March

Notes from day 1 of the March 2009 IASB meeting

17 Mar 2009

The IASB is holding its March 2009 meeting at its offices in London from Monday through Friday, 16 to 20 March 2009.

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting. Among other things, the Board agreed to:
  • Amend IFRIC 9 Reassessment of Embedded Derivatives to exclude contracts with embedded derivatives acquired in a combination of entities or businesses under common control or the formation of a joint venture.
  • Amend IFRIC 16 Hedges of a Net Investment in a Foreign Operation to allow entities to designate as a hedging instrument in a hedge of a net investment in a foreign operation an instrument that is held by the foreign operation that is being hedged.

 

FASB webcast on revenue recognition proposals

17 Mar 2009

The US Financial Accounting Standards Board will hold a live online webcast to discuss the joint IASB-FASB discussion paper (DP) 'Preliminary Views on Revenue Recognition in Contracts with Customers'.

The DP was published in December 2008. Comment deadline is 19 June 2009. The webcast will include an overview of the preliminary views of the FASB and the IASB from various perspectives. The webcast is free of charge, and viewers will be able to email questions to panelists during the event. An archive of the webcast will be put on FASB's website for access by the public. Details:
  • Title of webcast: A Proposed Approach for the Recognition of Revenue
  • Date and time: 27 March 2009, 1:00 PM to 2:00 PM (US EDT)
  • Panelists: Kenny Bement, FASB project manager; Mark LaMonte, Senior Vice President, at Moody's Investors Service; Kevin McBride, Accounting Policy Controller, Intel Corporation; and Jeff Slate, partner with Ernst & Young, LLP. Moderator is FASB member Leslie Seidman,
  • To register for the live or archived webcast: Click Here
  • Information about the revenue recognition discussion paper: IAS Plus Revenue Recognition Page

 

Two FASB proposals would ease mark-to-market

17 Mar 2009

At its meeting yesterday, the US Financial Accounting Standards Board agreed to propose two modifications to the US mark-to-market requirements for financial instruments.

  • Determining when a market for an asset or a liability is not active and determining when a transaction is not distressed. The Board decided to provide additional guidance to help an entity determine whether a market for an asset is not active and when a price for a transaction is not distressed. The Board Meeting Handout (PDF 108k) describes the proposed model the Board agreed to. The model would require 'significant judgement'.
  • Other-than-temporary impairments. The Board discussed proposed changes to the guidance for other-than-temporary impairments. Currently, an entity is required to assess whether it has the intent and ability to hold a debt instrument to recovery in determining whether an impairment is other than temporary. The proposed FSP would change that guidance as follows:
    • If the entity intends to sell the instrument or it is more likely than not that it will be required to sell the instrument before recovering its cost basis, the entire impairment loss would be recognised in profit or loss as an other-than-temporary impairment.
    • If the entity does not intend to sell the security and it is not likely that the entity will be required to sell the instrument before recovering its cost basis, only the portion of the impairment loss representing credit losses would be recognised in profit or loss. The balance of the impairment loss would be recognised as a charge to other comprehensive income. For most debt instruments, an entity would determine the impairment charge representing credit losses by using its best estimate of the impairment amount arising from an increase in the credit risk associated with the specific instrument. The impairment recognised in other comprehensive income would be amortised over the remaining life of a debt instrument prospectively. That amortisation would be recognised in other comprehensive income with an offset to the asset and would not affect profit or loss.
For both topics, the changes will be exposed as proposed FASB Staff Positions, comment deadline 1 April 2009, and would be effective for interim and annual periods ending after 15 March 2009. The proposed FSPs would be applied prospectively. The Board expects to discuss the comments it receives at its meeting on 2 April 2009.

IASCF trustees will meet 1-2 April in London

16 Mar 2009

The Trustees of the IASC Foundation, under which the IASB operates, will meet on Wednesday and Thursday, 1-2 April 2009, at the Crowne Plaza London – The City, 19 New Bridge Street, London EC4V 6DB.

The portion of the meeting open to public observation begins at 10:45am on 1 April and continues for the rest of that day and for the morning of 2 April. The agenda for the public session is as follows:

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London, 1-2 April 2009 (Public Session)

Wednesday 1 April 2009 (10:45 to 18:00)

  • Review of IASB Work Programme (morning)
  • Meeting with the Monitoring Board (afternoon)
Thursday 2 April 2009 (8:30am to Noon)

12 IFRSs await EU endorsement

16 Mar 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 16 March 2009 (PDF 133k). Currently, 12 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
  • IFRS 7 Amendment – Improving Disclosures About Financial Instruments
  • IFRIC 9 and IAS 39 Amendment – Embedded Derivatives

IAS Plus newsletters on recent amendments to IFRSs

14 Mar 2009

Deloitte's IFRS Global Office has published two IAS Plus Update Newsletters on recent amendments to IFRSs.

Deloitte's IFRS Global Office has published two IAS Plus Update newsletters on recent amendments to IFRSs:

Deloitte Canada IFRS transition newsletter

14 Mar 2009

Deloitte Canada has published a special March 2009 issue of their 'Countdown' newsletter on IFRS transition in Canada.

This special edition provides a summary of the Exposure Draft Adopting IFRSs in Canada, II released on 12 March by the Canadian Accounting Standards Board (AcSB). This is the second IFRS-specific exposure draft released by AcSB and builds on the April 2008 exposure draft. Topics covered include:
  • Incorporation of IFRSs into the Handbook
  • Proposed definition of a publicly accountable enterprise
  • Confirmation of the effective date of IFRSs
  • Exposure of new introductory material for the Handbook
  • Exposure of changes to IFRSs since the 2007 bound volume (which was exposed in ED I)
  • IFRS 1 First-time Adoption of IFRSs
  • Emerging Issues Committee (EIC) Abstracts
The comment period ends on 15 May 2009. The regular monthly issue of Countdown will be published later in March. Click below for: Here are the two AcSB exposure drafts themselves:

FAF and FASB tell SEC to wait on IFRSs in USA

14 Mar 2009

The Financial Accounting Foundation, oversight body of the US Financial Accounting Standards Board, and the FASB have submitted a letter of comment on the US SEC's 'Roadmap for the Potential Use of Financial Statements Prepared In Accordance With International Financial Reporting Standards (IFRS) by U.S. Issuers'.

The Roadmap identifies several milestones that, if achieved, could lead to the required use of IFRS by US public companies in 2014, with optional use for some large companies as early as 2010. The FAF response to the SEC's proposed roadmap to IFRS in the United States is, essentially, perhaps in the future, but not yet – more study is needed. Even the optional early use of IFRS by large listed companies should not be permitted. The FAF and FASB question whether, at this point, IFRSs are 'high quality, sufficiently comprehensive, and workable for the U.S. environment'.

Here is an excerpt:

In summary, while the FAF and the FASB continue to support strongly the ultimate goal of a single set of high-quality global accounting standards as part of a global financial reporting system, in our view, additional study is needed to better identify, understand, and evaluate the strengths, weaknesses, costs, and benefits of possible approaches the U.S. should take in moving toward that goal.

Thus, we reiterate our support for a study that would have as its focus a thorough analysis of the issues identified by the SEC in the Roadmap as well as the issues outlined in this letter. Ideally, the study would establish criteria to use in evaluating alternative paths toward the desired end, consistent with a framework such as is embodied in the recent GAO report on financial regulation.

We note that given the complexity and magnitude of the issues involved, the study may not yield clear answers and that any decision about the path forward will involve tradeoffs. However, the point of the study is to reduce uncertainty as much as possible so as to ensure that the ultimate decision represents an effective path forward to achieving high-quality, internationally comparable financial information that capital providers find useful for decision making in global capital markets.

Finally, in this increasingly interconnected financial world, all investors, regardless of country, benefit from high-quality financial information. Thus, as the SEC thoughtfully considers the issues raised by the Roadmap and by the public debate generated through the comment process, we remain committed to continuing to work closely with the IASB to improve both U.S. GAAP and IFRS and to eliminate differences between them. We believe these joint efforts will improve the quality of the standards and the comparability of financial information globally and will advance the efforts toward a single set of high-quality global accounting standards.

IASB and ASBJ representatives meet

13 Mar 2009

Representatives of the Accounting Standards Board of Japan (ASBJ) and the International Accounting Standards Board (IASB) met in Tokyo on 11-12 March 2009 to discuss convergence of Japanese GAAP and IFRSs.

Among other things, the discussion covered the Draft Interim Report Application of International Financial Reporting Standards in Japan issued in February 2009 by the Planning and Coordination Committee of the Business Accounting Council regarding potential use of IFRSs by listed companies in Japan. The Draft Interim Report proposes that some listed companies could be permitted to use IFRS on a voluntary basis from the fiscal year ending 31 March 2010, with a decision on broader, mandatory use made in 2012. Click for:

FASB chairman's comments on mark-to-market

13 Mar 2009

FASB Chairman Robert H Herz testified on 12 March 2009 about mark-to-market accounting for financial instruments before the U.S. House of Representatives Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises. Mr Herz stressed the importance of unbiased accounting standards to capital market investors.

Click for:

Here is an excerpt from Mr Herz's testimony:

While sound and transparent reporting can have economic consequences, including potentially leading to procyclical behavior, it is not the role of accounting standard setters or general-purpose external reporting to try to dampen or counter such effects. Highlighting and exposing the deteriorating financial condition of a financial institution can result in investors deciding to sell their stock in the entity, in lenders refusing to lend to it, to the company trying to shed problem assets, and to regulators and the capital markets recognizing that the institution may be in danger of failing and need additional capital....

The fact that fair value measures have been difficult to determine for some illiquid instruments is not a cause of current problems, but rather a symptom of the many problems that have contributed to the global crisis, including lax and fraudulent lending, excess leverage, the creation of complex and risky investments through securitization and derivatives, the global distribution of such investments across rapidly growing unregulated and opaque markets that lack a proper infrastructure for clearing mechanisms and price discovery, faulty ratings, and the absence of appropriate risk management and valuation processes at many financial institutions. Many of the complaints about fair value also seem to arise in the context of its impact on capital adequacy. As previously noted, while the consideration of the impact of fair value accounting on bank regulatory capital is a very important issue, it is beyond the purview of the FASB.

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