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IAASA publishes “Desktop survey – disclosures of the new accounting standards in issuers’ 2016 annual financial statements”

IAASA, Ireland’s accounting enforcer, has today published the results of a desktop survey it has undertaken into the disclosures provided by selected Irish companies of the impact of  the new accounting standards which are due to be adopted in the next two years.

The new standards are IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, and IFRS 16 Leases.

IAASA’s document is available here.


These three Standards have the potential to significantly impact the reported results of companies, to make large impacts on companies’ balance sheets and to require additional disclosures in companies’ financial statements.

The transition from existing Standards to the new Standards may have a significant impact on, for example, banks when they measure expected impairment losses on their loan books or on technology companies and companies providing services when they measure revenues.

IFRS 9 incorporates a new expected loss impairment model for recognising impairment provisions and replaces the current incurred loss impairment model in IAS 39.

IFRS 15 specifies how and when a company will recognise revenue as well as requiring more disclosures to be given to the users of financial statements. The Standard provides a single, principles based model to be applied to all contracts with customers.

IFRS 16 specifies how  a company recognises, measures, presents and discloses leases. The Standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for substantially all leases.

The survey examined the 2016 annual financial statements of all 28 equity issuers listed on the main market of the Irish Stock Exchange and Allied Irish Banks plc, a debt issuer.

Survey results

The key results of the desktop survey are as follows:

IFRS 9 Financial Instruments

  1. The three Irish banks have provided detailed qualitative descriptions of the key concepts and expected impacts of the transition to IFRS 9 that is of a good quality in their 2016 annual financial statements; and

  1. The banks expect IFRS 9 to result in higher impairment provisions and more volatile impairment charges. However, banks did not quantify the possible impact of IFRS 9 on impairment provisions, prudential ratios, regulatory capital or key performance measures in their 2016 financial statements.

IFRS 15 Revenue from Contracts with Customers

  1. Most companies that will be impacted by IFRS 15 did not highlight important differences to current practises arising from their initial application of IFRS 15;

  1. A large number of companies provided little or no disclosure of the key concepts of IFRS 15; and

  1. Disclosures of the expected impact of IFRS 15 presented by a small number of companies was of good quality and indicative of the type of information that is useful to users of financial statements. 

IFRS 16 Leases

  1. 62% of companies are still evaluating the impact of IFRS 16 and a further 17% expect the new Standard to have a significant  impact in the period of initial application;

  1. There is room for improvement in the disclosure of the key differences from current accounting practices. Disclosures made by companies lacked sufficient detail of the key changes to accounting for leases or the descriptions were incomplete or companies were silent on the key changes arising from IFRS 16; and

  1. Disclosures of the expected impact of IFRS 16 presented by a small number of companies was of good quality and indicative of the type of information that is useful to users of financial statements.