2015 Annual update
This year provided further examples signifying the end of the IASB and FASB convergence efforts. For some projects, such as leases and insurance, it was already clear that convergence was no longer the main objective in the completion of the project. However, 2015 saw the finality of that decision as the Boards prepared non-converged ballot drafts of their new standards on lease accounting because they were unable to reconcile their views on the lessee accounting model.
This year also brought an unexpected change in the convergence agenda which saw the IASB and the FASB propose different changes to their previously fully converged standards on revenue recognition issued in 2014. These different approaches will result in new revenue standards that are no longer converged, albeit both with the same effective date of January 1, 2018.
The lack of convergence of IFRS and US GAAP for these major topics is particularly relevant for Canadian companies as both frameworks are used by Canadian companies and US GAAP continues to be prevalent in certain industries in North America. Messages from the FASB Chairman indicating that it is unlikely that IFRS will be adopted in the US in the near term suggest that the lack of convergence will continue for years to come.
The closing years of this decade will see a period of major accounting changes for public companies. The IASB's and FASB's new Revenue and Financial Instruments Standards will take effect in 2018 (and in 2019 for the FASB's Impairment Standard), followed by Leases one year later (in 2019). Collectively, the adoption of these standards will require significant time and resources. Companies should begin implementation efforts early to best position themselves for successful transition.
Focus on financial reporting is intended to help boards of directors, audit committee members, corporate management and other interested parties to identify and address international, Canadian, US regulatory and other financial reporting developments that may affect their organizations. To facilitate ease of finding the information most relevant to your organization, we have arranged this publication by organization type and the applicable financial reporting framework.
This publication is of a general nature, intended solely to increase awareness of financial reporting developments. Readers should consult the original pronouncements and/or their financial advisers for detailed guidance on the application of these standards.
In this edition:
The information in this edition is based on pronouncements released prior to November 15, 2015. For pronouncements released after this date, please refer to the website of the standard setter or regulator in question, or contact your KPMG adviser.