7 Recently issued IFRS
Accounting standards and interpretations issued by the IASB/IFRIC and approved by the European Commission
Commission Regulation (EU) No. 183/2013 of 4 March 2013 approved the amendments set out in the document “Government Loans – Amendments to IFRS 1”, which introduces an exception to the retrospective application of IFRSs for First-time Adopters, on the basis of which government loans must be evaluated prospectively, on the transition date, in accordance with the provisions of IFRS 9, “Financial Instruments” (IAS 39 for entities that have not yet applied IFRS 9) and IAS 20, “Accounting for Government Grants and Disclosure of Government Assistance”. The entity may choose to apply the aforementioned provisions retrospectively if the information required for such application was available at the time the government loan was initially recorded. The new provisions will take effect from financial years starting on or after 1 January 2013.
Commission Regulation (EU) No. 301/2013 of 27 March 2013 approved the amendments set out in the document “Annual Improvements to IFRSs – 2009-2011 Cycle”, which contains changes of an essentially technical and editorial nature to international accounting standards. The new provisions will take effect from financial years starting on or after 1 January 2013.
Commission Regulation (EU) No. 313/2013 of 4 April 2013 approved the amendments set out in the document “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)”, which provides some clarifications and simplifications of the transition requirements of IFRS 10, IFRS 11 and IFRS 12. The new measures will take effect from financial years starting on or after 1 January 2014.
Commission Regulation (EU) No. 1174/2013 of 20 November 2013 approved the amendments set out in the document “Amendments to IFRS 10, IFRS 12 and IAS 27”, which provides clarifications concerning the definition of the scope of consolidation for companies classified as investment entities. The provisions contained in the document will take effect from financial years starting on or after 1 January 2014.
Commission Regulation (EU) No. 1374/2013 of 19 December 2013 approved the amendments set out in the document issued by the IASB on 27 June 2013, “Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36)”. The amendment concerns disclosure of the recoverable value of assets that have been impaired, where the recoverable value is based on the fair value less costs of disposal. The new provisions will take effect from financial years starting on or after 1 January 2014.
Commission Regulation (EU) No. 1375/2013 of 19 December 2013 approved the amendments set out in the document “Novation of Derivatives and Continuation of Hedge Accounting”, which introduces an exception to the requirement for the discontinuation of hedge accounting in circumstances when a hedging instrument is required to be novated to a central counterparty as a result of laws or regulations. The new provisions will take effect from financial years starting on or after 1 January 2014.
Accounting standards and interpretations issued by the IASB/IFRIC and not yet approved by the European Commission
On 20 May 2013, the IASB issued “IFRIC 21: Levies”, an interpretation of IAS 37, “Provisions, Contingent Liabilities and Contingent Assets”, which clarifies that the recognition of a liability for the payment of levies (other than those falling under the scope of other standards, such as income taxes pursuant to IAS 12, and other than fines and penalties arising from infringements of the law) takes place when the activity that triggers the payment of the levy, as identified by the relevant fiscal regulations, takes place.
According to the IASB, the provisions set out in the aforementioned document shall take effect for financial years beginning on or after 1 January 2014. However, since the provisions in question have not yet been approved by the European Commission, the date on which they come into effect may be postponed.
On 21 November 2013, the IASB issued the document “Defined Benefit Plans: Employee Contributions (Amendments to IAS 19 Employee Benefits)”. The amendments to IAS 19 allow (but do not require) contributions paid by employees or third parties that are independent of the number of years of service to be recognised as a reduction in the current service cost for the period, instead of attributing these contributions across the entire time period in which the service is rendered.
On 12 December 2013, the IASB issued the document “Annual Improvements to IFRSs – 2010-2012 Cycle”. The provisions contained in the document made amendments to: (i) IFRS 2, amending the definition of ‘vesting condition’; (ii) IFRS 3, stating that a contingent consideration classified as an asset or liability should be valued at its fair value as at each reporting date; (iii) IFRS 8, primarily requiring that information be provided concerning the valuation elements and criteria considered when determining the degree of aggregation of operating segments as presented in the financial statements; (iv) the Basis of Conclusions of IFRS 13, confirming the possibility of accounting for short-term receivables and payables for which the implicit interest rate has not been stated at their face value, if the effect of not discounting is immaterial; (v) IAS 16 and IAS 38, clarifying the methods to be used to determine the gross book value of assets, in the event of a revaluation following the application of the revaluation model; and (vi) IAS 24, specifying that an entity is related to the reporting entity if the entity (or a member of the group it belongs to) provides key management personnel services to the reporting entity (or to its parent company).
On the same date, the IASB issued the document “Annual Improvements to IFRSs – 2011-2013 Cycle”. The provisions contained in the document made amendments to: (i) the Basis of Conclusions for IFRS 1, clarifying the definition of IFRS “in force” for First-time Adopters; (ii) IFRS 3, clarifying that it excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself; (iii) IFRS 13, clarifying that the scope of the exception defined in paragraph 48 of IFRS 13 includes all contracts accounted for within the scope of IAS 39, regardless of whether they meet the definition of financial assets or financial liabilities as defined in IAS 32; and (iv) IAS 40, clarifying the interrelationship of IFRS 3 and the principle.
According to the IASB, the provisions set out in the aforementioned document shall take effect for financial years beginning on or after 1 July 2014. However, since the provisions in question have not yet been approved by the European Commission, the date on which they come into effect may be postponed.
On 30 January 2014, the IASB issued the document “IFRS 14 Regulatory Deferral Accounts”, the interim standard for the Rate-regulated Activities project. The document’s scope includes First-time Adopters which, according to the provisions of IFRS 14, are allowed to continue recognising amounts related to rate-regulated activities in accordance with the previous standards. In order to improve comparability with entities that already applied IFRS, the standard requires that the effect of this accounting method be presented separately from the other items. The provisions contained in the aforementioned documents will take effect from financial years starting on or after 1 January 2016.
On 19 November 2013, the IASB issued the document “IFRS 9 Financial Instruments - Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39”, with the relative Basis for Conclusions and Guide to Application. These documents: (i) introduce a substantial revision of the accounting methods for hedging transactions; (ii) with regard to IFRS 9, which requires that changes in the fair value of liabilities designated at fair value recognised in the income statement, consisting of profits or losses resulting from changes in the entity’s credit risk, be attributed to “Other components of comprehensive income”, allow this regulatory provision to be applied prior to the application of the other provisions of IFRS 9; and (iii) eliminate the indication of 1 January 2015 as the date of compulsory entry into force of IFRS 9.