February

IASB issues standard on share-based payment

19 Feb 2004

The IASB has issued IFRS 2 'Share-based Payment'.

Click for Press Release (PDF 36k). The main requirements of IFRS 2 are:

 

Main requirements of IFRS 2
  • Recognition and measurement. All share-based payment transactions must be recognised in the financial statements, using a fair value measurement basis. An expense is recognised when the goods or services received are consumed. The same recognition and measurement standards apply to both public and non-public companies
  • Fair value measurement principle. In principle, transactions in which goods or services are received as consideration for equity instruments of the entity should be measured at the fair value of the goods or services received. Only if the fair value of the goods or services cannot be measured reliably would the fair value of the equity instruments granted be used
  • Measuring employee share options. For transactions with employees and others providing similar services, the entity is required to measure the fair value of the equity instruments granted, because it is typically not possible to estimate reliably the fair value of employee services received
  • When to measure fair value - options. For transactions measured at the fair value of the equity instruments granted (such as transactions with employees), fair value should be estimated at grant date
  • When to measure fair value - goods and services. For transactions measured at the fair value of the goods or services received, fair value should be estimated at the date of receipt of those goods or services
  • Measurement guidance. For goods or services measured by reference to the fair value of the equity instruments granted, IFRS 2 specifies that, in general, vesting conditions are not taken into account when estimating the fair value of the shares or options at the relevant measurement date (as specified above). Instead, vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised for goods or services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest
  • More measurement guidance. IFRS 2 requires the fair value of equity instruments granted to be based on market prices, if available, and to take into account the terms and conditions upon which those equity instruments were granted. In the absence of market prices, fair value is estimated using a valuation technique to estimate what the price of those equity instruments would have been on the measurement date in an arm's length transaction between knowledgeable, willing parties. The standard does not specify which particular model should be used
  • Disclosure. Disclosures include:
    • the nature and extent of share-based payment arrangements that existed during the period
    • how the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period was determined
    • the effect of share-based payment transactions on the entity's profit or loss for the period and on its financial position.

 

UK will adopt IFRS 2 as national standard

19 Feb 2004

The United Kingdom Accounting Standards Board has issued a press release announcing its intention to issue an accounting standard on share option schemes and other share-based payments identical to IFRS 2 effective for accounting periods beginning on or after 1 January 2005 for listed entities and 1 January 2006 for all other entities. .

The United Kingdom Accounting Standards Board has issued a press release announcing its intention to issue an accounting standard on share option schemes and other share-based payments identical to IFRS 2 effective for accounting periods beginning on or after 1 January 2005 for listed entities and 1 January 2006 for all other entities.

Deloitte Denmark newsletter on IFRS 2

19 Feb 2004

Deloitte (Denmark) has published a (PDF 53k). .

Deloitte (Denmark) has published a (PDF 53k).

Notes from the first day of the February IASB meeting

19 Feb 2004

To allow this home page to open more quickly, we have moved our observers' preliminary and unofficial notes from the February 2004 IASB meeting to a Separate Page. .

To allow this home page to open more quickly, we have moved our observers' preliminary and unofficial notes from the February 2004 IASB meeting to a Separate Page.

Impact of IFRS on European banks – ECB views

18 Feb 2004

The February 2004 edition of the Monthly Bulletin of the European Central Bank (ECB) includes a 13-page article on The Impact of Fair Value Accounting on the European Banking Sector.

The article presents "an overview of the current debate" and expresses ECB's views about "how exogenous shocks to the banking sector are likely to manifest themselves in banks' financial statements under the new rules." Click to (PDF 1,475k – see pages 70-83). Also, in an address to a plenary session of the European Parliament on 16 February 2004, Jean-Claude Trichet, president of the ECB, spoke about what he views as significant negative consequences of recognising financial instruments at fair values.

UK IFRS newsletter is published

18 Feb 2004

The February 2004 edition of the (PDF 132k) has been published.

This issue includes news about IFRS in Europe, project updates, and an IFRIC update. You can find all past newsletters Here.

Coming – new European rules on auditing and SPE disclosures

14 Feb 2004

In a (PDF 64k) before a plenary session of the European Parliament, Frits Bolkestein, European Commissioner for Internal Market, Taxation and Customs, announced that, in March, he will be proposing to the Commission a revised Company Law Directive on the Statutory Audit function.

"It will strengthen controls over the audit profession in the EU. With independent oversight; strengthened inspection; stronger ethical and educational principles; high quality audit standards." It is likely also to include:
  • Full group auditor responsibility for consolidated accounts of a group of companies.
  • Obligatory independent audit committees for listed companies.
  • Stricter auditor rotation requirements.
  • Strengthened sanctions.

Mr. Bolkestein also said the Commission is developing proposals to require "full disclosure in the company accounts of offshore Special Purpose Vehicles, including why the company uses these offshore structures and much stricter verification by the group auditor of their content".

New Zealand Accounting Alert

13 Feb 2004

Apologies for being a bit late in posting the latest (15 December 2003) (PDF 145k).

This issue discusses the major changes to existing practice that would result from three convergence exposure drafts issued by the Financial Reporting Standards Board (those for IAS 11, IAS 16, and IAS 19) and summarises recent guidance on accounting by trusts. Past Alerts can be downloaded Here.

IFRIC project pages updated to reflect recent meeting

12 Feb 2004

We have updated the following project pages to reflect the deliberations at IFRIC's meeting on 3-4 February 2004: .

USA accounting – year 2003 in review

12 Feb 2004

We have posted (PDF 1,108k) from Deloitte (United States of America).

The articles in this newsletter were drawn from issues of the Accounting Roundup newsletter dated 20 January through 16 December 2003, and have been updated where appropriate. Links are provided to locations where additional information can be found on each topic. Sections of this newsletter cover developments at FASB, EITF, GASB, AICPA, SEC, PCAOB, and IASB.

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