IAASB Enhances Standard For Assurance Engagements

In today’s global economy, there is strong public interest in high quality, relevant assurance on information beyond the audit or review of financial statements. Recognising this, the International Auditing and Assurance Standards Board (IAASB) released an updated and enhanced International Standard on Assurance Engagements (ISAE), titled ISAE 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, which addresses a broad range of assurance engagements.

ISAE 3000 (Revised) covers a wide variety of engagements, ranging from assurance on statements about the effectiveness of internal control, for example, to assurance on sustainability reports and possible future engagements addressing integrated reporting. The standard covers both reasonable and limited assurance engagements, and introduces guidance designed to help readers better understand these two levels of assurance.

“ISAE 3000 (Revised) is the overarching standard for current and future topic-specific ISAEs and assurance engagements where no separate ISAE exists. As a result, the IAASB’s revision involved striking an appropriate balance between ensuring that the standard is sufficiently robust, and that it is able to also facilitate innovation in the dynamic and evolving field of assurance,” noted James Gunn, IAASB Technical Director.

IASB Concludes 2010-2012 & 2011-2013 Annual Improvements Cycles

The International Accounting Standards Board (IASB) recently issued Annual Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle. The IASB uses the Annual Improvements process to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of any other project. The effective date of each amendment is included in the IFRSs affected.

Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle are a collection of amendments to IFRSs in response to issues addressed during the respective cycle for annual improvements to IFRSs. These amendments result from proposals that were contained in the Exposure Drafts (EDs) published in May 2012 and in November 2012 respectively.

IASB Publishes Proposals For Amendments Under Annual Improvements Cycle 2012-2014

The IASB recently published for public comment an ED of five proposed amendments to four IFRSs under its annual improvements project. The proposed amendments reflect issues discussed by the IASB in the project cycle that began in 2012. The proposed effective date for the amendments is for annual periods beginning on or after 1 January 2016, although earlier adoption is permitted.
Details of the proposed amendments outlined are as follows:

  • IFRS 5 Non-current Assets Held for Sale and Discontinued Operations – Changes in methods of disposal;
  • IFRS 7 Financial Instruments: Disclosures – Servicing contracts and Applicability of the amendments to IFRS 7 to condensed interim financial statements;
  • IAS 19 Employee Benefits – Discount rate: regional market issue;
  • IAS 34 Interim Financial Reporting – Disclosure of information ‘elsewhere in the interim report’.

IASB Publishes Proposals For Narrow-Scope Amendments To IAS 27 Separate Financial Statements

The IASB recently published for public comment ED: Equity Method in Separate Financial Statements (Proposed amendments to IAS 27). The proposed amendments to IAS 27 would allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate (parent only) financial statements. The IASB expects the proposed change will reduce compliance costs for many entities, while providing information helpful to an assessment of the investor’s net assets and profit or loss.

IASB Publishes Narrow-Scope Amendmentts To IAS 19 Employee Benefits

The IASB recently published narrow scope amendments to IAS 19 Employee Benefits entitled Defined Benefit Plans: Employee Contributions (Amendments to IAS 19). The narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary.

IASB Completes Important Steps In Reform Of Financial Instruments Accounting

The IASB recently announced the completion of a package of amendments to the accounting requirements for financial instruments.

Hedge accounting: The IASB has introduced a new hedge accounting model, together with corresponding disclosures about risk management activity for those applying hedge accounting. The changes to hedge accounting and the associated disclosures were developed in response to concerns raised by preparers about the difficulty of appropriately reflecting their risk management activities in the financial statements and concerns raised by users about the difficulty of understanding hedge accounting. The new model represents a substantial overhaul of hedge accounting that will enable entities to better reflect their risk management activities in their financial statements. The most significant improvements apply to those that hedge non-financial risk, and so these improvements are expected to be of particular interest to non-financial institutions. As a result of these changes, users of the financial statements will be provided with better information about risk management and about the effect of hedge accounting on the financial statements.

Own credit: As part of the amendments, the changes introduced also enable entities to change the accounting for liabilities that they have elected to measure at fair value, before applying any of the other requirements in IFRS 9. This change in accounting would mean that gains caused by a worsening in an entity’s own credit risk on such liabilities are no longer recognised in profit or loss.

IFRS 9 effective date: Because the impairment phase of the IFRS 9 project has not yet been completed, the IASB decided that a mandatory date of 1 January 2015 would not allow sufficient time for entities to prepare to apply the new Standard. The amendments made to IFRS 9 thus remove the mandatory effective date. However, entities may still choose to apply IFRS 9 immediately. The IASB decided that a new date should be decided upon when the entire IFRS 9 project is closer to completion.

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