The comment period on the Leases exposure draft ended on 13 September 2013. The comments received by the IASB and the FASB are far from unanimous, and many criticisms have been expressed on both sides of the Atlantic, some even challenging the model upheld by the Boards. Even some organisations representing analysts or users of financial statements have suggested that the standard setters’ proposals do not meet their needs.
When in August 2010, the IASB and the FASB published a joint exposure draft on leases, they could have had no idea that they would have to re-expose their proposals three years later. This, however, is what they were forced to do on 16 May 2013, so generally hostile were responses to the initial draft, so complicated the redeliberations and so changeable the positions.
At a time when the American organisations are appointing new leaders to both the FASB and the SEC, the IASB is continuing its work, and expects to see an exceptional number of publications in 2013.
Key documents such as the second exposure draft on leases, or the exposure draft on insurance contracts, are due for publication before the end of June.
The final standards on revenue recognition and hedge accounting should follow soon after.
The first quarter of 2013 is coming to a quiet close – and there is even a gleam of hope in sight! At the end of its March meeting, the IASB finally decided to remove the proposed interpretation on puts on non-controlling interests from its work plan, and to review the controversial elements of IAS 32 with a view to a potential amendment.
Over the course of the year, the IASB has redoubled its efforts on the financial instruments, revenue recognition, leases and insurance contracts projects – but has not yet published final standards for any of them. December 2012 saw nothing more significant than the publication of the proposed limited amendments to IFRS 10 and IAS 28, and to IFRS 11.
Once again, year-end reporting has come around! Unfortunately, you might be tempted to say. As in 2011, it’s not the new accounting texts which will make this a tricky exercise; it’s the background of crisis. Yet again, much is expected of issuers in terms of the quality and clarity of their disclosures, in particular regarding the impairment of financial and non-financial assets, the discount rate of future pension liabilities, and provisions for risks and expenses. This is what emerges from ESMA’s recommendations.
The SEC’s report on the work plan for the endorsement of IFRSs, published last July, made a great impression, since it was entirely free of any recommendations for adoption of IFRSs by the United States. After the shock come the reactions, and the cautious attitude of the US is causing some gritting of teeth.
Following the summer break, it’s back to school for the IASB, with even more new projects. Its work plan now includes three new limited amendments projects and three new research projects. Notably, the Board has decided to publish a revised exposure draft on phase II of IFRS 4: Insurance contracts.
Despite the uncertainty over whether the US will eventually adopt IFRS, the IASB is
continuing to make progress on its current major projects.
Deliberations are ongoing and the IASB is planning to publish exposure drafts on
leases, impairment of financial assets (phase 2 of the Financial Instruments
project) and limited amendments to the rules on classification and measurement
(phase 1 of the Financial Instruments project) by the end of the year.
Financial instruments were in the spotlight in April! The two Boards continued their progress on the proposed “expected loss” impairment model for financial assets (Phase II of IFRS 9/Impairment), and in particular clarified how the expected loss estimate should be determined. The Boards also reached an agreement on the definition of a business model which would permit measuring financial assets at amortised cost, and on bifurcation of embedded derivatives (Reopening of Phase I of IFRS 9/ Classification and measurement).
At the end of March, the IASB updated its work plan, once again postponing the publication of documents relating to the joint projects on Financial Instruments and Leases. In the case of Financial Instruments, publication of the Review Draft on hedge accounting and the Discussion Paper (or exposure draft, depending on the IASB’s final decision) on macro-hedging have been put back to the second quarter and second half of 2012, respectively.
At the time of writing this editorial, the IASB Update – the official publication reporting on Board meetings – had not yet been published, as the IASB’s last meeting spanned the end of February and the beginning of March. As a result, it is difficult for us to report on the Board’s provisional decisions, given that the subjects discussed were particularly complex and open to interpretation.