2009

Deloitte IFRS for SMEs newsletter in Spanish

25 Nov 2009

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

We have now posted Bulletin No 20 (24 November 2009), which discusses the following sections of the IFRS for SMEs:
  • Sec 24 Subvenciones Gubernamentales (Government Grants)
  • Sec 25 Costos por Préstamos (Borrowing Costs)
  • Sec 26 Pago Basado-en-acciones (Share-based Payment)
  • Sec 27 Deterioro del Valor de los Activos (Impairment of Assets)
Click to Download Bulletin 20 (PDF 246k). Nuestros Recursos en Español.

 

Deloitte webcast on financial instruments project

24 Nov 2009

On 9 December 2009 Deloitte United States will host a Deloitte Dbriefs webcast on the joint IASB and FASB financial instruments project.

There is no charge to participate, but you must register. Details:

 

We comment on improvements to IFRSs ED

24 Nov 2009

Deloitte Touche Tohmatsu has submitted comments on IASB Exposure Draft ED2009/11 Improvements to IFRSs, which was published 26 August 2009. The ED proposes improvements to eleven IFRSs, mostly mandatory for 2011 but several earlier.

While we support the IASB's improvements process, we have 'serious concerns regarding the quality and drafting of the 2009 amendments' and about inconsistencies between some of the proposed improvements and decisions on current agenda projects. Our view, in summary:

We welcome the IASB's continuing process to deal with certain amendments to IFRSs in an efficient and effective manner. Nonetheless, we have serious concerns regarding the quality and drafting of the 2009 amendments, as there is not always consistency between the Board's intentions as expressed in the introduction, the Basis of Conclusions and the actual wording of the amendment. This is particularly so with respect to the proposed changes to IAS 1, IAS 27, IAS 34, and IAS 40, in which the proposed amendments go beyond the Board's stated intentions and have more widespread consequences than indicated in the introduction or Basis for Conclusions. We also question whether such potentially wide-reaching amendments are within the scope of the annual improvements process.

We are also concerned that some of the proposed amendments and their implications appear to be in conflict with other projects on the Board's agenda. This is particularly the case with the proposed amendments to IAS 27. This apparent conflict is confusing for the Board's constituents, and we would strongly encourage the Board to ensure consistency between projects on its agenda and the annual improvements even if this means delaying an improvement.

Click for:

 

Newsletter on financial asset impairment ED

23 Nov 2009

Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Financial Instruments: Amortised Cost and Impairment.

On 5 November 2009 the IASB issued an exposure draft (ED) proposing to modify the way impairment losses are recognised on financial assets measured at amortised cost from an 'incurred loss model' to an 'expected loss model'. This is one of the phases of the IASB's comprehensive project to replace IAS 39. The newsletter summarises the IASB's proposed expected loss model, identifies a number of operational issues, and contrasts the IASB's proposal to the US FASB's proposed 'incurred loss model'. An appendix to the newsletter sets out a comprehensive numerical example of the calculation mechanics of the expected loss approach for fixed-rate financial instruments. Another appendix provides a detailed comparison of IAS 39's incurred loss approach and the proposed expected loss approach.

The existing incurred loss model IAS 39's incurred loss model assumes that all loans will be repaid until evidence to the contrary (known as a loss or trigger event) is identified. Only at that point is the impaired loan (or portfolio of loans) written down to a lower value.

IASB's proposed expected loss model Under the model proposed in the ED, expected losses are recognised throughout the life of a loan or other financial asset measured at amortised cost, not just after a loss event has been identified. The expected loss model avoids what many see as a mismatch under the incurred loss model – front-loading of interest revenue (which includes an amount to cover the lender's expected loan loss) while the impairment loss is recognised only after a loss event occurs. Proponents of the expected loss model believe it better reflects the lending decision. Under the IASB's proposed expected loss model, a provision against credit losses would be built up over the life of the financial asset based on the expected cash flows of the instrument (including expected credit losses), not market values. Extensive disclosure requirements would provide investors with an understanding of the loss estimates that an entity judges necessary.

Click to view IAS Plus Update Newsletter – Financial Instruments: Amortised Cost and Impairment (PDF 90k).
Links to all past IAS Plus newsletters are Here.

 

Exchange of letters on IFRS 9

23 Nov 2009

The IASB has Posted on its website an exchange of letters between the Trustees of the IASC Foundation and the European Commission regarding the Commission's concerns about IFRS 9 and its decision to postpone considering the Standard for endorsement.

  • The Trustees' letter states: "You would not expect the Trustees to be anything but surprised and disappointed at the deferral. However, we appreciate the Commission's continuing commitment to International Financial Reporting Standards (IFRSs). We acknowledge the supportive statement that your office made regarding IFRSs following the announcement and that the decision regarding timing does not prejudge the ultimate endorsement of IFRS 9."
  • The Commission's response states: "The European Commission remains fully committed to IFRS as the single set of globally accepted accounting standards. Moreover, EU stakeholders unanimously support the general approach based on a mixed attribute measurement model used by the IASB in IFRS 9. The decision not to seek accelerated endorsement of IFRS 9 at this stage reflects the changed economic outlook and market improvements."
Click for:

 

Updated Belgium country page

23 Nov 2009

We have updated our Belgium Country Page to elaborate on the requirements for the use of IFRSs by unlisted companies in Belgium.

The most recent change, adopted by Royal Decree of 27 September 2009 (PDF 327k), is that unlisted insurance companies must prepare their consolidated financial statements according to IFRSs as adopted by the EU for accounting years starting on or after 1 January 2012. The board of directors may decide to apply IFRSs as from accounting years starting on or after 1 January 2010, with such decision being irrevocable.

 

Financial reporting lessons from the financial crisis

23 Nov 2009

US SEC Commissioner Kathleen L Casey spoke about Lessons from the Financial Crisis for Financial Reporting, Standard Setting and Rule Making at Financial Executives International's 28th Annual Current Financial Reporting Issues Conference in New York on 17 November 2009. Commissioner Casey identified three key lessons from the crisis:

  1. First, financial stability depends upon market confidence; and investor confidence, in turn, depends upon the transparency of financial statements.
  2. Second, financial reporting and accounting standard setting must remain focused on the needs of investors. While there are many other important stakeholders that rely on financial statement reporting, investors' interests must remain paramount.
  3. Third, financial reporting must remain relevant and informative to investors, and should not impose unnecessary or costly burdens that do not add to investor understanding.
    Here is an excerpt relating to IFRSs in the United States:

    As the number of US investors with holdings of securities of non-US companies continues to increase, the Commission and the FASB would be remiss and would fail the needs of investors if we did not continue to support the development of a single set of high quality global accounting standards. The desirability of convergence on certain key accounting standards – particularly those related to financial instruments and other areas relevant to the credit crisis – has been highlighted in a number of forums, including the March 2009 communique of the G-20 finance ministers, the Department of Treasury's June 2009 Regulatory Reform report and the July 2009 Report of the Financial Crisis Advisory Group. The Commission strongly supports the continued convergence efforts of FASB and IASB. The existing convergence targets of these two standard setters pursuant to their 2006 MoU, as updated in September 2008, set the goal of completing several major joint projects by 2011. And less than two weeks ago, the FASB and IASB issued a joint statement reaffirming their commitment to achieving convergence of IFRS and US GAAP, and announcing plans to intensify their efforts to complete the major joint projects described in the MoU.

    Going forward, it is crucial that the United States continue to play a leadership role in the support and development of a single set of high quality global accounting standards. It is also my hope and expectation that the Commission will soon articulate the next steps to be taken with respect to the use of IFRS by US issuers – further signaling our commitment to this important goal.

    Click to view Lessons from the Financial Crisis for Financial Reporting, Standard Setting and Rule Making (PDF 45k).

    EITF Snapshot for Nov 2009

    21 Nov 2009

    We have posted the November 2009 edition of EITF Snapshot summarising the November 2009 meeting of FASB's Emerging Issues Task Force.

    EITF Snapshot, published by Deloitte & Touche LLP (USA), enables readers to identify relevant topics and to understand quickly the meeting's outcome. Past issues can be downloaded Here. This EITF Snapshot covers the following issue discussed by the EITF at the meeting:
    • Issue 09-2 Research and Development Assets Acquired in an Asset Acquisition – No consensus reached. Further discussion expected.
    • Issue 09-E Accounting for Distributions to Shareholders With Components of Stock and Cash in the Calculations and Presentation of Earnings per Share – Final consensus
    • Issue 09-F Casino Base Jackpot Liabilities – Consensus-for-exposure
    • Issue 09-G Clarification of the Definition of Deferred Acquisition Costs of Insurance Entities – Consensus-for-exposure
    • Issue 09-I Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset – Consensus-for-exposure
    • Issue 09-J Impact of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Primarily Trades – Consensus-for-exposure
    Initial EITF consensuses (known as 'consensuses-for-exposure') are exposed for a comment period after ratification by the FASB. At its first scheduled meeting after the comment period, the EITF considers comments received and, as warranted, affirms its consensuses-for-exposure as final consensuses. Those consensuses are then provided to the Board for final ratification.
    Click to view EITF Snapshot — November 2009.

     

    We comment on rate regulation ED

    21 Nov 2009

    Deloitte Touche Tohmatsu has submitted comments on IASB Exposure Draft ED2009/8 Rate-regulated Activities, which was published 22 July 2009. The objective of the proposals in the ED is to establish whether and how assets and liabilities resulting from rate-regulated activities should be recognised and measured under IFRSs.

    If adopted, the proposed IFRS would:
    • define regulatory assets and regulatory liabilities
    • set out criteria for their recognition
    • specify how they should be measured
    • require disclosures about their financial effects
    Our view, in summary:

    We support the Board's efforts to address differences in practice regarding the recognition of assets and liabilities arising from rate regulation. We agree that only the regulated entities proposed by the scope of the standard should be able to recognise regulatory assets and liabilities.

    However, we believe the ED's current scope criteria, as currently worded, would create confusion for entities proposed to be outside the scope of the final standard. In our view, this may result in entities asserting they are within the scope and applying the principles contained in the ED by merely analogising to their particular situation even though technically they do not meet the established criteria. We would prefer the final Standard's scope include all entities' operating activities whose prices are subject to regulation, and then subject all such entities to established recognition criteria. Expanding the scope to all rate-regulated entities will help alleviate our concern as it becomes a question of whether an entity meets the recognition criteria for it to be able to recognise a regulatory asset or liability. Entities within the scope of the standard, but not meeting the recognition criteria would be prohibited from recognising regulatory assets and liabilities under this [draft] IFRS. The risk of entities the Board did not intend to recognise regulatory assets and liabilities doing so would therefore be lessened.

    Click for:

     

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.