Eye on Reporting

Monthly Financial Reporting newsletter

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Welcome to the July edition of Eye on Reporting.

The new revenue recognition standard, IFRS 15 Revenue from Contracts with Customers, replaces several standards that previously dealt with revenue recognition. In our publication of Applying IFRS, we explore the key aspects of IFRS 15.

This month we also highlight:

  • The International Accounting Standards Board (IASB) has issued an exposure draft which proposes amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures
  • Our IFRS Developments publication on the recent developments in the IASB project on accounting for leases
  • The discussion of application issues related to IFRS 11 Joint Arrangements

Kind regards
Kimberley Crook and Graeme Bennett
Financial Accounting Advisory Services

Eye on Reporting headlines:

Hot topics

  • Applying IFRS: A closer look at the new revenue recognition standard
    A new revenue standard, IFRS 15 Revenue from Contracts with Customers, will supersede virtually all revenue recognition requirements in IFRS and US GAAP. The standard applies to all entities that enter into contracts to provide goods or services to their customers, unless the contracts are in the scope of other IFRSs, for example IAS 17 Leases. The standard also provides a model for the measurement and recognition of gains and losses on the sale of certain non-financial assets, such as property or equipment.

    As a result, IFRS 15 will likely affect an entity’s financial statements, business processes and internal control over financial reporting. While some entities will be able to implement the standard with limited effort, others may find implementation a significant undertaking. An early assessment will be the key to managing implementation.

    Our Applying IFRS publication highlights key aspects of IFRS 15. We also plan to issue industry-specific publications that will address, in further detail, significant changes to current industry practice. We encourage preparers and users of financial statements to read this publication and the industry supplements carefully and consider the potential effects of the standard.

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Other IFRS news and other updates

  • IFRS Developments: The IASB proposes additional guidance on the investment entity exception
    The International Accounting Standards Board (IASB) has issued an exposure draft (ED) proposing amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures to clarify application of the investment entity exception under IFRS 10. Our publication explains the details of the ED and discusses potential implications.

  • IFRS Developments: Boards continue their march towards new leases standard
    The IASB and the Financial Accounting Standards Board (FASB) continued re-deliberating ways to clarify and simplify their 2013 joint proposal on leases. Our latest IFRS Development publication summaries the Boards’ decisions made at their June 2014 meeting.

  • Applying IFRS: Challenges in adopting and applying IFRS 11
    This publication describes the requirements of IFRS 11 Joint Arrangements, explores application issues related to IFRS 11, and summarises the related disclosure requirements for joint arrangements. The publication also addresses some of the key practice issues from implementing IFRS 11 based on experiences of applying it during 2013.

  • Applying IFRS: Accounting for Levies
    IFRIC 21 provides interpretative guidance on the accounting for levies based on the recognition criteria in IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IFRIC 21 is effective for annual periods commencing on or after 1 January 2014 and is applied retrospectively, with early application permitted.

    In this publication, we address some of the frequently asked questions that arise as entities begin to apply IFRIC 21. The publication is not intended to provide a comprehensive list of IFRIC 21 issues and entities must consider all specific facts and circumstances when analysing any potential impacts.

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Industry in focus

  • Insurance
    Our July 2014 Insurance Accounting Alert provides a summary of the IASB’s discussions during its June 2014 meeting. The Board tentatively decided to confirm the principle for discount rates and provided additional application guidance on how to determine discount rates when there is a lack of observable data. The IASB also decided that subsequent changes in cash flow estimates of reinsurance contracts held should be recognised in profit or loss by the cedant when changes in the expected reinsured losses of the underlying direct contracts are recognised in profit or loss. The Board clarified the objective for the level of aggregation for the future insurance contracts standard and tentatively decided to add guidance that onerous contracts should not be aggregated with profit-making contracts when determining the contractual service margin.

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On the horizon

Below are recent proposals that are currently open for comment to the NZASB, IASB and/or International Public Sector Accounting Standards Board (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

IASB ED/2014/1 Disclosure Initiative (Proposed amendments to IAS 1)


23 July 2014

For-Profit ED NZASB 2014-4 Fair Value Disclosures by Retirement Benefit Plans (Amendments to NZ IAS 26)

31 July 2014


PBE ED NZASB 2014-3 Interests In Other Entities (Amendments to PBE SFR-A(NFP))

31 July 2014


PBE ED NZASB 2014-2 Interests In Other Entities (Amendments to PBE SFR-A(PS))

31 July 2014


For-profit Discussion Paper DP/2014/1 Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging

5 September 2014

17 October 2014

For-Profit Entity Consultation about IASB ED/2014/2 Investment Entities: Applying the Consolidation Exception (Proposed amendments to IFRS 10 and IAS 28)

5 August 2014

15 September 2014

International Public Sector Accounting Standards Board Strategy Consultation


31 July 2014

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Events and webcasts

  • IFRS 15: the new revenue recognition standard
    Listen to the replay of this webcast which provide an overview of the requirements of IFRS 15 and find out some of the potential practical application issues faced by attendees.

    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
David Bassett  – 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.