Here is the IASB-FASB Transmittal Letter to the G20
(PDF 53k). The progress report identifies and explains changes to the approach and timetables of a number of the boards' joint projects. The boards had previously Announced their Plan to Make these Changes
on 3 June 2010, with three objectives:
- prioritise the major projects to permit a sharper focus on issues and projects that they believe will bring about significant improvement and convergence of IFRS and US GAAP.
- phase the publication of exposure drafts (EDs) and related consultations to enable the broad-based and effective stakeholder participation in due process that is critically important to the quality of our standards. This includes limiting to four the number of significant or complex EDs issued in any one quarter.
- issue a separate consultation document seeking stakeholder input about effective dates and transition methods.
Some of the key changes, from an IASB perspective, are noted below.
Progress Report and Latest IASB Project Timetable
- Consolidation. Completion of a standard that would replace IAS 27 is planned for 4Q 2010, including improved disclosures about structured entities. Additionally, in 3Q 2010, IASB will issue an ED of proposed changes to its consolidation requirements relating to investment companies to align with existing US GAAP. IASB would finalise this in 1Q 2011.
- Derecognition of financial instruments. In March 2009, the IASB had issued an ED setting out a proposed derecognition model and an alternative model proposed by some Board members. Respondents favoured the alternative model. The IASB had anticipated issuing a revised ED in 3Q 2010 and a final standard by 1Q 2011. The new timetable would split the project into three components:
- Disclosure. The IASB will finalise new disclosure requirements for derecognitions by 3Q 2010.
- Balance sheet offsetting (netting) of derivatives. This is, in a sense, a presentation alternative to complete derecognition. IASB and FASB will jointly issue a separate ED in 4Q 2010 proposing changes to address differences in their standards on balance sheet netting of derivative contracts and other financial instruments and related disclosures. Those differences can materially affect financial reporting by financial institutions. Final converged netting standards are planned for 2Q 2011.
- Comprehensive standard on derecognition. At a future date, following additional staff research, the IASB and FASB will make a decision about the nature and scope of any further improvement and convergence efforts.
- Financial Instruments
- Hedge accounting. In 3Q 2010 the IASB will publish an ED on hedge accounting (previously scheduled for Q2 2010), with a final standard planned for 2Q 2011. Meanwhile, the FASB will hold public roundtable meetings with stakeholders on its 27 May 2010 Comprehensive Financial Instruments Proposals, which include hedge accounting. IASB will participate in those roundtables.
- Classification and measurement of Financial Liabilities. IASB issued an ED in May 2010. Final standard planned for 2Q 2011.
- Impairment of Financial Assets Measured at Amortised Cost. IASB issued an ED in November 2009. Final standard planned for 2Q 2011.
- Financial statement presentation. This project has essentially been split into three parts:
- Presentation of comprehensive income. The IASB issued a Proposal on 27 May 2010 that would require all entities to present results of operations in a single, continuous statement of comprehensive income (a two-statement presentation would be prohibited). FASB published a Similar Proposal. They expect to issue converged final standards in 4Q 2010.
- A comprehensive standard on financial statement presentation. In 2008, the boards published a Discussion Paper proposing comprehensive principles for presenting financial statements. Among those principles were (a) a cohesive structure for the balance sheet, statement of comprehensive income, and cash flow statement, (b) a subtotal of profit or loss in the comprehensive income statement, and (c) presentation of operating cash flows by the direct method. The boards have now decided to engage in additional outreach activities in 4Q 2010 before finalising and publishing an ED. Meanwhile, in 3Q 2010 they will post to their websites a staff draft of proposed standards that reflect tentative decisions made to date. An ED is now planned for 1Q 2011, with a final standard in 4Q 2011.
- Discontinued operations. This is a limited scope project to eliminate differences between the IFRS and US GAAP definitions of discontinued operations and related disclosures. The two boards plan an ED in 1Q 2011 and converged final standards in 4Q 2011.
- Financial instruments with characteristics of equity. In February 2008, IASB published a Discussion Paper that invited comment on a similar November 2007 FASB discussion document. Subsequently both boards decided to pursue an approach that differs from the proposals in the FASB discussion document. The plan had been for an ED in June 2010 and final IFRS by 2Q 2011. The new plan is for an ED in 1Q 2011 and a final standard in 4Q 2011.
- Leases. Because discussions between IASB and FASB on lessor accounting are taking longer than previously anticipated, publication of an ED has moved to 3Q 2010. However, a final converged standard is still expected in 2Q 2011.
- Fair value measurement. The IASB has decided to issue (in late June 2010) a limited exposure draft proposing relatively minor amendments to the proposals in its May 2009 ED on fair value measurement. The amendments relate to the proposed disclosure of a 'sensitivity analysis' for Level 3 fair value measurements for all assets and liabilities measured at fair value. As a consequence, IASB's final fair value measurement standard is now planned for 1Q 2011.
- Revenue recognition. An Exposure Draft was issued on 24 June 2010, and a final IFRS is planned for issue by 2Q 2011.
- Post-employment benefits. An Exposure Draft was issued in April 2010. A final IFRS is planned for 1Q 2011.
- Insurance contracts. The joint progress report acknowledges that IASB and FASB have reached different conclusions on several important technical issues in this project. The IASB plans to publish an ED in July 2010. In light of their differing views, the FASB plans to decide in July the best means for obtaining stakeholder input on the IASB proposal (for example, by publishing it as an exposure draft or in some other way). The progress report does not indicate a timetable for a final IFRS. However, the IASB's work plan on its website indicates final IFRS in 2Q 2011.
- Emissions trading schemes. In May 2010, the boards agreed that other MoU projects had a higher priority. The boards now plan a joint ED in 2H 2011, with a final converged standard sometime in 2012.
Click for Progress Report on Commitment to Convergence of Accounting Standards and a Single Set of High Quality Global Accounting Standards (PDF 64k).