The IASB recently published the conclusions from its recent Agenda Consultation and its five-year work plan.
Here’s how the news release summed it up:
- Listening to feedback from stakeholders, the Board has confirmed that a central theme for its activities until 2021 will be Better Communication in financial statements.
- The Board aims to improve the communication effectiveness of financial statements by taking a fresh look at how financial information is presented and grouped together. It will also continue to enhance disclosures and – through the IFRS Taxonomy™–support the use of electronic reporting.
- Other focus areas for the five-year period are:
- completing large projects– finalizing the new insurance contracts Standard and the revision of the Conceptual Framework, both of which are expected to be issued in 2017;
- supporting implementation – continuing to develop support, including online support, for stakeholders’ implementation of new IFRS Standards, and maintaining existing Standards effectively through the IFRS Interpretations Committee and post-implementation reviews; and
- focusing the research programme – reducing the number of research projects to enable stakeholders to engage in the Board’s work more fully and to ensure timely completion.
I don’t think there’s anything too surprising in there, or in the accompanying feedback statement. For those who were dreaming of deliverance from the complexities of income tax accounting, the statement confirms the board isn’t pursuing the area any further, although it notes it “may be worth developing some educational material, especially to explain the nature of the information provided by the ‘temporary difference’ approach used in accounting for deferred tax.” I couldn’t quite follow what the report is saying about accounting for share-based payments, another of the areas many love to hate. The report says (as the IASB has in the past) that no further work is being done, but then it classifies the area as one of eight research projects to be developed actively. Maybe I’m just missing something there. Perhaps the project most likely to create future turmoil is that on goodwill and impairment, looking at whether changes should be made to the impairment test for goodwill and other non-current, non-financial assets, and at the relative merits of an impairment-only approach and an amortization and impairment approach to goodwill.
In this space, whether fairly or not, I’ve sometimes criticized the IASB for focusing too narrowly on its mandate, and for not adequately considering how financial statements interact with other aspects of corporate reporting. The feedback statement addresses this train of thought very briefly. It notes: “Some investors put greater emphasis than other respondents on wider corporate reporting issues and extending the Board’s activities to include topics such as human and intellectual capital, climate change and reporting for entities listed on an unregulated market.” The IASB’s response is this: “As requested by the Trustees in January 2016, the Board has now allocated some modest resources to monitoring wider corporate reporting issues, including the implications of climate change for corporate reporting. This will enable the Board to take a somewhat more active role in this area.” I suppose it’s better than nothing, although it’s also true that I allocate some modest resources to monitoring hockey news, in the sense that sometimes I happen to hear some of it when I’m in the room. I never remember any of it though.
Regarding climate change specifically, the IASB isn’t planning any broad project, but says: “Some implications of climate change are within the scope of active projects or pipeline research projects, such as those on Provisions, Extractive Activities and Pollutant Pricing Mechanisms.” It’s a bit facetious to suggest that tinkering with IAS 37 would do much to address the desire to better track our descent into environmental disaster, but there you go. Regarding extractive activities, the board acknowledges IFRS 6 was only intended to be a temporary standard, and puts it back on the active research pipeline, but of course this entails that the temporariness will probably extend for another ten years at least.
If that sounds like a pessimistic assessment of likely progress, the IASB acknowledges that it’s taken much longer to complete its major projects than it anticipated, but it goes on:
- Most stakeholders agree, however, that: (a) it is important that IFRS Standards are of high quality. Thus, the Board’s deliberations are not, and should not be, limited by time constraints; (b) additional time is needed for the Board’s continuing initiatives to improve the quality of IFRS Standards, such as an increased focus on the quality of drafting and a more complete analysis before publication of the likely effects of applying a new Standard; and (c) the Board’s standard-setting due process must be transparent and include adequate public consultation on a global basis.
The feedback statement as a whole speaks to the board’s intention to focus its actions, set priorities more clearly and so forth, but at the same time the message seems clear – it’ll take as long as it takes…
The opinions expressed are solely those of the author.