The terms of reference for the inquiry included consideration of whether the going concern and liquidity risk disclosures required by IFRS provided timely and relevant information for all stakeholders. The Panel's preliminary report makes a number of observations on IFRS related matters, including:

• The Panel agrees and believes that the indicative minimum review periods set out in IFRS and UK GAAP are more relevant to considering the period over which detailed budgets and forecasts should be prepared than to the period over which other aspects of a going concern review should extend (particularly that 'stress tests' should be applied considering relevant economic outlook and business cycles)
• Investors and quite a lot of others have raised questions about the suitability of IFRS accounts as a basis for assessing solvency - noting views such as in the finance sector the regulatory capital assessment rather than the IFRS accounts is the better starting point, that an IFRS balance sheet isn't that useful for assessing capital adequacy because it lacks prudence, or that the use of IFRS accounts requires adjustments for prudence to ensure that the measure of capital held is robust and able to withstand a reasonable range of stresses
• Capital management is important to investors — they want to understand how this is done, through the eyes of management. The IAS 1 disclosures are not generally providing what they want, though they could in principle be used to do so
• The going concern assessment is a forward looking process - whilst it builds on past data, it also includes looking at possible outcomes not yet experienced. This "does not sit well with the IFRS accounts which are essentially backwards looking"
• The incurred loss model is widely accepted to have been inappropriate and is being addressed. A number of respondents and commentators suggested that "there was a sense that IFRS engendered a compliance mentality and that a more principles based approach was appropriate"
• One area of concern to regulators is the inconsistency they observed in valuations of the same financial instruments using different models and there are "inherent issues with point estimates".

Click for:

• UK FRC announcement (link to the UK FRC website)
• Our United Kingdom country page.

Full details of the webcast are provided below:

Please see our earlier story for more information on the FAF and PCSIC plan.

• Work plan update
• Future agenda and due process
• IFRS Interpretation Committee
• Global implementation of IFRSs
• Financial instruments
• Leases project
• Revenue project

Click for:

• Global Preparers Forum Meeting Agenda (link to IASB website)

We have posted Deloitte observer notes from the meeting (click through for direct access to the notes):

Tuesday, 1 November 2011

• Leases (IASB-FASB)
  • Lessor accounting: Disclosures
  • Transition: Other considerations
  • Transition: Sale and leaseback

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers for the entire meeting. The next IASB meeting is scheduled to occur on 7 November 2011.

The CFA Institute undertook a study regarding the quality of existing financial instruments risk disclosures, addressing credit, liquidity, market and hedging activities risk disclosures under IFRS 7. The report proposes general and specific recommendations for improving these risk disclosures, including:

• Executive summary. An 'Executive Summary' of risk disclosures should be provided outlining details of entity-wide risk exposure and effectiveness of risk management mechanisms across different risk types considered to be significant for specific business models
• Differentiated market risk categories. The components of market risk should be differentiated into more specific categories (i.e. interest rate, foreign currency and commodity) and treated with the same level of distinctiveness for reporting purposes as is the case with credit and liquidity risk under IFRS 7
• Improved alignment of qualitative and quantitative disclosures. Qualitative disclosures should better explain quantitative measurements
• Standardisation and assurance of quantitative disclosures. Standardised and adequately audited quantitative disclosures are required to improve comparability
• Improved and integrated presentation of disclosures. Integrated, centralised and tabular risk disclosures should be provided. For example, the report recommends disclosure of: a) the integration of risk exposure and risk management information; and b) interaction of different risk factors
• Areas for improvement of specific risk disclosures. These include the need to provide: a) informative entity-specific qualitative disclosures; b) improved and more meaningful sensitivity analysis; c) sufficient disaggregation to inform on respective risk exposures; d) full disclosure of risks associated with counterparties; and e) risk information related to off-balance sheet exposures
• Communication and not mere compliance. The report states "a principles-based definition of disclosure is not the antidote to fears about boilerplate and uninformative disclosures".

Part 2 of the report will be released at a later time and will provide a user perspective on the disclosures of derivatives and hedging activities.

Click for access to the report (link to CFA Institute website).

The IFRS Foundation has announced the publication of the following translations:

• French translation of the Exposure Draft ED/2011/4 Investment Entities the Exposure Draft ED/2011/5 Government Loans (Proposed amendments to IFRS 1); the exposure drafts can be accessed via the IASB's Comment on a proposal webpage.
• Slovak translation of the 2011 Briefing for Chief Executives, Audit Committees & Board of Directors; the Slovak translation is available in the subscriber area on eIFRS.

The International Public Sector Accounting Standards Board (IPSASB) has released new standards on service concession arrangements and annual improvements.

IPSAS 32 Service Concession Arrangements: Grantor seeks to address a lack of international guidance on how governments and other public sector entities should report their involvement in service concession arrangements, often used to build the infrastructure necessary to maintain and improve critical public services.

IPSAS 32 requires that service concession arrangement assets and their related financing are reported by the public sector entity, using an approach that is consistent with that used for the operator's accounting in Interpretation IFRIC 12 Service Concession Arrangements. IPSAS 32 uses the principles in IFRIC 12 for determining which entity (grantor or operator) should recognise an asset in a service concession arrangement, in order to ensure that the grantor recognises a service concession asset it controls.

The IPSASB has also published Improvements to IPSASs 2011. The IPSASB's improvements project is modeled on the IASB's annual improvements process. The improvements amend existing IPSASs to maintain alignment with International Financial Reporting Standards (IFRSs), as well as other general improvements.

IPSAS 32 applies to annual financial statements covering periods beginning on or after 1 January 2014, but may be applied earlier. The amendments made by Improvements to IPSASs 2011 are applied for annual financial statements covering periods beginning on or after 1 January 2013, but may be applied earlier.

Click for IPSASB press release (link to IFAC website).

The Canadian Office of the Superintendent of Financial Institutions (OSFI), an independent agency of the Government of Canada that supervises and regulates Canadian banks, insurers, and federally registered private pension plans, has issued a letter in which it concludes entities which it regulates should not early adopt many standards recently issued by the IASB.

In making its decision, the OSFI considered a number of factors such as industry consistency, OSFI policy positions on accounting and capital, operational capacity and resource constraints of Federally Regulated Entities (FREs), the ability to benefit from improved standards arising from the financial crisis and the notion of a level playing field with other Canadian and international financial institutions. OSFI concluded that FREs should not early adopt the following new or amended IFRSs, but instead should adhere to their mandatory effective dates:

• The 'suite of five' standards on consolidation: IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements, IAS 28 Investments in Associates and Joint Ventures (effective 1 January 2013)
• IFRS 13 Fair Value Measurement (effective 1 January 2013)
• Amendment to IAS 19 Employee Benefits (effective 1 January 2013)
• Amendment to IAS 1 Presentation of Items of Other Comprehensive Income (effective 1 July 2012)

Click for:

• OSFI letter (link to the OSFI website, also available in French)
• Our Canada country page.