30 November 2005: Agenda for the December 2005 IASB meeting
The IASB will hold its monthly Board meeting at its offices, 30 Cannon Street, London, on Tuesday to Friday, 13-16 December 2005. The agenda for the meeting is set out below.

13-16 December 2005, London Tuesday 13 December 2005 (Afternoon only) Conceptual Framework – qualitative characteristics Wednesday 14 December 2005 Insurance Contracts: Cancellation and renewal options Insurance Contracts: Participating Contracts (Education Session) Short-term Convergence – Income Taxes Fair Value Measurement Convergence: Renewable Intangible Assets – FASB proposals for changes to amortisation requirements of FAS 142 Goodwill and Other Intangible Assets. Here is the Link to the FASB Proposals. Thursday 15 December 2005 Instruments Puttable at Fair Value Insurance Contracts: Life Insurance Accounting Models Joint Ventures Accounting Standards for Small and Medium-sized Entities – continuing consideration of possible recognition and measurement simplifications for SMEs IFRIC Update Friday 16 December 2005 (Morning Only) Technical Plan

30 November 2005: Measurement discussion paper may now be downloaded
Our News Story of 17 November 2005 reported that the IASB has invited comment on a Canadian Discussion Paper Measurement Bases for Financial Reporting - Measurement on Initial Recognition. The Discussion Paper is now available for download without charge from the IASB Website.

29 November 2005: Authority of published IFRIC agenda decisions
The German Accounting Standards Board has published its view on the authority of IFRIC agenda decisions that IFRIC has begun publishing recently in IFRIC Update. We thought that visitors to IAS Plus might find this guidance of interest:

29 November 2005: EFRAG endorsement status reports
The European Financial Reporting Advisory Group (EFRAG) has begun publishing a report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. We are grateful to EFRAG for giving us permission to post them:

• Endorsement Status as of 24 November 2005 (PDF 21k)
• Endorsement Status as of 15 November 2005 (PDF 19k)

29 November 2005: National/regional pages updated

We have updated the following pages on IAS Plus to reflect accounting standards activity during the third quarter of 2005: Australia China Hong Kong Japan Malaysia Singapore Thailand

29 November 2005: IAS Plus Newsletters for third quarter 2005 are posted

The November 2005 IAS Plus newsletter has been published. The newsletter reports on the 3rd quarter 2005 activities of the IASB, the IFRIC, and the IASC Foundation, and also on worldwide issues and events relating to international financial reporting. The Asia-Pacific edition has the same 24-page news content as the Global Edition plus five pages of accounting standards updates for the Asia-Pacific region. November 2005 Asia-Pacific Edition (PDF 249k) November 2005 Global Edition (PDF 206k) You will find all Past IAS Plus Issues Here.

29 November 2005: 'The Brave New World of IFRS'
We have posted an article titled The Brave New World of IFRS (PDF 71k) by Eva K. Jermakowicz and Sylwia Gornik-Tomaszewski, published in the November 2005 issue of Financial Executive magazine. This article is copyright 2005 Financial Executives International and is posted here with the kind permission of FEI. FEI is a US-based organisation of 15,000 CFOs, VPs of finance, treasurers, controllers, and other senior financial executives.

28 November 2005: EFRAG comments on IFRS 3 proposals
In June 2005, the IASB and the FASB jointly published exposure drafts that would amend their business combinations standards (IFRS 3 and SFAS 141, both titled Business Combinations). The European Financial Reporting Advisory Group (EFRAG) has submitted to the IASB a comment letter expressing overall disagreement with the proposals from both a practical and a conceptual point of view. EFRAG's view:

• EFRAG Letter on Business Combinations Exposure Draft (PDF 124k).
• EFRAG Letter on Related IAS 19-27-37 Exposure Drafts (PDF 67k).

27 November 2005: Cooperation plan among EU regulators
The Committee of European Banking Supervisors (CEBS), the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) and the Committee of European Securities Regulators (CESR) have signed a joint protocol to foster co-operation and coordination in the areas of regulation, policy, information exchange and other tasks with a common interest. The practical objectives of the joint protocol are to:

• share information in order to ensure compatible sector approaches are developed;
• exchange experiences which can facilitate supervisors' ability to cooperate;
• produce joint work or reports to relevant EU Institutions and Committees;
• reduce supervisory burdens and streamline processes; and
• ensure the basic functioning of the three Committees develops along parallel lines.

26 November 2005: Canada proposes audit convergence with ISAs
The Canadian Auditing and Assurance Standards Board (AASB) has issued an invitation to comment on its proposed new standard-setting approach for the period 1 April 2006 to 31 March 2009. The proposed new approach envisions the convergence of Canadian Auditing and Assurance standards with the International Standards on Auditing (ISAs) and pronouncements of the International Auditing and Assurance Standards Board (IAASB) in the medium term. Comments requested by 14 March 2006. Click to Download the Invitation to Comment titled Auditing and Assurance Standards in Canada–Maintaining high standards in a global environment: A new standard-setting approach (PDF 516k).

26 November 2005: Australia proposes a new approach to interpretations

The Australian Accounting Standards Board has invited comments on a proposed new model for developing interpretations of Australian Accounting Standards, most of which are equivalent to IFRSs. Under the proposals:

• The AASB will assume direct responsibility for developing Interpretations and the Urgent Issues Group (UIG) will be disbanded.
• An Interpretations Agenda Committee would be formed with the purpose of recommending how an issue proposal is dealt with, for example:
  • whether an interpretation is warranted;
  • whether it is a purely domestic issue or whether it should be referred to the International Financial Reporting Interpretations Committee (IFRIC) of the IASB.
• An advisory panel chaired by the AASB Chairman or another AASB member will be formed on each issue where guidance may be necessary.

25 November 2005: IFRS model financial statements - investment trusts

Deloitte, in conjunction with the Association of Investment Trust Companies (AITC), has developed model consolidated annual IFRS financial statements for 2005 for investment trust company (ITC) groups. The model statements assume, consistent with AITC recommendations, that equity and fixed-income investments are measured at fair value through profit and loss. Some investments are also classified as available for sale for illustrative purposes. These model statements do not illustrate an ITC parent company's separate financial statements. While they also do not illustrate an ITC's interim financial statements, many of the accounting issues faced will be common to both interim and annual financial statements. Click to download Deloitte's Model IFRS Financial Statements for 2005 for Investment Trust Groups for the year ended 31 December 2005 (PDF 328k). You will find other model IFRS financial statements Here.

25 November 2005: EU formally adopts various IFRSs
By publication in the Official Journal of the European Union on 24 November 2005, Commission Regulation (EC) No 1910/2005 (PDF 123k) of 8 November 2005 has been brought into law. Regulation 1910/2005 amends Regulation (EC) No 1725/2003 (the 'Accounting Directive') to formally adopt the latest revisions to the following International Financial Reporting Standards: IFRSs 1 and 6; IASs 1, 16, 19, 24, 38, and 39; and IFRIC Interpretations 4 and 5.

24 November 2005: SEC Commissioner discusses convergence
In remarks at a conference sponsored by the Danish Ministry of Economic and Business Affairs in Copenhagen, US SEC Commissioner Cynthia A. Glassman discussed various SEC initiatives affecting foreign issuers, including accounting convergence and the SEC's reconciliation. Click to Download Commissioner Glassman's Speech (PDF 66k). An excerpt:

24 November 2005: IFRIC 7 on hyperinflation
The International Financial Reporting Interpretations Committee has issued Interpretation 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies. IFRIC 7 contains guidance on how an entity would restate its financial statements pursuant to IAS 29 in the first year it identifies the existence of hyperinflation in the economy of its functional currency. The Interpretation is effective for annual periods beginning on or after 1 March 2006. Earlier application is encouraged. Click for:

• Summary of the Main Requirements of IFRIC 7.
• Press Release (PDF 68k).

24 November 2005: International Accounting Education Standards Board
At its meeting last week, the IFAC Council approved, effective immediately, changes to IFAC's Constitution that included changing the name of the Education Committee to the International Accounting Education Standards Board (IAESB). The change was seen as necessary to reflect the Education Committee's authority to independently set standards and the equivalent level of legitimacy between it and other international standard setters. For information about the IAESB's pronouncements, proposals, and current activities, visit their website: www.ifac.org/education.

24 November 2005: Agenda for the IFRIC meeting 1 December
The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday 1 December 2005 (one day only). The agenda for the meeting is below:

Thursday 1 December 2005 Introduction and Administrative Matters D16 Scope of IFRS 2 - Proposals for final Interpretation Possible Draft Interpretation - Interim Reporting and Impairment of Goodwill and Investments in Equity Instruments Recommendations by the Agenda Committee regarding requests for IFRIC agenda items.

24 November 2005: Advisory group on IASCF trustee selection
The Trustees of the International Accounting Standards Committee (IASC) Foundation, under which the IASB operates, have formed a Trustee Appointments Advisory Group to help them in nominating and appointing qualified and interested individuals as Trustees. Members of the Advisory Group are:

• Jane Diplock, Chairman of the Executive Committee, International Organization of Securities Commissions
• Roger Ferguson, Chairman, Financial Stability Forum
• Donald Kaberuka, President, African Development Bank
• Haruhiko Kuroda, President, Asian Development Bank
• Luis Alberto Moreno, President, Inter-American Development Bank
• Rodrigo de Rato y Figaredo, Managing Director, International Monetary Fund
• Jean-Claude Trichet, President, European Central Bank
• Paul Wolfowitz, President, World Bank

23 November 2005: Australian model special purpose financial report
We have added to our Australia Page a downloadable model special purpose financial report. In Australia, financial reports for periods beginning on or after 1 January 2005 must be prepared in conformity with Australian equivalents to IFRSs (A-IFRSs). This model illustrates a special purpose report on first-time adoption of A-IFRSs. Other model financial reports for 2005 on our Australia page are Annual Consolidated Financial Report, Concise Annual Report, and Half-yearly Financial Report.

23 November 2005: New Global Offerings Services newsletter

We have posted the November 2005 Edition of the Deloitte Global Offerings Services Newsletter (PDF 130k). Global Offerings Services is a global team of Deloitte practitioners assisting non-US companies and non-US practice office engagement teams in applying US and International accounting standards (that is, US GAAP and IFRSs) and in complying with the SEC's financial reporting rules. Past GOs Newsletters are Here.

22 November 2005: Australian Alert on A-IFRS disclosures
Deloitte (Australia) has published Australian Accounting Alert 2005/14 Are You Ready for Increased A-IFRS Disclosures? (PDF 92k). With 31 December 2005 looming, many companies are nearing the end of their projects for transition to Australian equivalents of IFRSs. Most projects have focussed on the differences in measurement and recognition. However, entities will potentially have to significantly rework the form and content of their financial report in 2005. This Accounting Alert provides an overview of some of the key new disclosures that will be required under A-IFRSs. These include a new primary statement, sources of uncertainty and judgement, increased reconciliations, and much more information on certain types of transactions. Further details on disclosure requirements may be found in the model financial reports and presentation and disclosure checklists, available on our Australia Page. Links to all past Australian Accounting Alerts are Here.

22 November 2005: New Australian Accounting Alert on guarantees
Deloitte (Australia) has published Australian Accounting Alert 2005/13 AASB 139 Scope Amendment to Include Financial Guarantee Contracts (PDF 117k). The Alert discusses AASB 2005-09 Amendments to Australian Accounting Standards, which amends AASB 4 Insurance Contracts, AASB 1023 General Insurance Contracts, AASB 132 Financial Instruments: Disclosure and Presentation, and AASB 139 Financial Instruments: Recognition and Measurement to reflect the related Amendments Made by the IASB to IAS 39 and IFRS 4. Links to all past Australian Accounting Alerts are Here.

22 November 2005: Australian presentation and disclosure checklists

Deloitte (Australia) has published two new presentation and disclosure checklists – one for 2005 annual reports and the other for 2005 interim reports. These checklists summarise the presentation and disclosure requirements in Australian Accounting Standards and Urgent Issues Group (UIG) Interpretations for a general purpose financial report. They do not address recognition and measurement. Click to download the Presentation and Disclosure Checklist 2005 for: Annual Financial Reports (PDF 1,097k) Interim Financial Reports (PDF 162k)

21 November 2005: Revised IVSC guidance on valuing PP&E
The International Valuation Standards Committee (IVSC) has published revised International Valuation Guidance Note 3 (GN3) Valuation of Plant and Equipment. GN 3 was amended to ensure consistency with revised International Valuation Application 1 (IVA 1) Valuation for Financial Reporting published in the 2005 edition of International Valuation Standards. Revisions to IVA 1 were undertaken to reflect the changes made to the International Financial Reporting Standards as part of the IASB Improvements Project. Click to download:

• IVSC News Alert (PDF 32k)
• IVSC Guidance Note (PDF 156k)

20 November 2005: Agenda project pages updated

We have updated the following IASB agenda project pages to reflect discussions and decisions at the Board's November 2005 meeting:

• Accounting Standards for Small and Medium-sized Entities (SMEs)
• Business Combinations Phase 2
• Control (Consolidation)
• Fair Value Measurements
• Insurance Contracts
• Performance Reporting
• Short-term Convergence: Segment Reporting
• Short-term Convergence: Borrowing Costs
• Short-term Convergence: Earnings per Share
• Technical Corrections

19 November 2005: Day 4 of the November 2005 IASB meeting
The International Accounting Standards Board met at its offices in London on Tuesday through Friday, 15-18 November 2005. You will find all of the preliminary and unofficial notes taken by Deloitte observers at the meeting Combined on a Separate Page.

19 November 2005: Webcast on IFRS 7 and other issues
The Deloitte United Kingdom IFRS Centre of Excellence is running a monthly series of hour-long Internet-based IFRS technical updates, focusing on the most important international accounting standards and how they will affect UK companies. The seventeenth session was run on Thursday 17 November 2005, focusing on certain recent UK company law changes, guidance on Operating and Financial Reviews, the new standard IFRS 7 Financial Instruments: Disclosures and on some reminders for 2005 financial statements. To access the recording Click Here. Because each of these webcasts requires 30-50mb of storage space, our intent has been to retain them on-line for just a few months. However, they have proved very popular with IAS Plus visitors, and for the moment we have sufficient storage space to make them all available. Links to all past webcasts may be found on our United Kingdom Page.

18 November 2005: Day 3 of the November 2005 IASB meeting
The International Accounting Standards Board met at its offices in London on Tuesday through Friday, 15-18 November 2005. You will find all of the preliminary and unofficial notes taken by Deloitte observers at the meeting Combined on a Separate Page.

17 November 2005: Deloitte guide to applying IFRSs in the UK

iGAAP 2005–IFRS reporting in the UK, developed by Deloitte & Touche (United Kingdom), has been published. It provides comprehensive guidance for UK companies intending to report under International Financial Reporting Standards, by: focusing on the practical issues that companies will face; explaining clearly the requirements of IFRSs and how they differ from previous UK GAAP; adding interpretation and commentary where IFRSs are silent, ambiguous, or unclear; separately identifying those UK-specific requirements that will continue to apply; and providing many illustrative examples.

The publication may be purchased by calling +44 (0)870 777 2906 or by emailing customerservices@cch.co.uk.

17 November 2005: Discussion Paper on initial measurement
The IASB has published for public comment a Discussion Paper Measurement Bases for Financial Reporting - Measurement on Initial Recognition. The Discussion Paper, prepared by staff of the Canadian Accounting Standards Board (AcSB), analyses possible bases for measuring assets and liabilities on initial recognition. These include:

historical cost, current cost, fair value,

net realisable value, value in use, and deprival value.

The Paper evaluates the possible bases against criteria derived from the IASB Framework, as well as developments in finance theory, present value and statistical probability principles, and measurement practices. Neither the IASB nor the AcSB has yet debated the Discussion Paper. The IASB invites comments by 19 May 2006. Comments received will be analysed by staff of the AcSB. Their analysis and copies of responses will be provided to the IASB. The full Discussion Paper and a condensed version are now available to subscribers on the IASB's website. They will be freely available from 28 November 2005. Click for IASB Press Release (PDF 54k).

17 November 2005: Australian strategy on public sector entities
The Australian Accounting Standards Board (AASB) has published a Strategy Paper on Australian Accounting Standards and Public Sector Entities, including not-for-profit and governmental entities. Australian Accounting Standards (AASs) include Australian equivalents to IFRSs (A-IFRSs). Currently, the A-IFRSs specify the extent to which they are applicable to public sector entities. In addition, there are some AASs that are not A-IFRSs that are applicable to not-for-profit entities (for example, a standard on contributions). Overlaying all of these Standards are three 'industry-based standards' dealing with financial reporting by governments, and these effectively override AASs and A-IFRSs. The Strategy Paper acknowledges that these three industry standards "have not kept up with contemporary accounting thought". Accordingly, the Strategy Paper proposes to withdraw the three industry standards for years ending on or after 30 June 2007, with early adoption of the effect of withdrawal permitted. After withdrawal, AASs and A-IFRSs would apply in their own right to public sector entities. Click to download the AASB Public Sector Strategy Paper (PDF 83k).

16 November 2005: Day 2 of the November 2005 IASB meeting
The International Accounting Standards Board met at its offices in London on Tuesday through Friday, 15-18 November 2005. You will find all of the preliminary and unofficial notes taken by Deloitte observers at the meeting Combined on a Separate Page.

16 November 2005: Impact of IFRSs on European credit institutions
Deloitte IFRS experts in France recently presented the results of their review of the effects of first-time adoption of IFRSs by 15 European financial institutions. The 78-slide presentation covered:

16 November 2005: November 2005 IASB meeting day 1
The International Accounting Standards Board met at its offices in London on Tuesday through Friday, 15-18 November 2005. You will find all of the preliminary and unofficial notes taken by Deloitte observers at the meeting Combined on a Separate Page.

15 November 2005: EC eliminates fair value option 'carve-out'
The European Commission has adopted a Regulation endorsing the fair value option in IAS 39 on Financial Instruments: Recognition and Measurement As Amended by the IASB in June 2005. This removes one of the two 'carve-outs' that the EC had imposed when endorsing IAS 39 for use in Europe. The amended fair value option was approved unanimously by the EU Member States at the Accounting Regulatory Committee and by the European Parliament. Adoption is retroactive to 1 January 2005, so that companies will be able to apply the amended standard for their 2005 financial statements. Internal Market and Services Commissioner Charlie McCreevy said: "I am very pleased that the Commission has been able to eliminate the 'fair value carve-out' to IAS 39. The two IAS 39 carve-outs were always intended to be exceptional and temporary. We therefore need to press on with the technical work to find a solution on the second carve out." Click for:

• EC Press Release (PDF 94k).
• IASPlus Newsletter Describing the Fair Value Option (PDF 62k).

15 November 2005: Scott Taub is named Acting SEC Chief Accountant
US Securities and Exchange Commission Chairman Christopher Cox has designated Scott Taub to serve as Acting Chief Accountant for the SEC. Mr Taub has served as the Commission's Deputy Chief Accountant since September 2002. Prior to joining the Commission's staff, he was a partner in the Professional Standards Group of Arthur Andersen in Chicago. Mr Taub replaces Donald T Nicolaisen, who left in October 2005 to return to the private sector.

14 November 2005: FASB begins comprehensive employee benefits project
The US Financial Accounting Standards Board has added to its agenda a project to reconsider guidance in Statement No. 87 Employers' Accounting for Pensions, and Statement No. 106 Employers' Accounting for Postretirement Benefits Other Than Pensions. FASB's press release indicates that "consistent with its effort toward international convergence of accounting standards, the FASB expects to work with the International Accounting Standards Board and other standards setters" in connection with this project. At the moment, the IASB does not have on its agenda comprehensive reconsideration of IAS 19 Employee Benefits. Click for FASB Press Release (PDF 20k)

14 November 2005: Agenda for IASB November meeting
The International Accounting Standards Board will meet in public session at its offices in London on Tuesday through Friday, 15-18 November 2005. Presented below is the agenda for the meeting.

14 November 2005: Progress toward IFRS convergence in China
Representatives of the China Accounting Standards Committee (CASC) of the People's Republic of China and the International Accounting Standards Board (IASB) met in Beijing on 7 and 8 November 2005 to discuss a range of issues relating to the convergence of Chinese Accounting Standards (CASs) with International Financial Reporting Standards (IFRSs). At the conclusion of the meeting, the two delegations released a joint statement setting out key points of agreement, including the following:

• Press Release (PDF 31k)
• Joint Statement (PDF 11k)

9 November 2005: Agenda for SAC meeting 10-11 November
The Standards Advisory Council (SAC) will meet with the IASB in public session on Thursday and Friday 10-11 November 2005 at the Renaissance Chancery Court Hotel in London. Presented below is the agenda for the meeting.

8 November 2005: IASCF publishes financial instruments guidebook

The International Accounting Standards Committee Foundation has published a user's guide through the official text of the standards on financial instruments issued by the International Accounting Standards Board. The volume is a compilation of IAS 32, IAS 39, IFRS 7, and IFRIC Interpretation 2, with extensive cross-references and annotations of relevant IFRIC agenda decisions. The book may be purchased from the IASC Foundation for £38. Click for Press Release (PDF 62k).

7 November 2005: IASCF trustees to meet 15 November

The trustees of the IASC Foundation, under which the IASB operates, will hold an open meeting on 15 November 2005 at the Ritz Carlton Hotel in Washington, DC, USA. IASCF committees will hold closed meetings on the previous day. The agenda of the open meeting includes:

• Report of the Procedures Committee
• Report of the Chairman of the IASB
• Report of the SAC Chairman of the Standards Advisory Council

6 November 2005: IAASB defers ISAs 200 and 210
The International Auditing and Assurance Standards Board (IAASB) has deferred the effective dates of two revised International Standards on Auditing (ISAs) that were to take effect for audits of financial statements for periods beginning on or after 15 December 2005. They are ISA 200 Objective and General Principles Governing an Audit of Financial Statements and ISA 210 Terms of Audit Engagements. IASs 200 and 210 had been revised in December 2004 as a consequence of the IAASB's Revisions to ISA 700 The Independent Auditor's Report on a Complete Set of General Purpose Financial Statements (PDF 134k), which are effective for reports dated on or after 31 December 2006. The ISA 700 revisions:

• require that the auditor's report clearly identify the accounting framework by which the financial statements have been prepared – IFRSs or otherwise, and
• provide guidance on whether an accounting framework is acceptable, and on the need for the auditor to consider whether the financial statements are misleading even when they comply in all respects with that framework.

6 November 2005: Day 2 of the November 2005 IFRIC meeting
The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Thursday, and Friday 3-4 November 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the second and final day of the meeting.

4 November 2005, London IAS 34 interaction with IAS 36 and IAS 39 The IFRIC considered the interaction of the impairment provisions for equity instruments in IAS 39 and goodwill in IAS 36 with the requirement in IAS 34 that the frequency of reporting should not affect the measurement of an entity's annual results. The staff indicated that it believes there is evidence in IAS 34 to support both a discrete period approach and an integral period approach with regard to the reversal of impairment losses for investments in equity instruments and goodwill. IFRIC members supported the staff's view with some referring to IAS 34 as a 'schizophrenic' Standard. It was noted that indeed different year ends created a lack of comparability between entities as impairment tests are potentially performed at different times for goodwill. IFRIC debated ways of how best to proceed. Some suggested a proposal to the Board to delete paragraph 28 in IAS 34. Others argued that there were more fundamental issues to consider that could not be resolved with a quick fix (such as volume discounts as they affect revenue recognition, effectiveness testing when applying hedge accounting, requirements in IAS 19, and consideration of criteria for capitalising development costs under IAS 38). Some believe the particular issue under discussion arose as a result of the requirement that impairment losses cannot be reversed, therefore trying to resolve the issue through IAS 34 was not the correct approach. Some observed that the requirements in US GAAP are not the same as in IAS 34. Therefore, SEC registrants have additional problems to consider. IFRIC agreed to proceed with an Interpretation on the specific IAS 34/39 issue and tentatively decided to proceed on the basis that a more specific Standard would trump IAS 34. Some IFRIC members raised their concerns over this approach and IFRIC agreed to get the preliminary views of the IASB on the decision to take this direction before committing further resources to this project. IAS 17 Leases of Land that Do Not Confer Title on the Lessee The IFRIC received two requests for interpretation regarding the classification of leases on land that do not transfer title to the lessee. The first request is centred on what is meant by 'normally' in paragraph 14 of IAS 17. The second urges that a solution should be found that would be more reflective of the economic reality underlying such transactions in jurisdictions such as Singapore, where most transactions of land are leasehold. The staff noted the following options as available to IFRIC on these issues: 1. Interpret IAS 17 provisions related to long leases of land which do not transfer title to the lessee, 2. Recommend to the Board an amendment to IAS 17, either; removing the term 'normally', or clarifying when leases of land that do not transfer title to the lessee may be classified as finance leases. 3. Leave IAS 17 unchanged and publish reasons for not issuing an Interpretation (staff recommendation). After some discussion about the inconsistencies in IAS 17, IFRIC concurred with the staff recommendation to leave IAS 17 unchanged, as any other alternative would be beyond the remit of an Interpretation, and publish reasons for not issuing an Interpretation by highlighting that the length of the period in such leases does not matter. On a secondary issue, regarding whether a lease where the lessor is required to pay the market value of land on expiry of the lease to the lessee is normally classified as an operating lease, the staff did not consider that this issue should be the subject of a separate Interpretation as it does not appear to have widespread and practical relevance. The IFRIC concurred and requested that in the rejection wording, an example should be included to illustrate why this issue does not warrant a separate Interpretation. IAS 39 - Hedging the Inflation Component of Nominal Interest Rates The IFRIC received a submission asking whether it is possible under IAS 39 to apply fair value hedge accounting to a fixed interest rate liability when it is hedged with an inflation derivative. The IFRIC noted that the Fisher equation (1 + nominal interest rates) = (1 + real interest rates) X (1 + inflation) holds true in the long-term but noted that the market did not react in that theoretical manner in the short-term. It was pointed out that despite this assertion, it was difficult to reconcile that view with reasons why companies were trading heavily in the inflation swap market in order to hedge revenue (mainly utility companies with inflation linked revenues) and in some cases, fixed interest rate debt. Others indicated the existence of academic research that suggests that the relationship between inflation and interest rates is coincidental. This lead to a discussion about what constitutes a portion for hedge accounting purposes with IFRIC concluding that this was the real issue to be addressed (for instance, is the oil price considered to be a portion of the kerosene price, and if it is accepted that oil price rises cause inflation, then is the oil price a portion of inflation?). Some believe that trading of instruments based on a statistic such as inflation or LIBOR, does not mean it is a portion of some other statistic simply because they are quoted as such (such as LIBOR + y% to arrive at an interest rate to charge a borrower). IFRIC did not agree on the issue about portions and requested that the submitter be asked to provide additional information to flesh out the issues around how effectiveness testing is being conducted. Despite this, IFRIC noted that it was leaning towards rejecting this issue as it is too narrow to warrant an Interpretation, unless something came through from the revised submission that would alter this view. If any more work is conducted, it should be on the broader issue of what constitutes a portion. The staff was asked to obtain the preliminary views of the IASB on the IFRIC's intended direction on this issue. Review of Tentative Agenda Decisions and Recommendations by Agenda Committee IFRIC considered wording of the tentative agenda decisions and recommendations by the Agenda Committee regarding requests for IFRIC agenda items. Scroll down on this page to find notes from 3 November 2005. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

5 November 2005: October 2005 Accounting Roundup
We have posted October 2005 Accounting Roundup (PDF 250k). This newsletter, published by Deloitte & Touche LLP (United States), summarises recent accounting and financial reporting developments and provides Internet links to related content. This edition includes:

• FASB: Working draft of the Fair Value Measurements standard; final FSPs on determining grant date and on capitalisation of rental costs during a construction period; proposed FSPs on unrealised gains/losses on derivatives and on nontraditional loan products; 2005 FASAC survey; and summaries of recent FASB meetings.
• GASB: Exposure Draft on sales and pledges of receivables and revenues.
• AICPA: SOP on insurance contract acquisition costs; three Technical Practice Aids on recent natural disasters; and a practice alert on auditing variable interest entities.
• International: IASB's discussion paper on management commentary.
• Other: COSO's proposed internal control guidance for smaller businesses.
• Adoption dates and deadlines – an eight-page chart of significant adoption dates and deadlines for the FASB, EITF, GASB, AICPA/AcSEC, SEC, PCAOB, and IASB/IFRIC.

5 November 2005: Day 1 of the November 2005 IFRIC meeting
The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Thursday, and Friday 3-4 November 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the first day of the meeting.

3 November 2005, London Service Concession Arrangements Draft Interim Statement At this meeting the IFRIC discussed the issuance of a public statement that would clarify how existing standards apply to service concession arrangements in light of the delayed finalisation of D12-14. There was some discussion about how helpful such a statement would be given its factual nature, and lack of interpretive guidance. IFRIC agreed to deal only with the question of whether an exemption from the requirements of IAS 8 was to be created for service concession arrangements for the 2005 year ends. IFRIC's view was that such an exemption does not exist and the IASB will not be requested to consider creating an exemption. This view would be made clear in the IFRIC Update publication. In addition, a project summary of the tentative decisions already taken would be posted onto the IASB website in order to communicate to the public against bad practices currently being applied. Regarding the authoritativeness of such a statement, IFRIC members noted that this route would be taken only because the service concession arrangements project is unique given its far reaching implications across various IFRS Standards, and that this should not be seen as setting a precedent. Flowcharts As many different types of arrangements exist, IFRIC staff presented a high level outline of where the focus areas should be, to help IFRIC determine the scope of this project. The slide presentation was well received. In particular, the 'Snapshot-Allocation of Key Responsibilities Under Main Options for Private Sector Participation in Public Services' (see Observer Notes - Agenda Paper 2B) was seen as a good starting point of determining the focus area. IFRIC Process Review There were no observer notes for this discussion hence it was difficult to follow the discussion. Staff presented an analysis of comments received as well as staff recommendations. In addition, staff indicated that a sub-committee of the Standards Advisory Council (SAC) will be considering the issue of IFRIC's Process Review and would be informed of issues arising out of IFRIC's discussions. When asked about the functioning of the Agenda Committee in relation to IFRIC itself, IFRIC members expressed comfort about the process and set-up of the Agenda Committee given that every IFRIC member is provided with the Agenda Committee papers and in addition, is able to attend the Agenda Committee meetings if they so wish. There was some agreement that clear communication of the Agenda Committee's role and responsibilities should be developed in order to mitigate the perception that its process is not transparent. It was also noted that these perceptions were subsiding following the introduction of the process of communicating its recommendations in public meeting to IFRIC itself. This led to the issue of whether Agenda Committee meetings should be held in public, to which most responded by stating that as it is not a decision making body, there was no need for the Agenda Committee to meet in public (similar to the EITF). The Staff were asked to liaise with EITF staff in order to compare their processes and work on adopting best practices on both sides. Regarding the criteria for taking on projects, IFRIC members made the point that when the IASB is dealing with an issue as part of its own project, the policy governing IFRIC should not restrict it from taking immediate action that stops bad practice, regardless of how obvious the issue may seem. In addition, it should be stated that where constituents disagree with the decisions of IFRIC, they should be allowed to bring this to the IASB's attention. The prominence of IFRIC decisions on the IASB website was discussed, with many appearing to be in favour of this proposal. It was stated that old or outdated decisions would not be revisited to take into account changes to IFRS. The reasons for this were that it provided constituents with an archive on which they could base the rationale for accounting treatments adopted in the past as well as the issue of staff resource constraints. A suggestion that IFRIC rejections should be included in the Bound Volume publication was rejected. Some commentators suggested that IFRIC papers be made available publicly. This suggestion was rejected as it would make the IFRIC process unmanageable for both staff and IFRIC members. Access currently granted to liaison standard setters was viewed as discriminatory against other constituents and that this should be resolved. IFRIC members requested that they should be allowed to share their papers with experts on the same confidential basis as they are made available to them. It appeared that these suggestions would be taken forward to the SAC sub-committee. Others noted that observer notes should be made available at the same time that the IFRIC papers are made available to IFRIC members in order for interested parties to prepare adequately and follow the meetings. The point was made that a reference to 8-12 interpretations may be read as a 'budget' instead of a maximum threshold. IFRIC members asked that this should be clarified in order for constituents to correctly assess the work of IFRIC. IFRIC noted for discussion at a subsequent meeting, the formalisation of its role where a National Standard Setter requests negative clearance on guidance issued at a local level. IFRIC D15 - Reassessment of Embedded Derivatives The staff provided IFRIC with a comment letter analysis on D15. Overall, commentators agreed with IFRIC on its conclusions in D15. However, three main issues were raised by commentators which IFRIC were asked to consider: 1. Accounting treatment in business combinations The staff reported that a number of comment letters requested a clarification of the scope of IFRIC D 15 as to whether the phrase "an entity that first becomes party to a contract" also applies to instruments held by an entity which is acquired in a business combination, that is, whether a reassessment is required in conjunction with the business combination. IFRIC concluded that it could not address this issue as part of D15 as it would require re-exposure. The IFRIC also noted that there were broader issues around the assessment of certain contracts, not just embedded derivatives, at the time of a business combination that would widen the scope of the D15 project. Consequently, this issue would be addressed separately by asking the Agenda Committee to consider the issue and its scope. The IFRIC also noted that asking the Board to consider this issue as part of the phase 2 project on Business Combinations would not lead to a quicker resolution of the issues. In terms of US GAAP, it was noted that the guidance in the US requires assessment of the closely relatedness of the embedded derivative in as far as the actual counterparty to the contract is concerned, without any notion of an entity becoming a party via a business combination. 2. Specification and definition of 'a change in the contract' Most commentators requested a clarification of this term and expressed concern that this condition might be misused as a de facto-choice at the discretion of the entity if even minor changes would require a reassessment (for example, postpone the settlement by one day in order to allow reassessment). The staff suggested the following wording: "A substantive change in the terms of the contract is a significant change in the cash flows associated with the embedded derivative or the host contract." The IFRIC agreed with the Staff proposal but asked that the wording be checked against the guidance in IAS 16 regarding whether an exchanges of items of property plant and equipment has commercial substance as well as IAS 39 for consistency purposes. In addition, IFRIC agreed with the Staff recommendation that the Interpretation should consider changes to both components (the non-derivative host contract and the embedded derivative). When evaluating whether two items A and B are still closely related, logic implies that either A or B or both may have changed. Therefore, both items should be considered. The same is true when evaluating whether both items have become closely related. Either item A or B or both might have changed and as a result, A and B become closely related. 3. Consequences of a reassessment Some commentators requested further guidance as to the accounting consequences of a reassessment. Two possible treatments were noted: a. restatement as if the embedded derivative had always been identified and separated (this gives rise to the problem that probably a profit or loss has to be accounted for as a result of a change in fair value since inception) (a kind of retrospective treatment), b. the derivative is separated from the day of the reassessment onward. No profit or loss would be recognised and any difference would be attributed to the host contract (as the embedded derivative would be carried at fair value). The same commentators pointed out that both treatments have drawbacks: a. gives the opportunity to cherry-pick the hybrid contracts that would give rise to a profit or loss and change the terms of the contract to reassess them; b. has the problem of the amount attributed to the host contract probably not meeting the definition of an asset or a liability. IFRIC decided not to deal with this issue as part of the D15 project arguing that the scope of the Interpretation should be kept narrow, that is, to limit the scope to the question of whether or not to reassess. Questions about the accounting treatment after a reassessment would be outside the scope of the Interpretation. Other issues A commentator requested a clarification of D15's scope regarding whether the Interpretation only addresses the 'closely related' criterion of IAS 39. Otherwise, it is argued, D15 may lead to the situation when the entity is required to continuously reassess (being outside the scope of IFRIC D15) whether an 'own-use'-instrument despite initial expectations fulfils the net settlement characteristics and therefore is in IAS 39's and consequently D15's scope. IFRIC concluded that D15 does not capture the own use criteria, instead it only deals with issues already in the scope of IAS 39. On the issue of whether reassessment is required when market conditions change, the IFRIC agreed to include guidance that clarifies that reassessment is not required. The staff were asked to bring to the next meeting, the final Interpretation for approval. Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies IFRIC D5 An IFRIC member asked about paragraph 3 of the Consensus in the draft Interpretation, which assumes that all the non-monetary items in the opening balance sheet have to be restated from historical cost. However, IAS 29 requires items that have been revalued to be remeasured from the date of revaluation. The proposed wording was approved provided that it is consistent with IAS 29. The amendment required was viewed as more than editorial, since it changes some key wording in the Consensus paragraph. Accordingly, it was judged necessary to bring the text back to an IFRIC meeting and, if the proposed amendment is agreed, to report it to the Board. It was noted that this will delay the publication date, with the result that the Interpretation could no longer have an effective date of periods commencing on or after 1 January 2006. Update from Research Team A member of IFRIC provided an overview of the work that had been performed to date in researching possible methods of accounting for high inflation that would replace IAS 29 in the long-term. The basic premise of the new approach as it currently stands would be to account for high inflation (as opposed to hyperinflation). Based on research, 10% inflation was said to materially affect financial reporting if some sort of restatement was not undertaken. The research group is working on a lower threshold of 8% in order to be conservative. Two approaches are believed to be potentially workable, namely: the integral approach which would require comprehensive restatement, and the simplified approach which would require restatement of major impact items such as property plant and equipment and inventory. The research team hopes to present its work to date to the IASB at its next meeting as an education session. IFRIC D16 Scope of IFRS 2 Thirty-nine comment letters were received. Most supported the principle of expensing the cost of equity instruments issued by an entity in return for goods or services received even if some or all of those goods or services are not identifiable. The IFRIC discussed comments received and the staff recommendations. IFRIC agreed to amend D16 to introduce the notion of 'assumed' goods or services received as the current guidance, noting 'identifiable' goods or services is problematic. In addition, IFRIC agreed to extend the scope of D16 and provide guidance for instances where charitable donations in shares are given (for example, the shareholder gives shares to a child or parent) by clarifying that these would not be in the scope of IFRS 2 provided the recipient does not provide goods or services to the entity. Some respondents noted that under paragraph 13 of IFRS 2, there is a rebuttable presumption that the fair value of goods or services received can be reliably estimated, but paragraph 9 of D16 implies that this presumption must always be rebutted. As a result entities would always be required to measure both the fair value of goods or services received and the fair value of the equity instruments transferred and take the higher of the two - an onerous requirement. Further, they argued, this would be inconsistent with paragraph 13 which states that the presumption is rebuttable in rare cases only. The IFRIC agreed to change the wording of D16 to remove this inconsistency with IFRS 2 and to make clear that the onerous requirement to measure both sides of the transaction is not required in all cases. Some respondents asked for further guidance on determining the measurement date and recognising the expense in respect of a D16 type transaction. IFRS 2 defines the measurement date for transactions with parties other than employees as the date at which the entity receives the goods or services. Further, IG6 states that if the goods or services are received on more than one date, the entity should measure the fair value of the equity instruments granted on each date when the goods or services are received. The IFRIC agreed that the grant date should be used for measurement purposes. IFRIC D17 IFRS 2 Group and Treasury Share Transactions Some members pointed out that the comments received on IFRIC D17 highlighted the broader issues around push-down accounting from group financial statements to the separate financial statements, which could not be resolved in this project. On the issue where a subsidiary entity grants, to its employees, rights to equity instruments of its parent, the IFRIC decided to proceed with D17 as drafted (cash-settled), as the alternative treatment is far more problematic (which entails assuming that it does not matter whose shares the subsidiary settles with - the parent's shares or any other unrelated entity). On the issue of whether the classification should be the same whether the parent entity or the subsidiary entity grants those rights because the economic substance of the transactions is the same, the IFRIC asked the staff to reconsider the issue and bring back another paper at the next meeting. Customer Loyalty Programmes Loyalty cards/programs have long been an integral part of many companies' incentives and customer relationship management programs. Loyalty programs currently operating serve businesses as diverse as supermarkets, telecommunication companies, airlines, hotels, automobile rental companies, banks, and music and book sellers. The question before IFRIC is what is the appropriate accounting under IAS 18 Revenue when an entity provides rewards, normally non-cash rewards, to loyal customers. Scope The IFRIC discussed in general terms, the various schemes in place in trying to determine the scope of this project. IFRIC members noted that discounts and other sales incentives, regardless of how they are structured, should not be included in the scope of this project. Multiple element sales Paragraph 13 of IAS 18 states that "in certain circumstances, it is necessary to apply the recognition criteria to the separately identifiable components of a single transaction in order to reflect the substance of the transaction". This statement gives no guidance on: a. when a component of a single transaction is separately identifiable and; b. when applying the revenue recognition criteria in IAS 18 to a separately identifiable transaction is necessary to reflect the substance of the transaction. The IFRIC agreed to develop indicators that could be used to establish when IAS 18.13 would be applicable. After some debate, IFRIC agreed that IAS 18.13 is not helpful in addressing issues related to multiple element sales transactions nor is there any direction to other Standards that is useful. IAS 18.19 however leads to IAS 37. IFRIC was asked to consider, if it considers that IAS 37 is applicable, whether the entity incurs a present obligation to its customers under a loyalty program: a. when purchases are made by the customer; b. when the customer reaches the minimum threshold at which it can redeem its accumulated points; or c. at a later point (for instance, when the customer asks to redeem its points)? IFRIC did not reach a conclusion on this issue as some entities do not announce their schemes to customers and there seems to be an issue with (a) above where repeated purchases are required before the customer is entitled to a reward (at what point does the entity incur the obligation; after the first purchase or after the last required purchase, or is it somewhere in between?). On the issue of measurement, IFRIC agreed that this should be a separate project as there are broader issues outside the scope of customer loyalty programmes that require addressing. The alternatives identified by the Staff for IFRIC to consider include measurements based on: a. the estimated cost to the entity to provide the promised items; b. the excess, if any, of the estimated cost to provide the promised items over the amount the customer will pay for the items; c. the excess of the value of the promised items over the amount the customer will pay for the items (opportunity cost) or; d. some other amount. Regarding the applicability of IAS 32 and IAS 39, IFRIC agreed that generally, contracts within the scope of this project would be considered to be normal use contracts. In addition, schemes that reward customers in cash are very rare, therefore in most cases, no financial liability arises. In those rare cases where a customer is rewarded in cash for loyalty, then clearly a financial liability arises. Debrief on IAS 19 Hybrid Plans The staff provided an oral report back of discussions with experts in the actuarial community. The feedback was that the deconstruction approach is considered useful and so is the embedded guarantee approach in accounting for hybrid plans. However the approach in IAS 19 through which actuarial gains and losses are deferred, hinders the full application of the embedded guarantee approach as fair value measures cannot be fully implemented. In most cases, the intrinsic value approach is used at present. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

4 November 2005: Round-tables on 'Business Combinations Phase 2'
The IASB has released a List of Participants (PDF 9k) in the public round-table meetings to be held on 9 November 2005 on the Board's Business Combinations Phase II Proposals. The meeting is divided into three sessions (08:45-11:00, 11:30-13:45, and 14:15-16:30). The IASB and the US FASB issued identical exposure drafts, and the FASB held a similar round-table meeting with respondents to its exposure drafts on 27 October 2005. Ken Wild, Deloitte's Global IFRS Leader, will discuss Our Firm's Views on the IFRS 3 Proposals (PDF 103k) at the 08:45am session. Our views on related amendments to IAS 19, IAS 27, and IAS 37 can be found Here.

4 November 2005: Update on IFRSs in the Philippines
The Philippines has adopted all IFRSs for 2005 without modification. These Philippine equivalents to IFRSs apply to all entities with public accountability. That includes those whose securities are listed in a public market or are in process of listing; all financial institutions including banks, insurance companies, security brokers, pension funds, mutual funds, and investment banking entities; public utilities; and other economically significant entities, defined as total assets in 2004 of at least 250 million pesos (US$5 million) or liabilities of at least 150 million (US$3 million). The auditor's report will refer to "conformity with Philippine Financial Reporting Standards".

3 November 2005: 10th World Congress of Accounting Educators

The 10th World Congress of Accounting Educators will be held on 9-11 November 2006 in conjunction with the 17th World Congress of Accountants, which will be held 13-17 November 2006 in Istanbul, Turkey. For more information go to: 10th World Congress of Accounting Educators Website 17th World Congress Website

3 November 2005: IFAC proposes new governance structure
The International Federation of Accountants (IFAC) has invited comments on proposed revisions to its Constitution intended to strengthen IFAC's governance arrangements both to enhance its operations and to conform with current best practices. The invitation to comment Proposed Revision of the International Federation of Accountants' Constitution (PDF 453k) was developed over the past year by a special Constitutional Working Group. IFAC is proposing a three-tiered governance document structure:

• IFAC Constitution. The Constitution will remain the primary governance and foundation document of IFAC, and the process for its amendment by the IFAC Council would remain unchanged.
• IFAC Bylaws. The Bylaws, a new document currently being developed, would incorporate existing items from within the Constitution that provide greater detail in support of items addressed and include new provisions to further support the Constitution. The IFAC Board would have authority to amend the Bylaws with immediate effect until the next Council meeting, at which time the Council would need to approve the amendment for it to become permanent.
• IFAC Policies and Procedures Manual. The manual, also a new document currently being developed, would contain policies and procedures determined by the IFAC Board and management to support the Constitution and Bylaws.

2 November 2005: Conference on Danish GAAP and IFRSs
On 1 December 2005 Deloitte in Denmark is again hosting the yearly Deloitte Accounting Conference on Danish GAAP and IFRS. The first part will focus on news about Danish GAAP relevant to the annual financial statements for 2005 and on changes to the Danish Financial Statements Act, which are expected during the fourth quarter of 2005. The second part will cover the latest news about IFRSs, which all listed companies in Denmark must follow from 2005 for their consolidated financial statements. This year's current topic for discussion is the IASB Proposal to significantly modify the standards dealing with business combinations and provisions. Finally an update on the latest developments on European accounting scene will be provided.

• Download Conference Brochure (PDF 179k, Danish)
• Registration Form (PDF 70k, Danish)

2 November 2005: FASB fair value standard nears completion
Responding to the growing emphasis on fair value in financial statements, in June 2004 the US FASB issued an Exposure Draft on Fair Value Measurements. The ED would establish a framework for measuring fair values of both financial instruments and non-financial items. As a framework, the final standard will not expand current requirements for the use of fair value measurements in financial statements. Such changes would be considered in future standards. The FASB has recently posted on its Website a revised version it calls a Working Draft. A final standard is expected in late 2005. Here are a few highlights of the Working Draft and of major changes from the 2004 Exposure Draft, excerpted from the 1 November 2005 Issue of Deloitte's Heads Up newsletter:

2 November 2005: Four 'new style' IAASB exposure drafts
The International Auditing and Assurance Standards Board (IAASB) has issued exposure drafts of four proposed International Standards on Auditing (ISAs) in a new drafting style. The release of these documents marks the beginning of the IAASB's ambitious 18-month program to redraft its standards and to develop new standards using the new style. Key elements of the new drafting style include:

• basing the standards on objectives, as opposed to procedural considerations;
• use of the word 'shall' to identify requirements that must be followed;
• eliminating the present tense to describe actions by the professional accountant, which some had regarded as ambiguous in terms of obligation; and
• structural improvements to enhance the overall readability and understandability of the standards.

• ISA 240 (Redrafted) The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements.
• ISA 300 (Redrafted) Planning an Audit of Financial Statements.
• ISA 315 (Redrafted) Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement.
• ISA 330 (Redrafted) The Auditor's Procedures in Response to Assessed Risks.

1 November 2005: New Technical Corrections page
We have created a new Technical Corrections Page. Technical Corrections are IASB's fast-track process to deal with issues for which it is clear that the words in a standard do not properly convey the IASB's intention, even when considered with the basis for conclusions and any related guidance. There are links to this page on our Standards and Agenda pages, and on our Site Map.

1 November 2005: We comment on Draft Technical Correction 1
We have posted Deloitte's Letter of Comment on IASB Draft Technical Correction 1 Proposed Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation (PDF 30k).

1 November 2005: We comment on Basel IAS 39 FVO proposals
In July 2005, the Basel Committee on Banking Supervision issued a consultative document Supervisory Guidance on the Use of the Fair Value Option by Banks under IFRSs (PDF 83k) that discusses supervisory expectations for banks' use of the IAS 39 Fair Value Option. Deloitte has submitted a Letter of Comment on the Basel Committee Proposals (PDF 24k). We express concern that the proposed guidance could have the effect of modifying the fair value option provisions of IAS 39. Our overall view: