EFRAG European Outreach on Proactive Discussion Papers 'Improving Financial reporting of Income Tax' project and on 'Accounting for Business Combination Under Common Control' Project

In October and December 2011 EFRAG together with the Italian standard setter - Organismo Italiano di Contabilita (OIC), and with the UK Accounting Standards Board (ASB) issued two Discussion Papers: 'Accounting for Business Combination under Common Control' and 'Improving the Financial Reporting of Income Tax', in order to solicit input and views from constituents, prior to publication of the final discussion papers. 

The discussion paper on Accounting for Business Combination under Common Control represented a first step in responding to the diversity that exists in practice. Its principal aim was to set out the arguments and provide analysis to stimulate discussion and debate. It therefore included a comprehensive analysis of the issues drawing on the relevant IFRS literature. In addition, it noted that there was no 'ideal' accounting approach, but drew out three different views or ways of looking at the problem highlighting some of the strengths and weaknesses of each view.

The discussion paper on Income Tax represened the first step to gain input on whether IAS 12 should be improved, or whether there should be a fundamental rethinking and a new approach to be pursued. Several commentators argued that IAS 12 was a difficult standard to understand and apply, and that users did not find the information reported on income tax useful while such expense still represented one of the most significant single costs to most businesses. However, the accounting for it remained a relevant subject.

EFRAG and the National Standard Setters held meetings with constituents in the following locations:

a) Milan;

b) London;

c) Amsterdam;

d) Vienna;

e) Warsaw.

The input from these events was beneficial to EFRAG, the OIC and the ASB in their deliberations on the discussion papers, as well as in the future work of the IASB on its projects related to Income Taxes and to Accounting for Business Combination under Common Control.

EFRAG staff prepared short feedback statements on the meetings, summarising the key messages received. This formed part of the formal constituent feedback considered by EFRAG, the OIC and the ASB in their evaluation of comments on the discussion paper.
In addition to input received from constituents during the scheduled meetings, EFRAG invited constituents to comment on its discussion papers .

The deadline for comments on the 'Accounting for Business Combination Under Common Control' discussion paper was 30 April 2012, and 29 June 2012 the discussion paper on 'Improving Financial reporting of Income Tax'.

EFRAG published all its feedback statements during May and June 2012 as well as two consolidated feedback statements to summarise the feedback received.

More information about the individual proactive projects can be found under the related projects.