The Exposure Drafts set out proposals for a three-tier reporting framework, which aims to balance the needs of preparers and users of accounts.

The proposed three-tier approach, which has been developed and consulted on over the past six years, builds on the existing system:

• Tier 1 – Quoted groups will continue to report under international financial reporting standards (IFRS), as adopted by the EU. They would be joined in Tier 1 by other companies that are publicly accountable. This would apply if their debt is traded on public markets, or if they hold deposits or manage other people's money. (Some very small financial institutions would be exempt.)
• Tier 2 – All other UK entities, except those that apply the Financial Reporting Standard for Smaller Entities (FRSSE), would report under a new standard based on the IFRS for SMEs, which is considerably shorter and less complicated than current UK standards. The FRSME, as it would be called, would be modified to comply with UK and EU law and to ease tax reporting.
• Tier 3 – The smallest companies will continue to use the simplified version of UK standards, the FRSSE.

The consultation period will run until 30 April 2011. It is proposed that the new framework would be effective from 1 July 2013.

The document published today includes an explanation of the proposals, a draft Impact Assessment and the two new proposed standards. Click for:

• ASB press release (link to ASB website)
• The Future of Financial Reporting - Part One: Explanation (PDF 528k)
• The Future of Financial Reporting - Part Two: Draft Financial Reporting Standards (PDF 1.174k)
• The Future of Financial Reporting - Appendices (PDF 339k)
• A Key Facts Document compiled by the ASB (PDF 274k)
• Our UK country page

This batch includes editorial corrections and changes to IFRS for SMEs (issued July 2009), IFRS 9 Financial Instruments (issued November 2009), Bound Volume (Red Book) 2010, Bound Volume (Blue Book) 2010, Improvements to IFRSs (issued May 2010) and IFRS 7 Financial Instruments: Disclosures – Transfers of Financial Assets (issued October 2010).

Click for Editorial Corrections to IFRSs.

 

The proposed standard is the first step in the IAASB'S work to create robust standards for services that can be used by entities that are either not required or do not elect to be audited to meet their business reporting needs.

Click here for IAASB Press Release (IFAC website), which includes a link to download the proposal. Comments are due by 31 March 2011.

This edition focuses on:

• Principles-based accounting: The application of judgement in the application of IFRS principles
• Events after the reporting period
• An update on Canadian and international standard setting activities

Click here to download the October 2010 edition of Countdown (PDF 808k). A French translation is also available (PDF 694k). Click here to visit our Canada country page.

 

The purpose of the Work Plan is to consider specific areas and factors relevant to a Commission determination in 2011 as to whether, when, and how the current financial reporting system for U.S. issuers should be transitioned to a system incorporating IFRS. The SEC expects to continue to report periodically on the status of the Work Plan in 2011.

Click to view SEC's progress report.

 

The New Zealand Accounting Standard Review Board (ASRB) has released an updated summary of its 'Reporting by For-Profit Entities' project, which seeks to implement an updated differential reporting framework for New Zealand entities.

At its July 2010 meeting, the ASRB agreed to establish an Working Group involving the ASRB, New Zealand Financial Reporting Standards Board (FRSB) and New Zealand Securities Commission to consider key issues.

The October 2010 ASRB meeting considered and agreed with the Working Group's recommendations, which include the need to operationalise the IASB "public accountability" definition in the New Zealand context, and the benefit of having a consistent set of recognition and measurement requirements across the 'tier' structure. Accordingly, this means New Zealand is unlikely to adopt the IFRS for SMEs but will instead require IFRS recognition and measurement requirements for all entities, with disclosure relief for particularly classes of entities.

New Zealand and Australia are working together on cross-Tasman harmonisation and this development may be a key plank in achieving consistent reporting requirements between the two countries, as the 'tiered' approach has recently been adopted in Australia. Proposals for the revised regime are expected to be issued in 2011 after further NZ-Australia discussions.

Click for:

• ASRB project summary (link to ASRB website)
• Our New Zealand country page

 

These requirements will be added to IFRS 9 Financial Instruments and complete the classification and measurement phase of the IASB's project to replace IAS 39. They follow the IASB's November 2009 issue of IFRS 9, which prescribed the classification and measurement of financial assets.

The new requirements address the problem of volatility in profit or loss arising from an issuer choosing to measure its own debt at fair value. This is often referred to as the 'own credit' problem. The IASB decided to maintain the existing amortised cost measurement for most liabilities, limiting change to that required to address the own credit problem. With the new requirements, an entity choosing to measure a liability at fair value will present the portion of the change in its fair value due to changes in the entity's own credit risk in the other comprehensive income (OCI) section of the income statement, rather than within profit or loss.

IFRS 9 applies to financial statements for annual periods beginning on or after 1 January 2013. Entities are permitted to apply the new requirements in earlier periods, however, if they do, they must also apply the requirements in IFRS 9 that relate to financial assets.

Click for:

• IASB press release (PDF 33k)
• IASB feedback statement (PDF 95k)
• IAS Plus summary of IFRS 9 Financial Instruments
• IAS Plus summary of the IASB project to replace IAS 39: Accounting for the impairment of financial assets
• IAS Plus summary of the IASB project to replace IAS 39: Hedge accounting

 

IFRS Insights is a newsletter on IFRS aimed at US companies. This issue includes:

• Cutting costs and improving transparency with an 'IFRS Center of Excellence' (see also our earlier story on this topic)
• Coming changes for lease accounting
• Accounting for property, plant, and equipment under IFRS - what companies should consider in an effort to achieve a successful conversion
• Building an IFRS internal training program.

Click for September-October 2010 IFRS Insight newsletter (PDF 299k).

 

 

You can access the agenda on our November 2010 IFRIC meeting page. We will also post Deloitte observer notes on this page as they are available.