New Zealand Accounting Standards Board

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New Zealand Accounting Standards Board Minutes of the Meeting held on 22 March 2017 at XRB Office, Level 7, 50 Manners St, Wellington, commencing at 9.

1 New Zealand Accounting Standards Board Minutes of the Meeting held on 22 March 2017 at XRB Office, Level 7, 50 Manners St, Wellington, commencing at 9.20am Members Present: Apologies: Observer: In attendance: Kimberley Crook Todd Beardsworth (10.20am 1.15pm and from 3.30pm) Francis Caetano Charles Hett Lyn Hunt Karl Hickey Kris Peach (via teleconference until 2.50pm) Angela Ryan (9.15am 1.15pm and from 3.30pm) Stephanie Allan Todd Beardsworth (from 9.20am 10.20am and 1.15pm 3.30pm) Kris Peach (from 2.50pm) Angela Ryan (from 1.15pm 3.30pm) Nicola Hankinson Senior Policy Advisor at CA ANZ (11.15am 2.20pm and 3.15pm 4pm) Warren Allen Chief Executive (absent from 12 midday-1.30pm) Anthony Heffernan Director, Accounting Standards David Bassett Deputy Director, Accounting Standards Tracey Crookston Project Manager, Accounting Standards Lisa Kelsey Project Manager, Accounting Standards Aimy Luu Huynh Project Manager, Accounting Standards Lay Wee Ng Chief Advisor Reporting Strategy (for agenda item 3) Judith Pinny Project Manager, Accounting Standards Joanne Scott Senior Project Manager, Accounting Standards Vanessa Sealy-Fisher Senior Project Manager, Accounting Standards PUBLIC SESSION AGENDA ITEMS 4 10 The Board moved into public session. 4. SERVICE PERFORMANCE REPORTING PROVIDED FEEDBACK on the body of the draft standard on service performance reporting (SPR) (from the section dealing with information to be reported onwards); NOTED that staff proposed to keep the boxed explanations of changes made since the exposure draft in any near final draft standard used for further consultation; 1

2 (f) NOTED that Appendix A to the memo sets out respondents comments on Question 10 of ED NZASB Service Performance Reporting and how these comments had been addressed in the draft standard; NOTED that Appendix B to the memo sets out issues raised by the NZAuASB SPR subcommittee and how these issues had been addressed in the draft standard; AGREED that staff should arrange a meeting between NZAuASB and NZASB SPR subcommittee members to follow the NZASB s May meeting; and AGREED that at the May meeting the Board would consider a fatal flaw draft standard, a revised Basis for Conclusions, revised amendments to other standards and proposals for further consultation. 5. FRS-42 PROSPECTIVE FINANCIAL STATEMENTS AND PBE FRS 42 PRACTICE ISSUES NOTED the FRS-42 and PBE FRS 42 practice issues identified from outreach; AGREED the proposed approach for bringing FRS-42 and PBE FRS 42 practice issues back to the Board; NOTED the analysis of practice issue 1 regarding when an entity is required to comply with FRS-42; AGREED in principle that FRS-42 and PBE FRS 42 should apply to entities with a legislative requirement to prepare prospective financial information in accordance with generally accepted accounting practice (GAAP). Proposed amendments to the scope of FRS-42 and PBE FRS 42 will be drafted to remove the reference to or chooses to ; and PROVIDED FEEDBACK on the next steps for this project. 6. APPROVED BUDGET (PROPOSED AMENDMENTS TO PBE IPSAS 1) NOTED the submissions received on ED NZASB Approved Budget (Proposed Amendments to PBE IPSAS 1); AGREED that for public sector entities the comparison of prospective and actual information should be presented either on the face of the financial statements or as a separate statement. The option to provide this information in the notes was removed because this comparison is considered important for accountability and decision making in the public sector and should be given prominence. The Board AGREED that this change to the proposed amendments should be discussed in the Basis for Conclusions; AGREED that for not-for-profit entities the comparison of prospective and actual information could be presented on the face of the financial statements, as a separate statement or in the notes; and 2

3 NOTED that the updated standard will be presented for review and approval for issue at the next meeting. 7. PBE POLICY APPROACH 7.1 Annual review of the application of the PBE Policy Approach (f) (g) (h) AGREED to wait for the IPSASB to complete its revenue project, and apply the PBE Policy Approach to the IPSASB s new and revised revenue standards; AGREED to continue closely monitoring the IPSASB s project on leases; AGREED to consider the pros and cons of incorporating the IASB s narrow scope amendments dealing with the sale or contribution of assets between an investor and its associate or joint venture in the context of developing a PBE Standard based on IPSAS 40; AGREED to continue closely monitoring the IPSASB s financial instruments project to update IPSASs 28 to 30; NOTED that the IASB pronouncements that relate to employee benefits were considered in developing ED NZASB PBE IPSAS 39 Employee Benefits; AGREED to wait for the IPSASB to consider the impact of amendments from the IASB Disclosure Initiative on IPSASs; CONSIDERED the application of the PBE Policy Approach to recent IASB pronouncements in agenda papers 7.2, 7.3, and 7.4; and NOTED the status of the IPSASB pronouncements that have not yet been incorporated in the PBE Standards. 7.2 NZ IFRIC 22 Foreign Currency Transactions and Advance Consideration The Board AGREED to wait for the IPSASB to consider IFRIC 22 in the context of its next improvements project (currently expected in June 2018). 7.3 Transfers of Investment Property (Amendments to NZ IAS 40) The Board AGREED to wait for the IPSASB to consider Amendments to IAS 40 in the context of its next improvements project. 7.4 Annual Improvements to NZ IFRSs Cycle AGREED that the amendments to NZ IFRS 1 First-time Adoption of New Zealand Equivalents to International Financial Reporting Standards are not relevant to the PBE Standards and therefore should not be incorporated into the PBE Standards; 3

4 AGREED that the amendments to NZ IFRS 12 Disclosure of Interests in Other Entities should be incorporated into PBE IPSAS 38 Disclosure of Interests in Other Entities as part of an omnibus exposure draft for the PBE Standards; and AGREED that the amendments to NZ IAS 28 Investments in Associates and Joint Ventures should not be incorporated into PBE IPSAS 36 Investments in Associates and Joint Ventures until the IPSASB has considered whether the amendments should be made in IPSAS ED PBE IPSAS 40 PROVIDED FEEDBACK on the proposed actions to develop ED PBE IPSAS 40; and NOTED the next steps on the ED PBE IPSAS 40 project. The Board agreed to retain the IPSAS 40 Public Sector Combinations approach for classifying a combination as either an acquisition or an amalgamation. However, the Board suggested that, in the accompanying Invitation to Comment, constituents be invited to comment on whether they: consider the IPSAS 40 classification approach is workable and provides for appropriate outcomes; and, if not would prefer the alternative approach considered by the NZASB in its submission on IPSASB ED 60 Public Sector Combinations. The Board discussed whether modifications were required to the indicators in paragraphs 12 and 13 and the definitions. The Board asked staff to look at aligning the indicator in paragraph 12 with the concept of equity interests, as understood by PBEs in New Zealand, and to use the definitions of equity interests and owners from PBE IFRS 3 Business Combinations. The Board asked staff to review the use of the terms resulting entity and new entity to ensure that they are used consistently, and if necessary, to develop a definition for the term new entity. The Board agreed that the title of the New Zealand exposure draft should be PBE Combinations. 9. IMPAIRMENT OF REVALUED ASSETS (AMENDMENTS TO PBE IPSASs 21 AND 26) The Board NOTED the submissions received on ED NZASB Impairment of Revalued Assets (Proposed Amendments to PBE IPSASs 21 and 26). Subject to the amendments discussed at the meeting, the Board: AGREED to modify the proposed changes to paragraphs 54A and 69A of PBE IPSAS 21 Impairment of Non-Cash-Generating Assets and paragraphs 73A and 108A of PBE IPSAS 26 Impairment of Cash-Generating Assets to address a respondent s concern about the possible ambiguity in those new paragraphs; 4

5 APPROVED for issue Impairment of Revalued Assets (Amendments to PBE IPSASs 21 and 26); and APPROVED the signing memorandum from the Chair of the NZASB to the Chair of the XRB Board requesting approval to issue the Standard. 10. STANDARDS APPROVED The Board noted that the following standards have been issued: Approval 83 Transfers of Investment Property (Amendments to NZ IAS 40); Approval 84 NZ IFRIC 22 Foreign Currency Transactions and Advance Consideration; and Approval 85 Annual Improvements to NZ IFRSs Cycle. The Board moved out of public session. 5

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