[Global Financial Insights] IFRS 16 Post-Implementation Review | IASB Seeks Feedback
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- By Taxmann
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- Last Updated on 20 June, 2025
Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:
1. IASB launches request for information – Post-Implementation review of IFRS 16, Leases
On 17 June 2025, the International Accounting Standards Board (IASB) published a Request for Information (RFI) as part of its post-implementation review of IFRS 16 Leases. This RFI seeks public feedback by 15 October 2025 and invites stakeholders to share their experiences and insights to help the IASB evaluate whether IFRS 16 is achieving its objectives.
The RFI focuses on six key areas:
(a) Overall Assessment of IFRS 16 – Stakeholders are asked whether the standard meets its objective, if its principles are clear, and whether the improvements in financial information and the ongoing application costs align with initial expectations.
(b) Usefulness of Information Resulting from Lessees’ Judgements – The IASB is seeking views on how the use of judgement (such as determining lease term, discount rates, and variable payments) affects the usefulness and comparability of reported information.
(c) Usefulness of Information About Lease-Related Cash Flows – This section addresses whether the classification and disclosure of lease cash flows meet users’ needs and expectations.
(d) Ongoing Costs for Lessees – The IASB wants to understand if the costs of applying measurement requirements, especially related to reassessments, lease modifications, and discount rate changes, are higher than expected, and whether simplifications could be justified.
(e) Potential Improvements to Transition Requirements – Based on experience with the 2019 transition, feedback is sought on how future transition provisions could better balance cost relief for preparers and information needs of users.
(f) Other Matters Relevant to IFRS 16’s Effects – This includes feedback on how IFRS 16 interacts with other standards, particularly IFRS 9, Financial Instruments and IFRS 15, Revenue from Contracts with Customers in the context of rent concessions and sale and leaseback transactions.
Responses to this RFI will play a critical role in informing the IASB’s assessment of whether IFRS 16 is functioning as intended and whether any amendments or clarifications are warranted. The full RFI can be accessed on the IFRS Foundation’s website.
Source – International Accounting Standards Board
2. PCAOB sanctions audit firm and partner for repeated documentation failures
On June 12, 2025, the Public Company Accounting Oversight Board (PCAOB) announced disciplinary action against a registered public accounting firm and one of its partners, citing serious and repeated violations of PCAOB auditing and quality control standards across five issuer audits. The firm was found to have violated Auditing Standard (AS) 1215, Audit Documentation, by failing to assemble a complete and final set of audit documentation within the required period. In two audits, substantial additions were improperly made to workpapers just before PCAOB inspections. In three others, documentation was either missing, included unrelated client records, or was created nearly two years after the audit reports were issued, only in response to PCAOB inquiries.
The partner, who also served as the Engagement Quality Reviewer, violated AS 1220, Engagement Quality Review, by approving the issuance of audit reports without sufficient documentation to support the audit team’s conclusions or risk assessments. Despite the lack of required evidence, the partner gave sign-off on the audit reports, thereby failing to perform an objective and informed engagement quality review as required by the standard.
Additionally, the firm failed to design and implement adequate quality control policies and procedures. The partner, who had primary responsibility for the firm’s quality control system, was found to have recklessly contributed to these deficiencies, constituting a violation of PCAOB Rule 3502, Responsibility Not to Knowingly or Recklessly Contribute to Violations.
Without admitting or denying the findings, the firm and partner agreed to settle the charges. As part of the settlement, the firm’s PCAOB registration has been revoked, with eligibility to reapply after two years contingent upon satisfying certain remedial conditions. The partner has been barred from associating with any registered public accounting firm, with the opportunity to petition for reinstatement after two years and upon completion of 40 hours of continuing professional education (CPE) and any state licensure education requirements.
Monetary penalties totalling $60,000 were imposed, $35,000 on the firm and $25,000 on the partner. PCAOB Chair reiterated that audit documentation is a cornerstone of audit quality, stating that these sanctions serve as a reminder that the Board will hold auditors accountable at all levels when they fail to uphold professional standards and jeopardise investor protection.
Source – Public Company Accounting Oversight Board
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