March 2015

SBR

The Standard Business Reporting Business Advisory Group met in Melbourne on 16 March 2015. Matters considered included the inclusion of the Australian Bureau of Statistics as an agency in the scope of SBR, the forthcoming Electronic Lodgment System of the ATO and the broader application of SBR. A significant concern is the way some agencies are adapting SBR to their requirements which diminish the attractiveness of adopting SBR. The creation of the Digital Transformation Office, announced by the Prime Minister and Minister for Communications in January 2015, is viewed as a vehicle for addressing these concerns.

Cyber Security

ASIC has published Report 429 “Cyber Resilience: Health Check”(www.asic.gov.au), which deals with an entity’s ability to prepare, respond, adapt and recover from a cyber-attack.Cyber resilience is an area of focus for ASIC because of the potential for a cyber-attack can spread quickly and impact the integrity and efficiency of markets and trust and confidence in the financial system. ASIC notes that a resilience-based approach to cyber-attacks is vital for entities to better adapt to change, reduce exposure to risk and learn from incidents when they occur.

 

Recognise and Manage Risk

A soft copy of the third edition of the G100/Deloitte guidance “ASX Corporate Governance Principle 7: Recognise and manage Risk” has been sent to members and is available on the website. Roundtable briefings held in Melbourne, Sydney, Perth and Brisbane were very well attended by non-executive directors, CFOs and risk managers and demonstrated an increased focus on risk and risk management including Recommendation 7.4 on economic, social and sustainability risks. 

ASX Continuous Disclosure

The ASX has issued a consultation paper on Guidance Note 8 ‘Continuous Disclosure” (www.asx.com.au). The main changes proposed relate to:

  • Earnings guidance
  • Defacto earnings guidance
  • Earnings surprises
  • Meaning of market sensitive for purposes of earnings surprises
  • Correcting analyst forecasts and consensus estimates
  • Publishing analyst forecasts and consensus estimates
  • Analysts and investor briefings
  • Other financial forecasts and exploration and production targets
  • Other changes of substance.

 

Corporate Reporting

Financial Instruments: The IASB’s “2015 Financial Instruments Guide” which is a single reference point on reporting and accounting for financial instruments in accordance with IFRS will be issued shortly (www.ifrs.org).Disclosure initiative: The IASB has indicated that it will publish an exposure draft of ‘Practice Statement – Application of materiality to financial statements’ in June 2015 as part of its project addressing the volume and detail of disclosures.Leases: The IASB has published an overview of:

  • The likely practical effects of the forthcoming IFRS on leases (expected to be issued by end of 2015);
  • The similarities and differences between the IASB’s requirements and those of the FASB.

The new IFRS will require companies to bring leases onto the balance sheet and result in important differences in the income statement which include reporting higher operating income compared with the current requirements and the FASB’s model.

The Project Update is available at www.ifrs.org and compares the current and new requirements.

Classification of Liabilities: The IASB has issued ED/2015/1 ‘Classification of Liabilities (Proposed amendments to IAS 1’). Submissions are requested by 10 June 2015.

The proposed amendments are designed to improve presentation in financial statements by clarifying the criteria for classifying a liability as either current or non-current. This will be achieved by:

  1. Clarifying that the classification is based on the entity’s rights at the end of the reporting period; and
  2. Clarifying the link between the settlement of the liability and the outflow of resources from the entity.

The proposals clarify that an entity must have a right to refinance or rollover a loan, or other form of debt, for at least 12 months after the reporting date for it to be classified as non-current, otherwise it must be classified as current.

{Feedback from members is welcome, in particular, the effects of the proposals on securitised borrowings}.

Disability Reporting: The GRI and Foundation ONCE have jointly published ‘Disability in Sustainability Reporting’ which is a guide to assist organisations to communicate their commitment to respecting and promoting the rights of people with disabilities.

This guide is designed to help organisations understand what activities can have an impact, whether positive or negative, on the rights of people with disabilities, and which GRI disclosures can be used as the basis for reporting on those impacts. It can enhance organisational understanding of the value of transparency on disability, in terms of creating inclusive workplaces, as well as taking advantage of the business case of disability for the development of new products, services and physical environments. The guide also features a number of case studies from businesses that are making commitments and working to improve their disability related impacts.

Insurance: The IASB has published an overview of its general model for insurance contracts without participation features and the IASB’s tentative decisions (www.ifrs.org). The IASB expects to issue a new IFRS after 2015.

Corporate Social Responsibility: The Initiative for Responsible Investment (IRI) has published an overview of recent requirements by government and stock exchanges from 44 jurisdictions related to corporate social responsibility disclosure (www.hausercenter.org/iri)

Accounting for Sustainability: The Prince of Wales Accounting for Sustainability project (A4S) has published four guides prepared by its CFO leadership network to assist the finance and accounting community address issues relating to integrating sustainability into their business processes and decisions. The guides, including case studies, deal with:

  • natural and social capital accounting – an introduction for finance teams
  • enhancing investor engagement – an introduction to integrating risks resulting from macro sustainability trends in business decision making
  • managing future uncertainty – a practical guide for investor relations to engage on the drivers of sustainable value
  • CAPEX – a practical guide to embedding sustainability into capital investment appraisal.

The guides are available at www.accountingforsustainability.org.

 

Discount Rates

The G100 project is well advanced and it is expected that a guidance document will be issued in April 2015. Road-testing of the methodology has occurred and it is expected to be available for use in the valuation of employee liabilities for reporting periods ending on or after 30 June 2015. 

Taxation Reform

The G100 Executive has established a working group to develop G100 views as well as an approach to taxation reform. 

Cost of Regulation

The G100 met with representatives from Treasury and the Department of Prime Minister and Cabinet to discuss matters raised in the G100’s submissions on “Cutting Red Tape” with a view to items not already addressed being included in the proposals to be tabled in the Spring Session. The G100 was informed that reforms which parallel international requirements were an area of focus as was the content and detail of the remuneration report.The G100, in conjunction with CCH and KPMG, hosted a luncheon in Sydney on 20 March to address the Government’s 3rd Repeal Day. The Hon Christian Porter MP – Parliamentary Secretary to the Prime Minister, spoke on the Government’s proposals. 

G100 Website

Executive received a presentation from the website developer which included background to the overall format and approach which reflects current market and technical developments. The new site is expected to go ‘live’ at the end of March. 

G100/EY CFO First 100 Days Program

Members are reminded that they should contact Peter Meehan 0417 509 022 to discuss candidates for participation in the program which is exclusive to G100 members. 

Meeting with AASB Chairman

Executive met with Kris Peach, AASB Chairman and Nikola Giles – Technical Director. Matters discussed included the changing landscape for setting international standards and the ways in which Australia could seek to influence the development of IFRSs, the need for a closer relationship between the G100 and the AASB, the opportunity to provide input prior to the preparation of exposure drafts and the areas of focus and priorities of the AASB. 

11 March Members’ Dinner in Canberra

Rob Heferen, Executive Director Revenue Group – Treasury, discussed “Tax Reform – Way Forward”, Key areas of discussion were the significance of developing a process for reform as a means of achieving widespread support for making changes over the longer term. Members were advised that a consultation paper, outlining options for change, was likely to be issued in April as part of the process of developing proposals for reform to be included in a White Paper to be issued at a later date.Executive met with Kris Peach, AASB Chairman and Nikola Giles – Technical Director. Matters discussed included the changing landscape for setting international standards and the ways in which Australia could seek to influence the development of IFRSs, the need for a closer relationship between the G100 and the AASB, the opportunity to provide input prior to the preparation of exposure drafts and the areas of focus and priorities of the AASB.