Eye on Reporting

October edition 2018

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Welcome to the October edition of Eye on Reporting.

As highlighted in last month’s newsletter, Crypto-assets, taking a multitude of forms and constantly evolving, present complex challenges for preparers of financial information. The substance of the underlying economic relationships must be understood, and the best fit found under existing accounting standards.

Dealing with crypto-asset accounting therefore requires a detailed understanding of both distributed ledger technology and relevant accounting concepts. Even though the latest meeting of the IFRS Interpretations Committee saw discussions around possible standard-setting activities that may be undertaken, no immediate action by accounting standard setters is in sight.

Adding to the resources presented in our September newsletter, we have also released a publication which aims to provide guidance on the accounting under IFRS by the general holders of crypto-assets.

This month we also highlight:

  • The update of our Core Tools Library to include the International GAAP® Disclosure Checklist - IFRS in issue at 31 August 2018
  • The issue of NZASB ED 2018-4 PBE IPSAS 40 PBE Combinations

Kind regards
Graeme Bennett, David Pacey and Lara Truman
Financial Accounting Advisory Services


What’s new from EY

EY - Applying IFRS: A closer look at IFRS 15, the revenue recognition standard (Updated October 2018)

Applying IFRS: A closer look at IFRS 15, the revenue recognition standard (Updated October 2018)

Our updated Applying IFRS publication includes important changes to address evolving implementation issues. It is intended for use by entities that have adopted IFRS 15 Revenue from Contracts with Customers and also by those that are in the process of adopting.

The revenue standard, which was jointly developed with the FASB, creates a comprehensive source of revenue requirements for all entities in all industries. Our updated publication analyses the revenue standard, expanding our discussion of certain topics, including recent developments from the IASB and IFRS Interpretations Committee (IC).

EY - International GAAP Disclosure Checklist - IFRS in issue at 31 August 2018

International GAAP® Disclosure Checklist - IFRS in issue at 31 August 2018

This edition of the checklist is applicable for entities with a year end of 31 December 2018. It captures disclosure requirements for IFRS standards and interpretations in issue at 31 August 2018.

There is also an online version of the checklist which is available through the EY Online portal. The online checklist tool is available in two formats – a subscription-based version that includes links to IFRS and a free version that omits those links. For details, see the following link.

EY - IFRS Core Tools - Update of standards and interpretations in issue at 30 September 2018

IFRS Core Tools - Update of standards and interpretations in issue at 30 September 2018

This publication provides an overview of upcoming changes in standards and interpretations issued by the IASB and the IFRS IC as at 30 September 2018 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 decisions.

EY - Insurance Accounting Alert October 2018

Insurance Accounting Alert October 2018

The IASB held its third Transition Resource Group (TRG) meeting to discuss the implementation of IFRS 17 Insurance Contracts in September 2018. The TRG discussed ten IASB staff papers on specific issues submitted to the Board. In addition, IASB staff responses to 17 further issues raised were summarised and reported to the TRG.

 

Please note that the above publications are based on ‘pure’ IFRS, and do not cover New Zealand additional disclosure requirements.

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IFRS news and other NZ specific updates: for-profit entities

IAS 37 Provisions, Contingent Liabilities and Contingent Assets: Exposure draft on proposed amendments expected this quarter

As stated during the IASB’s September meeting, the Board is planning to issue the exposure draft on Costs Considered in Assessing Whether a Contract is Onerous and related proposed amendments to IAS 37 in the last quarter of 2018.

Webcast: Presentation of financial liabilities — Financial Instruments with Characteristics of Equity (FICE) Discussion Paper

This webcast discusses the IASB’s preferred approach to the presentation of financial liabilities.

It covers the proposal on how to present in other comprehensive income total income and expenses from certain types of financial liabilities and derivatives. The objective is to help users of financial statements distinguish income and expenses arising from financial liabilities with equity-like returns from income and expenses arising from financial liabilities with debt-like returns.

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IPSAS news and other NZ specific updates: public benefit entities

NZASB ED 2018-4 PBE IPSAS 40 PBE Combinations has been issued for comment

ED 2018-4 sets out proposals for accounting for amalgamations and acquisitions that would replace the current requirements in PBE IFRS 3 Business Combinations. The ED is based on IPSAS 40 Public Sector Combinations, issued by the International Public Sector Accounting Standards Board (IPSASB).

There are some significant differences between the proposals in the ED and the requirements in PBE IFRS 3. The ED:

  • has a broader scope than PBE IFRS 3 – the scope of PBE IFRS 3 excludes combinations under common control and combinations arising from local authority reorganisations; and
  • proposes to establish requirements for both amalgamations and acquisitions — PBE IFRS 3 requires that all combinations within the scope of the standard be accounted for as acquisitions

Webinar on PBE Combinations

The XRB is hosting a webinar on the ED detailed above, which will cover

  • an overview of the ED;
  • significant differences between the proposals in the ED and the requirements in PBE IFRS 3;
  • classifying a combination as an amalgamation or an acquisition; and
  • accounting for amalgamations and acquisitions.

PBE Standard based on IPSAS 41 Financial Instruments

The XRB has agreed to develop an ED of a PBE Standard based on IPSAS 41 which was released by the International Public Sector Accounting Standards Board (IPSASB) in September 2018. Because this new standard would eventually replace PBE IFRS 9 Financial Instruments, the Board agreed to defer the mandatory effective date of PBE IFRS 9 to align with the proposed effective date of the new standard. We expect to see an ED issued in the next month or two.

PBE Standard based on IFRS 17 Insurance Contracts

The XRB is currently working on developing a PBE Standard based on IFRS 17 Insurance Contracts. An ED is expected to include specific issues relevant to PBEs. The final standard will replace PBE IFRS 4 Insurance Contracts. We expect to see an ED issued by the end of 2018.

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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

IASB Discussion Paper Financial Instruments with Characteristics of Equity

7 Nov 2018

7 January 2019

 

IPSASB ED 66 Long term Interests in Associates and Joint Ventures (Amendments to IPSAS 36) and Prepayment Features with Negative Compensation (Amendments to IPSAS 41)

22 Oct 2018

 

22 Oct 2018

NZASB ED 2018-4 PBE IPSAS 40 PBE Combinations

31 January 2019

 

 

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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:

Graeme Bennett  – Partner, Auckland

+64 274 899 943

David Pacey – Associate Partner, Auckland

+64 212 425 716

Lara Truman – Associate Partner, 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

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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