overlay approach, the application by an entity of the approach, the related disclosures, and transition issues.
- Qualifying financial assets could include surplus assets that an entity holds for the purposes of regulatory requirements or internal capital objective.
- The basis for designating financial assets held by one legal entity as relating to contracts within the scope of IFRS 4 that are issued by a different legal entity should be explained by the reporting entity.
- Some of the overlay approach’s presentation and disclosure requirements will be amended.
- For the deferral approach (i.e. a temporary exemption from applying IFRS 9):
- An entity will be permitted to apply the temporary exemption only if it has not previously applied any version of IFRS 9 (except for the ‘own credit’ requirements in isolation), and its activities are predominantly related to insurance - such activities and the predominance ratio being clearly defined and requiring specific disclosures -.
- The disclosure proposals in the ED will be confirmed with a few amendments and additions.
Conceptual Framework (due Q4/2016)
- The proposals in the ED relative to the purpose of, status of, and departures from aspects of the Conceptual Framework as well as the approach to its future revisions are to be confirmed.
- Only the topics that have proved controversial or those for which new information has become available will be redeliberated.
- Developing concepts in the Financial Instruments with Characteristics of Equity research project to address challenges that arise in classifying financial instruments with characteristics of both liabilities and equity might necessitate further amendments to the revised Conceptual Framework.
Disclosure Initiative–Changes in Accounting Policies and Estimates (exposure draft to amend IAS 8 due Q4/2016)
The definitions of changes in accounting policies and changes in accounting estimates will be amended in order to clarify how accounting policies and estimates relate to each other; guidance about whether changes in valuation and estimation techniques are changes in accounting estimates is to be added, and existing examples of estimates will be updated.