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Deloitte Canada Countdown IFRS transition newsletter

30 Apr 2008

Deloitte Canada has released the fourth issue of their Countdown IFRS transition newsletter, to provide a snapshot of where we are now as far as Canada's transition to IFRSs is concerned – both in Canada and in Deloitte.

This issue of Countdown focuses (a) the proposed definition of Publicly Accountable Enterprises (PAEs) in order to help entities determine whether they are 'in or out' of IFRSs; (b) commentary on certain legal implications to enterprises transitioning to IFRSs; and an update on current IFRS events. Click to download:


FASB and CASC sign memorandum of understanding

29 Apr 2008

The Financial Accounting Standards Board (FASB) and the China Accounting Standards Committee (CASC) have issued a Memorandum of Understanding (MOU) articulating their commitment to strengthen cooperation and communication between the two standards-setting organisations.

The groups met at the FASB's offices in Connecticut to discuss how they can work together on issues pertaining to international convergence of accounting standards. As a result of the meeting, the organisations expressed the following in the MOU:
  • The FASB and the CASC will enhance communication and improve understanding in terms of technical issues to facilitate economic interaction between the two countries;
  • The FASB and the CASC will facilitate the exchange of experience of accounting standard setting, implementation, and international convergence between the two countries, including inviting each other to significant accounting standards seminars, reciprocal visits, etc.; and
  • The FASB and the CASC will strive to exchange opinions regularly and build the technical foundation for sharing views on convergence of accounting standards. Accordingly, the CASC will send staff to work at the FASB on a regular basis to research US GAAP and FASB's convergence efforts with International Financial Reporting Standards (IFRS). FASB Board members and staff will also visit the CASC to understand implementation of Chinese accounting standards and its international convergence efforts.

Click for Press Release (PDF 73k).

Noticias sobre información financiera internacional

29 Apr 2008

Deloitte & Touche Ltda (Colombia) has translated into Spanish the April 2008 IAS Plus Quarterly Newsletter.

This 33-page newsletter reports on the 1st quarter 2008 activities of the IASB, the IFRIC, and the IASC Foundation, and also on worldwide issues and events relating to international financial reporting:


Joint Forum paper on management of risk concentrations

28 Apr 2008

The Joint Forum – a consortium of the Basel Committee, IOSCO, and IAIS – has published a paper titled Cross-sectoral Review of Group-wide Identification and Management of Risk Concentrations.

Click here for the Press Release (PDF 104k).

The Risk Concentrations paper is being released in final form and has also been included in the Joint Forum submissions to the Financial Stability Forum to contribute to its work related to the market turmoil. This paper expands on previous reports and explores the extent to which financial conglomerates active in two or more of the banking, securities, and insurance sectors currently identify, measure, and manage risk concentrations at the firm-wide level and across the major risks to which these firms are exposed. The paper also explores how current and emerging risk techniques, including stress testing and scenario analyses, are employed to identify potential concentrations. It also includes observations and lessons drawn from the market turmoil that begin in mid-2007. An annex to the paper contains a summary of current regulatory requirements relating to risk concentrations.

Click to view Cross-sectoral Review of Group-wide Identification and Management of Risk Concentrations (PDF 650k).
Click here to go to our permanent page for resources relating to the Credit Crunch. By 'credit crunch' we mean the recent turmoil in the world's financial markets and responses to it from various international, regional, and national agencies.

Basel Committee steps to strengthen the banking system

28 Apr 2008

the Basel Committee on Banking Supervision has announced a series of steps to help make the banking system more resilient to financial shocks.

These measures will be introduced in a manner that promotes long-term bank resiliency and strong supervision, while seeking to avoid potentially adverse near-term impacts as the re-pricing of risk and deleveraging process continues in financial markets. The measures include:
  • Enhancing various aspects of the Basel II Framework, including the capital treatment of complex structured credit products, liquidity facilities to support asset-backed commercial paper (ABCP) conduits, and credit exposures held in the trading book. At the same time, the Committee notes the importance of prompt implementation of the Basel II framework, as this will help address a number of the shortcomings identified by the financial market crisis.
  • Strengthening global sound practice standards for liquidity risk management and supervision, which the Committee will issue for public consultation in the coming months.
  • Initiating efforts to strengthen banks' risk management practices and supervision related to stress testing, off-balance sheet management, and valuation practices, among others.
  • Enhancing market discipline through better disclosure and valuation practices.
Click to download the Basel Committee Announcement (PDF 30k).


Agenda for 8 May 2008 IFRIC meeting

28 Apr 2008

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday 8 May 2008. The meeting is open to the public and will be webcast.

The tentative agenda is shown below. The IFRIC meeting is for one day only and will not continue on Friday 9 May.

8 May 2008, London

Thursday 8 May 2008


Our views on IFRIC D23 on non-cash distributions

27 Apr 2008

Deloitte has submitted a Letter of Comments on IFRIC Draft Interpretation D23 'Distributions of Non-cash Assets to Owners'.

IFRIC D23 proposes that all types of distributions of non-cash assets to owners would be measured at the fair value of the assets distributed.

We agree with and support the consensus proposed in the Draft Interpretation to measure a liability to distribute non-cash assets as dividends to its owners at fair value, with any difference between the fair value of the liability and the carrying amount of the non-cash assets being recognised in profit or loss. We also agree that the entity should apply the requirements of IFRS 5 to non-current assets held for distribution to owners. However, we have a number of concerns with the consensus that are outlined in appendices to our letter.

Click for:


We comment on IFRIC D24 on customer contributions

27 Apr 2008

Deloitte has submitted a Letter of Comments on IFRIC Draft Interpretation D24 'Customer Contributions'.

IFRIC D24 proposes that if an entity receives assets that it uses to provide access to an ongoing supply of goods or services to a customer, the entity should recognise the contributed assets and revenue from providing access to the supply of goods or services over the period access is provided. Our letter does not support IFRIC's proposed consensus. We recommend that IFRIC not issue an Interpretation at this time but, instead, address the issue narrowly in an Agenda Decision. We suggest a proposed wording for the Agenda Decision. An excerpt from our letter:

We have reservations about the IFRIC's approach to this issue. The Interpretation does not clearly establish the principles on which it is based and, accordingly, the appropriate application of the proposed Interpretation is not always clear. In the absence of such clear principles, there is a danger that the Interpretation may be applied as a set of arbitrary rules, and may lead to practices which conflict with the principles of IAS 18.

For this reason, as explained in more detail below, we believe that it is best for the IFRIC not to proceed with the Interpretation but to address this issue for the time being in an Agenda Decision.

It appears to us that the IFRIC initially intended to address, in situations in which an entity receives a specific item of property, plant and equipment that must be used to provide access to a supply of goods or services, whether the recipient should recognise such an asset at fair value and how to account for the resulting credit. The IFRIC later extended this to circumstances where an entity receives cash to fund the acquisition or construction of that specific asset.

However, we believe that the Interpretation as currently drafted has a much wider scope without providing robust principles for all situations that may fall in that scope.

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We comment on two IAASB proposals

26 Apr 2008

Deloitte has recently submitted letters of comment to the International Auditing and Assurance Standards Board (IAASB) on two proposed International Standards on Auditing (ISAs), as listed.

Survey of European professional investors about fair values

25 Apr 2008

The Accounting Standards Committee of Germany has published a comprehensive survey on Attitudes towards Fair Value and Other Measurement Concepts.

The survey examines the attitudes of 242 professional investors (financial analysts, fund managers, institutional investors, and rating experts) from across Europe towards different measurement concepts. It was done in cooperation with the European Federation of Analysts Societies (EFFAS). Here's a quick summary of the major findings:
  • When asked to give a general opinion on financial accounting measurement concepts, the respondents, regardless of their background, favor the consistent application of fair value accounting for all assets and liabilities, rather than cost-based measurement.
  • However, users seem to distinguish between marked-based fair values ('mark-to-market' measurements) and fair values that are determined using valuation techniques ('mark-to-model' measurements):
    • For liquid and non-operating assets, investors consider mark-to-market fair value to be the most decision-useful measurement concept.
      IAS Plus observation:
      This finding is consistent with the view expressed recently by the CFA Institute strongly supporting the broad use of fair value measurement for all financial instruments. See our 21 April 2008 Story.
    • For non-liquid and operating assets, historical cost and market-based fair value are not regarded as being significantly different in respect to decision-usefulness. IAS Plus observation: This finding is somewhat at odds with the view of the CFA Institute in their 2007 Comprehensive Business Reporting Model: Financial Reporting for Investors, which concludes that 'fair value information is the most relevant information for financial decision making'... Our goal is for fair value to be the measurement attribute for assets and liabilities." See our 20 August 2007 Story.
    • Mark-to-model fair values are regarded as significantly less decision-useful than both market-based fair values and historical cost measures for practically all asset and liability classes. Only for financial assets do respondents view mark-to-model measures as more decision-useful than historical cost values. IAS Plus observation: The CFA Institute states: "With respect to the measurement of fair value, we believe that managers should look first to the most objective sources of fair value, for example, observable prices for the same or similar assets or liabilities in liquid markets. In the absence of such market-determined measurements, managers must report the best estimate of fair value as determined by widely accepted and applied valuation methods and by using market-based inputs."
Click to download:


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