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August

Polish translation of the IFRS for SMEs published

10 Aug 2011

The IFRS Foundation has announced that a Polish translation of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) 2009 has now been published online.

A translation of the core text of IFRS for SMEs is now available in eleven languages; in six cases the basis for conclusions and the implementation guidance have also been translated. All translations are available free of charge on the IASB's IFRS for SMEs website.

A summary of the requirements of the IFRS for SMEs is available here.

Deloitte (United States) comments on SEC convergence work plan

10 Aug 2011

Deloitte & Touche LLP (United States) has submitted a comment letter to the US Securities and Exchange Commission (SEC) on its views of the SEC staff paper, Work Plan for the Consideration of Incorporating International Financial Reporting Standards Into the Financial Reporting System for U.S. Issuers Exploring a Possible Method of Incorporation.

The letter expresses support of IFRS and the convergence efforts of the IASB and the FASB. The letter supports an "endorsement approach" similar to the one described in the SEC Staff Paper. See our earlier story for more information on the Staff Paper.

The letter, which expresses the views of the US firm only, includes the following opinions:

The SEC . . . must consider the varying needs and concerns of issuers (e.g., larger, multinational issuers vs. smaller, domestic-oriented issuers), who would be responsible for transitioning to IFRSs. We thus encourage the Commission to consider a multifaceted solution that would allow issuers to address individual transition concerns efficiently and cost-effectively. To that end, we believe that using an endorsement approach . . . to incorporate IFRSs into the U.S. financial reporting system, in conjunction with giving issuers an option to adopt IFRSs voluntarily during a transition period, strikes the right balance in addressing the various concerns raised by preparers and others. We agree that an endorsement approach would offer the benefits of (1) a more formal mechanism to address U.S.-specific issues and facilitate the SEC's mandate to protect U.S. investors and (2) the retention of U.S. GAAP as the statutory basis for financial reporting, thus avoiding the need for, and complexities with, changing the references from U.S. GAAP to IFRSs in U.S. laws, regulations, and contracts. . . .

In implementing an endorsement approach, the FASB should publicly seek stakeholders' input ("due process") when incorporating existing or new IFRSs into U.S. GAAP. We further believe that the goal of the due process should be to incorporate IFRSs, as issued by the IASB, without modification. . . .

[W]e believe that it would be appropriate for the FASB to override an IFRS principle before incorporating it into U.S. GAAP (both existing IFRSs and future IFRSs subject to endorsement) only if it determines that such an override is necessary in the public interest, to protect U.S. investors or there are legal or other operational barriers to incorporating the IFRS principle as issued by the IASB. . . . [W]e would expect the need to override a principle in IFRS to rarely arise. . . .

[W]e would encourage the SEC to remain committed to making a decision in 2011 (or as soon as practicable) regarding the approach of incorporating IFRSs into U.S. GAAP, despite the fact the FASB and IASB will not be able to complete the MoU projects by then." "We believe that preparers, investors, auditing firms, and others need certainty about whether, when, and how IFRSs will be incorporated into U.S. GAAP before they expend time and effort preparing the transition to IFRSs or an IFRS-based U.S. GAAP. . . .

We recommend that U.S. public entities should be permitted to early adopt IFRSs as issued by the IASB. . . .

We believe that a transition period of five to seven years is reasonable to meet the needs of issuers.

Click for our comment letter (PDF 321k).

Near Final Draft of IFRIC 20 published

10 Aug 2011

A near final draft of IFRIC Interpretation 20 'Stripping Costs in the Production Phase of a Surface Mine' has been posted to the IASB's website.

The Interpretation addresses the following issues:

  • recognition of production stripping costs as an asset;
  • initial measurement of the stripping activity asset; and
  • subsequent measurement of the stripping activity asset.

The near final draft (PDF 226k, link to IASB website) is available to eIFRS subscribers only.

New issue of the IASB's Investor Perspectives

06 Aug 2011

In April 2010, the Trustees of the IFRS Foundation and the IASB launched a programme to enhance investors' participation in the development of International Financial Reporting Standards (IFRSs).

One of the enhancements is a newsletter for investors entitled Investor Perspectives. A new edition is now available. Ian Mackintosh, the Vice-Chair of the IASB, writes about the IASB consultation on its future work programme:

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

Japan proposes to remove time limit for US accounting rules

04 Aug 2011

In line with recent developments and following an announcement of the Japanese Minister for Financial Services made in June 2011, the Financial Services Authority of Japan (FSA) yesterday proposed a draft regulation on the use of US GAAP in Japan that would extend the current option to use US GAAP beyond 2016.

In December 2009, the FSA adopted Cabinet Ordinances allowing the voluntary application of IFRS starting from the fiscal year ending 31 March 2010 and prohibiting the use of US GAAP starting from fiscal years ending after 31 March 2016. The draft regulation proposed yesterday would revoke the part of the December 2009 Cabinet Ordinances that prohibit the use of US GAAP after 2016.

Comments on the draft regulation close on 16 August 2011. Please click for FSA press release (Japanese only, link to FSA website).

Global banks expect impairment accounting proposals to improve financial statements

04 Aug 2011

Deloitte's Global Financial Service Industry (GFSI) group has published IFRS 9 Impairment Survey 2011, an inaugural global banking survey providing insights into current thinking across the industry.

The survey is based on the views of 56 major banking groups on the topic of loan impairment. Banks surveyed included seven of the top 10 global banking groups measured by total assets and span banks headquartered in Europe, Middle East & Africa, Asia Pacific and North America.

Findings include:

  • There was broad consensus that, even though the details of the new impairment requirements are not yet finalised, the expected loss approach should be the basis for the new impairment model. However, just over a quarter of banking groups are unconvinced that the introduction of an expected loss model will make financial statements more useful and over half believe it will result in a lack of comparability between institutions
  • Many banking institutions have laid the framework for meeting the proposed effective date of 2015. Just over half will have started their implementation by the end of 2011, and nearly 90% will have started by 2012. The biggest concern generally expressed is about gathering valid data on expected losses in the foreseeable future and on lifetime expected losses
  • Half of respondents do not believe an expected loss model will change their approach to the way they price lending; 41% believe it might
  • Overall, whilst cost and operational impacts also featured significantly, wider business and commercial impacts were of major concern to respondents, e.g. the effect on capital and accounting reserves on transition, and making financial results understandable and comparable. Despite this, awareness of the key issues at board level was not always significant.

Click for:

 

IASB proposes changing the effective date of IFRS 9

03 Aug 2011

Today, the International Accounting Standards Board (IASB) published an exposure draft proposing to push back the mandatory effective date of IFRS 9 'Financial Instruments' from 1 January 2013 to 1 January 2015.

The Board seeks to align the effective dates for all phases of the project (both completed and ongoing). The proposed deferral would only change the date when IFRS 9 would be mandatory. Entities could still elect to use IFRS 9 Financial Instruments before 2015.

Comments on the exposure draft are due on 21 October 2011.

Click for:

 

EFRAG report regarding costs of implementing country-by-country reporting

03 Aug 2011

In October 2010, the European Commission started a public consultation in order to gather stakeholders' views on country-by-country reporting by multinational companies. Country-by-country reporting is a concept that would require multinational companies to disclose financial information on their operations in third countries in their annual financial statements.The consultation mainly focused on companies active in an extractive industry in third countries.

As part of the follow-up analysis of the comments received, the DG Internal Market and Services of the European Commission asked the European Financial Reporting Advisory Group (EFRAG) to provide assistance in collecting evidence useful for assessing the administrative costs associated with implementing the two options suggested:

  • general country-by-country reporting by multinational companies with a full set of accounts including intra-group transactions, which are eliminated on consolidation, or
  • specific country-by-country reporting by companies, which are active in an extractive industry in third countries, including payments made by the extractive industry to governments in third countries and other extractive industry-specific information.

The report includes the following overall findings:

General country-by-country reporting

"(14) Feedback received from different companies regarding estimated costs to implement the proposals in respect of general country-by-country disclosure requirements (i.e., one-off costs), and estimated costs to comply with them (i.e., ongoing costs), varied significantly.

(15) Four out of seven multinational companies that participated in the cost assessment task provided a quantitative estimate of costs required for implementing and complying with the general country-by-country disclosure requirements. These quantitative estimates ranged from EUR 0.4 million to EUR 46.6 million for both one-off and ongoing costs. [...] Three other multinational companies provided only a qualitative estimate, as they did not consider the proposals to be specified sufficiently to arrive at a quantitative estimate.

(16) Feedback received emphasised the need to specify the proposed disclosure requirements more clearly, and drew attention to a number of constraints."

Specific country-by-country reporting

"(42) The overall feedback included in the section related to the general country-by-country reporting by multinational companies (see paragraphs 14 - 16) applies equally to the specific country-by-country reporting by companies, which are active in an extractive industry in third countries. [...] It is also noted that three out of four extractive companies that participated in the cost assessment task already participate in the EITI [Extractive Industries Transparency Initiative] in some countries. The other extractive company discloses some of the information voluntarily in the CSR reporting."

The full report can be accessed via the EFRAG press release (link to EFRAG website).

Click for our October 2010 article on the European Commission public consultation on country-by-country reporting

Minutes from the kick-off meeting of the Experts Group on Non-Financial disclosure by Companies

03 Aug 2011

The European Commission's Expert Group on disclosure of non-financial information by EU companies held its first meeting on 11 July 2011. Minutes from that meeting are now available on the EC's website.

In November 2010, the Services of the Internal Market and Services Directorate General of the European Commission started a public consultation in order to gather stakeholders' views on ways to improve the disclosure by enterprises of non-financial information (e.g. social and environmental).

The discussions of the expert group focused on four topics: "Norms, Principles and Guidelines", "Costs-benefits for companies", "Business Accountability" and "The Capital Market". The Experts are now invited to submit written comments on the issues discussed. The next meetings are expected to take place on 12 September and on 30 September 2011.

Click for EC's meeting meetings (PDF 40k).

IFRS Foundation conference in South America announced

03 Aug 2011

The IFRS Foundation announced the dates for its conference in South America, which will be held in São Paulo, Brazil on Thursday, 27 October 2011 and Friday, 28 October 2011. The conference will feature presentations by Hans Hoogervorst, Chairman, and Ian Mackintosh, Vice-Chairman of the IASB, and will focus on the future of IFRS and updates on projects and regulations.

Highlights of the conference topics include the following:
  • The future of IFRS and the path forward for the IASB
  • IFRSs technical update:
    • active projects
    • new and amended IFRSs
  • Regulatory update
  • IFRS implementation in Latin America

Additional conference details, including registration, are available here.

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