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Newsletter on IASB's revenue discussion paper

29 Jan 2009

Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter Discussion Paper Proposes New Basis for Revenue Recognition.

On 19 December 2008, the IASB and FASB jointly published a discussion paper (DP) that proposes a single, contract-based revenue recognition model. The model would apply broadly to contracts with customers, although contracts in the areas of financial instruments, insurance, and leasing may be excluded. Under the proposed model, revenue would be recognised on the basis of increases in an entity's net position in a contract with a customer.

With regard to recognition of revenue, the DP states: In the proposed model, revenue is recognised when a contract asset increases or a contract liability decreases (or some combination of the two). That occurs when an entity performs by satisfying an obligation in the contract.

With regard to measurement of revenue, the DP states: The boards propose that performance obligations initially should be measured at the transaction price – the customer's promised consideration. If a contract comprises more than one performance obligation, an entity would allocate the transaction price to the performance obligations on the basis of the relative stand-alone selling prices of the goods and services underlying those performance obligations.

Subsequent measurement of the performance obligations should depict the decrease in the entity's obligation to transfer goods and services to the customer. When a performance obligation is satisfied, the amount of revenue recognised is the amount of the transaction price that was allocated to the satisfied performance obligation at contract inception. Consequently, the total amount of revenue that an entity recognises over the life of the contract is equal to the transaction price.

Comment deadline is 19 June 2009.

Click for: IAS Plus Update Newsletter Discussion Paper Proposes New Basis for Revenue Recognition

Links to Past IAS Plus Newsletters.

New reporting guide and checklist from Deloitte Brazil

28 Jan 2009

Deloitte Brazil has published the 2008 edition of its Annual Guide for Financial Statements.

The Portuguese language guide, titled Demonstrações financeiras – Orientações referentes ao exercício de 2008, addresses the principal issues in preparing 2008 financial statements of Brazilian companies. The guide highlights the key changes to Brazilian GAAP in the past year. There are also updates on on-going convergence efforts with IFRSs and new statutory accounting changes brought about by Law 11.638/07. The guide includes discussion about the latest pronouncements issued by the Brazilian Committee on Accounting Pronouncements (Comitê de Pronunciamento Contábil, or CPC) during 2008, making it one of the most up-to-date references in Brazil. Deloitte Brazil has also published a companion 2008 financial statement checklist. Click for:

Mexico's CNBV issues rules on IFRS adoption

28 Jan 2009

On 27 January 2009, the Mexican Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, or CNBV) issued modifications to the securities and exchange laws (Disposiciones de Carácter General Aplicables a las Emisoras de Valores y a Otros Participantes del Mercado de Valores, or Circular Única de Emisoras) to adopt IFRSs by listed companies.

The adoption is mandatory for listed companies in 2012 with early adoption permitted as early as 2008. Also, such financial statements will have to be audited under International Standards on Auditing instead of Mexican Auditing Standards.

An exception to the above is provided for financial institutions.

Mexican Financial Reporting Standards, developed by the Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera (CINIF), will continue to be required for non-listed Mexican entities. CINIF continues with its programme for converging Mexican standards with IFRSs.

EU proposes funding for IASCF, PIOB, and EFRAG

27 Jan 2009

The European Commission has issued proposals that would strengthen the financial supervisory structure in Europe and provide an allocation of the EU Budget to provide direct funding of the IASCF, IFAC's Public Interest Oversight Board (PIOB) and the European Financial Reporting Advisory Group (EFRAG) – all private-sector bodies involved in the setting of accounting and auditing standards.

Under the new rules, the three committees that supervise, respectively, the securities, banking and insurance sectors – CESR, CEBS, and CEIOPS – will benefit from a 'clearer operational framework and more efficient decision-making processes', as well as enhanced funding. The proposal for financial support, which totals €36.2 million, now goes to the Council and the European Parliament for joint decision.

Under the proposals:

  • The IASCF would receive €5 million a year for three years 2011, 2012, 2013
  • EFRAG would receive €3 million a year for four years 2010-2013
  • The PIOB would receive €300 thousand a year for four years 2010-2013
  • CESR, CEBS, and CEIOPS would receive €2 million a year for four years 2010-2013

Click for:

We comment on proposed amendments to IFRS 1

24 Jan 2009

Deloitte has submitted a Letter of Comment on the IASB's exposure draft of Additional Exemptions for First Time Adopters – Proposed amendments to IFRS 1.

We are generally supportive of the proposed amendments in the ED. We agree with the Board that there are potential challenges for jurisdictions adopting IFRS in the near future which might be alleviated by the proposed exemptions. In particular, we agree that the proposed exemptions should help to limit undue cost and difficulty for certain first time adopters.

We do, however, believe that the amendments relating to oil and gas and rate-regulated entities could be improved. In particular, we would encourage the Board to consider providing more reasoning in the Basis for Conclusions to the Standard to explain what factors were considered to be important in deciding to issue an exemption that allows only certain entities to utilise previous cost amounts as deemed cost on the date of transition, but not others.

All of our past letters of comment are Here.

Updated comparisons of IFRSs and Canadian GAAP

24 Jan 2009

The Accounting Standards Board (AcSB) of Canada has adopted a strategy to replace Canadian standards with International Financial Reporting Standards (IFRSs) for publicly accountable enterprises by 1 January 2011. Other enterprises may also elect to adopt IFRSs.

To assist those affected by this strategy in becoming familiar with differences between Canadian standards and IFRSs, the AcSB staff has prepared an unofficial comparison between the more significant aspects of IFRSs and Canadian standards as of 31 July 2008. The comparison also identifies the currently active standard-setting projects of the IASB, FASB, and AcSB and comments on the extent to which the work in process is expected to eliminate existing differences:


Notes from day 5 of the IASB's January meeting

24 Jan 2009

The International Accounting Standards Board held its January 2009 meeting at its offices in London on Monday to Friday, 19-23 January 2009.

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

IAASB staff alert on going concern

24 Jan 2009

The unexpected severity, speed, and consequences of the credit crisis present unique challenges for management and auditors in assessing an entity's ability to continue as a going concern. To help auditors, management, and those charged with governance in addressing those challenges, the staff of the International Auditing and Assurance Standards Board (IAASB) has released a new practice alert entitled Audit Considerations in Respect of Going Concern in the Current Economic Environment.

The alert highlights areas in International Standard on Auditing (ISA) 570 Going Concern, as well as other ISAs, that are particularly relevant in the current economic environment and provides additional guidance for auditors in evaluating management's use of the going concern assumption. It also raises awareness of issues surrounding liquidity and credit risk that may create new uncertainties for entities or exacerbate those already existing. Click for:


Notes from day 4 of the IASB's January meeting

24 Jan 2009

The International Accounting Standards Board is holding its January 2009 meeting at its offices in London on Monday to Friday, 19-23 January 2009.

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

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