We do not support issuance of the ED as currently drafted for a number of reasons:

• We do not consider the proposals have a clear objective and therefore cannot determine whether the objective is met. The proposals do not illustrate the profit or loss effect and carrying values of all financial assets had they been classified differently; nor do they show the effect on impairment losses of applying different impairment loss models. Without a clearly identified objective that responds to an identified demand from users for specific information we cannot support the proposals as drafted.
• The proposals show alternative measurement bases even though the entity may have been prevented from measuring on that basis. In addition, had the entity been able to measure financial assets differently it may have made different classifications decisions for financial liabilities, eg applying the fair value option. The disclosures may as a result be confusing or be misunderstood.
• The discussions at the roundtable on the credit crisis in November and December 2008 that led to the issue of the ED focused on determining the most appropriate impairment model for AFS debt instruments. We believe consideration of this remains a priority and that the proposed 'as if' disclosures do not fill this gap or provide information to users that is most meaningful.
• We believe there is insufficient time for many entities, particularly those with calendar year-ends, to provide the proposed disclosures as required by the effective date. The amount of work needed to provide the disclosures is significant, particularly when determining the amortised cost for AFS debt instruments that have previously been subject to impairment losses. This applies to all entities in all sectors.

 

The statements do not reflect early application of new and revised standards, amendments, or interpretations that were issued but are not mandatory for 2008. Because HKFRS are virtually identical to IFRSs, these statements also illustrate compliance with IFRSs for 2008.

• Click to download the HKFRS Model Financial Statements for 2008 (PDF 1,330k).
• This book is also available in hardcopy for purchase from CCH Hong Kong: http://www.cch.com.hk/HK/onlinestore/ProductDetails.aspx?ProductId=3855

You will always find permanent links to these model financial statements and related presentation, disclosure, and compliance checklists on our Model Financial Statements Page. Although several new Standards and Interpretations were issued during 2008, none are effective for December 2008 year ends. For this reason, Deloitte has not produced revised IFRS model financial statements for December 2008. The majority of the Standards and Interpretations issued in 2008 are effective for annual periods beginning on or after 1 January 2009, and we expect to release our 2009 model IFRS financial statements illustrating the application of those Standards and Interpretations in the first half of 2009.

 

But the most surprising event of the worldwide financial crisis may be the change in mindset about what the proper role of government is in the economy. Governments are navigating a new landscape, contemplating the unmentionable, and taking actions once thought inconceivable. There is almost too much to absorb. In this issue of the quarterly Global Economic Outlook (PDF 4,210k), Deloitte Research global economists attempt to make sense of what is going on, in addition to providing their usual outlook for the near term future. Here is what to expect in this report:

• Analysis of some of the risks and opportunities stemming from the global crisis
• Views on how the emerging markets are faring in this crisis
• A look at how monetary policy is working, or not working, during the current crisis
• Outlooks on nine major countries/regions beginning with the US economic downturn and the efficacy of the policy responses, both past and future. We also look at the economics of the Eurozone, the United Kingdom, Russia, India, China, Japan, Latin America, and the Middle East

The IAS Plus page on international financial reporting issues relating to the global financial crisis is Here.

Presented below is the agenda for the meeting.

IASB Board Meeting Agenda - 19-23 January 2009, London

Monday 19 January 2009 (afternoon only) Derecognition Leases Tuesday 20 January 2009 Conceptual Framework Phase A - Objective and Qualitative Characteristics Conceptual Framework Phase C - Measurement Conceptual Framework Phase D - Reporting Entity Technical Plan IFRIC: Proposed IFRIC Interpretation: Transfers of Assets from Customers – Board vote to ratify IFRIC Interpretation 16 Hedges of a Net Investment in a Foreign Operation - Amendment to the restriction on the entity that can hold hedging instruments Annual Improvements 2008: – Analysis of comments on the August 2008 exposure draft Wednesday 21 January 2009 IFRS for Private Entities Fair Value Measurement Financial Instruments with Characteristics of Equity Thursday 22 January 2009 Fair Value Measurement (continued) IFRS 7 Amendment – Improving Disclosures about Financial Instruments – Analysis of comments on the October 2008 exposure draft Derecognition (continued from Monday) Leases (continued from Monday) IFRS 7 Amendment – Investments in Debt Instruments ED – Analysis of comments on the December 2008 exposure draft Friday 23 January 2009 (morning only) Post-employment Benefits Sweep Issues (if needed)

 

The proposals would require an entity to state in tabular form the fair value, amortised cost, and amount at which the investments are actually carried in the financial statements. The amendments would also require an entity to also disclose the effect on profit or loss if all debt instruments had been accounted for at fair value or at amortised cost.

 

The XBRL computer language has been developed specifically for automating the reporting of business information. XBRL allows companies, regulators, investors, analysts, and others using the IFRS Taxonomy 2009 to file, access, and compare IFRS financial data more easily. The near final version of the IFRS Taxonomy 2009 may be downloaded without charge from http://go.iasb.org/IFRS-Taxonomy-2009-review. The IASCF expects to release the final version in early April 2009, when it will also be freely available. Click for Press Release (PDF 44k).

 

FASB Expands Disclosures About Postretirement Benefit Plan Assets (PDF 124k) This newsletter discusses the recently issued FASB Staff Position No. FAS 132(R)-1, Employers' Disclosures About Postretirement Benefit Plan Assets, which amends FASB Statement No. 132(R), Employers' Disclosures About Pensions and Other Postretirement Benefits. The FSP requires more detailed disclosures about employers' plan assets, including employers' investment strategies, major categories of plan assets, concentrations of risk within plan assets, and valuation techniques used to measure the fair value of plan assets.

SEC Says Fair Value Is Fair: Study Finalized on Mark-to-Market Accounting (PDF 158k). This newsletter discusses the SEC's report and recommendations to Congress regarding mark-to-market (MtM) accounting. The report responds to the congressional mandate in Section 133 of the Emergency Economic Stabilization Act of 2008 that the SEC conduct a study on MtM accounting standards in consultation with the Federal Reserve Board and the secretary of the Treasury. See also the IAS Plus News Story of 5 Jan 2009.

 

As an EU member state, France requires companies whose securities trade on a regulated market to use International Financial Reporting Standards in their consolidated financial statements. Click here for the Recommandations de l'AMF en vue de l'arrêté des comptes 2008 (French version, PDF 369k) and English Version (PDF 236k). The AMF recommendations for 2008 financial statements are presented in ten sections as follows:

1. First-time application of IFRS 7 Financial Instruments: disclosures
2. IAS 39 Financial instruments: recognition and measurement
3. IAS 36 Impairment of assets
4. IAS 19 Employee benefits
5. IAS 1 Presentation of financial statements – classification of debts as current or non-current
6. Business combinations and consolidation
7. IFRS 5 Non-current assets held for sale and discontinued operations
8. IFRS 8 Operating segments
9. New standards and interpretations
   • Application of standards and interpretations in the European Union
   • Annual amendments
   • IFRIC 11 IFRS 2 – Group and treasury share transactions
   • IFRIC 12 Service concession arrangements
   • IFRIC 13 Customer loyalty programmes
   • IFRIC 14 The limit on a defined benefit asset, minimum funding requirements, and their interaction
   • IFRIC 15 Agreements for the construction of real estate
10. European proposal concerning exemption from consolidation

The proposals, if finalised, would make clear that reclassifications of financial assets under the October 2008 amendments to IAS 39 trigger a (re)assessment for embedded derivatives.

The turnaround time for the exposure draft is very short. Comments are required by 21 January and, if finalised, the amendments would be effective for years ending on or after 15 December 2008. Therefore, you will need to monitor the progress of the project so that the final requirements are incorporated in financial statements for December 2008 and subsequent accounting periods.

Click for IAS Plus Update Newsletter (PDF 115k)

Here are Links to Past IAS Plus Newsletters.

CESR reviewed the application of the reclassification amendment by financial institutions within the EU in their third quarter interim financial statements and interim management statements. CESR's analysis covered all 22 financial institutions in the FTSE Eurotop 100 index and 78 other financial institutions. The 100 companies are based in 21 EU member states. CESR found:

More than half of the financial companies concerned did not reclassify any financial instruments in their 3rd quarter 2008 financial statements. For the companies in the FTSE Eurotop 100 index almost two thirds of these companies did not reclassify any financial instruments in any of the categories.

CESR's report also responds to a request from the European Commission for CESR's views on accounting issues in addition to reclassification:

• Fair value option. CESR believes that 'there is a need to examine the effects of the use of the fair value option in more detail within a short timeframe', including whether reclassification should be permitted for financial assets measured using the fair value option.
• Embedded derivatives. CESR welcomes the IASB's recent ED on amendments to IFRIC 9 and IAS 39 and encourages the IASB and the FASB to work together to assess whether further clarification is needed relating to embedded derivatives. 'Furthermore, CESR would recommend that the IASB provides guidance on the main types of synthetic structures covered and on which factors are important for issuers in determining whether an embedded derivative exists and if so, whether it should be measured separately. This clarification should also state that embedded financial guarantee-types do not need to be separated out.'
• Impairment of available-for-sale items. CESR recommends the IASB examines the issues surrounding impairment for available for sale financial instruments.

CESR's report also recommends that 'the IASB should develop due process procedures – including public consultation – that, in rare circumstances, would enable it to 'amend its standards in response to emergency circumstances'. Click to Download the CESR Report (PDF 97k).