30 November: 11 IFRSs await EU endorsement

The European Financial Reporting Advisory Group (EFRAG) has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. Click to download the Endorsement Status Report as of 27 November 2009 (PDF 136k). The latest update reflects several events of last week – the endorsement of the revised IFRS 1 and IFRIC 17 by the European Commission and the publication of IFRIC 19 and the amendments to IFRIC 14 by the IASB. The following 11 IASB pronouncements are awaiting European Commission endorsement for use in Europe: Standards IFRS 9 Financial Instruments Interpretations IFRIC 18 Transfers of Assets from Customers Amendment to IFRIC 14 Prepayments of a Minimum Funding Requirement IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments Amendments IFRS 7 Amendment – Improving Disclosures About Financial Instruments IFRIC 9 and IAS 39 Amendment – Embedded Derivatives Improvements to IFRSs (Issued 16 April 2009) Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions Amendments to IFRS 1 Additional Exemptions for First-time Adopters IAS 32 Classification of Rights Issues IAS 24 Revised Related Party Disclosures You can always find the endorsement status report Here.

29 November 2009: Michel Barnier to be new EU Internal Market Commissioner

José Manuel Barroso, President of the European Commission, has announced that Michel Barnier of France will be the next European Commissioner for Internal Market and Services, succeeding Charlie McCreevy. The Internal Market Commissioner has responsibility for policy and oversight of accounting and auditing matters within the European Union, including relations between the Commission and the IASB. The Commissioner is also responsible for supervising the market for financial services and regulation of banks. Mr Barnier, 58, is currently a member of the European Parliament and has served in various political positions in France, including Member of the French National Assembly, Minister of the Environment, Secretary of State for European Affairs, Foreign Minister, and Minister for Agriculture and Fisheries. From 1999 to 2004 he served as European Commissioner for Regional Policy in the Commission of Romano Prodi. The new Commission will have 27 members, including President Barroso, one from each Member State. It will take office early in 2010 (the Parliamentary confirmation vote is scheduled for 26 January) and will serve through 31 October 2014. Click for EC Press Release on the New Commission (PDF 134k).

28 November 2009: Deloitte Canada IFRS transition newsletters

Deloitte Canada has published the November 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 'Tax'-ing Route to IFRS 'The Real Deal' – real issues and solutions on IFRS transition relating to Stock Compensation Performance Measurement Under IFRS Public Sector Government Business Enterprises Required to use IFRSs Deferral of the Consolidation Project 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: November 2009 Edition Countdown Newsletter – English (PDF 1,296k) November 2009 Edition Countdown Newsletter – French (Compte à Rebours) (PDF 1,783k) Related items: You will find more information about financial reporting in Canada on our Canada Page. We have a special page on First-time Adoption of IFRSs See story immediately before for our new Guide to IFRS 1

27 November 2009: New Deloitte Guide to IFRS 1

Deloitte's IFRS Global Office has published a revised Guide to IFRS 1 First-time Adoption of International Financial Reporting Standards. The guide was first published in 2004 with the aim of providing first-time adopters with helpful insights for the application of IFRS 1. This second edition has the same objective. We have updated the content to reflect the lessons learned from the first major wave of IFRS adoption in 2005, as well as for the changes to IFRS 1 since 2004. We have structured the guide to provide users with an accessible reference manual: An executive summary explains the most important features of IFRS 1; Section 2 provides an overview of the requirements of the Standard; Sections 3 and 4 cover the specific exceptions and exemptions from IFRS 1's general principle of retrospective application of IFRSs, focusing on key implementation issues; Section 5 addresses other components of financial statements where implementation issues frequently arise in practice; Section 6 sets out Q&As dealing with specific fact patterns that users may encounter in practice; and Section 7 discusses some of the practical implementation decisions faced by first-time adopters. Click for: Download Deloitte's Guide to IFRS 1 (PDF 370k) IAS Plus Page of Resources on First-time Adoption of IFRSs IFRS 1 Page on IAS Plus Like dozens of other Deloitte IFRS-related publications, there's a permanent link to this IFRS 1 Guide on our IFRS Publications Page.

27 November 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. 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 26 November 2009 Stay Tuned Online IFRS and UK GAAP Update: IFRS 9 Financial Instruments ED/2009/12 Financial Instruments: Amortised Cost and Impairment Classification of Rights Issues: amendment to IAS 32 IAS 24 Related Party Disclosures (revised 2009) A round up of other UK reporting matters Other IFRS developments and summaries for December 2009 To access the recording Click Here. There's a permanent link on our UK Country Page.

27 November 2009: IFRIC 17 endorsed for use in Europe

The European Commission has completed the process of endorsing, for use in Europe, the November 2008 restructured version of IFRIC 17 Distributions of Non-cash Assets to Owners. Click for the Commission Regulation (EC) No 1142 (PDF 836k), the endorsement Regulation published in the Official Journal of the European Union on 26 November 2009.

27 November 2009: Three Deloitte IFRS newsletters in Chinese

Deloitte China has published the Chinese translations of three IAS Plus Update IFRS newsletters: IAS 24 Related Party Disclosures Chinese Translation (PDF 211k). Here is the English Version (PDF 68k) IFRS 9 Financial Instruments Chinese Translation (PDF 291k). Here is the English Version (PDF 226k) Exposure Draft ED/2009/12 Financial Instruments: Amortised Cost and Impairment Chinese Translation (PDF 238k). Here is the English Version (PDF 90k) The Chinese newsletters are permanently available at Deloitte's CAS Plus Website and on our China Page. All past English versions are on our Newsletters Page.

27 November 2009: IFRS insurance accounting newsletter

Deloitte (United Kingdom) has published the November 2009 issue of Insurance Accounting Newsletter. This issue is titled Welcomed Convergence? and focusses on the renewed drive toward convergence of the US and international insurance accounting standards resulting from the October joint meeting of the FASB and the IASB. The newsletter includes computation examples illustrating how the decisions made at that meeting will affect a single premium insurance contract and a regular premium insurance contract. An appendix presents a summary of key decisions to date. Click to download Issue 9 of the Insurance Accounting Newsletter (PDF 267k). There are permanent links all issues of the newsletter on IAS Plus Insurance Project Page.

27 November 2009: IFRIC 19 on liability-equity swaps

The International Financial Reporting Interpretations Committee has issued IFRIC Interpretation 19 Extinguishing Liabilities with Equity Instruments following its approval by the IASB. The Interpretation applies when a debtor extinguishes a liability fully or partly by issuing equity instruments to the creditor. IFRIC's key conclusions in IFRIC 19: If a debtor issues equity instruments to a creditor to extinguish all or part of a financial liability, those equity instruments are 'consideration paid' in accordance with IAS 39.41. Accordingly, the debtor should derecognise the financial liability fully or partly. The debtor should measure the equity instruments issued to the creditor at fair value, unless fair value is not reliably determinable, in which case the equity instruments issued are measured at the fair value of the liability extinguished. If only part of a liability is extinguished, the debtor must determine whether any part of the consideration paid relates to modification of the terms of the remaining liability. If it does, the debtor must allocate the fair value of the consideration paid between the liability extinguished and the liability retained. The debtor recognises in profit or loss the difference between the carrying amount of the financial liability (or part) extinguished and the measurement of the equity instruments issued. When only part of the liability is extinguished, the debtor must determine whether the terms of the remaining debt have been substantially modified (taking into account any portion of the consideration paid that was allocated to the remaining debt). If there has been a substantial modification, the debtor should account for an extinguishment of the old remaining liability and the recognition of a new liability (see IAS 39.40). IFRIC 19 must be applied in annual periods beginning on or after 1 July 2010. Earlier application is permitted. It would be applied retrospectively from the beginning of the earliest comparative period presented. Click for: IASB Press Release (PDF 109k) More Information

27 November 2009: IASB amends IFRIC 14

On 26 November 2009, the IASB issued Prepayments of a Minimum Funding Requirement (Amendments to IFRIC 14). The amendments correct an unintended consequence of IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. Without the amendments, in some circumstances entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. This was not intended when IFRIC 14 was issued, and the amendments correct the problem. The amendments are effective for annual periods beginning 1 January 2011, with earlier application permitted. The amendments must be applied retrospectively to the earliest comparative period presented. Click for IASB Press Release (PDF 101k).

27 November 2009: IASB proposes disclosure relief under IFRS 1

The IASB has issued an exposure draft (ED) proposing to amend IFRS 1 First-time Adoption of IFRSs to state that an entity need not provide the comparative prior-period information required by the March 2009 amendments to IFRS 7 Improving Disclosures about Financial Instruments for first-time adopters adopting before 1 January 2010. As a result, IFRS 1, Appendix E, paragraph E1 will be amended as follows: E1 A first-time adopter may apply the transitional provisions in paragraph 44G of IFRS 7 to the extent that the entity's first IFRS reporting period starts earlier than 1 January 2010. The proposed limited exemption from comparative IFRS 7 disclosures for first-time adopters is consistent with the exemption permitted for early adopters of the March 2009 amendments to IFRS 7. Deadline for comments on the ED is 29 December 2009. Click for IASB Press Release (PDF 101k).

26 November 2009: Revised IFRS 1 endorsed for use in Europe

The European Commission has completed the process of endorsing, for use in Europe, the November 2008 restructured version of IFRS 1 First-time Adoption of IFRSs. Click for the Commission Regulation (EC) No 1136 (PDF 908k), the endorsement Regulation published in the Official Journal of the European Union on 26 November 2009.

26 November 2009: Proposed Roadmap for IFRS convergence in China

The Ministry of Finance (MOF) of the People's Republic of China has invited comment on an exposure draft of a Roadmap for Continuing and Full Convergence of the Chinese Accounting Standards for Business Enterprises (ASBE) with the International Financial Reporting Standards (IFRSs). Comments are due by 30 November 2009. The current ASBE were adopted by the MOF in February 2006. The principles in the ASBE are substantially in line with IFRSs, with a few exceptions. The Proposed Roadmap is Available in Chinese on the MOF's website. Because the IASB plans to complete a number of major projects by 2011, the Roadmap targets 2011 as the year for completion of the convergence programme of the ASBE and IFRSs. As part of that programme, during 2010 the ASBE standards will be revised; the existing Implementation Guidance will be incorporated into them; and the existing Explanatory Guidance will be renamed Implementation Guidance with enhanced content and illustrative examples. Once completed, all large and medium-sized enterprises will be required to use the revised standards as of 2012.

26 November 2009: UK ASB pension accounting study

The United Kingdom Accounting Standards Board (ASB) has issued a report The Financial Reporting of Pensions: Feedback and Redeliberations. The objective is to provide the IASB with recommendations on matters it might consider in developing a future financial reporting standard on pensions. The report is being published under the Pro-active Accounting Activities in Europe (PAAinE) initiative by the ASB, EFRAG, and the accounting standards boards of Germany and France. The recommendations are, however, only those of the ASB. The report is a follow-up to a discussion paper issued by the ASB in January 2008 and sets out the ASB's redeliberations and recommendations after consideration of the 103 responses to the discussion paper. Some key recommendations of the ASB: Recognition should be based on the principles of reflecting only present obligations as liabilities. The liability to pay benefits that is recognised (and the pension expense for each period) should be based on current salaries plus any future increases that are required by law or contract including other increases that are seen as nondiscretionary (ie there is a constructive obligation). Pension plans should be subject to the same principles of consolidation as are usually applied in determining whether one entity controls another. Pension assets and liabilities should be recognised immediately, but recognition of the changes in assets and liabilities relating to pension benefits are inextricably linked to the presentation of those changes in the financial statements. Future cash flows used to measure the liability to pay pension benefits should be: explicit; based on observable market prices that are adjusted to take into consideration entity-specific circumstances; incorporate in an unbiased way all available information about the amount, timing and uncertainty of cash-flows arising from the contractual obligations; and current – they correspond to conditions at the end of the reporting period. The liability to pay pension benefits should not be reduced to reflect an entity's credit risk. In measuring liabilities, the discount rate used should reflect the time value of money, and therefore should be a risk-free rate. Assets held to pay pension benefits should be reported at current values. Click for: ASB Report: The Financial Reporting of Pensions: Feedback and Redeliberations (PDF 1,409k) ASB Press Release (PDF 71k)

26 November 2009: New IFRS e-Learning modules in Chinese

Three additional IFRS e-Learning modules have now been translated into Chinese and posted on Deloitte's CAS Plus website: IAS 27 Consolidated and Separate Financial Statements IAS 28 Investments in Associates IAS 31 Interests In Joint Ventures In addition, the Conceptual Framework module has been updated. A complete list of Deloitte's IFRS e-Learning modules in Chinese is Here. To download the modules (there is no charge, but registration is required) click on the lightbulb icon on the CAS Plus home page or Click Here.

26 November 2009: We comment on IASCF Constitution proposals

On 9 September 2009, the Trustees of the IASC Foundation (IASCF) published for public comment proposals arising from the second part of their two-part review of the IASCF Constitution. The objectives of the proposals are to enhance the governance of the organisation, improve the involvement of stakeholders with a broad range of perspectives in both developed and emerging markets, and make operational improvements. The key proposals for changes to the IASCF Constitution are: Change of name of the IASC Foundation to the IFRS Foundation and the IASB to the IFRS Board Replace all references to 'accounting standards' with 'financial reporting standards' throughout the constitution Clarify the objectives of the organisation, in particular: Clarify the need to take account of emerging economies and, as appropriate, the special needs of small and medium-sized entities, and Not to broaden the scope to cover standards for public and not-for-profit entities Clearly acknowledge the role the Monitoring Board now plays in the governance structure of the organisation Formally recognise Africa and South America in the composition of the Trustees by requiring one Trustee from each of those two regions Establish a procedure for an accelerated due process in exceptional circumstances Provide for appointing up to two vice-chairmen for both the Trustees and the IFRS Board Amend the length of a possible second term of the IFRS Board members to ensure appropriate turnover, as follows: Board members would be appointed initially for a term of five years, with the option for renewal for a further three-year term. This will not apply to the Chairman and Vice-Chairman, who may be appointed for a second five-year term. The Chairman or Vice-Chairman may not serve for longer than ten consecutive years. Expressly provide that the IASB must consult the Trustees and the SAC when developing its technical agenda Deloitte has submitted a Letter of Comment on Part 2 of the Constitution Review: Proposals for Enhanced Public Accountability (PDF 77k). Some key points that we made in our letter We think that the Trustees' proposals with respect to consultation on the IASB's technical agenda and priorities do not go far enough. In our view, the Constitution should require the IASB to consult formally with constituents on a regular basis about the topics on its technical agenda and the relative priorities that have been assigned to those topics. The comment period must give constituents a realistic opportunity to comment on these matters. We also recommend that the positions of IASB Chair and Chief Executive Officer of the IASC Foundation be separated. The IASCF and the IASB are under increasing public scrutiny from many jurisdictions and it is vitally important that there be no conflict of interest (real or perceived) between the roles of IASB Chairman and the chief executive of its oversight body. We do not support the proposal to allow the Trustees, in exceptional circumstances, to authorise a shorter due process period. In order to maintain its credibility as an international standard-setter, the International Accounting Standards Board must expose all proposals for a period of time that affords all constituents a reasonable opportunity to understand, digest and comment on the IASB's proposals. As explained in Appendix A, our view is that permitting anything less than 30 days cannot be said to be proper 'due process'. Finally, we have concerns about the operations and output of the International Financial Reporting Interpretations Committee. We do not wish to see the IFRIC become an urgent issues group, but we think that there are issues that could be addressed efficiently by the IFRIC, but which – because of the Constitution's mandate for the IFRIC and the operating procedures documented in the IFRIC's Due Process Handbook – are referred to the IASB for action. In Appendix B we offer some suggestions about how the IFRIC's role and mandate could be reformed to make better use of the Committee. You can find background information on the 2008-2009 IASC Constitution Review Here.

25 November 2009: Reporting by audit firms begins 31 December

In our news stories of 15 August 2009 and 1 October 2009 we reported that the US Public Company Accounting Oversight Board has adopted rules that require registered public accounting firms (domestic and foreign) to report to the PCAOB about certain specified events (starting with events occurring 31 December 2009) and also to file annual reports (with the first annual reports due 30 June 2010). The PCAOB has now released Sample Forms and Other Details (link to PCAOB website, scroll down to 'Annual and Special Reporting' section). There are currently 2,261 audit firms registered with the PCAOB. Of those, 1,336 (59%) are US firms and the remaining 41% are foreign firms.

25 November 2009: Deloitte IFRS for SMEs newsletter in Spanish

Deloitte (Colombia) is publishing a series of Spanish language bulletins about the new IFRS for SMEs. We have previously posted Bulletins No 1 through 19 – links can be found Here. We have now posted Bulletin No 20 (24 November 2009), which discusses the following sections of the IFRS for SMEs: Sec 24 Subvenciones Gubernamentales (Government Grants) Sec 25 Costos por Préstamos (Borrowing Costs) Sec 26 Pago Basado-en-acciones (Share-based Payment) Sec 27 Deterioro del Valor de los Activos (Impairment of Assets) Click to Download Bulletin 20 (PDF 246k). Nuestros Recursos en Español.

25 November 2009: Notes from IASB fair value roundtable

On 2 November 2009, the IASB held a roundtable at the FASB offices in Norwalk, CT to discuss its Fair Value Measurements exposure draft (ED). Roundtable participants consisted of a cross-section of representatives including auditors, financial statement preparers, valuation experts and industry. We have posted Notes Taken by Observers at the Roundtable (PDF 34k). Participants in the roundtable were asked to address the following issues and questions relating to fair value measurements: Issue A – Fair value as an exit price When does a market-based exit price not reflect the present value of the expected future cash inflows and outflows from an asset or a liability? Issue B – Fair Value of liabilities Can the principles of ASU No 2009-5 be applied in practice in IFRSs? If not, why not? When might the fair value of a liability not be equal to the corresponding asset's fair value? Issue C – Fair value of non-financial assets and liabilities What specific additional guidance is needed to measure the fair value of non-financial assets and liabilities? Are any of the proposals in the exposure draft inconsistent with measuring the fair value of non-financial assets and liabilities? Issue D – Fair value in inactive markets Is the proposed guidance sufficient for measuring fair value when markets have become inactive (when they previously were active)? If not, what additional guidance do you think is necessary? Issue E – Fair value in emerging and transition economies What proposals in the exposure draft are not applicable to emerging and transition economies? Why are they not applicable? What specific additional guidance is needed? Issue F – Jurisdiction-specific issues Are there measurement considerations specific to your jurisdiction that the exposure draft does not seem to have contemplated? If so, what are they? Issue G – US GAAP convergence Aside from the reference market and blockage factors, would you expect there to be a numerical difference between a fair value calculated using the proposals in the exposure draft and a fair value calculated using the Topic 820? Have you learned anything from applying Topic 820 that the IASB should consider when finalising an IFRS on fair value measurement guidance?

24 November 2009: We comment on improvements to IFRSs ED

Deloitte Touche Tohmatsu has submitted comments on IASB Exposure Draft ED2009/11 Improvements to IFRSs, which was published 26 August 2009. The ED proposes improvements to eleven IFRSs, mostly mandatory for 2011 but several earlier. While we support the IASB's improvements process, we have 'serious concerns regarding the quality and drafting of the 2009 amendments' and about inconsistencies between some of the proposed improvements and decisions on current agenda projects. Our view, in summary: We welcome the IASB's continuing process to deal with certain amendments to IFRSs in an efficient and effective manner. Nonetheless, we have serious concerns regarding the quality and drafting of the 2009 amendments, as there is not always consistency between the Board's intentions as expressed in the introduction, the Basis of Conclusions and the actual wording of the amendment. This is particularly so with respect to the proposed changes to IAS 1, IAS 27, IAS 34, and IAS 40, in which the proposed amendments go beyond the Board's stated intentions and have more widespread consequences than indicated in the introduction or Basis for Conclusions. We also question whether such potentially wide-reaching amendments are within the scope of the annual improvements process. We are also concerned that some of the proposed amendments and their implications appear to be in conflict with other projects on the Board's agenda. This is particularly the case with the proposed amendments to IAS 27. This apparent conflict is confusing for the Board's constituents, and we would strongly encourage the Board to ensure consistency between projects on its agenda and the annual improvements even if this means delaying an improvement. Click for: Deloitte Letter of Comment on ED 2009/11 Improvements to IFRSs (PDF 84k) All Past Deloitte Letters of Comment to IASB/IASC

24 November 2009: Deloitte webcast on financial instruments project

On 9 December 2009 Deloitte United States will host a Deloitte Dbriefs webcast on the joint IASB and FASB financial instruments project. There is no charge to participate, but you must register. Details: Webcast topic: IASB and FASB Financial Instruments Project: A Closer Look Webcast content: Standard setters are considering fundamental changes to the accounting for financial instruments. What will you need to know to help determine the impact of these changes on your company's balance sheet and reported earnings? The webcast will discuss: Recent regulatory developments related to International Financial Reporting Standards (IFRSs) Changes to the accounting for financial assets and financial liabilities, including recognition and measurement of investments in debt and equity securities, loans, receivables, and borrowings Some key differences between US GAAP and IFRSs Date and Time: Wednesday 9 December 2009, 2:00pm EST (New York time), duration 90 minutes Target audience: Financial executives More Information and Registration Related IAS Plus Webpages: IAS 39 Replacement Project – Overall Classification and Measurement of Financial Instruments IFRS 9 Financial Instruments Impairment and Provisioning Hedge Accounting Derecognition Credit Risk in Liability Measurement

23 November 2009: Financial reporting lessons from the financial crisis

US SEC Commissioner Kathleen L Casey spoke about Lessons from the Financial Crisis for Financial Reporting, Standard Setting and Rule Making (PDF 45k) at Financial Executives International's 28th Annual Current Financial Reporting Issues Conference in New York on 17 November 2009. Commissioner Casey identified three key lessons from the crisis: First, financial stability depends upon market confidence; and investor confidence, in turn, depends upon the transparency of financial statements. Second, financial reporting and accounting standard setting must remain focused on the needs of investors. While there are many other important stakeholders that rely on financial statement reporting, investors' interests must remain paramount. Third, financial reporting must remain relevant and informative to investors, and should not impose unnecessary or costly burdens that do not add to investor understanding. Here is an excerpt relating to IFRSs in the United States: As the number of US investors with holdings of securities of non-US companies continues to increase, the Commission and the FASB would be remiss and would fail the needs of investors if we did not continue to support the development of a single set of high quality global accounting standards. The desirability of convergence on certain key accounting standards – particularly those related to financial instruments and other areas relevant to the credit crisis – has been highlighted in a number of forums, including the March 2009 communique of the G-20 finance ministers, the Department of Treasury's June 2009 Regulatory Reform report and the July 2009 Report of the Financial Crisis Advisory Group. The Commission strongly supports the continued convergence efforts of FASB and IASB. The existing convergence targets of these two standard setters pursuant to their 2006 MoU, as updated in September 2008, set the goal of completing several major joint projects by 2011. And less than two weeks ago, the FASB and IASB issued a joint statement reaffirming their commitment to achieving convergence of IFRS and US GAAP, and announcing plans to intensify their efforts to complete the major joint projects described in the MoU. Going forward, it is crucial that the United States continue to play a leadership role in the support and development of a single set of high quality global accounting standards. It is also my hope and expectation that the Commission will soon articulate the next steps to be taken with respect to the use of IFRS by US issuers – further signaling our commitment to this important goal.

23 November 2009: Updated Belgium country page

We have updated our Belgium Country Page to elaborate on the requirements for the use of IFRSs by unlisted companies in Belgium. The most recent change, adopted by Royal Decree of 27 September 2009 (PDF 327k), is that unlisted insurance companies must prepare their consolidated financial statements according to IFRSs as adopted by the EU for accounting years starting on or after 1 January 2012. The board of directors may decide to apply IFRSs as from accounting years starting on or after 1 January 2010, with such decision being irrevocable.

23 November 2009: Exchange of letters on IFRS 9

The IASB has Posted on its website an exchange of letters between the Trustees of the IASC Foundation and the European Commission regarding the Commission's concerns about IFRS 9 and its decision to postpone considering the Standard for endorsement. The Trustees' letter states: "You would not expect the Trustees to be anything but surprised and disappointed at the deferral. However, we appreciate the Commission's continuing commitment to International Financial Reporting Standards (IFRSs). We acknowledge the supportive statement that your office made regarding IFRSs following the announcement and that the decision regarding timing does not prejudge the ultimate endorsement of IFRS 9." The Commission's response states: "The European Commission remains fully committed to IFRS as the single set of globally accepted accounting standards. Moreover, EU stakeholders unanimously support the general approach based on a mixed attribute measurement model used by the IASB in IFRS 9. The decision not to seek accelerated endorsement of IFRS 9 at this stage reflects the changed economic outlook and market improvements." Click for: IASCF Trustees' Letter to the Commission (PDF 52k) European Commission Response (PDF 163k)

23 November 2009: Newsletter on financial asset impairment ED

Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Financial Instruments: Amortised Cost and Impairment (PDF 90k). On 5 November 2009 the IASB issued an exposure draft (ED) proposing to modify the way impairment losses are recognised on financial assets measured at amortised cost from an 'incurred loss model' to an 'expected loss model'. This is one of the phases of the IASB's comprehensive project to replace IAS 39. The newsletter summarises the IASB's proposed expected loss model, identifies a number of operational issues, and contrasts the IASB's proposal to the US FASB's proposed 'incurred loss model'. An appendix to the newsletter sets out a comprehensive numerical example of the calculation mechanics of the expected loss approach for fixed-rate financial instruments. Another appendix provides a detailed comparison of IAS 39's incurred loss approach and the proposed expected loss approach. The existing incurred loss model IAS 39's incurred loss model assumes that all loans will be repaid until evidence to the contrary (known as a loss or trigger event) is identified. Only at that point is the impaired loan (or portfolio of loans) written down to a lower value. IASB's proposed expected loss model Under the model proposed in the ED, expected losses are recognised throughout the life of a loan or other financial asset measured at amortised cost, not just after a loss event has been identified. The expected loss model avoids what many see as a mismatch under the incurred loss model – front-loading of interest revenue (which includes an amount to cover the lender's expected loan loss) while the impairment loss is recognised only after a loss event occurs. Proponents of the expected loss model believe it better reflects the lending decision. Under the IASB's proposed expected loss model, a provision against credit losses would be built up over the life of the financial asset based on the expected cash flows of the instrument (including expected credit losses), not market values. Extensive disclosure requirements would provide investors with an understanding of the loss estimates that an entity judges necessary. Links to all past IAS Plus newsletters are Here.

22 November 2009: Agenda project pages updated

We have updated the following pages on IAS Plus to reflect the discussions and decisions at the IASB's meeting on 17-19 November 2009: Amendment to IFRS 1 – Exemption from Comparative IFRS 7 Disclosures Emissions Trading Schemes Income Tax Insurance Contracts Leases Liabilities – Amendments to IAS 37 Post-employment Benefits Revenue Recognition IFRIC D25 Extinguishing Financial Liabilities with Equity Instruments

21 November 2009: We comment on rate regulation ED

Deloitte Touche Tohmatsu has submitted comments on IASB Exposure Draft ED2009/8 Rate-regulated Activities, which was published 22 July 2009. The objective of the proposals in the ED is to establish whether and how assets and liabilities resulting from rate-regulated activities should be recognised and measured under IFRSs. If adopted, the proposed IFRS would: define regulatory assets and regulatory liabilities set out criteria for their recognition specify how they should be measured require disclosures about their financial effects Our view, in summary: We support the Board's efforts to address differences in practice regarding the recognition of assets and liabilities arising from rate regulation. We agree that only the regulated entities proposed by the scope of the standard should be able to recognise regulatory assets and liabilities. However, we believe the ED's current scope criteria, as currently worded, would create confusion for entities proposed to be outside the scope of the final standard. In our view, this may result in entities asserting they are within the scope and applying the principles contained in the ED by merely analogising to their particular situation even though technically they do not meet the established criteria. We would prefer the final Standard's scope include all entities' operating activities whose prices are subject to regulation, and then subject all such entities to established recognition criteria. Expanding the scope to all rate-regulated entities will help alleviate our concern as it becomes a question of whether an entity meets the recognition criteria for it to be able to recognise a regulatory asset or liability. Entities within the scope of the standard, but not meeting the recognition criteria would be prohibited from recognising regulatory assets and liabilities under this [draft] IFRS. The risk of entities the Board did not intend to recognise regulatory assets and liabilities doing so would therefore be lessened. Click for: Deloitte Letter of Comment on ED 2009/8 Rate-regulated Activities (PDF 49k) IAS Plus Project Page All Past Deloitte Letters of Comment to IASB/IASC

21 November 2009: EITF Snapshot for Nov 2009

We have posted the November 2009 edition of EITF Snapshot (PDF 137k) summarising the November 2009 meeting of FASB's Emerging Issues Task Force. EITF Snapshot, published by Deloitte & Touche LLP (USA), enables readers to identify relevant topics and to understand quickly the meeting's outcome. Past issues can be downloaded Here. This EITF Snapshot covers the following issue discussed by the EITF at the meeting: Issue 09-2 Research and Development Assets Acquired in an Asset Acquisition – No consensus reached. Further discussion expected. Issue 09-E Accounting for Distributions to Shareholders With Components of Stock and Cash in the Calculations and Presentation of Earnings per Share – Final consensus Issue 09-F Casino Base Jackpot Liabilities – Consensus-for-exposure Issue 09-G Clarification of the Definition of Deferred Acquisition Costs of Insurance Entities – Consensus-for-exposure Issue 09-I Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset – Consensus-for-exposure Issue 09-J Impact of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Primarily Trades – Consensus-for-exposure Initial EITF consensuses (known as 'consensuses-for-exposure') are exposed for a comment period after ratification by the FASB. At its first scheduled meeting after the comment period, the EITF considers comments received and, as warranted, affirms its consensuses-for-exposure as final consensuses. Those consensuses are then provided to the Board for final ratification.

20 November 2009: Make IFRS for SMEs available in UK 'almost immediately'

In an article titled Decision Time published in CA Magazine, Deloitte UK partner Isobel Sharp argues that the United Kingdom and Ireland should make the IFRS for SMEs available almost immediately. The UK Accounting Standards Board has already indicated its intent to replace UK Financial Reporting Standards with the IFRS for SMEs, effective in 2012. "Perhaps only a few would change in 2010," she writes, "but it would be their choice. On the ASB timetable an exposure draft is due to be issued in 2010, with the standard following in 2011, only a matter of months before the January 2012 implementation date.... The techies may be relied on to raise the tedious. But are there any real hurdles? In short, the only question is 'What is best for business?'" Click to Download Decision Time by Isobel Sharp (PDF 309k).

20 November 2009: Deadline reminder – proposed improvements to IFRSs

We remind you that comments are due on 24 November 2009 on Exposure Draft (ED): Proposals for Amendments under its Annual Improvements Project. The ED was issued on 26 August 2009. It proposes amendments to eleven IFRSs. The most significant proposals address: measurement of non-controlling interests under IFRS 3 Business Combinations impairment of investments in subsidiaries, associates, and jointly controlled entities in the separate financial statements of the parent, investor, or joint venturer amendments to the disclosure principles for interim reporting under IAS 34 Interim Financial Reporting removal of the requirements in IAS 40 Investment Property to transfer investment property carried at fair value to inventories when it will be developed for sale

20 November 2009: Notes from Nov 2009 IASB meeting day 3

The IASB held its November 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 17-19 November 2009. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

20 November 2009: Notes from Nov 2009 IASB meeting day 2 afternoon

The IASB is holding its November 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 17-19 November 2009. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

19 November 2009: Notes from Nov 2009 IASB meeting day 2 morning

The IASB is holding its November 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 17-19 November 2009. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

19 November 2009: First two IFRS for SMEs workshops planned for Asia

The new training materials for the IFRS for SMEs being developed by the International Accounting Standards Committee Foundation (IASCF) will be rolled out at two 'train the trainers' workshops jointly presented by the IASCF and the Confederation of Asian & Pacific Accountants (CAPA) in January. The workshops will be held in Kuala Lumpur, Malaysia on 20-22 January 2010 and in Hyderabad, India on 25-27 January 2010. The intensive and interactive 3-day sessions will provide a detailed understanding of the IFRS for SMEs and equip the trainers to replicate the training in their own country. Besides trainers, other interested stakeholders are also invited to participate. For details of the workshops, please see the CAPA Website or click here to Download the Workshop Information and Registration Form (PDF 177k). The IFRS for SMEs training materials being developed by the IASCF are expected to be completed by the end of 2009 and will be available without charge on the IASB's website.

18 November 2009: NIIF 2009 / IFRS bound volume in Spanish

La Fundación IASC tiene el placer de anunciar la publicación de la nueva traducción al español de las Normas Internacionales de Información Financiera (NIIF) (enero 2009). The IASC Foundation is pleased to announce the publication of the Spanish translation of the IFRS Bound Volume as of January 2009. Click for IASCF Tienda Online / Online Shop.

18 November 2009: Revised agenda for November 2009 IASB meeting

The IASB has revised its November 2009 meeting agenda to move the topics that were to be discussed on Thursday morning and on Friday all to Thursday afternoon. As a result, the Board will not meet in public session either on Thursday morning or Friday. Here is the revised agenda: IASB Board Meeting Revised Agenda 17-20 November 2009, London Tuesday 17 November 2009 Post-employment Benefits Income Tax Insurance Contracts Wednesday 18 November 2009 – Joint Meeting with FASB Emissions Trading Schemes Insurance Contracts Leases Revenue Recognition Thursday 19 November 2009 (afternoon only starting 12:30pm) Proposed Amendment to IFRS 1 – Consequential amendment re disclosure requirements included in the transition provisions of Improving Disclosures about Financial Instruments (Amendments to IFRS 7, March 2009) SAC Update Liabilities – Amendments to IAS 37 IFRIC Update Ratification of Interpretation Based on IFRIC D25 Extinguishing Financial Liabilities with Equity Instruments

18 November 2009: Notes from the November 2009 IASB meeting day 1

The IASB is holding its November 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 17-20 November 2009. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

18 November 2009: Heads Up on IFRS 9

Deloitte United States has published a Heads Up Newsletter (PDF 171k) titled IASB Issues IFRS on Classification and Measurement of Financial Assets. This 13-page newsletter explains the requirements of IFRS 9 Financial Instruments, issued 12 November 2009 and effective mandatorily in 2013 and optionally starting in 2009. IFRS 9 replaces the existing classification and measurement requirements in IAS 39 for financial assets. It changes the manner in which entities classify and measure investments in debt and equity securities, loan assets, trade receivables, and derivative financial assets by requiring entities to classify financial assets as being measured at either amortised cost or fair value depending on the entity's business model and the contractual cash flow characteristics of the asset. The issuance of IFRS 9 represents the completion of the first phase of the IASB's project to replace IAS 39. Other phases address classification and measurement of financial liabilities, recognition and measurement of impairments, hedge accounting, and derecognition. The IASB expects to replace the remaining portions of IAS 39 during 2010.

18 November 2009: By All Accounts – new ICAEW journal

The Financial Reporting Faculty of the Institute of Chartered Accountants in England and Wales (ICAEW) has published the first edition of its new journal By All Accounts. The theme of this issue (dated January 2010) is IFRS for All? Financial reporting by entities of every shape and size is at a crossroads. Three articles in this issue focus on the IFRS for SMEs. Others deal with the following issues, among others: the politics of accounting, directors' duties under the law, IFRSs in transition, writing 'the front half' of the annual report, and IFRSs in central government. By All Accounts is copyright by the ICAEW and is posted on IAS Plus with their kind permission. Click to: Download By All Accounts – Issue 1, January 2010 (PDF 1,240k) Go to Financial Reporting Faculty Website

18 November 2009: European consultation on IFRS for SMEs

The European Commission has launched a consultation on the International Financial Reporting Standard for Small and Medium-sized Entities. The objective of the consultation is to gain an understanding of EU stakeholders' views on the IFRS for SMEs. The Commission is especially interested to receive comments from the users of accounts, such as businesses, banks, and investors. The consultation period is from 17 November 2009 to 12 March 2010. The Commission said that the responses will assist the Commission in its ongoing review of the Accounting Directives. Click to download: Consultation Paper (PDF 58k) Questionnaire – Contains all the questions from the Consultation Paper (MS Word DOC 131k) The Commission has indicated that French and German translations of these two documents will be available by the end of November 2009.

18 November 2009: Deloitte IFRS for SMEs newsletter in Spanish

Deloitte (Colombia) is publishing a series of Spanish language bulletins about the new IFRS for SMEs. We have previously posted Bulletins No 1 through 18 – links can be found Here. We have now posted No 19: Bulletin No 19 (17 November 2009) discusses Section 23 of the IFRS for SMEs, which deals with revenue. Click to Download Bulletin 19 (PDF 244k). We have many resources in Spanish Here.

18 November 2009: Top 20 things to do before 2010

Deloitte Canada has developed a checklist comprising 20 key things – from the tactical to the strategic – that publicly accountable enterprises (PAEs) must focus on this year to keep their IFRS conversion on track for 2011. This checklist is designed to help a company complete its preparation before 2010 for a seamless conversion. It is also intended to help companies: Save money in the long run by investing the time and resources now, rather than completing the conversion on a rush basis with limiting options Prioritise actions to be included in year-end progress reports required in management's discussion and analysis (MD&A) for public companies in Q4 2009 Prevent or minimise known difficulties that are commonly encountered in practice by Canadian entities Motivate immediate action by emphasising that certain tasks cannot wait until 2011 Click to download: 20 things to do before 2010 (English) (PDF 207k) Vingt choses à faire avant 2010 (French) (PDF 204k)

17 November 2009: Canadian public sector entities will use IFRSs

The Canadian Public Sector Accounting Board has amended the scope of public sector accounting standards to require that government business enterprises (GBEs) – public sector entities with self-sustaining, commercial-type operations – follow International Financial Reporting Standards (IFRSs) for periods beginning 1 January 2011. This allows for a comparison of similar entities in the public and private sector. Private sector businesses in Canada will also be required to use IFRSs starting on the same date. Click for Press Release (PDF 103k).

17 November 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 November 2009 meeting not to add the following topics to its agenda. Our summary now includes over 170 issues: IFRS 3: Measurement of non-controlling interest IFRS 3: Unreplaced and voluntarily replaced share-based payment awards IFRS 5: Write-down of a disposal group IAS 23: Meaning of 'general borrowings'

16 November 2009: Newsletter on IFRS 9 Financial Instruments

Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – IFRS 9 Financial Instruments (PDF 226k). The IASB issued IFRS 9 on 12 November 2009 as the first step in its project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring financial assets. Those requirements must be applied starting 1 January 2013, with earlier adoption permitted including for 2009. The IASB intends to expand IFRS 9 during 2010 to add new requirements for classifying and measuring financial liabilities, derecognition of financial instruments, impairment, and hedge accounting. By the end of 2010, IFRS 9 will be a complete replacement for IAS 39 – mandatory for 2013 and optional in earlier years. This newsletter explains the requirements of IFRS 9 in detail, compares IFRS 9 and IAS 39, and analyses the potential impact of a move to the new standard. The headlines (from the IAS Plus Update Newsletter) New classification and measurement requirements for financial assets New criteria for amortised cost measurement New measurement category – fair value through other comprehensive income Impairment assessment only for amortised cost assets No more available-for-sale assets No more held-to-maturity assets and tainting rules No more embedded derivatives in financial assets No more unquoted equity investments measured at cost less impairment Links to all past newsletters are Here.

16 November 2009: Newsletter on amendments to IAS 24

Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – IASB Issues Amendments to IAS 24 (PDF 68k) explaining the changes to IAS 24 that the IASB issued on 4 November 2009. The amendments provide a partial exemption from the disclosure requirements for government-related entities and clarify the definition of a related party. The revised IAS 24 also clarifies that disclosure is required of any commitments of a related party to do something if a particular event occurs or does not occur in the future, including executory contracts (recognised and unrecognised). The revised standard is effective for annual periods beginning on or after 1 January 2011, with earlier application permitted. Links to all past IAS Plus Update newsletters are Here.

15 November 2009: New IFRS e-Learning modules in Chinese

The following additional IFRS e-Learning modules have now been translated into Chinese and posted on Deloitte's CAS Plus website: IAS 1 Presentation of Financial Statements (revised 2007) IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 32/39 Financial Instruments - Part 1 IAS 32/39 Financial Instruments - Part 3 The following modules had previously been translated and posted: Introduction to IFRS e-Learning Conceptual Framework IAS 2 Inventories IAS 10 Events After the Reporting Period IAS 11 Construction Contracts IAS 16 Property, Plant and Equipment IAS 24 Related Party Disclosures IAS 38 Intangible Assets IAS 41 Agriculture IFRS 3 Business Combinations IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 8 Operating Segments To download the modules (there is no charge, but registration is required) click on the lightbulb icon on the CAS Plus home page or Click Here.

14 November 2009: EC letter to IASB on IFRS 9

The European Commission has posted on its website a letter from Jorgen Holmquist, Director-General of the Internal Markets and Services Directorate, to IASB Chairman Sir David Tweedie, indicating that the Commission has concerns about IFRS 9 and encouraging the IASB to 'revisit the key elements of its proposal having a more direct impact on the right dividing line between 'fair value' and 'cost' accounting and on financial stability (in areas such as the key role of business model, the scope of the OCI category and the recycling of gains/losses, and the prohibition of bifurcation of embedded derivatives)'. Click to Download the Commission's Letter (PDF 139k). Here is an excerpt: Overall, we take note of a number of changes addressing issues raised in our letter of 15 September. However, it would seem that the current draft may not yet have struck the right balance between 'fair value accounting' and 'amortised cost accounting', and may lead to more instruments being classified at fair value through profit or loss compared to the existing IAS 39, thus potentially exacerbating income volatility – even if the impact will vary from one entity to another, depending on their business model and the type of financial instruments in their balance sheet. Concerns therefore remain about the way in which the IASB has defined the classification criteria set out in the draft.

14 November 2009: Update on IFRS endorsements in Europe

At its meeting on 11 November 2009, the European Commission's Accounting Regulatory Committee voted in favour of the adoption of the following IFRSs for use in the European Union: Annual improvements 2009 Amendments to IAS 32 Classification of Rights Issues Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions ARC also decided to postpone its consideration of endorsement of IFRS 9. EFRAG has updated its endorsement status report to reflect the ARC recommendations. Click for EFRAG Endorsement Status Report of 13 November 2009 (PDF 120k).

14 November 2009: Deadline reminder – rate-regulated activities

We remind you that comments are due on 20 November 2009 on Exposure Draft (ED): Exposure Draft: Rate-regulated Activities. The ED was issued on 23 July 2009. The objective of the proposals in the ED is to establish whether and how assets and liabilities resulting from rate-regulated activities should be recognised and measured under International Financial Reporting Standards (IFRSs). If adopted, the proposed IFRS would: define regulatory assets and regulatory liabilities. set out criteria for their recognition. specify how they should be measured. require disclosures about their financial effects. The IASB was asked for guidance on the issue from many jurisdictions. Clarifying the accounting for rate regulation is of particular importance for jurisdictions that are in the process of adopting IFRSs and where accounting for the effect of rate regulation is in place for some sectors. In those cases entities are currently recognising sometimes significant 'regulatory' assets and liabilities by reference to an existing US standard, in the absence of an IFRS. Click for IASB Press Release (PDF 107k). Here is the link to the IAS Plus Project Page.

13 November 2009: Endorsement of IFRS 9 is postponed

In our News Story of 4 November 2009 we reported that the European Financial Reporting Advisory Group (EFRAG) had posted on its website an Invitation to Comment on its Draft Endorsement Advice (Word DOC 179k) relating to the endorsement of IFRS 9 for use in the European Union. EFRAG consulted both on its assessment of IFRS 9 against the EU endorsement criteria and on its initial assessment of the costs and benefits that would arise from the implementation of IFRS 9 in the EU. Comments were requested by 13 November 2009. In that Draft Endorsement Advice, EFRAG's overall tentative conclusion was that the information provided by IFRS 9 would be relevant, reliable, understandable, and comparable. "IFRS 9 satisfies the criteria for EU endorsement and EFRAG should therefore recommend its endorsement". However, EFRAG has now decided that "more time should be taken to consider the output from the IASB project to improve accounting for financial instruments. Therefore, at this stage, EFRAG has decided not to finalise its endorsement advice on IFRS 9. EFRAG is currently considering how it will proceed in its work to address the package of standards that are expected to replace IAS 39." Most likely, EFRAG's deferral means that IFRS 9 will not be available for use in Europe for 2009 year-ends.

12 November 2009: IASB issues IFRS 9 Financial Instruments

Today, the IASB issued IFRS 9 Financial Instruments as the first step in its project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring financial assets. Those requirements must be applied starting 1 January 2013, with earlier adoption permitted including for 2009. The IASB intends to expand IFRS 9 during 2010 to add new requirements for classifying and measuring financial liabilities, derecognition of financial instruments, impairment, and hedge accounting. By the end of 2010, IFRS 9 will be a complete replacement for IAS 39 – mandatory for 2013 and optional in earlier years. Click for IASB Press Release (PDF 103k). In a letter accompanying a mailing of the new standard to key stakeholders, IASB Chairman Sir David Tweedie wrote: "The completion of the first phase of the project responds directly to the recommendation of the G20 Leaders and other stakeholders to reduce the complexity of accounting for financial instruments. As requested, we have completed this first phase in time for companies to use, optionally, the new standard for year-end 2009 financial statements. Given the particular importance of this standard and the broad interest in its development, we undertook unprecedented efforts to consult stakeholders around the world in order to refine the proposals we published in July 2009 for public consultation. Furthermore, in response to concerns that were raised during our consultations the IASB has made various modifications to the proposals to improve the final product." Concurrent with issuing IFRS 9, the IASB published a Project Summary and Feedback Statement (PDF 133k) outlining how the Board has responded to comments received during the development of the new standard. The IASB also published a separate Summary of Responses to European Concerns (PDF 25k). Overview of IFRS 9 Financial Instruments IFRS 9 divides all financial assets that are currently in the scope of IAS 39 into two classifications – those measured at amortised cost and those measured at fair value – based on the following principles: Debt instruments. A debt instrument that meets two conditions can be measured at amortised cost: Business model test. The objective of the entity's business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes). Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other debt instruments must be measured at fair value through profit or loss (FVTPL). Even if an instrument meets the two amortised cost tests, IFRS 9 contains an option to measure such instruments at FVTPL, with some restrictions. The available-for-sale and held-to-maturity categories currently in IAS 39 are not included in IFRS 9. Equity instruments. All equity investments in scope of IFRS 9 are to be measured at fair value in the balance sheet, value changes recognised in profit or loss. There is no 'cost exception' for unquoted equities. However, if the equity investment is not held for trading, an entity can make an irrevocable election at initial recognition to measure it at fair value through other comprehensive income (FVTOCI) with only dividend income recognised in profit or loss. Despite the fair value requirement for all equity investments, IFRS 9 contains guidance on when cost may be the best estimate of fair value and also when it might not be representative of fair value. Derivatives. All derivatives, including those linked to unquoted equity investments, are measured at fair value. Embedded derivatives. The embedded derivative concept of IAS 39 is not included in IFRS 9. Consequently, embedded derivatives that under IAS 39 would have been separately accounted for at FVTPL because they were not closely related to the financial host asset will no longer be separated. Instead, the contractual cash flows of the financial asset are assessed in their entirety, and the asset as a whole is measured at FVTPL if any of its cash flows do not represent payments of principal and interest. Reclassification. For debt instruments, reclassification is required between FVTPL and amortised cost, or vice versa, if the entity's business model objective for its financial assets changes so its previous model assessment would no longer apply. IFRS 9 amends some of the requirements of IFRS 7 Financial Instruments: Disclosures including added disclosures about investments in equity instruments designated as at FVTOCI.

12 November 2009: Heads Up on proposed consolidation deferral

Deloitte United States has published a Heads Up Newsletter (PDF 89k) titled Board Votes to Defer Statement 167 for Interests in Certain Entities. FASB tentatively decided to defer indefinitely the effective date of Statement 167 Amendments to FASB Interpretation No. 46(R) Consolidation of Variable Interest Entities for reporting of investments in the financial statements of asset managers. The FASB staff indicated that mutual funds, hedge funds, private equity funds, money market funds, and venture capital funds are examples of entities that may meet the conditions for deferral. The FASB staff also indicated that securitisation entities, asset-backed financing entities, or entities formerly classified as qualifying special-purpose entities (QSPEs) would not meet the conditions. If finalised, the deferral would be effective for 2009.

11 November 2009: IASB webcast on IFRS 9

On 12 November 2009, the staff of the IASB will present a webcast about the forthcoming IFRS 9 Financial Instruments: Classification and Measurement. The webcast will be followed by a Q&A session in which registered participants can submit questions online. There is no charge to participate, but you must register. Details: Webcast topic: IFRS 9 Financial Instruments: Classification and Measurement Date and Time: Thursday 12 November 2009, 11:00am London time and again at 14:00pm London time Presenters: IASB staff More Information and Registration (IASB website) IAS Plus Webpage: Agenda Project IAS Plus Webpage: IFRS 9

11 November 2009: Heads Up on IASB credit loss proposal

Deloitte United States has published a Heads Up Newsletter (PDF 172k) titled IASB Proposes New Approach to Accounting for Credit Losses. The newsletter discusses the IASB's recent exposure draft Financial Instruments: Amortised Cost and Impairment, which proposes a fundamentally new approach to accounting for credit losses to replace the existing 'incurred-loss' model. The proposed approach, which affects the recognition of both net interest revenue and credit impairment, is designed to result in earlier loss recognition by taking into account future credit losses expected over the life of loans or other financial assets (an 'expected-loss' approach). The IAS Plus project page is Here.

11 November 2009: Deloitte IFRS conference in Japan

On Tuesday 8 December 2009, Deloitte Touche Tohmatsu LLC will hold an annual seminar Towards the adoption of International Financial Reporting Standards in Japan. Speakers at this predominantly Japanese-language event include: Mr. Atsushi Saito, President and CEO of Tokyo Stock Exchange Group, Inc. Mr. Noriaki Shimazaki, IASC Foundation Trustee and Chairman of the Sub-Committee on Accounting, Nippon Keidanren (Japan Business Federation). Mr. Tatsumi Yamada (Member of IASB) and Mr. Wayne Upton (IASB Director of International Activities). Tohmatsu partners will discuss possible implications of the planned IFRS adoption for Japanese companies. Deloitte member firms will participate, as panelists, in a discussion on the current status of the adoption of IFRSs by countries/areas around the globe, as well as matters that will require the first-time adopters in Japan to note. This seminar will be held in Tokyo, with live video broadcasts in Nagoya, Osaka and Fukuoka. Click for Conference Agenda and Registration Information (PDF 1,134k).

11 November 2009: FEE supports adoption of IFRS 9 in Europe

FEE (the Federation of European Accountants) has sent a Letter (PDF 69k) to the European Commission calling on the EC and others to support endorsement of IFRS 9 Financial Instruments for use in Europe.

11 November 2009: Deloitte IFRS for SMEs newsletter in Spanish

Deloitte (Colombia) is publishing a series of Spanish language bulletins about the new IFRS for SMEs. We have previously posted Bulletins No 1 through 17 – links can be found Here. We have now posted No 18: Bulletin No 18 (10 November 2009) discusses Section 22 of the IFRS for SMEs, which deals with liabilities and equity. Click to Download Bulletin 18 (PDF 197k). We have many resources in Spanish Here.

10 November 2009: IFRS insurance accounting newsletters in German

Deloitte (United Kingdom) is publishing a series of Insurance Accounting Newsletters. We post these regularly on our IAS Plus Insurance Project Page. Deloitte (Germany) has translated the following selected insurance newsletters into German (permanent links are also on the Insurance Project Page): Versicherungsbilanzierung 1: Current Exit Price ist vom Tisch (PDF 347k) Translation of UK Issue 5: Current Exit Price Off the Table (PDF 198k) Versicherungsbilanzierung 2: Treffen der Arbeitsgruppe (PDF 361k) Translation of the July 2009 Special Issue: Insurance Working Group Meeting (PDF 116k) Versicherungsbilanzierung 3: Antrag auf Scheidung? (PDF 404k) Translation of UK Issue 7: Filing for divorce? (PDF 173k) Versicherungsbilanzierung 4: Das neue Bilanzierungsmodell nimmt Gestalt an (PDF 357k) Translation of UK Issue 8: The New Accounting Model Takes Shape (PDF 115k)

10 November 2009: SEC Chairman comments on IASB-FASB convergence

In our News Story of 6 November 2009 we reported that the IASB and the US Financial Accounting Standards Board (FASB) issued a joint statement reaffirming their commitment to improve IFRSs and US GAAP and to bring about their convergence. The Boards also expressed their agreement to intensify their efforts to complete the major joint projects described in their 2006 Memorandum of Understanding (MoU), as updated in 2008. US SEC Chairman Mary L Schapiro has made the following Statement (PDF 27k) supporting the renewed convergence commitment: I am greatly encouraged by the commitment of the IASB and the FASB to provide greater transparency to the standard setting process and their convergence efforts. I believe that these efforts will result in improved financial information provided to investors.

10 November 2009: Updated report on European IFRS endorsement

The European Financial Reporting Advisory Group (EFRAG) has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. Click to download the Endorsement Status Report as of 9 November 2009 (PDF 133k). The following IASB pronouncements are awaiting European Commission endorsement for use in Europe: Standards IFRS 1 First-time Adoption of IFRS – Restructured standard (2008) Interpretations IFRIC 17 Distributions of Non-cash Assets to Owners IFRIC 18 Transfers of Assets from Customers Amendments IFRS 7 Amendment – Improving Disclosures About Financial Instruments IFRIC 9 and IAS 39 Amendment – Embedded Derivatives Improvements to IFRSs (Issued 16 April 2009) Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions Amendments to IFRS 1 Additional Exemptions for First-time Adopters IAS 32 Classification of Rights Issues IFRS 9 Financial Instruments [not yet issued by IASB, but EFRAG has begun its endorsement due process] You can always find the endorsement status report Here.

10 November 2009: G20 finance ministers progress report

The Finance Ministers and Central Bank Governors of the G20 nations met on 7 November 2009 at St Andrews, Scotland to assess the progress that has been made toward meeting the commitments that the G20 heads of state made at their summit meetings over the past twelve months in London, Washington, and Pittsburgh. Following the meeting the Finance Ministers published a: Progress Report (PDF 228k) Communiqué (PDF 34k) Below is an excerpt from the progress report dealing with progress in accounting standards.

10 November 2009: We encourage European support of IFRS 9

In a Letter to the European Commission (PDF 64k), Deloitte Touche Tohmatsu has recommended the endorsement of IFRS 9 Financial Instruments, relating to the classification and measurement of financial instruments, for use in the European Union. We had previously made a similar recommendation to the European Financial Reporting Advisory Group supporting its draft endorsement advice to the Commission (see our News Story of 8 November).

9 November 2009: Agenda for November 2009 IASB meeting

The IASB will hold its November 2009 regular monthly meeting at its offices in London on Tuesday to Friday 17-20 November 2009. The meeting will be open to public observation and will be webcast. Presented below is the agenda for the meeting. The Board will also meet with the Standards Advisory Council on 12-13 November 2009 (we Previously Posted the Agenda). IASB Board Meeting Agenda 17-20 November 2009, London Tuesday 17 November 2009 Post-employment Benefits Income Tax Leases Insurance Contracts Wednesday 18 November 2009 – Joint Meeting with FASB Discontinued Operations Insurance Contracts Leases Revenue Recognition Emissions Trading Schemes Thursday 19 November 2009 Liabilities – Amendments to IAS 37 Financial Instruments – Replacement of IAS 39 Revenue Recognition SAC Update Friday 20 November 2009 Proposed Amendment to IFRS 1 – Consequential amendment re disclosure requirements included in the transition provisions of Improving Disclosures about Financial Instruments (Amendments to IFRS 7, March 2009) IFRIC Update Ratification of Interpretation Based on IFRIC D25 Extinguishing Financial Liabilities with Equity Instruments

8 November 2009: Moving to the IFRS for SMEs in Ireland

Since 2005, listed groups in Ireland have been required to prepare their consolidated financial statements using IFRSs. Almost all other groups have a choice. They can use IFRSs, Irish GAAP as developed by the Accounting Standards Board (ASB), and if they are small they have a further option of using the Financial Reporting Standard for Smaller Entities (FRSSE). But from 2012, the options are expected to change. Irish GAAP is expected to be replaced with the IFRS for Small and Medium-sized Entities. Deloitte (Ireland) has published Choosing Your GAAP: Planning for the Proposed Removal of Irish GAAP (PDF 4,132k) explaining the ASB's plan. The publication examines the choices, explains the key areas of accounting and tax impact, and provides guidance on planning for the change. The entities directly affected by these plans include: Companies which are listed and have not adopted IFRS in their individual financial statements Subsidiaries in listed groups that have not adopted IFRS throughout the group All public limited companies that are not publicly accountable All private groups and companies Where consolidated accounts are prepared using IFRS, company law allows a choice of using Irish GAAP or IFRS for the company's individual financial statements. Deloitte research shows that many listed companies still use Irish GAAP in their parent company only accounts and thus use Irish GAAP for their Irish subsidiaries. Many others use IFRS for the parent company only accounts but continue to use Irish GAAP for subsidiaries.

8 November 2009: We support endorsement of IFRS 9 in Europe

The European member firms of Deloitte Touche Tohmatsu have written to the European Financial Reporting Advisory Group (EFRAG) in support of EFRAG's tentative conclusion to recommend that IASB's new principles for classifying and measuring financial instruments, which the IASB is expected to release shortly as IFRS 9 Financial Instruments, should be adopted for use in the European Union. The EFRAG tentative views and Deloitte's letter to EFRAG are based on a near-final draft of IFRS 9 that has already been posted on the IASB's website. Click to download Our Letter to EFRAG (PDF 37k). Here is an excerpt: We support endorsing IFRS 9 for use in the European Union and believe that endorsing the IFRS would be in the European interest. We believe that it is important for Europe to endorse IFRS 9 in order to send a clear and unambiguous message of support for a mixed measurement model for financial instruments based on the business model that an entity applies. We are satisfied that the IASB executed faithfully all steps in its due process in developing this IFRS. In particular, we note and commend the IASB for the scale of the stakeholder engagement that the IASB undertook to complete its work, including regular meetings with European institutions and prudential supervisors, the Economic and Monetary Council (ECOFIN), the Economic and Monetary Affairs Committee (ECON) of the European Parliament as well as maintaining close contact with the EFRAG and European Commission staff.

7 November 2009: Notes from the November 2009 IFRIC meeting

The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Thursday and Friday 5 and 6 November 2009. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting. Among other things, IFRIC reached consensus on a final Interpretation based on Draft Interpretation D25 Extinguishing Financial Liabilities with Equity Instruments and asked the IASB to approve the Interpretation at the Board's November 2009 meeting. Notes from the IFRIC Meeting 5-6 November 2009 Review of Tentative Agenda Decisions published in July 2009 IFRIC Update IAS 23 Borrowing Costs – Meaning of 'general borrowings' The IFRIC confirmed the tentative agenda decision not to add the item to its agenda. The IFRIC discussed the implications of the Board decision not to include this issue in the annual improvement process. After a short discussion over possible changes to the tentative agenda decision and implication of such a decision on the due process, the IFRIC decided to confirm the original tentative agenda decision. IFRS 5 – Write down of a disposal group The IFRIC confirmed the tentative agenda decision not to add the item to its agenda. IFRS 3 Business Combinations – Un-replaced and voluntarily replaced share-based payment awards The IFRIC confirmed the tentative agenda decision not to add the item to its agenda. IAS 32 – Debt to Equity Swap IFRIC D25 – Comment letter analysis (Agenda Paper 3) The IFRIC deliberated comment letters received to D25 Extinguishing Financial Liabilities with Equity Instruments. Most constituents agreed with the basic feature of D25 – that issuance of an entity's equity instruments was consideration paid and that the extinguishment should be determined at fair value, with any difference between the carrying value of the financial liability and its fair value at extinguishment being recognised as profit or loss. On the other hand, most constituents disagreed with the requirement to measure debt-for-equity swaps at the fair value of equity or fair value of the liability, whichever is more reliably determinable. Constituents felt that a preferred measurement basis should be specified to avoid an 'accounting choice' developing in practice. The IFRIC agreed to provide guidance on a preferred measurement basis. Two IFRIC members expressed their concerns that a preferred measurement basis might not capture the variety of situations for these transactions. Nevertheless, most of IFRIC members held their views that equity better represented consideration paid in the transaction. Therefore, the IFRIC decided that fair value of the equity instruments issued should be the preferred measurement basis. The IFRIC also agreed that if the debt-for-equity swap is measured using fair value of the financial liability extinguished, paragraph 49 of IAS 39 should not apply to its measurement, especially in the context of covenant violation. The IFRIC reached that conclusion as it believed that repayment on demand was not part of the original contractual terms and that the provision was non-substantive (the entity cannot pay it on demand). The IFRIC also agreed that all the measurement should be applied at the transaction date, and transaction date should be defined with reference to IFRS 3 Business Combinations. Regarding the scope, the IFRIC decided that the Interpretation should not apply to those debt-for-equity swaps where conversion terms were included in the initial contract of the liability extinguished (as there is no change of contractual terms). The scope exclusion for common control transaction proved to be more controversial. While some IFRIC members believed that common control transactions should be excluded from the scope of D25 as they represented a different economic substance, other IFRIC members noted that such an approach was not justified on the level of the reporting entity (separate financial statements). Finally, the IFRIC agreed that common control transaction should be excluded from the scope of D25 if there is indication that the economic substance of the transaction is that of equity contribution. The Basis for Conclusions will indicate that capital contributions are accounted separately if reliably determinable. The IFRIC also decided to provide additional guidance on how the Interpretation should be applied to partial extinguishments. The IFRIC noted that in that case the entity should assess whether some of the consideration paid relates to a modification of the part of the liability extinguished. If it does, the entity should allocate the consideration paid between the part of the liability extinguished and the part of the liability that remained outstanding. The IFRIC decided not to provide any further specific guidance on that allocation. The IFRIC also confirmed the transition requirement proposed in D25 – retrospective application. Further, the Interpretation should be effective for annual periods beginning on or after 1 April 2010, with earlier application permitted. Finally, the IFRIC approved the consensus and asked the Board to approve the Interpretation at its November meeting. Staff Recommendations for Tentative Agenda Decisions IAS 16: Accounting for Stripping Costs in the Production Phase The IFRIC considered a request to add to its agenda a project to clarify accounting treatment for stripping costs in the production phase. An educational presentation was made by Niall Weatherstone, Chief Advisor for Evaluation at Rio Tinto. The presentation clarified the technical and geological aspects of mining as well as significance of the stripping costs, especially in open pit mining. The main aspect of the presentation was treatment of waste and overburden. During production, waste and ore are mined together, and some of the waste represents an additional 'development' activity needed to secure access to the next level of ore ('push-backs'). The IFRIC noted that capitalisation of pre-production stripping costs (cost to remove waste before the actual ore is mined) is not contentious. The real issue is capitalisation of stripping costs in the production phase of the mine. The IFRIC also noted that stripping activity in the production phase occurs because development might continue through removal of overburden in portions of the mine, to reach ore that would be extracted in the current or in later periods. As such, stripping creates a future economic benefit. Many IFRIC members thought that conceptually such costs should be capitalised as well. Nonetheless, some IFRIC members expressed concerns about whether such costs could be distinguished from normal production cost and whether artificial arbitrary rules would not have to be introduced. The IFRIC considered four alternatives on accounting for stripping costs during production: expense when incurred capitalise as a cost of inventory as variable production cost (the US approach) capitalise and attribute to reserves benefited in a systematic and rational manner (the Canadian approach) capitalise using a strip ratio Most IFRIC members thought that Alternative 3 was the conceptually right answer, but Alternative 4 could be used as an expedient. Some IFRIC members were concerned with this view, as they believed that the main difference between Alternatives 3 and 4 was that Alternative 4 explicitly considers future costs which would be inconsistent with the Framework. For some IFRIC members the most pertinent issue was the unit of account issue – is the unit of account one mine? Some IFRIC members raised other issues with both alternatives 3 and 4 (for example, reflecting the profitability of each layer of ore and reflecting how the business of the pit is managed). The IFRIC noted that treatment of production stripping cost was very diverse all over the world. In particular, given transition of Canada to IFRSs, several conflicting practices would be present in IFRS jurisdictions. One IFRIC member asked about the relationship of stripping cost and the draft Extractive Industries Discussion Paper (DP). The staff clarified that the DP is not expected to treat the production stripping costs in detail. The DP will acknowledge that capitalisation might be appropriate. Moreover, the staff noted that the IASB is not expected to finalise an extractive industries Standard for three to five years. After discussion, the IFRIC agreed to add this project to its agenda and directed the staff to explore scope of the project, capitalisation alternatives, and possible amortisation methods. The discussion is expected to resume at the next IFRIC meeting. IAS 39 – Unit of account for forward contracts with volumetric optionality The IFRIC considered a request to add to its agenda a project to clarify unit of account for forward contracts with volumetric optionality. The IFRIC discussed the forward contracts to buy and sell a fixed quantity of a specified commodity at a fixed price over the term of a contract that grants the buyer the flexibility to purchase quantities of the same commodity also at this fixed price. The IFRIC was told that such contracts are common for business reasons in a variety of industries. From the perspective of the selling entity these contracts could be seen as a forward contract and a written option. The issue discussed was whether the forward and the written option should be analysed as two separate contracts for accounting purposes even though they are in a single contract and how this interacted with the 'own use' scope exception from IAS 39 in IAS 39.5. The IFRIC discussed four accounting alternatives: a single contract outside of scope of IAS 39 a single contract in of scope of IAS 39 (the whole contract accounted in its entirety as a derivative at fair value through profit or loss) two units of account, the own use exception applied to the forward contracts and written option component accounted as a derivative accounting policy choice between Alternative 2 and Alternative 3 The IFRIC noted that any of these four alternatives might be a reasonable interpretation of IAS 39. For this reason, some IFRIC members concluded that the issue should be referred to the Board for consideration. Nonetheless, a majority of the IFRIC members felt that more study is needed to understand how these requirements are applied in practice and directed the staff to investigate a variety of industries (not just utilities). Few members of IFRIC indicated that, from their experience, the full contract is treated as outside of IAS 39 (Alternative 1) as they are treated under the 'own use' exception (for instance, securing of capacity). In addition, the Chairman noted that in the meantime, he would find out the plans of the Board regarding scope of IAS 39 in the context of its current fast-track project to replace IAS 39. The IFRIC agreed to rediscuss this issue at its next meeting. IAS 38 Intangible Assets – Amortisation method The IFRIC received two requests for guidance on the meaning of 'consumption of economic benefits' of an intangible asset with a finite useful life. The staff explained that the requests are similar to questions raised in March 2008 and can be rephrased as whether the pattern of consumption of economic benefits should reflect values (for example, revenue) or only quantities (units). One member disagreed with the staff's recommendation not to take the matter onto the agenda as one of the requests submitted to IFRIC listed as an example an intangible asset recognised in accordance with IFRIC 12. The real question that needs to be answered is, in accounting for a licence to operate a tangible asset, whether one should look through the licence to the underlying tangible asset and amortise the intangible based on the consumption of the tangible. Another IFRIC member agreed that there is divergence in practice on this issue and that IFRIC should add the item to its agenda, as amortisation depends on the interpretation of economic benefits, which in some cases seem to indicate revenue streams. Another member concurred, pointing out that under IAS 17 the economic benefits of an operating lease are defined in terms of revenue, and that amortisation based on the revenue stream of an intangible would appear to be consistent with IAS 17. Another IFRIC member noted that IAS 38 seems to be clear that an intangible asset is amortised based on the expected usage, rather than revenue. Because of these differences, this member agreed with the staff's proposal not to add the item to the agenda. A vote was taken, and only five members voted to add the issue to IFRIC's agenda. The discussion then turned to the proposed wording of the agenda rejection notice and whether the IFRIC should make the bold statement that amortisation can only be based on the straight-line basis or on the units-of-production method and not on revenue streams (or values). One member mentioned that in the US they have concluded that no method can be ruled out completely as the facts and circumstances differ between arrangements. After discussion, IFRIC agreed to use the wording of IAS 38 to explain the basis for amortisation of intangible assets. The agenda decision will also make clear that preparers must apply judgement when choosing an amortisation method and that IAS 1 requires disclosure of the significant judgements made in the preparation of the financial statements. IFRS 2 Share-based Payment – Where manner of settlement is contingent on future events The IFRIC received a request to clarify the classification and measurement of share-based payment transactions in which the manner of settlement is contingent on future events. The IFRIC discussed, inconclusively, several possible sources of guidance on contingent settlements in IFRSs. The Chairman asked whether the IFRIC wanted to take the matter onto its agenda, and all IFRIC members declined. However, one member pointed out that in the agenda paper the staff has admitted that IFRS 2 does not contain a clear principle and that paragraphs 35-40 of IFRS 2 had to be 'interpreted' before reaching the conclusion in the staff's paper. It therefore appears to be necessary to interpret the existing principles in IFRS 2 to reach an acceptable answer. Another discussion followed on whether the issue was widespread in practice and several members indicated that they have experienced similar situations. The Chairman then directed the IFRIC onto the question of how such arrangements should be measured. A couple of members expressed concern about the subsequent measurement of a compound instrument where there is a change in circumstances. One member said it would be more appropriate to treat these conditions as vesting conditions, but pointed out that the question on whether this would meet the definition of a vesting condition has not yet been investigated. The IFRIC concluded that these matters will be better addressed as part of a comprehensive review of IFRS 2 rather than through a 'quick fix' amendment. The IFRIC will recommend the matter to the Board for inclusion in its IFRS 2 review project. IAS 27 – Common control transactions: presentation of comparatives when applying the 'pooling of interests' method Staff introduced two requests asking for guidance on the presentation of comparatives when the 'pooling of interest' method is applied to common control business combinations as well as other related issues regarding combined financial statements. Several members disagreed with addressing these specific questions without resolving the bigger issue of accounting for common control transactions. A general discussion followed on whether there are any principles in IAS 27 that the IFRIC can interpret that will resolve these questions. The IFRIC concluded that it could not identify clear principles for resolving the specific issues and, therefore, decided not to add these matters to its agenda until the larger issue of common control transactions is addressed by the Board. IAS 18 Revenue – Receipt of a dividend of treasury shares The IFRIC received a request for guidance on how an investor, in its separate financial statements, should account for dividends received in the form of the investee's treasury shares. Staff explained that the original request asked for guidance only in the situation where all ordinary shareholders are offered a pro-rata dividend of treasury shares. In analysing the request, the staff added another situation where there is also a cash dividend alternative. The IFRIC agreed that in the first situation, in accordance with paragraph 29(a) of IAS 18, the investor would not recognise any revenue as the dividend did not change the economic interest of any of the investors – their ownership shares in the investee remained unchanged. When discussing the second situation, one member was of the opinion that the presence of a cash alternative should not change the substance of the transaction and, therefore, this member does not agree with the staff's conclusion that revenue should be recognised. Another member indicated that if the cash alternative has economic substance, the investor has received some value and should recognise revenue. The IFRIC had a very long discussion on whether revenue should be recognised in situations where there is a cash alternative and how 'economic substance' should be interpreted. The question on measurement of revenue in such a situation was also raised. The IFRIC could not reach a consensus either on the amount of revenue to be recognised or whether revenue should be recognised at all. After much deliberation, the Chairman pointed out that the request only dealt with the first situation on which the IFRIC seemed to reach consensus and that any agenda decision should only deal with that. The IFRIC then agreed with the staff's conclusion on the first situation and asked for the draft agenda decision to be amended to only deal with that situation. IFRS 4 and IAS 32 – Scope issue for investments in REITs A request was submitted to the IFRIC to seek guidance on the liability/equity classification of financial instruments with specific features issued by Real Estate Investment Trusts (REITs). The staff provided background information on the nature of REITs. Staff noted that because a REIT has a contractual obligation to distribute 90% of distributable profit, some believe that there is a guaranteed benefit (as defined in IFRS 4) and, therefore, these investments should be accounted in accordance with IFRS 4. Several members expressed their surprise that the staff could consider these investments to be guaranteed benefits. One member suggested that if this was true, all financial liabilities will be regarded as guaranteed benefits and accounted for under IFRS 4. Another member pointed out that although paragraph 35 of IFRS 4 refers to 'financial instruments', it should be read as 'insurance contracts'. The IFRIC agreed that investments in REITs should be accounted for in accordance with the requirements of IAS 32 with regards to compound instruments. The IFRIC agreed not to add the matter to its agenda but proposed a significant redraft of the agenda decision to remove any reference to IFRS 4 and to refer only to IAS 32. IAS 32 – 'Fixed for Fixed' condition The IFRIC resumed its debate on more general 'fixed for fixed' condition in IAS 32. The staff presented a comprehensive overview of questions received on classification of financial instruments divided in two broad categories: foreign currency situations and pre-determined condition situation. Given a great variety of the questions, differences of views on the scope of the project, and the fact that the IASB expects to issue an exposure draft on Financial Instruments with Characteristics of Equity (FICE) in the second quarter of 2010, the IFRIC decided not to take the project on the agenda. The IFRIC noted that even though the issues represent a major problem in the practice, it is more appropriate that the issue should be in the scope of the FICE project. IFRIC Work in Progress The IFRIC coordinator gave a brief update on the progress of IFRIC activities. No additional outstanding projects apart from those discussed were identified except for the IFRS 2 issue on 'classification of conditions'. The staff noted that it was engaged in dialogue with constituents on that issue (vesting and non-vesting conditions) and the result of its analysis will be presented at the January IFRIC meeting. At the request of one IFRIC member, the staff clarified that several additional requests have been received and are being analysed. If sufficient progress is made in the analysis (including some clarification with the parties that submitted those requests), these might be presented for January IFRIC meeting. This closed the public session. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

6 November 2009: Deloitte hosts IAS 39 hedge accounting webcast

On 5 November 2009 Deloitte hosted a live webcast between The Hundred Group of Finance Directors in the UK and the IASB on the future of hedge accounting under IFRSs. The IASB is in the early stages of a project to revise this aspect of IAS 39. The Hundred Group Finance Directors believe that input on the right principles, before a revised model is exposed for comment, is critical at this time. It is also critical that, the input is received from all global market participants, not only financial institutions who have been the focus of regulators, standard-setters, and politicians during the financial crisis. Asking questions on behalf of The Hundred Group were Cadbury, Centrica, International Power, Rio Tinto, Severn Trent, and Tomkins. The IASB Board members answering the questions were John Smith and Stephen Cooper, as well as IASB staff Martin Friedhoff and Jens Berger. The webcast was hosted by Veronica Poole, Deloitte, Head of Global IFRS Office (London) and Andrew Spooner, Deloitte, Global Head of Financial Instruments Accounting. A recording of the webcast is available Here. If you are prompted, the ID is 63023 and the Passcode is 91918367.

6 Nov 2009: Comparison of IFRS for SMEs and Dutch GAAP 2009

The Deloitte IFRS Centre in The Netherlands has published the first edition of IFRS for SMEs and NL GAAP: Showing You the Key Differences. This 16-page booklet sets out some of the key differences between IFRS for SMEs and Dutch GAAP for annual periods beginning on or after 1 January 2009. It also includes general information about the IFRS for SMEs and the applicability of the IFRS for SMEs by Dutch legal entities. Click to download IFRS for SMEs and NL GAAP: Showing You the Key Differences (PDF 578k).

6 Nov 2009: IASB and FASB reaffirm commitment to convergence

The IASB and the US Financial Accounting Standards Board (FASB) have issued a joint statement reaffirming their commitment to improve IFRSs and US GAAP and to bring about their convergence. The Boards also express their agreement to intensify their efforts to complete the major joint projects described in their 2006 Memorandum of Understanding (MoU), as updated in 2008. In the interest of timely and continued progress, the two Boards also committed to monthly joint meetings and to provide transparency and accountability by providing quarterly updates on their progress on convergence projects. The oversight foundations of both Boards also issued a statement supporting the two Boards in their convergence efforts, as did the IASCF Monitoring Board. Click for: IASB-FASB Joint Statement (PDF 75k) Statement of IASCF and FAF Trustees (PDF 9k) Statement of IASCF Monitoring Board (PDF 77k) IASB Press Release (PDF 107k)

5 November 2009: IASB proposes to amend IAS 39 on impairment

The IASB has issued an exposure draft (ED) proposing to amend IAS 39 Financial Instruments: Recognition and Measurement to modify the way impairment losses are recognised on financial assets measured at amortised cost. This is one of the phases of the IASB's comprehensive project to replace IAS 39. The existing incurred loss model. Currently, IAS 39 recognises impairment of financial assets using an 'incurred loss model'. An incurred loss model assumes that all loans will be repaid until evidence to the contrary (known as a loss or trigger event) is identified. Only at that point is the impaired loan (or portfolio of loans) written down to a lower value. IASB's proposed expected loss model. The model proposed in the new ED is an 'expected loss model'. Under that model, expected losses are recognised throughout the life of a loan or other financial asset measured at amortised cost, not just after a loss event has been identified. The expected loss model avoids what many see as a mismatch under the incurred loss model – front-loading of interest revenue (which includes an amount to cover the lender's expected loan loss) while the impairment loss is recognised only after a loss event occurs. Proponents of the expected loss model believe it better reflects the lending decision. Under the IASB's proposed expected loss model, a provision against credit losses would be built up over the life of the financial asset based on the expected cash flows of the instrument (including expected credit losses), not market values. Extensive disclosure requirements would provide investors with an understanding of the loss estimates that an entity judges necessary. Because of significant practical challenges in moving to an expected loss model, the IASB will establish an Expert Advisory Panel comprising experts in credit risk management to advise the Board. Deadline for comments on the ED is 30 June 2010. Click for IASB Press Release (PDF 99k).

5 November 2009: Deloitte Canada webcast on IFRSs

The first of January 2010 will be the date of transition to IFRSs for many Canadian publicly accountable entities – signaling the preparation of the opening IFRS balance sheet as well as the start of dual reporting. In addition, there will be some Canadian early adopters filing their first IFRS financial statements in 2010. Deloitte Canada will present a webcast on Canadian adoption of IFRSs, as follows: Webcast topic: IFRS Technical Update–A Sea Change. Specific topics to be covered include: Canadian GAAP update: critical matters impacting 2009 Looking back: A recap of recent changes in IFRSs Looking ahead: Our IFRS new year predictions Recent regulatory developments on IFRSs Countdown to 1 January 2010: A final review of your opening balance sheet checklist Date and Time: Tuesday, 1 December 2009, 14:00pm Toronto time (EST), duration 90 minutes Presenters: Don Newell, National Leader IFRS Services; Clair Grindley, Associate Partner National IFRS Services; Kerry Danyluk, Partner GIOS; and Anshu Grover, Senior Manager Global Centre of Excellence More Information and Registration

5 November 2009: Czech version of IFRSs in Your Pocket 2009

Deloitte Czech Republic has published the Czech Language Version of IFRSs in Your Pocket 2009 – IFRS do kapsy 2009 (link to download the 849k PDF). This 134-page publication includes a special introduction by Martin Tesar, IFRS Partner of Deloitte Czech Republic, a comparison of the major differences between IFRSs and Czech GAAP, plus all of the information in the English language edition.

4 November 2009: IASB amends IAS 24 on related parties

The IASB has revised IAS 24 Related Party Disclosures to provide a partial exemption from the disclosure requirements for government-related entities and to clarify the definition of a related party. The Board did not change the fundamental approach to related party disclosures contained in previous version of IAS 24, which requires entities to disclose information about related party relationships and transactions. The revisions respond to concerns that the previous disclosure requirements and the definition of a related party were too complex and difficult to apply in practice, especially in environments where government control is pervasive. The revised standard addresses those concerns by: Providing a partial exemption for government-related entities. Until now, if a government controlled, or significantly influenced, an entity, the entity was required to disclose information about all transactions with other entities controlled, or significantly influenced by the same government. The revised standard still requires disclosures that are important to users of financial statements but eliminates requirements to disclose information that is costly to gather and of less value to users. It achieves this balance by requiring disclosure about these transactions only if they are individually or collectively significant. Providing a revised definition of a related party. The revised standard also clarifies that disclosure is required of any commitments of a related party to do something if a particular event occurs or does not occur in the future, including executory contracts (recognised and unrecognised). The revised standard is effective for annual periods beginning on or after 1 January 2011, with earlier application permitted. Click for IASB Press Release (PDF 106k).

4 November 2009: IASB webcast on impairment of financial instruments

The IASB will hold a webcast on the project on its forthcoming exposure draft on impairment of financial instruments that are measured at amortised cost. Webcast topic: IASB Exposure Draft Financial Instruments: Amortised Cost and Impairment. The ED will be issued shortly. Date and Time: Thursday, 5 November 2009, 11:00am London time Presenters: IASB staff More Information and Registration (link to IASB website) Project Page on IAS Plus Website

4 November 2009: Draft EFRAG endorsement letter for IFRS 9

The IASB is expected to release IFRS 9 Financial Instruments in the next several days. This version of IFRS 9 will represent a partial replacement of the existing IAS 39 – replacement of the principles for classifying and measuring financial assets. This is one of several phases of IAS 39 replacement, the others being hedge accounting, impairment, derecognition, and classification and measurement of financial liabilities. The European Financial Reporting Advisory Group (EFRAG) has posted on its website an Invitation to Comment relating to the endorsement of IFRS 9 for use in the EU. EFRAG is consulting both on its assessment of IFRS 9 against the EU endorsement criteria and on its initial assessment of the costs and benefits that would arise from the implementation of IFRS 9 in the EU. Comments are requested by 13 November 2009. Click here for More Information on EFRAG's Website.

4 Nov 2009: Lista de verificación de la presentación y revelación 2009

We have posted Lista de verificación de la presentación y revelación 2009 (the Spanish translation of Deloitte's IFRS Presentation and Disclosure Checklist for 2009) in both PDF and Microsoft Word formats. The checklist is formatted to allow the recording of a review of financial statements, with a place to indicate yes/no/not-applicable for each presentation and disclosure item. Click to download: IFRS Presentation and Disclosure Checklist for 2009 (Word version, Spanish) (ZIP of a Microsoft Word file 383k). IFRS Presentation and Disclosure Checklist for 2009 (PDF version, Spanish) (PDF 1,863k)

4 November 2009: Accounting Roundup – October 2009

We have posted the October 2009 Edition of Accounting Roundup (PDF 357k) 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: Revenue FASB Issues ASUs on Revenue Arrangements With Multiple Deliverables and Software Revenue Recognition Debt FASB Issues ASU on Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing Derivatives FASB Issues Proposed ASU on Embedded Credit Derivative Scope Exception IASB Amends IAS 32 to Clarify Rights Issues Other Accounting IASC Foundation Exposes IFRS for SMEs Taxonomy for Public Comment AICPA Publishes Working Draft of Oil and Gas Guide GAO Issues Report on Troubled Asset Relief Program SEC Matters SEC Further Defers Section 404(b) Requirement for Nonaccelerated Filers SEC Staff Releases Observations Based on Review of Interactive Data Financial Statements SEC Proposes Amendments to Rules Requiring Internet Availability of Proxy Materials SEC Proposes Rule to Provide Temporary Filing Accommodation for Static Pool Information SEC Issues Staff Accounting Bulletin to Revise Guidance on Oil- and Gas-Producing Activities SEC's Division of Corporation Finance Issues Compliance and Disclosure Interpretations on Oil and Gas Rules SEC Staff Issues Bulletin on Shareholder Proposals SEC Issues Final Rule Adopting Updated EDGAR Filer Manual Other Auditing ASB Proposes Various Statements on Auditing Standards You will find past issues of Accounting Roundup Here.

4 November 2009: Deloitte IFRS for SMEs newsletter in Spanish

Deloitte (Colombia) is publishing a series of Spanish language bulletins about the new IFRS for SMEs. We have previously posted Bulletins No 1 through 16 – links can be found Here. We have now posted No 17: Bulletin No 17 (3 November 2009) discusses Section 21 of the IFRS for SMEs, which deals with provisions and contingencies. Click to Download Bulletin 17 (PDF 231k). We have many resources in Spanish Here.

3 November 2009: CESR finds noncompliance with IFRS disclosures

The Committee of European Securities Regulators (CESR) has analysed the 2008 financial statements of 96 European listed banks and insurers, including 22 companies from the FTSE Eurotop 100 index, to assess compliance with the disclosure requirements of IFRS 7 Financial Instruments: Disclosures. CESR found that "in some areas a significant proportion of European financial companies failed to comply with mandatory disclosure requirements relating to financial instruments". Edxamples of noncompliance included disclosures about the use of valuation techniques and about relationships with special purpose entities (SPEs). CESR's analysis is reported in a CESR Statement titled Application of Disclosure Requirements Related to Financial Instruments in the 2008 Financial Statements. CESR's statement notes that "CESR would have expected a higher level of compliance with mandatory requirements, particularly in light of the market conditions that existed during the second half of 2008 and the beginning of 2009." Click for: CESR Statement (PDF 276k) CESR Press Release (PDF 162k)

1 November 2009: SEC bulletin on oil and gas accounting

The Office of the Chief Accountant of the US Securities and Exchange Commission has issued updated guidance on how the agency's staff interprets accounting rules related to the oil and gas industry. These updates correspond with rulemaking that the SEC approved in December 2008 to modernise its oil and gas company reporting requirements to help investors evaluate the value of their investments in these companies. The revisions of the guidance, known as Staff Accounting Bulletin No. 113, include: changing the price used in determining quantities of oil and gas reserves; eliminating the option to use post-quarter-end prices to evaluate write-offs of excess capitalized costs under the full cost method of accounting; removing the exclusion of unconventional methods used in extracting oil and gas from oil sands or shale as an oil and gas producing activity; and, removing certain questions and interpretative guidance which are no longer necessary. Click for: Staff Accounting Bulletin 113 (PDF 73k) SEC Press Release (PDF 29k)

1 November 2009: Agenda for joint ARG and GPF meeting

On Tuesday 10 November 2009, 10:00am to 17:00pm, representatives of the IASB will meet with the Analyst Representative Group and the Global Preparers Forum at the offices of the IASB. The meeting will be open to public observation. The meeting agenda topics are: Update on the IASB work plan Revenue Recognition Liabilities - Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets Financial Instruments - Impairment and Hedging Consolidation XBRL Update