May

Australia harmonises standards with IFRSs, New Zealand

16 May 2011

Further to our earlier story about Australia-New Zealand convergence, the Australian Accounting Standards Board (AASB) has released a number a standards to give effect to 'Phase 1' of the joint harmonisation programme being undertaken by the AASB and the New Zealand Accounting Standards Review Board (ASRB).

The new Standards are:

  • AASB 1054 Australian Additional Disclosures (link to AASB website, PDF 245k) sets out the Australian-specific disclosures that are additional to IFRSs in areas such as compliance with Australian Accounting Standards, the nature of financial statements (general purpose or special purpose), audit fees, imputation (franking) credits and the reconciliation of net operating cash flow to profit (loss)
  • AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project (link to AASB website, PDF 94k) makes amendments to a range of pronouncements, deleting various Australian-specific guidance and disclosures from other Standards and more closely aligning the wording used to that adopted in IFRSs. The 'true and fair override' is introduced into AASB 101 Presentation of Financial Statements (equivalent to IAS 1), but its application in the Australian context is limited by an additional 'Aus' paragraph
  • AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project – Reduced Disclosure Requirements (link to AASB website, PDF 48k) establishes reduced disclosure requirements for entities preparing general purpose financial statements under Australia's revised differential reporting framework.

In August 2009, the Prime Ministers of both countries released a Joint Prime Ministerial Statement of Intent and the Single Economic Market Outcome Proposals. The completion of Phase 1 of the convergence programme is expected to open the way for the relevant government agencies to remove the burdens associated with regulation affecting financial reporting by branches, subsidiaries and sub-consolidations in both countries.

The revised requirements are required to be applied for annual reporting periods beginning on or after 1 July 2011 (except AASB 2011-2, which is effective from 1 July 2013).

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New Zealand harmonises standards with IFRSs, Australian Accounting Standards

12 May 2011

The New Zealand Accounting Standards Review Board (ASRB) has approved the release of two standards which more closely harmonise New Zealand equivalents to International Financial Reporting Standards (NZ-IFRS) with both International Financial Reporting Standards (IFRSs) and Australian Accounting Standards.

New Zealand for-profit entities fully complying with NZ-IFRS have been able to make an explicit and unreserved statement of compliance with IFRSs. The effect of the new standards is to:

  • reintroduce options available under IFRSs into NZ-IFRS, e.g. the ability to use the cost method for investment property, or present the statement of cash flows using the indirect method
  • remove specific New Zealand requirements, e.g. the requirement to involve an independent valuer in the determination of the fair value of property, plant and equipment where the revaluation model is adopted
  • remove other New Zealand guidance from NZ-IFRS which is not also in IFRSs
  • delete a number of New Zealand specific disclosures, or move retained disclosures to a separate 'domestic' standard
  • ensure consistent terminology and requirements (particularly as to disclosures that are additional to those required by IFRSs) are adopted in New Zealand and Australia – the Australian Accounting Standards Board is expected to release equivalent amendments and standards in due course. The New Zealand and Australian regulators are also expected to consider 'mutual recognition' of financial reporting between the two countries

The revised requirements are required to be applied for annual reporting periods beginning on or after 1 July 2011. Click for:

 

Podcasts on new IASB standards

12 May 2011

A number of Deloitte podcasts have been published on the new IFRSs issued by the IASB today - the 'suite of five standards' on consolidation, joint ventures and disclosures, and the new standard on fair value measurement.

Each of the podcasts discusses the key changes and provides insights into the likely effect they will have in practice:
  • IFRS 10 Consolidated Financial Statements. Randall Sogoloff, Leader for Communications in the Deloitte IFRS Global Office, discusses the IASB's standard on Consolidation with Robert Bruce. The podcast is available for download here (12 mins, 8 mb)
  • IFRS 11 Joint Arrangements. Becky Fell, Director in the Deloitte IFRS Global Office, discusses the IASB's standard on Joint Arrangements with Robert Bruce. The podcast is available for download here (10 mins, 7 mb)
  • IFRS 13 Fair Value Measurement. Andrew Spooner, Lead IFRS Partner on Financial Instruments, discusses the new IASB's standard on Fair Value Measurement with Robert Bruce. The podcast is available for download here (18 mins, 13 mb).

These podcasts continue a series that will be posted to IAS Plus. All podcasts of the series are available here or via iTunes. Our earlier stories on the publication of the standards by the IASB are available immediately below.

Further changes to regular May IASB meeting agenda

12 May 2011

The IASB has again revised the agenda for its regular meeting scheduled for 17-20 May 2011 in London.

The only change is to swap the order of the discussion on Insurance Contracts and Asset and Liability Offsetting on Tuesday 17 May so they are now being held in that order.

The revised summary of the agenda for the meeting can be found here. We maintain a summary of the agenda for the next scheduled IASB meeting, and details of future meeting dates, here.

IVSC working towards guidance on fair value of financial instruments

12 May 2011

The International Valuation Standards Council (IVSC) has issued the latest edition of its 'E-Newsletter', which includes an update on the IVSC's work on guidance for the determination of the fair value of financial instruments.

In 2009, the IVSC formed a Financial Instruments Expert Advisory Group (FIEAG) to assist in identifying valuation problems that the IVSC could include on its work plan. The FIEAG contributed towards the production of a high-level standard specifically on financial instruments (IVS 250), which will be published in June 2011.

In addition, the IVSC has included two financial instruments projects on its work plan, which are likely to result in 'Technical Information Papers' (TIPs):

  • Financial instruments valuation methods – a high level overview of the principal valuation techniques used for valuing the main categories of over the counter instruments
  • Credit/debit valuation adjustments – an area in which there appears to be considerable divergence in practice.

The FIEAG also identified other potential projects on liquidity premiums, yield curve dislocation and model uncertainty. These projects are not currently included on the IVSC's work programme.

Click for IVSC E-Newsletter (link to IVSC website).

GRI releases information about sustainability reporting

12 May 2011

The Global Reporting Initiative (GRI) has released information suggesting that more companies are having their sustainability reports assured, which is considered to result in more accurate and trustworthy data.

GRI provides a comprehensive framework for producing sustainability reports, designed to allow entities to assess their sustainability performance and disclose the results in a similar way to financial reporting.

According to statistics collected by GRI for 1 January to 31 December 2010, almost half of all sustainability reports globally are being assured. The proportion of sustainability reports being assured increased from 45 percent (510) in 2009 to 47 percent (664) in 2010.

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IASB publishes final standards on consolidation, joint ventures and disclosures

12 May 2011

Today, the IASB published its "package of five" new and revised standards addressing the accounting for consolidation, involvements in joint arrangements and disclosure of involvements with other entities.

Each of the five standards have an effective date for annual periods beginning on or after 1 January 2013, with earlier application permitted so long as each of the other standards in the 'package of five' are also early applied. However, entities are permitted to incorporate any of the disclosure requirements in IFRS 12 into their financial statements without technically early applying the provisions of IFRS 12 (and thereby each of the other four standards).

 

The 'package of five' standards

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the consolidation guidance in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation — Special Purpose Entities by introducing a single consolidation model for all entities based on control, irrespective of the nature of the investee (i.e., whether an entity is controlled through voting rights of investors or through other contractual arrangements as is common in special purpose entities). Under IFRS 10, control is based on whether an investor has 1) power over the investee; 2) exposure, or rights, to variable returns from its involvement with the investee; and 3) the ability to use its power over the investee to affect the amount of the returns.

IFRS 11 Joint Arrangements

IFRS 11 introduces new accounting requirements for joint arrangements, replacing IAS 31 Interests in Joint Ventures. The option to apply the proportional consolidation method when accounting for jointly controlled entities is removed. Additionally, IFRS 11 eliminates jointly controlled assets to now only differentiate between joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities. A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets.

IFRS 12 Disclosures of Involvement with Other Entities

IFRS 12 requires enhanced disclosures about both consolidated entities and unconsolidated entities in which an entity has involvement. The objective of IFRS 12 is to require information so that financial statement users may evaluate the basis of control, any restrictions on consolidated assets and liabilities, risk exposures arising from involvements with unconsolidated structured entities and non-controlling interest holders' involvement in the activities of consolidated entities.

IAS 27 Separate Financial Statements (2011)

The requirements relating to separate financial statements are unchanged and are included in the amended IAS 27. The other portions of IAS 27 are replaced by IFRS 10.

IAS 28 Investments in Associates and Joint Ventures (2011)

IAS 28 is amended for conforming changes based on the issuance of IFRS 10, IFRS 11 and IFRS 12.

The standards are available to eIFRS subscribers (link to IASB website).

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IASB publishes final standard on fair value measurement

11 May 2011

The IASB has issued IFRS 13 'Fair Value Measurement' which replaces the guidance on fair value measurement in existing IFRS accounting literature with a single standard.

The IFRS is the result of joint efforts by the IASB and FASB to develop a converged fair value framework; the FASB has also issued conforming amendments to their own fair value guidance in ASC 820.

IFRS 13 defines fair value, provides guidance on how to determine fair value and requires disclosures about fair value measurements. However, IFRS 13 does not change the requirements regarding which items should be measured or disclosed at fair value.

IFRS 13 is effective for annual periods beginning on or after 1 January 2013 with early application permitted.

IFRS 13 is available to eIFRS subscribers (link to IASB website). Click for:

Changes to regular May IASB meeting agenda

11 May 2011

The IASB has revised the agenda for its regular meeting scheduled for 17-20 May 2011 in London.

The key changes are:
  • Tuesday, 17 May 2011 – extending the length of the meeting to end at 6:30pm
  • Wednesday, 18 May 2011 – removing the session on Revenue Recognition, swapping the sessions on Insurance Contracts and Leases (so they are now in that order), commencement of the meeting now 9:30am (rather than 8:00am).

The revised summary of the agenda for the meeting can be found here. We maintain a summary of the agenda for the next scheduled IASB meeting, and details of future meeting dates, here.

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