PUBLICATIONS AND ANNOUNCEMENTS
IFRS 2 amended for the classification and measurement of certain types of share-based payment (SBP) transactions
The amendments published by the IASB on 20 June 2016 (effective from 1 January 2018 with early application permitted) clarify the effects of vesting and non-vesting conditions on the measurement of cash-settled SBPs, the accounting for SBP transactions with a net settlement feature for withholding tax obligations, and the effect of a modification to the terms and conditions of a SBP that changes the classification of the transaction from cash-settled to equity-settled.
Proposals for amendments to IFRS 3 and IFRS 11 open for comment until 31 October 2016
On 28 June 2016, the IASB published an exposure draft aimed at clarifying the definition of a business as opposed to a group of assets, and the accounting for previously held interests if acquiring control or joint control of a business.
Proposed amendments to the IFRS Foundation Constitution open for comment until 15 September 2016
On 10 June 2016, the Trustees of the IFRS Foundation published an exposure draft (following the comments received by the Trustees on their July 2015 Request for Views) aimed at refining the current structure and activities of the organisation, as well as considering its future role. In particular, the review should further enhance governance and funding arrangements of the IFRS Foundation, strengthen the relevance of IFRS Standards, and support their consistent application.
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 20 and 22 June 2016. Other topics discussed by the Board include its research projects on Goodwill and Impairment, and on Financial Instruments with Characteristics of Equity.
For more detailed and comprehensive information on the Board’s discussions:
Insurance Contracts (new IFRS due early 2017)
- The contractual service margin (CSM) should be adjusted and allocated so that it represents at the end of a reporting period the profit for the future services to be provided for a group of contracts.
- The CSM should be measured by grouping insurance contracts that have, at inception, cash flows expected to respond similarly in terms of amount and timing to changes in key assumptions, and similar expected profitability.
- The expected duration and size of the contracts remaining in the group at the end of the period should be reflected when allocating the CSM of the group of contracts to the profit or loss statement.
- The change in the risk adjustment could be either disaggregated into a financial component and an underwriting component, or presented entirely as part of the underwriting result.
- The objective of disaggregating insurance finance income or expenses between profit or loss (P/L) and other comprehensive income (OCI) should be to present in P/L a systematic allocation of the total expected insurance finance income or expenses over the life of the contract; guidance will be provided to help in determining such a systematic allocation. Also, the entity should explain the total amount of insurance finance income or expenses in a reporting period.
Revised Conceptual Framework (due early 2017)
- The definitions of income and expenses should be those proposed in the exposure draft, with no discussion of the typical types of transactions and other events that may give rise to income and expenses.
- The statement of profit or loss for the period (SoPL) is to be the primary source of information about an entity’s financial performance; as such, it should include income and expenses, unless the relevance or faithful representation of the information provided in the SoPL would be enhanced by including a change in the current value of an asset or a liability in OCI, which can be decided only by the Board in setting Standards and is only expected to occur in exceptional circumstances.
- Income and expenses included in OCI should be recycled only when doing so would enhance the relevance or faithful representation of the information in the SoPL for that period; a decision about whether and when income and expenses included in OCI should be recycled can be made only by the Board in setting Standards.
Annual Improvements to IFRSs 2015–2017 Cycle (exposure draft due 2016)
IAS 12 Income Taxes is to be amended to clarify that the requirements in paragraph 52B go beyond the circumstances described in paragraph 52A of the Standard (i.e. an entity should apply those requirements to all income tax consequences of dividends).
UPCOMING COMMENT DEADLINES
15 September 2016
Exposure Draft - Trustees’ Review of Structure and Effectiveness: Proposed Amendments to the IFRS Foundation Constitution
31 October 2016
ED/2016/1 - Definition of a Business and Accounting for Previously Held Interests (Proposed amendments to IFRS 3 and IFRS 11)