Liquidity risk – give us the worst case!

A European example of issues arising in classifying liabilities for purposes of liquidity disclosures Here’s another of the issues arising from extracts of enforcement decisions issued in the past by the European Securities and Markets Authority (ESMA); this is from their 24th edition: The issuer issued loan notes (i.e. financial liabilities) that all have a…

Reducing disclosures for subsidiaries – why stop there?

IASB proposes reduced disclosure requirements for subsidiaries, announces a recent news release Here’s the summary: The proposals respond to feedback from stakeholders and are designed to ease financial reporting for eligible subsidiaries while meeting the needs of the users of their financial statements. The proposed Standard would be available to subsidiaries without public accountability—companies that…

Earnings management and the environment – we hit you either way

When companies massage the books, the environment takes a hit, indicates a recent article on the Canadian Accountant website Here are some extracts: Earnings management may be a form of financial fraud, but there are plenty of defenders who say accounting standards allow for managerial discretion in reporting earnings. Besides, when firms manipulate their books, aren’t they hurting…

Business combinations under common control – we cover it all!

Let’s return to the IASB’s discussion paper Business Combinations under Common Control, on which comments are requested by September 1, 2021. As we covered here, the main proposal is that fair-value information should be provided when a business combination under common control affects shareholders outside the group. In all other cases, the Board is suggesting…

Applying lease concepts, or: blowing in the wind!

CPA Canada’s IFRS Discussion Group recently discussed the following fact pattern: A landowner (“Landowner”) with a plot of agricultural land enters into an agreement for a specified period of time with Entity X (“Customer”) allowing the Customer to place a specified number of wind turbines and associated infrastructure on the plot of land. The Customer…

More intangible assets- the next balance sheet wave?

Are we approaching a revolution in accounting for intangible assets…? Asked in an interview about major current challenges and opportunities, the new IASB Chair Andreas Barckow commented as follows: The biggest challenge I see is to remain relevant in an ever-changing environment. While I think that our literature has generally stood the test of time,…

Management commentary – a risk-laden enterprise!

As we covered here, the IASB recently issued for comment a new framework for management commentary. The document describes management commentary as “a report that complements an entity’s financial statements. It provides management’s insights into factors that have affected the entity’s financial performance and financial position and factors that could affect the entity’s ability to…

Sustainability standards – if they affect anyone’s decisions, we don’t want them!

Here’s an extract from a comment letter submitted by US SEC Commissioner Hester M. Peirce to the IFRS Foundation, on its initiative to create a sustainability standards board Financial statements, prepared according to high-quality accounting standards, enable investors to make informed economic decisions. As the Foundation’s website explains, “IFRS Standards contribute to economic efficiency by…

Economic benefits from a windfarm – in substance it’s all ours!

The IFRIC recently issued for comment a tentative agenda decision on Economic Benefits from Use of a Windfarm, with comments requested by August 16, 2021. Here’s the fact pattern: The Committee received a request about whether, applying paragraph B9(a) of IFRS 16, an electricity retailer (customer) has the right to obtain substantially all the economic…