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28 February 2003: IFRS model financial statements in Chinese
We have posted the 2002 version of the IFRS model financial statements in Chinese. You will find the link on our China page.
28 February 2003: Observers' notes from February 2003 Advisory Council meeting
So our home page can download more quickly, we have moved our unofficial observers' notes from the February SAC meeting to a Separate Page. Most of the meeting was devoted to a roundtable discussion of various aspects of financial instruments. No decisions were taken. The discussions were structured so that, for each topic, an IASB staff member set out the background, including a brief summary of comments received, and then SAC members were invited to express concerns or comments.
26 February 2003: EU proposes to enlarge small-company reporting exemptions
European law allows member States to exempt small companies from certain requirements for disclosures in their accounts, preparing consolidated accounts, preparing an annual report, and being audited. The EC has Proposed (PDF 24k) to raise the size limits for defining a 'small company' by 16.8%.
26 February 2003: Our comments on proposed IAS/IFRS certification programme
Deloitte Touche Tohmatsu has submitted a letter of comment on the IASC Foundation Proposal for an IAS/IFRS Testing and Certification Programme (PDF 60k). Our letter expresses some concerns about the issues raised in the proposal and sets out a suggested short- and medium-term way forward. You can also Download All of our Firm's Other Letters of Comment on IASB and IASC proposals back to 1995.
25 February 2003: Valuation issues arising in IASB projects
The February 2003 edition of Global Valuation Issues (PDF 144k), the newsletter of the International Valuation Standards Committee, includes an update on valuation issues arising in IASB's agenda projects. In his message in the newsletter, IVSC Chairman John Edge noted:
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The 'unique selling point' of the IVS is that they have been developed to accord with the IAS. Deloitte Touche Tohmatsu recognise this in their 2002 Model IAS Illustrative Financial Statements. These state that the valuations of both property, plant and equipment, and of investment property, conform to International Valuation Standards.
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25 February 2003: Some new and revised IFRS will be effective for 2005, others not
The IASB has announced, via a story in its Insight newsletter, that certain new or revised standards will be mandatory for 2005 and that others will be encouraged but not mandatory, as follows:
Mandatory for 2005
- Business Combinations – both Phases I and II
- Convergence – short-term items
- First-Time Application of IFRS
- Improvements to Existing IFRS
- Amendments to IAS 32 and IAS 39
- Insurance Contracts Phase I
- Share-Based Payment
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Not mandatory for 2005.
Early application encouraged:
- Consolidation, including special purpose entities
- Deposit-Taking, Lending, and Securities Activities
- Performance Reporting (now called Income Statements)
- Post-Employment Benefits (part of the Convergence project)
- Liabilities, Equity, and Revenue Recognition
- Segment Reporting (part of the Convergence project)
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24 February 2003: Project pages updated for February meeting deliberations
We have updated our project pages for the following projects to reflect our notes from the Board's February 2003 meeting:
24 February 2003: Comparison of IFRS and Canadian GAAP
We have posted a comparison of International Financial Reporting Standards and Canadian GAAP. The Comparison is taken Handbook of the Canadian Institute of Chartered Accountants and is used with their kind permission.
23 February 2003: Notes from the third day of the February IASB meeting
We have consolidated all of our notes from the 19-21 February 2003 IASB meeting onto a Single Web Page.
22 February 2003: Impact of Sarbanes-Oxley on foreign issuers in USA
SEC Commissioner Paul S. Atkins recently spoke to a German audience about The Sarbanes-Oxley Act of 2002: Goals, Content, and Status of Implementation. His Remarks addressed the effects of the Act on non-US companies that issue securities in the United States.
22 February 2003: Update on use of IFRS by foreign issuers in Canada
In June 2002 we reported that the Canadian Securities Administrators (CSA) had Proposed (PDF 8k) that certain eligible foreign issuers would be allowed to submit financial statements prepared using IFRS (or several specified national GAAPs), without reconciliation to Canadian GAAP. The CSA also proposed that Canadian companies registered with the US SEC could use US GAAP, with a reconciliation to Canadian GAAP for the first two years in which US GAAP is used. The CSA has announced that its consideration of the comments on the proposal is nearing completion and that it expects to publish a revised proposal for comment by mid-2003.
21 February 2003: Update of UK Convergence Handbook is available
The Institute of Chartered Accountants in England and Wales has issued the third update of its Convergence Handbook, originally published in November 2000. The Handbook compared IAS and UK GAAP. This new update, which replaces all previous updates, reflects the effects of standards and exposure drafts issued by the IASC, the IASB, and the UK Accounting Standards Board up to the end of December 2002. Click to download the Convergence Handbook Update (PDF 170k).
21 February 2003: Notes from the second day of the February IASB meeting
We have consolidated all of our notes from the 19-21 February 2003 IASB meeting onto a Single Web Page.
21 February 2003: IASB announces effective date of improvements to existing IAS
At its meeting in London, the Board agreed that the effective date for all of the Improvements standards will be 1 January 2005. Earlier application will be encouraged. Publication of these standards is expected to commence in the middle of 2003.
20 February 2003: Notes from the first day of the February IASB meeting
We have consolidated all of our notes from the 19-21 February 2003 IASB meeting onto a Single Web Page.
20 February 2003: IASB updates its project timetables
Information posted in the timetable on IASB's website indicates the following changes:
19 February 2003: United States: Stock options get political (again)
Members of the US Congress are lining up for and against the recognition of the fair value of stock options as employee compensation expense. Members of Congress have sent letters to the FASB In Favour (PDF 460k) and Against (PDF 1,354k) expense accrual. The IASB has Proposed that all share-based payment transactions (including employee options) should be recognised in the financial statements, using a fair value measurement basis. An expense should be recognised when the goods or services received are consumed. The same recognition and measurement standards would apply to both public and non-public companies. The US FASB has invited comments on the IASB proposal. The current US standard (Statement 123) gives companies an option, in most cases, to accrue an expense or to disclose in the notes the amount that would have been accrued. Both of the Congressional letters refer to the IASB proposal.
19 February 2003: New DTT guide to transition to IFRS – property companies
European companies with investments in real estate will be particularly affected by the transition to IAS 40, Investment Property, because (a) the fair value accounting model, with value changes to P&L, is different from what most companies do today, (b) the methodology for measuring fair value differs from current practice, and (c) the definition of investment property in IAS 40 is broader than the traditional definition. This new guide from Deloitte & Touche's UK practice (published February 2003) contains guidance for property companies on the areas they need to consider when planning to implement the IAS 40. While focused on the transition from UK GAAP to IFRS, the issues identified in this guide are equally applicable to companies in other EU countries as they make their plans for the transition. Click to Download (PDF 242k).
19 February 2003: Latest Deloitte & Touche (US) Accounting Roundup
You can now download the 18 February 2003 edition of Accounting Roundup, a newsletter published by Deloitte & Touche (US). Among the topics covered are new EITF consensuses; FASB Staff Positions; SEC studies on SEC enforcement actions, credit rating agencies, and disciplinary actions against securities professionals pursuant to the Sarbanes-Oxley Act; software revenue recognition; accounting by health-care organisations; AcSEC projects; and the 4 February PCAOB meeting.
18 February 2003: New DTT guide to key issues in implementing IFRS
Deloitte & Touche (United Kingdom) has published an important study of the key business issues that can arise in implementing International Financial Reporting Standards – and how to deal with the. Examples of the kinds of issues addressed in IAS: Healthcheck 2002 are treasury management, distributions, debt covenants and financing, mergers and acquisitions, management compensation, product development, management information, statutory accounts, taxes, human resources, training, IT systems and investor relations. The guide sets out practical ideas for addressing these and other issues. Click to Download (PDF 1,532k).
18 February 2003: New DTT guide to transition to IFRS – manufacturing companies
From 1st January 2005 onwards, virtually all European companies with securities listed in the European Union must prepare consolidated accounts in accordance with International Financial Reporting Standards (IFRS). As a result, all affected entities will have to apply IFRS in 2004 to report comparative figures. This means that in 2003, while still reporting under their national GAAP, companies will need to run systems in parallel to be sure that the systems are ready for IFRS reporting in 2004 and to appreciate the changes to the figures arising under IFRS. A new guide – Manufacturing: The Future for UK Automotive and Aerospace Industries under IAS – from Deloitte & Touche's UK practice walks manufacturers through the impacts of IFRS on their accounts, preparing companies for the changes ahead. While focused on the transition from UK GAAP to IFRS, this guide will be of considerable benefit to companies in other EU countries as they make their plans for the transition. Click to Download (PDF 336k).
17 February 2003: Nominee for DTT CEO to push for global accounting standards
 The Board of Directors of Deloitte Touche Tohmatsu has approved the nomination of William G. Parrett as global CEO, subject to endorsement by partners of the DTT member firms. The global CEO will be confirmed at the end of this process in April 2003. In the Press Release announcing his selection, Mr. Parrett said he would "focus on the advancement of global accounting and auditing standards, corporate responsibility and accountability, and corporate citizenship in the global economy".
17 February 2003: EFRAG comments on enforcement of IFRS in Europe
The European Financial Reporting Advisory Group (EFRAG) as submitted its Comments (PDF 12k) to the Committee of European Securities Regulators on principles for enforcement of accounting standards in Europe.
16 February 2003: Acting SEC Chief Accountant speaks on convergence
 In recent Remarks before the New York State Society of CPAs, Acting SEC Chief Accountant Jackson M. Day spoke about the efforts underway to bring about international convergence of accounting standards. He commented on the importance of consistent application of accounting standards across national borders:
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Important to the success of convergence is an infrastructure that enables consistent, comparable and appropriate application in multiple jurisdictions around the world. This may be the most difficult part given the diversity of backgrounds and regulatory structures of each of the jurisdictions. The use of interpretive bodies, such as the Emerging Issues Task Force in the U.S. and the International Financial Reporting Interpretations Committee in the international arena, is a critical part of this infrastructure. While not every question can, or should, be answered, there also cannot be fifteen answers to a pervasive question. That would undermine the credibility of the global accounting system.
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15 February 2003: FASB launches new guidance series: FASB Staff Positions
The FASB has started a new series of application guidance known as FASB Staff Positions (FSP) as a way of improving information flow from its staff. The FASB staff will circulate a draft of a proposed FSP to Board members for their review. If a majority of Board members do not object to the proposed FSP, it will be posted on the FASB website for comment for a period of 30 days, which will be announced in FASB's newsletter Action Alert. At the end of the exposure period, the FASB staff will draft the final FSP. FSPs are intended to achieve more timely and consistent communication about the application of FASB literature. You can download the first Proposed FSP here ("Accounting for accrued interest receivable related to securitised and sold receivables under Statement 140").
14 February 2003: Advisory Council meeting will focus on financial instruments
When the IASB meets with the Standards Advisory Council on 24-25 February 2003, virtually the entire agenda will be a roundtable discussion of financial instruments -- particularly the IASB's proposed amendments to IAS 32 and IAS 39. On the first day, discussion will centre on derecognition, derivatives and hedge accounting, and impairment of financial assets. The second day's discussion will focus on the distinction between debt and equity. Click for Agenda Details. The IASB will also hold public roundtable discussions of IAS 32 and IAS 39 in Brussels (10-11 March) and in London (12-14 March). A total of 108 firms, organisations, and individuals (the majority from the banking and insurance sectors) have asked to participate. Click to download the Questions that IASB has asked participants to address (PDF 74k).
13 February 2003: IFRIC project summaries have been updated
We have updated the Summaries of the IFRIC Agenda Projects to reflect decisions made at the February 2003 IFRIC meeting.
13 February 2003: Study shows global trend toward GAAP convergence
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A study conducted jointly by the world's six largest accountancy firms, including Deloitte Touche Tohmatsu, shows a marked leap toward worldwide convergence with IFRS from previous years. The study, titled GAAP Convergence 2002, examines the current and planned adoption of IFRS in 59 countries. In 58 percent of the countries surveyed, national accounting standards will be replaced with IFRS for all listed companies, except where national issues remained not covered by the new standards. Another 22 percent said they were adopting IFRS on a standard by standard basis, and a further 20 percent said they were eliminating differences between national standards and IFRS as and when practical. 57 percent of those planning to adopt IFRS were driven by a government or regulatory requirement and 13 percent by standard setters. 51 percent of the 59 countries indicated that the complex nature of some of the international standards - in particular, those relating to financial instruments, and others incorporating fair value accounting - is a barrier to convergence in their country. In addition, 49 percent of the countries surveyed also cited the tax-driven nature of their national accounting regime as a hurdle. Consequently, many countries are at present limiting implementation of IFRS to listed companies, rather than extending it to all companies. Survey respondents also stressed the importance of getting better and more timely access to national language translations of the new standards and interpretations. While translations of IAS were available in 70 percent of the countries covered, in many cases the translations were not sanctioned by the IASB, and in nearly one-third of the countries where IFRS are available in the national language, the translations were not considered to be available quickly enough. Another area of challenge identified was the availability of IFRS training, for which demand is expected to build up significantly as the world moves towards new standards. Click to:
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13 February 2003: New DTT publication on corporate governance
The Sarbanes-Oxley Act of 2002 has rewritten the rules for corporate governance, disclosure, and reporting. The new and proposed SEC rules that influence Sarbanes-Oxley are complicated and require immediate and decisive action. Sarbanes-Oxley focuses heavily on the critical role of internal control. It is a process in which a company's board of directors, management, and other personnel must actively participate to drive business success. In a new publication, Moving Forward - A Guide to Improving Corporate Governance Through Effective Internal Control, Deloitte & Touche (US) recommends developing an internal control program with a single methodology to address the provisions of both Sections 302 and 404 of Sarbanes-Oxley. The comprehensive five step program provides a reliable approach to linking effective internal controls to sound corporate governance. Click to Download (PDF 665k).
12 February 2003: Use of IFRS around the world continues to grow
We have updated our table showing the Countries that Use IFRS for Reporting by Domestic Companies. The table reflects new information about required use of IFRS for listed companies in the Bahamas, Bulgaria, Jordan, Lebanon, and Mauritius – bringing to 65 the number countries in which IFRS must be used for reporting by domestic companies either currently or by 2005.
12 February 2003: Merits of IFRS debated at US NASD symposium
The NASD – the private-sector self-regulatory organisation for the United States securities industry, stock brokers, and brokerage firm – sponsored an international symposium on "Global Adoption of International Accounting Standards" at the Harvard Law School on 3 February 2003. The purpose of the symposium was to provide a forum at which international business and regulatory leaders could debate the merit and need for establishing a set of internationally accepted accounting standards. Among those participating were Sir David Tweedie, Chairman of the International Accounting Standards Board; Robert Herz, Chairman, Financial Accounting Standards Board; Howard Davies, Chairman of the UK's Financial Services Authority; Henry Paulson, Jr., Chairman and CEO of Goldman Sachs; Roel Campos, SEC Commissioner; Peter Fisher, US Treasury Undersecretary; and Robert Glauber, Chairman and CEO of NASD. The symposium was the first in a new NASD International Symposium Series on Transparency in Capital Markets. NASD News Release.
11 February 2003: Implementation of IFRS in Australia
In a paper presented at an investor relations forum in Sydney, Keith Alfredson, chairman of the Australian Accounting Standards Board (AASB), discusses Australia's approach to full implementation of International Financial Reporting Standards for financial years commencing on or after 1 January 2005. Click to Download Mr. Alfredson's Remarks (PDF 24k). An excerpt:
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Most IFRSs do not operate in isolation because of their frequent cross-references to other
IFRSs. Consequently it is most impracticable for the AASB to issue and make operative
selective IFRSs in isolation. For this reason, and given the wide-ranging planned
amendments to existing standards over the next two years to 2005, while further study is
required by the AASB, it is far more likely that the AASB will be forced to make most IFRSs
operative for financial years commencing on or after 1 January 2005 in a "big bang" rather in
what is somewhat hopefully envisaged in CLERP 9 through a transition process. While this
may be considered to be unfortunate, it is, I believe, inevitable and is, of course, largely out
of the hands of the AASB, given that implementation is dependent on the IASB's timetable
and output.
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10 February 2003: SEC requires analyst certification of research reports
The US Securities and Exchange Commission has voted to adopt a new regulation that will require research analysts to certify the truthfulness of the views they express in research reports and public appearances, and to disclose whether they have received any compensation related to the specific recommendations or views expressed in those reports and appearances. SEC Press Release.
10 February 2003: Agenda announced for IASB's meeting 19-21 February 2003
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The IASB will hold its monthly meeting at its offices in London on 19-21 February 2003. Topics scheduled to be discussed are:
- Business Combinations (Phase II)
- Convergence Project
- Employee Benefits - Convergence Issues
- First-Time Application of IFRSs
- IFRIC - Matters arising from the February IFRIC Meeting
- Improvements to Existing IASB Standards
- Insurance Contracts (Phase I)
- Reporting Performance
- Revenue Recognition
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9 February 2003: Notes from the second day of IFRIC's February 2003 meeting
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The International Financial Reporting Interpretations Committee (IFRIC) met on 5 February 2003 – the second day of a two-day meeting. Our unofficial notes are presented below:
Notes from the IFRIC Meeting
5 February 2003 |
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Changes in Decommissioning and Similar Liabilities
The IFRIC discussed several issues related to decommissioning and similar liabilities. The members noted that changes in the liability could be caused by changes in the discount rate, useful life of the asset and/or estimates of future cash flows. The IFRIC concluded on practical grounds that the portion of the asset related to prior years should be expensed and the portion related to future years should be capitalised to the asset for all changes in the liability. Two methods of allocation were discussed, however, the IFRIC decided that any means of reasonable allocation would be appropriate under the draft interpretation. Therefore, the draft interpretation will state a general principle or pro-rating and provide an example of one method that may be used to calculate the amount related to prior periods.
The IFRIC concluded that if a new law is enacted which creates a decommissioning obligation on an existing asset, then the debit should be to the asset-with a pro rata portion assigned to prior years. Changes in existing laws would be accounted for similarly. The IFRIC clarified that the portion allocated to the asset should be based on the assets expected remaining economic life (including reference to the potential annual evaluation of residual values and useful lives under the improvements to IAS 16). The IFRIC also clarified that a negative asset should never occur under this interpretation.
One member expressed a position that the change in the liability should be expensed entirely, however, the IFRIC decided that the change is a change in the original cost of the asset and a pro-rata portion should be assigned to it.
The IFRIC concluded that transition should be prospective. One observer noted that prospective application may be in conflict (depending upon the effective date of the final interpretation) with the first time application which will require retrospective application. The staff will consider the effect of this draft interpretation in drafting and in consideration of an appropriate effective date.
The IFRIC concluded to retain a cumulative catch-up method for changes in estimates (as noted above). The IFRIC concluded that the draft interpretation should not contain guidance on the income statement presentation of changes in decommissioning liabilities. The IFRIC also decided that the draft interpretation should include disclosure guidance.
The staff will prepare a pre-ballot draft for the members and depending on comments received, a ballot draft will be distributed shortly thereafter with the intention for an exposure draft either in late quarter 2 of 2003 or in quarter 3 of 2003.
Decommissioning Funds
The IFRIC concluded that the draft interpretation should be structured so that it states that the accounting for the liability (from which the fund is required or voluntarily entered into) should not impact the accounting for the contributions made to the fund. The first step will be to determine whether the fund should be consolidated by the contributor by reference to IAS 27 and SIC 12. If control does not exist, the entity will need to determine whether significant influence exists and therefore whether the fund is an associate. The entity will then need to determine the extent of its guarantee on the liabilities of others in the fund.
The IFRIC members agree to address the issue of silos separately from this interpretation. The IASB staff clarified that the virtually certain test in IAS 37 should be applied to whether the liability will be incurred, not whether the reimbursement will occur. The test for the reimbursement would be based on the definition of an asset, or probable.
The IFRIC concluded that the right to receive reimbursement from the fund meets the definition of a financial instrument and should be accounted for as an originated loan under IAS 39. However, the IFRIC expressed doubt that the information will be available to compute amortised cost (duration, interest rate, etc.) and therefore believe that in the absence of such information, the asset should be recorded at fair value as a held for trading security. Since the expense related to the liability would be running through expense, the IFRIC believes the income from the asset should also be to earnings.
The IFRIC concluded that decommissioning funds are not similar to insurance contracts and that the requirements in IAS 19 should not be applied by analogy.
Presentation - Operating and Ordinary Activities
After much debate, the IFRIC decided not to address this issue, as any conclusions would pre-empt an ongoing IASB project on performance reporting. The IFRIC, however, made clear that this issues is important in practice and must be addressed immediately.
Linkage
The IFRIC concluded that the draft interpretation should not address situation where one contract should be divided into two or more components and agreed on certain disclosure requirements. IFRIC also agreed to expand the name of the project to "Reporting of Linked Transactions".
The IFRIC concluded that the guidance for when to link transactions should be characterised as indicators. The Staff asked the IFRIC members whether the final conclusions should be documented as an interpretation or given to the Board to be issued as a standard. The IFRIC concluded that preparation of a pre-ballot draft for an interpretation should continue unless instructed by the Board that this should be issued as a standard.
This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.
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6 February 2003: Notes from the IFRIC meeting on 4 February
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The International Financial Reporting Interpretations Committee (IFRIC) met on 4 February 2003. Our unofficial notes of the meeting are as follows. IFRIC will continue its meeting on 5 February:
Notes from the IFRIC Meeting
4 February 2003 |
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Administrative
Ken Wild and Jeannot Blanchet were welcomed to their first IFRIC meeting. Norman Lyle attended as alternate to Clement Kwok.
Rights of Use
The IFRIC continued its discussion of determining when a contract that gives an entity the right to use an asset should be accounted for as a lease. The staff proposed that in assessing whether a lease had arisen all of the following criteria should be present:
the agreement is dependent upon a specific item or items ('the asset');
the entity obtains control over that asset for a specific period of time; and
the entity is contractually, or in substance, required to make payments under the agreement for its right to use the asset rather than for its actual use.
Previously it had been proposed that a lease would have been considered to exist when an entity that had rights to acquire substantially all of the output produced by an asset was deemed to have control over the asset (as specified by the above criteria), but only if the supplier obtained a return that was commensurate with that which would be obtained by an asset manager or operator.
The requirement to consider the supplier's return was therefore eliminated as it was not considered to be important in assessing whether a lease existed but whether the lease would be an operating or finance lease. Some IFRIC members were concerned that this could result in an inappropriate definition of control arising and were more comfortable with the inclusion of conditions indicating that the payments were in respect of the right to use the asset and not for the actual use of the asset or its output. These members referred the staff to the current EITF proposals in this regard and requested the staff to liaise with the EITF to arrive at similar wording.
The IFRIC supported that any agreement that fell within the ambit of the interpretation should be assessed at the inception of the contract and should only be reassessed if there was an amendment or significant modifications to the agreement. Thus the agreement would not be reassessed if there was only a change in circumstances.
It was agreed that the interpretation on issue should have retrospective application. One member of the IFRIC strongly disagreed and it was agreed that this would be referred to in the Basis for Conclusions with a specific request to comment.
It was agreed that the staff would draft a proposed interpretation to be circulated to the IFRIC prior to the next meeting with a view to finalising the interpretation for exposure at the next meeting.
Emission Rights
IFRIC previously had agreed that the proposed interpretation should make reference to IAS 20. As a result of the Board's decision to withdraw the current IAS 20 and replace it with something that has not yet been decided it was questioned whether this approach should continue. There was considerable concern amongst various IFRIC members that there should not be an immediate gain recognised on recording the emission certificates as an asset. It was noted that it could be difficult to include alternatives to IAS 20 in the absence of any clear guidelines from the Board as to what they believed the accounting for government grants should be and in the absence of any due process in this area. It was agreed that the interpretation should continue to refer to IAS 20 but that a section would be included in the preamble to the proposed interpretation regarding accounting for these grants in the absence of IAS 20 and requesting comment in this area.
It was agreed that the government grant should be taken to income on a systematic basis over the period to which it relates.
It was agreed that the staff would include guidance that the liability to be recognised in respect of the environmental damage would be based on the best estimate of whether it would be settled by the delivery of emission certificates at their current market value or the penalty provisions of the scheme as a result of sufficient certificates not being available.
It was agreed that the interpretation would not address accounting by traders in emission certificates.
An IFRIC member noted that the proposed effective date of three months after issue seemed to be fairly short.
It was agreed that the staff would address the issues raised and that a draft interpretation would be prepared with a view to approving it for issue at the next meeting.
Employee Benefits - Multi-Employer Plan Exemption
The staff proposed guidance that would be issued on when the exemption regarding accounting for multi-employer defined benefit plans as defined contribution plans would apply.
The IFRIC noted that it would be extremely rare for the situation to exist that there was no consistent and reliable basis for allocating the obligation, plan assets and cost to individual entities participating in the plan. They agreed that the interpretation would contain wording indicating this. They further agreed that the interpretation contain guidance that indicated that significant effort needed to be made before concluding that the information needed would not be available.
An IFRIC member stated that the proposed interpretation should address the measurement implications of cross subsidisation inherent in these plans.
It was agreed that the staff would address the issues raised and that a draft interpretation would be prepared.
Employee Benefits - Money Purchase Plans with Minimum Guarantee
The IFRIC considered how to apply IAS 19 to a plan that would be a defined contribution plan but for the existence of a minimum return guarantee. The terms of the plan are that a contribution is made each year based on the employee's current salary and the employee receives a benefit (a lump sum or an annuity) equal to the contributions paid into the plan plus the return generated on the assets acquired. The employer guarantees a minimum return on the assets over the period to when the benefit is paid.
The IFRIC agreed that such plans should be accounted for as defined benefit plans. It was proposed that this would be done by accounting for the minimum return as the defined benefit plan with an additional liability recognised in respect of the excess return on assets over the minimum guarantee.
Some concern was raised as how this relates to the position that the minimum guarantee is determined over the employee's service and consequently excess returns in a particular period could be used to offset lower returns in other periods.
Further concern was raised that the corridor approach would apply to accounting for returns on assets in excess of that expected whereas the increase in liability would be immediate.
It was agreed that the staff would consider these points and bring the issue back to the IFRIC with further proposals.
This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.
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6 February 2003: Bulgaria requires IFRS starting in 2003
As of 1 January 2003, all listed companies, banks, insurance companies, and pension funds in Bulgaria must use International Financial Reporting Standards. Other companies may choose to apply IFRS. Bulgarian GAAP will remain an alternative for them until 2005.
5 February 2003: New Deloitte & Touche (US) Accounting Roundup
We have posted the 3 February 2003 edition of Accounting Roundup, a newsletter published by Deloitte & Touche (US). Among the topics covered are recent SEC rules relating to implementing the Sarbanes-Oxley Act, recent EITF and AcSEC activity, notes from the January 2003 IASB meeting, and a new Deloitte & Touche publication on corporate governance and internal controls under Sarbanes-Oxley.
3 February 2003: Over 100 groups will speak at IAS 39 public roundtables
In December 2002, the IASB announced that it will hold public roundtable discussions during the week of 10 March 2003 on various aspects of its proposals to amend IAS 32 and IAS 39 on financial instruments. The Board decided to host the discussions following its review of more than 150 comment letters received in response to the proposed amendments. The Board noted that the comments on the proposals "represented a wide range of opinion and raised numerous questions". Over 100 organisations and individuals have signed up to speak at the roundtables. The IASB has released an Information Package (PDF 74k) setting out 42 questions that it would like participants in the roundtables to address.
2 February 2003: Six Europe-Africa country summaries are updated
We have updated our summaries of accounting standards activity in France, Germany, the Netherlands, Portugal, South Africa, and the United Kingdom.
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