Eye on Reporting
EY’s monthly financial reporting newsletter
Welcome to the May edition of Eye on Reporting.
We are pleased to announce that we have issued three new publications on proposed changes to accounting standards for public benefit entities (PBEs). These publications provide an overview of the proposed new standard on service performance reporting and five standards on accounting of interests in other entities.
This month we also issued a publication Improving disclosure effectiveness —The New Zealand story, which provides a short update on the financial reporting trends we observed in 2014 and 2015, and comments on what we might expect to see as we enter the 2016 reporting season.
Our IFRS Core Tools library has recently been updated and includes the March 2016 edition of IFRS Update. This edition provides an overview of the key requirements of pronouncements issued by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee as at 31 March 2016, as well as summarises the key features of selected IASB projects.
This month we also highlight:
- Our latest Applying IFRS publication on discussion of the key implications of IFRS 16 Leases for financial services entities.
- Our webcast on the IASB’s recent amendments, Clarifications to IFRS 15.
Kimberley Crook and Graeme Bennett
Financial Accounting Advisory Services
Eye on Reporting headlines:
- What’s new from EY?
- IFRS news and other updates: for-profit entities
- XRB updates
- Events and webcasts
- On the horizon
What’s new from EY?
|IFRS Core Tools|
This publication provides a high level summary of the exposure drafts for five new PBE Standards that deal with accounting for, and disclosure of, a PBE’s interests in other entities. Tier 1 and Tier 2 public sector and not-for-profit PBEs will be required to comply with the new standards when they are issued as final standards.
The New Zealand Accounting Standards Board (NZASB) has issued an exposure draft for a new PBE Standard on service performance reporting to address the information needs of users of the financial statements.
Certain Tier 1 and Tier 2 public sector PBEs and all Tier 1 and Tier 2 not-for-profit PBEs will be required to comply with the proposed standard. Our At a Glance publications provide a summary of new requirements for the statement of service performance under the new standards. Please note we issued two publications in relation to the new standard on service performance reporting: one publication for public sector PBEs and a separate publication for not-for-profit PBEs.
Improving disclosure effectiveness is a key trend in financial reporting. More companies are taking up the challenge to change financial reporting from a compliance exercise into a communication tool. EY has surveyed the efforts of NZX 50 entities to improve their disclosure effectiveness at 30 June 2014 and 30 June 2015. In this publication we provide a short update on the financial reporting trends we observed, and comment on what we might expect to see as we enter the 2016 reporting season.
The March 2016 edition of IFRS Update provides a high-level overview of the key requirements of each pronouncement issued by the IASB and the IFRS Interpretations Committee as at 31 March 2016 that are applicable for the first time for annual periods ended March 2016 and thereafter.
IFRS Update also summarises the key features of selected IASB projects and the most recent agenda rejection notices published by the IFRS Interpretations Committee.
Please note that the IFRS Update publication is based on ‘pure’ IFRS, and does not cover New Zealand additional disclosure requirements.
This edition of Applying IFRS summarises the key implications of IFRS16 Leases for financial services entities. IFRS 16 significantly changes the accounting for leases by lessees and could have implications for financial services entities’ balance sheets and regulatory capital requirements. This may be important in negotiating lease terms and payments for assets such as properties.
IFRS news and other updates: for-profit entities
IASB issued amendments to IFRS 15
The International Accounting Standards Board (IASB) issued amendments to IFRS 15 Revenue from Contracts with Customers, clarifying some requirements and providing additional transitional relief for entities that are implementing the new Standard.
The amendments to IFRS 15 do not change the underlying principles of the Standard but clarify how those principles should be applied. They arise as a result of discussions of the Transition Resource Group (TRG).
The amendments clarify how to:
- identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract
- determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided) and
- determine whether the revenue from granting a licence should be recognised at a point in time or over time.
In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for an entity when it first applies the new Standard.
The amendments are effective for period beginning on or after 1 January 2018.
EY’s latest IFRS Developmentspublication summarises the clarifications issued by the IASB on IFRS 15.
Please note the New Zealand Accounting Standards Board (NZASB) has not yet issued amendments to NZ IFRS 15, but the amendments are expected to be issued in the near future.
IASB decides to broaden eligibility for the temporary exemption from IFRS 9
During the April meeting, the IASB continued its redeliberations on proposed amendments to IFRS 4 Insurance Contracts to allow entities issuing contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 Financial Instruments together with IFRS 4 before the new insurance contracts standard (IFRS 4 Phase II) becomes effective.
The Board made tentative decisions, allowing for broader eligibility for the temporary exemption from applying IFRS 9 (temporary exemption) and it also evaluated several aspects of the overlay approach.
XRB issued the EG A1 Guide to the application of the Accounting Standards Framework
The External Reporting Board (XRB) issued the Explanatory Guide XRB A1 Guide to the application of the Accounting Standards Framework (EG A1).
EG A1 reflects the completion of the staged implementation of the Accounting Standards Framework. The Explanatory Guide accompanies the latest version of XRB A1 and is applicable for reporting periods beginning on or after 1 January 2016. The Explanatory Guide is not mandatory. EG A1 can be found here.
Events and webcasts
Our panel of EY subject-matter professionals will discuss the IASB’s recent amendments, Clarifications to IFRS 15, and will highlight practical challenges and a variety of examples.
Our panel will also highlight the latest thinking on selected questions discussed by members of the IASB/FASB Joint Transition Resource Group (TRG). In this webcast, we will discuss:
Register for the webcast here.
Archived recordings of all our previous webcasts are available here.
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
27 May 2016
30 June 2016
ED NZASB 2016-1 PBE IPSAS 34 Separate Financial Statements
30 June 2016
29 July 2016
For more information on any of the points raised in this newsletter, please contact a member of EY 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|
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.