Eye on Reporting
April edition 2018
Welcome to the April edition of Eye on Reporting.
From 1 January 2018, two major new standards – NZ IFRS 9 Financial Instruments and NZ IFRS 15 Revenue from Contracts with Customers - will have to be applied for the first time. Entities need to ensure they give sufficient thought to their 2018 interim financial reporting, as this will be the first external reporting in which these standards are applied. Disclosures of the impact of applying these standards will be required under the general requirements of NZ IAS 34 Interim Financial Reporting.
A number of publications are available which provide further guidance on the disclosure requirements for interim financial reporting. Specifically, our new Good Group — Illustrative Interim Condensed Consolidated Financial Statements (March 2018) contains example disclosures on the impact of applying both NZ IFRS 9 and NZ IFRS 15 for corporate entities.
This month we also highlight:
- Updates to EY Global IFRS Core Tools library to include the International GAAP® Disclosure Checklist - IFRS in issue at 28 February 2018
- The IFRS Interpretations Committee’s Agenda Decision on revenue recognition in a contract for the sale of a unit in a residential multi-unit complex
Graeme Bennett, David Pacey and Lara Truman
Financial Accounting Advisory Services
- What’s new from EY
- IFRS news and other updates: for-profit entities
- IPSAS news and other updates: public benefit entities
- On the horizon
What’s new from EY?
This edition contains illustrative interim condensed consolidated financial statements of Good Group (International) Limited and subsidiaries for the interim period ending 30 June 2018. It is prepared in accordance with IFRS issued as at 28 February 2018 and effective for annual periods beginning on 1 January 2018. This document highlights the new requirements in IFRS 15 and IFRS 9 on first time adoption.
This edition of the checklist is applicable for entities with a year end of 30 June 2018. It captures disclosure requirements for IFRS standards and interpretations in issue at 28 February 2018.
We also offer an Online version of the checklist for client access, which is available in two formats – a subscription-based version that includes links to IFRS and a free version that omits those links.Further details on how to sign up for either the basic online checklist or full subscription with access to the enhanced online checklist are available here.
This is our second edition in a series of joint publications between EY and the University of Melbourne on IFRS 15 Revenue from Contracts with Customers that was founded on the University of Melbourne survey results which indicated that many entities considered they were falling behind in their implementation.
This publication aims to assist entities in transitioning to IFRS 15 by providing practical tips for still meeting this deadline and mitigating the last minute rush.
The revised Conceptual Framework was issued in March 2018. It contains a number of comprehensive changes to the 2010 Conceptual Framework, and includes some new concepts, updated definitions and clarifications.
It is effective for annual periods beginning on or after 1 January 2020 for preparers who develop accounting policies based on the Conceptual Framework.
Please note that the above publications are based on ‘pure’ IFRS, and do not cover New Zealand additional disclosure requirements
IFRS news and other updates: for-profit entities
March 2018 IFRIC Update published
The IFRIC Update is a summary of the decisions reached by the IFRS Interpretations Committee (Committee) in its public meetings. The Committee has reached several Agenda Decisions in its recent meetings, relating to the following issues:
- Presentation of interest revenue for particular financial instruments (IFRS 9 Financial Instruments and IAS 1 Presentation of Financial Statements)
- Revenue recognition in a real estate contract (IFRS 15 Revenue from Contracts with Customers)
- Revenue recognition in a real estate contract that includes the transfer of land (IFRS 15 Revenue from Contracts with Customers)
- Right to payment for performance completed to date (IFRS 15 Revenue from Contracts with Customers)
Topics discussed, decisions reached and agenda papers can be accessed here.
Approval of the amendments to NZ IAS 19 Employee Benefits for when there is a change to a defined benefit plan
In its meeting on 21 March 2018, the New Zealand Accounting Standards Board (NZASB) has approved for issue the Plan Amendment, Curtailment or Settlement (Amendments to NZ IAS 19).
This amendment clarifies the requirements for accounting for employee benefits when there is a plan amendment, curtailment or settlement to a defined benefit plan.
The amendments are effective from 1 January 2019 and can be viewed here.
International Accounting Standards Board (IASB) seeks comments on proposed amendments to IAS 8
Applying IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, an entity changes an accounting policy only if the change is required by an IFRS or results in improving the usefulness of information provided to users of its financial statements. However, a common reason why an entity voluntarily changes an accounting policy is to reflect non-authoritative material included in agenda decisions published by the IFRS Interpretations Committee.
To facilitate voluntary changes in accounting policy that result from an agenda decision, the IASB intends to amend IAS 8 to lower the impracticability threshold for retrospective application of such changes.
Further information can be found here.
IASB completes revisions to its Conceptual Framework
On 29 March 2018, the IASB issued a revised version of its Conceptual Framework for Financial Reporting. The revised Conceptual Framework includes: a new chapter on measurement; guidance on reporting financial performance; improved definitions and guidance—in particular the definition of a liability; and clarifications in important areas, such as the roles of stewardship, prudence and measurement uncertainty in financial reporting.
Further information and supporting documents can be found here.
IPSAS news and other updates: public benefit entities
Webinar: Accounting for Leases - proposed changes from IPSASB for lease accounting
Exposure Draft 64 Leases (ED 64), proposes some key changes to the accounting for leases by public benefit entities as well as associated disclosures in the financial statements, is currently open for comment. If you are a lessor we urge you to read the document and consider commenting as the proposals are significantly different to the for-profit requirements in NZ IFRS 16 and could have significant impact on a lessors financial statements.
The External Reporting Board (“XRB”) has issued a webinar which summarises key points from the ED. A replay of the webinar can be accessed here.
IPSASB about to propose amendments to IPSAS 39 Employee Benefits equivalent to the Amendments to NZ IAS 19 Employee Benefits
The Board applied the Policy Approach to the Development of PBE Standards (PBE Policy Approach) to the Amendments to NZ IAS 19 and noted that the International Public Sector Accounting Standards Board (IPSASB) is about to propose equivalent amendments to IPSAS 39 Employee Benefits.
These amendments will be addressed in a future PBE Omnibus project.
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/XRB by
Comments due to IASB by
Comments due to IPSASB by
31 May 2018
30 June 2018
23 April 2018
30 May 2018
13 April 2018
27 July 2018
For more information on any of the points raised in this newsletter, please contact a member of EY Financial Accounting Advisory Services Team:
|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
|Charis Halliday – Senior Manager, Wellington|| |
+64 275 543 047
|Kim Wilson – Senior Manager, Christchurch|| |
+64 257 396 614
|Yulia Bogatova – Manager, Auckland|| |
+64 274 899 408
|Gali Slyuzberg – Manager, Wellington|| |
+64 274 899 565
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.