Eye on Reporting

Monthly Financial Reporting newsletter

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Welcome to the November edition of Eye on Reporting.

We are delighted to announce the release of our updated IFRS Core Tools publications. These tools are designed to keep you up with the changing landscape of IFRS.

The new revenue standard marks a significant change from current requirements under IFRS. Early preparation will be key to the successful implementation of the new standard. In this edition we explore important aspects and practical implementation issues of IFRS 15 for entities from different industries.

This month we also highlight:

  • The September 2014 edition of IASB Projects: A pocketbook guide
  • The New Zealand Accounting Standards Board (NZASB) has issued revised PBE Standards, which have been enhanced for not-for-profit entities
  • Our IFRS Developments publications on the recent developments in the IASB project on accounting for leases.

Kind regards
Kimberley Crook and Graeme Bennett
Financial Accounting Advisory Services

Eye on Reporting headlines:

Hot topics

  • 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:

    • IFRS Update at 31 August 2014. This edition of IFRS Update provides an overview of IFRS standards and interpretations effective for years ended September 2014 and thereafter. It includes standards and interpretations in issue at 31 August 2014.
    • Good Group (International) Limited - December 2014. The edition contains the illustrative annual consolidated financial statements of Good Group (International) Limited and subsidiaries for the year ended 31 December 2014. The illustrative financial statements are prepared in accordance with IFRS issued as at 31 August 2014.
    • International GAAP® Disclosure Checklist at 31 August 2014. This edition of the checklist is applicable for entities with a year end of 31 December 2014 or thereafter.
    Please note that these publications are based on ‘pure’ IFRS, and do not cover New Zealand additional disclosure requirements.

    The 2014/15 edition of Good Group New Zealand Limited for Tier 1 and Tier 2 for-profit entities applying NZ IFRS is currently under development.
  • New accounting standards and interpretations

    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 30 September 2014 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.

  • IASB Projects: a pocketbook guide as at 30 September 2014

    The September 2014 edition of IASB Projects: A pocketbook guide summarises the key features of the IASB’s active projects at 30 September 2014. It also includes some potential implications of the proposals, along with our views on certain projects.

    This is the final edition of the pocketbook guide. We will continue to keep you informed about the IASB’s active projects in our publication IFRS Update.

  • NZASB issued Effective Date of NZ IFRS 9 (PBE)

    The New Zealand Accounting Standards Board (NZASB) issued Effective Date of NZ IFRS 9 (2009) (PBE) and NZ IFRS 9 (2010) (PBE). The Standard amends the mandatory effective date of both versions of NZ IFRS 9 (PBE) from 1 January 2015 to 1 January 2018. The purpose of the amendment is to defer the mandatory date of application so that not-for-profit entities currently applying NZ IFRS PBE are not required to apply either version of NZ IFRS 9 (PBE) before they are required to apply the PBE Accounting Standards from 1 April 2015.

    The Standard is available here.

  • NZASB issued PBE Standards enhanced for not-for-profit entities

    The NZASB issued the PBE Standards and the PBEs' Framework that incorporate enhancements for not-for-profit (NFP) entities. These standards apply to Tier 1 and Tier 2 NFP entities, and are effective for reporting periods beginning on or after 1 April 2015. They can be applied earlier by NFP entities as long as all the pronouncements are applied at the same time.

    The standards and the PBE Framework are available on the XRB website here.

    The NZASB also issued two explanatory guides to help NFP entities with their financial reporting requirements from 1 April 2015:

    EG A8 provides guidance for NFP entities that are required to prepare financial statements in compliance with GAAP in deciding what to include in the reporting entity.

    EG A9 helps NFP reporting entities to identify whether they have a relationship with one or more other entities for financial reporting purposes. If a reporting entity has a relationship with another entity for financial reporting purposes, EG A9 briefly explains how that relationship is accounted for by the reporting entity.

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Other IFRS news and other updates

  • IFRS Developments: FASB addresses sale and leasebacks

    At a separate Financial Accounting Standards Board (FASB) meeting, the FASB made decisions to clarify the proposed guidance on the accounting for sale and leaseback transactions. The FASB also addressed some US GAAP issues, affirming its 2013 proposed decisions about the discount rate for lessee entities that are not public business entities, the accounting for leveraged leases and the accounting for related party leasing transactions. Our IFRS Developments tells you what you need to know about these decisions.

  • IFRS Developments: Boards reaffirm the definition of a lease but continue to work on its application

    The International Accounting Standards Board (IASB) and the FASB reaffirmed, at their October 2014 meeting, their proposed definition of a lease and made some changes to how that definition would be applied. The Boards will consider an additional clarification at a future meeting. Our IFRS Developments publication tells you what you need to know about these developments.

  • NZASB issued amendments to NZ IFRS 10 and NZ IAS 28

    The NZASB issued narrow-scope amendments to NZ IFRS 10 Consolidated Financial Statements and NZ IAS 28 Investments in Associates and Joint Ventures (2011). The amendments address an acknowledged inconsistency between the requirements in NZ IFRS 10 and those in NZ IAS 28 (2011), in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The Standard requires the recognition of the full gain or loss on a transaction involving a business and a partial gain or loss on a transaction involving assets that do not constitute a business, regardless of whether the business or assets are within a subsidiary. The amendments apply to Tier 1 and Tier 2 for-profit entities, and are effective from annual periods commencing on or after 1 January 2016. Earlier application is permitted.

    The standard is available here and on the XRB website.

  • NZASB issued amendments to NZ IAS 27

    The NZASB issued Equity Method in Separate Financial Statements (Amendments to NZ IAS 27). The Standard allows entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in its separate financial statements. The Standard is applicable to Tier 1 and Tier 2 for-profit entities, and is effective for annual periods beginning on or after 1 January 2016, with early application permitted.

    The Standard is available here and on the XRB website.

  • XRB issued Exposure Draft to Remove For-profit Tier 3 and Tier 4

    The External Reporting Board (XRB), which is responsible for the New Zealand Accounting Standards Framework, has issued an Invitation to Comment (ITC) and two exposure drafts (ED) to remove For-profit Tier 3 (NZ IFRS Diff Rep) and Tier 4 (Old GAAP) from the Accounting Standards Framework for periods beginning on or after 1 April 2015. The ED also revokes NZ IFRS PBE from 1 April 2015 as this set of standards has been replaced by the PBE Standards.

    The ITC and EDs are available for download here.

  • IFRS Developments: Proposed clarifications of unit of account and fair value measurement requirements

    The IASB has proposed clarifications of: the unit of account for subsidiaries, joint ventures and associates; and the fair value measurement requirements for certain quoted investments. Our IFRS Developments summarises the proposals.

  • IFRS Developments: IASB concludes the 2012-2014 Annual Improvements Cycle

    The IASB issued their annual cycle of improvements to IFRSs 2012-2014 Cycle in September 2014. The document sets out five amendments to four standards that are effective on or after 1 January 2016. Please note that the NZASB has not yet issued the New Zealand equivalents to the Annual Improvements 2012-2014 Cycle.

    Our IFRS Developments summarises the amendments.

  • IFRS Developments: IASB discussion paper on rate regulation

    This publication provides an overview of the key highlights of the discussion paper published by the IASB on reporting the financial effects of rate regulation.

  • IFRS Developments Retail and Consumer Products: The new revenue recognition standard - retail and consumer products

    The IASB and the FASB issued their joint revenue recognition standard IFRS 15 Revenue from Contracts with Customers earlier this year, which replaces existing IFRS and US GAAP revenue requirements. Our IFRS Developments summarises some of the key aspects of IFRS 15 for retail and consumer products entities. The topics covered include: rights of return; customer options for additional goods or services; consideration paid or payable to customers; reseller or distributor arrangements; licences and franchise arrangements.

    We also invite you to register for our global webcast on IFRS 15, scheduled for 18 November 2014, where we will discuss how the new revenue recognition model will impact the retail and consumer products industry.

    Please click here to register.

  • IFRS Developments for Power and Utilities: The new revenue recognition standard – power and utilities

    Power and utilities (P&U) entities may need to change certain revenue recognition practices as a result of IFRS 15. The key issues for the P&U entities include determining how the standard applies when identifying performance obligations, estimating variable consideration and accounting for contract modifications. Our IFRS Developments provides an overview of the new requirements of IFRS 15 for P&U entities.

  • IFRS Developments for oil and gas: The new revenue recognition standard – oil and gas and IFRS Developments for oilfield services: The new revenue recognition standard – oilfield services

    In these publications, we outline the key considerations and actions for oil and gas and oilfield services entities in determining when and how to apply IFRS 15.

  • IFRS Developments: Audit committee considerations for the new revenue standard

    Audit committees have an important role to play overseeing the implementation of the new standard in their organisations. Our IFRS Developments highlights audit committee considerations for the new revenue standard.

  • IFRS Practical Matters – Revenue reckoning: a transformational new standard

    The latest edition of our IFRS Practical Matters series helps organisations understand the impact of the new revenue recognition standard. This publication describes what chief financial officers, chief accounting officers or board members need to do now to prepare for the change.

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Industry in focus

  • Insurance

    Insurance Accounting Alert: September 2014
    This Insurance Accounting Alert covers topics addressed at the September 2014 IASB meeting. The IASB continued re-deliberations on its 2013 Exposure Draft Insurance Contracts (ED). The Board held a decision-making discussion on two topics for the premium allocation approach (PAA):

    • Pattern of revenue recognition.
    • Determination of interest expense in profit or loss.
    The Board also held an educational session on contracts that contain participating features (participating contracts), in which it provided the staff with further provisional direction on the model for such contracts.

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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

Comments due to IPSASB by

ED NZASB 2014-6 Omnibus Amendments to For-Profit Accounting Standards

28 November 2014



ED NZASB 2014-5 Disclosure Concessions for Tier 2 For-profit Entities: NZ IFRS 15 Revenue from Contracts with Customers

14 November 2014



IASB ED/2014/4 Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value (Proposed amendments to IFRS 10, IFRS 12, IAS 27, IAS 28 and IAS 36 and Illustrative Examples for IFRS 13)

28 November 2014

16 January 2015


For-profit Discussion Paper Reporting the Financial Effects of Rate Regulation

28 November 2014

15 January 2015


ED/2014/3 Recognition of Deferred Tax Assets for Unrealised Losses (Proposed amendments to IAS 12)

21 November 2014

18 December 2014


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Events and webcasts

  • IFRS 9: impairment for banks and similar entities (Replay)

    In this webcast, our panel will discuss the new IFRS 9 impairment requirements and what this means for banks and similar entities with significant credit risk exposures. This includes:

    • Key principles of the expected credit loss model for loans and bonds
    • Key changes from the exposure draft
    • Significant interpretation issues and practical implementation issues
    • The impact and implications for banks and similar entities

    Please click here to watch.

  • International Public Sector Accounting - IPSAS Update 2014

    Join us on 3 December for a discussion on the latest developments in the area of international public sector accounting. We will provide a progress update on key projects currently on the International Public Sector Accounting Standards Board’s (IPSASB) agenda, and also the developments regarding its governance and oversight.

    We will also be talking about IPSAS adoption and implementation around the world, including the status of EPSAS (European Public Sector Accounting Standards) for EU Member States and New Zealand’s progress on implementing IPSAS.

    This webcast is aimed at providing public sector finance managers with the latest developments on the IPSASB's projects and IPSAS implementation globally.

    Please click here to register.

  • Improving disclosure effectiveness (Replay)

    The terms ’disclosure overload’ and ’cutting the clutter’ are used to describe a problem in financial reporting that has become a priority issue for the IASB, local standard setters, and regulatory bodies. The growth and complexity of financial disclosure is also drawing significant attention from the users and preparers of financial statements. If an entity is able to improve the effectiveness of communication through the financial statements, the entity is reducing the users’ uncertainty about its financial position and performance and, ultimately, the cost of capital.

    In this webcast, we will discuss:

    • The projects that the IASB is currently undertaking within a broad-based initiative to explore how disclosures in IFRS financial reporting can be improved.
    • The ways of making financial statements more effective in communicating financial information under current IFRS.

    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
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.