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February

Deloitte Canada IFRS transition newsletter

28 Feb 2009

Deloitte Canada has published the February 2009 issue of their Countdown IFRS transition newsletter, to discuss practical issues Canadian companies are facing in IFRS transition as well as to provide an update on recent IFRS events.

Articles in this issue include:
  • Looking back on Australia's IFRS conversion
  • An overview of the Public Sector Accounting Standards Board's Invitation to Comment relating to the application of IFRSs to the Public Sector
  • 'The Real Deal' – real issues and solutions on IFRS transition relating to property, plant and equipment
  • Deloitte publications and events and how to access them
  • An Update on Current IFRS events – including various important Exposure Drafts or Discussion Papers
Click below for:

 

10 IASB pronouncements await EU endorsement

28 Feb 2009

The European Financial Reporting Advisory Group (EFRAG) has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments.

Click to download the Endorsement Status Report as of 9 February 2009 (PDF 110k). Currently, there are 10 IASB pronouncements are awaiting European Commission endorsement for use in Europe, as follows:

Standards

  • IFRS 1 First-time Adoption of IFRS – Restructured standard (2008)
  • IFRS 3 Business Combinations (2008)

Interpretations

  • IFRIC 12 Service Concession Arrangements
  • IFRIC 15 Agreements for the Construction of Real Estate
  • IFRIC 16 Hedges of a Net Investment in a Foreign Operation
  • IFRIC 17 Distributions of Non-cash Assets to Owners
  • IFRIC 18 Transfers of Assets from Customers

Amendments

  • IAS 27 Consolidated and Separate Financial Statements (2008)
  • IAS 39 Amendments for Eligible Hedged Items
  • IAS 39 Amendments for Reclassification of Financial Assets

 

Matrix of the Impact of Switching from Brazilian GAAP to IFRSs

28 Feb 2009

Deloitte Brazil has developed a matrix highlighting which IFRSs are likely to cause the biggest changes from Brazilian GAAP and suggesting priorities that companies might consider in planning their transition to IFRSs.

The priorities are derived by evaluating the impact of an IFRS and its complexity in relation to current Brazilian standards.

Click for IFRS – Matriz de Impacto e Prioridades: Áreas de foco na implementação do IFRS.

Financial Crisis Advisory Group will meet 5 March

26 Feb 2009

The joint IASB-FASB Financial Crisis Advisory Group (FCAG) will hold its third meeting on Thursday 5 March 2009 from 9:15am to 3:15pm EST at Baruch College, Newman Conference Center, 151 East 25th Street, 7th Floor, New York, NY 10010 USA.

The meeting will be open to public observation and will be webcast. Main agenda items are as follows (there's More Information on FASB's website):
  • Part I: Further Exploring Matters Discussed at February 13th Meeting:
    • Display of through-the-cycle provisioning in general purpose financial statements
    • Possible approaches to improvement and simplification of accounting and reporting of financial instruments
  • Part II: Fair Value, continued:
    • Is it appropriate and useful to report gains (or losses) from fair value changes in a reporting entity's own indebtedness? Why or why not?
    • What additional guidance, if any, is needed in the area of determining fair value?
  • Part III: Off-Balance Sheet Items:
    • What are the best ways to bring about useful information regarding securitizations and other structured entities?
    • Assuming that a consolidation/de-recognition approach is used, what principles should determine whether a securitization or other structured entity is included in the balance sheet of a sponsoring entity?
  • Part IV: Standard-Setter Governance and Due Process:
    • How (and by whom) should oversight be exercised over accounting standard-setters on a national (or international) basis in order to ensure appropriate independence, accountability, and transparency in the standard-setting process?
    • What criteria should accounting standard-setters consider in balancing the need for resolving an 'emergency issue' on a timely basis and the need for active engagement from constituents through due process?
The IASB and FASB established the FCAG in response to the recent global financial crisis. Its purpose is to advise the boards about the role of accounting during the crisis and potential changes. Preliminary and unofficial notes taken by Deloitte observers at the first two FCAG meetings can be found here: The FCAG will meet again on Monday 20 April 2009 in London at the Crowne Plaza Hotel London-The City, 19 New Bridge Street, London.

EC guidance on impaired assets of European banks

26 Feb 2009

The European Commission has published a Communication with guidance on the treatment of impaired assets in the EU banking sector.

While the guidance covers measurement and disclosure of impairment, it also encompasses management of impaired assets, including state aid and relief schemes, The guidance is based on a number of principles:
  • Full transparency and disclosure of impairments, which has to be done prior to government intervention.
  • Coordinated approach to the identification of assets eligible for asset relief measures through development of eligible categories of assets.
  • Coordinated approach to valuation of assets ex-ante, based on common principles such as valuation based on real economic value (rather than market value), implemented by independent experts and certified by bank supervisors. This valuation is for the purpose of providing government aid to banks (for instance, troubled asset purchase or insurance programmes). The Communication does not appear to address financial reporting issues.
  • Validation by the Commission of the valuation of the assets, in the framework of the State aid procedures on the basis of uniform assessment criteria.
  • Adequate burden-sharing of the costs related to impaired asset between the shareholders, the creditors and the State.
  • Adequate remuneration for the State, at least equivalent to the remuneration of State capital
  • Coverage of the losses incurred from the valuation of the assets at real-economic-value by the bank benefiting from the scheme.
  • Aligning incentives for banks to participate in asset relief with public policy objectives, through an enrolment window limited to six months during which the banks would be able to come forward with impaired assets.
  • Management of assets subject to relief so as to avoid conflicts of interests.
  • Appropriate restructuring including measures to remedy competition distortion, following a case by case assessment and taking into account the total aid received through recapitalisation, guarantees or asset relief, with a view to the long-term viability and normal functioning of the European banking industry.
Click for:

EC would cut accounting burden for micros

26 Feb 2009

The European Commission has sent to the European Parliament and the Council of Ministers a proposal to exempt 'micro entities' from the accounting and financial reporting requirements of the 4th Company Law Directive.

Micro entities are the smallest companies. For this proposal they have to meet two of the three following criteria:

  • A balance sheet total of not more than €500.000;
  • A net turnover of not more than €1.000.000;
  • Not more than ten as average number of employees during the financial year.
Currently, the Accounting Directives require around 5.4 million limited liability companies in Europe to prepare financial statements and, in many cases, have them audited. The Commission's proposal acknowledges that the Accounting Directives 'have led to improved financial reporting environment in the EU'. At the same time, though, the Commission has concluded that the Directives impose a burden on micro entities that can be reduced. Under the Commission's prpoposal, EU Member States would decide whether to retain the requirements of the Accounting Directives for micro entities or to exempt micro entities from them. Of course, apart from the Directives, EU Member States generally have their own national financial reporting requirements. The proposal would not affect those. Member States could keep their existing requirements or design simplified rules for micros. Click for:

EC strengthens supervisors and standard-setters

26 Feb 2009

The European Commission has adopted measures to strengthen the supervisory framework for EU financial markets and to provide funding for bodies involved in financial reporting standards at the EU and international levels, including the IASB.

Strengthening CESR, CEBS, CEIOPS
Under the new rules, the three committees that supervise the securities, banking, and insurance sectors will benefit from a clearer operational framework and more efficient decision-making processes.
The committees are
The Commission's action contains a non-exhaustive list of tasks that the Committees are expected to perform and introduces qualified majority voting when consensus cannot be reached. Measures adopted by the three Committees remain non-binding. However, member states that do not follow those measures must be prepared to present the reasons for this choice.

Funding IASB/IASCF, EFRAG, PIOB, and CESR, CEBS, CEIOPS

The Commission is proposing that the three committees, as well as the following three bodies involved in the standard-setting process for financial reporting and auditing at both EU and international level, should be provided with financial support from the EU budget:

Total funding of the six groups would amount to €36.2 million over the period 1 January 2010 until 31 December 2013, as follows:

Recipient

2010

2011

2012

2013

Total

IASCF/IASB

€0

€5,000

€5,000

€5,000

€15,000

EFRAG

€3,000

€3,000

€3,000

€3,000

€12,000

PIOB

€300

€300

€300

€300

€1,200

CESR, CEBS, CEIOPS Combined

€2,000

€2,000

€2,000

€2,000

€8,000

The funding proposal now passes to the Council and the European Parliament for consideration.
Click for:

 

Notes from Standards Advisory Council meeting day 2

25 Feb 2009

The Standards Advisory Council (SAC) held a two-day meeting with the IASB in London on 23 and 24 February 2009. The SAC provides a forum for the IASB to consult a wide range of interested parties affected by the IASB's work.

On 19 February 2009, the IASCF Trustees announced the members of the SAC for the three years 2009-2011 (see our News Story of 19 February 2009). A significant change from the previous SAC structure is that members represent organisations rather than serving as individuals. This is the first meeting under SAC's new chairman, Paul Cherry. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the SAC meeting.

Notes from Standards Advisory Council meeting day 1

24 Feb 2009

The Standards Advisory Council (SAC) held a two-day meeting with the IASB in London on 23 and 24 February 2009. The SAC provides a forum for the IASB to consult a wide range of interested parties affected by the IASB's work.

On 19 February 2009, the IASCF Trustees announced the members of the SAC for the three years 2009-2011 (see our News Story of 19 February 2009). A significant change from the previous SAC structure is that members represent organisations rather than serving as individuals. This is the first meeting under SAC's new chairman, Paul Cherry. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the SAC meeting.

Mutual recognition of audit oversight

24 Feb 2009

Charlie McCreevy, the EU Commissioner for the Internal Market and Services, has issued a Statement expressing concern that the United States has not yet agreed to a system of mutual recognition of national oversight of the auditing profession.

An excerpt:

The EU's aim has always been to move towards full reliance on the audit inspections of the public oversight bodies in these third countries. In practice, this would mean that audit firms from these countries would no longer have to be inspected by European public oversight bodies, as we in the EU could rely on the audit inspections that were carried out by their counterparts in these countries. In return, of course, EU oversight bodies would expect the same treatment for EU audit firms. Putting in place this model of cooperation would go a long way towards restoring the confidence of investors. But of course, it has to be based upon mutual trust.

Whilst some of our trading partners, notably Canada and Japan, seem to be open towards such an agenda, the same is not true for the United States. As things stand at the moment, the EU will commit itself to facilitate United States' inspections but we currently have no guarantee that the United States will do the same for us. This is not good for the confidence of our investors here in the EU. Nor does it send the right signal for the EU's own oversight bodies which we here in the EU have worked hard to put in place.

Click to view Audit Working papers — Statement Charlie McCreevy Commissioner for the Internal Market and Services (PDF 17k).

Correction list for hyphenation

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