Report from recent IFASS meeting released
The International Forum of Accounting Standards Setters (IFASS) met in Kuala Lumpur on 29-30 March 2012. A detailed report of proceedings at the meeting has now been released, outlining discussions on numerous topics such as the relationship between standard setters and the IASB, the IASB's work programme and processes, and a report on the possible adoption of IFRS in the United States noting a possible "step back".
The public meeting was attended by representatives of standard setters from Australia, Austria, Belgium, Brazil, Canada, France, Germany, Hong Kong, India, Italy, Japan, Malaysia, Mexico, Netherlands, New Zealand, Norway, Pakistan, Peoples Republic of China, Republic of Korea, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Syria, Taiwan, the United Kingdom, and the United States. Representatives of the European Financial Reporting Advisory Group (EFRAG), the International Accounting Standards Board (IASB), International Public Sector Accounting Standards Board (IPSASB) and the IFRS Advisory Council also attended.
A full summary of the topics covered is available in our earlier story where the agenda of the meeting was posted. Some highlights from the various discussions are outlined below.
International standard setting and interpretation
The IFASS participants discussed a number of related topics on how international standard setting should be undertaken, and the role of national standard setters in that process. In addition, the interaction with regional standard setters (such as EFRAG, AOSSG and GLASS, which also gave reports) was considered.
The participants discussed a paper A Model for National Standard Setters and noted the following. A lot of the discussion focused on the role of national standard setters in the standard-setting process and the resolution of jurisdiction-specific issues. Delegates noted that national standard setters should wherever possible "not deviate from or provide jurisdiction-specific interpretations of IFRSs" and should consult throughout the IFASS network to ensure there is no misinterpretation and that the interpretation is not "causing problems for others".
The meeting also discussed a draft Statement of Best Practice Between the IASB and IFASS. Mr Mackintosh (IASB Vice Chairman) commented that the "IASB wants to formalise its relationship with national standard setters and work productively with them". Participants commented that the relationship should be seen as a 'partnership' and "standard setters wanted to be listened to, and heard by, the IASB". A number of suggestions to improve the drafting of the document were discussed and will be actioned before the next meeting.
The group also discussed the role and selection of an IFASS Chairman, which will be provided by a standard setter of a jurisdiction and will also have a Chairman's Advisory Committee.
Comments on the possible adoption of IFRS in the United States
Tom Linsmeier, a FASB member, spoke in a personal capacity on the possibility of the United States.
In a candid analysis, Mr Linsmeier noted that no decisions have been made and that a "the report of staff's recommendations will be made public if and when the [SEC] Commissioners make a decision about the direction forward in the U.S. but likely not before June or July". He went on to note that the ability of the SEC to make a decision may be constrained by the presidential election in which policy activity generally ceases from July or August, which although the SEC is "not bound by such restrictions, but often voluntarily chooses to comply". He added that there will be a need to directly engage the United States Congress on the decision and so "the timing of the final decision is not known".
In another comment, Mr Linsmeier noted that:
The SEC staff acknowledges that its current thinking generally reflects a step back from potential full adoption of IFRSs and from its original "condorsement" proposal
The other participants noted the comments. The IASB Chairman (Hoogervorst) "expressed disappointment" with the observations and "was discouraged by the delay" and called for "the SEC to make a decision one way or the other" to eliminate uncertainty. Various other representatives commented in similar tones and made other consequences of the United States potentially not adopting IFRSs.
The representatives discussed the following issues:
- Improving the financial reporting of income tax - discussion on the discussion paper on this topic published by the UK Accounting Standards Board and EFRAG
- Business combinations under common control - discussion on the paper on this topic published by the Italian standard setter and EFRAG
- Research and development costs under IFRSs - consideration of a paper prepared by the Accounting Standards Board of Japan (ASBJ) outlining issues with IAS 38 Intangible Assets
- Foreign currency convertible bonds - consideration of paper prepared by the Indian standard setter on the difficulties in applying IAS 32 Financial Instruments: Presentation to bonds issued in India
- Accounting for small (or micro)-sized entities in different jurisdictions - a report of a survey on the financial reporting framework for these entities prepared by the Korean Standard setter
- Goodwill amortisation and impairment - query from the Italian standard setter on whether representatives would support a potential project to investigate whether the current requirements for goodwill measurement are still valid
- Going concern and liquidity risks: developments in the UK
- Operating profit or loss - issues experienced by Korea in relation to 'operating profit or loss' following its adoption of IFRSs
Other matters discussed
The other items discussed at the meeting included:
- Reports from regional groups (AOSSG, EFRAG, GLASS, PAFA) and support for developing jurisdictions
- IASB post-implementation reviews
- Effects analysis
- Public Sector Conceptual Framework
- Unit of account
- IASB work programme
- Other matters
The next meeting of the IFASS is scheduled to be held in Zurich on 22-23 October 2012.
Click for access to the full summary of the meeting (link to the AASB website).