Communiqué – November 2014

The Asian-Oceanian Standard-Setters Group (AOSSG) held its sixth annual meeting on
26 and 27 November 2014 at the Hong Kong Institute of Certified Public Accountants(HKICPA), Hong Kong. The meeting was hosted by the HKICPA and attended by 18 member
standard-setters as well as representatives of the International Accounting Standards Board(IASB) and the IFRS Foundation.
The participating jurisdictions were Australia, Brunei, Cambodia, China, Hong Kong, India,Indonesia, Japan, Korea, Macao, Malaysia, Nepal, New Zealand, Pakistan, Singapore,Sri Lanka, Syria and Vietnam.
Mr. Clement Chan, Chair of the AOSSG and President of the HKICPA, and Dr. Jee In Jang,
Vice-Chair of the AOSSG and Chair of the Korea Accounting Standards Board (KASB),
welcomed delegates to the meeting.
At the opening ceremony, Sir C.K. Chow, Chairman of the Hong Kong Exchanges andClearing Limited, provided the keynote address. He stressed the importance of thedevelopment of a single global set of financial reporting standards in the development of a
global market economy and expressed appreciation for the efforts of the AOSSG and theHKICPA in the growth of IFRS in the region.
The IASB was represented at the meeting by the Chairman, Mr. Hans Hoogervorst, Boardmembers, Mr. Chungwoo Suh and Mr. Takatsugu Ochi, and Technical Director, Mr. HenryRees. Mr. Mitsuhiro Takemura and Ms. Grace Leung, respectively the Director and PracticeFellow of the IFRS Foundation Asia-Oceania Regional Office in Tokyo, also attended themeeting.
On behalf of the IASB, Mr. Ochi expressed appreciation for the ongoing efforts of theAOSSG in promoting IFRS throughout the Asian-Oceania region and enhancing thecontributions from the region to the IASB’s due process.
Update and discussion on IASB projects
Mr. Rees, Mr. Ochi and Mr. Suh provided an update on recent activities, including inparticular, issuance of final standards of IFRS 9 Financial Instruments and IFRS 15 Revenue
from Contracts with Customers, progress on the Leases, Insurance Contracts, MacroHedging, Conceptual Framework, post-implementation review of IFRS 3 Business
Combinations and the IASB research projects.
Conceptual Framework
The meeting discussed issues arising from the IASB’s recent tentative decisions made in thecourse of redeliberating the feedback received on its Discussion Paper A Review of theConceptual Framework for Financial Reporting, including:

whether the definitions of asset and liability are sufficiently precise;

whether the recognition threshold is sufficiently robust in determining whether an itemthat meets the definition of an asset or a liability should be recognised in the financialstatements;
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how to identity a relevant measurement basis for an asset and a liability recognised in
the financial statements;

whether amounts presented in the other comprehensive income should be recycled, andif so, whether it should apply in all circumstances; and

what are the major considerations in distinguishing liabilities from equity.

LeasesThe meeting discussed key outstanding topics in the Leases project that are to beredeliberated by the IASB, including the definition of a lease and small-asset leases
exemption for lessees. Members also discussed their concerns on the differences in thetentative decisions reached by the IASB and the US Financial Accounting Standards Board.
Insurance Contracts
The meeting discussed key AOSSG issues arising from the IASB's recent deliberations on
the insurance contracts project, in particular, the practical issues relating to transition
requirements for contracts with no participating features and accounting for contracts withparticipating features. The meeting also discussed the alternative model for accounting forcontracts with participating features proposed by the European Insurance CFO Forum.
Disclo sur e in itiativ e. T he meeting discussed the purpose of notes to the fi nanci al statements, the ordering of notes to the fi nanci al statements, the r ole of materi ality i n addressi ng the dis clos ure pr obl em, and the nature of signific ant acc ounti ng policies and i mpr ovi ng acc ounti ng polic y discl os ures

Islamic Finance
The meeting noted the activities of the AOSSG Islamic Finance Working Group, in particular,
the findings of the Working Group’s study of 132 Islamic financial institutions around theworld and the financial reporting framework in those entities’ jurisdictions. The study further
analysed the different accounting treatments of three common Islamic financial transactions:lessor accounting, classification of customer investment accounts and recognition andmeasurement of finance income.
Members considered that it was important to establish why an authority would impose
differential requirements and concluded that future outreach to government ministries, central
banks and securities regulators may be necessary to promote the use of IFRS by Islamic
financial institutions.
Disclosure Initiatives
The meeting discussed the IASB's tentative decisions in relation to the Principles ofDisclosures project, including:whether the respective roles of the primary financial statements and the roles of thenotes should be clarified;

whether entities should use judgement to determine which accounting policies should be
more prominent;

whether additional standards-level guidance regarding the disclosure of non-IFRS
information should be developed; and

whether a general principle of cross-referencing from financial statements to other typesof reports is necessary.
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Rate-regulated Activities
The meeting discussed the IASB’s Discussion Paper Reporting the Financial Effects of RateRegulation, including:

what types of information about the financial effects of rate regulation is most relevant tousers of financial statements in making investment and lending decisions;

what kinds of rate regulation in the Asia-Oceania region should be considered; and

whether and, if so, how IFRS should be amended to provide relevant information in IFRS
financial statements, considering the various rate regulation schemes around the world.

Equity Method of Accounting
The KASB presented its research report on the equity method of accounting. The meeting
discussed current accounting issues on the equity method and the KASB’s proposed
alternatives for accounting for equity-invested entities.
IASB members expressed their appreciation for the research paper and requested thatAOSSG members’ views on the issues be provided to the IASB staff.
Application issues in relation to Consolidated Financial Statements
The meeting discussed an application issue in Hong Kong in relation to IFRS 10
Consolidated Financial Statements, in particular, the consolidation exemption condition set
out in IFRS 10.4(a)(iv). The IASB noted the issue, which is now on the 'requested agenda
items' for consideration for future IASB projects.
Emission Trading Scheme
The KASB provided an overview of the emission trading scheme in Korea and theaccounting issues that KASB identified in its development of a Korean accounting standard
that deals with the scheme.
The KASB believes that there is a need for the IASB to consider those accounting issues aspart of its research project.
Members discussed matters relating to the progress of the IASB’s Emission Trading Scheme
project, and a range of accounting issues.
IFRS in the Region
AOSSG members from Japan, Indonesia, Sri Lanka and India provided updates on theprogress of adopting IFRS in their respective jurisdictions.
Building regional capacity – pilot IFRS Centre of Excellence
Members noted the progress of the AOSSG’s pilot IFRS Centre of Excellence (COE) projectin Nepal, including a review of the standard-setting capacity, and reports on the June 2013
and November 2014 IFRS Train-the-Trainer (TTT) programs in Kathmandu.

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Members also noted that the AOSSG Working Party will continue monitoring the IFRS
adoption progress in Nepal and advising on strategic standard-setting matters before
concluding the initiative, most likely in 2015.
The Accounting Standards Board of Nepal provided an update on the progress of adopting
IFRS in Nepal, including its transition plan, a preliminary strategic plan and feedback on thepilot IFRS COE, and thanked member jurisdictions from Australia, India, Korea and Malaysia
for providing presenters for the TTT sessions.
AOSSG Strategic Plan
Members discussed key AOSSG activities planned for the next five years commencing fromthe 2014 Annual AOSSG Meeting, that is:to continue to support the IASB’s due process by: (i) providing AOSSG’s views throughwritten submissions, at face-to-face AOSSG meetings and through the AOSSG’srepresentation at the IASB’s Accounting Standards Advisory Forum; and (ii) contributing
to the IASB’s research projects;

to continue to reinforce and remind members of the AOSSG’s commitment to a single
set of global accounting standards;

to continue to identify competent key individuals and staff to be involved in the AOSSG
and provide them exposure to technical and strategic AOSSG matters;

to continue to engage with members of IFRS Trustees, IFRS Advisory Council and IASB
from the Asia-Oceania region, and staff of the IFRS Asia-Oceania office;

to continue to assess whether further IFRS COEs in the region are feasible andnecessary;to reach out to and support member organisations that are less active;to ensure local stakeholders are aware of the AOSSG and its aims; and

to utilise the AOSSG website more effectively.

The strategic plan was approved at the meeting.
Closing remarks
Mr. Hoogervorst noted the constructive atmosphere that AOSSG members created for themeeting discussions. He recognised the contributions of the AOSSG to the development ofIFRS, for example, the amendments to IAS 41 Agriculture and various research findingssuch as those discussed at the meeting, and the AOSSG’s participation at the IASB
Accounting Standards Advisory Forum.
Mr. Chan thanked the IASB members and staff for making themselves available for open andconstructive discussions on current issues. He thanked AOSSG members for their work in
preparing for the meeting and their attendance. Mr. Chan also thanked the organising teamof the HKICPA for hosting the meeting.
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About the AOSSGThe objectives of the AOSSG are to:(a)promote the adoption of, and convergence with, IFRS by jurisdictions in the region;(b)

promote consistent application of IFRS by jurisdictions in the region;(c)coordinate input from the region to the technical activities of the IASB; and(d)cooperate with governments and regulators and other regional and internationalorganisations to improve the quality of financial reporting in the region.

Further information about the AOSSG and its Working Groups is available at AOSSG
website (www.aossg.org).

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