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Background In February 2006, the European Commission formed a Roundtable for Consistent Application of IFRSs. The Roundtable convened for the first time in May 2006. Information about the Roundtable can be found On the EC Internal Market IAS Website. Terms of Reference The terms of reference state, among other things: The function of the Roundtable Participants Chair Nature of output Click to download: Roundtable Terms of Reference (PDF 21k) Function of the Roundtable The function of the Roundtable, as set out in its Terms of Reference: The function of the Roundtable is to act as a simple and efficient forum for European accounting experts to identify, at an early stage, emerging and potentially problematic accounting issues in relation to consistent application. The Roundtable will thereby complete the existing European infrastructure contributing to a proper and consistent application of IFRS. The Roundtable would gather views in Member States through audit firms, standard setters and other bodies. It could then identify and group together those issues where it is felt there is a real risk of divergence and recommend which of those should be taken up by IFRIC as a matter of urgency. As such the Roundtable would also act as a filter mechanism. It should be underlined that the Roundtable will not be making any interpretations or guidance under IFRS. This is the task of IFRIC. When allowed to do so by their statutory working rules, EU national enforcers of financial information grouped within CESR/EECS will inform the Roundtable about enforcement decisions taken under the Transparency and Prospectus Directives in relation to financial reporting based on IFRS. Roundtable Participants Commission (Chair + 1) 2 IASB 1 CESR (CESR-Fin) 2 EFRAG (TEG) 1 Auditors (1 FEE + 'big four') 5 National Standard Setters from France, Germany, UK plus any other national standard-setter can participate by advance notice to the Commission 3+22 Preparers (UNICE+2 rotating by sector) 3 CEBS (when concerned by the issue) 1 CEIOPS (when concerned by the issue) 1 Process for Identifying Issues Roundtable participants will propose issues in writing. The Commission will assemble these into an Issues Paper for the next Roundtable meeting. At the next Roundtable meeting: Presentation of issue by proposer Discussion Initial feedback Consensus of either: (a) common concern about inconsistent application, and therefore widespread sentiment to pursue. Proceed with developing a Technical Paper. (b) no common concern about inconsistent application, and therefore no widespread sentiment to pursue. Nothing further to be done. A Technical Paper is developed, usually by the proposer At the subsequent Roundtable meeting: Developer presents Technical Paper Technical discussion Consensus of either: (a) Common concern about inconsistent application. Recommend referral to IFRIC. (b) No common concern about inconsistent application. Nothing further to be done. The following Diagram of the Above Process (PDF 36k) was prepared by the European Commission. Meeting Summaries Roundtable Meeting 17 May 2006 Agenda (PDF 18k) Report (PDF 21k) Decision regarding process It was agreed that the Roundtable will recommend referring to IFRIC those limited number of cases where the accounting treatment under IFRS is so divergent, significant and widespread as to warrant 'common concern' among the different groups of participants (preparers, auditors, national standard setters, regulators). Circumstances could also arise where the matter should be addressed directly to the IASB Board. The Roundtable itself will not make any interpretations. Issues put before the Roundtable: Issue 1 Definition of Cash and cash equivalents (IAS 7) Issue 2 De facto control Issue 3 Potential Voting Rights (IAS 27) Issue 4 Scope of SIC 12 (IAS 27) Issue 5 Separate financial statements issued before consolidated financial statements (IAS 27) Issue 6 Accounting for the service component of a lease contract when the service is to be provided near inception of the lease (IAS 17) Issue 7 Step acquisition of an associate (IAS 28, IFRS 3) Issue 8 Onerous contracts (IAS 37) Issue 9 Puts on minority interests Issue 10 Classification of a financial instrument (IAS 32) Issue 11 Restricted shares (IFRS 2, IFRIC 8, IAS 32) Decisions regarding issues of common concern: Issue 2 De facto control – a Technical Paper will be prepared for the next Roundtable meeting. Issue 9 Puts on minority interests – this issue is already being considered by IFRIC Issue 10 Classification of a financial instrument (IAS 32) – this issue is already being considered by IFRIC The comments expressed on the other issues listed in the Issues Paper did not demonstrate a widespread sentiment on the need for an interpretation. Roundtable Meeting September 2006 The Roundtable noted 'common concern' on three issues and recommended these for referral: 1. De facto control – to be referred to the IASB 2. IFRIC 9 Reassessment of embedded derivatives (covering also the general treatment of financial instruments in the context of a business combination) – to be referred to IFRIC 3. Common control transactions – to be referred to the IASB Click for Report of 20 September 2007 Roundtable Meeting (PDF 25k). Issues papers for the meeting can be found on the On the EC Internal Market IAS Web Page. Roundtable Meeting January 2007 At its 26 January 2007 meeting, the Roundtable discussed six new issues. Two of those will be developed into Technical Papers for a further discussion at the next meeting. The two issues are: Regulatory Assets and Liabilities IAS 17 Leases – exercise of renewal/extension options The Roundtable also discussed a paper on the treatment of IFRIC rejections. The Roundtable also noted that the US Securities and Exchange Commission is requiring SEC registrants who file on the basis of 'IFRSs as Adopted by the EU' to provide a reconciliation from 'IFRSs as Adopted...' to full IFRSs, as well as to US GAAP. Click for Report of 26 January 2007 Roundtable Meeting (PDF 25k). Issues papers for the meeting can be found on the On the EC Internal Market IAS Web Page.