NEW IFRS PUBLICATIONS
As IFRS (International Financial Reporting Standards) are evolving fast, we continue our focus on the latest IASB’s (International Accounting Standards Board) updates. Since our last blog published in July 2016, the following publications have been issued by the IASB:
Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts”
These amendments address concerns about the different effective dates of IFRS 9 and the forthcoming new insurance contracts standard. This future IFRS 17 is expected to be published during the first quarter of 2017 with an effective date being probably 2021.
The amendments enable insurers to choose between two solutions during the temporary period (2018-2021) :a “deferral” approach whereby an insurer can apply IAS 39 rather than IFRS 9 until 2021, or an “overlay” approach that permits to recognize in other comprehensive income, rather than profit or loss, the volatility that could arise from designated financial assets (until 2021).
Annual improvements to IFRS – 2014-2016 cycle
The Annual Improvements process provides a mechanism for dealing efficiently with a collection of minor amendments to IFRS Standards. The 2014-2016 cycle brings amendments to the following standards:
- IFRS 1 (First-time Adoption of International Financial Reporting Standards): some short-term exemptions for first-time adopters have been deleted because they are no more applicable. The reliefs provided had been available to entities only for reporting periods that had passed.
- IFRS 12 (Disclosure of Interests in Other Entities): the amendments clarify that the requirements of this standard also apply to interests in entities within the scope of IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations) except for summarized financial information required by paragraph B17.
- IAS 28 (Investments in Associates and Joint Ventures): the amendments only regard investments in associates and joint ventures held by a venture capital organization, or a mutual fund, unit trust and similar entities including investment-linked insurance funds. These entities are allowed to measure these investments at fair value through profit or loss instead of applying the equity method. The amendments now clarify that this choice is to be made on an investment-by-investment basis, upon initial recognition.
IFRIC 22 – Foreign currency transactions and advance consideration
IFRIC 22, which is an interpretation of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, provides requirements about which exchange rate to use in reporting foreign currency transactions when payment is made or received in advance. IFRIC 22 addresses this issue by clarifying that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity should determine a date of the transaction for each payment or receipt of advance consideration.
Transfers of investment property (Amendments to IAS 40)
The amendments to IAS 40 clarify the circumstances where transfers from or to the investment property category are permitted.
NEW 5-YEAR WORK PLAN
Following the public agenda consultation launched in August 2015, the IASB published in November 2016 its five-year work plan.
After the completion of the remaining standard-setting projects (Insurance Contracts and Conceptual Framework), which is expected for the first half of 2017, the central theme for the Board’s activities until 2021 will be Better communication in financial statements. This topic includes a disclosure initiative, a project on primary financial statements and other projects including work on IFRS Taxonomy.
The latest short-term oriented work plan was published on December, 16th:
We will get back to these projects in our next blog. Stay tuned!