Meeting with Disclosure Initiative Advisory PanelExtract of minutesDate:
17 September 2019, TuesdayTime:
10:00 a.m. – 11:30 a.m.Venue: Board room, 37/F., Wu Chung House, 213 Queen's Road East, Wanchai, HongKongMembers Present:
Eros Lau, Deloitte Touche TohmatsuErnest Lee, Deloitte Touche TohmatsuSimon Riley, BDO LimitedCecilia Shek, Ernst & YoungCatherine Tang, KPMGElza Yuen, PwCStaff in attendance: Christina Ng, Director, Standard Setting, HKICPAMichelle Fisher, Deputy Director, Standard Setting, HKICPAKatherine Leung, Associate Director, Standard Setting, HKICPAApologies:
Kelly Kong, Jardine Matheson & Co., LimitedCynthia Leung, Financial Reporting Council
1.IASB ED/2019/6 Disclosure of Accounting PoliciesProposed amendments to IAS 1 Presentation of Financial StatementsThe Conceptual Framework for Financial Reporting 2018 states that financial reportsare prepared for users who have a reasonable knowledge of business and economicactivities and who review and analyse the information diligently. Some panelmembers expressed concern that users are not expected to be IFRS experts. If allaccounting policies that only duplicate the recognition or measurement requirementsof IFRS are removed from the financial statements, users who are unfamiliar withIFRS requirements would have to consult IFRS Standards in order to understand thefinancial statements.Two panel members questioned whether there is any overlap in auditing standardsand the proposal and whether the proposal has any impact in auditing (eg ifmanagement determine the accounting policy of impairment of assets is immaterialunder the proposal, will there any impact on the auditors in determining key auditmatters).Paragraph 117AMost panel members considered that it is difficult to understand the second sentenceof the proposed paragraph 117A, ie why an accounting policy relating to materialtransactions, other events or conditions might not be material. One panel member feltit was only understandable after reading the new illustrative example T in theMateriality Practice Statement.Some panel members suggested that the second sentence of the proposedparagraph 117A should be moved to below the proposed paragraph 117C for a morelogical flow of requirements.One panel member suggested that the IASB should further elaborate under whatcircumstances an accounting policy relating to material transactions, other events orconditions would not be material, ie when an accounting policy is unlikely to influencethe decision making of the financial statement users.Paragraph 117B(a)
Some panel members noted that the proposed paragraph 117B(a) is not consistentwith the principle of materiality and proposed redrafted paragraph 117. The examplerefers to ‘material change to amounts’, which implies only quantitative factors areconsidered. Whether an accounting policy is material requires consideration ofqualitative factors as well.A panel member noted a change in accounting policy may affect users’ decisions onthe future operation of company, and should not only be based on the financialimpact of the change at a point in time.Proposed amendments to IFRS Practice Statement 2 Making Materiality Judgements(Materiality Practice Statement)
Most panel members considered that the ‘Diagram-determining whether anaccounting policy is material’ (Diagram) is useful for reader to apply the proposal.However, they noted it only makes reference to proposed paragraphs 117, 117A and117D. Panel members suggested that the Diagram should also demonstrate how toapply the proposed paragraphs 117B & 117C in order to have a complete thinkingprocess for determining whether an accounting policy is material.One panel member considered that example S only demonstrates how to judgewhether the accounting policy is material and suggested the IASB to expand theexample by providing guidance on what kind of entity-specific information should bedisclosed.Most panel members considered that example T is confusing. Most panel membersthought that having identified that assets subject to impairment testing are material tothe financial statements and the impairment accounting policy meets the proposedparagraph 117B(d), one would conclude that the accounting policy for impairment ismaterial. However, the separate accounting policy is not ultimately required to bedisclosed because it merely duplicates the IFRS requirements. The Panel suggestedthat the IASB should clarify the example T with reference to the proposed paragraph117-117D. In addition, two panel members suggested that it would be easier forusers to understand the proposal if the IASB developed the example T to illustratetwo cases to show contrast, firstly demonstrating a boilerplate accounting policy andsecondly illustrating an entity-specific accounting policy (eg how the entity determinesits CGU).Some Panel members recommended that the IASB should consider incorporating theDiagram and two new examples in the Materiality Practice Statement in theillustrative examples supporting IAS 1 to make them more accessible.
IASB Exposure Draft ED/2019/6 Disclosure of Accounting Policies — Meeting summary
下载原件Meeting with Disclosure Initiative Advisory PanelExtract of minutesDate:
17 September 2019, TuesdayTime:
10:00 a.m. – 11:30 a.m.Venue: Board room, 37/F., Wu Chung House, 213 Queen's Road East, Wanchai, HongKongMembers Present:
Eros Lau, Deloitte Touche TohmatsuErnest Lee, Deloitte Touche TohmatsuSimon Riley, BDO LimitedCecilia Shek, Ernst & YoungCatherine Tang, KPMGElza Yuen, PwCStaff in attendance: Christina Ng, Director, Standard Setting, HKICPAMichelle Fisher, Deputy Director, Standard Setting, HKICPAKatherine Leung, Associate Director, Standard Setting, HKICPAApologies:
Kelly Kong, Jardine Matheson & Co., LimitedCynthia Leung, Financial Reporting Council
1.IASB ED/2019/6 Disclosure of Accounting PoliciesProposed amendments to IAS 1 Presentation of Financial StatementsThe Conceptual Framework for Financial Reporting 2018 states that financial reportsare prepared for users who have a reasonable knowledge of business and economicactivities and who review and analyse the information diligently. Some panelmembers expressed concern that users are not expected to be IFRS experts. If allaccounting policies that only duplicate the recognition or measurement requirementsof IFRS are removed from the financial statements, users who are unfamiliar withIFRS requirements would have to consult IFRS Standards in order to understand thefinancial statements.Two panel members questioned whether there is any overlap in auditing standardsand the proposal and whether the proposal has any impact in auditing (eg ifmanagement determine the accounting policy of impairment of assets is immaterialunder the proposal, will there any impact on the auditors in determining key auditmatters).Paragraph 117AMost panel members considered that it is difficult to understand the second sentenceof the proposed paragraph 117A, ie why an accounting policy relating to materialtransactions, other events or conditions might not be material. One panel member feltit was only understandable after reading the new illustrative example T in theMateriality Practice Statement.Some panel members suggested that the second sentence of the proposedparagraph 117A should be moved to below the proposed paragraph 117C for a morelogical flow of requirements.One panel member suggested that the IASB should further elaborate under whatcircumstances an accounting policy relating to material transactions, other events orconditions would not be material, ie when an accounting policy is unlikely to influencethe decision making of the financial statement users.Paragraph 117B(a)
Some panel members noted that the proposed paragraph 117B(a) is not consistentwith the principle of materiality and proposed redrafted paragraph 117. The examplerefers to ‘material change to amounts’, which implies only quantitative factors areconsidered. Whether an accounting policy is material requires consideration ofqualitative factors as well.A panel member noted a change in accounting policy may affect users’ decisions onthe future operation of company, and should not only be based on the financialimpact of the change at a point in time.Proposed amendments to IFRS Practice Statement 2 Making Materiality Judgements(Materiality Practice Statement)
Most panel members considered that the ‘Diagram-determining whether anaccounting policy is material’ (Diagram) is useful for reader to apply the proposal.However, they noted it only makes reference to proposed paragraphs 117, 117A and117D. Panel members suggested that the Diagram should also demonstrate how toapply the proposed paragraphs 117B & 117C in order to have a complete thinkingprocess for determining whether an accounting policy is material.One panel member considered that example S only demonstrates how to judgewhether the accounting policy is material and suggested the IASB to expand theexample by providing guidance on what kind of entity-specific information should bedisclosed.Most panel members considered that example T is confusing. Most panel membersthought that having identified that assets subject to impairment testing are material tothe financial statements and the impairment accounting policy meets the proposedparagraph 117B(d), one would conclude that the accounting policy for impairment ismaterial. However, the separate accounting policy is not ultimately required to bedisclosed because it merely duplicates the IFRS requirements. The Panel suggestedthat the IASB should clarify the example T with reference to the proposed paragraph117-117D. In addition, two panel members suggested that it would be easier forusers to understand the proposal if the IASB developed the example T to illustratetwo cases to show contrast, firstly demonstrating a boilerplate accounting policy andsecondly illustrating an entity-specific accounting policy (eg how the entity determinesits CGU).Some Panel members recommended that the IASB should consider incorporating theDiagram and two new examples in the Materiality Practice Statement in theillustrative examples supporting IAS 1 to make them more accessible.