Wed 26 Oct 2022
The IFRS Interpretations Committee (Committee) has published a final agenda decision (available here) on methods for determining the amount of revenue to be recognised on immediate annuity contracts. It was confirmed and published by the International Accounting Standards Board (IASB) in July 2022.
As a reminder, IFRS 17 Insurance Contracts (IFRS 17) requires an entity to measure the total margin (also called the contractual service margin or CSM) on a group of insurance contracts at the subscription date, and then to allocate the CSM by “coverage unit” over the expected coverage period. Immediate annuity contracts are those under which the policyholder makes a non-refundable payment upfront in exchange for a periodic payment that starts immediately after contract inception for as long as the policyholder survives.
The standard does not specify a particular method for identifying coverage units, other than that they should reflect the services provided in each period to the policyholder under the contract. The request submitted to the Committee related to how these services should be defined in order to determine whether a method is acceptable or not. The request sets out two possible methods: the first presupposes that the expected annuity payment remains constant over time, and the second presupposes that annuity payments will reduce over time, as the likelihood of the policyholder’s survival diminishes as they get older.
The Committee concluded that the first method is acceptable. However, it rejected the second method on the grounds that, if the insurer has accepted and managed the risk that the policyholder may survive longer than expected, the compensation pertains to the risk adjustment for non-financial risk that is recognised separately from the contractual service margin.
Introduction In May 2023, the International Accounting Standards Board (IASB) published amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements, that set out new disclosure requirements for entities with such arrangements. Supplier finance arrangements are also referred to as supply chain finance, payables finance or reverse factoring […]
Introduction The International Accounting Standards Board (IASB) has published amendments to IAS 12 Income Taxes (IAS 12) that introduce a temporary exception to the recognition of deferred taxes resulting from the implementation of the OECD Pillar Two rules, and that require targeted disclosures on entities’ exposure to these new tax rules. Additionally, the Financial Reporting Council (FRC) has […]
The IFRS Interpretations Committee (Committee) has published a final agenda decision (available here) on how to determine whether a contract contains a lease where there are substitution rights. It was confirmed and published by the International Accounting Standards Board (IASB) in March 2023. The request submitted to the Committee related to: In the fact pattern submitted […]
One of the concepts introduced by IFRS 9 Financial Instruments (IFRS 9) (effective for IFRS reporters other than insurance companies since 2018) is the “solely payments of principal and interest” (SPPI) test. This test must be met for a financial asset to be measured at amortised cost, rather than fair value. A financial asset will […]
Entities may be aware that in December 2021, the Organisation for Economic Co-operation and Development (OECD) published its Pillar Two model rules (“the rules”). The rules address the tax challenges arising from the digitalisation of the economy and were agreed by jurisdictions representing more than 90% of global GDP. The rules aim to ensure that […]
IAS 1 Presentation of Financial Statements sets out the circumstances in which an entity is required to classify a liability as current. One of those circumstances, set out in sub-paragraph 69(d), is when the entity does not have an unconditional right to defer settlement of the liability for at least 12 months. In January 2020, […]
This publication looks at the top ten areas of improvement highlighted by the Financial Reporting Council (FRC) in its Annual Review of Corporate Reporting for 2022/23, setting out a checklist of what companies should be providing, and avoiding, in their forthcoming annual reports. The top ten topic areas are: Statement of cash flows Financial instruments […]
Here we provide a technical publication that sets out the key accounting and corporate reporting considerations and reminders for the 2022/2023 reporting season. https://blogs.mazars.com/mindthegaap/files/2022/11/Hot-Topi_Corporate-Reporting-Issues-for-Clients-2022_23-1.pdf
The IFRS Interpretations Committee (Committee) has published a final agenda decision (available here) on whether public shares issued by a SPAC (Special Purpose Acquisition Company) should be classified as financial liabilities or equity. It was confirmed and published by the International Accounting Standards Board (IASB) in July 2022. A SPAC is an ad hoc entity […]
The IFRS Interpretations Committee (Committee) has published a final agenda decision (available here) on government measures to encourage reductions in vehicle CO2 emissions. It was confirmed and published by the International Accounting Standards Board (IASB) in July 2022. The request submitted to the Committee related to government measures that apply to entities that produce or […]
The International Accounting Standards Board (IASB) has published amendments to IFRS 16 Leases (IFRS 16) Lease Liability in a Sale and Leaseback. These amendments clarify the subsequent measurement of sale and leaseback transactions where the initial sale of the underlying asset meets the IFRS 15 Revenue from Contracts with Customers (IFRS 15) criteria for recognition as a […]
Here we set out two summary technical publications, one for IFRS reporters and one for UK GAAP reporters, that set out the key accounting and corporate reporting considerations and reminders for the 2021/2022 reporting season. Publication for IFRS reporters: https://blogs.mazars.com/mindthegaap/files/2022/01/Hot-Topic_-Corporate-Reporting-Overview-2021-22_IFRS-FINAL.pdf Publication for UK GAAP reporters: https://blogs.mazars.com/mindthegaap/files/2022/01/Hot-Topic_-Corporate-Reporting-Overview-2021-22_UK-GAAP-FINAL.pdf
The international Accounting Standards Board (IASB) has published a Request for Information for the post-implementation review of IFRS 9 Financial Instruments on classification and measurement. This relates to the first phase of the PIR on IFRS 9, which focuses on the classification and measurement section of the standard. The PIR phases relating to impairment and hedge […]
In April 2021, the IFRS Interpretations Committee (Committee) issued an agenda decision regarding how to account for configuration or customisation costs associated with software purchased from a supplier in a Software as a Service (SaaS) arrangement (i.e. a cloud-based computing arrangement), specifically considering: Whether to recognise a separate intangible asset for the costs of configuring […]
This publication looks at the key good disclosure points that companies should include within their interim reporting, as well as those aspects that companies should look to avoid. Please use the following link to view the Hot Topic publication: https://blogs.mazars.com/mindthegaap/files/2021/05/Hot-Topic_Interim-reporting-key-highlights-checklist.pdf
The International Accounting Standards Board (IASB) is currently consulting on its activities and its work plan for the next five years: Request for Information: Third Agenda Consultation. The comment period open until 27 September. Background and overview of the current work plan This is the third agenda consultation; an exercise that began in 2011, at the […]
What’s the issue? The IFRS Interpretations Committee (“IFRS IC”) has published a final agenda decision in relation to supply chain financing arrangements; specifically reverse factoring. The decision relates to the impact of reverse factoring arrangements on the presentation in the statement of financial position (balance sheet) and statement of cash flows, and disclosure within the notes […]
At the March 2021 International Accounting Standards Board’s (“IASB”) meeting, the Board members began the anticipated task of redeliberating the proposals set out in the exposure draft: General Presentation and Disclosures (“ED”), which was published in December 2019 (and was open for comment until 30 September 2020). For a summary of the original proposals, please […]
The International Accounting Standards Board (“IASB”) has published an amendment to IFRS 16 Leases Covid-19-Related Rent Concessions beyond 30 June 2021 that extends by one year the application period of the amendment to IFRS 16 Leases issued last year (May 2020 amendment) to support lessees account for Covid-19-related rent concessions. Because the pandemic is still at its […]
This publication looks at how companies can improve their cash flow statements and liquidity disclosures, following the FRC’s thematic review. Please use the following link to view the Hot Topic publication: https://blogs.mazars.com/mindthegaap/files/2020/12/Hot-Topic_Cash-Flow-and-Liquidity-Disclosures-1.pdf
At our Corporate Governance and Reporting Forum webinar, we discussed the pressures and challenges that companies, particular listed and AIM, are facing this year with their annual reporting. This article sets out our top tips for 5 significant areas of disclosure in your annual report for this year; these being based on our experiences from […]
One of the emerging trends that has arisen during the Covid-19 pandemic has been the surging number of cases of rental forgiveness or deferral, as lease arrangements are negotiated between lessees and lessors. Economically, the purpose of these negotiations is clear: they are largely arranged for the purpose of alleviating lessee cashflow pressures in the […]
This publication looks at the key disclosure expectations, in relation to the impact of Covid-19, that companies should focus on when preparing their forthcoming annual reports. Please use the following link to view the Hot Topic publication: https://blogs.mazars.com/mindthegaap/files/2020/11/Hot-Topic_Impact-of-Covid-19_Key-Disclosure-Expectations.pdf
This publication looks at the top ten areas of improvement highlighted by the Financial Reporting Council (“FRC”) in its Annual Review of Corporate Reporting for 20129/20, setting out a checklist of what companies should be providing, and avoiding, in their forthcoming annual reports. The top ten topic areas for 2019/20 are: Judgements and estimates Impairment […]
It is difficult to imagine a more extreme test of corporate responsibility and governance than the coronavirus outbreak. Background to the s172 statement The obligation for companies to consider the effects of their actions on other stakeholders (in section 172 of the Companies Act 2006) was imposed in 2007, in response to concerns that companies […]
At the International Accounting Standards Board’s (“IASB”) meeting in December 2019, it was tentatively decided to delay the effective date of IFRS 17 Insurance Contracts (“IFRS 17”) and the fixed expiry date of the temporary exemption from applying IFRS 9 Financial Instruments (“IFRS 9”) in IFRS 4 Insurance Contracts (“IFRS 4”). Why? IFRS 17, undoubtedly, […]
The International Accounting Standards Board (“IASB”) has issued narrow-scope Amendments to IAS 1 Presentation of Financial Statements (“IAS 1”) – Classification of Liabilities as Current or Non-current. The amendments clarify the requirements for classifying liabilities, such as debts, loans and borrowings, as current or non-current. Whilst the amendments clarify current requirements, and do not substantially […]
Important proposals have been announced for IFRS-reporters that will lead to fundamental changes as to how entities will be required to present information within their primary statements, particularly within the statement of profit or loss when reporting on financial performance. The most significant areas of change, which will result in entities needing to change their […]
The IFRS Interpretations Committee (“Committee”) recently opined on how airlines should account for compensation paid to passengers for delayed or cancelled flights. The result of their deliberations was that such payments should be accounted for as a reduction to revenue. Here, we consider what the implications of this agenda decision are. The Committee’s conclusion is […]
Last week, the International Accounting Standards Board (“IASB”) issued amendments to the financial instruments standards, IFRS 9 Financial Instruments (“IFRS 9”), IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”) and IFRS 7 Financial Instruments: Disclosures (“IFRS 7”), setting out changes to some of the hedge accounting requirements in order to provide temporary relief to […]
On 26 June 2019, the IASB published the exposure draft: ED/2019/4 Amendments to IFRS 17, proposing the long-awaited amendments to the insurance contracts standard. Set out below is a summary of the key points of the exposure draft covering what the concerns are with the existing requirements and how the IASB proposes to amend IFRS 17 […]
The Financial Reporting Council (“FRC”) has issued Amendments to FRS 101 – 2018/19 cycle, which prohibit insurers applying FRS 101 Reduced Disclosure Framework (“FRS 101”) in their financial statements when IFRS 17 Insurance Contracts (“IFRS 17”) becomes effective. Why – what’s the background? FRS 101 requires entities to apply the recognition and measurement requirements of […]
The ongoing reform of short-term interest rate benchmarks, and the growing uncertainties affecting future cash flows, have persuaded the International Accounting Standards Board (“IASB”) to put forward proposed amendments to the hedge accounting requirements in IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”) and IFRS 9 Financial Instruments (“IFRS 9”) by issuing the Exposure Draft Interest […]
The IFRS Interpretations Committee (“Committee”) has now clarified which, and how, IFRS standards are to be applied to holdings of cryptocurrencies; this conclusion being reached after the Committee put their tentative decisions out for discussion back in March. Refer to our previous blog article for further details. The previous tentative conclusions reached have now been […]
IFRS 16 Leases (“IAS 16”) came into effect on 1 January 2019. The first interim set of financial statements, which are usually presented in a condensed format in accordance with IAS 34 Interim Financial Reporting (“IAS 34”), must therefore take account of the implementation of the new standard. For entities with a 31 December 2019 year-end, the half-year interim […]
A few final technical issues prior to publication of the ED At the May 2019 meeting, the IASB discussed a few final technical issues on the proposed amendments to IFRS 17 Insurance Contracts prior to finalising the exposure draft, which is expected imminently. The Board tentatively decided: to specify criteria that must be met for an insurance […]
At the April 2019 meeting, the IASB concluded its deliberations on amendments to IFRS 17 Insurance Contracts (see previous blog articles for further details) and authorised its staff to start the drafting of the exposure draft. The IASB has also confirmed that it intends to amend the effective date of IFRS 17, deferring it to […]
At the March meeting, the IASB continued its discussions on the amendments necessary to IFRS 17 Insurance Contracts, which are looking to address the criticisms raised by stakeholders and thus to more faithfully represent the performance of insurance contracts in financial statements. At the end of this meeting the IASB tentatively decided to add additional […]
The required accounting for the holdings of cryptocurrencies, such as Bitcoin, Ripple or Litecoin, has recently caused much difficulty and divergence in practice, and with the ever rapidly-growing use of cryptocurrencies around the world, this issue is becoming much more pertinent. This is because, as yet, there are no specific requirements written into IFRS Standards […]
At the February meeting, the IASB continued its discussions on the amendments necessary to IFRS 17 Insurance Contracts, which are looking to address the criticisms raised by stakeholders and thus to more faithfully represent the performance of insurance contracts in financial statements. At the end of this meeting the IASB tentatively decided to add additional […]
At the January meeting, the IASB decided to make amendments to IFRS 17 Insurance Contracts, relating to the following topics: reinsurance contracts purchased by a primary insurer (reinsurance contracts held); and amortisation of the contractual service margin (CSM) in profit or loss for contracts that include an investment return service.These changes are intended to address criticisms […]
1. Group insurance policies Under a group insurance policy an entity provides insurance coverage to members of an association or to customers of a bank (members or customers that purchase insurance coverage are referred to as ‘certificate holders’). Some of those policies give the entity the right to terminate the coverage for all certificate holders […]
The September Transition Resource Group (TRG) meeting provided further clarity in a range of areas related to insurance under IFRS 17. Our analysis addresses the points that we expect will affect most insurers. Other topics discussed applicable to mutuals and associations will be analysed in a separate blog. 1. Factors that can affect the length […]
A year and a few months after the issue of the new insurance contracts standard, insurers (issuers of insurance contracts) are recalibrating their IFRS 17 implementation approaches based on the latest technical developments and positions adopted by their peers. Latest developments include the IASB’s transition resource group discussions, the recent clarifications to IFRS 17 discussed […]
This website uses cookies.
Some of these cookies are necessary, while others help us analyse our traffic, serve advertising and deliver customised experiences for you.
This website cannot function properly without these cookies.
Analytical cookies help us enhance our website by collecting information on its usage.
We use marketing cookies to increase the relevancy of our advertising campaigns.