APRIL 2009

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Please remember that publications to which this page has links may be out of date because of new or changed IFRSs or other reasons.

30 April 2009: Amaro Gomes appointed to the IASB
Amaro Luiz de Oliveira Gomes has been appointed to a five-year term as a full-time member of the International Accounting Standards Board (IASB) starting 1 July 2009. Mr Gomes is currently Head of Financial System Regulation Department of the Central Bank of Brazil. In that capacity, Mr Gomes has played a leading role in the adoption of International Financial Reporting Standards in Brazil. All listed companies and all banks (including domestic owned and foreign owned, listed and unlisted banks) will have to prepare and publish consolidated financial statements in full compliance with IFRSs starting with years ending 31 December 2010. At the Central Bank of Brazil, Mr Gomes has been responsible for drafting regulatory proposals on such matters as Basel II implementation, money laundering, accounting and auditing, microfinance, and prudential requirements. Since 2004, he has served on the Accounting Task Force of the Basel Committee on Banking Supervision. Before joining the Central Bank, Mr Gomes was an auditor with one of the international audit firms. He is co-author of a book Accounting for Financial Institutions. Click for Press Release (PDF 99k). Click for a complete History of Members of the IASB.

30 April 2009: UK FRC encourages SEC to allow IFRSs
The United Kingdom Financial Reporting Council (FRC), the UK's independent financial reporting regulator, has responded to the US Securities and Exchange Commission (SEC) on its proposed Roadmap on the use of International Financial Reporting Standards (IFRS) by US companies. The FRC encourages the SEC to permit US issuers who can demonstrate their competence in IFRS to be able to adopt IFRS in place of US Generally Accepted Accounting Principles (GAAP). The FRC also encourages the SEC to clarify that US companies that do adopt IFRS will not be at risk of being required to return to US GAAP at a later date if the SEC decides not to mandate IFRS for all US companies. The FRC's response also encourages the IASB and the US FASB to continue to work together but notes that the focus should be on achieving improvements in financial reporting, whether under US GAAP or IFRS, rather than convergence of IFRS and US GAAP as a goal in itself. Click for:

30 April 2009: Modernised accounting law adopted in Germany
The German Parliament has passed the Act to Modernise Accounting Law (in German: Bilanzrechtsmodernisierungsgesetz). A goal of the legislation is to reduce the financial reporting burden on German companies. The accounting requirements under the Act are described as an alternative to International Financial Reporting Standards for small and medium-sized companies that do not participate in capital markets. In announcing the new law, the German Federal Ministry of Justice (which administers the Commercial Code (ComC) in Germany) said:
The modernised ComC accounting law is also an answer to the International Financial Reporting Standards (IFRS), published by the International Accounting Standards Board (IASB). The IFRS are geared to suit capital market oriented enterprises; in other words, they also serve information needs of financial analysts, professional investors and other participants in the capital markets.

By far the majority of those German enterprises that are required by law to keep accounts and records do not take part in the capital market at all. For this reason, there is no justification for committing all the enterprises that are required to keep accounts and records to the cost-intensive and highly complex IFRS. Also the draft recently discussed by the IASB of a standard IFRS for Small and Medium-Sized Entities is not a good alternative for drawing up an informative annual financial statement. Practitioners in Germany have strongly criticised the IASB draft because its application – compared with ComC accounting law – would still be much too complicated and costly.

The law exempts 'sole merchants' (proprietorships) with less than €500,000 turnover and Euro 50,000 profit from any obligation to keep accounts and records. Small companies (less than 50 employees, assets of €4.8 million, and annual turnover of €4.8 million) need not have an audit and may publish only a balance sheet. Medium-sized companies (less than 250 employees, assets of €19.2 million, and annual turnover of €38.5 million) have reduced disclosure requirements and may combine balance sheet items. Among the new accounting provisions of the ComC:
  • Companies will be permitted to capitalise internally generated intangible assets, while getting an immediate tax deduction for the costs.
  • Financial institutions will measure financial instruments designated as 'held for trading' at fair value, with value changes recognised in a 'special reserve'. The Ministry of Justice press release states: 'This special reserve has to be built up from part of the enterprise's trading profits when times are good and can then be used to offset trading losses when times get worse. Hence this special provision has an anticyclical effect. Here the necessary steps have been taken in order to respond to the financial markets crisis.'
  • Special purpose entities that are controlled must be consolidated.
The new law takes effect 1 January 2010, with early application for 2009 permitted. Click for

29 April 2009: IAS Plus Newsletter – Improvements 2009
Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Improvements to IFRSs 2009 (PDF 108k) discussing the final Improvements to 12 IFRSs that the IASB issued on 16 April 2009. The IASB uses the annual improvements project to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project. The latest amendments were included in exposure drafts of proposed amendments to IFRSs published in October 2007, August 2008, and January 2009. Most of the amendments are effective for annual periods beginning on or after 1 January 2010, although entities are permitted to adopt them earlier. Past issues of all IAS Plus newsletters are Here.

28 April 2009: Agenda for 7 May 2009 IFRIC meeting
The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday 7 May 2009 (one day only) 10:00am to 17:30pm. The meeting is open to the public and will be webcast. The tentative agenda is shown below.
Agenda for the IFRIC Meeting
Thursday, 7 May 2009

  • Introduction
  • Compliance Costs for REACH (European Commission Regulation Concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals)
  • Venture capital consolidations and partial use of fair value through profit or loss
  • Determination of cash equivalents
  • Review of Tentative Agenda Decisions published in March IFRIC Update
    • Classification of tonnage taxes
    • Disclosure of idle assets and construction in progress
    • Accounting for sales costs
    • Participation rights and calculation of the effective interest rate
    • Classification of failed loan syndications
    • Discount rate assumptions used in fair value calculations
    • Voluntary prepaid contributions under a minimum funding requirement
  • Staff Recommendations for Tentative Agenda Decisions
    • IFRS 3 Business Combinations
    • Acquisition related costs in a business combination
    • Earlier application of revised IFRS 3
    • Treatment of transaction costs on acquisition or disposal of non-controlling interests
    • Potential effect of IFRS 3 (as revised in 2008) and IAS 27 (as amended in 2008) on equity method accounting
    • Impairment of investments in associates
    • Hedging using more than one derivative as the hedging instrument (IG.F.2.1)
    • Meaning of significant or prolonged
    • Scope of IFRIC 12
    • Applicability to the customer
  • Administrative Session – IFRIC work in progress

26 April 2009: iGAAP 2009 – Chinese language version
Deloitte Taiwan has published iGAAP 2009 Chinese Version. This three-volume set, in traditional Chinese, includes all the content of iGAAP 2009 English Version. The Chinese version is organised as follows:
  • Volume 1: Preface, Framework, IAS 1, IAS 8, IAS 16, IAS 40, IAS 38, IAS 36, IAS 2, IAS 12, IAS 18, IAS 19, IFRS 2, IFRS 8, IAS 26
  • Volume 2: Includes all of the iGAAP chapters relating to financial instruments (IAS 32, IAS 39, IFRS 7) and insurance contracts (IFRS 4)
  • Volume 3: IAS 37, IAS 23, IAS 21, IFRS 5, IAS 7, IAS 10, IAS 24, IAS 27, IFRS 3, IAS 28, IAS 31, IAS 33, IAS 34, IAS 11, IAS 20, IAS 29, IAS 41, IFRS 1
For information about purchasing iGAAP 2009 Chinese Version, please send an email to fltsai @ deloitte.com.tw.

26 April 2009: Deloitte webcast – IFRS in the real estate industry
On 30 April 2009, Deloitte (United States) will hold a live web presentation titled Revisiting International Financial Reporting Standards: What Will the Impact Be In the Real Estate Arena? . Details:
  • Topic: Increasingly, U.S. companies are factoring IFRS into their strategic planning – even as they focus on today's economic challenges. How might U.S. real estate companies reinforce their efforts around IFRS readiness today? The webcast will discuss:
    • The current economic crisis and its affect on IFRS in the U.S.
    • Lessons from the European IFRS experience.
    • The SEC's IFRS roadmap and timing for IFRS adoption.
    • Impact of IFRS on publicly owned and privately held real estate companies and funds.
  • Date: Thursday, 30 April 2009
  • Time: 11:00am US EDT (15:00 GMT)
  • Host: Dorothy Alpert, Principal – Deloitte LLP
  • More Information and Registration

25 April 2009: Agenda project pages updated
We have updated our IASB agenda project pages to reflect the discussions and decisions at the IASB's April 2009 meeting, as follows:

25 April 2009: IASB conclusions on FASB FSPs
The IASB has reviewed two recent FASB Staff Positions (FSPs) on fair value and impairment of financial assets and has reached the following conclusions:
  • FSP FAS 157-4, which provides guidance on determining fair value when market activity has decreased. The IASB has agreed that the guidance in FSP FAS 157-4 is broadly consistent with the principles of fair value in IFRSs and the recommendations of the IASB's Expert Advisory Panel. The IASB plans to include relevant guidance from the FSP in the IASB's exposure draft on Fair Value Measurement, which will be published in May.
  • FSP FAS 115-2 and FAS 124-2, which addresses other-than-temporary impairments for debt securities. The IASB has decided not to propose adopting the conclusions in this FSP. This FSP applies to debt securities and shifts the focus for assessing impairment from an entity's intent to hold until recovery to its intent to sell.
    FSP FAS 115-2 and FAS 124-2 requires:
    • An entity must assess whether (a) it intends to sell the debt security or (b) it is more likely than not that the entity will be required to sell the debt security before its anticipated recovery (for example, to meet working capital needs).
    • If it does intend to sell (or it cannot assert that it is more likely than not that it will not have to sell the securities before recovery), the entity will write the asset down to fair value through earnings.
    • If an entity does not intend to sell a debt security (available-for-sale or held-to-maturity), but it is probable that the entity will not collect all amounts due according to the debt's contractual terms, the entity will bifurcate the impairment amount:
      • The impairment due to credit, measured as the difference between amortized cost and the present value of expected cash flows discounted at the security's effective rate, would be recognised in earnings.
      • The remaining amount of the impairment (noncredit portion) would be recognised in other comprehensive income (separately from other unrealised gains and losses on available-for-sale securities). The noncredit portion for held-to-maturity securities recorded in other comprehensive income should be amortised prospectively (with the offsetting amount increasing the value of the asset) over the remaining life of the security.
    In deciding not to adopt FSP FAS 115-2 and FAS 124-2, the IASB said that, instead, it will take up the broad issue of impairment as part of its Comprehensive Review of IAS 39. The IASB believes that an immediate response to the recent FSP on impairment is unnecessary. The IASB also announced a timetable for the IAS 39 review, which calls for issuance of an exposure draft of a proposed replacement for IAS 39 by October 2009.
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24 April 2009: Notes from day 3 of the April 2009 IASB meeting
The IASB held its April 2009 meeting at its offices in London on Wednesday to Friday 22-24 April 2009. The meeting is open to public observation and is being webcast. Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

24 April 2009: Proposed public sector convergence with IAS 39
The International Public Sector Accounting Standards Board (IPSASB) has invited comment on three exposure drafts of proposed International Public Sector Accounting Standards (IPSASs):
  • ED 37 Financial Instruments: Presentation,
  • ED 38 Financial Instruments: Recognition and Measurement, and
  • ED 39 Financial Instruments: Disclosures.
The EDs propose IPSASs that converge with the IASB's standards for financial instruments as at 31 December 2008, with limited changes. Additional application guidance has been included in each ED on two key public sector issues:
  • Provision by government of financial guarantees that are given at zero cost or below market price, and
  • Concessionary loans (loans at below market interest rates).
Comments are requested by 31 July 2009. The EDs may be viewed by going to www.ifac.org/EDs. Click for Press Release (PDF 19k).

24 April 2009: Notes from day 2 of the April 2009 IASB meeting
The IASB is holding its April 2009 meeting at its offices in London on Wednesday to Friday 22-24 April 2009. The meeting is open to public observation and is being webcast. Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

23 April 2009: Tiempos Turbulentos

 Deloitte (Colombia) has published the Spanish translation of a Deloitte (United States) accounting alert:

This accounting alert highlights the accounting issues and literature most likely to be relevant when assessing the accounting implications of today's financial environment. It focuses on the following:
  • determining fair values in inactive markets,
  • revised projections of economic outlook indicating impairment and lack of recoverability for many assets,
  • reduced availability of credit and increasing cost of finance,
  • increased levels of bankruptcy,
  • the impacts on hedge accounting, and
  • critical enhanced disclosure requirements.

23 April 2009: Notes from day 1 of the April 2009 IASB meeting
The IASB is holding its April 2009 meeting at its offices in London on Wednesday to Friday 22-24 April 2009. The meeting is open to public observation and is being webcast. Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

22 April 2009: Deloitte comments to IASB on FASB FSPs
Deloitte's IFRS Global Office has submitted to the IASB a Letter of Comment on IASB's Request for Views on Proposed FASB Amendments on Fair Value Measurement and Impairment Requirements. On 19 March 2009, the IASB requested views on what were, then, two proposed FASB Staff Positions. The FASB has since adopted the two proposals as final FSPs, along with a third related FSP dealing with disclosures, as follows:
  • FSP FAS 157-4, which provides guidance on determining fair value when market activity has decreased
  • FSP FAS 115-2 and FAS 124-2, which addresses other-than-temporary impairments for debt securities
  • FSP FAS 107-1 and APB 28-1, which discusses fair value disclosures for financial instruments in interim periods
The Deloitte letter to the IASB provides our detailed views on each of the final FASB Staff Positions and contrasts them with IFRSs. Here are two excerpts from our letter:
  • Regarding FAS 157-4, the Deloitte letter to the IASB states:
    We believe that the FASB Staff Position FAS 157-4 is broadly consistent with the principles of fair value in IFRSs and the Expert Advisory Panel document and therefore an amendment to IFRSs is not necessary. However, in light of the IASB's imminent release of an exposure draft on Fair Value Measurements, the IASB should consider whether the words used in the FASB Staff Position FAS 157-4 are consistent with the exposure draft and whether the wording of the exposure draft should be aligned with the FASB Staff Position FAS 157-4. In addition, the IASB should seek the views of the Expert Advisory Panel to establish whether differences in the words of the FASB Staff Position FAS 157-4 and the Expert Advisory Panel report are expected to have any practical effect.
  • Regarding FAS 115-2 and 124-2, the Deloitte letter to the IASB states:
    As noted in the request for views, the differences between U.S. GAAP and IFRSs with respect to scope, impairment triggers, impairment measurements, and recoveries are numerous and complex. A short term project to fully converge with FASB's amendment would entail substantial changes to IFRSs that would require significant efforts and would create unnecessary complexities (e.g., recognizing impairments of held-to-maturity securities that are not due to credit in other comprehensive income). Instead, we would encourage both Boards to expedite their work on a joint standard that would improve reporting for all financial instruments including impairment issues (e.g., loss recognition triggers, measurement of losses, recognition of recoveries, etc.).

22 April 2009: PCAOB alert on fair value and impairment audit issues
The US Public Company Accounting Oversight Board has issued a Staff Audit Practice Alert to inform auditors of public companies about potential implications on reviews of interim financial information and annual audits of three recently-issued Financial Accounting Standards Board Staff Positions relating to fair value measurements, impairments of financial assets, and disclosures. See the IAS Plus News Story of 14 April 2009 for more information about the FSPs. The PCAOB's alert is intended to remind auditors of their responsibilities in conducting reviews of interim financial information and annual audits in light of the new FSPs related to fair value measurements and other-than-temporary impairments. Click for:

22 April 2009: Chinese translation of newsletter on G20 and IFRSs
Deloitte China has published the Chinese translation of the following IAS Plus Update newsletter:

22 April 2009: Deloitte IFRS newsletter in Spanish
Deloitte (Colombia) has published the Spanish translation of the following IAS Plus Update newsletter:

We have many resources in Spanish Here,

21 April 2009: IASB roundtables on consolidation and derecognition
The IASB will conduct three two-day public roundtable discussions on its exposure drafts on Consolidation and Derecognition of Financial Instruments. The roundtables will take place in Toronto on 1 and 2 June 2009, in Tokyo on 8 and 9 June 2009, and in London on 15 and 16 June 2009. Interested parties may register on the IASB's Website. The IASB plans to issue new requirements on consolidation by the end of 2009 and on the derecognition of financial instruments in the first half of 2010. Click for Press Release (PDF 101k).

21 April 2009: IASB updates its 'Who We Are' booklet
The International Accounting Standards Board has published an updated version of IASB and the IASC Foundation – Who We Are and What We Do. This six-page booklet contains a great deal of information about the organisation and its work, including the mission; structure; due process; lists of Board members, IASCF Trustees, and senior staff; funding; use of IFRSs; and contact details. We are grateful to the IASC Foundation for giving us permission to post the booklet on IAS Plus. Click to download IASB and the IASC Foundation – Who We Are and What We Do (PDF 328k - link updated to the latest version).

20 April 2009: Free access to basic IFRSs
The International Accounting Standards Board has begun making available on its website, without charge, access to the versions of IFRSs (including interpretations) published in the most recent bound volume of IFRSs and the application guidance that is an integral part of those standards. Free registration is required. The illustrative examples, implementation guidance, and bases for conclusions that accompany, but are not part of, the standards are available only to subscribers. The free standards are available in the following languages:
  • Dutch 2008
  • English 2009
  • French 2008
  • German 2008
  • Italian 2008
Each standard is a separate PDF file. You can access the standards on the IASB's Website Here for the English version and Here for the Translations. Also available are unofficial summaries of each standard, available in several languages.

19 April 2009: IAS Plus Newsletter – Derecognition exposure draft
Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – New Derecognition Model Proposed for Financial Instruments (PDF 148k). On 31 March 2009, the IASB published an exposure draft ED/2009/3 Derecognition: Proposed amendments to IAS 39 and IFRS 7. The ED proposes to replace the existing guidance on derecognition of financial assets and financial liabilities in IAS 39 Financial Instruments: Recognition and Measurement and the related disclosures required by IFRS 7 Financial Instruments: Disclosures. The ED also sets out an alternative derecognition model preferred by a minority of Board members. Comments are due by 31 July 2009. The Board plans public round-table discussions over the coming months to seek constituents' input and to explain the interaction between the proposals in the ED and the recent proposals on consolidation set out in ED 10 Consolidated Financial Statements. Past issues of all IAS Plus newsletters are Here.

19 April 2009: IAS Plus Newsletter – Leases discussion paper
Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Boards Issue Preliminary Views on Lease Accounting (PDF 129k). On 19 March 2009, the IASB and the US Financial Accounting Standards Board jointly issued a Discussion Paper (DP) outlining their preliminary views on a new accounting model for leases from the perspective of lessees. The models in both boards' current standards is often criticised because lessees do not recognise their property rights or obligations under many leases even though those rights and obligations meet the definitions of assets and liabilities. The DP discusses various issues associated with lessor accounting, but the boards had no preliminary views on them (and, consequently, they are not dealt with in this newsletter). The IASB has requested comments on the DP by 17 July 2009. The newsletter includes a table summarising the preliminary views of each board as presented in the DP. It also includes a more detailed discussion on key topics in the DP. Past issues of all IAS Plus newsletters are Here.

17 April 2009: IASB employee benefits working group will meet
The IASB's Employee Benefits Working Group will meet Tuesday 28 April 2009 from 10:00 to 17:00 at the Millennium Gloucester Hotel (Kensington Suite), 4-18 Harrington Gardens, London. The entire agenda focuses on disclosure issues. Specific agenda topics are:
  • Welcome, introduction, and update on recent activities
  • Disclosures – General
    • Overview
    • Objectives
    • Materiality
    • Level of aggregation/disaggregation
  • Defined benefit plan asset disclosures
    • Fair value disclosures
    • Other disclosure issues
  • Risk disclosures
    • Alternative presentations of risks
  • Multi-employer plan disclosures
The meeting is open to public observation.

16 April 2009: Investment professionals strongly favour one global GAAP
91% of the 1,574 Chartered Financial Analysts responding to a CFA Institute survey support worldwide companies using a single set of accounting standards to prepare general purpose financial statements. 64% of respondents believe companies should use IFRSs as promulgated by the IASB, which maintains sole authority to make changes or exceptions to the standards. Regarding a possible approach to adopting IFRSs in the United States, respondents were split, with 50% preferring a staged adoption approach as proposed in the US SEC roadmap, while 47% prefer adoption at the same date for all filers. Respondents were also divided on who should be responsible for ensuring consistent enforcement across countries – with 50% preferring a single global enforcement body and 47% preferring enforcement at the country level. Click for:

16 April 2009: IASB amends 12 IFRSs
The IASB has issued Improvements to IFRSs – a collection of amendments to twelve International Financial Reporting Standards – as part of its program of annual improvements to its standards. The IASB uses the annual improvements project to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project. The latest amendments were included in exposure drafts of proposed amendments to IFRSs published in October 2007, August 2008, and January 2009. Most of the amendments are effective for annual periods beginning on or after 1 January 2010, although entities are permitted to adopt them earlier. During its deliberations of comments received on the exposure draft of Proposed Improvements to IFRSs published in August 2008, the IASB decided to postpone reconsideration of two IAS 39 issues (relating to the fair value option and bifurcation of an embedded foreign currency derivative) until more analysis could be completed. Consequently, with the document published today, all the other issues included in the three exposure drafts have been finalised or removed from the IASB's agenda. The following table lists the IFRSs and topics addressed by the amendments. Click for IASB Press Release (PDF 45k).
IFRSSubject of amendmentEffective for annual
periods beginning
IFRS 2 Share-based PaymentScope of IFRS 2 and revised IFRS 31 July 2009
IFRS 5 Non-current Assets Held for Sale and Discontinued OperationsDisclosures of non-current assets (or disposal groups) classified as held for sale or discontinued operations1 January 2010
IFRS 8 Operating SegmentsDisclosure of information about segment assets1 January 2010
IAS 1 Presentation of Financial StatementsCurrent/non-current classification of convertible instruments1 January 2010
IAS 7 Statement of Cash FlowsClassification of expenditures on unrecognised assets1 January 2010
IAS 17 LeasesClassification of leases of land and buildings1 January 2010
IAS 18 RevenueDetermining whether an entity is acting as a principal or as an agentNone – amendment to non-mandatory guidance
IAS 36 Impairment of AssetsUnit of accounting for goodwill impairment test1 January 2010
IAS 38 Intangible AssetsAdditional consequential amendments arising from revised IFRS 3

Measuring the fair value of an intangible asset acquired in a business combination

1 July 2009
IAS 39 Financial Instruments: Recognition and Measurement Treating loan prepayment penalties as closely related embedded derivatives

Scope exemption for business combination contracts

Cash flow hedge accounting

1 January 2010
IFRIC 9 Reassessment of Embedded DerivativesScope of IFRIC 9 and revised IFRS 31 July 2009
IFRIC 16 Hedges of a Net Investment in a Foreign OperationAmendment to the restriction on the entity the entity that can hold hedging instruments1 July 2009

16 April 2009: Comment deadline – IASB request for views
We remind you that comments are due on 20 April 2009 on the IASB's Request for Views on Proposed FASB Amendments on Fair Value Measurement and Impairment Requirements. On 19 March 2009, the IASB requested views on what were, then, two proposed FASB Staff Positions. The FASB has since adopted the two proposals as final FSPs, along with a third related FSP dealing with disclosures, as follows:
  • FSP FAS 157-4, which provides guidance on determining fair value when market activity has decreased
  • FSP FAS 115-2 and FAS 124-2, which addresses other-than-temporary impairments for debt securities
  • FSP FAS 107-1 and APB 28-1, which discusses fair value disclosures for financial instruments in interim periods
See the IAS Plus News Story of 14 April 2009 for more information. Also, Deloitte United States has published a Heads Up Newsletter (PDF 141k) titled FASB Issues Guidance on Measuring Fair Value When Market Activity Declines, Other-Than-Temporary Impairments, and Interim Fair Value Disclosures discussing the three FSPs. Further, on 7 April 2009 the IASB issued a Statement saying:
'Initial reports regarding new or additional divergences between IFRSs and US GAAP being created by these FSPs appear to be overstated. A preliminary review of the FASB's decisions by IASB staff indicates that FASB's objectives and approach on the application of fair value when a market is not active appear to be broadly similar to those in IFRSs.'

16 April 2009: New IPSASB public sector standards handbook
The International Public Sector Accounting Standards Board (IPSASB) has published the 2009 Handbook of International Public Sector Accounting Pronouncements. The IPSASB develops International Public Sector Accounting Standards (IPSASs) intended for national, state, and local governments and their agencies, as well as international public sector bodies. The 2009 IPSASB Handbook contains all pronouncements of the IPSASB as of 31 December 2008. The handbook can be downloaded free of charge (two PDF files) from the IFAC Online Bookstore (www.ifac.org/store). Printed copies can be ordered now for immediate shipment – free of charge, except for a US$25.00 shipping cost.

15 April 2009: IAS Plus Newsletter – G20: Implications for IFRSs
We have reported previously on the Declaration on Strengthening the Financial System issued by the leaders of the Group of 20 (G20) following their meeting in London on 2 April 2009. Those declarations address reforming the regulation of the global financial sector, including strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, and reinforcing international cooperation. To help achieve those goals, the G20 report calls on the accounting standard setters to improve standards for determining the fair values of financial instruments in illiquid markets and to take other actions regarding complexity of financial reporting, provisioning, and off balance sheet financing, among other matters. Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – G20: Implications for IFRSs (PDF 100k). The newsletter focuses in depth on G20 issues that affect financial reporting and highlights areas in which the International Accounting Standards Board and IASC Foundation Trustees are already active or have announced plans to address the G20's recommendations. The newsletter also discusses the accounting-related recommendations of two working groups that the G20 established in November 2008:
  • Working Group 1: Enhancing Sound Regulation and Strengthening Transparency
  • Working Group 2: Reinforcing International Cooperation and Promoting Integrity in Financial Markets
Past issues of all IAS Plus newsletters are Here.

15 April 2009: Accounting implications of carbon emissions trading
The Australian government has published an exposure draft of proposed legislation that would establish a 'Carbon Pollution Reduction Scheme' that would be effective from 1 July 2010. Under the proposal, organisations with facilities in specified sectors (stationary energy, transport, etc) that emit more than 25,000 tonnes of CO2-equivalent will be required to surrender an emissions permit for each tonne of CO2-equivalent produced in that year. The legislation will create a 'cap and trade' scheme. The Government will set the volume of allowable emissions (the cap) and the market will determine the price of the permits based on supply and demand. Deloitte Australia has published Australian Accounting Alert 2009/3 (PDF 447k) that examines the potential effects of the legislation on current financial reporting. Such effects may include:
  • Reassessment of impairment models – Is the legislation an impairment trigger? How does it affect the measurement of recoverable amount?
  • Provisions and contingent liabilities – The legislation may affect the recognition and measurement of provisions, for example, s provision for the rehabilitation of waste disposal sites
  • Impact of contractual 'carbon clauses' on the valuation of derivatives and hedging
  • Disclosure of significant adjustments and estimation uncertainties
  • Accounting for emission rights. In this regard, the Alert notes:
    There is currently no formal guidance at international or Australian levels on how to account for permits issued under emission trading schemes. IFRIC 3 Emission Rights was withdrawn in June 2005 by the IASB because of a lack of symmetry between the recognition and measurement of the permit asset and the emissions obligation. The IASB and Australian Accounting Standards Board have both added the accounting for emission rights to their respective agendas; however an exposure draft is not expected from the IASB until mid 2009. At the March 2009 meeting, the IASB agreed that free permits or allowances should be recognised as an asset and measured at fair value. However, the Board could not agree on how the credit arising from the recognition of the asset should be treated (as revenue or a performance obligation liability) – this will be debated at a future meeting.
  • Disclosures under Australian Stock Exchange rules – The ASX requires disclosure of how an entity manages its material business risks

15 April 2009: Heads Up on FASB fair value FSPs
Deloitte United States has published a Heads Up Newsletter (PDF 141k) titled FASB Issues Guidance on Measuring Fair Value When Market Activity Declines, Other-Than-Temporary Impairments, and Interim Fair Value Disclosures discussing three recently issued Staff Positions (FSPs):
  • FSP FAS 157-4, which provides guidance on determining fair value when market activity has decreased
  • FSP FAS 115-2 and FAS 124-2, which addresses other-than-temporary impairments for debt securities
  • FSP FAS 107-1 and APB 28-1, which discusses fair value disclosures for financial instruments in interim periods
See also the IAS Plus News Story of 14 April 2009.

15 April 2009: Webcast on IASB's income tax proposals
Deloitte Australia will hold an Asia-Pacific Dbrief webcast on the IASB's exposure draft ED/2009/2 Income Tax on Tuesday 21 April at 12 noon Australian EST (GMT+10). The webcast will cover the proposed new IFRS on accounting for income tax, likely to be effective from 2011. The proposal, if adopted, will cause significant changes to the way businesses across the Asia-Pacific region prepare their financial statements. Topics that will be discussed include:
  • an overview of the proposed new rules, including changes in the measurement of tax balances, particularly 'uncertain tax positions'
  • key issues and impact areas for your business
  • what you need to do now to prepare for the transition.
To register for the webcast Click Here.

14 April 2009: Chinese translation of newsletter on leases
Deloitte China has published the Chinese translation of the following Heads Up newsletter:

14 April 2009: Most US financial executives want IFRSs
We have posted the results of the 2009 IFRS Survey (PDF 84k) conducted in March 2009 by Deloitte (United States). The goal of the survey was to gather data and information about how companies perceive the Securities and Exchange Commission's proposed IFRS roadmap, and how companies are approaching IFRSs, given a certain level of regulatory uncertainty. Highlights of the survey report include:
  • 75% of respondents supported or strongly supported a movement toward a single set of high-quality accounting standards, such as IFRSs.
  • 62% of respondents agreed or strongly agreed that the SEC should establish a date (the so-called 'date certain') for requiring US companies to use IFRSs.
  • Over half (56%) of respondents surveyed indicated that the SEC should extend the option for early use of IFRSs to a broader group of US companies than outlined in the current SEC roadmap.
  • 64% of respondents stated that no budget has yet been allocated for IFRS conversion, in contrast to the quarter (25%) who have budgeted for assessment and readiness, or all aspects of conversion.
  • 56% of financial executives described the proposed SEC timeline to be 'about right' or could be accelerated further.
  • Over half (54%) of survey respondents indicated some or sufficient in-house knowledge of IFRSs, while 40% acknowledged no in-house IFRS knowledge or experience.

14 April 2009: FASB issues FSPs on fair value and impairments
The US Financial Accounting Standards Board has issued three final FASB Staff Positions (FSPs) intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of financial assets:
  • FSP FAS 157-4 Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly provides guidelines for making fair value measurements more consistent with the principles presented in FASB Statement No. 157 Fair Value Measurements.
  • FSP FAS 107-1 and APB 28-1 Interim Disclosures about Fair Value of Financial Instruments enhances consistency in financial reporting by increasing the frequency of fair value disclosures.
  • FSP FAS 115-2 and FAS 124-2 Recognition and Presentation of Other-Than-Temporary Impairments provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities.
The FSPs are effective for interim and annual periods ending after 15 June 2009, with limited earlier application permitted. The IASB has solicited views on the FSPs in their draft form – comments due 20 April 2009. Click for:

14 April 2009: Heads Up on IASB's income tax exposure draft
On 31 March 2009, the IASB issued exposure draft ED/2009/2 Income Tax containing proposals for an International Financial Reporting Standard on income tax that would replace the current guidance under IAS 12 Income Taxes and its related Interpretations. The ED seeks to clarify certain aspects of IAS 12 and reduce the income tax accounting differences between IFRSs and US GAAP. The comment deadline is 31 July 2009, with a final standard expected in 2010. Deloitte (United States) has published a Heads Up Newsletter (PDF 98k) highlighting the significant changes proposed for income tax accounting under IFRSs and comparing the proposals with existing practice under US GAAP.

13 April 2009: Deloitte comments on financial statement presentation
Deloitte's IFRS Global Office has submitted to the IASB a Letter of Comment on the Joint IASB-FASB Discussion Paper: Preliminary Views on Financial Statement Presentation (PDF 214k). While we agree with many of the proposals in the discussion paper, we have identified a number of issues that we feel are essential to the development of a financial statement presentation model that provides useful information for users and can be practically implemented by preparers, including those noted below:
  • Cohesiveness objective. While we support the cohesiveness objective, the subjectivity involved in determining the appropriate classification (that is, operating, investing, and financing) of certain items may lead to inconsistent practices among similar entities (or for similar items within the same entity). Therefore, more detailed descriptions of the classification categories and further clarity regarding the parameters to be used in determining the appropriate classification of financial statement items would be beneficial for preparers and users. Further, the Boards need to address and potentially develop specific requirements and disclosures in accounting for changes in the category classification of items from one period to another.
  • The management approach to classification of financial information. The management approach is appropriate because it provides management the ability to classify an entity's financial information based on the manner in which the underlying assets and liabilities are used, rather than specific rules dictating the presentation. However, there are certain practical concerns with such an approach, including a potential reduction in comparability of financial information among entities with similar operations and potential difficulties in determining classification due to the subjective nature of such an approach.
  • Direct method of presenting operating cash flows. The Boards should consider additional analysis to understand the benefits to users of presenting cash flows using the direct method and such benefits outweigh the cost.
  • Reconciliation schedule. We are concerned the proposed schedule (reconciling non-cash items and comprehensive income) may distract users from information that is relevant and create an unnecessary burden for preparers. Further, we are concerned this information, in addition to the information provided in the statement of cash flows under the direct method, is no different than the information presented under the indirect method of presenting cash flows.
Click for:

10 April 2009: FCAG will meet on 20 April in London
The Financial Crisis Advisory Group (FCAG) will meet in London at the Crowne Plaza Hotel, 19 New Bridge Street, on Monday 20 April 2009. The IASB and the FASB jointly established the FCAG to advise them about the role of accounting during the crisis and potential changes. On 11 March 2009 the FCAG published an Invitation to Comment requesting responses to seven questions to assist FCAG in discussing accounting and reporting matters related to the global financial crisis and making recommendations thereon to the IASB and the US FASB. This will be the FCAG's fourth meeting. You can find the IAS Plus notes from the earlier meetings Here.

10 April 2009: Agenda for April 2009 IASB meeting
The IASB will hold its April 2009 meeting at its offices in London on Wednesday to Friday 22-24 April 2009. The meeting will be open to public observation and will be webcast. Presented below is the agenda for the meeting. The Financial Crisis Advisory Group will meet on Monday 20 April 2009 in London. The IASB will not meet in public session on Tuesday 21st.
IASB Board Meeting Agenda
22-24 April 2009, London

Wednesday 22 April 2009

Thursday 23 April 2009

Friday 24 April 2009 (morning only)

9 April 2009: Financial Stability Forum recommendations
The Declaration on Strengthening the Financial System (PDF 137k) issued by the leaders of the Group of 20 (G20) following their meeting in London on 2 April 2009 calls for the Financial Stability Forum (FSF) to be expanded, given a broadened mandate to promote financial stability, and re-established with a stronger institutional basis and enhanced capacity as the Financial Stability Board (FSB). The FSF has now done that – click for Press Release (PDF 20k). The FSB membership will include all G20 countries as well as Spain and the European Commission. The FSB is chaired by Mario Draghi, Governor of the Bank of Italy. Its Secretariat is based at the Bank for International Settlements in Basel, Switzerland.
Obligations of Financial Stability Board members:
As obligations of membership, member countries and territories commit to pursue the maintenance of financial stability, maintain the openness and transparency of the financial sector, implement international financial standards (including the 12 Key International Standards and Codes), and agree to undergo periodic peer reviews, using among other evidence IMF/World Bank public Financial Sector Assessment Program reports. The FSB will elaborate and report on these commitments and the evaluation process. The 12 key International Standards and Codes include International Financial Reporting Standards and International Standards on Auditing.
Concurrently, the FSF issued an updated set of recommendations and principles to strengthen financial systems. The Press Release (PDF 64k) includes an overview of the recommendations and principles plus links to download the four individual reports that comprise the recommendations and principles:
The recommendations note the following IASB actions to date:
  • Consistent guidance has been issued by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) for fair valuation when markets are illiquid, and for the transfer of assets between valuation categories in rare circumstances. The IASB has also proposed revised standards for the consolidation and disclosure of off-balance sheet entities and related exposures. The IASB finalised in March 2009 an amendment to IFRS 7 setting forth enhancements to required risk and valuation disclosures for financial activities, including for complex financial instruments.

Regarding financial reporting and pro-cyclicality, the recommendations state:

  • The Basel Committee on Banking Supervision should assess how to address the impact of differences between International Financial Reporting standards (IFRS) and US Generally Accepted Accounting Principles (GAAP), the appropriate treatment of off-balance sheet exposures and guarantees, and the treatment of highly liquid government securities.
  • The FASB and IASB should issue a statement that reiterates for relevant regulators, financial institutions and their auditors that existing standards require the use of judgement to determine an incurred loss for provisioning of loan losses.
  • The FASB and IASB should reconsider the incurred loss model by analysing alternative approaches for recognising and measuring loan losses that incorporate a broader range of available credit information. The FSF recommends that the FASB and IASB establish a resource group to provide input on technical issues and complete this project on an expedited basis.
  • Accounting standard setters and prudential supervisors should examine the use of valuation reserves or adjustments for fair valued financial instruments when data or modelling needed to support their valuation is weak.
  • Accounting standard setters and prudential supervisors should examine possible changes to relevant standards to dampen adverse dynamics potentially associated with fair value accounting. Possible ways to reduce this potential impact include the following:
    • Enhancing the accounting model so that the use of fair value accounting is carefully examined for financial instruments of credit intermediaries.
    • Transfers between financial asset categories.
    • Simplifying hedge accounting requirements.
A wide range of 'credit crunch' information is Here on IAS Plus.

9 April 2009: FASB Codification would become US GAAP
The US Financial Accounting Standards Board has proposed to change the 'GAAP hierarchy' in the United States to make the FASB Accounting Standards Codification the single source of authoritative US accounting and reporting standards as of 1 July 2009, except for rules and interpretive releases of the Securities and Exchange Commission, which are sources of authoritative GAAP for SEC registrants. Currently, FASB Statement 162 The Hierarchy of Generally Accepted Accounting Principles identifies various sources of US GAAP and arranges them in a hierarchy for users to apply. Once the Codification is in effect, all of its content would carry the same level of authority. The proposal would apply to financial statements of nongovernmental entities that are presented in accordance with GAAP. The proposal may be Downloaded (PDF 68k) from FASB's website. Comment deadline is 8 May 2009.

9 April 2009: Tricia O'Malley will chair AcSB
Patricia (Tricia) O'Malley has been appointed Chair of the Accounting Standards Board of Canada (AcSB) effective in mid-June 2009. Ms O'Malley had been the first full-time AcSB Chair starting in October 1999 prior to her appointment to the International Accounting Standards Board in January 2001. At the conclusion of her term on the IASB in June 2007, she became the IASB's Director of Implementation Activities, managing IFRIC Interpretations and improvements projects. Before becoming a full-time standard-setter, she was a partner in the National Assurance and Professional Practice Group of KPMG. Canada is adopting IFRSs as Canadian GAAP for publicly accountable enterprises for interim and annual financial statements relating to financial years beginning on or after 1 January 2011.

9 April 2009: New EFRAG planning and resource committee
The European Financial Reporting Advisory Group (EFRAG) Supervisory Board has appointed an interim Planning and Resource Committee (PRC) as part of EFRAG's restructuring. The role of the PRC will be to set the agenda for proactive work that results in the issuance of discussion papers, position papers, and other outputs. The PRC will provide guidance on the allocation of resources from EFRAG and National Standard Setters (NSS) to proactive projects and will monitor the progress of the work concerned. Members of the interim PRC are:
  • Peter Sampers - Member of the EFRAG Supervisory Board, Chair of the PRC ad interim
  • Angelo Caso - Chair of the OIC (Italian Standard Setter)
  • Ian Mackintosh - Chair of the UK ASB
  • Jean-Francois Lepetit - Chair of the ANC (French Standard Setter)
  • Hans Van Damme - Member of the EFRAG Supervisory Board
  • Stig Enevoldsen - Chairman of EFRAG TEG
Click for Press Release (PDF 60k).

8 April 2009: G20 Declaration and IASB response
The Declaration on Strengthening the Financial System (PDF 137k) issued by the leaders of the Group of 20 (G20) following their meeting in London on 2 April 2009 calls on the accounting standard setters to improve standards for determining the fair values of financial instruments in illiquid markets and to take other actions regarding complexity of financial reporting, provisioning, and off balance sheet financing, among other matters:
Accounting standards
We have agreed that the accounting standard setters should improve standards for the valuation of financial instruments based on their liquidity and investors' holding horizons, while reaffirming the framework of fair value accounting.

We also welcome the FSF recommendations on procyclicality that address accounting issues. We have agreed that accounting standard setters should take action by the end of 2009 to:

  • reduce the complexity of accounting standards for financial instruments;
  • strengthen accounting recognition of loan-loss provisions by incorporating a broader range of credit information;
  • improve accounting standards for provisioning, off-balance sheet exposures and valuation uncertainty;
  • achieve clarity and consistency in the application of valuation standards internationally, working with supervisors;
  • make significant progress towards a single set of high quality global accounting standards; and
  • within the framework of the independent accounting standard setting process, improve involvement of stakeholders, including prudential regulators and emerging markets, through the IASB's constitutional review.
The IASB has responded to the G20 leaders' recommendations and, at the same time, to Recent Decisions taken by the US Financial Accounting Standards Board (FASB). Here are excerpts:
  • The IASB's response to the G20: 'The IASB is committed to taking action on each of the items recommended by the G20 by the end of 2009, the target date suggested by the G20, in order to ensure globally consistent and appropriate responses to the crisis.'

  • The IASB's response to the FASB actions: 'Initial reports regarding new or additional divergences between IFRSs and US GAAP being created by these FSPs appear to be overstated. A preliminary review of the FASB's decisions by IASB staff indicates that FASB's objectives and approach on the application of fair value when a market is not active appear to be broadly similar to those in IFRSs.'
Click for IASB Press Release (PDF 106k).

8 April 2009: Accounting Roundup – first quarter 2009 review
We have posted Accounting Roundup: First Quarter in Review–2009 (PDF 536k, 45 pages), prepared by the Accounting Standards and Communications Group of Deloitte LLP (USA). This newsletter provides brief descriptions of pronouncements affecting accounting, financial reporting, and corporate governance issued during 1Q-2009 by standard setters and regulators including FASB, EITF, AICPA, SEC, FASAB, PCAOB, GASB, IASB, IFRIC, and IAASB. This quarterly review consists of articles, adapted as necessary, from issues of Accounting Roundup published in January and February 2009, as well as new articles for the month of March. There's also information about upcoming Dbriefs Webcasts. You will find past issues Here. International and IFRS-related developments covered in this edition of Accounting Roundup are:
  • IASB Amends Financial Instrument Disclosures
  • IASB Proposes Amendments to IFRIC Interpretations 9 and 16
  • IASB Issues Amendments to Clarify Accounting for Embedded Derivatives
  • IASB Proposes Amendments to Derecognition Requirements for Financial Instruments
  • FASB and IASB Issue Discussion Paper on Lease Accounting
  • IASB Proposes New Consolidation Standard
  • IASB Proposes Changes to Income Tax Accounting
  • FASB and IASB Issue Discussion Paper on Revenue Recognition
  • IFRIC Issues Interpretation on Customer Contributions
  • IASC Foundation Publishes 2009 IFRS XBRL Taxonomy for Public Comment
  • IASB Reexposes Proposed Standard on Related Parties

8 April 2009: IFRSs in your Pocket 2008 in Polish

 Deloitte Poland has published Sygnalizujemy właściwy kierunek: Praktyczny przewodnik po MSSF 2008 – IFRS in your Pocket 2008 in Polish (PDF 823k, April 2009, 89 pages). This publication is a translation into Polish of the English language IFRSs in your Pocket 2008 guide updateed to October 2008, and additionally includes a comparison between IFRSs and the accounting requirements of the Polish Accounting Act. As a member of the European Union, Poland requires all listed companies preparing consolidated financial statements to use IFRSs. Poland also requires all banks preparing consolidated financial statements, whether or not listed, to use IFRSs. Some other companies are permitted to use IFRSs in their consolidated or separate financial statements – those that are listed or have filed for admission to public trading and a parent company that is, itself, a subsidiary of an entity that prepares its consolidated financial statements using IFRSs. Other companies follow Polish Accounting Standards.

7 April 2009: G20 leaders support global accounting standards
The Communique Issued by the Leaders of the Group of 20 (G20) (PDF 174k) following their meeting in London on 2 April 2009 calls on "the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards". This recommendation builds on the recommendation in the Final Report of G20 Working Group 1 Enhancing Sound Regulation and Strengthening Transparency (PDF 720k), issued 25 March 2009, which also recommends adoption of a single set of accounting standards globally. The report also recommends greater involvement of representatives of emerging market economies in the IASCF/IASB structure.
Recommendation 23: The IASB should enhance its efforts to facilitate the global convergence towards a single set of high-quality accounting standards by sharing the experience of countries that have completed this process and by providing technical assistance.
— Responsibility: IASB
— Timeline: Fall 2009
— Monitoring: Expanded FSF

The long-term benefits likely to result from the use of a harmonized set of international accounting standards are considerable, in particular from a market transparency and cost perspective. While adapting IFRS according to national circumstances rather than fully complying with them may be appropriate in some cases to take into account country-specific characteristics of markets, it also voids some of the benefits of a global set of accounting standards.

The Working Group recommends that the IASB facilitate the transition towards a single set of high-quality global standards globally by sharing the experience of countries that have completed this process and by providing global assistance.

7 April 2009: Deloitte comments on SEC IFRS 'Roadmap'
Deloitte & Touche LLP (United States) has submitted to the US Securities and Exchange Commission its views on the SEC's proposed Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers. The letter expresses support for allowing foreign registrants to use IFRSs and for the convergence efforts of the IASB and the FASB. But the letter suggests that there are some areas of the Roadmap that require further consideration by the SEC before it is adopted. Click for An excerpt from the Deloitte letter:
We support the steps that the SEC has already taken toward the acceptance of IFRSs in the U.S. capital markets, including allowing foreign private issuers to use IFRSs in their SEC filings without a reconciliation to U.S. GAAP. In our view, IFRSs are of high quality and are sufficiently comprehensive to provide transparent financial information. We also support a standard-setting process that addresses the ongoing needs of financial statement users and makes relevant improvements to standards. To that end, we are supportive of the convergence efforts of the IASB and FASB in developing the highest quality standards.

As with any important policy decision, the Commission will need to consider and weigh various factors in deciding whether to mandate IFRSs for all U.S. issuers. More specifically, the Commission will need to consider recent developments relating to the financial crisis, including the loss in confidence in the U.S. capital markets, the development of capital market alternatives outside the United States, and the impact on global competitiveness. Also, there have been ongoing questions about U.S. financial reporting, including the complexity of U.S. GAAP and the need to have standards that are less reliant on detailed rules and bright lines. While some may argue that, in light of recent events, this is not the time to make fundamental changes in financial reporting requirements, we believe that these very events reinforce the need to rethink the approach to financial reporting.

We support the objective in the proposed roadmap of transitioning all U.S. issuers to IFRSs but have a number of observations and recommendations regarding how the proposed roadmap can be improved. The most important of these recommendations are (1) the current need for the SEC to be more definitive about its plan to transition all U.S. issuers to IFRSs in the future and (2) the removal of the significant disincentives for early adopters of IFRSs.

7 April 2009: Deloitte International Tax Source
The Deloitte International Tax Source (DITS) is likely to be of interest to visitors to IAS Plus – who come from over 200 jurisdictions around the world. DITS is a comprehensive one-stop web database for international tax rates, information, and analysis key to doing business in a cross-border environment. DITS provides access to:
  • Tax rates for more than 60 jurisdictions, including:
    • Corporate and historical income tax rates,
    • Domestic withholding rates,
    • Withholding tax rates for dividends, interest, and royalties for in-force and pending tax treaties, and
    • Indirect tax rates (VAT/GST/sales tax).
  • Comparative data on holding companies
  • Comparative data on transfer pricing policies
  • An executive library of:
    • International Tax and Business Guides and Highlights
    • A wide range of global tax publications
    • Tax tools
    • Live interactive webcasts led by Deloitte professionals
DITS is free, easy to use, and always available. Access the Deloitte International Tax Source at www.dits.deloitte.com/. There's a short video overview Here to introduce you to DITS.

7 April 2009: Comment deadline – discussion paper on presentation
We remind you that comments are due on 14 April 2009 on the Discussion Paper: Presentation of Financial Statements, which was published jointly by the IASB and the FASB on 16 October 2008. The project is about how best to portray assets, liabilities, income, expense, cash flows, and related information in financial statements. It does not address how those items are recognised or measured. The DP proposes fundamental changes in the appearance of financial statements, both in their structure and the level of detail presented. Some of the key changes include:
  • The line items presented, descriptions used and order of presentation would be aligned between the statements of financial position, comprehensive income, and cash flows.
  • The financial statements would be segregated into business activities (sub-categorised into operating and investing), financing activities, income taxes, and discontinued operations.
  • Items would be classified in the financial statements based on a 'management approach', with further sub-classifications then required.
  • A reconciliation would be required between the statement of cash flows and the statement of comprehensive income.

6 April 2009: 11 IFRSs await EU endorsement
The European Financial Reporting Advisory Group (EFRAG) has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. Click to download the Endorsement Status Report as of 3 April 2009 (PDF 132k). With the recent endorsement of IFRIC 12 Service Concession Arrangements, there are currently 11 IASB pronouncements awaiting European Commission endorsement for use in Europe, as follows:
    Standards
  • IFRS 1 First-time Adoption of IFRS – Restructured standard (2008)
  • IFRS 3 Business Combinations (2008)
    Interpretations
  • IFRIC 15 Agreements for the Construction of Real Estate
  • IFRIC 16 Hedges of a Net Investment in a Foreign Operation
  • IFRIC 17 Distributions of Non-cash Assets to Owners
  • IFRIC 18 Transfers of Assets from Customers
    Amendments
  • IAS 27 Consolidated and Separate Financial Statements (2008)
  • IAS 39 Amendments for Eligible Hedged Items
  • IAS 39 Amendments for Reclassification of Financial Assets
  • IFRS 7 Amendment – Improving Disclosures About Financial Instruments
  • IFRIC 9 and IAS 39 Amendment – Embedded Derivatives

6 April 2009: IFRS checklists in French
Deloitte (Canada) has published French language translations of the 2008 IFRS Presentation and Disclosure Checklist for 2008 and the IFRS Compliance Questionnaire for 2008:

6 April 2009: IFRS insurance accounting newsletter
Deloitte (United Kingdom) has published the second edition of its monthly newsletter focussing on the joint IASB and FASB project to develop a new, comprehensive, global financial reporting standard for insurance. This issue focuses on the estimate of insurance cash flows. The IASB plans to publish an exposure draft for comment in the second half of 2009 and a final standard in 2011. This newsletter provides an update on progress being made by the IASB and FASB in their joint project. Click to download Issue 2 of the Insurance Accounting Newsletter (PDF 130k). There are permanent links all issues of the newsletter on IAS Plus Insurance Project Page.

6 April 2009: Heads Up – SEC's revised financial reporting manual
The Division of Corporation Finance of the US Securities and Exchange Commission released a new version of its Financial Reporting Manual. This 267-page manual is specifically intended for the SEC staff, but because it contains useful information for registrants it has been posted to the SEC's website. The manual provides the SEC staff's interpretations of form requirements and portions of Regulations S-X and S-K, including guidance on topics such as the form and content of a registrant's financial statements, providing separate financial statements of businesses acquired or to be acquired and investments in entities accounted for by the equity method, pro forma financial information, Management's Discussion and Analysis, and non-GAAP financial measures. Deloitte (United States) has published an updated Heads Up newsletter (PDF 148k) discussing the revised manual. An appendix to Heads Up is a table summarising the more important additions and changes since the previous edition of the manual. Click for:

6 April 2009: EU ministers urge IASB to adopt recent FASB fair value decisions
Following their informal meeting in Prague on 3 and 4 April 2009, the EU Finance Ministers and Central Bank Governors (ECOFIN) issued a statement urging the IASB to adopt the conclusions on fair value measurement in illiquid markets and on impairment of financial assets that were approved by the US Financial Accounting Standards Board last week. Our News Story of 3 April 2009 explains the FASB decisions. Click to Download the ECOFIN Statement (PDF 20k). Here is an excerpt.
The US standard setting authority is in the process of adopting new accounting guidance, with the aim of accurate valuation of assets in illiquid markets which are not functioning properly, which could provide their financial institutions with much more flexibility to move away from using distressed prices in these circumstances. They also propose amendments to current US GAAP impairment rules. These changes could result in a significant divergence of international accounting practice for financial instruments.

Ministers therefore call on the IASB to cooperate closely with the FASB in order to immediately address these issues, with the aim of achieving equivalent treatment and application of parallel standards in the IFRS and US GAAP systems, in order to avoid risks of competitive distortions emerging.

5 April 2009: FEE views on fair value measurement
FEE, the Federation of European Accountants, has submitted its response to the Financial Crisis Advisory Group's 11 March 2009 Invitation to Comment. With regard to fair value measurement of financial instruments, FEE states:
FEE believes strongly that financial reporting based on IFRS, and notably fair value accounting for financial instruments, has revealed the economic reality of market participants' positions at an earlier stage than otherwise would have been the case under a more cost basis driven model. In our view, the requirement to account for certain financial instruments at fair value has not caused the financial crisis nor has it been a significant contributing factor. Nevertheless, practice has shown that fair value accounting is more difficult to apply in illiquid markets and preparers and auditors have had to use significant judgments to arrive at consistent valuations in difficult market circumstances. Preparers would benefit from additional guidance on fair value measurements when observable market prices are not available.

Financial reporting under IFRS did show that financial institutions were highly geared. The introduction of IFRS 7 further improved risk disclosures on financial instruments. As 2007 was the first year that IFRS 7 was required to be applied and this gave greater scope to risk disclosure, it is expected that risk disclosures will further improve as more experience with the standard is being gained. The Financial Stability Forum disclosure requirements have also enhanced the risk disclosures.

The financial crisis has accelerated the discussion on the need to introduce anti-cyclical measures to the global system of financial regulation and to a certain extent also to financial reporting. Financial reporting has been blamed by some commentators for its pro-cyclical influence, thus aggravating the situation in markets that have become distressed or illiquid. We are of the opinion that the effects of the current market volatility are captured, but not caused by fair value accounting. Fair value provides a timely and relatively objective measure of existing value. Failure to report such values would leave investors and policy decision makers less aware or even unaware of credit and liquidity challenges. The accounting policies need to indicate carefully on which basis the fair values concerned have been determined.

Click to download the FEE Response to FCAG (PDF 84k)

3 April 2009: IASCF releases 2009 XBRL IFRS Taxonomy
The IASC Foundation has issued the final IFRS Taxonomy 2009 and published for comment a draft of the Due Process Handbook for XBRL Activities. The taxonomy translates IFRSs as of 1 January 2009 into XBRL (eXtensible Business Reporting Language). XBRL allows companies, regulators, investors, analysts and others to benefit from easier filing, improved access to, and comparison of financial data. Both the 2009 taxonomy and the draft Due Process Handbook for XBRL Activities may be downloaded without charge from the IASB's Website at www.iasb.org/XBRL/XBRL.htm. Click for Press Release (PDF 28k). We have an XBRL Page on IAS Plus.

3 April 2009: Deloitte response to FCAG invitation to comment
Deloitte Touche Tohmatsu has submitted a comment letter to the Financial Crisis Advisory Group (FCAG) in response to FCAG's 11 March 2009 Invitation to Comment. The FCAG invited responses to seven questions, to assist FCAG in discussing accounting and reporting matters related to the global financial crisis and making recommendations thereon to the IASB and the US FASB. The IASB and the FASB jointly established the FCAG to advise them about the role of accounting during the crisis and potential changes. The Deloitte letter is in two parts: Deloitte United Kingdom has also submitted a separate letter to FCAG addressing the going concern issue: Past Deloitte comment letters to IASB and related bodies are Here.

3 April 2009: Three FASB Staff Positions on fair value
Yesterday, the US Financial Accounting Standards Board approved three FASB Staff Positions (FSPs) to clarify fair value accounting for financial instruments, particularly in distressed markets. The Board had received 600 comment letters on three proposed FSPs. The letters presented mixed messages from investors, individuals, preparers, regulatory bodies, business associations, and auditors regarding the proposed FSPs. An extensive discussion took place before consensuses were reached by FASB to draft and issue final standards:
  • FSP FAS 157-e Determining Whether a Market Is Not Active and a Transaction Is Not Distressed. In discussing this proposal, the FASB indicated that proposed FSP FAS 157-e was not intended to change the objective of a fair value measurement even when there has been a significant decrease in market activity for the asset being measured. The objective is to determine fair value (an 'exit price') in the current inactive market and not the value in a hypothetical active market or a midpoint between the two. A significant change from the proposed FSP FAS 157-e relates to the removal of the presumption that all transactions in an inactive market are distressed unless proven otherwise.
  • FSP FAS 115-a, FAS 124-a, and EITF 99-20-b Recognition and Presentation of Other-Than-Temporary Impairments (OTTI). FASB agreed that the scope of the new OTTI model should be limited to debt securities. The existing OTTI models for equity securities would continue. The new OTTI model for debt securities would shift the focus from an entity's intent to hold until recovery to its intent to sell.
    • An entity would write underwater debt securities that it currently intends to sell down to fair value through earnings.
    • For those not intended for sale (available-for-sale or held-to-maturity), if it is probable that the entity will not collect all amounts contractually due, the entity will bifurcate the OTTI. The impairment due to credit, measured as the difference between amortized cost and the present value of expected cash flows discounted at the security's effective rate, would be recognised in earnings. The remaining amount of the impairment (noncredit portion) would be recognized in other comprehensive income.
  • FSP FAS 107-b and APB 28-a Interim Disclosures about Fair Value of Financial Instruments. Public entities must disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments in interim and annual financial statements and explain any changes.
The final FSPs are expected to be issued late next week, effective for interim and annual periods ending after 15 June 15 2009. Early adoption would be permitted with restrictions. Deloitte (United States) has published a 'Breaking News' Heads Up Newsletter (PDF 150k). The IASB has invited comments on the proposed versions of the first two of the above FSPs (see the IAS Plus News Story of 21 March 2009. We have lots of related news on our Credit Crunch Page.

3 April 2009: Notes from the IASC Foundation Trustees meeting
The Trustees of the IASC Foundation, under which the IASB operates, met in London on 1 and 2 April 2009. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the public portion of the meeting. The Trustees also held a joint meeting with the new IASCF Monitoring Board on 1 April. Our notes of that meeting are posted separately immediately below.
Notes from the Meeting of the IASC Foundation Trustees
1 and 2 April 2009

Review of the IASB Work Programme: Progress on Issues Raised by the G20 and Financial Stability Forum

The IASB Chairman reviewed with the Trustees the work of the Board to answer the demands of the G20 and Financial Stability Forum. He outlined that the IASB would work to replace IAS 39 in 'months not years' (perhaps 6-8 months) and was already working closely with the FASB and prudential regulators.

There was broad support from the Trustees on the IASB's intended actions, although some thought that the IASB was being too defensive. In particular, some of the IASB's proposed actions could be seen as radical. What was important was to maintain the commitment to high quality global standards: no more quick fixes.

An underlying concern, and one perhaps for the Monitoring Board to consider, was what would happen if the FASB 'went left' and the IASB 'went right'? International convergence was still the goal, but the two main standard-setters were subject to tremendous pressure in their own markets.

A Trustee noted that 'dynamic provisioning' was an unfortunate term and one that lacked an agreed definition. Were he a Board member, he would not support any loan loss model that allowed for cookie jar reserves. However an approach that allowed for a thoughtful way to provide for losses in the financial statements, that was transparent, and that allowed the possibility of expected losses 'might be a great place to be'.

Sir David thanked the Trustees and noted that the staff was already hard at work on the issue.

Report of the Due Process Oversight Committee

The Trustees received a report from the chairman of the Trustees' Due Process Oversight Committee. The committee will include a summary report in the IASC Foundation's annual report and include a more comprehensive report on its activities on the Foundation's website.

The focus of the committee in 2008 would be, in particular, the standard-setting process at the IASB; and the effectiveness of working groups.

The draft report of the Committee for inclusion in the IASCF's Annual Report was approved.

The Trustees also agreed to issue a Due Process Handbook for the IASCF's XBRL Activities, which will be released in early April for a 90-day public comment period. There was some discussion of the quality assurance (especially 'accounting technical') processes around the IFRS XBRL Taxonomy, especially the extent to which it interprets IFRSs into the financial statements in a particular way, and that technical accounting experts are satisfied that that application is appropriate. This point will receive particular attention of the quality review teams and a report will be made to the July Trustees' meeting.

Trustee Robert Glauber reported on his impressions of the reconstituted Standards Advisory Council. He noted that the SAC wants feedback from the IASB that addresses their comments on the agenda and other issues discussed with it. Trustees noted that, to be truly effective, the SAC needed to be used properly, and to be respected.

Report on the Constitution Review

The IASCF staff presented a draft of the proposed Feedback Statement on Phase I of the Constitution Review. There was no substantive discussion of this document.

The staff noted that the comment period on the opening round of Phase 2 of the review had closed on 31 March. The staff would be analysing the comments and discussing them with the Constitution Committee before bringing recommendations for changes to the Constitution to the July 2009 Trustees' meeting. The review must be completed by 2010. It was intended to hold public roundtables in Asia (Tokyo), the Americas (New York), and London, late in 3Q and during 4Q 2009.

The staff also noted that the Monitoring Board's Charter would be published on 2 April 2009. The staff noted that the Charter required decisions by consensus and that any change to that would probably need Trustee concurrence, even though the Trustees are not a signatory to the Charter (they are a signatory to the Memorandum of Understanding).

IFRS Dissemination Strategy

Sir Bryan Nicholson, chair of the Finance Committee, presented various approaches to implementing the decision made in October 2008 to provide free access to the mandatory elements of IFRSs. The approaches outlined the key issues to be addressed if the IASCF were to provide more of its materials for free.

The decision was closely related to the long-term funding arrangements for the organisation. In 2008, the IASCF recorded a profit of £3.3 million on the sale of publications and related activities, such as licensing the content to others. This is part of the IASCF's overall funding base.

The Trustees noted that, until the stable funding system is in place and fully operational, they probably could not afford to lose significant revenue streams. Therefore, they agreed not to extend free access to non-mandatory elements of IFRS and other materials for the moment. They committed to reconsidering this position in 2011, by which time they will be able to assess the effect of providing free access to the mandatory content.

XBRL Developments

Olivier Servais, the IASCF XBRL Team Leader, presented an overview of developments with respect to the IFRS XBRL Taxonomy. The Trustees approved the 2009 XBRL Taxonomy for issue and it is now public.

The Trustees approved the draft XBRL Due Process Handbook for exposure and this was released on 2 April 2009 for a 90-day comment period.

The XBRL staff also reviewed budgets and other matters, but there was little discussion of these items.

There was more discussion of whether the IASCF should develop 'IFRS Taxonomy Extensions' – additional tags that go beyond the mandatory IFRS requirements (for instance, to disaggregate property, plant and equipment, or address industry-specific line items).

The staff presented a proposal under which they would work with the IASB and the Trustees Due Process Oversight Committee to develop an approach to the issue. This would be presented at the July 2009 Trustees' meeting.

In discussing the proposals, the Trustees were very aware of the delicate balance that they had to achieve: was XBRL a business tool or an official pronouncement? How was it to be branded? In addition, by exploring 'taxonomy extensions', the XBRL was taking the IASB into industry-specific areas – something that the IASB has consistently resisted doing.

Trustees cautioned that care was needed in deciding what to do and how far to go. This needed to balance the desires of securities regulators to have common extensions against concerns about unintended interpretations of IFRSs. This suggested that a shared responsibility approach was most desirable.

The IASCF staff noted that they were already working with IOSCO and others to explore how to make such co-operation operational.

Review of Long-term Funding of the IASC Foundation

The Trustees discussed progress towards a stable long-term funding regime for the IASCF. They noted that if they were to expand their activities to the budgeted £23 million level as planned, the IASCF would face a £6.6 million funding gap (about £4 million if you include publication revenues in the contribution line).

The Trustees discussed the implications of this at some length. One Trustee noted that, with the agreed central funding in the European Union from 2011, there was no certainty that voluntary funding would continue (it would likely not continue in some Member States at least). It was noted that the 'programme funding' did not include the US$8 million contributed by the major accounting networks on an annual basis. Sam DiPiazza noted that the networks were not asking to be relieved of this contribution, but did acknowledge that the networks' contribution impairs the independence of the IASCF.

Sir Bryan Nicholson noted that IFAC's Public Interest Oversight Board takes a very close interest in the allocation of public funds. It is likely that the IASCF's Monitoring Board will do likewise: therefore it is necessary that the Trustees are realistic about raising money. The jump to the long-term funding regime cannot be accomplished in one year. The IASCF will continue to have a mixture of voluntary contributions and programme funding for a while longer, and will need the net proceeds of the sale of publications as well.

The Trustees' finance committee will meet in the near future and will return with further proposals at the July 2009 meeting.

This summary is based on notes taken by observers at the IASCF Trustees meeting and should not be regarded as an official or final summary.

3 April 2009: Notes from the IASCF Monitoring Board meeting
The Trustees of the IASC Foundation held a joint meeting with the new IASCF Monitoring Board on 1 April 2009. It was the inaugural meeting of the Monitoring Board. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting.
Notes from the Joint Meeting of the IASCF Monitoring Board and IASCF Trustees
1 April 2009

Gerrit Zalm, IASCF Chairman, chaired this meeting, noting that this would not be the usual situation because the Monitoring Board would appoint its own chair. He welcomed the Monitoring Board members:
  • International Organization of Securities Commission (IOSCO):
    • Emerging Markets Committee: Guillermo Larain
    • Technical Committee: Hans Hoogervorst
  • European Commission: Charlie McCreevy, Commissioner for Internal Market and Services
  • Financial Services Agency (Japan): Junichi Maruyama, Deputy Commissioner for International Affairs
  • US Securities and Exchange Commission: Mary Schapiro, Chairman
  • Basel Committee on Banking Supervision [Observer]: Sylvie Matherat (Banque de France), Chair, Accounting Task Force

Mr McCreevy noted that the financial crisis had highlighted the necessity of removing 'regulatory arbitrage' through co-operation among securities regulators. Ms Schapiro stated that the SEC remained committed to the independence of financial reporting standard-setting and to the investor focus of financial reporting. In addition, as far as the capital markets were concerned, she supported the pre-eminence of investors' needs. A single set of high-quality financial reporting standards was part of that commitment, and the SEC remained committed to the goal of international convergence.

The IASCF Vice-Chairman pleaded with the Monitoring Board that they continue the apolitical nature of the Trustees: in his view, the dedication and impartiality of the Trustees had served the organisation well for the past eight years and was something worthy of preserving.

Trustees' Oversight Activities in 2008 and Priorities for 2009

Antonio Vegezzi, Chair of the Trustees' Due Process Oversight Committee, presented a review of the activities of the committee for 2008 and their priorities for 2009. He noted that the due process of the IASB was an area of concern for all the Trustees, and that the meetings of the committee were not restricted to members of the committee. The meetings and minutes are not made public, but reports of the activities of the committee are discussed with the Trustees in open session.

Members of the Monitoring Board questioned the suspension of due process in October 2008. Mr Vegezzi stated that the decision was taken by the Trustees as a whole, unanimously and after intense discussion. It was not something that was done lightly.

Sam DiPiazza noted that the Trustees took the due process of the organisation very seriously and that the due process of the IASB was 'far beyond' that of the US Financial Accounting Foundation and the FASB. He stated that 'due process is at the heart of everything that the Trustees do'.

IASC Foundation Financial Position

David Sidwell, Chairman of the Trustees' Audit Committee, reviewed the financial statements of the IASB, which had been approved at a meeting of the Audit Committee on 31 March 2009 and the audit report signed.

Looking forward, Mr McCreevy noted that the European Union would be providing funds from the main budget for the years 2011-2013, subject to the final approval of the Commission's recommendation, which was expected by the end of the current EU Parliamentary session. There was a general discussion of funding, but little beyond general support for the approach being developed by the Trustees.

Funding and Requirements for the IASC Foundation

Miranda Corti, IASCF Director of Finance and Resources, made a presentation of the IASCF's expected resource requirements over the next five years. To meet the IASCF's objective of establishing IFRS as the global standards for financial reporting, staff resources would need to rise from 110 now to 140 by 2013, with an expense budget of about £23 million. A short discussion followed.

Proposed Trustee Nomination Process for 2009

The Monitoring Board was informed that the Trustees were likely to recommend the re-appointment of the following Trustees whose terms expire in 2009 and who are eligible for reappointment and have indicated a willingness to continue: David Sidwell, Paul Tellier, Jeff van Rooyen, and Luigi Spaventa. Two Trustees must retire (Phil Laskawy and Bertrand Collomb), and the process of advertising for their replacements would begin in April 2009. In particular, the proposed process was:

  • April 2009: the Trustees should advertise for a minimum of two positions (the two members who are term-limited) and specifically invite nominations from Europe and North America. The advertisement will be released in early April in the Economist and provide six weeks for nominations.
  • April and May 2009: the Trustees will provide the opportunity for the Monitoring Board to put forward candidates for consideration by the Trustees during the period of advertisement. Simultaneously, the Trustees will write to relevant stakeholder groups, particularly from the investor, preparer, and official communities, to seek nominations.
  • June 2009: the Nominating Committee will develop a possible shortlist of candidates, based upon the input received from the Monitoring Board and other parties, and will conduct background research where appropriate.
  • July 2009: At the Trustees' meeting, the Nominating Committee will present a recommendation to the full Trustees' meeting. Once supported by the Trustees, the Trustees would formally present nominations to the Monitoring Board for consideration. The process should be complete by September 2009.

There were no particular comments from members of the Monitoring Board on the proposed approach. However, Mr McCreevy noted that he would be consulting his European colleagues, including the EU Parliament and Member States. This comment was clearly unexpected and caused a great deal of concern, especially among Trustees. One Trustee asked whether there were other areas of the Monitoring Board's mandate that were subject to the review of the EU Parliament. Another asked whether what the Commissioner was referring to was 'consultation' or 'consent'. Mr McCreevy subsequently clarified his remarks by saying that his discussions would be informal consultations and would be restricted to EU candidates. He hoped that there would be a consensus around any candidate, but in the absence of such a consensus, the decision would rest with the Commissioner.

IFRS Adoption in Emerging Markets

Guillermo Larrain (IOSCO Emerging Markets Committee) briefed the Monitoring Board and Trustees of the results of a survey about the implementation of IFRS in emerging markets [not emerging economies]. He noted in particular that Brazil had decided to adopt (not adapt) IFRS, which was a significant move.

Sam DiPiazza observed that, in his experience, the training being undertaken in South America was impressive and that the capacity to support IFRS was already good and getting better. In addition, he had seen that principles-based judgements were 'just as robust' in emerging markets as they were in developed ones.

Response to the Financial Crisis

Sir David Tweedie introduced the IASB's responses to the financial crisis and explained in broad terms some of the issues being addressed by the IASB (most of them jointly with FASB). He stressed that this meeting should not get into technical details, but should address process issues only.

Ms Matherat (Basel Committee) stressed Basel's commitment to working with the IASB towards the 'more timely recognition of losses'. In addition, there was a need to have an audit trail from internal reporting to external financial reporting to prudential filings, but she did not elaborate what this might be.

Participants expressed various views on aspects of providing for losses in financial statements and encouraged the IASB to have an open mind as they explored the alternatives. In addition, bank regulators were encouraged to tighten the requirements about what could be distributed by banks.

A Trustee noted that it was not the loss provisioning model that had saved banks in some jurisdictions; it was the regulator actively preventing them from investing in certain asset classes that had saved them. Sir David agreed, noting that regulatory capital had been too low to cover 'unexpected' losses. Ms Matherat noted that, in her view, loan loss provisions were there to provide for expected losses; and capital provided the cushion against unexpected losses. Both had proved inadequate in the current financial crisis.

Closing the debate, Sir David outlined the IASB's proposals for replacing IAS 39, to which there was general agreement. Although welcoming the intent to replace IAS 39 'in months, not years' (Sir David's words), Mr McCreevy observed that the IASB had yet to give the Commission Services an adequate response to their letter sent in late October 2008. Sir David noted that this letter had been discussed with a broad range of constituents, and the IASB had received a strong message that the items in that letter were not imperative when compared to fixing IAS 39 as a whole. Mr McCreevy and Sir David 'agreed to differ' on this point.

This summary is based on notes taken by observers at the Joint Monitoring Board and IASCF Trustees meeting and should not be regarded as an official or final summary.

3 April 2009: Monitoring Board elects chair, approves charter and MoU


Mr Hoogervorst
 The IASCF Monitoring Board held its first meeting, jointly with the Trustees of the IASC Foundation, on Wednesday 1 April 2009 in London. The Monitoring Board members participating in the meeting with the IASCF were Hans Hoogervorst, Chair of the Netherlands Authority for Financial Markets; Guillermo Larrain, Chairman of the IOSCO Emerging Markets Committee and the Superintendencia de Valores y Seguros of Chile; Junichi Maruyama, Deputy Commissioner for International Affairs of the JFSA; Mary Schapiro, Chairman of the US SEC; European Commissioner Charlie McCreevy; and Sylvie Matherat, representative of the Basel Committee on Banking Supervision. At the meeting, the Monitoring Board:
  • Elected Hans Hoogervorst, Chair of the Netherlands Authority for Financial Markets, as its first Chairman for a two-year term
  • Adopted a Charter (PDF 390k) setting out the Monitoring Board's role and duties, organisation, membership, and meeting requirements, among other things
  • Approved a Memorandum of Understanding Between the Monitoring Board and IASCF (PDF 360k) defining the role of the Monitoring Board and its relationship with the IASCF Trustees
The Charter defines the Monitoring Board's mission as follows:
  • To cooperate to promote the continued development of International Financial Reporting Standards as a high-quality set of global accounting standards;
  • To monitor and reinforce the public interest oversight function of the IASCF while preserving the independence of the IASB. In that regard:
    • To participate in the selection and approval of IASCF Trustee appointments; and
    • To advise the IASCF Trustees with respect to the fulfillment of their responsibilities, in particular with respect to regulatory, legal and policy developments that are pertinent to the IASCF's oversight of the IASB and appropriate sources of the IASCF's funding;
    • To discuss issues and share views relating to International Financial Reporting Standards, as well as regulatory and market developments affecting the development and functioning of those standards.
The MoU states the purpose of the IASCF Monitoring Board as follows:
The primary purpose of the IASCF Monitoring Board is to serve as a mechanism for formal interaction between capital markets authorities and the IASCF, thereby facilitating the ability of capital market authorities that allow or require the use of IFRS in their jurisdictions to effectively discharge their mandates relating to investor protection, market integrity, and capital formation. The IASCF Monitoring Board will help ensure the public accountability of the IASCF by monitoring and reinforcing the public interest oversight function of the IASCF, as well as to promote the continued development of IFRS as a high-quality set of global standards.
Click for IASCF Monitoring Board Press Release (PDF 48k).

3 April 2009: IFRS model financial statements in French
Deloitte (Canada) has published Model IFRS Financial Statements for 2007 in the French language. These model financial statements for the year ended 31 December 2007 illustrate the application of the presentation and disclosure requirements of International Financial Reporting Standards (IFRSs) by an entity that is not a first-time adopter of IFRSs. They also contain additional disclosures that are considered to be best practice, particularly where such disclosures are included in illustrative examples provided with a specific Standard. Although several new Standards and Interpretations were issued during 2008, none are effective for December 2008 year ends. For this reason, these 2007 model statements remain a relevant reference for 2008. Click for:

2 April 2009: Do not confuse investor reporting and prudential regulation
The European Contact Group (ECG) – a European forum of representatives of the six largest international accounting networks, including Deloitte – has Written to Charlie McCreevy (PDF 57k), the European Commissioner for Internal Market and Services, concerning 'dynamic provisioning' for determining appropriate bank provisions for loan losses. The ECG letter characterises various dynamic provisioning proposals into two general categories:
  • Improvements to or changes from the 'incurred loss' model employed by current IFRSs, and
  • Introduction of a 'buffer fund' to address economic cyclicality
Regarding the first type, the ECG supports the current projects of IASB and FASB to improve impairment recognition for debt and equity instruments, including possibly replacing the 'incurred loss' model by an 'expected loss' model. But ECG does not support proposals to introduce into financial reporting intentional excessive conservatism that could undermine the ability of financial statements to give a true and fair view of financial position and financial performance for the period.

Regarding the buffer fund approach, ECG notes that while this may be something that bank regulators may wish to consider for prudential regulation purposes, incorporating this into financial reporting standards is wholly inappropriate. "Applying a mixture of financial and prudential accounting in the financial statements will damage the transparency, consistency and comparability of financial statements to the detriment of capital market users."

On 25 March 2009, FEE, the Federation of European Accountants, published a Policy Statement with a similar message. Also, EFRAG made essentially the same point in its Letter to the Joint IASB Financial Crisis Advisory Group (PDF 76k):
One of the issues that is being much debated at the moment is the relationship between general purpose financial reporting and prudential reporting. While there are links between the general purpose financial reporting and prudential reporting and there are advantages to be gained the closer general purpose financial statements and the prudential returns are to each other, the information needs of capital market participants are not the same as those of prudential regulators. Therefore, we think it is fundamentally important that it is recognised that those different information needs mean different financial reporting objectives, and that could mean different reporting.

2 April 2009: Practical insights on converting to IFRSs
An article in the April 2009 issue of Financial Executive magazine presents the views of senior financial officers of two companies, Deutsche Telekom National Grid, who were responsible for making their company's transition to IFRSs. Both executives emphasise the importance of a stable platform of accounting standards before embarking on an IFRS conversion. The article reviews the steps each company took in making the transition and the internal changes – both practical and mindset changes – that were involved. The article is copyright by Financial Executives International and is posted on IAS Plus with their kind permission. Click to download the article IFRS in Three Years Possible... But Only with a Stable Platform (PDF 73k). We have added a link to this article on our First-time Adoption Page.

2 April 2009: Deloitte response to IASCF Constitution Review Part 2
Deloitte Touche Tohmatsu has submitted a letter of comment in response to the invitation to comment from the IASC Foundation on the Review of the IASCF Constitution: Identifying Issues for Part 2 of the Review (PDF 165k). Among the ideas expressed in the letter:
Deloitte Touche Tohmatsu Suggestions for IASCF Constitution Review Part 2
  • 'Principles-based' standards. The Constitution should require that "the IASB should develop financial reporting standards that are based on 'clear principles'. We would use the phrase 'clear principles' in the Constitution in preference to 'principles-based', for which there is no consensus on what that phrase means".
  • IASB due process. The IASB should amend its Due Process Handbook to require the IASB to:
    • give constituents an opportunity to comment on the IASB's agenda and relative priorities
    • substantively redeliberate a preliminary view included in a discussion paper if there is a substantial un-orchestrated level of opposition to it
    • make a preliminary assessment of the practical and cost/benefit consequences of a particular approach before committing itself to that approach
    • conduct field tests when a proposal would change current practice in an untested way
  • Fast track changes to standards. We do not support creating a separate 'fast track' procedure for changes to IFRSs
  • Standards for not-for-profit entities and public sector entities. The IASB's primary function at present is 'private sector' financial reporting standards. We believe that this responsibility remains appropriate and should not change at this time. The IPSASB should be encouraged to continue to develop public sector standards based on IFRSs. In due course, although not as a current priority, the IASB should address issues in financial reporting by not-for-profit entities.
  • Collaboration. The Constitution should not be amended to encourage or require IASB collaboration with any specific organisations. The Constitution already permits such collaboration, and the IASB has been doing so quite successfully with a range of organisations.
  • Monitoring Board. The Constitution should be amended to incorporate several of the principles set out in the Memorandum of Understanding between the IASCF and the new Monitoring Board – specifically that the MoU does not alter the terms of the relationship between the Trustees and the IASB; nor does it alter the Trustees' responsibilities as described in the Constitution.
  • Standards Advisory Council. The Trustees develop criteria that will allow them to assess how effectively the IASB engages with and responds to the Standards Advisory Council.
  • Funding. We are firmly in favour of a principle that those parties who use the IASC Foundation 'works' (IFRSs and related documents) should bear the burden of funding the IASC Foundation's standard-setting activities. We believe that this is best left in the hands of local financial market regulators, who in turn should be responsible for raising the money from their constituents, including but not necessarily limited to preparer companies.
  • IASCF openness. 'Many of the criticisms being levelled at the IASCF and the Trustees in particular stem from a lack of transparency and understanding around what they do and how they do it. We encourage the Trustees to prepare a document that explains their operating procedures and how they exercise their oversight functions.'
  • IASCF CEO. We favour appointing a CEO of the IASCF, one who is not a member of the IASB or the IASB/IFRIC staff
Click here for more information about 2008-2009 Constitution Review on IAS Plus.

1 April 2009: 2009 illustrative annual report from Deloitte Australia

 Deloitte Australia has released their Illustrative Annual Report for financial years ending on or after 30 June 2009. Australian accounting standards are identical to IFRSs. The main changes from 2008 that are illustrated in this publication are:
  • the changes to the ASX corporate governance principles and recommendations
  • AASB 8 Operating Segments (early adoption) (identical to IFRS 8)
  • Interpretation 13 Customer Loyalty Programmes
In releasing the new illustrative report, Deloitte Australia notes:
Our objective in this publication is to encourage you to 'tighten the screws' on your disclosures in your financial report. In current market conditions users will seek more information around going concern status and liquidity positions. It may be timely to revisit current disclosures and to ensure that the current market conditions are taken into account. Impairment of assets is also of interest to users of financial reports. Directors should ensure that their review processes are robust and transparent and that the disclosure in financial reports reflects both technical compliance with the disclosure requirements and provides meaningful information to make decisions and understand the entity's business.
The Illustrative Annual Report is released in four parts:
  • Section A – What's new in Financial Reporting? (PDF 393k). Provides a summary of the changes to pronouncements, as well as links to where you can find further information that may be helpful.
  • Section B – Illustrative Annual Report (PDF 1,083k). Accounting Standard AASB 101 Presentation of Financial Statements (identical to IAS 1) requires that the entity include in the notes to the financial statements an explicit and unreserved statement of compliance with IFRSs. If the auditor is of the opinion that the financial report complies with IFRSs, the auditor's report so states.
  • Section C – Illustrative Concise Report (PDF 880k). Australian Corporations Law permits an entity to fulfil its annual reporting obligation to shareholders by providing a 'concise financial report for the year drawn up in accordance with accounting standards made for the purposes of this paragraph'. In August 2008 the Australian Accounting Standards Board adopted AASB 1039 Concise Financial Reports (Available Here).
  • Section D – Reporting Obligations (PDF 250k). Contains useful information on the requirements to prepare, audit, and lodge financial reports, as well as reporting deadlines, under Australian laws and regulations.

1 April 2009: IPSASB proposes to adopt IAS 41 for the public sector
IFAC's International Public Sector Accounting Standards Board (IPSASB) has published an exposure draft ED 36 Agriculture. This ED is part of the IPSASB's global convergence program, scheduled for completion by 31 December 2009, to substantially converge International Public Sector Accounting Standards (IPSASs) with IFRSs approved at 31 December 2008. ED 36 proposes an IPSAS that converges with the IAS 41 Agriculture, with limited changes to ensure consistency with other IPSASs. These changes include an acknowledgement that, in some jurisdictions, biological assets may be sold or transferred for nominal amounts. You can download ED 36 from IFAC's Website. Comment deadline is 30 June 2009.

1 April 2009: FCAG letter to the G20
The Financial Crisis Advisory Group (FCAG) has issued a letter for distribution to the members of the G-20 meeting in London tomorrow. The FCAG was established by the IASB and the US FASB to advise the two boards about standard-setting implications of the global financial crisis and potential changes to the global regulatory environment. The letter explains the mission of the FCAG and its progress to date. The letter notes that the FCAG expects to issue its report in July 2009. Click for FCAG Letter to the G20 (PDF 45k).



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