PUBLICATIONS AND ANNOUNCEMENTS
Release of the final standard on insurance accounting
On 18 May 2017, the IASB issued the long-awaited IFRS 17 Insurance Contracts to supersede IFRS 4 effective for annual periods beginning on or after 1 January 2021 (earlier application permitted only if IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers are also applied). The new Standard requires all insurance contracts to be accounted for in a consistent manner, and aims at helping users of financial statements better understand insurers’ risk exposure, profitability and financial position. The Board is currently undertaking a number of activities to support implementation of the Standard (e.g establishing a Transition Resource Group).
Consultation on the post-implementation review of IFRS 13 open until 22 September 2017
On 25 May 2017, the IASB initiated the second phase of the Post-Implementation Review of the fair value Standard by issuing a Request for Information (RFI) aimed at assessing whether IFRS 13 Fair Value Measurement works as intended and achieves its objectives, and at detecting areas of the Standard that present challenges that could result in inconsistent application of the requirements. The RFI focuses on (i) disclosures about fair value measurements, (ii) the unit of account for quoted investments in subsidiaries, joint ventures and associates, (iii) application of the concept of the ‘highest and best use’, and (iv) application of judgement in specific areas.
IFRS INTERPRETATIONS COMMITTEE (IC)
LATEST DECISIONS SUMMARY
The IC met on 3 May 2017 to discuss, besides its work in progress, a new question received on whether a financial instrument, classified as equity by the issuer in accordance with IAS 32.16A-16D (i.e. an instrument that meets the definition of a financial liability that is exceptionally classified as an equity instrument because it has all the features and meets the conditions in paragraphs 16A-B or 16C-D of IAS 32) is eligible for fair value through other comprehensive income (OCI) classification in accordance with IFRS 9 (in particular, paragraph 4.1.4 allows an entity to make an irrevocable election on the initial recognition of an equity instrument that is neither held for trading nor contingent consideration arising from a business combination to present subsequent fair value changes in OCI, rather than in profit or loss).
The IC concluded that such an instrument is not eligible for the presentation election in paragraph 4.1.4 of IFRS 9, because it does not meet the definition of an equity instrument in IAS 32 (i.e. any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities, as already explained in paragraph BC5.21 of the Basis for Conclusions on IFRS 9).
For more detailed and comprehensive information on the IC’s discussions: https://s3.amazonaws.com/ifrswebcontent/2017/IFRIC/May/IFRIC-Update-May-2017.html
INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)
LATEST DECISIONS SUMMARY
The following is a summarised update on the main tentative decisions taken by the IASB at its meeting on 16-17 May 2017. Additional discussions of the Board included Dynamic Risk Management (educational session on the research project), Rate-regulated Activities (developing new accounting model for activities subject to defined-rate regulation), and Goodwill and Impairment (exploring possible simplifications to the impairment test in IAS 36).
For more detailed and comprehensive information on the IASB’s discussions: https://s3.amazonaws.com/ifrswebcontent/2017/IASB/May/IASB-May-Update-2017.html
Long-term interests in associates and joint ventures (amendments to IAS 28 due H2/2017)
The proposed clarifications to IAS 28 (initially included in the exposure draft Annual Improvements to IFRS Standards 2015–2017 Cycle) are to be finalised as follows:
- The requirements in IFRS 9 should be applied to long-term interests (i.e. interests to which the equity method is not applied but that, in substance, form part of the net investment in an associate or joint venture), without taking account of any adjustments to their carrying amount resulting from the application of IAS 28, and before applying the loss allocation and impairment requirements in IAS 28.
- Illustration of the interaction between the requirements in IAS 28 and IFRS 9 with respect to long-term interests should be included in educational material.
- The amendments should have an effective date of 1 January 2019 (with earlier application permitted), and apply retrospectively subject to transitional provisions (similar to those in IFRS 9 regarding the classification and measurement of financial assets for entities that apply the amendments after they first apply IFRS 9).
UPCOMING COMMENT DEADLINES
31 July 2017
ED/2017/2 - Improvements to IFRS 8 Operating Segments (Proposed amendments to IFRS 8 and IAS 34)
22 September 2017
Request for Information - Post-implementation Review — IFRS 13 Fair Value Measurement
2 October 2017
DP/2017/1 - Disclosure Initiative—Principles of Disclosure
RSM INTERNATIONAL COMMENT LETTERS
On 24 May 2017, RSM International submitted a letter of comment to the IASB on ED/2017/3 Prepayment Features with Negative Compensation (Proposed amendments to IFRS 9) http://www.ifrs.org/Current-Projects/IASB-Projects/Symmetric%20Prepayment%20Options/Pages/comment-letters.aspx
As in previous years, RSM is sponsoring the IFRS Foundation Conference in Amsterdam on 29-30 June 2017 http://www.ifrs.org/Alerts/Conference/Pages/ifrs-conference-amsterdam-2017.aspx