IASB proposes to update Conceptual Framework reference in IFRS 3

The International Accounting Standards Board (Board) has today (May 30) published for public consultation proposed narrow-scope amendments to IFRS 3 Business Combinations. The amendments would update a reference to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations.

IFRS 3 specifies how a company should account for the assets and liabilities it acquires when it obtains control of a business. It refers companies to the Board's Conceptual Framework to determine what constitutes an asset or a liability.

IFRS 3 refers to an old version of the Conceptual Framework. The Board proposes to update IFRS 3 so it refers instead to the latest versionissued in March 2018.

Updating the reference without making any other changes to IFRS 3  could change the accounting requirements for business combinations because the liability definition in the 2018 Conceptual Framework is broader than that in previous versions. Companies would need to record provisions and contingent liabilities when they acquire a business they would not record in other circumstances. To avoid this, the Board also proposes that for provisions and contingent liabilities, companies refer to IAS 37 Provisions, Contingent Liabilities and Contingent Assets instead of the Conceptual Framework to determine what constitutes a liability.

This change is proposed to stand until the Board decides whether and how to amend IAS 37 to align it with the 2018 Conceptual Framework.

The Exposure Draft Reference to the Conceptual Framework, with proposed amendments to IFRS 3, can be found here. The comment deadline is 27 September.


European Single Electronic Format Becomes European Law

After over four years and a mammoth effort translating the IFRS standards into all official EU languages, the European Single Electronic Format (ESEF) became law on May 29.
The mandate is due to take effect for all IFRS based annual reports issued by public companies and PIEs for financial years that start on or after January 1, 2020 and heralds a huge step forward for transparency in Europe. 
ESEF will require all public companies across Europe to submit their Annual Financial Reports digitally as Inline XBRL documents and in accordance with the IFRS standards.
Markets and regulators around the world are shifting from paper to structured data, with ESEF passing into law marking a significant step forward for business transparency and financial analysis across Europe and no doubt accelerating this push in many other parts of the world. With business information in both human and digital machine-readable format, data will be far simpler to search, compare and analyse. ESEF also means Europe will be well placed to take advantage of rapid technological developments in AI and big data analysis – all innovations that could lead to a fundamental change in finance and business over the next decade.

(XBRL International - www.xbrl.org)


AICPA Issues Report on its EAQ Program

The AICPA recently released its annual Highlights and Progress Report on its Enhancing Audit Quality (EAQ) efforts.  That program supports the CPA profession’s commitment to performing high-quality audits. Since 2014, they’ve been analyzing audit data to see where quality improvement is most needed, then developing related resources and education to help auditors, auditees and other stakeholders. Here are some highlights from 2018.

Cybersecurity and Auditor responsibility

Kathleen Hamm, board member for PCAOB recently gave a speech to the Baruch College 18th Annual Financial Reporting Conference which provided an excellent update on the state of management and auditor responsibility for cybersecurity. She called on auditors to step up. Referencing the Yahoo debacle of recent years, and other rather similar events, she pointed to the lack of disclosure by management of the data thefts as a failure of management and the auditors to adequately discharge their responsibilities. 


Ms Hamm’s talk reminds us of why cybersecurity is one of the biggest threats to modern commerce. Read her speech here.

CPA Founding Partner

Chartered Professional Accountants of Canada (CPA Canada), one of the largest national accounting organizations in the world, has chosen to become a founding partner of ThinkTwenty20.