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Deloitte comment letters on the IIRC's integrated reporting discussion paper and IASB's amendments to IFRS 1 exposure draft

14 Dec 2011

Deloitte's IFRS Global Office has submitted letters of comment to the International Integrated Reporting Council (IIRC) on its Discussion Paper, Towards Integrated Reporting — Communicating Value in the 21st Century, and to the International Accounting Standards Board (IASB) on its Exposure Draft ED 2011/5, Government Loans — Proposed amendments to IFRS 1.

In regards to the IIRC discussion paper, we acknowledge the purpose of the discussion paper is to create dialogue on the direction and framework for corporate reporting. We agree on improving the current corporate reporting model and that the principle of stewardship should encompass value creation and the costs incurred to create that value. We also provided what we feel are necessary steps in the process of developing a new (integrated) business reporting model. The following is an excerpt from the letter:

We think the following steps are necessary to further the IIRC’s goal: research into and development of a ‘conceptual framework’ for integrated reporting which not only identifies but defines the building blocks of integrated reporting with accompanying rationales. Relevant building blocks would include amongst others:

  • the objective of integrated reporting
  • the primary user group
  • the principle of stewardship of the capitals and resources used by the entity in the context of integrated reporting (which should be a Guiding Principle)
  • the elements of integrated reporting including an assessment of performance or relevant performance metrics in respect of those elements
  • the reporting entity
  • the defining characteristics or attributes of information for inclusion in an integrated report, which would consider relevance, materiality and quality, amongst others, and
  • the standards for disclosing the integrated report in a digital format (e.g., XBRL).

For the integrated reporting model to be successful and capable of practical and consistent application we believe a clear definition of and consensus on these fundamental concepts will be necessary.

In regards to the IASB exposure draft, we agree that first-time adopters should have the same transitional relief as existing preparers in applying the 2008 IAS 20 amendments. However, we suggest that draft paragraph B10 should be amended to make it clear that the proposed exemption applies only to the requirements of IFRS 9 and IAS 20 insofar as they relate to the grant element of government loans at below market rate.

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