30 September 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 11 – links can be found Here. We have now posted No 12: Bulletin No 12 (29 September 2009) discusses Sections 14, 15, and 16 of the IFRS for SMEs, which deal with accounting for investments in associates, joint ventures, and investment property. Click to Download Bulletin 12 (PDF 219k). We have many resources in Spanish Here.

30 September 2009: Notes from special 29 Sept 2009 IASB meeting

The IASB is held a special Board meeting at its offices in London on Tuesday 29 September 2009. Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.

29 September 2009: IASCF Trustees will meet 7-8 October

The Trustees of the IASC Foundation will meet on 7-8 October 2009 at the Wharton Auditorium, TIAA-CREF Offices, 730 Third Avenue 17th Floor, New York, NY. Only the session on 7 October (13:30 to 17:15pm) is open to public observation. Agenda topics of the public session are as follows: Report of the IASB Chairman Addressing IFRS adoption in emerging markets Report from the SAC Chairman Update on the Constitution Review Report of the Due Process Oversight Committee Report of the Education and Publications Committee

29 September 2009: Proposed XBRL taxonomy for IFRS for SMEs

The International Accounting Standards Committee (IASC) Foundation has invited comment on an exposure draft of the IFRS for SMEs XBRL Taxonomy. The Taxonomy is a complete translation of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) into XBRL (eXtensible Business Reporting Language). The exposure draft of the IFRS for SMEs Taxonomy is accompanied by a comprehensive review package containing a sample XBRL filing and explanatory materials, as well as illustrative financial statements and a presentation and disclosure checklist. The exposure draft of the IFRS for SMEs Taxonomy is available online at IFRS for SMEs XBRL Taxonomy and is open for comment until 27 November 2009. The IASC Foundation aims to publish the final version of the IFRS for SMEs Taxonomy in December 2009.

29 September 2009: IASB Chairman meets with EU Parliament committee

Sir David Tweedie, Chairman of the International Accounting Standards Board, met with the Economic and Monetary Affairs Committee of the European Parliament on 28 September 2009 to discuss the IASB's response to issues arising from the financial crisis. His remarks focussed, in particular, on the IASB's response to issues raised by EU institutions. Click to download Sir David's Statement (PDF 27k). Here is an excerpt: Actions taken to respond to global concerns From the outset of the crisis, the IASB has worked on a defined programme with time lines to address issues arising from the financial crisis. Our initial focus was on the three areas identified by the Financial Stability Forum: (1) the application of fair value in illiquid markets; (2) accounting for off balance sheet items; and (3) disclosures related to risk. On all three points, we have acted urgently. On fair value in illiquid markets, we produced a report in October 2008 that the European Commission praised. We have consistently stated that IFRS and US guidance are consistent in this important area. I know that there was concern that the recent FASB Staff Position on fair value measurement might have created a new unlevel playing field. It is for this reason that immediately after the FASB's publication, we posted a press release reiterating that our approach was consistent with the FASB's. As an extra precaution to ensure that global consistency is maintained, on 28 May 2009 the IASB published an exposure draft on fair value measurement that directly incorporates the relevant FASB guidance. On off balance sheet items, the G20, the Financial Stability Forum, and this Council have all emphasised the need for more transparency in the accounting for these items. There is some evidence that IFRSs have held up relatively well on this issue, but we have now proposed tightening our rules further. On risk disclosures, in March 2009 the IASB published improvements to the disclosure requirements for fair value measurements and reinforced existing principles for disclosures about the liquidity risk associated with financial instruments.

29 September 2009: We comment on fair value measurement ED

Deloitte Touche Tohmatsu has submitted comments on the IASB Exposure Draft Fair Value Measurement, which was published 28 May 2009. We are generally supportive of the proposal, though we have concerns about some aspects and make suggestions for changes. The ED proposes guidance on how fair value should be measured where it is required by existing standards. The ED does not propose to extend the use of fair value measurements in any way. It would add disclosure requirements about how fair values were determined. If adopted, the proposals would replace fair value measurement guidance contained within individual IFRSs with a single, unified definition of fair value, as well as further authoritative guidance on the application of fair value measurement in inactive markets. The IASB's starting point in developing the exposure draft was the equivalent US standard, SFAS 157 Fair Value Measurements (now Accounting Standards Codification Topic 820). The proposed definition of fair value is identical to the definition in SFAS 157, and the supporting guidance is also largely consistent with US GAAP. You will find an overview of the Proposals in the ED Here. An excerpt from our letter of comment on the ED: We support the Board's efforts to replace the existing guidance on fair value measurement in IFRS accounting literature with a single standard and strive for closer convergence with fair value measurement requirements in Accounting Standards Codification Topic 820 (ASC 820) Fair Value Measurements and Disclosures (formerly Statement 157), issued by the US Financial Accounting Standards Board (FASB). Global convergence is important as it serves to further reduce complexity and application issues that often result from inconsistent principles in similar US and international standards. Moreover, convergence of this draft IFRS will result in more consistent measurement of fair value among IFRS preparers and better comparability with entities preparing financial statements under US GAAP. Furthermore, we understand that full convergence to ASC 820 may not be appropriate in instances where the IASB ED has demonstrated a more conceptually superior principle. However, in areas where the IASB does agree with the principles in ASC 820, we recommend the verbiage be closely aligned as not to create wording differences that cause confusion among constituents.... Some proposals within the ED do not move the draft IFRS towards convergence and, we believe, have not been demonstrated to be conceptually superior to ASC 820. For example, such proposals include, but are not limited to, the most advantageous market concept, the definition of a 'knowledgeable' market participant, and the accounting (deferral) of certain day one gains and losses. Click to download Our Letter of Comment (PDF 126k). All past letters comment are Here.

28 September 2009: FSB seeks simplified global financial instruments accounting

The Financial Stability Board (FSB) has urged the IASB and FASB to simplify, improve, and converge their accounting standards for financial instruments "in a manner that does not expand the use of fair value in relation to the lending activities (involving loans and investments in debt instruments) of financial intermediaries". The FSB was established to coordinate the policies by which countries regulate and supervise financial institutions. Click for FSB Statement (PDF 56k). Here is an excerpt: At present, the IASB and the US Financial Accounting Standards Board (FASB) are considering a variety of approaches which could possibly lead to divergences between IASB and FASB standards with respect to: improving and simplifying financial instruments accounting, where FASB is considering an approach that is based on fair value measurement for most financial instruments, which would be proposed by early 2010, while the IASB has proposed a mixed model of historical cost and fair value, to be available for use in 2009 year-end financial statements; provisioning and impairment, where the IASB plans to propose a standard using an expected loss or expected cash flow approach to loan loss provisioning in October 2009, which would generally recognise credit losses earlier and mitigate procyclicality,1 whereas the FASB continues to consider changes to impairment recognition, including an approach based on fair value with plans to issue its proposal by early 2010; off-balance sheet standards, where the IASB's proposal on derecognition, which is now subject to consultation, would require repurchase agreements to be treated as sales and forward contracts in certain situations (thus leading to off-balance sheet treatment), instead of as financing transactions on the balance sheet as under current IASB and FASB standards. Moreover, continuing differences in accounting requirements of the IASB and FASB for netting/offsetting of assets and liabilities also result in significant differences in banks' total assets, posing problems for framing an international leverage ratio. Therefore, additional work in the areas above is urgently needed in order to meet the important objectives of convergence, transparency and the mitigation of procyclicality, as standard setters continue their efforts to improve the quality of their standards and reduce the complexity of their standards on financial instruments.

28 September 2009: G20 call for global standards by 2011

Following their meeting in Pittsburgh, Pennsylvania USA on 24-25 September 2009, the leaders of the G20 nations issued a Final Statement (PDF 102k) identifying a range of additional steps that should be taken to strengthen international financial regulatory system to avoid a future global financial crisis. One of their stated goals is complete convergence of accounting standards across the G20 member nations by June 2011: We call on our international accounting bodies to redouble their efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011. The International Accounting Standards Board's (IASB) institutional framework should further enhance the involvement of various stakeholders. Here is the link to our Comprehensive Credit Crunch Page.

28 September 2009: IASB webcast on rate-regulated activities

The IASB will hold a webcast on the project on rate-regulated activities: Webcast topic: IASB Exposure Draft Rate-regulated Activities. The ED was issued 22 July 2009. Comment deadline is 20 November 2009. The ED proposes to: define regulatory assets and regulatory liabilities set out criteria for their recognition specify how they should be measured require disclosures about their financial effects Date and Time: Monday, 5 October 2009, 9:30am London time and again at 14:30pm London time Presenters: IASB staff More Information and Registration (link to IASB website) Project Page on IAS Plus Website

26 September 2009: Conference on accounting in Latin America – day 2

The World Bank, the International Federation of Accountants, and the Interamerican Development Bank are jointly hosting the third annual conference on Accounting and Accountability for Regional Economic Growth in Latin America and the Caribbean (referred to as CReCER after its Spanish/Portuguese acronym). Deloitte is one of the sponsors. The conference is being held in Sao Paulo, Brazil, on 23-25 September 2009. About 900 delegates are participating. This year's conference theme is Restoring Confidence in the Wake of the Financial Crisis. On 22 September 2009, the day preceding the conference, the IASB hosted a meeting of regional standard setters. Presented below are notes taken by Deloitte observers at the second day of the conference – focussing mainly on comments about financial reporting. Conference on Accounting and Accountability for Regional Economic Growth, Sao Paulo Notes from 24 September 2009 Drivers of Accounting Excellence Jim Sylph, Executive Director of Professional Standards at IFAC, discussed the meaning of 'audit quality'. He noted that International Standards on Auditing (ISAs) provide guidance on an auditor's responsibility for a single engagement. International Standard on Audit Quality No 1, on the other hand, is addressed to the firm, providing guidance on the controls that must be in place to achieve audit quality. Regarding client relationships, he said that auditors must act in the interests of the shareholders of the client and in the public interest, which sometimes may not be the same as the interests of the management and board of directors of the client. Mr Sylph noted that audit risks increase significantly in two circumstances – when it is a first-year audit and the auditor does not know the client well enough and when accounting and auditing standards have changed and the auditor has not kept up. Richard George, Chair of the International Ethics Standards Board for Accountants, pointed out that cultural aspects within an audit firm are as important to audit quality as auditing methodology. While a robust methodology is essential, an audit involves scepticism, professional judgement, independence, objectivity, and integrity – ethical issues. He said that many issues in financial reporting are matters of professional judgement, not fact. For example, choices of accounting policies, measurements, and estimates require objectivity. Mr George also pointed out that IFAC's Revised Code of Ethics went into effect in July 2009 and that it applies not just to auditors but to all members of IFAC member bodies, including financial statement preparers. Mr George highlighted that the choice of accounting policies is an ethical issue, not just a matter of regulatory compliance – from an ethical point of view it is not 'free choice' – the public interest in high quality information is paramount. Recent Trends and Regional Initiatives in Accounting and Auditing Policymaking Manual Sanchez y Madrid, Deputy Chair of IFAC's Compliance Advisory Panel, discussed IFAC's Member Body Compliance Program. The Program is a means to evaluate the quality of IFAC member and associate member bodies' endeavors to meet IFAC membership requirements. The Program includes a self-assessment of compliance and development of country-specific action plans. Click here for more information about IFAC's Member Body Compliance Program. Henri Fortin, Senior Financial Management Specialist at The World Bank, discussed the World Bank's ROSC Reports on Accounting and Auditing in Latin America and the Caribbean. He noted that in the region 15 ROSC A&A reports have been completed, 3 are at the drafting stage, and in 3 countries the review is underway. The objectives of the ROSC program are two-fold: Assessment. Analyse comparability of national accounting and auditing standards with international standards, determine the degree with which applicable accounting and auditing standards are complied, and assess strengths and weaknesses of the institutional framework in supporting high-quality financial reporting. Action plan. Assist the country in developing and implementing a country action plan for improving institutional capacity with a view to strengthening the country's corporate financial reporting regime. Click here for More Information about the ROSC Accounting and Auditing Reviews. Mr Fortin also explained the ways that The World Bank has provided technical assistance in the accounting and auditing area to the region. These include assistance in adopting IFRSs, improving university curriculums to include IFRSs, and quality control in the accounting profession. He also noted that the Bank has provided 17 virtual accounting and auditing seminars with 16 connected countries in the region since October 2006. Topics of the seminars have included IFRSs and the IFRS for SMEs. Luciano Schweizer, Operations Specialist at the Interamerican Development Bank (IDB), said the IDB has organised IFRS and ISA projects in nine countries in the region. These include assistance in adopting IFRSs and ISAs, IFRS training, and helping to design the curriculums at 12 universities. Mr Schweizer said that, in the region, some countries have the capacity to adopt IFRSs and ISAs directly, while others, for now, converge their local standards toward international norms. He acknowledged that with convergence, the result is not necessarily an international standard. SMEs and SMPs: A Prosperous Partnership for Sound Financial Reporting Paul Pacter, the IASB's Director of Standards for SMEs, reviewed the history of development of the IFRS for SMEs, which was published in 9 July 2009. The IFRS for SMEs is a self-contained standard of 230 pages tailored for the needs and capabilities of smaller businesses. Many of the principles in full IFRSs for recognising and measuring assets, liabilities, income, and expenses have been simplified; topics not relevant to SMEs have been omitted; and the number of required disclosures has been significantly reduced. To further lessen the reporting burden for SMEs, revisions to the IFRS will be limited to once every three years, Mr Pacter said. He noted that the Spanish translation of the IFRS for SMEs was posted on the IASB's website on 17 September 2009. To support implementation the IASC Foundation is developing comprehensive multilingual training material and is working with international development agencies to provide instructors for regional workshops to 'train the trainers' in the use of the training material, particularly within developing and emerging economies. The English language material will be downloadable free of charge from the IASB's website in late 2009. Ricardo Rodil, Member of IFAC's Small and Medium Practices Committee, said SMEs have been affected by the global financial crisis and are finding access to capital more difficult. There is a need for all SMEs, including micros, to public good quality financial reports if they want to obtain capital. Vania Maria da Costa Borgeth, Chief Accountant at BNDES (a Brazilian government-sponsored development bank that supports SMEs), said her bank welcomes the IFRS for SMEs because it provides high quality, transparent information for small companies. We want to work to make the IFRS for SMEs become a reality for Brazilian SMEs, Ms Borgeth said, but she noted that some SMEs resist the effort and cost of making such a significant change. This summary is based on notes taken by observers at the conference and should not be regarded as an official or final summary.

24 September 2009: Conference on accounting in Latin America – day 1

The World Bank, the International Federation of Accountants, and the Interamerican Development Bank are jointly hosting the third annual conference on Accounting and Accountability for Regional Economic Growth in Latin America and the Caribbean (referred to as CReCER after its Spanish/Portuguese acronym). Deloitte is one of the sponsors. The conference is being held in Sao Paulo, Brazil, on 23-25 September 2009. About 900 delegates are participating. This year's conference theme is Restoring Confidence in the Wake of the Financial Crisis. On 22 September 2009, the day preceding the conference, the IASB hosted a meeting of regional standard setters. Presented below are notes taken by Deloitte observers at the first day of the conference – focussing mainly on comments about financial reporting. Conference on Accounting and Accountability for Regional Economic Growth, Sao Paulo Notes from 23 September 2009 Official Welcome Maria Clara Cavalcante Bugarim, the President of Brazil's Federal Accounting Council, welcomed the delegates. She said that a key goal of the conference is to encourage cooperation on accounting across Latin America in the interest of economic growth and economic stability. Accounting should be a universal business language across borders. To achieve that, she said, accounting must report economic reality without bias. Plenary Addresses Pamela Cox, Regional Vice-President for Latin America and Caribbean of The World Bank, said that accounting has risen to the top of the global economic agenda as a result of the current economic crisis. Because of strong prudential and economic regulation, Latin America has weathered the crisis better than other regions of the world – no banking crises, no increase in inflation, no devaluations of currencies, and no current account deficits. Still, there are some regional problems, including declines in economic growth and significantly reduced exports. Ms Cox cited three critical imperatives for Latin American economic growth: sound financial management, transparency, and confidence in financial reporting. In particular, she said, SMEs need reliable accounting. The regrettable consequence of poor accounting is lack of access to capital. Capital providers want accurate and reliable information about an SME's financial condition, future cash flows, profitability, and viability. She said the World Bank is pleased with the new IFRS for SMEs. 'It is an important step to link lenders and small businesses. We see major benefits for the IFRS for SMEs.' Roberto Vellutini, Vice-President for Countries of the Inter-American Development Bank, said that the IDB is increasingly relying on national fiduciary systems rather than imposing its own. That is true in 21 of the 26 IDB borrowing countries. Robert Bunting, IFAC President, noted the importance of a single set of high quality accounting standards for listed and other public interest entities. He also said that IFAC was 'instrumental in supporting the IFRS for SMEs'. While expressing the view that SMEs 'at the bottom level of the hierarchy' need a third set of very simple accounting standards, Mr Bunting also spoke of the importance of a 'single set of common global accounting standards' for SMEs. He said that banks are wary of lending to SMEs because they do not have the quality of financial information that banks can trust. Makhtar Diop, World Bank Country Director for Brazil, spoke mainly about Brazil's success in coping with the global financial crisis. Because of Brazil's strong financial sector, small mortgage market, and strong banking supervision, the effect has been more like a small recession in Brazil rather than a major crisis. He said Brazil still needs more transparent financial reporting in all sectors. Mr Diop pointed out that Brazil has adopted IFRSs for all listed companies, banks, and insurance companies starting in 2010. In this regard, Brazil is leading the path in Latin America. After the Financial Crisis: Lessons Learned for Financial Reporting Beth Brooks, member of the Global Public Policy Committee (GPPC) of the Six Largest Global Audit Networks, said that strengthened corporate financial reporting is critical to restoring confidence in the markets. She noted that the leaders of the G20 nations are meeting 24-25 September in Pittsburgh and are likely to reaffirm their commitment to a single set of global accounting standards. 'Global standards are fundamental to what the G20 want to accomplish' – more integrated global financial markets. Ms Brooks described the current global financial crisis as a 'global illness being treated with national remedies'. Because capital moves across borders, global accounting standards are essential for better capital allocation and market efficiency. For emerging markets, global standards will improve comparability and enhance trust in their reported numbers. Global standards also prevent 'regulatory arbitrage'. Ms Brooks also said the GPPC favours not only global standards but a single global accounting standard setter. Citing examples in both the United States and the European Union, she expressed concern about political interference in accounting standards, which 'harms the quality of the standards and destabilises capital markets'. Finally, Ms Brooks urged the United States to set a date certain for adoption of IFRSs. Jan Engstrom, member of the IASB, spoke about 'the enduring need for strong international standards'. He said that the speed with which IFRSs have been adopted around the world in the past eight years – now 120 countries – has surprised everybody. The current financial crisis, Mr Engstrom said, is the result of bad business decisions in an environment where political and regulatory systems failed. Politicians need to know the truth about businesses to make sound public policy decisions. Mr Engstrom reviewed the IASB's response to the current global financial crisis, including more fair value guidance, proposals on consolidation and derecognition, and a fast-track project to replace the existing IAS 39. In Mr Engstrom's view, the IFRS for SMEs is the most important standard issued by the IASB. Millions of companies are expected to adopt it, and the SME standard is already providing direction for changes to full IFRSs – for instance in simplifying IAS 39. Michael Hathorne, chairman of the International Public Sector Accounting Standards Board (IPSASB), noted that the financial crisis is not just a private sector phenomenon. Many government balance sheets have been damaged by a sharp rise in government debt and deficits, plus the existence of contingent liabilities for guarantees. General purpose government financial reports must clearly show what governments have done in response to the financial crisis, and how governments will pay for it. The IPSASB has three critical goals: Complete by 31 December 2009 the current project to converge IPSASs with IFRSs as they stood at 31 December 2008. Provide guidance for governments' reporting of long-term sustainability, particularly reporting all obligations and resources expected to meet those obligations. Mr Hathorne said the current cash basis of reporting used by many governments fails to provide this information. Develop the first international conceptual framework for public sector financial reporting, particularly what is the objective and how is the reporting entity defined. He also urged that accounting standards used by government must be developed independently of government. Politicians will not be forgiven by future generations, he said, if obligations incurred today are hidden and yet must be paid for tomorrow. IFRSs: Changes, Challenges, and Opportunities in Adopting Them Geraldo Toffanello, Director of Corporate Accounting for Gerdau Group (a Brazilian steel company) discussed his company's experience in switching from Brazilian GAAP to IFRSs. He said that migration to IFRSs required 60 major adjustments from Brazilian GAAP. The most significant effects resulted from stopping amortisation of goodwill, measuring assets and liabilities acquired in a business combination at fair value, measuring financial instruments at fair value through profit or loss, and including noncontrolling (minority) interest in equity and in profit or loss. Gerdau data: Impact of IFRSs on Reported Equity (Billions of Brazilian Real, 1 Real = US$0.56)   2008 2007 Brazilian GAAP 17.960 11.420 IFRS excluding noncontrolling interest 20.167 12.700 IFRS including noncontrolling interest 25.044 16.723 Impact of IFRSs on Reported Profit (Billions of Brazilian Real, 1 Real = US$0.56)   2008 2007 Brazilian GAAP 1.059 1.262 IFRS excluding noncontrolling interest 3.940 3.550 IFRS including noncontrolling interest 4.945 4.303 Mr Toffanello noted that while 2009 is not yet over, the IFRS impact is expected to be very different due to the fiscal crisis – significant asset impairments and declines in fair values of financial instruments. He said his company is a US SEC registrant because their shares trade on the NYSE, and switching to IFRSs had a major benefit of eliminating the need for them to prepare financial information based on US GAAP, which had been a costly process in the past. Henri Fortin, Senior Financial Management Specialist at The World Bank, discussed the regional picture of IFRS adoption in Latin America and the Caribbean. Nearly all countries in the region have adopted IFRSs or are in the process of doing so (Colombia and Suriname being exceptions), generally for listed companies and in some cases more broadly. Mr Fortin noted a growing interest in the IFRS for SMEs in the region. Among the challenges that have arisen in IFRS adoption in the region, Mr Fortin mentioned: The need to integrate IFRSs into the whole business culture, not just financial reporting (eg corporate governance and contracts) The need to separate financial reporting to investors and creditors using IFRSs from tax accounting requirements The need to integrate IFRSs into university accounting curriculums The need for IFRS training and perhaps an 'IFRS Certificate'. Ramon Jubbels, IFRS Practice Head at KPMG Brazil, listed a number of objectives in migrating from Brazilian GAAP to IFRSs: Comparability of Brazilian companies with those in the rest of the world Greater transparency afforded by IFRSs Strengthen Brazilian capital markets Improved internal financial information systems Enhanced global recognition of Brazil as a major economy Closing Remarks for Day One Jose Luis Lupo, Country Representative for Brazil for the Interamerican Development Bank, concluded the day by saying that the financial crisis has demonstrated that 'this is the moment' for IFRSs. Countries need more reliable standards for information in which users can have confidence. This summary is based on notes taken by observers at the conference and should not be regarded as an official or final summary.

24 September 2009: Proposed financial supervision reforms in EU

The European Commission has proposed legislation intended to significantly strengthen the supervision of the financial sector in Europe. Specific goals of the proposals are: to sustainably reinforce financial stability throughout the EU; to ensure that the same basic technical rules are applied and enforced consistently; to identify risks in the system at an early stage; and to be able to act together far more effectively in emergency situations and in resolving disagreements among supervisors. The proposal notes that "the current financial crisis has highlighted weaknesses in the EU's supervisory framework, which remains fragmented along national lines despite the creation of a European single market more than a decade ago and the importance of pan-European institutions". The proposals are intended to address those weaknesses by creating: a European Systemic Risk Board (ESRB) to monitor and assess risks to the stability of the financial system as a whole ('macro-prudential supervision'). The ESRB will provide early warning of systemic risks that may be building up and, where necessary, recommendations for action to deal with these risks. a European System of Financial Supervisors (ESFS) for the supervision of individual financial institutions ('micro-prudential supervision'), consisting of a network of national financial supervisors working in tandem with new European Supervisory Authorities, created by the transformation of existing Committees for the banking securities and insurance and occupational pensions sectors. The three European Supervisory Authorities would be: European Banking Authority (EBA) European Insurance and Occupational Pensions Authority (EIOPA), and European Securities and Markets Authority (ESMA). If adopted, the proposals would result – for the first time ever – in certain financial markets supervisory powers being given to pan-European authorities. Click for the European Commission's Draft Legislation (PDF 24k). The proposal is supported by the three existing EU financial supervisory bodies, the CESR, CEBS, and CEIOPS, which would be replaced by the three new European Supervisory Authorities. Click for their CESR-CEBS-CEIOPS Joint Release (PDF 45k). The European Commission is urging swift approval by the Council and European Parliament so the new structure could begin functioning in 2010.

23 September 2009: Notes from the 22 Sept 2009 IASB meeting

The IASB held a special Board meeting at its offices in London on Tuesday 22 September 2009. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.

23 September 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 10 – links can be found Here. We have now posted No 11: Bulletin No 11 (22 September 2009) discusses Section 13 of the IFRS for SMEs, which deals with accounting for inventories. Click to Download Bulletin 11 (PDF 201k). We have many resources in Spanish Here.

23 September 2009: IASCF Monitoring Board statement

The IASC Foundation's Monitoring Board has published a Statement of Principles for Accounting Standards and Standard Setting. The statement emphasises the importance of providing high-quality financial information to ensure the confidence of capital providers in making investment decisions. The Monitoring Board said that 'independence and transparency' are an essential part of the standard setter's due process. The Monitoring Board is a group of public capital market authorities to whom the IASC Foundation established a public accountability link. Here is an excerpt from the Monitoring Board's statement: Financial standards and regulations created or modified in the midst of any crisis should be considered carefully. This is particularly true with regard to the current review of accounting standards because these standards play an important role in public company financial disclosures, and these financial disclosures, in turn, are an important part of the foundation upon which fair and efficient capital markets are based. Financial crises have historically sparked panics in capital markets, and regulators and standard setters recognise that market panics should not be allowed to evolve into regulatory panics, where important regulatory fundamentals are inadvertently undermined in an effort to respond quickly to the symptoms – rather than the root causes – of a market crisis. Click to download: Monitoring Board Statement (PDF 89k) IASC Foundation Trustees' Press Release welcoming the Monitoring Board's statement (PDF 98k) FASB's Trustees Statement supporting the Monitoring Board's statement (PDF 96k)

21 September 2009: Additional IASB Board meeting 29 September

The IASB has announced that the Board will hold an additional meeting on Tuesday 29 September 2009 to discuss its project to replace IAS 39. Start time will be between 11:00 and 13:00 and the meeting will last two hours. This is in addition to the special meeting that the Board will hold on 22 September 2009. The agenda: Financial Instruments: Classification and Measurement Financial Instruments: Impairment

21 September 2009: Deadline reminder – fair value measurement ED

We remind you that comments are due on 28 September 2009 on the Exposure Draft: Fair Value Measurement. The ED was issued by the IASB on 28 May 2009. It proposes guidance on how fair value should be measured where it is required by existing standards. The ED does not propose to extend the use of fair value measurements in any way. It would add disclosure requirements about how fair values were determined. If adopted, the proposals would replace fair value measurement guidance contained within individual IFRSs with a single, unified definition of fair value, as well as further authoritative guidance on the application of fair value measurement in inactive markets. The IASB's starting point in developing the exposure draft was the equivalent US standard, SFAS 157 Fair Value Measurements. The proposed definition of fair value is identical to the definition in SFAS 157 and the supporting guidance is also largely consistent with US GAAP.

21 September 2009: IOSCO consults on auditing issues

The International Organization of Securities Commission (IOSCO) Technical Committee has launched three related consultation reports prepared by its Task Force on Audit Services. The three IOSCO reports address: Transparency of firms that audit public companies. This paper explores whether enhancing the transparency of audit firms' governance, audit quality indicators and audited financial statements could maintain and improve audit quality and the availability and delivery of audit services. Auditor communications. This paper considers whether changes to the standard audit report or additional auditor communications are warranted to address concerns about the effectiveness of the standard audit report in communicating important information about the audit and audit process to investor. Ownership structures for audit firms. This paper focuses on the impact of audit firm ownership restrictions on concentration in the market for auditing large issuers. The paper describes the current state of audit firm concentration and explores the potential benefits for audit service availability of removing ownership restrictions and discusses the adverse impact that removing ownership restrictions may have on audit firm competence, professionalism, independence, and audit quality. The paper also considers the pros and cons of authorizing alternative forms of audit firm ownership and governance. Comments are requested by 1 December 2009. Click to download: Consultation Report: Transparency of Firms that Audit Public Companies (PDF 399k) Consultation Report: Auditor Communications (PDF 600k) Consultation Report: Exploration of Non-Professional Ownership Structures for Audit Firms (PDF 362k) IOSCO News Release (PDF 383k)

21 September 2009: HK consults on acceptance of Mainland accounting

Hong Kong Exchanges and Clearing Limited (HKEx) has published a Consultation Paper (PDF 389k) regarding a proposed framework to accept the use of Mainland China accounting and auditing standards, and Mainland audit firms endorsed by the Ministry of Finance and the China Securities Regulatory Commission, by Mainland incorporated companies listed in Hong Kong starting in 2010. Currently, Mainland firms must use either IFRSs or Hong Kong Financial Reporting Standards (which are identical to IFRSs) for listing in Hong Kong. Responses to the consultation paper are requested by 23 October 2009.

20 September 2009: Agenda project pages updated

We have updated the following pages on IAS Plus to reflect the discussions and decisions at the IASB's regular September 2009 Board meeting: Classification of Rights Issues (proposed amendment to IAS 32) Credit Risk in Liability Measurement Derecognition Conceptual Framework – Objectives and Qualitative Characteristics Conceptual Framework – Reporting Entity Financial Statement Presentation Financial Instruments with Characteristics of Equity Financial Instruments: Classification and Measurement Financial Instruments: Replacement of IAS 39: Hedge accounting Financial Instruments: Replacement of IAS 39: Impairment Insurance Contracts Leases Liabilities – Amendments to IAS 37 Post-employment Benefits Related Party Disclosures Revenue Recognition

20 September 2009: IFRS in the Canadian insurance industry

Deloitte Canada has published Canadian Insurance Industry: A Clear Path to IFRS Conversion (PDF 159k). This booklet highlights the accounting considerations and other considerations that are important to the insurance industry in Canada when making the transition to IFRSs in 2011. Topics covered include: Insurance contracts - product classification Insurance contracts - financial statement presentation and disclosure issues Insurance contracts - embedded derivatives and unbundling Insurance contracts - measurement approach Financial instruments

20 September 2009: Comparison of IFRSs and Hong Kong FRSs

The Hong Kong Institute of Certified Public Accountants has updated their Comparison between HK Financial Reporting Standards and International Financial Reporting Standards (PDF 99k) to reflect differences as of 1 July 2009. All differences are essentially in transition provisions and effective dates.

19 September 2009: Notes from the Sept 2009 IASB meeting day 4

The IASB is holding its September 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 15-18 September 2009. Click to go to the preliminary and unofficial Notes taken by Deloitte Observers at the first day of the meeting.

19 September 2009: Chinese translation of two IFRS newsletters

Deloitte China has published the Chinese translations of two IAS Plus Update newsletters: Additional Exemptions for First-time Adopters Chinese Translation (PDF 203k). Here is the English Version (PDF 78k) IASB Releases Omnibus Exposure Draft of Annual Improvements Chinese Translation (PDF 249k). Here is the English Version (PDF 71k) You will find links to this and many other IFRS materials in Chinese on our China Page.

18 September 2009: IASB webcast on IAS 39 replacement

The IASB will hold a webcast on the project to replace IAS 39 Financial Instruments: Recognition and Measurement: Webcast topic: Replacement of IAS 39. More specifically: an overview of the feedback received on the Exposure Draft Financial Instruments: Classification and Measurement, the Request for Information – Impairment of Financial Assets, and the Discussion Paper Credit Risk in Liability Measurement, and the next steps in the project Date and Time: Wednesday 23 September 2009 at 11:00 and again at 17:00 London time (GMT +1 hour) Presenters: IASB staff More Information and Registration (link to IASB website)

18 September 2009: Additional IASB Board meeting 22 September

The IASB has announced that the Board will hold an additional meeting on Tuesday 22 September 2009 from 11:00am to 13:00pm London time. The meeting will be webcast. The agenda will be reconsideration of IAS 39 – specifically: Financial Instruments: Classification and Measurement – whether the cost exemption for unquoted securities that cannot be reliably measured should be removed, as proposed in the exposure draft Impairment of Financial Instruments

18 September 2009: Notes from the Sept 2009 IASB meeting day 3

The IASB is holding its September 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 15-18 September 2009. Click to go to the preliminary and unofficial Notes taken by Deloitte Observers at the first day of the meeting.

18 September 2009: Analysis of extractive industries DP

Deloitte Australia's Energy and Resources Group has published Issue 6 of the Extracting Value Newsletter (PDF 204k), a special edition focussing exclusively on the draft Discussion Paper (DP) Extractive Activities, recently released 'for information purposes' by the IASB. Whilst ostensibly proposing approaches producing outcomes similar to common industry practice, there are a number of interesting issues and considerations arising from the draft Discussion Paper – such as potentially mandating capitalisation of exploration expenditure and much more information about the fair value of reserves and resources. This edition of Extracting Value explores some of these issues, beginning the commercial and pragmatic analysis of the proposals. An excerpt: In summary terms, the Discussion Paper proposes to: introduce mineral reserve and resource definitions based on industry practice eliminate 'phase accounting' – separate accounting for exploration and evaluation, development, production and so on – in favour of one asset, either a 'mineral asset' or 'oil and gas asset' account for mining and oil and gas projects using a 'unit of account' which is effectively the 'area of interest' accounting commonly used in Australia under current standards require measurement based on historical cost, but countenancing the possibility of using another measure such as current value or (more likely) fair value retain a modified impairment approach to assets in the exploration and evaluation stage introduce extensive disclosures, including a form of 'standardised value' for reserves/resources and possibly responding to the 'publish what you pay' lobby.

17 September 2009: IFRS for SMEs in Spanish is released

The IASB has posted on its website the IFRS for Small and Medium-sized Entities in Spanish (NIIF para las PYMES). The three files – Standard, Basis for Conclusions, and Guidance – are available for free download; registration is required.

17 September 2009: EU memo for G20 addresses IFRSs

The European Commission has released a memorandum in conjunction with the upcoming meeting of G20 leaders titled European Commission Calls for United EU position for G20 Summit in Pittsburgh (PDF 21k). On IASB-related issues, the Commission noted: "The EU should also seek a renewed commitment from the G20 to accelerating the pace of delivery on accounting standards and non-cooperative jurisdictions. It is vital that the IASB delivers on appropriate reform of the accounting rules to ensure that financial stability concerns are fully taken into account to reduce pro-cyclicality in the system. Convergence to high quality accounting standards remains a top priority of the EU, in particular as regards financial instruments. The EU therefore needs to secure a strong political commitment to balanced convergence towards high quality standards no later than 2010. Regarding non-cooperative jurisdictions, a roadmap should be agreed to complete the work, including clear milestones for evaluating their compliance."

17 September 2009: Heads Up on FASB oil and gas ED

Deloitte United States has published a Heads Up Newsletter (PDF 151k) discussing the FASB's recently issued Exposure Draft (ED) (link to FASB website) of a proposed Accounting Standards Update, Oil and Gas Reserve Estimation and Disclosures. The purpose of the ED is to align the current reserve estimation and disclosure requirements of Accounting Standards Codification Topic 932, Extractive Industries - Oil and Gas, with the requirements in the SEC's final rule, Modernization of the Oil and Gas Reporting Requirements (PDF 629k, link to SEC website), which was issued in December 2008. The proposed amendments would be effective for annual periods ending on or after 31 December 2009. The IASB has a research agenda project on Extractive Industries

17 September 2009: Notes from the Sept 2009 IASB meeting day 2

The IASB is holding its September 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 15-18 September 2009. Click to go to the preliminary and unofficial Notes taken by Deloitte Observers at the first day of the meeting.

16 September 2009: IASCF Trustees' letter to G20 leaders

The Trustees of the IASC Foundation, the oversight body of the International Accounting Standards Board (IASB), have written to the leaders of the G20 countries in connection with their meeting on 24-25 September in Pittsburgh, Pennsylvania USA. The purpose of the letter is to inform the leaders of G20 countries of the progress that the IASC Foundation and the IASB have made in response to the G20's recommendations on accounting standards agreed at the Leaders Summits in Washington in November 2008 and in London in April 2009. An appendix to the letter includes a detailed report of specific steps the IASC Foundation and IASB have taken in response to the financial crisis. Click for: September 2009 - IASCF Letter to G20 Leaders (PDF 40k) April 2009 - G20 Declaration and IASB response November 2008 - Report of the G20 Summit IAS Plus Comprehensive Credit Crunch Page

16 September 2009: 'Eligible hedged items' endorsed in the EU

The European Union has endorsed the amendment to IAS 39 Financial Instruments: Recognition and Measurement titled Eligible Hedged Items for use in the European Union. Click for Commission Regulation No 839/2009 of 15 September 2009 as published in the Official Journal (PDF 820k). EFRAG has updated their Endorsement Status Report (PDF 119k) to reflect this endorsement.

16 September 2009: Notes from the Sept 2009 IASB meeting day 1

The IASB is holding its September 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 15-18 September 2009. Click to go to the preliminary and unofficial Notes taken by Deloitte Observers at the first day of the meeting.

16 September 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 9 – links can be found Here. We have now posted No 10: Bulletin No 10 (15 September 2009) continues the discussion from the Bulletins 5-9 on the treatment of financial instruments in the IFRS for SMEs. It addresses measurement of financial instruments. Click to Download Bulletin 10 (PDF 175k). We have many resources in Spanish Here.

15 September 2009: Notes from the North American financial instruments roundtable

The IASB and the US FASB jointly held a Roundtable on Financial Instruments – Classification and Measurement at the FASB's offices in Norwalk, Connecticut, on Monday, 14 September 2009. Participating in the discussion were representatives of the FASB and the IASB and a range of their constituents, including banks, insurers, broker-dealers, audit firms, financial analysts, and insurance and securities regulators. FASB Technical Director Russ Golden chaired the session. At the table were FASB Board members Bob Herz, Tom Linsmeier, Mark Siegel, and Larry Smith, and IASB Board members Steve Cooper (by video link), Patrick Finnegan, Jim Leisenring, Patricia McConnell, and John T Smith. Presented below are notes taken by Deloitte observers at the roundtable. No decisions were reached at this meeting. Our project summary is Here. Our notes from the 10 September 2009 London roundtable are Here. Notes from the Financial Instruments Roundtable 14 September 2009, Norwalk, CT Measurement Categories Participants expressed mixed views on the relative merits of fair value versus amortized cost measurement for items not managed on a fair value basis. One participant suggested that it is always better to measure on a fair value basis than on an amortized cost basis as fair value captures the potential risks and market volatilities inherent in financial instruments compared to amortized cost which has proven to be a less relevant measurement attribute to users of financial statements who are interested in what the net assets of an entity is worth at a given point of time. A couple of participants from banks indicated support for a two-pronged test for amortized cost measurement based on a business model and instrument terms somewhat similar to that proposed by the IASB. However, they emphasized that the primary test should be an entity's business model (e.g., whether an item is managed on a contractual yield basis or on a fair value basis) and that the characteristics of the financial instrument (e.g., whether the instrument should be eligible for amortized cost measurement when the variability in its cash flows is considered) should be secondary. Some questioned whether accounting based on an entity's business model is rigorous enough. Business models change over time. An entity that intends to hold a financial instrument for collection and payment of contractual cash flows might go bankrupt depending on the asset quality. In addition, the same company might have different desks managed on different bases. Representatives from insurers and insurance regulators expressed concern about the potential for unintended consequences if a new financial instruments standard is developed without consideration of accounting for the liabilities of insurance companies. In particular, they were concerned that the accounting rules might suggest an accounting mismatch even if there is an economic match of assets and liabilities. Several participants emphasized that users of financial statements often look for both fair value and amortized cost information for the same financial instruments. As long as users obtain the information they need in a timely manner in some form, it matters less how the line between different measurement categories is drawn for accounting purposes. Some user representatives suggested that preparers of financial statements should provide two sets of balance sheets: one on a fair value basis and one on an amortized cost basis. An IASB Board member asked whether the Board should require presentation of fair value information within parentheses on the face of the balance sheet or in a prominent comprehensive note disclosure. Presentation of fair value information within parentheses on the face of the balance sheet might obviate the demand for an approach in which financial instruments are measured at fair value on the balance sheet but changes in fair value are recognized in other comprehensive income (OCI), which is a key component of the FASB's tentative model. One participant suggested that a fair value through OCI approach might be appropriate for items with more uncertainty in valuation because it reflects assets at fair value on the balance sheet without distorting the income statement with earnings volatilities. One participant called for a detailed study of the usefulness of current fair value disclosures for financial instruments. Some potential limitations of current fair value disclosures that were noted include (1) the fact that an entry price notion rather than an exit price notion is used to prepare these disclosures, (2) portfolio valuation issues, and (3) the robustness of their preparation. A Board member indicated that based on feedback from users of financial statements, it is evident that information in the footnotes is not as rigorous as information on the face of the financial statements. Another participant highlighted the need to require information about fair value on the face of the financial statement to ensure that such information is communicated to investors in companies' earnings releases. Investments in Equity Instruments An IASB Board member explained that the option to elect fair value through OCI for equity instruments with no recycling of gains and losses on realization was intended, in part, to avoid the need for complex impairment tests. However, many participants instead favored recycling upon realization. There was no support for a lower-of-cost-or-market approach for such equity investments. Representatives from insurers suggested that the distinction between realized and unrealized gains and losses is important in a long-term insurance business. If a portfolio of equity securities is held over the long term to support long-term insurance liabilities, short-term variations in fair value may mean little. Therefore, those changes in fair value should not be included in net income. Users suggested that measures of comprehensive income are becoming more and more important. Analysts typically make adjustments on the basis of reported net income, but a better approach might be to start with comprehensive income. Securitisation Tranches Banking representatives expressed concern about the IASB model for securitisation tranches. In particular, they questioned why only the most senior tranche should qualify for amortized cost measurement and why all other tranches should be accounted for at fair value. One suggestion was that mezzanine tranches should also qualify for amortized cost measurement if the cash flows are reasonable to predict and the yield at acquisition is commensurate with the risk. Another suggestion was that tranches that are at least rated investment grade should qualify for amortized cost measurement. Embedded Derivatives Some participants expressed support for the IASB's proposal to eliminate the current accounting approach to embedded derivatives over the FASB's proposed model which does not eliminate the complexity associated with evaluating the clearly-and-closely related criterion. However, one participant suggested that an option to bifurcate an embedded derivative should be retained for financial liabilities until the issue of own credit risk in liability measurements is resolved. Own Credit Risk in Liability Measurements Several participants expressed unease about reflecting the impact of changes in own credit risk in fair value measurements of nonderivative financial liabilities, such as senior unsecured debt. Also, some participants expressed concerns about implications of reflecting the impact of changes in own credit risk in fair value measurement of structured product liabilities where issuers generally hedge their exposures except their own credit risk. Convergence Participants asked how the FASB and the IASB plan to arrive at a convergence solution for financial instruments. Since the IASB plans to issue a new classification and measurement standard, with early adoption permitted for 2009 year-end financial statements, participants questioned how convergence will be possible unless the FASB accepts without changes what the IASB has already issued. One IASB Board member suggested that the year-end 2009 deadline for the IASB is in response to political demands, but that early adopters of the new standard should anticipate further changes to the standard as the IASB and the FASB work together to issue one converged standard. The FASB chairman suggested that the FASB will need to carefully assess whether convergence is in the best interest of U.S. investors in this area. While some participants expressed preference to the IASB's proposed approach over the FASB's, they urged the IASB to take time to deliberate with the FASB prior to finalizing the classification and measurement standard. This summary is based on notes taken by observers at the roundtable and should not be regarded as an official or final summary.

15 September 2009: International accounting regulators meet

Regulators of the accounting profession in over 20 jurisdictions met in San Francisco on 10-11 September 2009 for the Second Annual Forum of International Accountancy Regulators. The Forum is sponsored by the National Association of State Boards of Accountancy (NASBA) and is devoted to the exchange of issues and ideas related to the global impact of international accounting and auditing regulation. During the two-day event, speakers addressed the complexities of international mobility, the legal liability challenges faced by auditors of public companies, and the adoption of IFRSs in the US and throughout the world. Fermin del Valle, partner in Deloitte Argentina and former IFAC chair and member of the Financial Crisis Advisory Group (FCAG), discussed the challenges and benefits of globally reporting high quality financial information that reflects economic reality. Click for: Mr del Valle's Presentation (PDF 505k) NASBA Report on the Forum (PDF 76k)

15 September 2009: We comment on financial instruments ED

Deloitte Touche Tohmatsu has submitted comments on the IASB Exposure Draft Financial Instruments: Classification and Measurement. The ED is the first part of a three-phase project to replace IAS 39 Financial Instruments: Recognition and Measurement. The other two phases of the IAS 39 project are addressing Impairment and Provisioning and Hedge Accounting. Additionally, the Board's project on Derecognition of Financial Instruments will also result in amendments to IAS 39. The IASB plans to complete the replacement of IAS 39 during 2010, although mandatory application will not be before January 2012. The Classification and Measurement ED proposes that a financial asset or financial liability should be measured at amortised cost if two conditions are met: The instrument has basic loan features The instrument is managed on a contractual yield basis A financial asset or financial liability that does not meet both conditions would be measured at fair value. You will find more information about the Proposals in the ED Here. An excerpt from our letter of comment on the ED: Assessing the relative merits of the replacement to IAS 39 in parts clearly limits our ability to evaluate the proposals comprehensively as there are many areas that are yet to be finalised with which the classification and measurement proposals will interact. We therefore look forward to the issue of EDs on the other aspects of this project in order for us to understand and fully assess the replacement to IAS 39 in its entirety.... We support the IASB's approach for a mixed measurement model for both financial assets and financial liabilities. We believe amortised cost is a meaningful measurement attribute for certain financial instruments in certain circumstances when it is accompanied by fair value disclosures. Focusing on whether financial instruments have basic loan features and how the entity manages those instruments is a meaningful approach to determining whether an instrument can be measured at amortised cost. We have specific concerns and recommendations about how to make the amortised cost criteria more relevant and meaningful which are included in the appendix to this letter. Click to download Our Letter of Comment (PDF 141k). All past letters comment are Here.

14 September 2009: Nearly 90% view IFRS adoption in USA as 'likely'

89% of 245 financial executives who responded to a July 2009 Deloitte survey said that their companies viewed mandatory IFRS conversion in the United States to be highly likely or somewhat likely. And 80% of the companies are already taking action – with 40% having already performed a high-level IFRS assessment and another 40% planning to do so in the next one to two years. These results, compared to trends reported by Deloitte in April 2009, are a strong indication that attitudes and dynamics around IFRSs are changing in the US. In addition, 67% of the companies have designated a person or team to focus on IFRSs or monitor IFRS developments. Only 20% of the respondents indicated they have no plans to perform IFRS assessment activities. Click to download: IFRS Survey Results 2009: Update on Views and Activities (PDF 84k) Download our Earlier April 2009 Survey (PDF 85k)

14 September 2009: 9 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 14 September 2009 (PDF 131k). The following 9 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 IAS 39 Amendments for Eligible Hedged Items 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

13 September 2009: New guide to IFRSs from a US perspective

The Center for Audit Quality of the American Institute of CPAs has published a Guide to International Financial Reporting Standards. The purpose of the Guide is 'to provide interested parties with useful information and to help facilitate an informed public discussion among all those who have a stake in our capital markets system'. You can Download the Guide (PDF 7,865k) from the CAQ website.

12 September 2009: Notes from the London financial instruments roundtable

The IASB conducted a Roundtable on Financial Instruments – Classification and Measurement at the Board's offices in London on Thursday 10 September 2009. Board member Robert Garnett chaired the sessions, and Board members Stephen Cooper, Amaro Gomes, Jim Leisenring, John Smith, and Wei-Guo Zhang, and FASB Chairman Robert Herz, were at the table. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the Roundtable. Our project summary is Here. Notes from the Financial Instruments Roundtable 10 September 2009, London Overall comments There was broad agreement with the mixed measurement model proposed by the IASB, and with the 'business model' overlay. The FASB approach (all financial instruments at fair value on the balance sheet; with some changes recognised in profit and loss, others in other comprehensive income) did not receive much support. The political realities facing the IASB were acknowledged, and participants were largely supportive of the IASB's efforts to address financial instrument accounting on a timely basis-although this did potentially compromise short-term convergence with the FASB. Items that must be measured at fair value through profit and loss There was a genuine consensus that the IASB's choice of a mixed measurement model was the appropriate one, at least at this stage. Participants also agreed that both the terms of the instrument and the entity's business model were important considerations in determining the appropriate accounting. However, there were divergent views about whether one should have primacy over the other. Many participants supported the IASB's proposals, at least for financial assets, but some expressed concerns about the consequences for liabilities. Many supported fair value as the default measurement attribute, with the onus on the entity to prove that the criteria for amortised cost measurement were met; although some were less enthusiastic and wanted a wider role for amortised cost. Many participants were concerned about how the IASB had defined the amortised cost category, in particular about how operational the 'basic loan features' and 'managed on a contractual yield basis' attributes were (more guidance was requested); but views were mixed about whether the proposed cut would lead to more or fewer instruments being measured at fair value. The proposed elimination of the concept of embedded derivatives was criticised and some participants would support a simplified approach to bifurcating embedded derivatives. However, there was also significant support for eliminating embedded derivatives altogether. Some participants challenged the IASB's conclusions that distressed debt could not have basic loan features, noting that the distressed debt example illustrated the need for the IASB to identify the principles underlying 'basic loan features', rather than trying to illustrate their intentions through examples. However there was general agreement that leverage in an instrument was not a basic loan feature. The 'other' measurement category The roundtables discussed how an instrument should be measured if it is not measured at fair value through profit and loss. The IASB has proposed that the other category should be amortised cost; the FASB has proposed fair value through other comprehensive income. Bob Herz introduced the FASB's proposed alternative, noting that the FASB had opted for a fair value approach because, in their opinion, amortised cost was not as relevant as a current measure. In addition, by requiring fair value on the balance sheet, the FASB sought to ensure that quarterly and annual earnings releases reported the fair value of financial instruments, rather than waiting for the financial statement footnote disclosure. Participants did support achieving a converged answer on this issue, although not all agreed what this should be. There was a concern that neither the IASB nor the FASB had a clear understanding of what should be recognised in OCI and why; and whether items recognised in OCI could or should be reclassified to profit and loss. Participants from certain industries (for example, fund management and some insurers), wanted the ability to use OCI to reflect their long-term management of a portfolio of items while retaining the ability to reclassify realised gains and losses to profit or loss. Some participants were supportive of the FASB's 'balance sheet at fair value' approach, but others did not support this – especially measuring liabilities at fair value. In addition, there was concern about the extent to which the fair value adjustment was recognised in profit or loss, although others were equally concerned that interest and impairment might not always be recognised in profit and loss (this applies particularly to the IASB's proposals on equity instruments). Exceptions to the general principles Equity instruments There was significant criticism for the IASB's proposal that some equity instruments not held for trading should be measured at fair value with subsequent changes in fair value recognised in other comprehensive income. A significant number of participants supported an alternative approach that would retain the current 'available for sale' category for equity instruments only, with a simplified impairment test (lower of cost and current market value) with the requirement that subsequent reversals up to original cost should be recognised. A few participants suggested retaining the 'cost' exception for unquoted equities. In response, other participants noted that considerable progress had been made in recent years in measuring private equity instruments, especially given the growth in private equity financing. There are reasonably robust models available. Some participants, notably from Europe, were concerned many of the instruments in the fair value through profit and loss category also had a significant level of measurement uncertainty attached to them, and encouraged the IASB to explore whether it would be possible to reflect the measurement uncertainty in other comprehensive income (although they did not suggest how this might be achieved). Securitisation transactions Participants in both sessions discussed securitisation transactions in the context of multiple tranche or 'waterfall' transactions. The proposed application guidance states that 'any tranche that provides credit protection to other tranches in any situation does not have basic loan features.' Many participants suggested that it was preferable to have a two-step approach to determining whether a tranche had basic loan features. This involved 'looking through' the securitisation vehicle to the underlying assets and cash flows. 'Looking through' was difficult, but it was possible in many situations. If it was not possible to look through, fair value should be required. IASB members around the table challenged participants, especially those from the investment banks, about whether it was possible to look through a securitisation transaction: the IASB had previously been told by some that it was not operational, now it seemed it was. Reclassification A significant number of participants stated that, should the business model 'overlay' be retained, reclassification should be mandatory if the business model changed. Participants noted that 'business model' was not a euphemism for 'management intent', but went to the core of the business; its fundamental purpose; how it was run; etc. Consequently, changes in the business model would likely be very infrequent. This summary is based on notes taken by observers at the roundtable and should not be regarded as an official or final summary.

12 September 2009: EITF Snapshot for Sept 2009

We have posted the September 2009 edition of EITF Snapshot (PDF 115k) summarising the September 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 08-1 Revenue Arrangements With Multiple Deliverables – Final consensus Issue 08-9 Milestone Method of Revenue Recognition – No consensus reached. Further deliberations are expected at a future EITF meeting Issue 09-2 Research and Development Assets Acquired in an Asset Acquisition – Consensus-for-exposure Issue 09-3 Certain Arrangements That Include Software Elements – Final consensus Issue 09-4 Seller Accounting for Contingent Consideration – No consensus reached. No further discussion expected Issue 09-B Consideration of an Insurer's Accounting for Majority Owned Investments When the Ownership Is Through a Separate Account – Consensus-for-exposure Issue 09-E Accounting for Distributions to Shareholders With Components of Stock and Cash in the Calculations and Presentation of Earnings per Share – 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.

11 September 2009: We comment on 'rights issues' ED

Deloitte Touche Tohmatsu has submitted comments on the IASB Exposure Draft Classification of Rights Issues. The ED proposes to amend IAS 32 so that a rights issue that is (a) denominated in a currency other than the functional currency of the issuer and (b) issued pro rata to an entity's existing shareholders for a fixed amount of cash should be classified as equity. Our letter acknowledges that the requirement in IAS 32 that a derivative is an equity instrument only if it will be settled by the issuer exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments (the 'fixed for fixed' criterion) is a 'bright line rule that lacks a clear conceptual basis' and creates practice problems. Nonetheless, we do not think the IASB should deal with rights issues in isolation, because it would create inconsistencies with the accounting for other derivatives. Instead, we recommend that the IASB should take this opportunity to address the 'fixed for fixed' criterion in its entirety on an accelerated basis. Specifically, the IASB should develop a model that has a clear principle for when a derivative contract that will or may be settled through the delivery of the issuer's own equity instruments can qualify for equity classification. Click to download Our Letter of Comment (PDF 25k). All past letters comment are Here.

10 September 2009: Deloitte IFRS newsletter in Spanish

Deloitte (Colombia) has published the Spanish translation of the following IFRS publication: Boletín de Actualización IAS Plus – IASB emite borrador para discusión pública sobre mejoramientos anuales (PDF 26k) Spanish version of: IAS Plus Update September 2009 – IASB releases omnibus exposure draft on annual improvements (PDF 71k) We have many resources in Spanish Here.

10 September 2009: Notes from IASCF constitution roundtable

The IASC Foundation held the first of the Roundtables on Part 2 of its Review of the Foundation's Constitution in London on 9 September. Gerrit Zalm, IASCF Chairman, chaired the sessions, accompanied by IASCF staff and Sir Bryan Nicholson, IASCF Trustee. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the roundtable. Upcoming constitution roundtables are New York on 6 October 2009 and Tokyo on 21 October 2009. Notes from IASC Foundation Constitution Roundtable London, 9 September 2009 Consistent themes Several participants noted the great strides made by the IASCF and the IASB to improve its governance, structures, consultations, and other operational aspects of its activities, but noted that perceptions of the organisation were still often negative. The Trustees and the IASB needed to do all things necessary to reverse these perceptions. The amendments proposed by the Trustees could lay the foundations of such a shift in perception. The participants expressed broad agreement with the majority of the proposals. Five areas were consistently highlighted. Agenda setting Participants want the Trustees to be bolder and require a formal public consultation, not necessarily annually but regularly, on the IASB's agenda and priorities. The SAC, even in its latest incarnation, is not able to represent all constituents. Consequently, to ensure that the IASB's agenda and the priority it assigns to the projects on it have the support of as many constituents as possible, public consultation is necessary. In the words of one participant, the IASB should make as much effort over setting the agenda as over the standards themselves. The importance of establishing 'feedback mechanisms' on the IASB's agenda-setting activities that were, and were seen to be, an effective engagement with constituents, was mentioned by almost all participants. Participants and Trustees expressed the hope that such a process could be developed without becoming overly bureaucratic. IASB's Due Process Many participants suggested that the IASB should be required to provide feedback to constituents, especially the SAC, about how it used the comments it received on agenda proposals and formal consultation documents, not only where the Board accepted arguments, but as importantly why it did not accept those who disagreed with the proposal or offered an alternative approach. This feedback was seen by many as essential to maintaining the IASB's legitimacy as a responsible and responsive independent standard-setter. Participants recommended that the IASB be required to undertake a substantive redeliberation of an issue in the face of a substantial, unorchestrated level of opposition to a principle. In addition, the IASB should be encouraged to conduct field tests of proposals that are controversial or change existing practice in an untested manner. Fast-track Due Process This was the topic that received the most comment. While some, including the European Commission representative, supported constitutional language to facilitate it, many were opposed. Those who were opposed noted that the current 30-day due process was the bare minimum that constituents, especially representative organisations, could reasonably be expected to consult and formulate a thoughtful response to a proposal. Others saw it simply as unnecessary and likely to be open to abuse. IASCF Oversight Most participants thought that the constitutional provisions for IASCF oversight of the IASB were sound, but that the operational aspects of those provisions (benchmarks, etc) should be documented properly so that constituents could make their own judgements about whether the Trustees (and Monitoring Board) were actually providing appropriate robust oversight of the IASB. Funding Many participants, while acknowledging that the IASCF had a difficult task negotiating with so many different jurisdictions and regions, noted that the IASCF needed to establish a sustainable funding regime as quickly as possible. Adequate funding helped to insure independence, while a lack of independence brought with it the danger of retreating from due process. While noting the European Commission's proposal for EU-level finding, participants noted that such funding might not be as desirable (or sustainable) as funding from preparer companies and users of the financial statements. Other issues Some participants commented on the proposals for IASB members' terms: while most accepted the '5 years + 3' proposal, some urged that flexibility was more important subject to an overall maximum term (as now). There was a worry that experience could be lost and that there could be disruption to the standard-setting activities as a result. Some participants thought that the IASCF's relationship with the Monitoring Board was still unclear and should be clarified. The Trustees had stated that it was separate from or outside the IASCF 'envelope' and yet the operations of the IASCF and the Monitoring Board seemed to contradict that statement. Many participants supported the possibility to appoint up to two vice-chairmen for each of the IASCF and IASB, seeing that this would help with the outreach activities of both parts of the organisation. Some participants wanted a stronger statement in the Constitution about the role and interest of prudential regulators in the activities of and standards issued by the IASB. However, other participants were equally strongly of the view that the investor community should be recognised as the primary user group. Prudential regulators have extra powers that enable them to obtain additional information from entities – a power not available to investors. However, participants agreed that there should be dialogue between the IASB and prudential regulators and others with legitimate interests in financial reporting standards. There were varying degrees of enthusiasm for the change of name, with some seeing it as vital and others mostly irrelevant.

9 September 2009: IASCF Proposals for constitution changes

The Trustees of the International Accounting Standards Committee Foundation (IASCF), the oversight body of the IASB, have published for public comment proposals that form the second part of a two-part review of the IASC Foundation 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 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 Comments are requested by 30 November 2009. Click for: IASCF Press Release (PDF 105k) Full text of the proposals Downloadable from the IASB's Website (PDF 402k) Background Information on the constitution review, including decisions made by the Trustees in part one of the review

9 September 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 8 – links can be found Here. We have now posted No 9: Bulletin No 9 (8 September 2009) continues the discussion, from the Bulletins 6, 7, and 8, on the treatment of financial instruments in the IFRS for SMEs. Click to Download Bulletin 9 (PDF 269k). We have many resources in Spanish Here.

9 September: New jurisdiction pages for Guam and Guyana

We have added new jurisdiction pages for Guam and Guyana. Our jurisdiction pages describe, among other things, each jurisdiction's financial reporting framework: Guam. Companies in Guam follow the US GAAP issued by the Financial Accounting Standards Board (FASB) as the primary source of authoritative literature for financial reporting. As of now, there are still various differences between IFRSs and US GAAP, although convergence efforts are underway ongoing. Guyana. The Companies Act empowers the Institute of Chartered Accountants of Guyana (ICAG) to adopt accounting standards for Guyana that are mandatory for all companies. Until 2000, the ICAG had been considering International Accounting Standards (IASs) individually and adopting them, though at a later date than the effective date specified in the IAS. Effective 1 July 2000, the ICAG Council adopted a policy by which IFRSs automatically become effective in Guyana at the same time as they are effective internationally. Thus all companies are required to follow IFRSs. The Council is currently considering the adoption of the IFRS for SMEs. Links to all of our jurisdiction pages are Here.

8 September 2009: New Deloitte SEA e-newsletter on financial reporting

The Deloitte Southeast Asia (SEA) Assurance & Advisory Services Group has published the inaugural issue of a newsletter focussing on financial reporting issues from a Southeast Asia perspective. This newsletter is a collaborative effort among the Deloitte member firms operating in Brunei, Guam, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. The newsletter brings together recent updates on financial reporting developments both internationally and within the region, and features topical matters that would be of interest to our clients and our professionals. Many of our clients have asked for more information about the implications from recent pronouncements, industry-specific accounting issues, and differences between IFRSs and local GAAP. This newsletter is directed towards meeting these requests. This first issue sets the scene with an overview of the financial reporting framework of the jurisdictions in the region and their stage of IFRS adoption. Besides the news in brief on IFRSs and local standard-setting activities, Alan Nisbet, Head of Assurance & Advisory, Deloitte Southeast Asia, provides his thoughts on how the key changes in IFRSs will affect financial reporting for 2009. Click to download Point of View Newsletter Issue No 1 (PDF 328k) An archive of past issues will be available on our new Point of View Page.

8 September: IFRS for SMEs: A Summary from SAICA

The South African Institute of Chartered Accountants (SAICA) has published IFRS for SMEs: A Summary – a 26-page overview of the IFRS for SMEs. On 13 August 2009, South Africa became the first country in the world to adopt the IFRS for SMEs. It is effective immediately for all entities that are not publicly accountable and that do not elect to follow full South African standards, which are identical to full IFRSs. SAICA's new overview includes a 'bullet point' summary of each of the 35 sections of the IFRS for SMEs. It was prepared jointly by SAICA and W Consulting. We are grateful to them for giving us permission to post it on IAS Plus. Click to download IFRS for SMEs: A Summary (PDF 223k).

8 September: 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 30 July 2009 Stay Tuned Online IFRS and UK GAAP Update archive is now available, covering the following topics: IFRS for Small and Medium-sized Entities ED 2009/5 Fair-value Measurement DP2009/2 Credit Risk in Liability Measurement IAS 39 The Sequel ED 2009/6 Management Commentary FRS 30 Heritage Assets and other UK developments Other IFRS Developments To access the recording Click Here (35.4mb WMV). When you click on this link, what happens will depend on how your computer is configured. The webcast may open directly in your media player, or you may be asked whether you want to open or save the file, or you may only be given a choice to save the file. You can play a saved file by clicking on it. There's a permanent link on our UK Country Page.

7 September 2009: Agenda for WSS meeting 10-11 September 2009

On Thursday and Friday 10-11 September 2009, the IASB will host a meeting of World Accounting Standard-Setters (WSS) at the Renaissance Chancery Court Hotel, 252 High Holborn, London. The meeting will be open to public observation. Presented below is the agenda for the meeting. IASB Meeting with World Standard Setters – Agenda 10-11 September 2009, Renaissance Chancery Court Hotel, London Thursday 10 September 2009 (9:30am to 17:45pm) Morning 9:30-13:00 Welcome, Sir David Tweedie, IASB Chairman IASB planning and priorities Accounting and the financial crisis: Consolidation and derecognition Consolidation project update Derecognition project update Break-out discussions of consolidation and derecognition (five groups) Afternoon 14:00-17:45 Discussion group feedback (from morning) – consolidation and derecognition Revenue recognition Concurrent sessions: Option 1 - IFRS for SMEs Option 2 - Choose one of: Financial instruments with characteristics of equity Leases Measurements under consideration (cross-cutting) Friday 11 September 2009 (9:00am to 16:15pm) Morning 9:00-13:00 Accounting and the financial crisis: Financial instruments (recognition and measurement) IASB project update FASB project update Break-out discussions (five groups) Discussion group feedback Afternoon 14:00-16:15 Concurrent sessions: Option 1 - IFRSs Technical Update and Q&A Option 2 - Choose one of: Financial instruments with characteristics of equity Leases Income taxes Measurements under consideration (cross-cutting) Implementation activities update Concluding comments

7 September 2009: Deadline reminder – financial instruments ED

We remind you that comments are due on 14 September 2009 on the Exposure Draft: Financial Instruments: Classification and Measurement. The ED was issued by the IASB on 14 July 2009 as the first part of its three-phase project to replace IAS 39 Financial Instruments: Recognition and Measurement. The Board decided to address classification and measurement of financial assets and financial liabilities first because they form the foundation of a standard on reporting financial instruments. Moreover, many of the concerns about IAS 39 that have been expressed during the financial crisis relate to its classification and measurement requirements. The IASB plans to finalise the classification and measurement proposals in time for non-mandatory application in 2009 year-end financial statements. The other two phases of the IAS 39 project are addressing Impairment and Provisioning and Hedge Accounting. Additionally, the Board's project on Derecognition of Financial Instrument will also result in amendments to IAS 39. The IASB plans to complete the replacement of IAS 39 during 2010, although mandatory application will not be before January 2012. The classification and measurement ED proposes that a financial asset or financial liability would be measured at amortised cost if two conditions are met: The instrument has basic loan features and it is managed on a contractual yield basis. A financial asset or financial liability that does not meet both conditions would be measured at fair value. This would include all investments in equity instruments (and derivatives on those equity instruments) – including those that do not have a quoted market price in an active market. The existing IAS 39 classifications of 'held to maturity' and 'available for sale' would be eliminated.

6 September 2009: Agenda for September 2009 IASB meeting

The IASB will hold its September 2009 regular monthly meeting at its offices in London on Tuesday to Friday 15-18 September 2009. The meeting will be open to public observation and will be webcast. Presented below is the agenda for the meeting. IASB Board Meeting Agenda 15-18 September 2009, London Tuesday 15 September 2009 Post-employment Benefits Conceptual Framework: Conceptual Framework – Objectives and Qualitative Characteristics Conceptual Framework – Reporting Entity Revenue Recognition Leases Wednesday 16 September 2009 (morning only) Liabilities – Amendments to IAS 37 Derecognition Thursday 17 September 2009 Classification of Rights Issues (proposed amendment to IAS 32) Related Party Disclosures Financial Statement Presentation – Field tests and FASRI study [education session] Financial Instruments with Characteristics of Equity Financial Instruments: Replacement of IAS 39: Impairment Credit Risk in Liability Measurement - Comment letter analysis Friday 18 September 2009 Financial Statement Presentation – Definitions, management approach, net debt, discontinued operations Financial Instruments: Replacement of IAS 39: Hedge accounting Financial Instruments: Classification and Measurement – Comment letter analysis Insurance Contracts

4 September 2009: Newsletter on annual improvements ED

On 26 August 2009, the IASB published an Exposure Draft proposing improvements to the following eleven IFRSs: IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 3 Business Combinations IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 7 Financial Instruments: Disclosures IAS 1 Presentation of Financial Statements IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 27 Consolidated and Separate Financial Statements IAS 28 Investments in Associates IAS 34 Interim Financial Reporting IAS 40 Investment Property IFRIC 13 Customer Loyalty Programmes Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – IASB Releases Omnibus Exposure Draft of Annual Improvements (PDF 71k) explaining the proposed improvements. Click to go to the Project Page on the IAS Plus Website. Past issues of all IAS Plus newsletters are Here.

4 September 2009: Heads Up on FASB's income tax guidance

Deloitte United States has published a Heads Up Newsletter (PDF 108k) titled Deferred No Longer: FASB Provides Guidance on Accounting for Uncertainty in Income Taxes and Eliminates Certain Disclosure Requirements for All Nonpublic Entities. When FASB originally adopted its guidance on uncertainty in income taxes (Accounting Standards Codification (ASC) Section 740), it had deferred that guidance for certain nonpublic entities until the first annual financial statements for financial years beginning after 15 December 2008. That deferral was intended to give the FASB time to develop guidance that it has now published in the form of Accounting Standards Update (ASU) 2009-06. Therefore, nonpublic entities are required to apply all of the recognition and measurement principles of ASC 740. However, the FASB has provided those entities with relief from some of the income tax disclosure requirements. The IASB has proposed similar principles for recognising and measuring uncertainty in income taxes in its March 2009 Exposure Draft Income Tax. The IFRS for SMEs contains similar disclosure relief.

3 September 2009: Representatives of IASB and ASBJ will meet

Representatives of the IASB and the Accounting Standards Board of Japan will meet at the IASB's office in London on Monday 7 September 2009 from 08:30 to 15:30. The meeting is open to public observation. The agenda for the meeting is: Measurement of Liabilities Financial Instruments – Classification and Measurement (issues other than discussed in the above session) and Impairment Other Comprehensive Income and Recycling/Non-recycling – a cross-cutting issue among Financial Statement Presentation, Financial Instruments (Classification and Measurement), and Post-employment benefits More Info on IASB website.

3 September 2009: IFRS for SMEs 'goes live'

We have posted an article by Paul Pacter, the IASB's Director of Standards for SMEs (who is also webmaster of IAS Plus) about the new IFRS for SMEs. The article, titled IFRS for Most Private Companies Goes Live (PDF 726k), was published in Financial Executive magazine September 2009 issue. The article discusses why the IASB took the project on, benefits of the new standard, the kinds of simplifications of full IFRSs that are reflected in the SME standard, and issues in transitioning from an SME's existing GAAP to the IFRS for SMEs. "With the issuance of IFRS for SMEs, IASB has eased the complexity of financial statements for thousands of companies worldwide – as well as for those who use those financial statements to make credit, lending and investment decisions." The article is copyright by Financial Executives International, and we have posted it on IAS Plus with their kind permission.

3 September 2009: Guía Rápida NIC/NIIF 2009 – Argentina

Deloitte Argentina has published Guía Rápida NIC/NIIF 2009 – the Argentine Spanish-language version of our very popular IFRSs in your Pocket booklet. The Argentine publication is based on the 2009 English version but has been updated to include summaries of all IFRSs through June 2009. It also includes news regarding the IFRS implementation process in Argentina (2011 is the year of mandatory adoption for some public companies, and optional for other entities), contact names of our local specialists, information about local standard-setters, discussion of issues relating to translation of IFRSs into Spanish, and a foreword by Fermín del Valle, director of professional practice of Deloitte's Latin American countries group, among other additions to the English language version. Click to download Guía Rápida NIC/NIIF 2009 - Argentina (PDF 1,209k).

3 September 2009: PCAOB Q&A on references to standards

The US Public Company Accounting Oversight Board has published Staff Questions and Answers on References to Authoritative Accounting Guidance in PCAOB standards (PDF 35k). As a result of FASB's new Codification, some PCAOB standards include descriptions of and references to accounting requirements that are no longer current. Also, some PCAOB standards include descriptions of accounting requirements that may not represent the final language as adopted in the Codification. The Q&A alert auditors that the FASB Codification now represents the single source of authoritative US GAAP. Auditors should look to the FASB Codification and the rules of the US Securities and Exchange Commission for authoritative US GAAP guidance for SEC registrants, even though PCAOB standards may contain descriptions of and references to pre-Codification US GAAP.

2 September 2009: Heads Up on FASB's proposed fair value disclosures

Deloitte United States has published a Heads Up Newsletter (PDF 96k) explaining FASB's Proposals for new and revised disclosures about fair value measurements (see our News Story of 1 Sept 2009).

2 September 2009: We comment on 'credit risk' discussion paper

Deloitte Touche Tohmatsu has submitted comments on the IASB Discussion Paper Credit Risk in Liability Measurement. We support the Board's effort to address this critical topic and believe that future standard setting would benefit if the IASB were to define a consistent set of principles for when credit risk should be reflected in liability measurements. To assist in the development of such a set of principles, we believe that the Board should first define the various potential measurement attributes that could be applied to liabilities as part of Phase C of its Conceptual Framework Measurement project. Our comment letter outlines the measurement attributes that we believe the Board should consider (see first box below) and proposes a set of principles governing when the measurement of a liability should incorporate credit risk (an excerpt is in the second box below). Click to download Our Letter of Comment (PDF 40k). All past letters comment are Here. Measurement Attributes for Liabilities At this time, we support further consideration of four different measurement attributes for liabilities. 1. Fair value – Standard-setters define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, i.e., an exit price. Because fair value, as proposed to be defined by the IASB, is a price in a current market transaction, this measurement attribute reflects the impact of the entity's own credit risk. 2. Amortised cost. – For a liability, amortised cost is 'the amount at which the liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount'. Typically, this measurement attribute reflects the entity's own credit risk at initial recognition. For example, when a financial liability is measured at the amount of cash proceeds received, the amount of cash proceeds generally reflects the entity's credit risk. However, subsequent changes in credit risk are not reflected in subsequent measurements. 3. Current Measurement Using a Frozen Credit Spread – This measurement attribute uses a present value technique that discounts the expected future cash flows at a current benchmark rate (such as a risk free rate, an interbank benchmark rate, or a bank prime rate) plus (or, in some circumstances, minus) the spread that applied to the liability at initial recognition. Subsequent measurements reflect changes in the benchmark rate; but changes in credit risk are ignored. Similar to amortised cost, this measurement attribute reflects the entity's own credit risk at initial recognition, but subsequent changes in credit risk are not reflected in subsequent measurements. 4. Current Measurement Using a High Quality Credit Approach – This measurement attribute uses a present value technique that discounts the expected future cash flows using a current high quality discount rate, for example, the current risk free rate or the current discount rate for high quality corporate bonds. This measurement attribute excludes the effect of the specific credit risk of the issuer both at initial recognition and in subsequent measurements. Excerpt from Our Comments on Measurement of Liabilities Subsequent to Initial Recognition In determining the best subsequent measurement attribute, the board should consider the relevance of changes in the issuers own credit to investors. For example, for most debt obligations, the issuer does not have the practical ability to realise gains associated with decreases in their credit worthiness. They are also not required to absorb losses associated with increases in their credit worthiness in debt obligations. Thus, changes in an issuer's own credit is generally not relevant and should not be incorporated in the subsequent measurement of most debt obligations. This would lead to debt obligations being measured at amortised cost or a current measurement using a frozen credit spread (whether fixed rate debt obligations should be measured using a frozen or current benchmark interest rate is not a topic for this Discussion Paper). Where the issuer could realise changes in value of a liability due to changes in its own credit risk, a measurement attribute incorporating current risk (e.g., fair value) may be appropriate.

2 September 2009: Accounting Roundup – August 2009

We have posted the August 2009 Edition of Accounting Roundup (PDF 245k) 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: Consolidation FASB Issues Proposal Regarding Ownership Provisions in the Consolidation Subtopic Fair Value FASB Issues Proposal on Fair Value Measurements and Disclosures FASB Issues Accounting Standards Update Regarding Measuring Liabilities at Fair Value Financial Instruments IASB Proposes Guidance on Classification of Rights Issues IFRIC Proposes Interpretation on Extinguishing Financial Liabilities With Equity Instruments Other Accounting IASB Proposes Changes as Part of Its Annual Improvements Project SEC Matters SEC Announces James L. Kroeker as SEC Chief Accountant SEC Sends Sample Letter to Public Companies on MD&A Disclosure Regarding Provisions and Allowances for Loan Losses SEC Releases Interpretive Guidance Regarding the FASB's Codification SEC's Division of Corporation Finance Issues Compliance and Disclosure Interpretations SEC Issues Orders Approving PCAOB Rule Proposals SEC Staff Issues Notice Regarding Upcoming EDGAR Release 9.17 and XBRL Validation You will find past issues of Accounting Roundup Here.

2 September 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 7 – links can be found Here. We have now posted No 8: Bulletin No 8 (1 September 2009) addresses some of the more complex financial instruments issues, including fair valuation and derecognition, in the IFRS for SMEs. Click to Download Bulletin 8 (PDF 175k). We have many resources in Spanish Here.

1 September 2009: Comment deadline reminder – rights issues ED

We remind you that comments are due on 7 September 2009 on the Exposure Draft: Classification of Rights Issues. The ED was issued by the IASB on 6 August 2009. The ED proposes to amend IAS 32 Financial Instruments: Presentation to clarify the accounting treatment when rights issues are denominated in a currency other than the functional currency of the issuer. Current practice appears to require such issues to be accounted for as derivative liabilities. The proposals state that if such rights are issued pro rata to an entity's existing shareholders for a fixed amount of currency, they should be classified as equity regardless of the currency in which the exercise price is denominated. The IASB plans to issue the final amendment before the end of 2009 with early application permitted. If adopted the amendment will apply retrospectively.

1 September 2009: US data suggest importance of global standards

New US Treasury Department data show that US owners held over US$4.2 trillion of foreign securities at 31 December 2008, including US$2.7 trillion of foreign equity securities and another US$1.3 billion of foreign long-term debt. On the flip side, foreign owners held around US$3.0 trillion of US equities and US$6.5 trillion of US long-term debt. These data are further evidence for a single set of accounting standards for both US and non-US reporting entities. US Holdings of Foreign Securities: (US$ billion) Source: US Treasury Department, preliminary data released 31 August 2009 Type of Security 31 Dec 2007 31 Dec 2008 Long-term Securities 6,855 4,009 –   Equity –   5,248 –   2,748 –   Long-term debt –   1,607 –   1,261 Short-term debt securities 357 282 Total 7,212 4,291 Foreign Holdings of US Securities: (US$ billion) Source: US Treasury Department, data released April 2009 Type of Security 30 June 2007 30 June 2008 Long-term Securities 9,136 9,463 –   Equity –   3,130 –   2,969 –   Long-term debt –   6,007 –   6,494 Short-term debt securities 635 858 Total 9,772 10,322 These and other similar data are on our Statistics Page.

1 September 2009: FASB proposes fair value disclosures for 2009

The US Financial Accounting Standards Board (FASB) has issued an exposure draft (ED) of a proposed Accounting Standards Update intended to improve disclosures about fair value (FV) measurements. Proposed new and revised disclosures include: Effect of reasonably possible alternative Level 3 measurements (measurements based on unobservable inputs) that could increase or decrease FV significantly – sometimes called sensitivity disclosures Transfers of assets or liabilities among Level 1, 2, and 3 measurements Information about gross purchases, sales, issuances, and settlements of assets or liabilities whose FV is measured using a Level 3 FV measurement Disaggregated disclosures of FV for each class of assets and liabilities Valuation techniques and inputs used to measure FV using Level 2 and 3 measurements The proposed disclosures are similar to those already required by IFRS 7 Financial Instruments: Disclosures. With the exception of the sensitivity disclosures (item 1 above), the new disclosures would be required for interim and annual reporting periods ending after 15 December 2009. The Level 3 sensitivity disclosures would be effective for interim and annual reporting periods ending after 15 March 2010. FASB's deadline for comments on the proposals is 12 October 2009. Click for FASB News Release (PDF 98k). The news release includes a link to download the ED.

1 September 2009: Deloitte Canada Countdown IFRS transition newsletters

Deloitte Canada has published the August 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: How Fair is Fair Value? 'The Real Deal' – real issues and solutions on IFRS transition relating to Investment Property CSA Staff Notice 33-314 Relating to Non-self Regulatory Organizations Deloitte Publications and Events and How to Access Them An Update on Current IFRS events – including various important EDs and Discussion Papers Click below for: August 2009 Edition Countdown Newsletter – English (PDF 2,062k) August 2009 Edition Countdown Newsletter – French (Compte à Rebours) (PDF 1,751k) You will find more information about financial reporting in Canada on our Canada Page.