September

Representatives of IASB and ASBJ will meet

03 Sep 2009

Representatives of the IASB and the Accounting Standards Board of Japan will meet at the IASB's office in London on Monday 7 September 2009 from 08:30 to 15:30. The meeting is open to public observation.

The agenda for the meeting is:
  • Measurement of Liabilities
  • Financial Instruments – Classification and Measurement (issues other than discussed in the above session) and Impairment
  • Other Comprehensive Income and Recycling/Non-recycling – a cross-cutting issue among Financial Statement Presentation, Financial Instruments (Classification and Measurement), and Post-employment benefits
More Info on IASB website.

 

PCAOB Q&A on references to standards

03 Sep 2009

The US Public Company Accounting Oversight Board has published Staff Questions and Answers on References to Authoritative Accounting Guidance in PCAOB standards.

As a result of FASB's new Codification, some PCAOB standards include descriptions of and references to accounting requirements that are no longer current. Also, some PCAOB standards include descriptions of accounting requirements that may not represent the final language as adopted in the Codification. The Q&As alert auditors that the FASB Codification now represents the single source of authoritative US GAAP. Auditors should look to the FASB Codification and the rules of the US Securities and Exchange Commission for authoritative US GAAP guidance for SEC registrants, even though PCAOB standards may contain descriptions of and references to pre-Codification US GAAP.

 

IFRS for SMEs 'goes live'

03 Sep 2009

We have posted an article by Paul Pacter, the IASB's Director of Standards for SMEs (who is also webmaster of IAS Plus) about the new IFRS for SMEs.

The article, titled IFRS for Most Private Companies Goes Live (PDF 726k), was published in Financial Executive magazine September 2009 issue. The article discusses why the IASB took the project on, benefits of the new standard, the kinds of simplifications of full IFRSs that are reflected in the SME standard, and issues in transitioning from an SME's existing GAAP to the IFRS for SMEs.

"With the issuance of IFRS for SMEs, IASB has eased the complexity of financial statements for thousands of companies worldwide – as well as for those who use those financial statements to make credit, lending and investment decisions."

The article is copyright by Financial Executives International, and we have posted it on IAS Plus with their kind permission.

 

Guía Rápida NIC/NIIF 2009 – Argentina

03 Sep 2009

Deloitte Argentina has published Guía Rápida NIC/NIIF 2009 – the Argentine Spanish-language version of our very popular IFRSs in your Pocket booklet.

The Argentine publication is based on the 2009 English version but has been updated to include summaries of all IFRSs through June 2009. It also includes news regarding the IFRS implementation process in Argentina (2011 is the year of mandatory adoption for some public companies, and optional for other entities), contact names of our local specialists, information about local standard-setters, discussion of issues relating to translation of IFRSs into Spanish, and a foreword by Fermín del Valle, director of professional practice of Deloitte's Latin American countries group, among other additions to the English language version. Click to download Guía Rápida NIC/NIIF 2009 - Argentina (PDF 1,209k).

Accounting Roundup – August 2009

02 Sep 2009

We have posted the August 2009 Edition of Accounting Roundup published by Deloitte & Touche LLP (United States).

The newsletter is now organised by topic rather than by standard-setter. Topics covered in this issue include:

Consolidation

  • FASB Issues Proposal Regarding Ownership Provisions in the Consolidation Subtopic
Fair Value
  • FASB Issues Proposal on Fair Value Measurements and Disclosures
  • FASB Issues Accounting Standards Update Regarding Measuring Liabilities at Fair Value
Financial Instruments
  • IASB Proposes Guidance on Classification of Rights Issues
  • IFRIC Proposes Interpretation on Extinguishing Financial Liabilities With Equity Instruments
Other Accounting
  • IASB Proposes Changes as Part of Its Annual Improvements Project
SEC Matters
  • SEC Announces James L. Kroeker as SEC Chief Accountant
  • SEC Sends Sample Letter to Public Companies on MD&A Disclosure Regarding Provisions and Allowances for Loan Losses
  • SEC Releases Interpretive Guidance Regarding the FASB's Codification
  • SEC's Division of Corporation Finance Issues Compliance and Disclosure Interpretations
  • SEC Issues Orders Approving PCAOB Rule Proposals
  • SEC Staff Issues Notice Regarding Upcoming EDGAR Release 9.17 and XBRL Validation
You will find past issues of Accounting Roundup Here.

Heads Up on FASB's proposed fair value disclosures

02 Sep 2009

Deloitte United States has published a Heads Up Newsletter explaining FASB's Proposals for new and revised disclosures about fair value measurements.

We comment on 'credit risk' discussion paper

02 Sep 2009

Deloitte Touche Tohmatsu has submitted comments on the IASB Discussion Paper Credit Risk in Liability Measurement.

We support the Board's effort to address this critical topic and believe that future standard setting would benefit if the IASB were to define a consistent set of principles for when credit risk should be reflected in liability measurements. To assist in the development of such a set of principles, we believe that the Board should first define the various potential measurement attributes that could be applied to liabilities as part of Phase C of its Conceptual Framework Measurement project. Our comment letter outlines the measurement attributes that we believe the Board should consider (see first box below) and proposes a set of principles governing when the measurement of a liability should incorporate credit risk (an excerpt is in the second box below). Click to download Our Letter of Comment (PDF 40k). All past letters comment are Here.

 

Measurement Attributes for Liabilities

At this time, we support further consideration of four different measurement attributes for liabilities.

1. Fair value – Standard-setters define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, i.e., an exit price. Because fair value, as proposed to be defined by the IASB, is a price in a current market transaction, this measurement attribute reflects the impact of the entity's own credit risk.

2. Amortised cost. – For a liability, amortised cost is 'the amount at which the liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount'. Typically, this measurement attribute reflects the entity's own credit risk at initial recognition. For example, when a financial liability is measured at the amount of cash proceeds received, the amount of cash proceeds generally reflects the entity's credit risk. However, subsequent changes in credit risk are not reflected in subsequent measurements.

3. Current Measurement Using a Frozen Credit Spread – This measurement attribute uses a present value technique that discounts the expected future cash flows at a current benchmark rate (such as a risk free rate, an interbank benchmark rate, or a bank prime rate) plus (or, in some circumstances, minus) the spread that applied to the liability at initial recognition. Subsequent measurements reflect changes in the benchmark rate; but changes in credit risk are ignored. Similar to amortised cost, this measurement attribute reflects the entity's own credit risk at initial recognition, but subsequent changes in credit risk are not reflected in subsequent measurements.

4. Current Measurement Using a High Quality Credit Approach – This measurement attribute uses a present value technique that discounts the expected future cash flows using a current high quality discount rate, for example, the current risk free rate or the current discount rate for high quality corporate bonds. This measurement attribute excludes the effect of the specific credit risk of the issuer both at initial recognition and in subsequent measurements.

Excerpt from Our Comments on Measurement of Liabilities Subsequent to Initial Recognition

In determining the best subsequent measurement attribute, the board should consider the relevance of changes in the issuers own credit to investors. For example, for most debt obligations, the issuer does not have the practical ability to realise gains associated with decreases in their credit worthiness. They are also not required to absorb losses associated with increases in their credit worthiness in debt obligations. Thus, changes in an issuer's own credit is generally not relevant and should not be incorporated in the subsequent measurement of most debt obligations. This would lead to debt obligations being measured at amortised cost or a current measurement using a frozen credit spread (whether fixed rate debt obligations should be measured using a frozen or current benchmark interest rate is not a topic for this Discussion Paper). Where the issuer could realise changes in value of a liability due to changes in its own credit risk, a measurement attribute incorporating current risk (e.g., fair value) may be appropriate.

Deloitte IFRS for SMEs newsletter in Spanish

02 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 7 – links can be found Here. We have now posted No 8:
  • Bulletin No 8 (1 September 2009) addresses some of the more complex financial instruments issues, including fair valuation and derecognition, in the IFRS for SMEs. Click to Download Bulletin 8 (PDF 175k).
We have many resources in Spanish Here.

 

Comment deadline reminder – rights issues ED

01 Sep 2009

We remind you that comments are due on 7 September 2009 on the Exposure Draft: Classification of Rights Issues.

The ED was issued by the IASB on 6 August 2009. The ED proposes to amend IAS 32 Financial Instruments: Presentation to clarify the accounting treatment when rights issues are denominated in a currency other than the functional currency of the issuer. Current practice appears to require such issues to be accounted for as derivative liabilities. The proposals state that if such rights are issued pro rata to an entity's existing shareholders for a fixed amount of currency, they should be classified as equity regardless of the currency in which the exercise price is denominated. The IASB plans to issue the final amendment before the end of 2009 with early application permitted. If adopted the amendment will apply retrospectively.

 

FASB proposes fair value disclosures for 2009

01 Sep 2009

The US Financial Accounting Standards Board (FASB) has issued an exposure draft (ED) of a proposed Accounting Standards Update intended to improve disclosures about fair value (FV) measurements.

Proposed new and revised disclosures include:
  1. Effect of reasonably possible alternative Level 3 measurements (measurements based on unobservable inputs) that could increase or decrease FV significantly – sometimes called sensitivity disclosures
  2. Transfers of assets or liabilities among Level 1, 2, and 3 measurements
  3. Information about gross purchases, sales, issuances, and settlements of assets or liabilities whose FV is measured using a Level 3 FV measurement
  4. Disaggregated disclosures of FV for each class of assets and liabilities
  5. Valuation techniques and inputs used to measure FV using Level 2 and 3 measurements
The proposed disclosures are similar to those already required by IFRS 7 Financial Instruments: Disclosures. With the exception of the sensitivity disclosures (item 1 above), the new disclosures would be required for interim and annual reporting periods ending after 15 December 2009. The Level 3 sensitivity disclosures would be effective for interim and annual reporting periods ending after 15 March 2010. FASB's deadline for comments on the proposals is 12 October 2009. Click for FASB News Release (PDF 98k). The news release includes a link to download the ED.

 

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