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 January 2017, the following publications have been issued by the IASB:
IFRS 17: the long-awaited standard for insurance accounting
The issuance of IFRS 17 in May 2017 is the conclusion of a major project started in 2007. IFRS 17 is effective from 1 January 2021 and replaces IFRS 4 Insurance Contracts, which has always been presented as an interim standard.
The current standard IFRS 4 does not prescribe the measurement of insurance contracts as it essentially grandfathered any national GAAP. Consequently, transition to the new requirements will be very different from one company to another and, for some of them, will bring fundamental changes to existing insurance accounting practices.
Because insurance contracts are generally not issued by companies outside of the insurance industry, IFRS 17 is expected to affect almost exclusively insurance companies. For that reason, we will not get into details regarding IFRS 17 requirements. Supporting materials for implementation are available here on the official IFRS website.
Discussion Paper “Principles of Disclosure”: a first milestone in the “Better Communication in Financial Reporting” project
In 2013, the Board launched its Disclosure Initiative, a portfolio of implementation and research projects, to address the problems identified and improve the effectiveness of disclosures in financial statements.
The current situation can be illustrated as follows:
The Discussion Paper published in March 2017 suggests principles governing what, how and where information should be disclosed in the financial statements to improve the information provided to users of financial statements. It focuses primarily on the content of the notes.
The Discussion Paper seeks public feedback on disclosure issues the Board has identified through outreach as well as its preliminary proposals to resolve these issues. Ultimately, it is expected that it could lead to amendments to IAS 1 Presentation of Financial Statements—the Standard covering general disclosure requirements—or the development of a new general disclosure Standard.
IFRIC 23 “Uncertainty over Income Tax Treatments”, which is an interpretation of IAS 12 “Income Taxes”, addresses the accounting for income taxes when tax treatments involve uncertainty. Where it is unclear how tax law applies to a particular transaction or circumstance, IFRIC 23 requires an entity to assess whether it is probable that a tax authority will accept an uncertain tax treatment used by an entity in its income tax filings. If yes, the entity should determine its accounting tax position consistently with the tax treatment used in its income tax filings. If no, the entity should reflect the effect of uncertainty in determining its accounting tax position.
The other H1-2017 publications are only proposals that do not call for comments at that stage.
Update of the Board’s Work Plan
The latest workplan published on June, 26th is available here on the official IFRS website.
As regards the publications expected for H2-2017, we will pay particular attention to the final revision of the Conceptual Framework and to the Practice Statement on materiality (which is part of the Disclosure Initiative Project).
We will get back to these projects in our next blog. Stay tuned!