31 May 2009: Full convergence with IFRSs in Singapore by 2012

The Singapore Accounting Standards Council has decided to fully converge Singapore Financial Reporting Standards with IFRSs by 2012. The fully-converged standards would apply to all Singapore-incorporated companies listed on the Singapore Stock Exchange. This was announced in an address by Mr Tharman Shanmugaratnam, Singapore Minister for Finance, at an IFRS conference in Singapore on 27 May 2009. Click to Download Mr Shanmugaratnam's Address (PDF 85k). Here is an excerpt: Singapore's Convergence Roadmap As an international business and financial centre, Singapore has a strong stake and interest in the development of IFRS as the global accounting standard. We have long been an advocate for a single global accounting standard, and since 2002, Singapore has embarked on a strategy of closely modeling our Singapore Financial Reporting Standards or SFRS after the IFRS – deviating from IFRS only in very specific and exceptional instances where there are strong reasons backed by economic and business substance arguments. Singapore companies have generally been 'IFRS-ready' and 'IFRS-compliant' in a substantive manner for a number of years now. With our experience implementing IFRS, Singapore is thus well placed to play an active role in the development of IFRS as the global accounting standard. The Singapore Accounting Standards Council has therefore decided to take a key step forward in its strategic directions, to work towards the full convergence of the SFRS with the IFRS for Singapore incorporated companies listed on the Singapore Stock Exchange by 2012.

31 May 2009: Deloitte Canada Countdown IFRS transition newsletters

Deloitte Canada has published the May 2009 issue of their Countdown IFRS transition newsletter, to discuss practical issues Canadian companies are facing in IFRS transition as well as to provide an update on recent IFRS events. Articles in this issue include: Managing Costs on Transition to IFRS The 'Real Deal' – real issues and solutions on IFRS transition relating to impairment Just Released – CSA Staff Notice 52-324 Issues Relating to Changeover to IFRS Deloitte Publications and Events and How to Access Them An Update on Current IFRS events – including various important ED's or Discussion Papers Click below for: May 2009 Edition Countdown Newsletter – English (PDF 1,994k) May 2009 Edition Countdown Newsletter – French (Compte à Rebours) (PDF 1,743k) You will find more information about financial reporting in Canada on our Canada Page.

30 May 2009: IASB webcasts on income tax exposure draft

On 3 June 2009, the IASB will host two live webcasts introducing the exposure draft (ED) Income Tax. The ED was published on 31 March 2009, with comments due 31 July 2009. The ED proposes to replace IAS 12 Income Taxes with a new standard that retains the 'temporary difference' approach in IAS 12. The objective of that approach is to recognise now the future tax consequences of past events and transactions, rather than waiting until the tax is payable or recoverable. Although the proposed standard retains the same principle, the IASB proposes to remove most of the exceptions in IAS 12, to simplify the accounting, strengthen the principle in the standard, and restructure the standard. Details of the webcasts: Webcast Topic: IASB Exposure Draft on Income Tax Date: Wednesday, 3 June 2009 Times: 9:30am (London time) and again at 3:30pm (London time) Presenters: Robert Garnett, Member of the IASB, and Anne McGeachin, Senior Project Manager More Information and Registration Download the Exposure Draft: 'Open to Comment' Section of IASB Website

30 May 2009: European survey of users' information needs

The European Financial Reporting Advisory Group (EFRAG) and the French national standard-setter (Conseil National de la Comptabilité) have jointly issued a report of a recent survey about the needs of users of financial statements in Europe. 32 user organisations in 10 countries took part in the survey. Users were almost unanimous in finding financial statements and management commentary the most useful sources of financial information. Amongst the improvements that users would like to see were: more stability in reporting standards. improved comparability. simpler presentations that highlight key data and key disclosures. better disclosure of risk management information. more or better quality prospective information. more highlighting of trends in growth and profitability. Click to Download the Report (PDF 1,704k).

29 May 2009: IFRSs and private company reporting in the United States

The Deloitte United States Center for Corporate Governance has published International Financial Reporting Standards: What it Means for Private Company Reporting. This publication discusses the movement toward IFRSs and its implications for private company financial reporting in the United States. It also discusses some financial reporting issues that may be unique to private companies (also known as small and medium-sized entities, or SMEs), and the efforts of the IASB to develop a set of global standards geared specifically to private companies, the IFRS for SMEs. Finally, the paper discusses the potential benefits and challenges of using either IFRSs or IFRS for SMEs, as well as, some key questions and considerations for private company financial statement users and preparers. Also included is a comparison of financial reporting under proposed IFRS for SMEs with US GAAP in selected areas. Click to: Download IFRS: What it Means for Private Company Reporting (PDF 725k) Go to the Deloitte Center for Corporate Governance Website Here is an excerpt from the report: The benefits of global standards are not limited to public companies, as markets are also becoming integrated for private companies, both large and small. More and more private companies are looking to do business across borders and obtain financing from foreign sources. Reduced complexity, greater transparency, increased comparability, and improved efficiency are all potential benefits of IFRS and IFRS for Private Entities*. Both IFRS and IFRS for Private Entities also may reduce the burden of financial reporting on private companies, thereby reducing compliance costs. Not only might private companies benefit from a common set of reporting standards, but the users of their financial statements, particularly those in different jurisdictions, would likely benefit as well. Users such as lenders, vendors, customers, venture capitalists, and non-management owners will need to understand only one set of standards in their dealings with private companies in different jurisdictions.... IFRS or IFRS for Private Entities may be a welcome alternative to US GAAP for many private companies. The factors that drive the choice of a reporting standard, however, are unique to each company's objectives and growth strategies. In making the choice, private companies will likely benefit from carefully evaluating the options and measuring the potential costs and benefits. *Shortly after this publication went to press, the IASB decided that the final name of the standard will be IFRS for SMEs.

29 May 2009: Stay Tuned Online – IFRS and UK GAAP update

The Deloitte London IFRS Centre of Excellence is running a series of hour-long Internet-based financial reporting updates, aimed at helping finance teams keep up to speed with IFRSs and other financial reporting issues. Each update lasts no more than an hour, and sessions are normally held three times a year, approximately at the end of March, July and November. (This particular webcast is an added one because of the number of recent IASB publications.) We intend to make a recording of each session available on IAS Plus for a period of at least four months from the date of the presentation. The topics covered in the 28 May 2009 Stay Tuned Online IFRS and UK GAAP Update: ED Income Tax ED Derecognition: proposed amendments to IAS 39 and IFRS 7 DP Preliminary Views on Revenue Recognition in Contracts with Customers DP Leases: Preliminary Views. To access the recording Click Here. There's a permanent link on our UK Country Page.

28 May 2009: IASB exposure draft on fair value measurement

The IASB has published an exposure draft (ED) of proposed guidance on how fair value should be measured where it is required by existing standards. The ED does not propose to extend the use of fair value measurements in any way. It would add disclosure requirements about how fair values were determined. If adopted, the proposals would replace fair value measurement guidance contained within individual IFRSs with a single, unified definition of fair value, as well as further authoritative guidance on the application of fair value measurement in inactive markets. The IASB's starting point in developing the exposure draft was the equivalent US standard, SFAS 157 Fair Value Measurements as amended. The proposed definition of fair value (FV) is identical to the definition in SFAS 157 and the supporting guidance is also largely consistent with US GAAP. Comment deadline is 28 September 2009. Click for Press Release (PDF 101k). Overview of the Proposals in the Fair Value Measurement ED FV definition. The IASB proposes an exit price definition of FV: "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". Most advantageous market. FV measurement of an asset or liability assumes sale or transfer in the most advantageous market for the asset or liability available to the entity. Measurement assumptions. FV measurement of an asset or liability should use the assumptions that market participants would use in pricing the asset or liability. Highest and best use of an asset. FV measurement of an asset assumes that the asset will be sold to a market participant who will use it at its highest and best use. Assume transfer of a liability. FV measurement of a liability assumes that the liability is transferred to a market participant at the measurement date. Day one gains/losses. In four cases identified in the ED, FV measurement at initial recognition might differ from the transaction price. An entity would recognise any resulting gain or loss unless the relevant IFRS for the asset or liability requires otherwise. Valuation techniques. The ED proposes guidance on valuation techniques, including specific guidance on markets that are no longer active. Valuation techniques must be consistent with the 'market approach', 'income approach' or 'cost approach'. An entity would choose the valuation technique most appropriate in the circumstances and for which sufficient data are available to measure fair value. Hierarchy of inputs to valuation. The ED proposes a fair value hierarchy that prioritises into three levels the inputs to valuation techniques used to measure fair value: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices). Level 3 inputs are inputs for the asset or liability that are not based on observable market data (unobservable inputs). Disclosures. The ED proposes various disclosures about how assets and liabilities were measured at fair value -- "information that enables users of its financial statements to assess the methods and inputs used to develop those measurements and, for fair value measurements using significant unobservable inputs (Level 3), the effect of the measurements on profit or loss or other comprehensive income for the period".

28 May 2009: IASB proposes to amend IFRIC 14

The IASB has published an exposure draft of proposed amendments to IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The proposed amendments are aimed at correcting an unintended consequence of IFRIC 14. As a result of the interpretation, entities are in some circumstances not permitted to recognise as an asset some prepayments for minimum funding contributions. The ED proposes to correct the problem. Comments on the ED are due 27 July 2009. Click for Press Release (PDF 96k).

28 May 2009: Two special IASB meetings in June

The IASB will hold two special Board meetings in June, in addition to its regular monthly 15-19 June meeting, as follows: Monday 1 June 2009, 16:30 to 18:00 (London time) Friday 5 June 2009, 13:00 to 15:30 (London time) The sole agenda topic of both meetings is the IASB's Comprehensive Financial Instruments Project to develop a replacement for IAS 39. Both meetings will be webcast.

28 May 2009: Annual reports of UK FRC, FASB/FAF, IFAC, US SEC
IAS Plus visitors may find the following recently-issued annual reports of interest (with links to source on other websites):

• Annual report of the United Kingdom Financial Reporting Council for 2008-2009 (UK FRC). An excerpt:

  We note with concern the recent increase in political pressure on both the IASB and FASB. Whilst we remain open to identifying improvements in how fair value accounting is applied, we are of the view that, in those limited areas to which it applies, it is more appropriate than any alternative so far identified.... We continue to have significant concerns that the EU might adopt its own version of IFRS rather than the standards as published by the IASB. In November 2008, an ASB coordinated letter, signed by UK constituents representing a range of interests, was published in the Financial Times, stressing the importance of the EU not adopting its own version of IFRS.

• Annual report of the Financial Accounting Foundation (FAF) for 2008. An excerpt:

  Fortunately, international cooperation in accounting standard setting is not new and is well established. We continue to work actively with the International Accounting Standards Board (IASB) to coordinate our actions and to improve and converge our standards in major areas, including those relating to accounting for financial instruments. Our joint standard-setting efforts have benefited from the input we received at a series of global roundtables we held in November and December 2008 on reporting issues relating to the financial crisis and from the ongoing discussions of our new, senior-level Financial Crisis Advisory Group. Beyond the financial crisis, we continue to work with the IASB on other joint projects aimed at creating a common set of high-quality global accounting standards. In September, the Boards published an updated version of their 2006 Memorandum of Understanding describing their progress since 2006 and establishing forward milestones on major joint projects aimed at developing common high-quality standards. In October 2008, the Boards issued a Discussion Paper with our preliminary views on significant improvements to financial statement presentation and in December we issued a joint discussion document on the very important subject of revenue recognition.

• Annual report of the International Federation of Accountants (IFAC) for 2008. An excerpt:

  A key feature of the report is its Service Delivery section, which compares IFAC's planned services with those delivered in five areas: Standards and Guidance Promoting Quality International Collaboration Activities Representation of the Accountancy Profession in the Public Interest Information Services This section of the annual report-which comprehensively describes the services delivered by IFAC in 2008-is critical in demonstrating IFAC's accountability to its stakeholders. For this reason, we have sought and received assurance from our independent auditors about the reliability of this information.

• Annual report of the US Securities and Exchange Commission for 2008. An excerpt:

  In the midst of the 2008 global market crisis, the strong international partnerships the Commission has built in recent years proved invaluable. Over the past few years, the SEC has signed and implemented information sharing arrangements for enforcement and regulatory cooperation with securities regulators around the world, including supervisory arrangements in 2007 related to the oversight of NYSE-Euronext and ISE Eurex and arrangements in 2008 for sharing non-public issuer specific information relating to the application of International Financial Reporting Standards.

28 May 2009: IPSASB reaffirms its IFRS convergence strategy

At its 18-21 May 2009 in Washington DC, the International Public Sector Accounting Standards Board (IPSASB) reaffirmed its commitment to its global IFRS convergence program and the development of standards dealing with financial instruments. The IPSASB confirmed that it will continue its full consultation on three financial instruments exposure drafts issued on 23 April 2009 rather than defer the process to wait for completion of current IASB financial instruments projects. The three IPSASB exposure drafts (which may be downloaded at www.ifac.org/EDs) are: ED 37 Financial Instruments: Presentation ED 38 Financial Instruments: Recognition and Measurement ED 39 Financial Instruments: Disclosures The IPSASB will consider any changes ultimately adopted by the IASB in due course. Comments on EDs 37-39 are due by 31 July 2009. Click for IPSASB Press Release (PDF 33k).

28 May 2009: Global IFRS and Offerings Services newsletter

We have posted Deloitte's US Reporting Newsletter for Non-US Based Companies March-April 2009 Edition – includes news through 15 April 2009 (PDF 243k). The newsletter is developed by Deloitte's Global IFRS and Offerings Services (GIOS) team – Deloitte practitioners assisting non-US companies and non-US practice office engagement teams in applying US GAAP and IFRSs and in complying with the SEC's financial reporting rules. The GIOS Newsletter is an update on relevant GAAP, regulatory, and other matters, webcasts, and publications, with hyperlinks to source material. Past GIOS Newsletters are Here. In this issue of the GIOS newsletter: IFRS Matters IASB Amends Financial Instrument Disclosures 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 Changes to Income Tax Accounting Tips on Applying IFRS IFRS Tools US GAAP Matters FASB Proposes to Improve Guidance on OTTI and Fair Value Measurements in Inactive Markets and on Distressed Transactions FASB Issues FSP on Assets Acquired and Liabilities Assumed in a Business Combination That Arise From Contingencies EITF Proposes Issue on Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance EITF Proposes Issue 08-9 on Milestone Method of Revenue Recognition FASB Proposes Statement on GAAP Hierarchy FASB Proposes Technical Corrections Standard Deloitte Issues Alert on Deep-Out-of-the-Money Share Option Awards Deloitte Issues Alert on OTTI Analysis of Perpetual Preferred Securities SEC Issues New Compliance and Disclosure Interpretations SEC Staff Releases Observations from Reviews of Certain IPOs Other Matters Other SEC Rules Issued in the First Quarter of 2009 AICPA Proposes and Issues SASs as Part of Clarification and Convergence Project IAASB Issues Final Clarified ISAs PCAOB Reproposes Auditing Standard on Engagement Quality Reviews SEC's Division of Corporation Finance Releases Updated Financial Reporting Manual SEC Publishes 2008 Annual Report SEC's Findings of Section 404(a) Deficiencies for First Time Filers

28 May 2009: IFRS insurance accounting newsletter

Deloitte (United Kingdom) has published the May 2009 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 covers in detail the key tentative decisions made by the IASB at its 22 April 2009 meeting. They were: require insurers to recognise revenue when they generate new business. the new business revenue, together with the acquisition expenses incurred to secure it, will provide the elements for the initial calibration of the residual margin or the recognition of day one loss. Click to download May 2009 Edition of the Insurance Accounting Newsletter (PDF 240k). There are permanent links all issues of the newsletter on IAS Plus Insurance Project Page.

27 May 2009: Plan for US capital markets reform

The Committee on Capital Markets Regulation has published The Global Financial Crisis: A Plan for Regulatory Reform. The Committee is an independent and nonpartisan research organisation dedicated to improving the regulation of US capital markets. The Committee comprises 25 leaders from the investor community, business, finance, law, accounting, and academia. Two IASC Foundation Trustees (Samuel A DiPiazza, Jr and Robert R Glauber) serve on the Committee. The 25 members also include William C Freda, Vice Chairman and US Managing Partner of Deloitte, and William G Parrett, former Global CEO of Deloitte. The report is the result of a year-long examination into the global financial crisis and the key deficiencies in the regulatory system. Critical topics addressed include capital requirements, resolution procedures, the regulation of hedge fund and private equity, the securitisation process, credit default swaps and other derivatives, disclosure and accounting standards, credit rating agency practices, and the overall US regulatory architecture. The report makes 57 practical and specific recommendations for regulatory reform, several of which refer to the IASB and the FASB. Chapter 4 Enhancing Accounting Standards examines two accounting issues raised by the financial crisis: the use of fair value accounting and the requirements for consolidation. Click to download: Press Release and Fact Sheet (PDF 142k) Full Report (PDF 7,344k) Executive Summary (PDF 364k) Presented below are summaries of the four accounting-related recommendations. Recommendation 43. Study How FVA Can Be Improved. The Committee believes 'fair value' accounting is a problematic standard in inactive or distressed markets because it conflates the concepts of market value and credit model value and may confuse investors. We do not believe the problem has been solved by FASB's latest guidance. We recommend continuing to study how 'fair value' accounting can be improved. We further recommend that this be done on a joint basis by FASB and IASB, so the two major accounting standard setters are consistent in their approach. Recommendation 44. Supplement FVA with Dual Presentation of Market and Credit Values. To supplement fair value reporting, the Committee proposes that FASB require an additional dual presentation of the balance sheet for Level 2 and Level 3 assets using credit value and market value independently of each other. Accompanying this dual presentation, firms should also disclose their underlying valuation methodologies. In the case of credit value, this includes sharing modeling techniques, estimates, assumptions, and risk factors. In the case of market value, the disclosures should reveal what market prices were actually relied on. Recommendation 45. Allow The Fed to Use a Non-GAAP Methodology. As for regulatory accounting, the Committee believes the Fed should not be limited to following US GAAP and should instead be free to choose another method (credit value, market value, or some combination of both) it deems appropriate. Recommendation 46. Implement FIN46R. As for consolidation, we agree with the FIN 46R approach because it focuses on the issue of control. [FIN 46R is FASB's revised standard on consolidation of special purpose vehicles.]

27 May 2009: Model IFRS financial statements in Polish

Deloitte Poland has published Wzorcowe Skonsolidowane Sprawozdanie Finansowe 2009 według MSSF – Model IFRS Consolidated Financial Statements for 2009 in Polish. These model financial statements illustrate the accounting and disclosures required by IFRSs as endorsed by the European Union for reporting periods beginning on or after 1 January 2009. Click to download Wzorcowe Skonsolidowane Sprawozdanie Finansowe 2009 według MSSF – model IFRS consolidated financial statements for year ended 31 December 2009 in the Polish language (PDF 3,697k, 120 pages). Please note that these financial statements reflect those IFRSs endorsed by the EU as of 5 March 2009. They do not reflect other IFRSs that are effective for 2009 but that were not endorsed by 5 March 2009.

26 May 2009: Appointments to EC Standards Advice Review Group

The European Commission has appointed three new members to the Standards Advice Review Group (SARG). The role of the SARG is to advise the Commission in the endorsement process of International Financial Reporting Standards and International Financial Reporting Committee Interpretations. SARG assesses whether EFRAG's opinions on endorsement of IFRSs and IFRICs are well-balanced and objective. Click for EC Announcement of Appointments to SARG (PDF 17k). You can find Minutes of SARG Meetings here on the EC website.

26 May 2009: Updated summary of IFRIC agenda rejections

We have updated our Summary of Issues Not Added to IFRIC's Agenda to reflect the IFRIC's final decisions at its May 2009 meeting not to add the following topics to its agenda. Our summary now includes over 150 issues: IAS 12: Classification of tonnage taxes by shipping companies IAS 16: Disclosure of idle assets and idle construction in progress IAS 38: Accounting by a real estate developer for sales costs during construction IAS 39: Participation rights and calculation of the effective interest rate IAS 39: Classification of failed loan syndications IAS 41: Discount rate used in fair value calculations IFRIC 14: Voluntary prepayments

26 May 2009: IFRS e-Learning en Español

The Spanish version of Deloitte's IFRS e-Learning Site is now live: www.deloitteifrslearning.com/spanish/registration_es.asp. Currently, 20 of the 37 English modules are available in Spanish without charge. They are: Conceptual Framework (Marco Conceptual para la Preparación y Presentación de Estados Financieros) IAS (NIC) 1, 2, 7, 8, 10, 16, 17, 18, 19, 21, 23, 24, 28, 31, 38, 40, 41 IFRS (NIIF) 1, 5 Further Spanish language modules are in development and will be released to the site over forthcoming months. IAS Plus has many resources in Spanish Here.

24 May 2009: Agenda project pages updated

We have updated our IASB agenda project pages to reflect the discussions and decisions at the IASB's May 2009 meeting, as follows: Annual Improvements 2009 Consolidation Credit Risk Financial Instruments – Comprehensive project Conceptual Framework Phase D - Reporting Entity IFRS 1 – Additional Exemptions for First-time Adopters Insurance Contracts Instruments with Characteristics of Equity Interim Financial Reporting Joint Ventures Leases Post-employment Benefits Rate-regulated Activities Revenue

23 May 2009: IFAC Monitoring Group adopts charter

The Monitoring Group that oversees the auditing, assurance, ethics, and education standard-setting activities of the International Federation of Accountants (IFAC), including IFAC's Public Interest Oversight Board, has adopted a new formal charter. The Monitoring Group comprises the International Organization of Securities Commissions, Basel Committee of Banking Supervision, European Commission, International Association of Insurance Supervisors, The World Bank, The Financial Stability Board, and International Forum of Independent Audit Regulators. The role of the Monitoring Group with respect to IFAC's public Interest activities is similar to that of the IASC Foundation Monitoring Board. Hans Hoogervorst, Chair of the Netherlands Authority for Financial Markets, chairs both the IFAC and the IASC Foundation monitoring boards. Click for: Monitoring Group Charter (PDF 2,366k). Press Release (PDF 15k).

23 May 2009: SEC seminar on XBRL filings

The US Securities and Exchange Commission will conduct a public seminar on 10 June 2009 from 12:00 noon to 15:00 to help companies comply with new XBRL filing requirements. SEC staff will present information about the technology requirements for complying with the rules and will also provide an overview of the tools and information provided by the Commission to assist with compliance. The seminar will be held at the SEC's Washington DC headquarters and will also be available via webcast on the SEC website. Click for SEC Announcement (PDF 29k).

22 May 2009: Fifth meeting of Financial Crisis Advisory Group

The Financial Crisis Advisory Group (FCAG) was established by the IASB and US FASB in response to the recent global financial crisis. Its purpose is to advise both Boards about the role of accounting during the crisis and potential changes. The FCAG held its fifth meeting in London on 22 May 2009. Presented below are the preliminary and unofficial notes taken by a Deloitte observer at the meeting. For related information please see our Credit Crunch Page. IASB-FASB Financial Crisis Advisory Group Meeting 22 May 2009 The Financial Crisis Advisory Group held a short public session prior to entering a closed administrative session during which it would draft its Report to the Chairmen of the International Accounting Standards Board and the US Financial Accounting Standards Board. Recent developments: IASB decision to split the Comprehensive Financial Instruments Project into three sections Sir David Tweedie explained that, as a result of the FASB's April 2009 amendment of FAS 115 and FAS 124, with respect to 'other than temporary' impairment of financial instruments, the IASB had come under intense pressure to modify IFRS to follow suit: the problem was that IFRSs do not have the concept of an 'other than temporary impairment' nor is the IFRS impairment model compatible with that in US GAAP generally. To accommodate the requests to follow the FASB FSPs would be too difficult for the IASB to do and would distract its efforts to meet the undertaking made to the G20 to present proposals for a comprehensive replacement of IAS 39 later in 2009. The IASB had considered various alternatives, but had decided that the best chance that it has to meet both the simplification and timeliness objectives is to split the comprehensive replacement of IAS 39 project in to three: Classification and measurement – Exposure draft in July 2009, two to two-and-a-half months for comment; There would be two categories that would drive measurement: fair value and amortised cost (with a likely fair value option for the latter category). The IASB will explore two ways of making this categorisation: (i) any financial instrument that is traded would be at fair value, with all others at amortised cost; or (ii) debt instruments at amortised cost (with fair value option) and equity instruments at fair value. Financial statement presentation issues (the split between gains and losses reported in net profit and loss and those reported in Other Comprehensive Income) were to be resolved, but it was highly likely that there would be no recycling between OCI and Profit or Loss. Impairment – request for views (given the classification model developed) to be issued at the same time as the above ED Hedging – to follow, once classification is finalised The entire package is to be delivered by mid-2010. In response to a question, Sir David noted that the current pressure is on Available for Sale financial instruments and the impairment rules in IAS 39; the IASB hopes that by 'fixing' classification, that pressure would be relieved. Aligning US GAAP and IFRS was not possible, since the two models have fundamentally different starting points. Sir David also noted that, given the time scales involved, any involvement of the Financial Instruments Working Group would probably have to be through email comments rather than a physical meeting. Robert Herz, FASB Chairman, noted that there was a desire at the FASB to arrive at a good common answer with the IASB and that the FASB would use its best efforts to achieve that. However, he cautioned that some of his Board had very different views from their IASB colleagues, especially with respect to the potential 'widening' of the amortised cost category. He noted that, in his jurisdiction, the 'appetite for convergence at the price of improvements' was not there. He also noted the recent developments in the US - especially the 'stress test' developed by the US Federal Reserve and banking regulators, which he noted had a greater degree of transparency and accommodated future changes in accounting standards. He saw these developments as helpful and commended the Fed for their very constructive assistance as the tests were being developed. A member noted that it was especially worrying that the IASB and the FASB seemed to be in different positions on the categorisation of financial instruments and thought that this was a dangerous place to be. Several other members echoed these concerns, expressing the hope that the Boards would be able to agree on what financial items qualified for measurement at amortised cost. An FCAG Co-Chairman noted that he was becoming increasingly concerned with the political environment and in particular the continual pressure on standard-setters from bankers (preparers and preparer associations) and finance ministers. The focus of these efforts is a relaxation of financial reporting standards that would permit financial institutions to boost their balance sheets: The result is that investors are getting lopsided financial reports, know they are getting lopsided reports and thus continue not to trust the information they are receiving. This is delaying any potential financial recovery. The other Co-Chairman noted that the pressure on the IASB at the moment threatened the considerable progress of the past 15-20 years, in particular the removal of the reconciliation requirements for SEC registrants using pure IFRS. 'Scapegoating' the financial reporting standard-setters was unjustified and unhelpful, but to lose IFRS at this stage would be tragic and the long-term costs of such an event would be significant. Other FCAG members supported these comments. A member noted that much of the current stress has been created between two jurisdictions: the US and EU; however, the financial crisis is a global one and IFRS is used in many jurisdictions. Having the IASB being constantly asked to accommodate the EU was risking having it diverted into non-productive areas wasting time and resources. The FCAG's report must, therefore, express strong support in favour of a global investor-focused set of financial reporting standards. A member noted that piecemeal changes to financial reporting standards risked undermining confidence in the market. He noted that there was a great deal of cynicism among investors (especially in the US, the market with which he was most familiar). If investors lose trust with financial reporting standards any real recovery in the financial markets would be difficult to achieve. The IASB and FASB should not accept a solution that could be seen as ridiculous. (He suggested that changing financial reporting standards to avoid portraying reality was rather like trying to avoid the consequences of climate change by asking the scientists to recalibrate their thermometers.) A bank regulator was concerned about the confrontational tone of some of the comments. What was needed was a cooperative attitude, understanding and respecting each others' views, in order to reach a solution. It was clear that financial reporting standards were not the cause of the crisis-that was accepted-but it was also true that they were linked to the crisis and had a role in the solution. Thus it was important to engage the bank regulators in a constructive manner. It was noted that a recent Working Paper (No 16, Findings on the interaction of market and credit risk) contained very little criticism of financial reporting standards and was far more critical of banking regulation. Another banking regulator noted that the Financial Stability Board and the Basel Committee had made strong statements in favour of independent, private-sector financial reporting standards, in particular those of the IASB and FASB, and that the two groups had worked and continue to work to preserve the independence of the Boards. He noted the constructive cooperation between the Basel Committee and the IASB's Expert Advisory Panel that led to the very useful guidance issued in October 2008, and on the work currently under way on pro-cyclicality. He noted that the FCAG's report should note that financial reporting standard-setting is at its best when it demonstrates its independence by following due process and responding to reasonable (and reasoned) input. Closing comments At the invitation of the Co-Chairmen, FASB Chairman Herz stated that the IASB and the FASB 'would move heaven and earth' to achieve a common solution, but the concern of some FASB members is that 'broadening' the amortised cost bucket was not in the best interests of investors. Sir David agreed, saying that a common answer was vital. IASB members also were concerned about limiting the number of items that could be included in the amortised cost category. Next steps The FCAG will now draft its report. The Co-Chairmen noted that it would probably be necessary to meet in July 2009. This meeting would take place in New York. This summary is based on notes taken by observers at the FCAG meeting and should not be regarded as an official or final summary.

22 May 2009: Impairment of available-for-sale equity instruments

In releasing the May 2009 issue of the IFRIC Update newsletter, the International Financial Reporting Interpretations Committee has taken the unusual step of drawing attention to its tentative agenda decision relating to impairment of available-for-sale equity instruments because of its particular significance in the current market environment. The IFRIC was asked to clarify the meaning and interpretation of the phrase 'significant or prolonged' as used in IAS 39.61 – which requires an entity to recognise impairment if the decline in value is 'significant or prolonged'. Although IFRIC has tentatively decided not to add the issue to its agenda because the IASB is working on an accelerated project to replace IAS 39, the IFRIC was concerned that some applications of the impairment requirements in practice are inconsistent with the standard. Accordingly, IFRIC's draft agenda decision identifies some of the inconsistencies and IFRIC's conclusions about them. IFRIC has invited comments on its draft agenda decision, which it expects to finalise at IFRIC's 9-10 July 2009 meeting. The IFRIC Update may be Downloaded from IASB's Website.

22 May 2009: IFRS e-learning modules updated

Deloitte IFRS e-Learning modules are kept up to date as the IASB publishes new and amended pronouncements. The following modules have recently been updated to version 9.0 IAS 12 Income Taxes IAS 18 Revenue IAS 19 Employee Benefits IAS 29 Financial Reporting in Hyperinflationary Economies IAS 32/39 Accounting for financial instruments IAS 32/39 Hedge Accounting IAS 32/39 Derecognition of financial instruments IAS 36 Impairment of Assets IAS 38 Intangible Assets IAS 40 Investment Property We expect to release updated versions of the remaining version 8.x modules by 30 June 2009. Deloitte's e-learning was launched in January 2004 and is available completely free of charge. Millions of modules have been downloaded – access by clicking on the light bulb icon on our home page. Thirty-seven modules are now available.

22 May 2009: Notes from May 2009 IASB meeting day 3

The IASB is meeting at its offices in London from Tuesday 19 May to Thursday 21 May 2009. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

22 May 2009: Heads Up on FASB's codification

Deloitte United States has published a Heads Up newsletter on What Preparers Need to Know About the FASB Codification. On 1 July 2009, the FASB Accounting Standards Codification will become the single source of authoritative generally accepted accounting principles (GAAP) in the United States. The current GAAP hierarchy consists of four levels of authoritative accounting and reporting guidance (levels A through D), including original pronouncements of the FASB, EITF abstracts, and other accounting literature. The Codification eliminates this hierarchy and replaces current GAAP (other than rules and interpretive releases of the SEC) with just two levels of literature: authoritative and nonauthoritative. Once effective, the Codification will significantly change the way users refer to GAAP and research accounting issues. In addition to publishing this Heads Up newsletter, Deloitte United States will hold a quarterly accounting roundup webcast on 8 June 2009 which will include an explanation of the Codification and its impact on preparers of financial statements. Click for: Download the Heads Up Newsletter about the Codification (PDF 150k) More Information about the Webcast

21 May 2009: Notes from May 2009 IASB meeting day 2

The IASB is meeting at its offices in London from Tuesday 19 May to Thursday 21 May 2009. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

21 May 2009: IASB webcasts on derecognition exposure draft

On 27 May 2009, the IASB will host two live webcasts introducing exposure draft ED/2009/3 Derecognition (Proposed amendments to IAS 39 and IFRS 7). The ED was published on 31 March 2009, with comments due by 31 July 2009. The ED proposes to improve the requirements for derecognition of financial instruments currently in IAS 39. Derecognition means removing a financial instrument from an entity's financial statements. This occurs if the entity no longer controls a financial asset or no longer has an obligation to settle a financial liability. The IASB is also proposing to enhance the disclosures currently required by IFRS 7, especially in situations where an entity continues to have an ongoing involvement in a financial asset that would be derecognised under the proposals. The live web presentation will include an interactive question and answer session. Questions can be submitted on-line during the presentation. Instructions will be given at the beginning of the presentation. Details: Webcast Topic: IASB Exposure Draft on Derecognition Date: Wednesday, 27 May 2009 Times: 9:30am (London time) and again at 13:00pm (London time) Presenters: Stephen Cooper, Member of the IASB, and Michael Mueller, Practice Fellow More Information and Registration Download the Discussion Paper: 'Open to Comment' Section of IASB Website

21 May 2009: Two US analysts named to IASB

Mr Finnegan Ms McConnell

The Trustees of the International Accounting Standards Committee Foundation have appointed two leading investment analysts to the International Accounting Standards Board: Patrick Finnegan, Director of the Financial Reporting Policy Group, CFA Institute Centre for Financial Market Integrity. Mr Finnegan currently leads a team at CFA Institute responsible for providing user input into the standard-setting activities of the IASB, FASB and key regulatory bodies. Patricia McConnell, former Senior Managing Director, Equity Research, Accounting and Tax Policy Analyst, Bear Stearns & Co. In a 32-year career in Bear Stearns' Equity Research group, Ms McConnell established herself as one of the leading analysts in the United States on issues related to accounting. She was a member of the IASB's Standards Advisory Council and the International Accounting Standards Committee (the IASB's predecessor body). Both will become full-time members for a five year term starting on 1 July 2009. They will relocate to London. They will replace Mary Barth and Tom Jones, who are retiring from the IASB at the end of June. Click for IASCF Press Release (PDF 105k).

20 May 2009: Notes from May 2009 IASB meeting day 1

The IASB is meeting at its offices in London from Tuesday 19 May to Thursday 21 May 2009. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

19 May 2009: Deloitte IFRS newsletters in Spanish

Deloitte (Colombia) has published the Spanish translations of the following IFRS publications: Boletín Actualización IAS Plus Abril 2009 – Mejoramientos 2009 a los IFRS (PDF 33k) Spanish version of IAS Plus Update April 2009 – Improvements to IFRSs 2009 (PDF 95k) and Estándares internacionales de información financiera: Consideraciones para la industria de productos de consumo (PDF 332k) Spanish version of International Financial Reporting Standards: Considerations for the Consumer Products Industry (PDF 298k) We have many resources in Spanish Here.

19 May 2009: Special IASB meeting on 5 June

The IASB will hold a special Board meeting at its offices in London on Friday 5 June 2009 starting at 13:00 (London time) and running between two and two-and-a-half hours. Some Board members will be taking part via conference call. An audio webcast will be available via the internet. The agenda topic for the meeting is: Financial Instruments: Recognition and Measurement – Replacement of IAS 39 This is an education session and the Board will not be asked to make decisions. The Board's regular June meeting will be held 15-19 June 2009. The Board will meet with the Standards Advisory Council on 22-23 June 2009 in London.

16 May 2009: UK Parliament Committee defends 'mark-to-market'

A report from the United Kingdom House of Commons Treasury Committee has concluded that bad decisions at banks – not accounting rules – caused the global financial crisis. The report, titled Banking Crisis: Reforming Corporate Governance and Pay in the City, makes the following points, among others: Fair value accounting Fair value accounting has led to banks publishing some very dispiriting financial results, but this is because the news itself has been bad, not the way in which it has been presented. The uncomfortable truth for banks is that market participants had overinflated asset prices which have subsequently corrected dramatically. Fair value accounting has actually exposed this correction, and done so more quickly than an alternative method would have done. Important features of accounting frameworks are that they encourage transparency and consistency across firms and asset classes. But it is a bridge too far to expect them to also lead to intelligent decision-making. We do not consider fair value accounting to be a suitable scapegoat for the hubris, poor risk controls and bad decisions of the banking sector. EU modifications of IFRSs We regret the power of the European Commission to pick and choose which international accounting standards should be implemented in the EU and call on the Treasury to consider the impact of the Commission's powers on the objective of establishing a single global set of accounting standards. Click for: Treasury Committee Report (PDF 1,819k) Comprehensive Credit Crunch Resources on IAS Plus

15 May 2009: Roundtables on consolidation and derecognition

The IASB has announced details of its planned North American roundtables on consolidation and derecognition, to be held in Toronto, 1-2 June 2009: Location: Hyatt Regency Toronto on King (Regency D/E), 370 King Street West, Toronto, Ontario M5V 1J9, Canada Times: Monday 1 June – morning (09:00 to 12:15): Derecognition education session Monday 1 June – afternoon (13.30 to 16:45): Joint derecognition and consolidation round table Tuesday 2 June – morning (09:00 to 12:15): Consolidation-only round table Click here for More Info and Registration on IASB's website. The IASB will hold similar roundtables: 8 and 9 June 2009 in Tokyo 15 and 16 June 2009 in London Although the roundtables will not be webcast live, audio recordings will be available on IASB's website shortly after the roundtables.

14 May 2009: Taiwan will move to IFRSs in 2013

On 14 May 2009, the Financial Supervisory Commission (FSC) of Taiwan announced its roadmap for the full adoption of IFRSs in Taiwan. Taiwan has adopted a plan to adopt IFRSs in two phases. Phase I companies (listed companies and financial institutions supervised by the FSC, except for credit cooperatives, credit card companies, and insurance intermediaries) will be required to adopt Taiwan-IFRS starting 2013. Early adoption in 2012 is optional for companies that have already issued securities overseas, or have registered an overseas securities issuance with the FSC, or have a market capitalisation of greater than NT$10 billion. Phase II companies (unlisted public companies, credit cooperatives, and credit card companies) will be required to adopt Taiwan-IFRS starting 2015, with optional early adoption starting 2013. The FSC said that it was taking this action to make Taiwan's capital markets more attractive to foreign investors and and help Taiwanese companies raise capital overseas. Click for Announcement in Chinese.

14 May 2009: Role of national standard setters

Gilbert Gelard

IASB Board member Gilbert Gelard spoke about National Standard Setters: A New Role in a Globalising World at the London School of Economics on 11 May 2009. Mr Gelard discussed the importance of global accounting standards, European adoption of IFRSs, 'adopt versus adapt', and how the spreading of IFRSs throughout the world has dramatically changed the national standard setters 'scene'. Click to Download Mr Gelard's Remarks (PDF 43k), which are posted on IAS Plus with his kind permission. Here is an excerpt: If standard setters have a role to play in this new world, they should be careful on how to use scarce resources. There is also one thing they are tempted to do and should refrain from doing: they should not try to second-guess nor to interpret IFRSs. The argument that something is so specific to their jurisdiction that the correct solution to an issue can only be developed locally appears to be ill-founded in almost all cases. An apparently purely local question can and should always be upgraded to a more general issue likely to be encountered somewhere else in the world. The interpretative issues should be sent for examination to IFRIC, which is the competent body. The only thing a standard setter should be allowed to issue regarding IFRS is guidance and educational material, provided this guidance is not an interpretation by another name. Different local flavours of IFRSs should be avoided at all costs. The memorandums of understanding proposed by the IASB to standard setters is quite specific on the question of interpretations.

13 May 2009: Deloitte Canada IFRS newsletter on income taxes

Deloitte Canada has published a special May 2009 issue of their Countdown newsletter on IFRS transition in Canada. Titled The Taxing Steps Toward Global Convergence: IASB Proposes Changes to Income Tax Accounting, this newsletter discusses the IASB exposure draft proposing amendments to IAS 12 Income Taxes. The comment deadline is 31 July 2009, with a final standard expected to be issued in 2010. Click here for: May 2009 Special Edition Countdown Newsletter – English (PDF 1,008k) May 2009 Special Edition Countdown Newsletter – French (Compte à Rebours) (PDF 749k)

12 May 2009: FCAG will meet on 22 May in London

The Financial Crisis Advisory Group (FCAG) will meet in London at the Crowne Plaza Hotel, 19 New Bridge Street, on Friday 22 May 2009 starting at 08:00am. 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 fifth meeting. You can find the IAS Plus notes from the earlier meetings Here.

12 May 2009: Guidance on software revenue recognition

In October 1997, the American Institute of CPAs published Statement of Position (SOP) 97-2 Software Revenue Recognition. SOP 97-21 provides guidance on revenue recognition for software and software-related products. While primarily developed for the software industry, the SOP increasingly applies to other industries in which software has become more than incidental to products and services. While IAS 18 addresses revenue recognition broadly, there is no parallel in IFRSs to SOP 97-2. Since the issuance of SOP 97-2, US standard setters released a wide range of guidance (over 50 publications in all!) clarifying specific aspects of software revenue recognition, including SOP 98-4, SOP 98-9, various AICPA Technical Practice Aids, EITF Issues, and SEC guidance. Nevertheless, as software technology continues to evolve, entities are continually confronting new challenges in recognising revenue for software arrangements. Deloitte United States has published the second edition of Software Revenue Recognition – A Roadmap to Applying AICPA Statement of Position 97-2 (PDF 169 pages, 886k) to address some of the most difficult-to-interpret provisions of SOP 97-2 as well as provide a new overview of the main topics in SOP 97-2 under the following headings: Scope Basic revenue recognition principles Multiple-element arrangements Additional software products, upgrade rights, and discounts Postcontract customer support (PCS) Services Contract accounting

11 May 2009: Agenda for May 2009 IASB meeting

The IASB will hold its regular May 2009 meeting at its offices in London on Tuesday to Thursday 19-21 May 2009 (three days). The meeting will be open to public observation and will be webcast. Presented below is the preliminary agenda for the meeting. IASB Board Meeting Agenda 19-21 May 2009, London Tuesday 19 May 2009 Credit Standing Draft discussion paper on credit risk in liability measurement Consolidation – ED10 Comment Letter Analysis Post-employment Benefits IFRS 1 – Additional Exemptions for First-time Adopters The Board will consider comments received relating to the remaining proposals in the September 2008 Exposure Draft Additional Exemptions for First-time Adopters (Proposed Amendments to IFRS 1) Financial Instruments: Recognition and Measurement – Expected Loss impairment method Financial Instruments: Recognition and Measurement – Fair value impairment Method Revenue Recognition - Contract boundaries Wednesday 20 May 2009 Joint Ventures Annual Improvements 2009 The Board will discuss several proposed amendments relating to the revisions to IFRS 3 and IAS 27: various amendments on the effective date and the transition guidance of the two standards and consequential amendments; the treatment of pre-existing contingent consideration of the acquiree, an IFRIC recommendation on the contractual customer relationship and other amendments relating to IFRS 3; and the re-allocation of other comprehensive income for a transaction with noncontrolling interest in IAS 27 and the consideration of the FASB's proposed amendment to the scope of SFAS 160. Leases Financial Instruments: Recognition and Measurement – Impairment Comparison between the incurred loss model, expected loss model and fair value model to impairment. Financial Instruments: Recognition and Measurement – Classification Circumstances in which financial instruments could be measured on a basis other than fair value Thursday 21 May 2009 Conceptual Framework – Reporting Entity IAS 34 Interim Financial Reporting An amendment to IAS 34 Interim Financial Reporting as part of the annual improvements project. Rate-regulated Activities Revenue Recognition – joint meeting with the FASB Uncertain consideration Insurance Contracts Financial Instruments with Characteristics of Equity Financial Instruments: Recognition and Measurement – Current Value Measurement Method (tentative)

11 May 2009: Deloitte guide to IFRS 3 in French

Deloitte Canada has published Regroupments d'Enterprises et Changements dans les Participations: Guide portant sur la version révisée des normes IFRS 3 et IAS 27 (PDF 561k). This is the French translation of our English language publication Business Combinations and Changes in Ownership Interests: A Guide to the Revised IFRS 3 and IAS 27 (PDF 647k. This guide deals mainly with accounting for business combinations under the 2008 revision to IFRS 3. Where appropriate, it deals with related requirements of IAS 27 (Revised 2008) – particularly as regards the definition of control, accounting for non-controlling interests, and changes in ownership interests. Other aspects of IAS 27 (such as the requirements to prepare consolidated financial statements and detailed procedures for consolidation) are not addressed. There are 16 chapters plus appendices that (a) compare the 2008 versions of IFRS 3 and IAS 27 (2008) with their predecessors, and (b) identify the continuing differences between IFRSs and US GAAP.

10 May 2009: IASB Member comments on global financial crisis

John Smith

IASB Board member (and former Deloitte United States partner) John Smith addressed the European Commission Conference Financial Reporting in a Changing World. The focus of his remarks was on the impact of the global financial crisis on accounting standard-setters in general and on the IASB in particular. You can Download Mr Smith's Remarks from the IASB website (PDF 31k). Here is an excerpt: The financial crisis has highlighted three primary lessons for accounting standard-setters. First: The integrated nature of capital markets, combined with the mobility of capital itself, highlights the need for a commonly accepted set of accounting standards. Second: Financial institutions, regulators and investors failed to understand adequately the risks being taken. Accounting should play an important role in assisting all parties in this regard. Accordingly, there is a need to provide additional transparency to the risks being taken by financial institutions and provide meaningful information to investors and regulators. Third: The current accounting rules create numerous options, which reduce comparability and add unnecessary complexity. Accordingly there is an urgent need to address the accounting for financial instruments to reduce complexity, enhance comparability and relevance and provide a basis for convergence worldwide. We at the IASB are taking actions on all of these fronts.

9 May 2009: Notes from the May 2009 IFRIC meeting

The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Thursday 7 May 2009 (one day only). Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting. Notes from the IFRIC Meeting 7 May 2009 Compliance Costs for REACH (European Commission Regulation Concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals) The staff said that IFRIC must decide whether a project on compliance costs for REACH should be added to IFRIC's agenda. Following the March IFRIC meeting, to identify whether there is currently divergence in practice, the staff asked the IFRIC members and a national standard setter to provide information about experience in their own organisations and country networks. From the responses received (not available to observers) the staff concluded that divergence does not seem to exist. Most companies expense REACH costs as incurred and do not capitalise. Some based this decision on materiality, and this conclusion may change in the future if the costs increase. Other types of registration costs seem to be expensed because they are not material. Entities are using judgement to determine whether costs should be expensed or capitalised in accordance with IAS 38. The staff view is that IAS 38 provides a sufficiently clear intangible asset definition and recognition criteria to apply to costs incurred in relation to the REACH regulation, and meeting these criteria, including the requirement to demonstrate future economic benefits, is a matter of judgement. One IFRIC member did not fully agree with not taking the issue onto the agenda on the basis of materiality reasons. Overall, the costs of compliance with REACH are huge. The IFRIC member thought that the IFRIC should develop some guidance, or alternatively be more specific in the rejection notice as this member did not believe that IAS 38 is clear. The Chairman noted that just because something is not material now doesn't mean that IFRIC wouldn't deal with the issue. Another IFRIC member agreed that IAS 38 was not completely clear, and the rejection notice should include appropriate references so that people could understand why it is clear. Another IFRIC member supported this, stating that the IFRIC should be more specific in the rejection notice. The staff responded by stating that agenda decisions should not provide guidance. To that end, they would not want to provide paragraph numbers; however, they agreed that the word 'clear' could be omitted from the agenda decision. Another IFRIC member suggested that IFRIC should take the issue onto the agenda, as IAS 38 does not help distinguish internally generated versus existing physical assets and costs associated with these. As a result they thought divergence in practice would result. Another IFRIC member then noted that paragraph 34 of the staff paper was making a big point. The paragraph states that: 'The staff is of the view that the registration costs for existing substances would also meet the asset recognition criterion when taking any of the view above, that is even if taking view 1, the costs do not have to be expensed as incurred.' The IFRIC member said that this paragraph is making a leap because paragraph 20 of IAS 38 allows such capitalisation only 'rarely'. We are effectively obtaining a licence to do what we are already doing. The IFRIC member queried how has 'rare' been achieved? That is, if paragraph 20 is the correct paragraph to be referring to. Another IFRIC member then asked how can the IFRIC say that IAS 38 is clear when we have spent months deciding if it is? Other IFRIC members supported not taking the issue on to the agenda because it would be in the form of implementation guidance, rather than saying in the agenda decision that it is 'clear'. They suggested removing the words sufficient and clear. Others agreed with this suggestion. Another IFRIC member added that the notion that people would have to apply judgement to each circumstance should also be added to the agenda decision. The Chairman asked for a vote as to whether anyone objected to not putting the issue on the agenda. Only two IFRIC members did. It was noted that the staff paper was very well written and provided excellent background for the issue of how to account for REACH costs. It was noted that REACH may be an issue for the educational division for producing guidance. This would not affect the IFRIC's agenda decision, however. Revised agenda decision wording will be circulated after the meeting. Venture Capital Consolidations and Partial Use of Fair Value Through Profit or Loss The staff said that the issue being addressed was whether, at the consolidated financial statement level, the use of the scope exemption in paragraph 1 of IAS 28 Investments in Associates for a portion of an investment in an associate is appropriate. The request received by IFRIC noted that current practice is divided between two views: View A - Identify all direct and indirect interests held in the associate by either the parent or any of its subsidiaries and apply IAS 28 to the entire investment in the associate. View B - Identify all direct and indirect interests held in the associate, but use the scope criteria in IAS 28 to determine the allowed accounting treatments for the investment (or a portion of the investment). The staff believes that existing IFRS are not clear regarding whether View A or View B is appropriate and guidance exists to support both views. The staff recommended that the IFRIC not add the issue to the agenda. Rather the staff recommended that the staff present the issue to the Board for its deliberation and potential inclusion in the exposure draft of Proposed Improvements to IFRSs to be published in August 2009. A number of IFRIC members agreed with the staff recommendation. The Chairman noted that the question is really can the parent use the scope exemption, or does it have to account for it all using a consistent accounting policy. Only one IFRIC member felt this issue should be added to the agenda. One IFRIC member suggested that IAS 28 should be abolished. On the assumption that IAS 28 will be opened up as a larger project by the Board, the IFRIC did not think that it should provide any recommendations for the Board in its rejection notice. Determination of Cash Equivalents At its March meeting the IFRIC agreed that units of money market funds and other readily redeemable funds do not qualify as cash equivalents. This is because they are essentially equity instruments that have no maturity. Consequently, the IFRIC decided that it needed to consider whether units in money market funds should be in-substance cash equivalents. The IFRIC also decided that the criterion in the definition that cash equivalents must be convertible to known amounts of cash means that the amount of cash that will be received must be known at the time of the initial investment. That is, the units cannot be considered cash equivalents simply because they can be converted to cash at any time at the then market price. This would not necessarily satisfy the criterion that they be subject to an insignificant risk of changes in value. The staff introduced the paper by stating that the objective of the paper is to provide the additional analysis requested by the IFRIC on the issue and make a recommendation on whether the IFRIC should add the issue to the agenda. At the March meeting, the IFRIC concluded that it would not add the issue to its agenda but requested the staff to bring back wither proposed wording for a tentative agenda decision or proposed wording for an amendment to IAS 7. As a result of the analysis in the staff paper, the staff did not believe that an amendment to IAS 7 was required as the essential criteria are clear in the standard. The staff proposed wording for a tentative agenda decision. After the March meeting, the IFRIC received a further request for guidance in relation to IAS 7, which the staff included as an addendum to the staff paper. That request related to the classification as cash equivalents of fixed deposits or similar instruments with an original term of longer than three months. The instruments bear interest at a fixed rate determined at the date of deposit, are redeemable on demand but are subject to a penalty on early redemption. The amount of the penalty decreases depending on the period the instrument is outstanding. The submission clearly stated that the principal amount is always redeemed in full. The staff recommendation was that redeemable fixed-term deposits are cash equivalents because they meet the critical criteria in the definition: (a) readily convertible to a known amount of cash throughout their term, and (b) subject to an insignificant risk of change in value assessed against the amount at inception. One IFRIC member did not believe that the agenda decision covers the addendum facts. A number of IFRIC members said that the key was that the instrument was redeemable on demand. Another IFRIC member said that the only amount of cash equivalent is the par amount. Any interest receivable should be accounted for separately. Another IFRIC member said that if an instrument is puttable within three months, it can still be a cash equivalent even if maturity is longer. The staff then added that a key point to being a cash equivalent is that you get back what you put in, not only part of it. For example, if you put in 100 and can only get 50 back at any time, it would not be a cash equivalent. Another IFRIC member suggested that management intent is important. For example, if an investment is intended to be held for 5 years it would not be considered to be a cash equivalent. It was then suggested that perhaps wording could be added to the agenda decision along the lines of 'as long as there is an insignificant risk of change in the carrying value at reporting date it could be a cash equivalent'. Some had concerns around this. If the entity intends to leave the amount invested it is not a cash equivalent. The Chairman then asked the IFRIC if they agreed with the decision not to add the issue to the agenda. The IFRIC members agreed. The Chairman then asked the IFRIC to consider each of the fact patterns in turn. In relation to the original fact pattern, the IFRIC discussed variation in cash flows, and agreed to modify the agenda decision to add in wording that reflects the first sentence of IAS 7 paragraph 7 that the purpose must be to meet the short-term cash commitments rather than for investment or other purposes. In relation to the addendum, the IFRIC agreed that in light of the change to the agenda decision, the specific fact pattern does not need to be separately addressed. Review of Tentative Agenda Decisions Published in March 2009 IFRIC Update Classification of Tonnage Taxes The IFRIC confirmed their decision not to add this issue to the agenda. The IFRIC did not agree with the changes the staff had made to the proposed agenda decision and preferred the original wording of the agenda decision. Some IFRIC members were concerned that adding the additional sentences proposed may confuse the principle. The staff agreed to amend the agenda decision wording to focus only on those taxes that are not income taxes. Subject to receiving the final wording, the IFRIC agreed. Disclosure of Idle Assets and Construction in Progress The IFRIC agreed to finalise its tentative agenda decision not to add the issue to its agenda. Accounting for Selling Costs of Real Estate Projects The IFRIC received four comment letters from respondents; two respondents explicitly supported the IFRIC's decision not to add the issue to its agenda; the other two did not suggest adding it to the agenda. All four suggested changes to the IFRIC's proposed wording. The IFRIC confirmed its decision not to add the issue to its agenda, but agreed that they needed to clarify the wording. Final wording to be circulated to the IFRIC members for approval. Financial Instrument with Participating Rights The IFRIC confirmed its decision not to add the issue to its agenda. Failed Loan Syndications The IFRIC confirmed its decision not to add the issue to its agenda. Discount Rate Assumption Used in Fair Value Calculations The IFRIC confirmed its decision not to add the issue to its agenda. Final wording to be circulated to the IFRIC members for final approval. IFRIC 14 - Voluntary Prepayments The IFRIC confirmed its decision not to add the issue to its agenda. Staff Recommendations for Tentative Agenda Decisions Acquisition-related Costs in a Business Combination The staff introduced the first issues relating to IFRS 3 Business Combinations (2008) by noting that the IFRIC has received requests to clarify the treatment of acquisition-related costs that the acquirer incurred before the application of IFRS 3 (2008) that relate to a business combination that is accounted for according to the revised standard. Some constituents believe that IFRS 3 (2008) is not clear on whether those acquisition-related costs should be capitalised or expensed, and asked the IFRIC to clarify the transition requirements. The staff noted that a number of views have developed in practice. These were outlined in the staff paper as follows: View A: The acquisition-related costs should be expensed. Supporters of View A argue that IFRS 3 (2008) is applicable because the acquisition-related costs were incurred in respect to a business combination for which the acquisition date falls after the effective date of the revised standard. View B1: The acquisition-related costs incurred in the reporting periods before adoption of the revised standard should be capitalised and those incurred after the revised standard is adopted should be expensed. Therefore, supporters of View B1 would first apply the requirements of IFRS 3 (2004) and then upon adoption of IFRS 3 (2008) apply those requirements. View B2: The acquisition-related costs incurred in the reporting periods before adoption of the revised standard should be capitalised. Upon adoption of the new standard, acquisition-related costs should be expensed retrospectively and comparative periods are restated. Supporters of View B2 argue that the adoption of IFRS 3 (2008) is a change in accounting principle and that therefore the requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors should be applied. View B3: The acquisition-related costs incurred in the reporting periods before adoption of the revised standard should be capitalised. However, upon adoption of IFRS 3 (2008), the acquirer adjusts the opening balance of retained earnings without restatement of the comparative periods. The staff believe that the treatment of acquisition-related costs that (a) relate to a business combination that is accounted for in accordance with IFRS 3 (2008) and (b) the acquirer incurred before adoption of the revised standard can be determined with sufficient clarity from the withdrawal of IFRS 3 (2004) and the explanations in IFRS 3 (2008). They therefore recommended that the IFRIC does not add the issue to its agenda. One IFRIC member stated that this issue had been addressed in the US in relation to SFAS 141R, where it was concluded that View A, B2 and B4 (not included within the IFRIC staff paper – this view is to capitalise and then expense in the first period of adoption through profit or loss) would all be acceptable answers. A number of IFRIC members thought that View A would not be in compliance with IFRS 3 (2004) at the end of the reporting period, and would therefore be unhappy with saying that View A is the only method of accounting for such costs (as is effectively being recommended by the staff). Another IFRIC member added that most US companies decided to expense their acquisition-related costs. The IFRIC agreed not to add the issue to the agenda. However, the proposed wording of the agenda decision would be amended to say that there are multiple ways of accounting for such acquisition-related costs. Entities would need to disclose how they had accounted for such costs if material. The IFRIC asked the staff to rewrite the agenda decision accordingly. Earlier Application of IFRS 3 The transition requirement in paragraph 64 of IFRS 3 (2008) permits an entity to apply the revised standard before 1 July 2009. However, it restricts early application as follows: 'this IFRS shall be applied only at the beginning of an annual reporting period that begins on or after 30 June 2007'. Some constituents asked the IFRIC to clarify: (a) whether IFRS 3 (2008) can be applied early only from the beginning of an annual period or from any time during the annual period; and (b) if the revised standard can be adopted early at any time during the annual period, whether an entity must restate prior business combinations that occurred in the same annual period. The staff recommended that the IFRIC not add this issue to its agenda. The staff believe that the wording in IFRS 3.64 clearly requires application of the revised standard for the whole annual period if it is applied early. Therefore, the staff do not expect divergence in practice. The IFRIC agreed with the staff analysis, but suggested that the wording of the proposed agenda decision be clarified. Transaction Costs for NCI The IFRIC has been asked to clarify the treatment of transaction costs relating to acquisitions and disposals of non-controlling interests (NCI) that do not result in a loss of control of the entity. Paragraph 30 of IAS 27 (2008) requires those transactions to be accounted for as equity transactions. However, the standard does not contain explicit requirements for transaction costs incurred in relation to the acquisition or disposal of NCI. Therefore, some constituents have asked the IFRIC to clarify whether an entity should either expense those transaction costs or deduct them from equity. The staff recommended that the IFRIC not add a project to its agenda to clarify how an entity should account for transaction costs that it incurs in a transaction with NCI that does not result in the loss of control of a subsidiary. The staff believes that relevant guidance already exists in IFRSs. Directly attributable transaction costs that are incurred in an acquisition or disposal of NCI that does not result in the loss of control of an entity should be deducted from equity. The IFRIC agreed with the staff; however, one IFRIC member said that the rationale for supporting the rejection should be IAS 1.106(d)(iii). The other IFRIC members agreed, and the staff were requested to amend the agenda decision accordingly. Potential Effect of IFRS 3 (2008) and IAS 27 (2008) on Equity Method Accounting By way of background, in November 2008, the IFRIC asked the staff to carry out additional research and analysis on the two additional issues: (a) Issue 1 – How the initial carrying value of an equity method investment should be determined; and (b) Issue 3 – How an equity method investee's issue of shares should be accounted for. At IFRIC's March 2009 meeting, the staff updated the IFRIC that a broader review of the potential effect of IFRS 3R was being performed by the staff and would be deliberated by the Board in the future. Issues 1 and 3 were included in this review. Further, issues 1 and 3 are being included in the staff analysis of the comments received on the exposure draft ED 10 Consolidated Financial Statements issued in December 2008. In relation to issue 1, the staff view is that other IFRSs provide consistent guidance on the treatment of costs. When assets are: (a) measured at fair value through profit or loss, the only cost allowed to be capitalised is the fair value of the asset itself with all other costs expensed as incurred; or (b) measured on a basis other than fair value through profit or loss (that is, historical unamortised cost, amortised cost, available-for-sale assets, etc), all costs required to obtain the asset are included in the measurement of the asset on initial recognition. In relation to issue 3, the staff view is that if an investor's ownership interest in an associate is reduced through the equity method investee's issuance of shares rather than by the sale of the investor's holdings, the investor would recognise a gain or loss, including the amounts described in paragraph 19A of IAS 28*. As a result, in the staff's opinion, the accounting for the equity method investee's issuance of shares should be consistent with the guidance provided in paragraph 19A of IAS 28 and as expanded throughout other IFRSs. The IFRIC agreed with the staff conclusion in relation to issue 1; however, one staff member suggested that the agenda decision be amended to describe the two questions being addressed, and also not address the EITFs directly. The other IFRIC members agreed. Another IFRIC member thought that it was inconsistent to say that they did not expect divergence in practice, and at the same time note that the Board is currently considering the issue. It was agreed to take out the last paragraph of the rejection. In relation to issue 3, some IFRIC members were not convinced that 19A requires the answer provided, although they liked the accounting. Overall, the IFRIC agreed with the staff recommendation. * Paragraph 19A of IAS 28 states (relevant section underlined): If an investor loses significant influence over an associate, the investor shall account for all amounts recognised in other comprehensive income in relation to that associate on the same basis as would be required if the associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by an associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the investor reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when it loses significant influence over the associate. For example, if an associate has available-for-sale financial assets and the investor loses significant influence over the associate, the investor shall reclassify to profit or loss the gain or loss previously recognised in other comprehensive income in relation to those assets. If an investor's ownership interest in an associate is reduced, but the investment continues to be an associate, the investor shall reclassify to profit or loss only a proportionate amount of the gain or loss previously recognised in other comprehensive income. Impairment of Investments in Associates In March 2009, the IFRIC received a request to address the potentially conflicting guidance in IAS 28, IAS 36 Impairment of Assets and IAS 39 Financial Instruments: Recognition and Measurement when performing an impairment test of investments in associates. The request noted different impairment models (IAS 36 vs IAS 39) are used for impairment testing of investments in associates in the consolidated financial statements vs the separate financial statements of the investor. In the staff's opinion, given the different purposes of consolidated financial statements and separate financial statements (as detailed by the Board in BC66 of IAS 27), different impairment models (IAS 36 and IAS 39) are appropriate. Based on the explicit guidance provided in IAS 28 and other IFRSs, in the staff's opinion, IFRSs already provide relevant guidance and the staff does not expect divergent interpretations in practice. Therefore, the staff recommended that the IFRIC not add this issue to its agenda. The IFRIC members were asked if they agreed with the staff recommendation. One IFRIC member did not agree. That member thought that the two amounts should be the same, and it would be difficult to explain to the market why they are different. Another IFRIC member queried whether the cross-exemptions also apply in the separate financial statement for investments held at cost – or is it only if they are equity-accounted? The staff responded by saying that it is not clear. An IFRIC member stated that you could argue that the IAS 39 exemptions apply whether the investment is held at cost or equity-accounted. Another thought it is clear the equity method investments are excluded from IAS 39, but it is not clear for those held at cost. Another IFRIC member pointed out that IAS 39 permits the use of cost only when the entity is unable to get a reliable measurement. It does not incorporate cost and fair value as the staff are implying. The staff also said that because different measurement models apply, it would also seem appropriate to use different impairment models. Another IFRIC member disagreed with the staff analysis, stating that consolidation of subsidiaries is not the same as equity accounting. Equity accounting is a valuation method, not a consolidation, and this member disagrees with the analogy to consolidation. The staff also noted that the requirements for separate financial statements are in IAS 27, not IAS 28. One IFRIC member said that this was debatable as IAS 28 does refer to separate financial statements (by referring you back into IAS 27). Another IFRIC member thought the issue should be referred to the Board and dealt with via the annual improvements process. The IFRIC agreed to refer the issue to the Board. Interim Disclosures of Fair Values The IFRIC received a request to provide guidance on whether fair value disclosures are required for interim reporting periods in accordance with IAS 34 Interim Financial Reporting. The Board discussed fair value disclosures in interim financial reports at its April 2009 meeting. The Board decided to include in its exposure draft on fair value measurement the requirement to disclose, in interim periods, the same information required by IFRS 7 Financial Instruments: Disclosures. The Board asked the IFRIC to clarify whether IAS 34 currently provides sufficient guidance to enable entities to decide whether fair value disclosures would be required in interim financial reports. In the staff's view, interim disclosures for fair value measurements are required if: (a) the annual report provides a disclosure; (b) the information it contains changes significantly; and (c) those changes significantly affect a reader's understanding of the changes in financial position and performance of the entity since the end of the last annual reporting period. Following discussion, the IFRIC agreed with the staff view not to add the issue to IFRIC's agenda, subject to wording changes. Hedging Using More Than One Derivative as the Hedging Instrument In March 2009 the IFRIC received a request for guidance on how to apply IAS 39 Guidance on Implementing F.2.1 Whether a derivative can be designated as a hedged item (IAS 39 IG F.2.1.) when an entity issues fixed interest rate foreign currency debt and then swaps it into floating interest rate local currency debt using a cross currency interest rate swap (CCIRS). The entity also enters into a local currency pay-fixed, receive-variable interest rate swap (IRS), which has a shorter duration than that of the cross currency interest rate swap. In the staff's view, the real question in the case is whether the combination of the two derivatives (i.e. the CCIRS and the IRS) as the hedging instrument satisfy the hedge effectiveness test (as required by IAS 39 including paragraph 88) for one hedged item (eg the US debt) for the risks (US$/AUD FX risk and fixed/float interest risk). In the staff's view: (a) the CCIRS and the IRS in combination are eligible for joint designation as the hedging instrument in a hedging relationship with the fixed rate US$ debt as the hedged item; (b) the challenge of such a designation is the hedge effectiveness testing (as pointed out by supporters of View B - see paragraph 9 above); (c) if the prospective hedge effectiveness test (paragraphs 88(b) and AG105(a) of IAS 39) fails because of the challenge associated with this hedging relationship then the hedging relationship would not qualify for hedge accounting from the outset, ie commencement of the initial IRS covering the first five years (notwithstanding the eligibility for designation). In the staff's opinion, IAS 39 provides clear guidance for the cases of combining the two derivatives as a single hedging instrument and its hedge effectiveness test (including the submitter's case). Therefore, in the staff's view, development of an interpretation would result in providing implementation guidance on paragraphs 77 and 88, rather than an interpretation. One IFRIC member asked if there was really diversity in practice. Another responded by saying yes there was. The staff were requested to remove the wording from the agenda decision which stated that the IFRIC had not identified any significant diversity in practice. The IFRIC agreed with the staff recommendation not to add the issue to IFRIC's agenda, subject to the drafting change noted above. Meaning of 'Significant or Prolonged' In March 2009 the IFRIC received a request to add an item to its agenda to provide guidance on the conceptual meaning of 'significant or prolonged' in the context of recognising impairment on available-for-sale equity securities in accordance with IAS 39. The staff expressed concern about the timing of any response from IFRIC given the board's project on financial instruments, and would recommend not adding the issue to the agenda. They did note, however, that there is clear diversity in practice. Some IFRIC members thought that this issue should be one of judgement, although they had seen in practice 'rules' which interpreted the requirements of IAS 39 as being 9 months and 20%. This was considered to be moving away from judgement. Another IFRIC member supported the introduction of 'bright lines' on the basis that this would solve the issue quickly and provide comparability. Other IFRIC members noted that the view of some people is that markets always recover and therefore the one the question is whether the entity will be able to hold the investment for long enough for the market to recover. Another IFRIC member asked if the same entity was in the market buying equity investments? At least this would support their view. The response was no. It was noted by another IFRIC member that recovery is not considered in IFRSs. Another IFRIC member noted that the reason for the problem is that the impairments cannot be reversed. Could the IFRIC recommend to the Board to change that requirement? The Chairman noted that this depends on what measurement basis the board decides in the new exposure draft, and this is yet to be decided. Impairment may not be needed at all. The IFRIC agreed not to take the issue on to the agenda. The IFRIC were then asked if they would like to highlight inappropriate practices in the agenda decision. The IFRIC agreed, but noted that it should be made clear that whatever is included within the agenda decision are only examples. The IFRIC did not discuss exactly which examples to include within the agenda decision. The Chairman also suggested that the IFRIC could issue the agenda decision not only in the IFRIC update, but also as a separate paper (including the same wording) and request all national standard setters to comment on the issue. The objective would be to gain as much publicity for the issue as possible. They may also consider issuing a special press release. The staff noted that it is important to receive both positive and negative feedback on this issue. Scope of IFRIC 12 In March and April 2009 the IFRIC received two requests for guidance on the application of IFRC 12 Service Concession Arrangements. One focuses on one of the criteria for determining whether an arrangement is within the scope of the Interpretation. The other requests guidance on the application of the Interpretation to other features of the arrangement. In the staff's view, the issues raised in the submissions are already sufficiently addressed in the Interpretation to prevent divergence from emerging in practice. In addition, the staff is of the opinion that the issues raised call for implementation guidance rather interpretation. All IFRIC members except one agreed with the staff recommendation. IFRIC 18: Applicability to the Customer In March 2009, the staff received a request to add to the IFRIC agenda an issue regarding the applicability to customers of IFRIC 18 Transfers of Assets from Customers. In the staff's opinion, IFRIC 18 is explicit that it does not apply to the customer's accounting for the transfer of assets. The IFRIC members agreed. Based on the explicit scope of IFRIC 18, principles explained throughout IFRIC 18 including its Basis for Conclusions, and guidance in other IFRSs, in the staff's opinion, divergent interpretations are not expected in practice. Therefore the staff recommends that the IFRIC not add this issue to its agenda. The IFRIC agreed, subject to minor wording changes. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

8 May 2009: CAQ Guide to Public Company Auditing

The Center for Audit Quality of the American Institute of CPAs has published a Guide to Public Company Auditing. The guide illustrates for capital market stakeholders the important role public company auditing plays in preserving the strength and stability of US capital markets. Written with the layperson in mind, the Guide provides answers to the most frequently asked questions about, and topics related to, public company auditing, including: The relationship between company management, the audit committee and the auditors Audit team composition Steps in the audit process Finding fraud Auditor independence Click to Download the Guide to Public Company Auditing (PDF 1,520). We have posted the guide on IAS Plus with the kind permission of the Center for Audit Quality.

8 May 2009: Commissioner McCreevy's comments on IFRSs and IASB

Charlie McCreevy, the European Commissioner for Internal Market and Services, addressed a range of issues relating to IFRSs and the IASB in his keynote address at the European Commission's conference on Financial Reporting in a Changing World in Brussels yesterday. He cited the benefits of IFRSs for Europe and urged countries that have not yet adopted IFRSs, including the United States, to make the move. He cited recent progress in improving the IASCF's governance structure but said more action is needed regarding the geographic composition of IASB, due process, and balancing the Board with members with more practical experience. He urged the IASB to accelerate its work on issues identified as a result of the global financial crisis, including fair value measurement, aligning the IASB's impairment rules with those in the United States, and loan loss provisioning. Click to Download Commissioner McCreevy's Remarks (PDF 73k).

8 May 2009: IPSASB proposes convergence with IFRS 3 and IAS 38

The International Public Sector Accounting Standards Board (IPSASB) has published two new exposure drafts – ED 40 Intangible Assets and ED 41 Entity Combinations from Exchange Transactions – proposing that governments and other public sector entities follow the related IFRS requirements. ED 40 proposes an IPSAS that converges with IAS 38 Intangible Assets. ED 40 also incorporates guidance on website costs in Interpretation SIC 32 Intangible Assets - Web Site Costs. It also includes guidance on intangible heritage assets. ED 41 is converged with IFRS 3 Business Combinations. Entity combinations that arise from non-exchange transactions are being addressed in a separate public sector-specific project. Comments on the EDs are requested by 15 August 2009. You can download the EDs at www.ifac.org/EDs.

7 May 2009: CIMA study on complexity of corporate reporting

The Chartered Institute of Management Accountants (CIMA) has published a report on Complexity, Relevance and Clarity of Corporate Reporting: The views of CIMA FTSE 350 Directors (PDF 181k). The overall conclusion: We fear that statutory accounts limit the scope for describing what a business actually does, that audit now merely confirms that the technical accounting has been performed in line with the regulations, and that management has fewer opportunities to explain performance and strategy – with integrity – because they are bound by complex rules to report less relevant information in more detail. The report identifies four areas for improvement: The report identifies the following areas for improvement: Principles based standards. Firstly, to avoid setting rules too tightly to allow for the communication of genuinely useful and insightful information, we strongly urge an adherence to a principles based approach to drawing up reporting requirements. The pressure to align IFRS with those of United States GAAP may have started to tilt the balance towards rules based standards. But this could only further complicate financial reporting and limit the ability of CFOs and boards to apply sensible judgments to how they translate practical management information into published reports and accounts. Materiality. Today's financial IT systems and more complicated business practices are capable of producing huge volumes of data. But we must remain focused on what really has a bearing on a company's performance and viability. Narrative reporting. Take care not to overcomplicate the management commentary. This is a crucial area of financial reporting, and one that has evolved considerably over the past few years. We believe that published financial reports, should communicate to a wide audience the kind of information usually imparted in analysts presentations – in other words, the data and assumptions that drive decision making, information which often falls outside the scope of GAAP. Integrity. Integrity and professionalism are the cornerstones of our profession and we expect our members to display these qualities at all times. But excessive complexity in the accounting rules can actually make it harder for them to do so. We are grateful to the Chartered Institute of Management Accountants for giving IAS Plus permission to post the report.

7 May 2009: IASB webcasts on leases discussion paper

On 13 May 2009, the IASB will host two live webcasts introducing the joint IASB-FASB discussion paper Leases: Preliminary Views. The DP was published on 19 March 2009, with comments due by 17 July 2009. In the DP the IASB and the FASB propose a possible new model for lease accounting. The model is based on the principle that all leases give rise to liabilities for future rental payments and assets (the right to use the leased asset) that should be recognised in the lessee's statement of financial position. The live web presentation will include an interactive question and answer session. Questions can be submitted on-line during the presentation. Instructions will be given at the beginning of the presentation. Details: Webcast Topic: Joint IASB-FASB discussion paper Leases: Preliminary Views Date: Wednesday, 13 May 2009 Times: 9:30am (London time) and again at 15:30pm (London time) Presenters: Jan Engstrom, Member of the Board. and Rachel Knubley, Senior Project Manager More Information and Registration Download the Discussion Paper: 'Open to Comment' Section of IASB Website

6 May 2009: IAS Plus newsletter – income tax exposure draft

Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Changes Proposed for Income Tax Accounting (PDF 102k) discussing the IASB's Exposure Draft Income Tax published on 31 March 2009. The ED proposes to replace IAS 12 Income Taxes with a new standard. The proposed standard (set out in ED/2009/2 Income Tax) retains the basic IAS 12 approach to accounting for income tax, known as the temporary difference approach. However, the IASB proposes to remove most of the exceptions in IAS 12, to simplify the accounting and strengthen the principle in the standard. In addition, the IASB proposes a changed structure for the standard that will make it easier to use. Comments on the exposure draft are due by 31 July 2009. The proposal also more closely aligns international standards with FASB Statement 109 Accounting for Income Taxes. Past issues of all IAS Plus newsletters are Here.

6 May 2009: Accounting Roundup – April 2009

We have posted the April 2009 Edition of Accounting Roundup (PDF 362k) published by Deloitte & Touche LLP (United States). The newsletter is now organised by topic rather than by standard-setter. Topics covered in this issue include: Fair Value Measurements FASB Issues Guidance on Measuring Fair Value When Market Activity Declines FASB Issues FSP on Interim Fair Value Disclosures Investments in Debt and Equity Securities FASB Issues FSP on Other-Than-Temporary Impairments SEC Issues Staff Accounting Bulletin on Other-Than-Temporary Impairments Business Combinations FASB Issues FSP on Assets Acquired and Liabilities Assumed in a Business Combination That Arise From Contingencies Pensions and Other Postemployment Benefits GASB Issues Invitation to Comment on Pension Standard Derivative Instruments and Hedging Activities GASB Issues Derivative Instruments Guide Other Accounting XBRL 2009 Taxonomies Released GASB Issues Statement on GAAP Hierarchy GASB Issues Statement on Related-Party Transactions, Going-Concern Considerations, and Subsequent Events IASB Issues Annual Improvements Standard IASC Foundation Issues IFRS Taxonomy 2009 and Publishes XBRL Handbook for Public Comment Other SEC Matters SEC's Division of Corporation Finance Releases Updated Financial Reporting Manual SEC Staff Issues Compliance Guide for Small Entities SEC Issues Technical Amendments to Conform Various Rules, Forms, and Schedules to Statements 141(R) and 160 SEC Issues New Compliance and Disclosure Interpretations Other SEC Rules Issued or Proposed in April 2009 Other Auditing PCAOB Issues Staff Practice Alert 4 Regarding Fair Value Measurements, Disclosures, and Other-Than-Temporary Impairments PCAOB Issues Concept Release on Possible Revisions to Audit Confirmations Standard AICPA Proposes Clarifying and Converging SAS AICPA Issues Exposure Draft on Compilation and Review Standards AICPA Issues Guidance on Applying Agreed-Upon Procedures to XBRL-Tagged Data You will find past issues of Accounting Roundup Here.

6 May 2009: Deloitte response to EC Directives consultation

The Deloitte member firms in the European Economic Area have jointly submitted a Response to the European Commission Proposals (PDF 7,765k) to update the 4th and 7th Directives – known as the Accounting Directives. The EC Directorate on Internal Markets and Services launched a Consultation on the Proposals in March 2009. The consultation invites comments on a range of issues including: Structure of the Directives General principles of accounting recognition and measurement Size criteria for micros, small, medium, and large entities Which financial statements should be required for each category Electronic filing Financial statement formats Footnotes Valuation (measurement) issues Consolidation requirements The Commission expects to complete its analysis of the comments and to present proposed revisions to the Directives to the European Parliament by the end of 2009. Here are two excerpts from the Deloitte letter: Comment with regard to accounting options and national 'add-ons' to the Directives In our view, the Directives should, in principle, not provide Member State options concerning pure accounting (ie, the recognition and measurement of assets and liabilities). The harmonisation of accounting within the European Union benefits users (increased comparability of accounts within the EU) and preparers (reduced costs for groups of companies and economies of scale generally), and generally facilitates cross-border trade and services, including accounting and audit. However, we recognise that Member States use accounting information in different ways and so the need to provide certain options may continue as regards additional information that may be required under tax or corporate governance law or practices or requirements that can be deemed to depend upon the specific business environment of a Member State. The onus will be on Member States to justify the additional costs to business of making use of these options, or providing additional requirements to those set out in the Accounting Directives, upon the basis of the specific Member State context. Comment with regard to the IFRS for Small and Medium-sized Entities In the short and possibly medium term, the (revised) Accounting Directives will continue to form the European legal accounting framework for non listed companies. However, we do not believe this should remain the case in the long term as by their nature Directives are not flexible enough to rapidly reflect changing economic needs and do not necessarily reflect views from beyond Europe. We support convergence toward a single set of high-quality global accounting standards, adapted as required for entities that are not publicly accountable and SMEs, prepared through a robust and independent standard-setting process, and that maintaining a parallel European framework for the long term would not be a good use of resources or benefit European preparers and users. We ask that the Commission work towards providing a mechanism for Member States to opt to use directly the forthcoming standard from the IASB on accounting for non-publicly accountable entities. This mechanism should be based on the test that the accounting requirements of the Directives are met through use of that simplified IFRS.

6 May 2009: Deloitte's Laurence Rivat appointed to IFRIC

The Trustees of the IASC Foundation have appointed Laurence Rivat, a partner at the national office of Deloitte France, as a new member of the International Financial Reporting Interpretations Committee (IFRIC) for a three-year term beginning on 1 July 2009. She will replace Ken Wild, partner in Deloitte United Kingdom, whose term expires 30 June 2009. The Trustees also reappointed three current IFRIC members to three-year terms – Sara York Kenny, Consulting Advisor, International Finance Corporation (World Bank Group); Takatsugu Ochi, Assistant General Manager, Financial Resources Management Group, Sumitomo Corporation; and Ruth Picker, Partner and Global Director, Global IFRS Services, Ernst and Young. Laurence Rivat has been the leader (since 2001) of one of six Deloitte IFRS Centres of Excellence and a member of the Deloitte IFRS Leadership Team. Ms Rivat is actively involved in global activities on IFRSs on various subjects. Click for IASCF Press Release (PDF 101k).

6 May 2009: Study of IFRS implementation in Europe in 2006

The European Commission has published Evaluation of the Application of IFRS in the 2006 Financial Statements of EU Companies. This is a study, conducted by a consulting firm, of the 2006 IFRS consolidated financial statements of 270 groups whose shares trade on a regulated exchange in Europe. This study is similar to a Study of 2005 IFRS Financial Statements conducted for the European Commission by the Institute of Chartered Accountants in England and Wales in March 2007. The new study (dated December 2008 but just released by the European Commission) is published in two parts: Complete Report: Application of IFRS in the 2006 Financial Statements of EU Companies (PDF 6,107k) Executive Summary (PDF 184k) Below is an excerpt from the executive summary. There is significant support for this overall IFRS initiative and its accompaniment from the sample of stakeholders that we have canvassed, for example: 'Our national GAAP were well engineered, but nobody could understand them beyond our country'. 'Our clients now make more easily cross border investments since they understand the figures'. 'Cooperation and exchange of information through CESR is boosting the enhancement of enforcement of regulations'. As our analysis of the 270 financial statements has shown, the quality of disclosure by preparers improved in 2006, although further efforts are needed to attain full compliance. Additional efforts are also needed to further enhance the level of enforcement. As stated in paragraph 3.1 the level of enforcement varies widely between the 25 member states and the CESR identified in 2006 only 10 countries fully compliant with enforcement standards. There are a number of issues to address with certain of the standards to simplify, adapt and/or make clearer the financial information reported as set out on paragraph 3.3. Difficulties we encountered during our analysis of financial statements, and comments made by enforcers and other stakeholders, indicates that the issue of how far to go in standardising presentation formats for ease of reading and comparability needs to be addressed. This topic could potentially be examined in liaison with developments on potential computerisation and coding of financial statement disclosures. During interviews with national stakeholders, it became clear that the implementation of IFRS in the European Union has changed and somewhat diminished their roles. These changes in roles and focus of national stakeholders need to be examined more fully in order to ensure that there is optimisation of all efforts of each of the national stakeholders in promoting, assisting in implementation and ensuring compliance with the IFRS as endorsed by the European Union.

5 May 2009: Notes from today's special IASB meeting

The IASB held a special Board meeting at its offices in London on Tuesday 5 May 2009. Because the meeting was arranged at short notice, some Board members took part via conference call. Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting. The Board will hold its regular May meeting on 18-22 May 2009 at its offices in London.

5 May 2009: IFAC 2009 handbook of auditing standards

The International Federation of Accountants has released the 2009 Handbook of International Standards on Auditing and Quality Control. The handbook brings together all the International Standards on Auditing (ISAs) and the International Standard on Quality Control that were redrafted by the International Auditing and Assurance Standards Board (IAASB) to improve their clarity. These will become effective on 15 December 2009. This handbook replaces Part II of the 2008 Handbook of International Standards on Auditing, Assurance, and Ethics Pronouncements. Part I of the 2008 Handbook will remain in effect during 2009. It contains pronouncements on auditing, review, other assurance, and related services issued by the IAASB as of 1 January 2008, and the IFAC Code of Ethics. The pronouncements on auditing in Part I of the 2008 Handbook will remain in effect up to 14 December 2009; thereafter, they will be replaced by those contained in the 2009 Handbook. The Handbooks can be downloaded free of charge in PDF format from www.ifac.org/store. Printed copies may be purchased.

5 May 2009: Employee benefits working group meeting notes

The IASB's Employee Benefits Working Group met in London on 28 April 2009. Click here for the Preliminary and Unofficial Notes (PDF 57k) taken by Deloitte observers at the meeting.

5 May 2009: Special IASB meeting today

The IASB will hold a special Board meeting at its offices in London on Tuesday 5 May 2009 starting at 09.30 (London time). Because the meeting has been arranged at short notice, some Board members will be taking part via conference call. Due to renovation work currently taking place in the IASB Boardroom, observers will not be able to attend the meeting. However, an audio webcast will be available via the internet. Click Here for the link to register to listen to the audio webcast on the IASB's website. The agenda topic for the meeting is: Financial Instruments: Recognition and Measurement – Replacement of IAS 39 The Board will discuss remeasurement of financial instruments based on discounted cash flows (an alternative to fair value measurement based on an exit price). This is an education session and the Board will not be asked to make decisions. The Board's regular May meeting will be held 18-22 May 2009.

5 May 2009: Chinese translation of newsletter on Improvements

Deloitte China has published the Chinese translation of the following IAS Plus Update newsletter: Chinese Translation of IAS Plus Update Newsletter – Improvements to IFRSs 2009 (PDF 156k). Here is the English Version (PDF 108k) You will find links to these and many other IFRS materials in Chinese on our China Page.

4 May 2009: IFRSs in your Pocket 2009

We have published the eighth edition of our popular guide to IFRSs – IFRSs In Your Pocket 2009 (PDF 563k). This 124-page guide includes information about: IASB structure and contact details IASB due process Use of IFRSs around the world, including updates on Europe, Asia, USA, and Canada Summaries of each IASB Standard and Interpretation, as well as the Framework and the Preface to IFRSs Background and current status of all current IASB projects IASC and IASB chronology Update on IFRS-US GAAP convergence Other useful IASB-related information We are pleased to grant permission for accounting educators and students to print copies of the PDF file for educational purposes. Please contact your local Deloitte practice office to request a printed copy. You will find Links to our Many Other IFRS Publications here.

4 May 2009: Chinese translation of two IAS Plus Update newsletters

Deloitte China has published the Chinese translations of the following IAS Plus Update newsletters: Chinese Translation of IAS Plus Update Newsletter – Exposure Draft on Derecognition (PDF 161k). Here is the English Version (PDF 148k) and Chinese Translation of IAS Plus Update Newsletter – Discussion Paper on Lease Accounting (PDF 164k). Here is the English Version (PDF 129k)

4 May 2009: Deloitte Canada Countdown IFRS transition newsletters

Deloitte Canada has published the April 2009 issue of their Countdown IFRS transition newsletter, to discuss practical issues Canadian companies are facing in IFRS transition as well as to provide an update on recent IFRS events. Articles in this issue include: The Role of Internal Audit in IFRS implementation IASB Income Taxes Exposure Draft: Considerations for Canadian Companies 'The Real Deal' – real issues and solutions on IFRS transition relating to business combinations Deloitte Publications and Events and How to Access Them An Update on Current IFRS events – including various important EDs or Discussion Papers Click below for: April 2009 Edition Countdown Newsletter – English (PDF 1,760k) April 2009 Edition Countdown Newsletter – French (Compte à Rebours) (PDF 1,791k) You will find more information about financial reporting in Canada on our Canada Page.

1 May 2009: IFRS conversion in banking - Spanish translation

Deloitte (Colombia) has published the Spanish translation of a Deloitte (United States) IFRS conversion report: El camino de la conversión hacia los IFRS: Consideraciones para la industria bancaria y de merados de capital (PDF 201k) Spanish version of The Path to IFRS Conversion: Considerations for the Banking and Capital Markets Industries (PDF 267k) This booklet includes sections on: Understanding the implications of IFRS for the banking and capital markets industry for accounting and finance, systems and tax Reviewing key differences between IFRS and US Generally Accepted Accounting Principles (GAAP) Evaluating approaches to IFRS conversion Developing an IFRS road map IFRS lessons from the European experience