We've posted Deloitte observer notes from the topics discussed on day three of the meeting. We have also posted the notes of the revenue recognition project discussion from Day 2 of the meeting. The topics discussed were as follows (click through for direct access to the notes for that particular topic):

Tuesday, 14 December 2010

• Revenue recognition
  • Initial comment letter analysis

Wednesday, 15 December 2010

• Consolidation (IASB only)
  • Feedback received through FASB roundtables
  • Effective date for IFRSs on consolidation, joint arrangements and disclosure of involvement with other entities
• Insurance contracts
  • Issues identified in the outreach activities
• Financial instruments — Hedge accounting
  • Education session

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers for the entire meeting.

The proposal would result in a consistent approach to lease accounting for both lessees and lessors using a 'right-of-use' approach.

We agree with the proposed right-of-use model when it is applied to very simple lease arrangements that include a fixed term with fixed payments as we believe this will increase transparency of the economic effects of leasing arrangements to users of the financial statements. However, we have significant concerns over the application of the right-of-use model when the arrangement includes other terms such as options and contingencies.

Click to Download our Comment Letter (PDF 146k).

The partnership is designed to help companies make greater use of the OECD Guidelines for Multinational Enterprises and the GRI Sustainability Reporting Framework, with the objective of bringing increased coherence and consistency to their efforts to act more responsibly and be more transparent about their sustainability.

The OECD Guidelines for Multinational Enterprises and the GRI Sustainability Reporting Framework are based on and promote the same internationally agreed standards and principles for responsible business conduct, including social and human rights and economic and environmental matters. The GRI Sustainability Reporting Framework provides guidance on how to measure sustainability performance and the OECD Guidelines for Multinational Enterprises provides a benchmark to assess such performance.

Click for:

• OECD/GRI press release (link to OECD website)
• OECD Guidelines for Multinational Enterprises (link to OECD website)
• GRI Sustainability Reporting Framework (link to GRI website)
• Our sustainability page.

 

25 companies appeared to have given no IAS 1 capital management disclosures at all. The annual reports and accounts of the residual 40 companies were then reviewed in more detail covering both the business review and the audited financial statements. Even though the study concludes that there is good practice in places the overall finding is:

"The majority of companies omitted or provided largely boilerplate information about financial capital in a manner that failed to convey meaningfully how they assess capital and how they manage it over the medium to long term. There are significant opportunities for improvement in reporting about capital."

Click for:

• ASB press release (link to ASB website)
• ASB Study: Financial Capital Management Disclosures (PDF 230k, link to ASB website)
• Our UK country page

 

The panel also addressed related issues such as how the new board would work with the Financial Accounting Standards Board (FASB) throughout the standard-setting process, what would be the new board's mission and structure, and how it would be potentially funded. The panel also began preparation of a draft report containing its recommendations, and is expected to issue the report to the FAF Board of Trustees in early 2011 and then to the public.

Click for press release (link to FAF website).

Until now, Peruvian companies (public and non-public) issue financial statements under Peru Generally Accepted Accounting Principles (PEGAAP) which is IFRS based after endorsement by the Consejo Normativo de Contabilidad (CNC). The last endorsement of IFRS by CNC was on August 23, 2010 which is effective since January 1, 2011. Therefore non-public companies will continue to issue financial statements under PEGAAP, while public companies will apply IFRS 1 and issue financial statements under full IFRS as issued by IASB.

CONASEV has indicated that public companies should prepare the first financial statements under IFRS by December 31, 2011; investment funds, and others should prepare the first financial statements under IFRS by December 31, 2012. Early application of IFRS is optional and should be communicated to CONASEV. The adoption of IFRS should be definitive and unreserved. Interim financial statements will be presented under IFRS for the year 2012 (if early adoption was elected, 2011).

CONASEV's resolution is a significant step towards transparency and high quality financial information in the Peruvian stock market.

Click for resolution Nº 102-2010-EF/94.01.1 (PDF 195k, in Spanish)

In his speech Mr. Goldschmid describes two basic scenarios that are probable if the US Securities and Exchange Commission (SEC) comes to a negative decision on IFRS adoption:

"First, the coalition of nations supporting IFRS could break apart. Rather than two sets of accounting standards, IFRS and U.S. GAAP, we could go back to pre-2000 fragmentation. Many national accounting systems would exist. The cost, in terms of lack of transparency and comparability, higher accounting expenses, etc., would be extremely large.

The second basic scenario is even worse from a U.S. perspective. The coalition in support of IFRS could hold and the U.S. would become isolated. The U.S. would no longer play the large and constructive role it now plays in IFRS development and oversight. I believe that without active U.S. participation the overall quality of the international accounting standards would deteriorate. Remember, there is less concern about transparency and investor protection in some other parts of the world."

Click for keynote speech excerpt (link to IASB website).

 

Click for:

• Hong Kong Financial Reporting Standards – Illustrative Annual Financial Statements 2010 (PDF 3,624k)
• Heads Up newsletter Sharing Views on the Revenue Project (PDF 126k)
• Heads Up newsletter FASB Proposes to Delay Effective Date of Disclosures About TDRs by Creditors (PDF 89k)
• December 2010 edition of EITF Snapshot (PDF 88k)
• November 2010 edition of Accounting Roundup (PDF 390k)
• December 2010 edition of Australia Accounting Alert

 

The proposed redrafting aims to assist the ongoing worldwide development of continuing professional development systems and compliance mechanisms.

Comments on the exposure draft are requested by 8 March 2011. Click for IAESB press release (link to IFAC website).

One of the enhancements is a newsletter for investors. Board members Stephen Cooper, Patrick Finnegan and Patricia McConnell publish timely updates on financial reporting matters. For the new issue of the Investor Perspectives they have been joined by Paul Pacter, IASB member and former webmaster of IAS Plus:

• 10 December 2010 – Paul Pacter: Capital providers need good small business reporting, too

All Investor Perspectives are archived on the IASB's website.