Eye on Reporting

November edition 2017

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Welcome to the November edition of Eye on Reporting.

On 12 October 2017, the International Accounting Standards Board (IASB) issued a narrow scope amendment to IFRS 9 Financial Instruments. This amendment addresses which financial assets can be measured at amortised cost and clarifies the accounting for the modification of a financial liability.

The IASB also made amendments to IAS 28, providing guidance on the accounting for long-term interests in associates or joint ventures, to which the equity method is not applied, using IFRS 9.

In the public benefit entity (PBE) space, the long awaited standard on Service Performance reporting, PBE FRS 48, was issued by the NZASB on 9 November 2017. This standard establishes principles and requirements for public benefit entities to present service performance information that is useful for accountability and decision-making purposes in a general purpose financial report.

This month we also highlight:

  • Updated versions of our publications on IFRS 15 Revenue from Contracts with Customers, covering presentation and disclosure requirements of IFRS 15 as well as key changes from current IFRS and recent developments
  • Our new EY Webcast: IAS 12 and IFRIC 23 developments
  • Update of our IFRS Core Tools library to include an Alternative Format version of Good Group–Illustrative Consolidated Financial Statements (December 2017) and the IFRS Update publication

Kind regards
Kimberley Crook and Graeme Bennett
Financial Accounting Advisory Services


What’s new from EY?

EY - IFRS Developments, Issue 130: IASB issues an Amendment to IFRS 9

IFRS Developments, Issue 130: IASB issues an Amendment to IFRS 9

On 12 October 2017, the International Accounting Standards Board (IASB) issued an amendment to IFRS 9 Financial Instruments. This amendment enables more assets to be measured at amortised cost than under the previous version of IFRS 9. Specifically, it allows debt instruments with negative compensation prepayment features to be measured at amortised cost or fair value through other comprehensive income. It also clarifies that, under IFRS 9, gains and losses arising on modifications of financial liabilities that do not result in derecognition should be recognised in profit or loss.

The amendment is effective for annual reporting periods beginning on or after 1 January 2019, but earlier application is permitted.

Note that the equivalent amendments to NZ IFRS 9 on Prepayment Features with Negative Compensation were issued by the NZASB on 9 November 2017.


EY - IFRS Update of standards and interpretations in issue at 30 September 2017

IFRS Update of standards and interpretations in issue at 30 September 2017

IFRS Update is an overview of upcoming changes in standards and interpretations issued by the IASB and the IFRS IC as at 30 September 2017 that will be effective for the first-time for reporting periods ended at that date or thereafter. It also summarises key features of selected IASB projects and recent IFRS IC agenda rejection notices.

Please note that this publication and the following publication below are based on ‘pure’ IFRS, and do not cover New Zealand additional requirements.


EY - Good Group – Illustrative Consolidated Financial Statements – Alternative Format (December 2017)

Good Group – Illustrative Consolidated Financial Statements – Alternative Format (December 2017)

This edition contains the illustrative consolidated financial statements of Good Group (International) Limited and subsidiaries for the year ended 31 December 2017 or thereafter, prepared using an alternative format and in accordance with IFRS in issue at 31 August 2017 and effective for annual periods beginning 1 January 2017.

The notes to the financial statements in this edition have been reorganised according to their nature and their importance.


EY - Applying IFRS- IFRS 15 Revenue from Contracts with Customers: A closer look at the new revenue recognition standard (Updated October 2017)

Applying IFRS- IFRS 15 Revenue from Contracts with Customers: A closer look at the new revenue recognition standard (Updated October 2017)

With its effective date fast approaching, entities will soon need to adopt the new revenue recognition standard, IFRS 15 Revenue from Contracts with Customers. Our updated Applying IFRS publication analyses the new standard, including the amendments made by the IASB in April 2016, and explains key changes from current IFRS as well as recent developments from the IASB, International Financial Reporting Interpretations Committee (IFRIC) and the Joint Transition Resource Group for Revenue Recognition (TRG).


EY - Applying IFRS- IFRS 15 Revenue from Contracts with Customers: Presentation and Disclosure requirements of IFRS 15

Applying IFRS- IFRS 15 Revenue from Contracts with Customers: Presentation and Disclosure requirements of IFRS 15

Our updated publication summarises the presentation and disclosure requirements of IFRS 15 Revenue from Contracts with Customers, an aspect which may present significant challenges both on transition and an ongoing basis. The publication uses examples from early-adopters, to illustrate possible formats for disclosing information required by IFRS 15.


EY - IFRS 9 Impairment Banking Survey

EY IFRS 9 Impairment Banking Survey

In 2017, EY performed a third IFRS 9 impairment survey of 29 major banking institutions. This was undertaken to assess financial institutions’ state of readiness in the implementation of the IFRS 9 program with a particular focus on impairment. This publication outlines the survey results, including the expected impact of IFRS 9, key operating model and policy decisions, and the assessment of business impacts.


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IFRS news and other updates: for-profit entities

International Accounting Standards Board issues narrow–scope amendments to IFRS 9 and IAS 28

On 12 October 2017, the IASB issued amendments to IFRS 9 and IAS 28 Investments in Associates and Joint Ventures to aid implementation. The amendments to IFRS 9 are covered by our IFRS Developments publication, Issue 130 in the section above.

The amendments to IAS 28 clarify, that companies account for long-term interests in an associate or joint venture — to which the equity method is not applied — using IFRS 9.

The IASB has also published an example that illustrates how companies apply the requirements in IFRS 9 and IAS 28 to long-term interests in an associate or joint venture. This example can be accessed here.

IASB staff webcast on IFRS 9: don't forget disclosure

This webcast is presented by IASB staff and the key disclosure requirements introduced with IFRS 9, which are significantly different to those in IAS 39 and therefore may result in significant changes in the information provided in the financial statements of many entities.

The webcast can be accessed here.

Approved for issue: 2017 Omnibus Amendments to NZ IFRS

On 9 November 2017, the NZASB issued the 2017 Omnibus Amendments to NZ IFRS. These include a series of amendments to NZ IFRS 10 Consolidated Financial Statements, NZ IAS 28 Investments in Associates and Joint Ventures, NZ IFRS 4 Insurance Contracts, NZ IFRS 7 Financial Instruments: Disclosures, as well as some minor or editorial corrections to other standards.

The amendments require the ultimate New Zealand parent entity (except where the parent is an investment entity) to present consolidated financial statements and to apply the equity method when accounting for investments in associates and joint ventures. They also include further minor amendments to NZ IFRS.

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IPSAS news and other updates: public benefit entities

PBE FRS 48 Service Performance Reporting

PBE FRS 48 Service Performance Reporting was issued by the NZASB on 9 November 2017. Key elements of the new standard are the requirements for qualifying public benefit entities to provide sufficient contextual information to understand why the entity exists, what it intends to achieve in broad terms over the medium to long term, and how it goes about this. Entities will also need to provide further information on what the entity has done during the reporting period in working towards its broader aims and objectives and disclose any significant judgements made.

The standard will be applicable to all Tier 1 and Tier 2 not-for-profit PBEs; and Tier 1 and Tier 2 public sector public benefit entities required by legislation to provide information in respect of service performance in accordance with generally accepted accounting practice (GAAP). The standard is effective for annual periods beginning on or after 1 January 2021 (earlier application is permitted).

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Events and webcasts

EY Insurance Webcast: Implementing IFRS 17: experiences from the field

IAS 12 and IFRIC 23 developments webcast

In June 2017, the IASB issued IFRIC 23 Uncertainty over Income Tax Treatments, which interprets the requirements of IAS 12 Income Taxes. IFRIC 23 aims at addressing key concerns related to the accounting for uncertain tax positions. This webcast will highlight everything you need to know about IFRIC 23 and an agenda decision on Interest and penalties related to income taxes. It will also cover the amendments to IAS 12 Income taxes, issued in January 2016.

This webcast will take place on Wednesday, 15 November 2017, Register for this webcast here.

Archived recordings of all our previous webcasts are available here.

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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

IPSASB Exposure Draft 62, Financial Instruments

13 November 2017

 

31 December 2017

IPSASB Accounting for Revenue and Non-Exchange Expenses Consultation Paper

22 November 2017

 

15 January 2018

IASB Exposure Draft ED/2017/6 Definition of Material (Amendments to IAS 1 and IAS 8)

24 November 2017

15 January 2018

 

IASB Exposure Draft ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8)

24 November 2017

15 January 2018

 

Invitation to comment on Tentative Agenda Decision and comment letters—Revenue recognition in a real estate contract

 

20 November 2017

 

Invitation to comment on Tentative Agenda Decision and comment letters—Contributing property, plant and equipment to an associate

 

20 November 2017

 

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Contacts

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
Charis Halliday – Senior Manager, Wellington +64 275 543 047
Yulia Bogatova – Manager, Auckland +64 274 899 408
Gali Slyuzberg – Manager, Wellington +64 274 899 565

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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.

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