Eye on Reporting
Monthly Financial Reporting newsletter
Welcome to the July edition of Eye on Reporting.
This month we highlight the latest in our series of publications on the potential implications of the new revenue recognition standard for various industry sectors, this time for mining and metal entities.
We also highlight:
- The New Zealand Accounting Standards Board will be working with the Australian Accounting Standards Board to support its membership of a prestigious advisory group to the International Accounting Standards Board
- Our latest IFRS Development publication on the International Accounting Standards Board’s project to address accounting for dynamic risk management
- Our webcast on impacts of IFRS 9 Financial Instruments on non-financial institutions.
Kimberley Crook and Graeme Bennett
Financial Accounting Advisory Services
Eye on Reporting headlines:
IFRS news and other updates
NZASB to work with AASB on international advisory forum
The New Zealand Accounting Standards Board (NZASB), a sub-board of the XRB, will be working with the Australian Accounting Standards Board (AASB) to support its membership of a prestigious advisory group to the International Accounting Standards Board (IASB). The AASB is one of just four Asia-Oceania representatives on the Accounting Standards Advisory Forum (ASAF). Following a recent review of ASAF and its membership, the AASB has retained its membership, with the assistance of the NZASB.
Read full release on the XRB's website.
New accounting standards and interpretation
NZ IAS 8 and PBE IPSAS 3 Accounting Policies, Changes in Accounting Estimates and Errors require 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 30 June 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.
Amendments to Standard XRB A2
The External Reporting Board (XRB) has issued Standard Amendments to Standard XRB A2 Meaning of Specified Statutory Size Thresholds (XRB A2). The amending Standard takes into account amendments to the Charities Act 2005 (Charities Amendment Act 2014) which, among other matters, set out the size thresholds for a charitable entity for assurance purposes. The Charities Amendment Act 2014 uses the terms ‘total operating expenditure’ and ‘control’ for the purpose of determining the size thresholds.
The amending Standard and XRB A2 are available on the XRB's website.
This edition of IFRS Developments covers the background of the IASB’s project to address accounting for dynamic risk management and the Board’s discussions during its May 2015 meeting around the next steps of the project.
Applying IFRS: New Venezuelan currency regime - same accounting and reporting considerations
Venezuela’s revamped foreign currency exchange system will require companies with operations there to reconsider the exchange rate(s) they use to translate their bolivar-denominated monetary assets and liabilities and related revenues and expenses. Entities should also consider supplementing their disclosures to reflect their consideration of recent events. This Applying IFRS tells you what you need to know.
Industry in focus
Mining & Metals
The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have jointly issued a revenue recognition standard, IFRS 15 Revenue from Contracts with Customers, which replaces the existing IFRS and US GAAP revenue requirements. Mining and metals entities will need to change how they evaluate many of their transactions, even if the amount of revenue they report may not change significantly, or at all. While in general, we do not expect IFRS 15 to significantly affect the accounting for many common types of arrangements in the sector, entities will still need to carefully evaluate how IFRS 15 may affect specific contracts and their financial reporting processes overall. This publication considers key implications of IFRS 15 for mining and metals entities. The publication expands on our earlier IFRS Developments for Mining & Metals: IFRS 15 – the new revenue recognition standard: Impact on mining and metals entities (September 2014). The publication also supplements our Applying IFRS: A closer look at the new revenue recognition standard (June 2014) and should be read in conjunction with that publication.
At its June meeting, the IASB tentatively decided to modify the proposed insurance accounting model for contracts with participation features based on the variable fee approach. This approach will apply only to contracts that meet certain criteria. The CSM for these contracts will be recognised in profit or loss on the basis of the passage of time. Our Insurance Accounting Alerttells you what you need to know.
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
9 October 2015
26 October 2015
9 October 2015
26 October 2015
30 September 2015
19 October 2015
Events and webcasts
IFRS 9 for non-financial institutions (Replay)
The IASB issued the final version of IFRS 9 Financial Instruments. The standard is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Impacts of the new standard will be varied, and may include significant development of systems and processes. It is critical to plan an initial assessment of the likely impacts of IFRS 9 in order to manage successful transition and implementation.
During this webcast, our panel will discuss the key concerns of IFRS 9 and provide insights on:
- The background to the IFRS 9 project
- Key areas of impact for non-financial institutions
- The new classification model
- The new expected credit loss model, and how it applies to non-financial institutions
- New criteria for hedge accounting, with practical examples.
Please click here to watch.
IFRS 4 Insurance Contracts - Participating contracts and update on key issues (Replay)
The IASB has substantially completed the development of the model for non-participating contracts under IFRS 4. However, issues relating to its model for insurance contracts with participating features have yet to be resolved. The coming months will be key to resolving the remaining issues in order for a standard to be issued.
Join us for an update on progress and a discussion about the key outstanding questions. This webcast will specifically discuss:
- Timelines for completion and interaction with IFRS 9
- IASB model – main tentative decisions to date and key issues for remaining re-deliberations
- Participating contracts – what is the issue, what proposals are being considered, and how will questions be resolved?
- The road ahead.
Please click here to watch.
The IASB's proposed Conceptual Framework
Join us for a discussion of the IASB’s proposed Conceptual Framework Exposure Draft. Our subject matter professionals explain the proposed principles and concepts and discuss the consequential amendments, effective date and transition requirements.
- Proposed definitions of financial statement elements (assets, liabilities, income and expenses)
- Various measurement bases
- Presentation and disclosure issues and the principles and objectives proposed.
Click here to register for the webcast scheduled for Asia-Pacific time zones.
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.
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|
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.