We include details of the IFRS developments including a new Practice Statement and an interpretation on materiality in financial statements. There is also information about the latest implementation guidance for IFRS 16 Leases and we comment on an initiative from Accountancy Europe to promote a discussion about improving the communication and presentation of financial information.
Cybersecurity is a critical risk management issue for business. Crowe Horwath LLP (US) maintains a practical resource centre about cybersecurity and the AICPA has issued a cybersecurity risk management reporting framework that all businesses should consult.
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The International Accounting Standards Board (IASB) has issued IFRS Practice Statement 2 Making Materiality Judgements. The publication encourages companies to apply judgement instead of using IFRS requirements as a checklist, so that financial statements focus on the information that is useful to investors.
The Practice Statement gathers all the materiality requirements in IFRS Standards and adds practical guidance and examples companies might find helpful in deciding whether information is material.
The Practice Statement is not mandatory and neither changes requirements nor introduces new ones. Companies are permitted to apply the guidance in the Practice Statement to financial statements prepared any time after 14 September 2017.
A short video introduces the guidance.
New IFRS standards and guidance will be issued that will improve communication in financial reporting. At present, there is "disclosure overload" often leading to duplication and important information being lost amidst irrelevant and minor detail. A change in approach is essential for financial reporting to continue with its transition into new media and away from traditional bully printed documents. There is an opportunity to promote innovation and flexibility in financial reporting and at the same time improve quality and accessibility.
In applying IFRIC 23 the company has to consider whether a taxation authority might examine the uncertain tax position. Based on experience and expert advice the accounting treatment should reflect how the authority might conclude on the matter.
IFRIC 23 Interpretation is effective from 1 January 2019.
IFRS 17 Insurance Contracts was issued in May 2017. Following the issuance of the standard, the IASB released a series of resources to help with the implementation of IFRS 17. They include webinars, slides and presentations to meetings with investors, regulators and national standard setters.
At an Accountancy Europe event held in Brussels on 18 September 2017, the paper Core & More - An opportunity for smarter corporate reporting was presented. A particular feature of the discussion at the event was the impact of changing technology on corporate reporting. One observation was "the status quo is going backwards."
Core & More aims to present corporate reporting in a smarter way, organising financial and non-financial information based on the interests of users. Information relevant for a wide range of stakeholders would be in the Core report, and supplementary details for a more limited audience would form the More reports. The paper explores how technology might support the Core & More concept, especially in the context of an online report. It also addresses the relationship between Core & More and the Integrated Reporting initiative, as well as the need to foster innovation.
Camillo Giovannini of Crowe Horwath Romania has prepared a detailed briefing introducing the Regulation. Crowe Horwath International member firms in the EU can provide support to companies that are impacted by the Regulation. An early discussion about the implications is strongly advised.
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