News on IFRS: July 2016

Our latest IFRS News provides perspectives on key considerations for impairment tests, current IC rejections and the PwC leases lab.

Alternative Performance Measures – Under scrutiny by regulators

Companies using Alternative Performance Measures (APMs) should understand the new guidance issued by the European Securities and Markets Authority (ESMA) and the International Organization of Securities Commissions (IOSCO) as well as applicable amendments to IAS 1. Annette Malsch from Accounting Consulting Services summarises the dos and don’ts and adds some practical examples.

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What is a business?

The IASB has proposed clarifications to the definition of a business in IFRS 3 Business Combinations.

The definition of a business affects the accounting not only for acquisitions but also for disposals, consolidation and other areas.

  • Why change the existing requirements?
  • What is going to change?
  • Why is this important?
  • What’s next?

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Ten reminders for interim reporting

The interim reporting season has arrived for many. Saad Siddique from Accounting Consulting Services summarises the key items to consider for 2016 interim financial statements.

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Amendments to IFRS 2

The IASB issued amendments to IFRS 2 on 20 June 2016. The amendments provide additional guidance on the accounting for cash-settled share-based payments and add an exception that provides equity-settled accounting where the settlement of share-based payment awards is split between equity instruments issued to the employee and a cash payment to the tax authorities.

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Cannon Street Press

  • Insurance contracts
  • Previously held interests
  • IAS 12 Income Taxes: Presentation of income tax consequences arising from dividends
  • Conceptual Framework

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The PwC leases lab

For lessees, IFRS 16 is just an accounting change; it will not require major changes to systems or processes.

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IFRIC Rejections in short – IAS 21

IAS 21 is applied on the accounting for foreign currency transactions, on the conversion of profit and loss and financial position of foreign businesses and the conversion of the entity’s profit and loss and financial position to presentation currency.

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In brief – A look at current financial reporting issues

  • Impact of UK referendum result on financial reports: PwC In brief INT2016-12
    Read more…
  • IASB issues amendment to IFRS 2: PwC In brief INT2016-11
  • GPPC paper on IFRS 9 impairment considerations for systemically important banks: PwC In brief INT2016-10

 

News on IFRS: May 2016

Our latest IFRS News provides perspectives on key considerations for impairment tests, current IC rejections and the PwC leases lab.

IFRS 15: final amendments to the new revenue standard issued

The IASB has amended IFRS 15 to clarify the guidance on identifying performance obligations, licences of IP and principal versus agent. The amendments also provide additional practical expedients on transition. These amendments differ from those being made by the FASB. Sallie Deysel looks into the details for us.

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Regulator focus: What can we learn from the ESMA report?

ESMA (the European Securities and Markets Authority) has recently issued its Report on Enforcement and Regulatory activities of accounting enforcers in 2015.

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Key things to look out for with Operating Segments

An operating segment is defined as a component of an entity:

  • that engages in business activities from which it can earn revenues and incur expenses;
  • whose operating results are regularly reviewed by the entity’s chief operating decision maker (CODM) to assess performance and allocate resources; and
  • for which discrete financial information is available.

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The PwC leases lab

The new leasing standard leaves lessor accounting substantially unchanged. Given that the vast majority of entities in the real estate industry are lessors in leasing transactions, you might think they have little to worry about.

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Cannon Street Press

  • Insurance and IFRS 9
  • Conceptual Framework
  • Disclosure Initiative: changes in accounting policies
    and accounting estimates
  • Further discussions

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IFRIC Rejections in short – IAS 18

IAS 18, Revenue deals with revenue arising from sales of goods, rendering of services, interest, royalties and dividends. It is one of the standards that requires the highest degree of judgement. Thus it is not surprising that many matters have been raised with the IC over the last 13 years.

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In brief – A look at current financial reporting issues

IFRS in brief

    • South Sudan enters hyperinflation: In brief INT2016-09
      Read more…
    • Immediate impact on cash pooling arrangements of IFRS IC decision: In brief INT2016-08
      Read more…

News on IFRS: April 2016

Our latest IFRS News provides perspectives on key considerations for impairment tests, current IC rejections and leases lab.

Valuation: Key considerations for impairment tests

ESMA (the European Securities and Markets Authority) has identified the following enforcement priorities that they, together with national bodies in Europe, will examine within listed companies’ 2015 financial statements:

  • the impact of financial market conditions on financial statements, particularly the current interest rate environment, country and FX risk, and volatility in the price of commodities,
  • fair value measurement and related disclosures, and
  • statement of cash flows and related disclosures.

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Current IC rejections

The IC observed that when accounting for net investment hedges, an entity should apply the ‘lower of’ test in determining the effective portion of the gains or losses arising from the hedging instrument.

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The PwC leases lab

Pharma companies typically lease buildings, company cars and computers. Many of these arrangements are currently accounted for as operating leases. Under the new standard, almost all leases will be moved onto the balance sheet.

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Cannon Street Press

Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts

  • Definition of a business
  • Goodwill and Impairment
  • Agenda Consultation

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IFRIC Rejections in short – IAS 17

In January, the IASB issued the new leasing standard, IFRS 16. Nevertheless, the guidance in IAS 17 remains applicable for almost three years, making this an opportune moment to review how the IC addressed the questions raised on IAS 17.

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Cryptic IFRS word seek

Give your brain a workout and keep it buzzing for your next accounting term!

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In brief – A look at current financial reporting issues

IFRS in brief

    • Immediate impact on cash pooling arrangements of IFRS IC decision
      Read more…
    • IASB issues amendment to IFRS 15 ‘Revenue from contracts with customers’
      Read more…
    • IASB issues a narrow scope amendment to IAS 7, ‘Statement of cash flows’
      Read more…

News on IFRS: March 2016

Our latest IFRS News provides perspectives on Alternative Performance Measures, IFRS 9 impairment and IAS 7 amendment.

Alternative Performance Measures

The use of Alternative Performance Measures (APMs) is widespread. A recent analysis of reporting practices in the UK FTSE 100 revealed a need for more transparency, especially under the light of the ESMA guidance applicable for all announcements after 3 July 2016. Jennifer Lau and Anna Schweizer from Accounting Consulting Services look into the details.

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IFRS 9 impairment

IFRS 9 introduces a new expected credit loss (ECL) approach to impairment provisioning for financial instruments: a radical move away from the current incurred loss model in IAS 39. Following the issue of IFRS 9, two bodies – the Basel Committee on Banking Supervision (the Committee) and the Enhanced Disclosure Task Force (EDTF) – have recently published guidance in respect of the ECL requirements in IFRS 9.

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IAS 7 amendment

Borrowings form a major part of nearly every business and operation. Information about changes in borrowings helps users of financial statements evaluate the financial health of an entity.

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Cannon Street Press

  • Insurance contracts
  • Goodwill and Impairment
  • Measurement of interests in associates and joint ventures
  • Non-current liabilities: conditions that are tested after the end of the reporting period
  • Financial Instruments with characteristics of equity

Read more… 

IC rejections

IAS 16 covers recognition, measurement, and disclosure of property, plant and equipment (PPE). Nine matters related to IAS 16 have resulted in an agenda rejection by the IC.

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In brief – A look at current financial reporting issues

IFRS in brief

  • Accounting considerations for Venezuelan entities – update as of February 2016
    Read more…
  • IAASB issues Invitation to Comment on Enhancing Audit Quality in the Public Interest
    Read more…
  • IASB issues a narrow scope amendment to IAS 7, ‘Statement of cash flows’
    Read more…

News on IFRS: February 2016

Our latest IFRS News provides perspectives on IFRS 16 Leases, narrow-scope amendments to IAS 12, current IC rejections, P*Q crashes and IC rejections.

The plane has landed – the IASB has published its new leasing standard!

The IASB has finally finished its long-standing project on lease accounting and released IFRS 16 Leases. Holger Meurer from Accounting Consulting Services looks into the details.

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IASB issues narrow-scope amendments to IAS 12

John Chan from Accounting Consulting Services brings us up to speed on the clarified guidance for recognising deferred tax assets on unrealised losses.

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Current IFRIC rejections

The IC has recently decided not to take on a number of issues to its agenda. Gabriela Mendez, Joanna Demetriou and Anna Schweizer from Accounting Consulting Services examine the practical implications.

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Cannon Street Press

  • Insurance contracts
  • Revenue from contracts with customers
  • Measurement of interests in associates and joint ventures that in substance form part of the net investment

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IFRIC Rejections in short – IAS 12

Simon Whitehead and Satoshi Tsunoda of US Accounting Consulting Services examine the practical implications of IC rejections related to IAS 12.

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In brief – A look at current financial reporting issues

IFRS in brief

  • IAASB issues Invitation to Comment on Enhancing Audit Quality in the Public Interest
    Read more…
  • IASB issues a narrow scope amendment to IAS 7, ‘Statement of cash flows’
    Read more…
  • IASB issues narrow scope amendments to IAS 12, ‘Income taxes’
    Read more…

News on IFRS: December 2015/January 2016

Our latest IFRS news provides perspectives on revenue TRG discussions, financial instruments, FASB exposure draft, IFRS in the US and year-end reporting reminders.

IASB announces IFRS 16 new Leases standard

The International Accounting Standards Board (IASB) finished its long-standing project on lease accounting and published IFRS 16, “Leases”. Find more detailed information in this “In brief”: A look at current financial reporting issues.

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Revenue TRG discusses optional purchases, licences and other topics

The Revenue Transition Resource group (TRG) continues to debate implementation issue related to the new revenue standard. Michel Vique from Accounting Consulting Services looks into the details.

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TRG for Impairment of Financial Instruments weighs in again on
IFRS 9 implementation issues

The Transition Resource Group for Impairment of Financial Instruments (ITG) continues discussions on impairment implementation issues.

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FASB issues Exposure Draft on Definition of a Business

The IASB has discussed the FASB’s proposed amendments and agreed to proceed with an Exposure Draft (ED) expected to be broadly in line with the FASB proposals. Joanna Demetriou from Accounting Consulting Services looks at the details.

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Update: IFRS in the US

IFRS continues to receive attention in the US as evident in recent SEC comments regarding a single set of high quality, global accounting standards. John McKeever from Accounting Consulting Services looks at why IFRS is still important in the US.

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10 reminders for year-end reporting

A busy reporting season looms for many. Here are 10 reminders to consider for 2015 annual financial statements. For more details, see the latest IFRS quarterly update, which also includes a summary of new standards applicable for 2015.

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Cannon Street Press

  • Insurance contracts
  • Classification and measurement of share-based payments

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2016 accounting horoscope

Karl Janse van Rensburg takes a look into the stars for us…

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IC Rejections in short – IAS 11

Vivian Lai of Accounting Consulting Services examines the practical implications of IFRIC rejections related to IAS 11.

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In brief – A look at current financial reporting issues

IFRS in brief

  • IASB publishes a new standard on lease accounting
    Read more…
  • IFRIC 21 Levies – Recognition of the debit
    Read more…
  • IASB issues amendment on one-year deferral of
    IFRS 15

    Read more…

News on IFRS: November 2015

Our latest IFRS news provides perspectives on foreign currency and advance consideration,uncertainty over income tax treatments and application of materiality to financial statements

Interpretation proposed on foreign currency for advance consideration

The IFRS Interpretations Committee published an exposure draft (ED) for a new interpretation on determination of the foreign currency exchange rate to translate non-monetary prepayments and deferred income liabilities. Derek Carmichael from Accounting Consulting Services provides an overview of the ED.

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New interpretation proposed on uncertainty over income tax treatments

The IC has observed diversity in practice in the recognition and measurement of a tax liability or asset in circumstances where there is uncertainty in the application of the tax law, and is thus proposing to issue specific guidance.

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Proposed practice statement on application of materiality to financial statements

The IASB has issued an ED of a Practice Statement on the application of materiality as part of its ongoing Disclosure Initiative project. The ED does not, however, address the definition of materiality, since this will be addressed in the Principles of Disclosure Discussion Paper.

Read more…

Cannon Street Press

  • Leases
  • Update on IFRS 9 Impairment Transition Group
  • Financial Instruments with the Characteristics of Equity
  • Disclosure Initiative
  • IFRS 9 effective date for insurers and the new insurance contracts standard
  • Borrowing costs on completed qualifying assets
  • Joint control

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IFRS Rejections in short – IAS 10

IAS 10 provides guidance for whether or not, and how, an event occurring after the reporting date (but prior to authorisation of the financial statements for issue) needs to be reflected in the financial statements.

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In brief – A look at current financial reporting issues

IFRS in brief

  • IFRIC 21 Levies – Recognition of the debit
    Read more…
  • IASB issues amendment on one-year deferral of
    IFRS 15

    Read more…

News on IFRS: September 2015

Our latest IFRS news provides perspectives on impairment, IFRS research and negative interest rates.

Impairment through the eyes of regulators

The first half of 2015 has been marked by increased volatility in global markets. This economic environment could lead to revised budgets and forecasts with an expectation of lower cash flows from existing non-financial assets. With the amount of headroom diminishing, regulators have put impairment at the top of their agendas. So, what do they focus on? This article is based on a review of the 2014 ESMA enforcement decisions in relation to IAS 36.

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IFRS research is separating the facts from the hype

Are IFRS financial statements truly comparable? Are entities considering the appropriate qualitative characteristics when making changes to accounting policies? Has the IASB driven the extensive use of fair value?

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Negative interest rates, not just for banks!

A prolonged period of very low interest rates has highlighted some interesting (and unique) accounting issues. These issues don’t just impact banks, all borrowers and lenders could be impacted and the IC is currently looking at several of the issues.

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Cannon Street Press

  • Request for views on work plan
  • Research projects
  • Standard setting projects
  • Maintenance and implementation projects
  • Next steps

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IFRS rejections in short – IAS 7

The saying goes that ‘cash is king’.Users of financial statements stay true to this saying and continue to focus on the ability of an entity to generate cash as well as how it has used that cash. The cash flow statement is the tool designed by standard setters to communicate this information, splitting cash flows into operating, investing and financing activities.

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In brief – A look at current financial reporting issues

IFRS in brief

News on IFRS: July/August 2015

Our latest IFRS news contains some information about revenue recognition, pension accounting requirements and revenue recognition.

IASB proposes clarifications to IFRS 15

The IASB has proposed amendments to IFRS 15 in some of the areas discussed by the TRG. These areas include accounting for licences, principal versus agent guidance and practical expedients on transition. The proposed amendments differ from those suggested by the FASB. Sallie Deysel from Accounting Consulting Services brings us up to speed on the ED.
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IASB issues ED on pensions

Richard Davis from Accounting Consulting Services brings us up to speed on the new Exposure Draft proposing amendments to IAS 19 and IFRIC 14.
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Revenue TRG weighs in again on IFRS 15 implementation issues

The Revenue Transition Resource group (TRG) continues to debate implementation issues related to the new revenue standard.
Read more…

Cannon Street Press

  • Insurance and IFRS 9
  • IFRS Implementation Issues
  • Fair value Measurement
  • IFRS 3 post implementation review
  • Financial Instruments with characteristics of equity

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IFRS rejections in short – IAS 2

Yelena Belokovylenko of Accounting Consulting Services examines the practical implications of IFRIC rejections related to IAS 2.
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Are you interested in more regular updates?

In brief – A look at current financial reporting issues

IFRS in brief

  • Consequences of the Greek financial crisis
    Read more…
  • Accounting for priority review vouchers (pharma industry)
    Read more…