Eye on Reporting

Monthly Financial Reporting newsletter

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Welcome to the April edition of Eye on Reporting.

The International Accounting Standards Board (IASB) has now largely completed its deliberations on the new leases standard and has directed the IASB staff to commence drafting. The IASB is expected to issue the new leases standard in the second half of 2015. Our IFRS Developments publication discusses the latest IASB decisions.

Our IFRS Core Tools library has recently been updated and includes illustrative interim financial statements for periods ending 30 June 2015 and thereafter, as well as an updated 30 June 2015 year end disclosure checklist. Both documents incorporate IFRS standards and interpretations in issue as at 28 February 2015.

This month we also highlight:

  • Our publications on the IASB and FASB discussions about implementation issues relating to the new revenue standard
  • The latest Applying IFRS publication on the key measurement principles and disclosures requirements under the standard on share-based payment
  • The Insurance Accounting Alert on the IASB’s March 2015 discussions on its 2013 ED Insurance Contacts.

Kind regards
Kimberley Crook and Graeme Bennett
Financial Accounting Advisory Services

Eye on Reporting headlines:


Hot topics

Charities Amendment Act 2014 effective 1 April 2015
On 6 November 2014, the Charities Amendment Act 2014 received Royal Assent. The Charities Amendment Act 2014 requires the financial statements of a "large" charitable entity (with annual operating expenditure of $1m or more) to be audited by a qualified auditor and the financial statements of a "medium size" charitable entity (with annual operating expenditure of $500,000 or more) to be subject to an audit or a review. The amendment is effective for reporting periods beginning on or after 1 April 2015.

IFRS Developments Issue 103: IASB staff to begin drafting the new leases standard
The International Accounting Standards Board (IASB) has directed the staff to proceed with preparing the new leases standard for balloting, as the due process requirements necessary to issue a new standard have been met. The IASB also decided to require additional disclosures for lessees in the period that the new standard is first applied. Our IFRS Developments tells you what you need to know about the IASB’s decisions at its March 2015 meeting.

Applying IFRS: New standard on leases is taking shape
The IASB and the US Financial Accounting Standards Board (FASB) have substantially completed redeliberations on the forthcoming leases standards that would require lessees to recognise assets and liabilities for most leases. Many aspects of today’s lessor accounting would remain the same. Our Applying IFRS publication discusses how the IASB’s new standard would be applied so that entities can identify and evaluate the effects on their finances and operations before it the Board issues the new standard, which we expect to occur in the second half of 2015.

IFRS Core Tools

We have released our updated IFRS Core Tools publications. The IFRS Core Tools are designed as practical building blocks to provide a comprehensive basis for our clients to keep up with the changing landscape of IFRS. The updates comprise: 

Good Group (International) Limited - illustrative interim condensed consolidated financial statements for the period ended 30 June 2015. This edition contains the illustrative interim condensed consolidated financial statements of Good Group (International) Limited and subsidiaries for interim periods ending 30 June 2015 or thereafter. The illustrative financial statements are prepared in accordance with IFRS in issue at 28 February 2015.

International GAAP® Disclosure Checklist (IFRS in issue at 28 February 2015). This edition of the checklist is applicable for entities with a period end of 30 June 2015 or thereafter. It captures disclosure requirements for IFRS standards and interpretations in issue at 28 February 2015.

Please note that these publications are based on ‘pure’ IFRS, and do not cover New Zealand additional disclosure requirements.

New accounting standards and interpretation
NZ IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors requires disclosure when an initial application of a standard has an effect on the current period, or any prior period, and disclosure of the possible impact of new and revised standards and interpretations that have been issued but are not yet effective.

The attached publications indicate standards and interpretations which have become effective, and those on issue which are not yet effective, for 31 March 2015 year-ends.

It is important to note that there are two separate publications, one for for-profit entities and one for public benefit entities (PBEs). Differences in the accounting standards framework applying to for-profit entities and PBEs make it important to select the applicable publication.

New Accounting Standards and Interpretations for For-profit Entities

New Accounting Standards and Interpretations for Public Benefit Entities

 

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Other IFRS news and other updates

IFRS Developments Issue 104: IASB and FASB decide to make more changes to their new revenue standards
The FASB and the IASB agreed to propose adding practical expedients to their new revenue standards to make it easier for entities to account for contract modifications at transition. This edition of IFRS Developments tells you what you need to know about the issues discussed by the Boards in March 2015.

Applying IFRS - TRG for revenue recognition discusses more implementation issues
At the March meeting, the Transition Resource Group (TRG) for revenue recognition discussed a number of implementation issues raised by stakeholders about the new revenue standards and reached general agreement on many topics. This edition of Applying IFRS summarises their discussions.

Applying IFRS: Accounting for share-based payments under IFRS 2 - the essential guide
This publication gives an overview of the accounting for share-based payments under IFRS 2 Share-based Payment. The standard requires entities to measure and recognise such transactions in their financial statements. This publication outlines the key measurement principles and disclosures requirements under IFRS 2.

 

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Industry in focus

Public Sector

IPSAS Outlook - March 2015
The latest issue of IPSAS Outlook discusses the drivers for Indonesia’s decision to move from cash to accrual accounting and the steps taken to implement this decision. We also explore the requirements of IPSASB’s recently issued IPSAS 33 First-time Adoption of Accrual Basis IPSASs.

Insurance
Insurance Accounting Alert March 2015: IASB continues its discussions on participating contracts
At its March meeting, the IASB held an education session as part of the redeliberations on its 2013 ED Insurance Contracts. The IASB explored what adaptations to the ‘general model’ applied to non-participating contracts could be made for participating contracts. No decisions were made. This issue of the Insurance Accounting Alert summarises what you need to know about the IASB’s March 2015 discussions.

Real Estate
Applying IFRS in Real Estate: The new revenue recognition standard – real estate
This publication considers the potential implications of IFRS 15 for real estate entities. It supplements our Applying IFRS: A closer look at the new revenue recognition standard (June 2014) and should be read in conjunction with that publication.

 

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On the horizon

Below are recent proposals that are currently open for comment to the NZASB, IASB and/or IPSASB. Please refer to the current exposure draft section on the XRB website for more details (www.xrb.govt.nz).

Standard/Exposure Draft

Comments due to NZASB by

Comments due to IASB by

Comments due to IPSASB by

IASB ED/2014/6 Disclosure Initiative (Proposed amendments to IAS 7)

N/A – comment period closed

17 April 2015

 

IASB ED/2015/1 Classification of Liabilities (Proposed amendments to IAS 1)

12 May 2015

10 June 2015

 

Public Benefit Entity Consultation on ED NZASB 2015-2 2015 Omnibus Amendments to PBE Standards

15 May 2015

 

 

Public Benefit Entity Consultation on ED NZASB 2015-1 Disclosure Initiative (Amendments to PBE IPSAS 1) 

15 May 2015

 

 

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Events and webcasts

The new revenue recognition standard: a closer look - A webcast series for IFRS preparers: session 1, 2 and 3 (Replay)

Register for three sessions of our webcast - The new revenue recognition standard: a closer look. The webcast series will include a detailed discussion and a variety of examples for each step of the new revenue recognition model by our panel of subject-matter professionals.

The first webcast in this series will cover the requirements of Step 1 and Step 2 of the new revenue recognition model, as well as the application guidance on warranties. Our panel will also discuss the transition requirements of the new standard. Please click here to watch.

The second webcast will cover the requirements of Step 3 and Step 4, as well as the guidance on capitalisation of costs to obtain and fulfil contract. Please click here to watch.

The third webcast will cover the requirements of Step 5, as well as the application guidance on licenses of intellectual property. Our panel will also discuss presentation and disclosure requirements, highlighting areas that may require significant amounts of data and/or judgments by management. Please click here to watch.

Archived recordings of all our previous webcasts are available here.

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  • Contacts

For more information on any of the points raised in this newsletter, please contact a member of EY’s Financial Accounting Advisory Services Team:


Kimberley Crook  – Partner, Auckland +64 274 899 535
Graeme Bennett  – Partner, Auckland +64 274 899 943
David Pacey  – Executive Director, Auckland +64 212 425 716
Lara Truman  – Executive Director, Wellington +64 274 899 896
Alex Knyazev  – Senior Manager, Auckland +64 218 53 152
David Bassett  – Senior Manager, Auckland +64 274 899 883


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The information contained in this newsletter does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to action being taken on any of the information.

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