Click here for IAASB Press Release (IFAC website), which includes a link to download the proposal. Comments are due by 31 March 2011.

The proposed three-tier approach, which has been developed and consulted on over the past six years, builds on the existing system:

• Tier 1 – Quoted groups will continue to report under international financial reporting standards (IFRS), as adopted by the EU. They would be joined in Tier 1 by other companies that are publicly accountable. This would apply if their debt is traded on public markets, or if they hold deposits or manage other people's money. (Some very small financial institutions would be exempt.)
• Tier 2 – All other UK entities, except those that apply the Financial Reporting Standard for Smaller Entities (FRSSE), would report under a new standard based on the IFRS for SMEs, which is considerably shorter and less complicated than current UK standards. The FRSME, as it would be called, would be modified to comply with UK and EU law and to ease tax reporting.
• Tier 3 – The smallest companies will continue to use the simplified version of UK standards, the FRSSE.

The consultation period will run until 30 April 2011. It is proposed that the new framework would be effective from 1 July 2013.

The document published today includes an explanation of the proposals, a draft Impact Assessment and the two new proposed standards. Click for:

• ASB press release (link to ASB website)
• The Future of Financial Reporting - Part One: Explanation (PDF 528k)
• The Future of Financial Reporting - Part Two: Draft Financial Reporting Standards (PDF 1.174k)
• The Future of Financial Reporting - Appendices (PDF 339k)
• A Key Facts Document compiled by the ASB (PDF 274k)
• Our UK country page

The new requirements address the problem of volatility in profit or loss arising from an issuer choosing to measure its own debt at fair value. This is often referred to as the 'own credit' problem. The IASB decided to maintain the existing amortised cost measurement for most liabilities, limiting change to that required to address the own credit problem. With the new requirements, an entity choosing to measure a liability at fair value will present the portion of the change in its fair value due to changes in the entity's own credit risk in the other comprehensive income (OCI) section of the income statement, rather than within profit or loss.

IFRS 9 applies to financial statements for annual periods beginning on or after 1 January 2013. Entities are permitted to apply the new requirements in earlier periods, however, if they do, they must also apply the requirements in IFRS 9 that relate to financial assets.

Click for:

• IASB press release (PDF 33k)
• IASB feedback statement (PDF 95k)
• IAS Plus summary of IFRS 9 Financial Instruments
• IAS Plus summary of the IASB project to replace IAS 39: Accounting for the impairment of financial assets
• IAS Plus summary of the IASB project to replace IAS 39: Hedge accounting

At present, issuers of securities in regulated markets in the EU are required to make public an annual financial report comprising, inter alia, a management report and the audited financial statements. When the issuer is required to prepare consolidated accounts, the audited financial statements must comprise consolidated accounts drawn up accordance with international accounting standards (IFRS). Currently, the applicable accounting standards do not require issuers to disclose financial information on a country-by-country basis in their consolidated accounts, although the Accounting Directives do require issuers to identify subsidiaries, jointly controlled entities and associates.

The IASB is currently working on a possible country-by-country reporting requirement which could be incorporated within a replacement Standard for IFRS 6 Exploration for and Evaluation of Mineral Assets. Once finalized, this standard is likely to become mandatory in the EU through the usual endorsement process under the IFRS Regulation.

The questionnaire for the consultation includes the following questions:

The questionnaire of the European Commission can be accessed here (link to EC website). Responses must be received by 22 December 2010.

• Financial Instruments: Hedge Accounting

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers for the entire meeting. The next IASB meeting will be a three day special meeting on Financial Instruments: Impairment scheduled for 10-12 November 2010.

• 26 October 2010 – Stephen Cooper: Lessor accounting – what really are the lessor's assets?

All Investor Perspectives are archived on the IASB's website.

The Trustees are seeking input into their review by means of a questionnaire, which covers the following matters:

• Objectives and scope of activities of the Interpretations Committee
• Membership
• Operating procedures
• Agenda criteria
• Outputs from the Committee
• Communications
• Leadership
• Interaction with the IASB.

The closing date for completion of the questionnaire is 31 January 2010. The Trustees are expected to publish a report from their review of the Interpretations Committee in the first half of 2011.

Click for:

• IFRS Trustees press release (link to IASB website)
• Interpretations Committee questionnaire (link to IASB website, in Word format, 256k).