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September

Deloitte IFRS for SMEs newsletter in Spanish

30 Sep 2009

Deloitte (Colombia) is publishing a series of Spanish language bulletins about the new IFRS for SMEs.

We have previously posted Bulletins No 1 through 11 – links can be found Here. We have now posted No 12:
  • Bulletin No 12 (29 September 2009) discusses Sections 14, 15, and 16 of the IFRS for SMEs, which deal with accounting for investments in associates, joint ventures, and investment property. Click to Download Bulletin 12 (PDF 219k).
We have many resources in Spanish Here.

Notes from special 29 Sept 2009 IASB meeting

30 Sep 2009

The IASB is held a special Board meeting at its offices in London on Tuesday 29 September 2009.

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

IFRS Conversion in the Canadian insurance industry

29 Sep 2009

Deloitte Canada has published Canadian Insurance Industry: A Clear Path to IFRS Conversion.

This booklet highlights the accounting considerations and other considerations that are important to the insurance industry in Canada when making the transition to IFRSs in 2011. Topics covered include:

  • Insurance contracts - product classification
  • Insurance contracts - financial statement presentation and disclosure issues
  • Insurance contracts - embedded derivatives and unbundling
  • Insurance contracts - measurement approach
  • Financial instruments

Analysis of extractive industries Discussion Paper

29 Sep 2009

Deloitte Australia's Energy and Resources Group has published Issue 6 of the Extracting Value Newsletter.

A special edition focusing exclusively on the draft Discussion Paper (DP) Extractive Activities, recently released 'for information purposes' by the IASB. Whilst ostensibly proposing approaches producing outcomes similar to common industry practice, there are a number of interesting issues and considerations arising from the draft Discussion Paper – such as potentially mandating capitalisation of exploration expenditure and much more information about the fair value of reserves and resources. This edition of Extracting Value explores some of these issues, beginning the commercial and pragmatic analysis of the proposals. An excerpt:

In summary terms, the Discussion Paper proposes to:

  • introduce mineral reserve and resource definitions based on industry practice
  • eliminate 'phase accounting' – separate accounting for exploration and evaluation, development, production and so on – in favour of one asset, either a 'mineral asset' or 'oil and gas asset'
  • account for mining and oil and gas projects using a 'unit of account' which is effectively the 'area of interest' accounting commonly used in Australia under current standards
  • require measurement based on historical cost, but countenancing the possibility of using another measure such as current value or (more likely) fair value
  • retain a modified impairment approach to assets in the exploration and evaluation stage
  • introduce extensive disclosures, including a form of 'standardised value' for reserves/resources and possibly responding to the 'publish what you pay' lobby.

IASCF Trustees will meet 7-8 October

29 Sep 2009

The Trustees of the IASC Foundation will meet on 7-8 October 2009 at the Wharton Auditorium, TIAA-CREF Offices, 730 Third Avenue 17th Floor, New York, NY.

Only the session on 7 October (13:30 to 17:15pm) is open to public observation. Agenda topics of the public session are as follows:
  • Report of the IASB Chairman
  • Addressing IFRS adoption in emerging markets
  • Report from the SAC Chairman
  • Update on the Constitution Review
  • Report of the Due Process Oversight Committee
  • Report of the Education and Publications Committee

IASB Chairman meets with EU Parliament committee

29 Sep 2009

Sir David Tweedie, Chairman of the International Accounting Standards Board, met with the Economic and Monetary Affairs Committee of the European Parliament on 28 September 2009 to discuss the IASB's response to issues arising from the financial crisis.

His remarks focussed, in particular, on the IASB's response to issues raised by EU institutions. Click to download Sir David's Statement (PDF 27k). Here is an excerpt:

Actions taken to respond to global concerns

From the outset of the crisis, the IASB has worked on a defined programme with time lines to address issues arising from the financial crisis. Our initial focus was on the three areas identified by the Financial Stability Forum: (1) the application of fair value in illiquid markets; (2) accounting for off balance sheet items; and (3) disclosures related to risk. On all three points, we have acted urgently.

On fair value in illiquid markets, we produced a report in October 2008 that the European Commission praised. We have consistently stated that IFRS and US guidance are consistent in this important area. I know that there was concern that the recent FASB Staff Position on fair value measurement might have created a new unlevel playing field. It is for this reason that immediately after the FASB's publication, we posted a press release reiterating that our approach was consistent with the FASB's. As an extra precaution to ensure that global consistency is maintained, on 28 May 2009 the IASB published an exposure draft on fair value measurement that directly incorporates the relevant FASB guidance.

On off balance sheet items, the G20, the Financial Stability Forum, and this Council have all emphasised the need for more transparency in the accounting for these items. There is some evidence that IFRSs have held up relatively well on this issue, but we have now proposed tightening our rules further.

On risk disclosures, in March 2009 the IASB published improvements to the disclosure requirements for fair value measurements and reinforced existing principles for disclosures about the liquidity risk associated with financial instruments.

We comment on fair value measurement ED

29 Sep 2009

Deloitte Touche Tohmatsu has submitted comments on the IASB Exposure Draft Fair Value Measurement, which was published 28 May 2009. We are generally supportive of the proposal, though we have concerns about some aspects and make suggestions for changes.

The ED proposes guidance on how fair value should be measured where it is required by existing standards. The ED does not propose to extend the use of fair value measurements in any way. It would add disclosure requirements about how fair values were determined. If adopted, the proposals would replace fair value measurement guidance contained within individual IFRSs with a single, unified definition of fair value, as well as further authoritative guidance on the application of fair value measurement in inactive markets. The IASB's starting point in developing the exposure draft was the equivalent US standard, SFAS 157 Fair Value Measurements (now Accounting Standards Codification Topic 820). The proposed definition of fair value is identical to the definition in SFAS 157, and the supporting guidance is also largely consistent with US GAAP. You will find an overview of the Proposals in the ED Here.

An excerpt from our letter of comment on the ED: We support the Board's efforts to replace the existing guidance on fair value measurement in IFRS accounting literature with a single standard and strive for closer convergence with fair value measurement requirements in Accounting Standards Codification Topic 820 (ASC 820) Fair Value Measurements and Disclosures (formerly Statement 157), issued by the US Financial Accounting Standards Board (FASB). Global convergence is important as it serves to further reduce complexity and application issues that often result from inconsistent principles in similar US and international standards. Moreover, convergence of this draft IFRS will result in more consistent measurement of fair value among IFRS preparers and better comparability with entities preparing financial statements under US GAAP. Furthermore, we understand that full convergence to ASC 820 may not be appropriate in instances where the IASB ED has demonstrated a more conceptually superior principle. However, in areas where the IASB does agree with the principles in ASC 820, we recommend the verbiage be closely aligned as not to create wording differences that cause confusion among constituents....

Some proposals within the ED do not move the draft IFRS towards convergence and, we believe, have not been demonstrated to be conceptually superior to ASC 820. For example, such proposals include, but are not limited to, the most advantageous market concept, the definition of a 'knowledgeable' market participant, and the accounting (deferral) of certain day one gains and losses.

Click to download Our Comment Letter (PDF 126k). All past comment letters are Here.

 

Proposed XBRL taxonomy for IFRS for SMEs

29 Sep 2009

The International Accounting Standards Committee (IASC) Foundation has invited comment on an exposure draft of the IFRS for SMEs XBRL Taxonomy.

The Taxonomy is a complete translation of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) into XBRL (eXtensible Business Reporting Language). The exposure draft of the IFRS for SMEs Taxonomy is accompanied by a comprehensive review package containing a sample XBRL filing and explanatory materials, as well as illustrative financial statements and a presentation and disclosure checklist. The exposure draft of the IFRS for SMEs Taxonomy is available online at IFRS for SMEs XBRL Taxonomy and is open for comment until 27 November 2009. The IASC Foundation aims to publish the final version of the IFRS for SMEs Taxonomy in December 2009.

 

FSB seeks simplified global financial instruments accounting

28 Sep 2009

The Financial Stability Board (FSB) has urged the IASB and FASB to simplify, improve, and converge their accounting standards for financial instruments "in a manner that does not expand the use of fair value in relation to the lending activities (involving loans and investments in debt instruments) of financial intermediaries".

The FSB was established to coordinate the policies by which countries regulate and supervise financial institutions. Click for FSB Statement (PDF 56k).

Here is an excerpt:

At present, the IASB and the US Financial Accounting Standards Board (FASB) are considering a variety of approaches which could possibly lead to divergences between IASB and FASB standards with respect to:

  • improving and simplifying financial instruments accounting, where FASB is considering an approach that is based on fair value measurement for most financial instruments, which would be proposed by early 2010, while the IASB has proposed a mixed model of historical cost and fair value, to be available for use in 2009 year-end financial statements;
  • provisioning and impairment, where the IASB plans to propose a standard using an expected loss or expected cash flow approach to loan loss provisioning in October 2009, which would generally recognise credit losses earlier and mitigate procyclicality,1 whereas the FASB continues to consider changes to impairment recognition, including an approach based on fair value with plans to issue its proposal by early 2010;
  • off-balance sheet standards, where the IASB's proposal on derecognition, which is now subject to consultation, would require repurchase agreements to be treated as sales and forward contracts in certain situations (thus leading to off-balance sheet treatment), instead of as financing transactions on the balance sheet as under current IASB and FASB standards.

Moreover, continuing differences in accounting requirements of the IASB and FASB for netting/offsetting of assets and liabilities also result in significant differences in banks' total assets, posing problems for framing an international leverage ratio.

Therefore, additional work in the areas above is urgently needed in order to meet the important objectives of convergence, transparency and the mitigation of procyclicality, as standard setters continue their efforts to improve the quality of their standards and reduce the complexity of their standards on financial instruments.

G20 call for global standards by 2011

28 Sep 2009

Following their meeting in Pittsburgh, Pennsylvania USA on 24-25 September 2009, the leaders of the G20 nations issued a Final Statement identifying a range of additional steps that should be taken to strengthen international financial regulatory system to avoid a future global financial crisis.

One of their stated goals is complete convergence of accounting standards across the G20 member nations by June 2011:

We call on our international accounting bodies to redouble their efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011. The International Accounting Standards Board's (IASB) institutional framework should further enhance the involvement of various stakeholders.

Here is the link to our Comprehensive Credit Crunch Page.

Click for G20 Leaders Final Statement (PDF 102k).

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