Eye on Reporting
March edition 2018
Welcome to the March edition of Eye on Reporting.
This month was relatively quiet from a standard setting perspective. The New Zealand Accounting Standards Board (NZASB) discussed a number of important projects at its February meeting, including ED 63 Social Benefits and the related PBE project on insurance accounting. The NZASB has decided to develop a PBE Standard based on NZ IFRS 17 Insurance contracts which will eventually replace PBE IFRS 4 Insurance Contracts. This work will continue over the coming months and we will update you once the NZASB issues its initial work.
On 7 February 2018, the IASB issued amendments to the guidance in IAS 19 Employee benefits, which relate to the accounting for plan amendments, curtailments and settlements. IAS 19 requires that when a plan is changed the net defined benefit asset or liability must be remeasured. The amendments issued confirm that an entity must use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement.
This month we highlight:
- Our publication IFRS Developments Issue 134: IASB issues amendments to IAS 19 Employee Benefits which covers these amendments and their potential impact
- Update of our Core Tools Library to include Good Investment Fund Limited (Equity) 2018 - Illustrative financial statements
- The issue of the amending standard - Annual Improvements to NZ IFRSs 2015–2017 Cycle by the New Zealand Accounting Standards Board (NZASB)
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?
The IASB has issued amendments to IAS 19 Employee Benefits, addressing the accounting for a plan amendment, curtailment or settlement that occurs during a period. Entities will be required to use updated actuarial assumptions to determine current service cost and net interest for the remainder of the reporting period after such events.
The publication can be accessed here.
This publication provides an overview of the status of the European Union (EU) endorsement process for IFRS standards and amendments issued by the IASB as at 31 December 2017 with an EU effective date after 1 January 2017. The information related to EU endorsement is as of 12 February 2018.
The publication can be accessed here.
Good Investment Fund Limited (Equity) 2018 - Illustrative financial statements
This edition contains the illustrative annual financial statements of Good Investment Fund Limited (Equity) for the year ended 31 December 2018, prepared in accordance with IFRS issued as at 31 August 2017.
The Fund is a fictitious open-ended investment fund, incorporated and listed in a fictitious country whose puttable shares are classified as equity instruments under IAS 32 Financial Instruments: Presentation.
A separate publication entitled Good Investment Fund Limited (Liability), whose puttable shares are classified as liability under IAS 32 is also available here.
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
The IASB has published a one-page summary of the accounting model in IFRS 17 Insurance Contracts
This summary illustrates different elements of the model and how they will be displayed on a company’s balance sheet and income statement and can be accessed here.
The NZASB has issued an amending standard - Annual Improvements to NZ IFRSs 2015–2017 Cycle
This amending standard—based on Annual Improvements to IFRS Standards 2015–2017 Cycle, issued by the International Accounting Standards Board (IASB)—clarifies requirements in the following standards and subjects:
- NZ IFRS 3 Business Combinations and NZ IFRS 11 Joint Arrangements: Previously held interest in a joint operation
- NZ IAS 12 Income Taxes: Income tax consequences of payments on financial instruments classified as equity
- NZ IAS 23 Borrowing Costs: Borrowing costs eligible for capitalisation
This amending standard is effective for annual periods beginning on or after 1 January 2019 with early application permitted. The amendments can be accessed here.
Our publication summarising the amendments resulting from the equivalent Annual Improvements to IFRS Standards 2015-2017 Cycle issue can be accessed here. Please note that this publication is based on ‘pure’ IFRS, and does not cover New Zealand additional disclosure requirements.
IPSAS news and other updates: public benefit entities
External Reporting Board (XRB) Webinar: Proposed Changes to Accounting for Leases by PBEs
The way Tier 1 and 2 public benefit entities (PBEs) account for leases is under review. Most not-for-profit and public sector entities will enter lease arrangements, with some of these at below-market terms (concessionary leases).
The potential impact of the proposed changes are considered to be widespread, for both lessees and lessors, and may impact both an entity's financial position and financial performance.
The XRB has scheduled a webinar which outlines the proposed changes and will take place on 15 March 2018. You can register for the webinar here.
The NZASB has published for public comment Exposure Draft NZASB 2018-2 Omnibus Amendments to Tier 3 and Tier 4 PBE Accounting Requirements (Simple Format Reporting – Limited Scope Amendments).
The ED includes amendments to:
- align terminology and concepts with the PBE Conceptual Framework (to the Tier 3 standards only)
- clarify existing requirements, and
- add a requirement to sign and date the performance report.
It also incorporates amendments (to Tier 4 standards only) arising from the 2017 Amendments to XRB A1 Application of the Accounting Standards Framework (2017 Amendments to XRB A1) and makes minor editorial amendments.
The ED is currently open for comments and can be accessed 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/XRB by
Comments due to IASB by
Comments due to IPSASB by
31 May 2018
30 June 2018
23 April 2018
31 March 2018
30 May 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.