On March 6, 2019, Chair of the International Accounting Standards Board (Board) Hans Hoogervorst delivered a speech at the Seminario international sobre NIIF y NIF, organised by the Consejo Mexicano de Normas de Información Financiera. Mr Hoogervorst described the global nature of IFRS Standards, the recently issued major Standards and the Board's work on improving the formatting and structure in IFRS financial statements through its Primary Financial Statements project. This article summerized the meeting minutes for practical references.

Major standards

• IFRS 9: the transition for banks has been challenging but seems to have gone smoothly. Overall, provisions have increased, but not unduly so—perhaps due to the benign economic conditions in much of the world. The benefits of a forward-looking loan loss provisioning model that requires banks to consider future events are appearing. A good example of this is Brexit in the UK, where many banks are now disclosing loan loss provisions against the risk of a disorderly Brexit. 
• IFRS 15: the good news is that IFRS 15 seems to be working well. According to a recent EY survey of US CFOs and CIOs, 94% felt that, over the long term, revenue recognition changes will deliver a value return that will exceed the investment they will make, up from 62% last year. Reported benefits include improving data quality and data-driven insights into business performance, enhancing risk awareness and identifying strategic cost reduction opportunities.
• IFRS 16: the new standard has only been in place for a matter of months, and some striking outcomes are appearing. In the UK, for example, analysis published last month showed that the UK’s top 350 listed companies alone will disclose an additional £180 billion of leasing liabilities that will now be fully visible to investors.
• IFRS 17: IASB has been working closely with the insurance industry to help ease implementation, through its Transition Resource Group and other forms of outreach. Based on this feedback, it has proposed a one-year extension to 2022 for the effective date of IFRS 17, and is also looking to make some targeted adjustments to the standard.

Primary Financial Statements

Currently the IFRS income statement is relatively form-free. In practice, non-GAAP measures are often non-comparable. Providing more structure to the financial statements is also important as more financial information is produced and consumed digitally. This revolution of formatting and structure in IFRS financial statements is concluded as followed:

• Operating profit: IASB has decided to define operating profit as profit excluding financing, tax and income/expenses from investments. It has convinced that its definition of operating profit shows what most would view as the results of a company’s main business activities.

The IASB understands that the definition of operating profit as profit excluding financing, tax and income/expenses from investments does not work for financial entities, such as banks.

• Investment Category: this category includes income and expenses from investments, from financial investments to associates and joint ventures. Investors tend to look at such investments separately from operating profit.
• Profit before Financing and Tax: as the name indicates, this subtotal excludes expenses from financing activities (such as interest expense on loans or bonds) and tax, which differs from the very commonly used non-GAAP measures of EBIT and EBITDA.

In addition to improving the structure of the income statement, IASB has developed guidance that will improve disaggregation. Currently, all too often, many components of the income statement are lumped together in ‘other income or expenses’. For many investors this is a big source of frustration and our guidance will make excessive aggregation much more difficult.

Finally, companies are required to disclose in the notes which components of income or expense they judge to be ‘unusual’, either in size or in frequency.