UK: Recent IFRS Standards And Interpretations – As At 31 March 2015

Last Updated: 2 June 2015
Article by Hannah Laws and Jack Easton

Overview - Introduction and purpose of the bulletin

This bulletin provides a high level overview of the most recently issued International Financial Reporting Standards (IFRS) and interpretations, to ensure compliance with international financial reporting requirements.

An entity has to make disclosures about:

A. Standards and interpretations that have been adopted for the first time, and

B. Standards and interpretations that have been issued but have not yet been adopted.

The distinction between A and B above will depend upon the entity's year-end and whether or not it has taken advantage of any "early adoption" permissions.

We will add new material to this bulletin when it is released, and will delete older items approximately six months after the balance sheet date of the latest annual financial statements in which a standard or interpretation could have been adopted for the first time. Within this bulletin changes from the previous edition of the bulletin are flagged in a separate section dedicated to changes.

INTRODUCTION

Appendix A to this bulletin sets out the range of possible implementation dates in annual accounts for each standard and interpretation, on the assumption that they have not been adopted early. We have also included a column so that the schedule can be used as a checklist by preparers or auditors of accounts and so that all new financial reporting requirements have been fully considered in the period end process.

In the main body of the bulletin we:

  • reiterate the disclosure requirements and recommend an approach to disclosures relating to un-adopted standards,
  • highlight changes since the previous edition of the bulletin, and
  • provide brief descriptions of recent standards and interpretations.

This IFRS update summarises the changes in the standards and interpretations that are:

a) mandatory and where there may still be companies with year ends such that they have not yet reported in compliance with these changes, and

b) standards and interpretations that are not yet mandatory. Early adoption is often permitted.

The main purpose of this summary is to provide information to assist entities comply with IAS 8 disclosure requirements relating to changes in accounting policies. A change in accounting policy can be voluntary or required by a standard or interpretation.

The disclosure requirements arising from voluntary changes in accounting policies are detailed in paragraph 29 of IAS 8. However, in this bulletin we will be discussing paragraphs 28 and 30, which deal with accounting policy changes required by an IFRS or IFRIC interpretation. The disclosures required by a mandatory change are unsurprisingly similar to those for a voluntary change in accounting policy.

IAS 8 requires entities to disclose both the effect of:

  • initial adoption of standards (paragraph 28), and
  • the effect of new pronouncements which have not yet become effective (paragraph 30).

In Appendix A to this bulletin we list all standards, changes and interpretations that may be still relevant to these disclosures requirements. Developments that should have been adopted "by now" are not listed. The appendix could be useful:

  • in identifying accounting changes that an entity may need to prepare for and then implement;
  • as a checklist for identifying disclosures required by IAS 8 (paragraph 28 or 30).

Care is needed in respect of:

  • the particular year end of an entity;
  • Making decisions about early adoption
  • EU endorsement
  • start-ups and short or long accounting periods, because mandatory implementation dates are based on the beginning date of the accounting period.

Under paragraph 28 of IAS 8, entities are required to disclose the effect that initial application of an IFRS has on the current period or any prior period reported in their financial statements. Required disclosures are listed below:

a) the title of the IFRS;

b) when applicable, that the change in accounting policy is made in accordance with its transitional provisions;

c) the nature of the change in accounting policy;

d) when applicable, a description of the transitional provisions;

e) when applicable, the transitional provisions that might have an effect on future periods;

f) for the current period and each prior period presented, to the extent practicable, the amount of the adjustment:

i) for each financial statement line item affected; and

ii) if IAS 33 Earnings per Share applies to the entity, for basic and diluted earnings per share;

g) the amount of the adjustment relating to periods before those presented, to the extent practicable; and

h) if retrospective application required by paragraph 19(a) or (b) of IAS 8 is impracticable for a particular prior period, or for periods before those presented, the circumstances that led to the existence of that condition and a description of how and from when the change in accounting policy has been applied.

Where a new standard or interpretation has been published, but is not yet effective, and has not been adopted, IAS 8, paragraph 30, requires entities to disclose this fact and known or reasonably estimable information relevant to assessing the possible impact that application of the new IFRS will have on the entity's financial statements in the period of initial application.

IAS 8 paragraph 31 also lists the exact disclosures that need to be made in order to comply with paragraph 30 and these are:

a) the title of the new IFRS;

b) the nature of the impending change or changes in accounting policy;

c) the date by which application of the IFRS is required;

d) the date as at which the entity plans to apply the IFRS initially; and

e) either:

i) a discussion of the impact that initial application of the IFRS is expected to have on the entity's financial statements; or

ii) if that impact is not known or reasonably estimable, a statement to that effect.

Entities should make these disclosures even if the new accounting pronouncement is issued after the balance sheet date but before the authorisation of the financial statements. Disclosure should be given in respect of the developments that are, or could be, significant to the entity and it is not necessary in respect of standards and interpretations that are clearly not applicable to the entity or that are not expected to have a material impact on the entity.

Whilst there is no harm in companies including a "technical update" this is clutter that can be cut back. An entity that wishes to make clear that it has considered this requirement can include a statement to the effect that no pending standard or change is expected to have a significant impact on its financial statements in the period of application.

In our view, an IFRS that has not yet been endorsed by the EU should be regarded as issued but not yet effective (rather than be treated as "unissued"). Where disclosures are being made about IFRSs that have not yet been endorsed by the EU, we recommend that this fact is also disclosed.

CHANGES SINCE PREVIOUS EDITION OF THIS BULLETIN

The list below summarises the changes from the previous issue of this bulletin:

(a) Standards that should have been adopted by now and have therefore been deleted from the technical bulletin and Appendix A:

  • Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to IFRS 1)
  • IFRS 13 Fair Value Measurement
  • Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12)
  • Employee Benefits (Amendments to IAS 19)
  • Disclosures: Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)
  • Government Loans (Amendments to IFRS 1)
  • Annual improvements to IFRSs 2009 – 2011 Cycle
  • IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

(b) Standards that have been endorsed by the EU since the previous issue of this bulletin and can therefore be early adopted:

  • None

(c) New standards or interpretations since the previous issue of this bulletin (identified within this bulletin using Δ NEW):

  • None

SUGGESTED WORDING IN FINANCIAL STATEMENTS

Initial adoption

This section relates to both initial application of a standard that became mandatory for the first time during the current period and to early adoption of a standard not yet effective.

If none of the standards and interpretations that were adopted for the first time in the current period has a significant impact on an entity's financial statements we suggest the following wording:

"There were no IFRS standards or IFRIC interpretations adopted for the first time in these financial statements that had a material impact on the Group/entity's financial statements."

If there is a significant (material) impact due to initial application of a standard please use the following wording as guidance:

"From [insert current period start date], the Group has adopted the following new and amended IFRSs and IFRIC interpretations [list all standards and interpretations adopted for the first time in the current period].

The adoption of these revised standards has not had a material impact for the Group's result for the year and equity, other than [list only the standards that had a material impact].

[State any change in accounting policy resulting from adoption of the standards/interpretations that had a material impact]. The adoption of the [state the standard or interpretation] has resulted in an increase/decrease in [financial statement line item] of [financial impact] (as at [prior period end]: [financial impact]) and a decrease/increase in [financial statements line item] of [financial impact] (as at [prior period end]: [financial impact]).

The effect on the [consolidated] statement of comprehensive income as at [current period end] is an increase/decrease in [financial statement line item] of [financial impact] (as at [prior period end]: [financial impact]) and a decrease/increase in [financial statements line item] (as at: [prior period end]: [financial impact]).

The effect on the basic earnings per share and diluted earnings per share for year ended [current period end] is a decrease/increase of [financial impact] and [financial impact] respectively (as at [prior period end]: [financial impact] and [financial impact] respectively). [Required only where IAS 33 is applicable]."

Specimen disclosures are included in Appendix B.

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