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World Council Comments on IASB Discussion Paper on Business Combinations

The International Accounting Standards Board requested comment on their Discussion Paper regarding Business Combinations – Disclosures, Goodwill and Impairment. World Council supported the adoption of the scheduled goodwill amortization as well as simplifications offered for the impairment test, but urged the disclosure of scheduled goodwill amortization as a separate item outside of the operating result. World Council expressed concern that this disclosure would “require the disclosure of internal confidential information that, if disclosed, could operate to the detriment of a company.”

World Council’s comments on IASB’s Discussion Paper on Business Combinations – Disclosures, Goodwill and Impairment, can be found here.

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International Accounting Standards Board, Comment Letter

World Council Responds to IFRS Foundation’s Consultation Paper on Sustainability Reporting

In September 2020, the International Accounting Standards Board requested stakeholders to respond to the IFRS Foundation’s questions on sustainability reporting found in their Consultation Paper on Sustainability Reporting. The consultation paper hoped to address concerns surrounding consistency and comparability in sustainability reporting.  According to the IFRS, “A set of comparable and consistent standards will allow businesses to build public trust through greater transparency of their sustainability initiatives, which will be helpful to investors and an even broader audience in a context in which society is demanding initiatives to combat climate change.”

World Council supported the IFRS’ goal to implement internationally recognized sustainability reporting standards as well as the development of a sustainability standards board (SSB) but requested that the IFRS consider small financial cooperatives when creating sustainability reporting standards. World Council asked that these standards avoid overburdensome reporting requirements; and include goals for financial inclusion as a requirement essential for the success of the SSB’s implementation.

World Council’s response to the IFRS’ Consultation Paper on Sustainability Reporting can be found here.

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International Accounting Standards Board, Comment Letter

WOCCU Urges IASB to Expand IFRS for SMEs Standard

The World Council of Credit Unions urged the IASB to allow a greater use of the IFRS for SMEs Standard and in particular to make it easier for credit unions to utilize the standard.  The comments came as a part of the Request for Information on the IFRS for SMEs Standard issued by the International Accounting Standards Board. 

In particular, WOCCU noted that allowing some credit unions—especially smaller institutions and those in developing countries— would help limit excessive compliance burdens on small credit unions and reduce the burden on those smaller financial institutions in developing countries.  WOCCU urged the IASB to allow expressly the ability to state financials in conformity with the IFRS for SMEs standard noting that this could be accomplished with little effort and without defeating the purpose of the standard.

A copy of the letter can be viewed here.

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International Accounting Standards Board

IFRS Consults on Sustainability Reporting Standards

The Trustees of the IFRS Foundation (IFRS) have published a Consultation Paper to assess demand for global sustainability standards and, if demand is strong, assess whether and to what extent the Foundation might contribute to the development of such standards.

Amid heightened focus on environmental, social and governance (ESG) matters, developments in sustainability reporting and increased calls for standardisation of such reporting, the IFRS is now seeking stakeholder input on the need for global sustainability standards.

The Consultation Paper sets out possible ways the IFRS might contribute to the development of global sustainability standards by broadening its current remit beyond the development of financial reporting standards and using its experience in international standard-setting, its well-established and supported standard-setting processes and its governance structure.

A copy of the consultation can be viewed here.

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International Accounting Standards Board

Credit Unions Mentioned in IFRS Virtual Conference

At the IFRS Foundation's IFRS Virtual Conference a panel discussing the Second Comprehensive Review of the IFRS for SMEs Standard mentioned that credit unions in particular were interested in clarifying the scope of the IFRS for SME standard to clarify that IFRS for SMEs can be used for purposes of calculating Expected Credit Losses and other accounting measures. WOCCU is pleased to hear that this possibility will be considered by IFRS.

Currently the United Kingdom and the Republic of Ireland base their requirements on IFRS for SMEs.  Small credit unions in the United States allows credit unions under $10 million in assets to follow Regulatory Accounting Principles which are similarly less stringent than G.A.A.P.  Many countries are reluctant to allow the use of IFRS for SMEs for accounting purposes for credit unions because the lack of clarity surrounding the applicability of the "publicly accountable" standard, which many regulators interpret as prohibiting them from using the standard for credit unions.

WOCCU has urged clear expansion of the standard as use of the IFRS for SME standard would represent a lighter and more appropriate treatment of IFRS 9/CECL for credit unions.  WOCCU intends to comment on the review by the close of the October 28 comment period.

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International Accounting Standards Board

IASB Delays Standard on Classification of Liabilities

The International Accounting Standards Board (IASB) has issued an amendment to dever by one year the effective date of Classification of Liabilities as Current or Non-Current, which amends IAS 1, Presentation of Financial Statements. WOCCU supported this delay in light of the COVID-19 pandemic.  The proposal was issued in January 2020 for annual reporting periods beginning on or after January 1, 2022.  They standard is now effective for annual reporting periods beginning on or after January 1, 2023.

WOCCU welcomes this delay as it should provide regulatory relief to credit unions during the COVID-19 pandemic.

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International Accounting Standards Board

WOCCU Comments on IASB’s Classification of Liabilities as Current or Non-current

WOCCU responded to the International Standards Accounting Board’s (IASB) requested comments on their Exposure Draft Classification of Liabilities as Current or Non-current—Deferral of Effective Date Proposed amendment to IAS 1. In January 2020, due to Covid-19 pandemic interferences, the IASB proposed a deferral to the amendments for IAS 1 Presentation of Financial Statements, moving the annual reporting periods to the beginning or after January 1, 2023. WOCCU expressed its concurrence with the deferral, expressing the necessary operational relief the deferral would provide to credit unions suffering from pandemic pressures, “that could delay the implementation of any changes in classification resulting from the application of these amendments and… the pandemic will delay the ability of a credit union to start and extend the duration of the renegotiation of loan covenants.” WOCCU’s full response to the IASB’s Exposure Draft can be found here.

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International Accounting Standards Board

WOCCU Urges IASB to Implement Reg Relief in IRB Reform

The World Council of Credit Unions (WOCCU) urged the International Accounting Standards Board (IASB) to adopt measures that would reduce regulatory burden on credit unions in its comment letter on the IASB's Exposure Draft on Interest Rate Benchmark Reform. 

The Exposure Draft is part of the IASB's Interest Rate Benchmark Reform, which was issued in September 2019, and is the next phase of the project that considers the effects of interest rate benchmark reform on an entity’s financial statements that arise when interest rate benchmarks are replaced with alternative, nearly risk-free interest rates that are based, to a greater extent, on transaction data (alternative benchmark rates). 

WOCCU urged the use of the practical expedient in numerous instances to reduce the regulatory burden on the preparation of financial statements.  

A copy of the comment letter can be viewed here.

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International Accounting Standards Board

IFRS for SMEs Under Review by IASB

The International Accounting Standards Board (IASB) is undergoing a comprehensive review for the purposes of updating the IFRS for SMEs Standard.  This simplified accounting standard for small and medium entities is used by some jurisdictions as the basis for the requirements of implementing IFRS 9 for Financial Instruments and the expected loss calculations.  Although the standard is intended for "publicly accountable entities", WOCCU has supported its use for credit unions as a means of simplifying the accounting and reporting requirements of IFRS 9 for credit unions.  WOCCU intends to look at ways that the standard and approaches can be aligned with IFRS 9.

A copy of the consultation can be viewed here.
 

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International Accounting Standards Board

WOCCU Urges Clarification by IASB on Treatment of Financial Instruments with Characteristics of Equity

In a recently filed comment letter with the International Accounting Standards Board (IASB) on their Discussion Paper:  Financial Instruments with Characteristics of Equity, WOCCU strongly supported continuing the IASB existing approach to classifying cooperative shares as equity when the cooperative has an unconditional right to refuse redemption of the shares,  yet urged clarification on the IASB’s approach to the treatment of accounting for convertible bonds and similar instruments particularly as they relate to contractual and non-contractual rights of the instrument.

A copy of the comment letter can be viewed here.

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International Accounting Standards Board, Comment Letter

WOCCU Actively Monitoring IASB Work Plan

The International Accounting Standards Board (IASB) issued their new work plan at the end of January containing a number of items relevant to credit unions this year.  A thorough summary of the January IASB meeting, containing numerous details can be found here.

Of particular interest to credit unions are the following:

  • IASB will finish the Conceptual Framework in March.  This is the primary accounting standard on defining equity versus liabilities, and could impact the ability of cooperatives to use shares as equity;
  • The IASB will issue a Discussion Paper in the Second Quarter of 2018 called Financial Instruments with Characteristics of Equity, which may also address when credit union shares and cooperative shares qualify as equity on an accounting basis (assuming this is not addressed in the Conceptual Framework); 
  • IASB is planning Discussion Papers or Exposure Drafts (similar to proposed rules) on requirements for primary financial statements—including, according to the IASB meeting summary, requiring companies to disclose their key management performance measures, as well as proposals on management commentary and disclosure requirements; and
  • IASB is also planning to issue a research summary paper on share-based payments, which indicates that they are considering changes to the rules on dividends.  This item may or may not affect credit unions based on the share-based dividends aspect.

WOCCU will closely monitor these items as they evolve throughout the year and will continue to ensure that the credit union/cooperative perspective is considered at each step of the process.

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International Accounting Standards Board