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30 November 2011: IASB meets with CIS and Baltic States for IFRS update
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On 28 and 29 November 2011, members of the IFRS Foundation and the IASB met with representatives of professional accounting and auditing bodies and ministries from the Commonwealth of Independent States (CIS) and the Baltic States. The meetings updated these countries on current projects, and the direction and future agenda of the IASB. The meeting also provided a forum to discuss the use of IFRSs within these jurisdictions, including the adoption of IFRSs and the IFRS for SMEs, as well as the process for translating the standards.
The representatives also met with the International Auditing and Assurance Standards Board (IAASB) and the International Federation of Accountants (IFAC) to discuss adoption and implementation of International Standards on Auditing (ISAs).
Click for the IASB press release (link to IASB website). An IAASB press release is also available (link to IFAC website).
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28 November 2011: Stay Tuned Online — IFRS and UK GAAP update
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The Deloitte London IFRS Centre of Excellence is running a series of hour-long Internet-based financial reporting updates, aimed at helping finance teams keep up to speed with IFRSs and other financial reporting issues. Each update lasts no more than an hour, and sessions are normally held three times a year, approximately at the end of March, July, and November. We intend to make a recording of each session available on IAS Plus for a period of at least four months from the date of the presentation. The topics covered in the November 2011 webcast:
- A review of UK corporate reporting
- Latest IFRS developments
- IAS 19(2011) Employee Benefits — update
- The future of UK reporting including UK GAAP
- The IASB’s revised revenue proposals
To access the recording click here. There's a permanent link on our UK country page.
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28 November 2011: Updated EFRAG 'endorsement status report'
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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
28 November 2011 (PDF
194k). Currently, the following twelve IASB pronouncements await endorsement action:
- IFRS 9 Financial Instruments
- IFRS 10 Consolidated Financial Statements
- IFRS 11 Joint Arrangements
- IFRS 12 Disclosures of Interests in Other Entities
- IFRS 13 Fair Value Measurement
- IAS 27 Separate Financial Statements (2011)
- IAS 28 Investments in Associates and Joint Ventures (2011)
- Amendments to IAS 12 Deferred tax: Recovery of Underlying Assets
- Amendments to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters
- Amendments to IAS 1 Presentation of Items of Other Comprehensive Income
- Amendments to IAS 19 Employee Benefits
- IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
You can always find the endorsement status report
Here.
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28 November 2011: EU formally adopts IFRS 7 amendments
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The European Union has published the
Commission Regulation (EC) No 1205/2011 endorsing the
amendments to IFRS 7 Financial Instruments: Disclosures published by the IASB on
7 October 2010.
The amendments will allow users of financial statements to improve their understanding of
transfer transactions of financial assets (for example, securitisations), including understanding
the possible effects of any risks that may remain with the entity that transferred the assets.
The amendments also require additional disclosures if a disproportionate amount of transfer
transactions are undertaken around the end of a reporting period. |
25 November 2011: ESMA statement on sovereign debt in IFRS financial statements
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The European Securities and Markets Authority (ESMA) has posted to its website a statement
concerning the accounting treatment in relation with sovereign debt
exposures in connection with current market developments. Special consideration is
given to the accounting treatment of Greek sovereign debt.
In July 2011, ESMA published a public statement on disclosures related to sovereign debt to be included in IFRS financial statements. In the statement, ESMA pointed out the need for enhanced transparency in interim and annual financial statements for European listed issuers using
IFRSs.
Since then ESMA conducted a study on the accounting treatment
of Greek sovereign debt in the half-year financial statements of
financial institutions listed in regulated European markets.
The statement published today is divided into two sections:
- Section 1 is directed toward annual financial statements for
reporting periods ending 31 December 2011. It contains elements that
should be considered by issuers and their auditors in relation to
sovereign debt exposures. Recommendations are intended to ensure
consistent application of IFRS requirement across Europe; they are
informed by findings from the study on the accounting treatment of Greek
sovereign debt in the half-year financial statements for
reporting periods ending 30 June 2011.
- Section two details the findings from the study on the accounting
treatment of Greek sovereign debt in the half-year financial statements
and ESMA's assessment of them. It also lists elements that should have
been considered by issuers and their auditors in relation to sovereign
debt exposures in those statements. Depending on future economic
developments, these should be considered when preparing or auditing the
upcoming year-end financial statements.
Please click for the
Public Statement:
Sovereign Debt in IFRS Financial Statements (PDF, 3.06mb, link to
ESMA website).
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25 November 2011: Remarks by IASB Chairman Hans Hoogervorst at the IFRS Foundation Conference in Melbourne
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On 24 November 2011, IASB Chairman Hans Hoogervorst addressed the IFRS Foundation Conference in Melbourne, Australia. In his speech, he discussed a wide number of topics, including the adoption of IFRSs in the Asia-Pacific region, the current status of the financial instruments project, and the prospects for global adoption of accounting standards.
Mr Hoogervorst noted the adoption of IFRSs across the Asia-Oceania region, starting with countries such as Australia which adopted IFRS from 2005, and the establishment of Asian-Oceanian Standards Setters Group (AOSSG).
In relation to the financial instruments project, Hoogervorst gave a candid assessment of the current status, noting it is a "difficult project", lamenting that the IASB and FASB "ended up in different places" on offsetting, but also noting the good progress in areas such as hedge accounting and impairment. He also discussed the IASB's recent decision to conduct a limited review of IFRS 9 Financial Instruments, noting the IASB "gradually came to the conclusion that we could make a lot of progress on both ... issues – insurance and convergence - by adapting IFRS 9 in a limited way".
Hoogervorst concluded his speech by providing an assessment in relation to the question of the adoption of IFRS in various countries, discussing the 'big four' of China, Japan, India, and the United States. Reflecting upon the work plan reports recently released by the United States Securities and Exchange Commission (SEC), Mr Hoogervorst made the following remarks:
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The SEC staff has nearly completed its thorough and comprehensive assessment of the issues related to US adoption of IFRSs. These latest papers examine how well the standards are being applied by companies reporting using IFRSs and the remaining differences between IFRSs and US GAAP.
While this first paper concluded that the financial statements analysed generally complied with IFRSs, there were inconsistencies observed – mainly due to a lack of disclosure of accounting policies and how individual standards had been applied. Indeed, this is a common finding for regulatory reviews.
The Wall Street Journal noted the findings of this study were similar to a previous SEC study of Fortune 500 companies using US GAAP. The problem of inconsistent application exists whether companies use IFRSs or US GAAP...
The second paper, examining the differences between IFRSs and US GAAP, contains no major surprises. The paper recognises the tremendous progress that the boards have made in bringing IFRSs and US GAAP into alignment. However, the paper also shows how quite a few differences remain, particularly in the detail. Many of these differences are not very important. But getting rid of them through a process of convergence could take up many, many years.
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Hoogervorst also noted the IASB-FASB convergence process has been extremely useful in improving IFRSs and US GAAP, however, he also observed that convergence "does not always result in the highest quality outcome. It has served its purpose, but now it is time to move on."
Click for the speech transcript (link to IASB website).
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24 November 2011: ESMA replies to IASB agenda
consultation
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The European Securities and Markets Authority (ESMA) has posted to its website a comment letter
on the IASB's Agenda Consultation 2011.
Even though ESMA believes that this consultation can provide additional
input for the agenda setting process, it does not "consider the consultation to be the basis on which to
determine what projects, and the scope of these, the IASB should work on
for the coming years".
Apart from requesting a period of calm in changes to
accounting standards (which has been asked for in many comment letters
to the IASB) and pointing out that the major projects the IASB is
currently working on (revenue recognition,
leases,
insurance contracts,
financial instruments) will "go well beyond 2011", ESMA comments that
the IASB has pressing business on its hands that does not need to be
consulted about.
Three aspects ESMA mentions specifically:
- A fundamental debate consisting of conceptual and practical issues on what
constitutes performance is necessary and should be undertaken by the IASB as
soon as possible;
- The IASB should restart its Financial Instruments with Characteristics of Equity project
identifying the characteristics that should be present in an instrument
for it to be classified as either an equity or a liability instrument;
and
- We urge the Board to provide guidance in the area of Business Combinations Between Entities Under Common Control and
Extractive Industries.
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Please click for the
ESMA's comment letter (PDF 3.77mb, link to ESMA website). |
23 November 2011: IASB podcast on insurance
contracts
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The IASB has made a podcast on the current state of debate in the
IASB/FASB joint project on insurance
contracts available. Patrick Finnegan, IASB member, and Joanna
Yeoh, Technical Manager, report on developments in the project following the IASB meeting on 15 November 2011 and joint IASB/FASB meeting on 16 November 2011.
To listen to the podcast, please click
here
(link to IASB website). |
23 November 2011: Deadline reminder – Third batch of SMEIG Q&As and
IASB agenda consultation
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We remind you that comments on the following two documents
are due on 30 November 2011: Third batch of SME Implementation Group questions and answer documents
and Request for Views Agenda Consultation 2011.
The SME Implementation Group (SMEIG) develops non-mandatory guidance
on the IFRS for SMEs in the form of questions and
answers (Q&As). In September 2011 a third batch of Q&As on draft guidance related to the implementation IFRS for
SMEs was published. Also open for comment is the
fourth batch of Q&As
published two days ago.
On 26 July 2011, the International Accounting Standards Board (IASB) launched a public consultation to seek
broad public input on the strategic direction and overall balance of its future work programme.
The IASB thinks that its future work should fall into broad categories: 'Developing financial reporting' and 'Maintaining' existing IFRSs.
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22 November 2011: IASB and IFAC agree to collaborate on public and private accounting standards
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The IASB and the International Federation of Accountants (IFAC) have issued a Memorandum of Understanding (MoU), agreeing to co-operate in developing private and public sector accounting standards. This MoU was developed to ensure greater consistency in the boards' standard-setting activities. In the MoU, the boards lay out a 'communication and co-operation process' which provides information on meetings, projects, crises, programs, soliciting feedback and more.
Click for IASB press release (link to IASB website).
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22 November 2011: Malaysia finalises IFRS-compliant standards
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The Malaysian Accounting Standards Board (MASB) has issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework), which is a fully IFRS-compliant framework and equivalent to IFRSs. The new MFRS Framework represents the finalisation of proposals published in June 2011.
The MFRS Framework comprises Standards as issued by the International Accounting Standards Board (IASB) that are effective on 1 January 2012. It also comprises new and revised Standards recently issued by the IASB that will be effective after 1 January 2012 such as Standards on financial instruments, consolidation, joint arrangements, fair value measurement and employee benefits, among others. The adoption of the MFRS Framework will allow Malaysian entities to be able to assert that their financial statements are in full compliance with IFRSs.
The MFRS Framework is to be applied by all Malaysian entities other than private entities for annual periods beginning on or after 1 January 2012. However, certain 'transitioning entities' (essentially those involved in agriculture and real estate construction) will be allowed to defer adoption of the new MFRS Framework for an additional one year, so that it will be mandatory for annual periods beginning on or after 1 January 2013.
Click for MASB press release (link to MASB website).
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21 November 2011: SME Implementation Group publishes draft Q&As for comment
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The SME Implementation Group (SMEIG) has published two draft questions and answers (Q&As) on the IFRS for
SMEs. Click for access to the Q&As:
Q&As are non-mandatory guidance. Comments are due by 31 January 2012.
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21 November 2011: Updated EFRAG 'endorsement status report'
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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
18 November 2011 (PDF
193k). Currently, the following thirteen IASB pronouncements await endorsement action:
- IFRS 9 Financial Instruments
- IFRS 10 Consolidated Financial Statements
- IFRS 11 Joint Arrangements
- IFRS 12 Disclosures of Interests in Other Entities
- IFRS 13 Fair Value Measurement
- IAS 27 Separate Financial Statements (2011)
- IAS 28 Investments in Associates and Joint Ventures (2011)
- Amendments to IFRS 7 Financial Instruments: Disclosures
- Amendments to IAS 12 Deferred tax: Recovery of Underlying Assets
- Amendments to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters
- Amendments to IAS 1 Presentation of Items of Other Comprehensive Income
- Amendments to IAS 19 Employee Benefits
- IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
You can always find the endorsement status report
Here.
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21 November 2011: Latest batch of editorial corrections to IFRSs released by the IASB
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The IASB has posted to its website a new batch of Editorial Corrections to IFRSs.
This batch makes editorial corrections and changes to ED/2011/4 Investment Entities (issued August 2011), IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (issued March 2004), IFRS 7 Disclosures – Transfers of Financial Assets (Amendments to IFRS 7) (issued October 2010), IFRS 9 Financial Instruments, IFRS 13 Fair Value Measurement (issued May 2011), IAS 19 Employee Benefits (issued June 2011), Bound Volume (Red Book) 2011, Bound Volume (Education) 2011, Bound Volume (Blue Book) 2012 and IFRS for SMEs (issued July 2009). |
18 November 2011: EFRAG draft comment letter on
government loans
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The European Financial Reporting Advisory Group (EFRAG) has issued its draft comment letter on
the IASB Exposure Draft ED/2011/5 Government Loans (Proposed amendments to IFRS 1).
EFRAG is supportive of what the proposed amendments are trying to achieve, but it believes that the Board should limit the scope of the proposed transitional relief to entities that, under their previous GAAP, accounted for government loans as liabilities.
Comments on the letter are invited by 27 December 2011. The draft comment letter can be downloaded
via the
press release on EFRAG's website.
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18 November 2011: New translations of IFRSs
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The IFRS Foundation has announced that translations of IFRSs 2011
into French and Spanish are now available on the IASB's website. The files
correspond to the text used for the adoption of IFRSs into law, and do not
include the accompanying material such as the Bases for Conclusions and
Implementation Guidance.
Please click for:
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17 November 2011: Deloitte comment letter on agenda consultation
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Deloitte's IFRS Global Office has submitted a letter of comment to the International Accounting Standards Board (IASB) on its Request for Views on its Agenda Consultation 2011.
In the comment letter, we agree with the agenda and highlight several key points in the Board's strategic direction:
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We agree with the Board that, as an immediate priority, it must dedicate all necessary resources to completion of the projects on revenue from contracts with customers, leases, insurance contracts and financial instruments. Given the scale of these four projects, a realistic allocation of significant resources to other projects can be made only once these priority projects have been substantially completed.
The continued development and refinement of the Conceptual Framework for Financial Reporting (2010) is critical to provide a clear set of principles to underpin individual standards. The Framework should, however, remain a ‘living document’ to be assessed as new standards are developed. In this way, the Framework can evolve as the global financial reporting environment changes.
The development of a clear framework for disclosures in financial statements is critical and urgent. This should be undertaken separately from, and with more urgency than, any project on presentation.
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Click to Download our Comment Letter on Request for Views on its Agenda Consultation 2011 (PDF 126k). All of our past comment letters are here.
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17 November 2011: Final notes from the November IASB meeting
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The IASB's regular monthly meeting was held on 15-16 November 2011 in London, part of it a joint meeting with the FASB. We have posted Deloitte observer notes from the remaining session held on Wednesday (click through for direct access to the notes):
Wednesday, 16 November 2011 (other sessions)
Click here to go to the preliminary and unofficial
Notes Taken by Deloitte Observers for the entire meeting.
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17 November 2011: SEC releases reports on IFRS in practice and US GAAP-IFRS differences
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The staff of the United States Securities and Exchange Commission (SEC) have released two additional Staff Papers as part of the SEC's work plan for the consideration of incorporating IFRSs into the Financial Reporting System for U.S. Issuers.
Analysis of IFRS in Practice
The first paper, An analysis of IFRS in Practice, presents the Staff's observations regarding the application of IFRS in practice, based on an analysis of the most recent annual consolidated financial statements of 183 companies across 36 industries which prepare financial statements in accordance with IFRSs. The companies were selected from the Fortune Global 500 (the top 500 companies by revenue) and represented all those which prepared financial statements in accordance with IFRS in English. The 183 companies were domiciled in 22 countries, with the majority (approx 80%) being domiciled in the European Union, but with China and Australia also being represented with more than five companies.
The Staff Paper summarises the research as follows:
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The Staff found that company financial statements generally appeared to comply with IFRS requirements. This observation, however, should be considered in light of the following two themes that emerged from the Staff’s analysis:
- First, across topical areas, the transparency and clarity of the financial statements in the sample could be enhanced. For example, some companies did not provide accounting policy disclosures in certain areas that appeared to be relevant to them. Also, many companies did not appear to provide sufficient detail or clarity in their accounting policy disclosures to support an investor’s understanding of the financial statements, including in areas they determined as having the most significant impact on the amounts recognized in the financial statements... In some cases, the disclosures (or lack thereof) also raised questions as to whether the company’s accounting complied with IFRS....
- Second, diversity in the application of IFRS presented challenges to the comparability of financial statements across countries and industries. This diversity can be attributed to a variety of factors. In some cases, diversity appeared to be driven by the standards themselves, either due to explicit options permitted by IFRS or the absence of IFRS guidance in certain areas. In other cases, diversity resulted from what appeared to be noncompliance with IFRS... While country guidance and carryover tendencies may promote comparability within a country, they may diminish comparability on a global level.
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IFRS - U.S. GAAP comparison
A second paper, A Comparison of U.S. GAAP and IFRS, to provide an assessment of whether there is "sufficient development and application of IFRS for the U.S. domestic reporting system" by inventorying areas in which IFRS does not provide guidance or where it provides less guidance than U.S. GAAP. The Staff reviewed U.S. GAAP accounting requirements and compared those requirements to equivalent or corresponding IFRS requirements, as applicable. The Staff omitted from its review any U.S. GAAP requirements and the IFRS equivalents that are subject to the ongoing joint standard-setting efforts either through the Memorandum of Understanding (MoU) joint standard-setting projects of the FASB and the IASB, or other areas where the FASB and IASB had agreed to work together.
The second Staff Paper notes the staff "generally noted that U.S. GAAP contains more detailed, specific requirements than IFRS" and notes the following fundamental differences between U.S. GAAP and IFRS:
- IFRS contains broad principles to account for transactions across industries, with limited specific guidance and stated exceptions to the general guidance
- Fundamental differences exist between the FASB and IASB conceptual frameworks, including their level of authority and the definition and recognition of assets and liabilities
The Staff Paper then provides a broad comparison of the requirements of U.S. GAAP and IFRS, highlighting notable differences. The report notes it does "not include an analysis of the impact that those differences, individually or collectively, may have on the quality of IFRS."
Click for:
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16 November 2011: Additional notes from the November IASB meeting
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The IASB's regular monthly meeting was held on 15-16 November 2011 in London, part of it a joint meeting with the FASB. We have posted Deloitte observer notes from the insurance session held on the first day of the meeting, along with most of the sessions from the second day (click through for direct access to the notes):
Tuesday, 15 November 2011 (other sessions)
Wednesday, 16 November 2011
Notes from Wednesday's joint session on Insurance Contracts will be posted soon.
Click here to go to the preliminary and unofficial
Notes Taken by Deloitte Observers for the entire meeting.
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16 November 2011: FAF comments on SEC 'condorsement' paper
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The Board of Trustees of the United States Financial Accounting Foundation (FAF), the oversight body for the Financial Accounting Standards Board (FASB), has written to the United States Securities and Exchange Commission (SEC) in relation to the SEC's May 2011 paper on the possible incorporation of International Financial Reporting Standards (IFRS) into U.S. GAAP (the 'condorsement' approach).
The FAF Board of Trustees recommend an IFRS incorporation approach that embraces the concepts of the 'condorsement' framework whilst also addressing concerns raised by various U.S. stakeholders. The submission notes:
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The recommended approach is premised on the belief that although the pursuit of a single set of global accounting standards is a worthy objective, a more practical goal for the foreseeable future is to achieve highly comparable (but not necessarily identical) financial reporting standards among the most developed capital markets that are based on a common set of international standards.
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The FAF Trustees offer many recommendations to 'refine' the condorsement approach, including:
- Active U.S. involvement in and support of international standard setting. This would include FASB (and other standard setters) having 'nonvoting observer rights' on the IASB, regular meetings between the IASB and FASB, and the FASB being responsible for IASB due process, outreach and other activities in the United States
- Evaluation criteria. The FASB would develop criteria for the possible endorsement of IASB standards into U.S. GAAP, including such aspects as investor primacy, independent standard setting, due process and benefits exceeding costs
- Role of FASB. The FASB would agree not to undertake separate projects on topics on the IASB's technical agenda, but would retain authority to set its own technical agenda. After completion of the existing convergence projects, the FASB would consider remaining major differences between US GAAP and IFRS and conduct thorough due process for potential incorporation of the IFRS requirements into U.S. GAAP.
The letter also discusses other topics such as funding of the IASB and further periodic reviews of the approach.
Click for full text of the FAF Trustees letter to the SEC (link to FAF website).
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15 November 2011: Notes from the November IASB meeting
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The IASB's regular monthly meeting is being held on 15-16 November 2011 in London, part of it a joint meeting with the FASB. We have posted Deloitte observer notes from most of the sessions held on the first day of the meeting (click through for direct access to the notes):
Tuesday, 15 November 2011 (other sessions)
Notes from the session on Insurance Contracts will be posted soon.
Click here to go to the preliminary and unofficial
Notes Taken by Deloitte Observers for the entire meeting.
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14 November 2011: Deloitte IFRS podcast on the new revenue recognition exposure draft
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Randall Sogoloff, Leader for Communications in the Deloitte IFRS Global Office, and Phil Barden, Leader for Deloitte’s Global Revenue Recognition team, discuss the new revenue recognition exposure draft Revenue from Contracts with Customers with Robert Bruce. They discuss the key changes that are proposed and provide insights into the likely effect they will have in practice. The podcast is available for download here (30 mins 13 mbs) or via iTunes; it is one of a series that will be posted to IAS Plus. All podcasts of the series are available here.
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14 November 2011: IASB and FASB publish revised revenue recognition exposure draft
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Today, the IASB and FASB published for comment Exposure Draft Revenue from Contracts with Customers, a revised draft standard that converges the revenue recognition standard for IFRSs and US GAAP. The goals of the exposure draft are to (1) improve financial reporting by creating a single revenue recognition standard, (2) clarify the principles for recognising revenue, and (3) create consistent principles that can be applied across various transactions, industries and capital markets.
The core principles of the 2010 exposure draft have remain largely unchanged. However, the boards have clarified and simplified the proposal in a number of areas:
- amending the principle for identifying separate performance obligations in a contract
- adding criteria to determine when a performance obligation is satisfied over time and, hence, when revenue is recognised over time
- simplifying the measurement of the transaction price
- aligning the accounting for product warranties more closely with existing requirements
- limiting the scope of the onerous test
- adding practical expedients for retrospective application of the proposals
- specifying the disclosures required for interim financial reports
Comment letters on the revised exposure draft are due by 13 March 2012.
Please click for:
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14 November 2011: EFRAG Update with summaries for the
late October conference call and the November EFRAG TEG meeting
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The European Financial Reporting Advisory Group (EFRAG) has released
the November 2011 issue of its EFRAG Update newsletter. On 26 October 2011, EFRAG held a meeting by public conference call. The EFRAG TEG meeting
was held 7 to 8 November 2011. Highlights of the meetings were an Invitation to Comment relating to the endorsement of
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine for use in the European Union and the
finalised EFRAG comment letter to the IASB on the
Exposure Draft ED/2011/2 Improvements to IFRSs.
Click for the
EFRAG Update (PDF
349k, link to EFRAG website).
Links to earlier issues are available
here. |
14 November 2011: New IVSC appointments
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The International Valuation Standards Council (IVSC) has announced a number of new appointments, following the annual general meeting of the organisation held in Hong Kong on 5 November 2011.
The new appointments include:
- IVSC Board of Trustees - Frank Vettese (incoming Managing Partner & Chief Executive, Deloitte Canada), Akihiro Watanabe (GCA)
- International Valuation Standards Board - Dr. Cindy Ma (Houlihan Lokey)
- International Valuation Professional Board - Chris Mercer (Mercer Capital Management), Professor Nick French (Oxford Brookes University), Greg Forsythe (Deloitte Financial Advisory Services, moving from Vice-Chair to Chair), Roy Farthing (Ernst & Young, new Vice-Chair).
Click for press release (link to IVSC website).
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11 November 2011: Updated IFAC guide to the audit of SMEs
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The Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) has published the third edition of its Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities. The implementation guide is intended to help practitioners understand and efficiently apply the clarified International Standards on Auditing (ISAs) to audits of small- and medium-sized entities (SMEs).
The updated guide is broken into two volumes. Volume 1 covers the core concepts of a risk-based audit; Volume 2 contains practical guidance on performing SME audits, including two case studies.
Click for IFAC press release (link to IFAC website). The guide may be downloaded from IFAC's website. |
11 November 2011: German Standard Setter announces new presidency and membership of new technical committees
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As reported earlier, unresolved questions of financing and membership basis had led the Accounting Standards Committee of Germany (ASCG) to terminate
in June 2010, effective 31 December 2010, the standardization agreement with Germany's
Ministry of Justice.
After months of debate and renewed efforts to find sustainable financing, the General Assembly of the ASCG found in
May 2011 that a German Standard
Setter can continue to exist. The new supervisory board held its
inaugural meeting in September 2011,
and today the members of the new technical committees and the new
presidency were announced.
Ms.
Liesel Knorr, President of the German Accounting Standards Board,
will continue as new president and will head the two new
technical committees – one for IFRSs and one for German
GAAP. Among the members appointed to the IFRS technical
committee is Dr. Andreas Barckow, head of Deloitte SE's IFRS Leadership Team,
head of Deloitte's Frankfurt IFRS Centre of Excellence and member of the Global IFRS Leadership Team (GILT)
of Deloitte.
More information on the new committees is available on the
ASCG website (German
/
English). More information on the
accounting framework in Germany is available on our
IAS Plus country page for
Germany.
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11 November 2011: Online investor survey on the
IASB's agenda consultation
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As part of its outreach activities in connection with its
Request for Views Agenda Consultation 2011, the IASB has created an online survey to understand from the investor community which areas of accounting are in the most urgent need of improvement.
The survey asks for views on the relative importance and urgency of the various projects suggested as additions to the IASB's agenda
and, more generally, what works and doesn't work in financial statements.
The IASB believes that the survey should take no longer than 20 minutes to complete.
It is available until Monday 19 December 2011 via the
IASB website. Comments on the IASB's agenda consultation are due by
30 November 2011.
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10 November 2011: DPOC publishes working draft of protocol for due process oversight
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The IFRS Foundation Trustees' Due Process Oversight Committee (DPOC) has posted to their website a working draft of a protocol for due process oversight. This document creates a framework for the Trustees to use when (1) reviewing the effectiveness of due process and (2) monitoring the IASB's compliance with due process.
The DPOC will publish a final draft of the operating protocol in 2012 for public comment, along with proposed enhancements to the Due Process Handbook.
Please click here to view the working draft on the IASB's website.
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10 November 2011: ESMA publishes 'Review of European enforcers on the implementation of IFRS 8'
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The European Securities and Markets Authority (ESMA) has released a Report on its post-implementation review of IFRS 8 Operating Segments. The Report discusses the application of IFRS 8 requirements by European issuers, and explores the areas posing significant challenges to investors, preparers and/or enforcers. The Report also provides ESMA’s tentative recommendations to enhance the application of the standard.
The conclusions reached by European enforcers in the Report are that '(i) the implementation
of IFRS 8 resulted in a fairly similar level of information compared to its predecessor IAS 14 and
that (ii) there is homogeneity in the issues faced by European enforcers when enforcing this standard. This
stems from a combination of weaknesses in the standard and a failure to fully comply with its requirements
by issuers.'
Please click here to read the Report on the ESMA website.
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10 November 2011: ESMA Consultation Paper on materiality
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The European Securities and Markets Authority (ESMA) has
published a consultation paper entitled Considerations of materiality in financial reporting.
The apparent differing views regarding the practical application of the concept of materiality amongst preparers, auditors, possibly users of the financial reports and, in some instances, accounting enforcers
is a recurring theme of discussions at the European Enforcers Coordination Sessions (a forum in which all European National Enforcers of financial information meet to exchange views and discuss experiences of enforcement of IFRS).
ESMA has therefore decided to publish a consultation paper in order to seek comments from interested parties on their understanding of various aspects of materiality in an effort to contribute to a consistent application of this important concept in financial reporting.
The consultation paper is structured around the chapters IFRS provisions, Characteristics of Primary Users and the Objective of Financial Reports, Attributes of the information, Errors, omissions and misstatements and aggregation, Note disclosures,
and Interim reports - each with detailed analyses and questions. An
annex to the paper (Annex II) provides a list of IFRS references to materiality and a list of selected
references to users of financial statements in IFRS.
Responses to the consultation paper should be submitted by 29 February 2012.
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10 November 2011: Summary of the October 2011 Trustees' meeting
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The Trustees of the IFRS Foundation have announced the conclusions of their meeting in Paris, France on 13 October 2011.
The Trustees discussed their own regional outreach activities, especially in Europe, and received reports of the Chair of the IASB
and the Chair of the IFRS Advisory Council. They also reviewed feedback received in response to the publication of the preliminary conclusions of the Trustees’ strategy review.
The Trustees also discussed the progress made in relation to
the appointment of a new Chair of the IFRS Foundation Trustees. A
shortlist of candidates has been agreed by the Trustees and the
Monitoring Board and the candidates were interviewed in the third
quarter of 2011. The Trustees will now submit their preferred candidate for approval by the Monitoring Board.
Please click
here to read the
summary on the IFRS Foundation's website. An audio recording of the meeting can be accessed by
clicking here.
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9 November 2011: IASB issues response to G20 conclusions
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The IASB has released an updated response to the conclusions reached at the G20 Leaders Summit held in Cannes, France on 3-4 November 2011. In the response document, the IASB details its progress in the following areas:
- Completed its review of off balance sheet financing
- Completed its reform of fair value measurement requirements
- Completed the first phase of the reform of financial instruments accounting
- Completed the majority of projects described by its Memorandum of Understanding with the FASB
- Significantly enhanced its outreach and stakeholder engagement activities
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9 November 2011: Standard setters from China, Japan and Korea meet
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Standard setters from China, Japan and the Republic of Korea met in Xiamen, China on 26 October 2011. Representatives were present from the China Accounting Standard Committee (CASC), Accounting Standards Board of Japan (ASBJ), Korea Accounting Standards Board (KASB), International Accounting Standards Board (IASB), along with other delegates from the three countries and Hong Kong and Macau.
The meeting discussed the process of convergence of accounting standards, the IASB's projects and its future agenda and the prospective efforts of the Asian-Oceanian Standard Setters Group (AOSSG).
The delegates agreed to maintain communication between the countries (on projects, convergence and issues), to coordinate perspectives on the IASB's projects, and to enhance regional communication and cooperation in Asia-Oceania. Full support was expressed for the IASB's Asia-Oceanian regional liaison office to be established in Tokyo in October 2012.
The next meeting will be held in Korea in 2012. Click for press release (link to ASBJ website).
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8 November 2011: Notes from the special November IASB meeting
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The IASB held a supplemental meeting on 7 November 2011 in London. We have posted Deloitte observer notes from the meeting (click through for direct access to the notes):
Monday, 7 November 2011
Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers for the entire meeting. The next IASB meeting is scheduled to occur on 15-16 November 2011.
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8 November 2011: Conclusions of the Trustees' Due Process Oversight Committee meeting
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The IFRS Foundation Trustees' Due Process Oversight Committee (DPOC) has posted to their website a summary of the conclusions of their meeting on 11 October 2011. The committee discussed:
- Development of a protocol for due process oversight
- Post-implementation review planning
- Agenda consultation
- Review of the IFRS Interpretations Committee
- Correspondence with third parties
- Due process oversight of standards
- Oversight of XBRL activities
- Interaction with national and regional accounting standard-setters
Please click here to read the notes on the IFRS Foundation's website.
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8 November 2011: Reappointment of three Trustees of the IFRS Foundation
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The Monitoring Board of the IFRS Foundation has approved the reappointment of three IFRS Foundation Trustees:
- Clemens Börsig (Europe),
- Robert Glauber (Vice-Chairman and acting Co-Chairman of the Trustees, North America)
and
- Noriaki Shimazaki (Asia-Oceania).
Their respective terms will now expire in December 2014.
Please click for an updated list of all
Trustees of the IFRS Foundation. The IFRS Foundation has published a
short
press release (link to IASB website).
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8 November 2011: IIRC to hold webcast on integrated reporting
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The International Integrated Reporting Committee (IIRC) is holding a webcast on integrated reporting on 15 November 2011 at 08:00am GMT. The webcast will last for one hour and will include topics such as an overview of the rationale behind the move towards integrated reporting, initial proposals for the development of an International Integrated Reporting Framework, and the next steps towards its creation and adoption.
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8 November 2011: IFRS Illustrative Financial Statements for 2011
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Deloitte's Global IFRS Office has released International Financial Reporting Standards — Model financial statements with no early application.
These model financial statements illustrate the application of the presentation and disclosure requirements of International Financial Reporting Standards (IFRSs) for the year ended 31 December 2011 by an entity that is not a first-time adopter of IFRSs. They also contain additional disclosures that are considered to be best practice, particularly where such disclosures are included in illustrative examples provided with a specific Standard.
The model financial statements illustrate the impact of a number of new and revised Standards and Interpretations that are mandatorily effective on 1 January 2011. However, they do not illustrate the impact of early adoption of new and revised Standards and Interpretations that are not yet mandatorily effective on 1 January 2011 (e.g. IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities).
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7 November 2011: Agenda for the regular November IASB meeting
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The IASB's regular monthly meeting is scheduled for 15-16 November 2011 in London, part of it a joint meeting with the FASB. Set out below is the agenda for the meeting (links are to our project summary for each topic). Times are shown in London time (GMT).
IASB Board Meeting Agenda
15-16 November 2011, London |
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Tuesday, 15 November 2011
IASB Meeting (09:45-17:30)
Wednesday, 16 November 2011
IASB Meeting (09:00-11:30)
IASB-FASB Joint Meeting (12:30-17:15)
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7 November 2011: Notes from the November IFRS Interpretations Committee meeting
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The IFRS Interpretations Committee met in London on 3-4 November 2011. The topics discussed were as follows (click through to detailed Deloitte observer notes for that topic):
Thursday 3 November 2011
Friday 4 November 2011
- Items for continuing consideration (continued)
- IFRS 11 Joint Arrangements — Acquisition of interest in joint operation
- IAS 28 Investments in Associates — Share of other changes in equity
- New items for initial consideration
- IAS 33 Earnings per Share — Earnings per share calculations for non-cumulative preferred dividends
- IFRIC 12 Service Concession Arrangements — Payments to operate
- IFRIC 12 Service Concession Arrangements — Classification of cash flows for construction
- IAS 38 Intangible Assets — Clarification on the application of amortisation method
- IAS 19 Employee Benefits — Classification of payments to encourage early retirement
Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers for the entire meeting.
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5 November 2011: G20 reiterates commitment to global standards, focuses on financial instruments
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The Group of 20 (G20) has released a Communiqué and supporting documents from the G20 Leaders Summit held in Cannes, France on 3-4 November 2011.
Many of the agreed outcomes are focused on global economic and other issues, and include agreed actions on implementing and deepening financial sector reforms. These include reference to global accounting standards, convergence and the governance of the IASB. Achieving convergence on financial instruments is singled out for particular attention and a report on the overall IASB-FASB convergence project is called for by April 2012.
The Cannes Summit Final Declaration includes the following observations in relation to accounting standards:
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"We reaffirm our objective to achieve a single set of high quality global accounting standards and meet the objectives set at the London summit in April 2009, notably as regards the improvement of standards for the valuation of financial instruments. We call on the IASB and the FASB to complete their convergence project and look forward to a progress report at the Finance Ministers and Central Bank governors meeting in April 2012. We look forward to the completion of proposals to reform the IASB governance framework."
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Other financial sector reforms cited include supervision of global systemically important financial institutions (G-SIFIs), regulation of banks (including 'shadow banking'), over-the-counter (OTC) markets and compensation practices, and reform of the Financial Stability Board (FSB).
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4 November 2011: Discussions at the joint
IASB-ASBJ meeting
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Representatives of the International Accounting Standards Board (IASB) and the Accounting Standards Board of Japan (ASBJ) held their fourteenth biannual meeting in London on 31 October and 1 November 2011.
IASB and ASBJ discussed the following topics:
The IASB has posted to its website a
press
release with a summary of the discussions.
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4 November 2011: Challenges in applying conventional international accounting standards for Islamic finance
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On 23 and 24 October 2011, the
Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI)
was hosting the World Bank Annual Conference on Islamic Banking and Finance.
One of the sessions of the meeting was dedicated to 'Challenges in applying conventional international accounting standards for Islamic finance'.
A speech given by Sutan Emir Hidayat,
Senior Lecturer at the Islamic Finance
University College of Bahrain, outlined the benefits of applying IASs / IFRSs
but also showed that full application of international accounting standards
by Islamic Financial Institutions (IFIs) can run counter to the objectives of Shariah-compliant banking.
The conclusions from his very detailed analysis are:
- Despite the benefits that International accounting standards offer, applying their standards to IFIs towards some extent will eliminate the essence of shariah principle. In other words, shariah compliance cannot be adequately reflected by financial statements and notes. While,
in fact, compliancy to Shariah is the main reason for IFIs' existence.
- The full application of IAS also will hold back / hinder our steps in developing accounting standards that adequately cater for shariah compliant transactions thus ignoring the significant contributions made by AAOIFI.
- IAS / IFRS were written with conventional products and operations in mind. When they are applied to Islamic products, typically they will treat the products, in economic substance, as equivalent to their conventional counterparts.
- Therefore, obviously, there are huge impediments on fully applying IAS for IFIs. But, a broad harmonization can be reached by the application of the relevant aspects of IAS.
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The full deck of slides for this speech is available on the
AAOIFI
website (PDF 692k).
This AAOIFI page offers an overview of the whole
programme of the conference with many links to speeches given. More
information on Islamic accounting is available on our
IAS Plus Islamic finance
page.
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4 November 2011: Updated IASB work plan released
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The IASB has released an updated work plan, dated 31 October 2011, outlining revised 'current best estimates' for its various projects. The timing for a number of projects has been deferred slightly, and the timing of post-implementation reviews formally announced.
The following is a summary of the revised work plan:
- Financial instruments:
- Effective date of IFRS 9 - expected finalisation by end of calendar 2011
- Impairment - confirmation of re-exposure, now due in the first half of 2012 (deferred from possible issue in Q4 2011)
- Hedge accounting - an exposure draft on macro hedge accounting now due in first half of 2012 (deferred from possible issue in Q4 2011), finalisation of general hedge accounting project remains first half of 2012
- Offsetting - finalised amendments to IFRS 7 and IAS 32 remain expected by end of 2011
- Other core projects – no changes to expected timing for:
- Leases - re-exposure in first half of 2012, finalised IFRS in the second half of 2012)
- Revenue recognition - re-exposure in calendar 2011, finalised IFRS in the second half of 2012
- Insurance contracts - review draft or re-exposure in the first half of 2012, no target date set for a finalised IFRS
- Post-implementation reviews – the IASB has announced indicative timing for the following reviews:
- IFRS 8 Operating Segments - review initiated in 2011, target completion in 2012
- IFRS 3 Business Combinations - review to be initiated in 2012
- Agenda Consultation - decisions on the agenda expected to be made in 2012
- Other projects - no updates in relation to annual improvements (although the 2009 annual improvements are expected to be finalised in the first half of 2012), IFRS 1 amendments for government loans, or the exemption from consolidation for investment entities.
Click for IASB work plan as of 31 October (link to IASB website). We have updated our agenda page to reflect the updated work plan and other known developments.
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3 November 2011: FAF webcast on Private Company Standards Improvement Council
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On Friday, 18 November, the Financial Accounting Foundation (FAF) will host a free webcast on their recently-issued Request for Comment on the Plan to Establish the Private Company Standards Improvement Council (PCSIC). The webcast will discuss (1) the financial reporting challenges of private companies, (2) the proposed standard-setting improvements, and (3) how stakeholders can provide input on the recommendations.
Full details of the webcast are provided below:
| Topic: |
IN FOCUS: The FAF Plan to Improve Private Company Financial Reporting
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| Date and time: |
Friday, 18 November 2011
6:30pm GMT (1:30pm EST) |
| More information and registration: |
Click Here |
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Please see our earlier story for more information on the FAF and PCSIC plan.
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3 November 2011: 2012 IFRS Blue Book – Coming
Soon
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The IFRS Foundation has announced that the 2012 IFRS Consolidated without early application will be published in December 2011. This volume (nicknamed the
"Blue Book")
will contain all official pronouncements that are mandatory on 1 January 2012. It does not include IFRSs with an effective date after 1 January 2012. For example, the Blue Book
will not include IFRS 9 Financial Instruments because it has an effective date of 1 January 2013. The Blue Book differs from the traditional BV, which includes all pronouncements issued at the publication date, including those that do not become mandatory until a future date. The IASB intends to publish the traditional BV (the
"Red Book") in
the first quarter of 2012. The Blue Book will sell for £60 plus shipping (academic, developing country, and volume discounts apply). You will find more information and ordering details
here. |
3 November 2011: UK report on going concern considers efficacy of IFRSs
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The Sharman Panel of Inquiry, established at the invitation of the United Kingdom Financial Reporting Council (UK FRC) to consider going concern and liquidity risks, has published its preliminary report and recommendations.
The aim of the Inquiry was to identify lessons for companies and auditors addressing going concern and liquidity risks and to recommend measures, if any, which are necessary to improve the existing reporting regime and related guidance for companies and auditors. The Panel recommends that for all businesses the going concern assessment should focus not only on short term liquidity risks but also on solvency risks that could threaten the company’s survival over the business cycle or that could cause significant damage to the community and environment.
The terms of reference for the inquiry included consideration of whether the going concern and liquidity risk disclosures required by IFRS provided timely and relevant information for all stakeholders. The Panel's preliminary report makes a number of observations on IFRS related matters, including:
- The Panel agrees and believes that the indicative minimum review periods set out in IFRS and UK GAAP are more relevant to considering the period over which detailed budgets and forecasts should be prepared than to the period over which other aspects of a going concern review should extend (particularly that 'stress tests' should be applied considering relevant economic outlook and business cycles)
- Investors and quite a lot of others have raised questions about the suitability of IFRS accounts as a basis for assessing solvency - noting views such as in the finance sector the regulatory capital assessment rather than the IFRS accounts is the better starting point, that an IFRS balance sheet isn't that useful for assessing capital adequacy because it lacks prudence, or that the use of IFRS accounts requires adjustments for prudence to ensure that the measure of capital held is robust and able to withstand a reasonable range of stresses
- Capital management is important to investors – they want to understand how this is done, through the eyes of management. The IAS 1 disclosures are not generally providing what they want, though they could in principle be used to do so
- The going concern assessment is a forward looking process - whilst it builds on past data, it also includes looking at possible outcomes not yet experienced. This "does not sit well with the IFRS accounts which are essentially backwards looking"
- The incurred loss model is widely accepted to have been inappropriate and is being addressed. A number of respondents and commentators suggested that "there was a sense that IFRS engendered a compliance mentality and that a more principles based approach was appropriate"
- One area of concern to regulators is the inconsistency they observed in valuations of the same financial instruments using different models and there are "inherent issues with point estimates".
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2 November 2011: Notes from the special November IASB meeting
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The IASB held a supplemental meeting on 1 November 2011 in London with the FASB. We have posted Deloitte observer notes from the meeting (click through for direct access to the notes):
Tuesday, 1 November 2011
- Leases (IASB-FASB)
- Lessor accounting: Disclosures
- Transition: Other considerations
- Transition: Sale and leaseback
Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers for the entire meeting. The next IASB meeting is scheduled to occur on 7 November 2011.
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2 November 2011: Agenda for the Global Preparers Forum meeting
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The IASB has posted to its website the agenda for the 8 November meeting of IASB representatives with the Global Preparers Forum (10:00 - 16:30 London time). The topics to be discussed are:
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2 November 2011: Agenda for the 7 November special IASB meeting
2 November 2011: CFA Institute study on user perspectives on IFRS 7 disclosures
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The CFA Institute, a global association of investment professionals, has published a report entitled User Perspectives on Financial Instrument Risk Disclosures under IFRS (Part 1), providing user insights and recommendations regarding risk disclosures under IFRS 7 Financial Instruments: Disclosures.
The CFA Institute undertook a study regarding the quality of existing financial instruments risk disclosures, addressing credit, liquidity, market and hedging activities risk disclosures under IFRS 7. The report proposes general and specific recommendations for improving these risk disclosures, including:
- Executive summary. An 'Executive Summary' of risk disclosures should be provided outlining details of entity-wide risk exposure and effectiveness of risk management mechanisms across different risk types considered to be significant for specific business models
- Differentiated market risk categories. The components of market risk should be differentiated into more specific categories (i.e. interest rate, foreign currency and commodity) and treated with the same level of distinctiveness for reporting purposes as is the case with credit and liquidity risk under IFRS 7
- Improved alignment of qualitative and quantitative disclosures. Qualitative disclosures should better explain quantitative measurements
- Standardisation and assurance of quantitative disclosures. Standardised and adequately audited quantitative disclosures are required to improve comparability
- Improved and integrated presentation of disclosures. Integrated, centralised and tabular risk disclosures should be provided. For example, the report recommends disclosure of: a) the integration of risk exposure and risk management information; and b) interaction of different risk factors
- Areas for improvement of specific risk disclosures. These include the need to provide: a) informative entity-specific qualitative disclosures; b) improved and more meaningful sensitivity analysis; c) sufficient disaggregation to inform on respective risk exposures; d) full disclosure of risks associated with counterparties; and e) risk information related to off-balance sheet exposures
- Communication and not mere compliance. The report states "a principles-based definition of disclosure is not the antidote to fears about boilerplate and uninformative disclosures".
Part 2 of the report will be released at a later time and will provide a user perspective on the disclosures of derivatives and hedging activities.
Click for access to the report (link to CFA Institute website).
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1 November 2011: IFRS Foundation's translations update
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The IFRS Foundation has announced the publication of the following translations:
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1 November 2011: IPSASB issues standards on service concessions, annual improvements
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The International Public Sector Accounting Standards Board (IPSASB) has released new standards on service concession arrangements and annual improvements.
IPSAS 32 Service Concession Arrangements: Grantor seeks to address a lack of international guidance on how governments and other public sector entities should report their involvement in service concession arrangements, often used to build the infrastructure necessary to maintain and improve critical public services.
IPSAS 32 requires that service concession arrangement assets and their related financing are reported by the public sector entity, using an approach that is consistent with that used for the operator's accounting in Interpretation IFRIC 12 Service Concession Arrangements. IPSAS 32 uses the principles in IFRIC 12 for determining which entity (grantor or operator) should recognise an asset in a service concession arrangement, in order to ensure that the grantor recognises a service concession asset it controls.
The IPSASB has also published Improvements to IPSASs 2011. The IPSASB's improvements project is modeled on the IASB's annual improvements process. The improvements amend existing IPSASs to maintain alignment with International Financial Reporting Standards (IFRSs), as well as other general improvements.
IPSAS 32 applies to annual financial statements covering periods beginning on or after 1 January 2014, but may be applied earlier. The amendments made by Improvements to IPSASs 2011 are applied for annual financial statements covering periods beginning on or after 1 January 2013, but may be applied earlier.
Click for IPSASB press release (link to IFAC website).
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1 November 2011: Canadian regulator decides against allowing early adoption of recent IFRSs by certain entities
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The Canadian Office of the Superintendent of Financial Institutions (OSFI), an independent agency of the Government of Canada that supervises and regulates Canadian banks, insurers, and federally registered private pension plans, has issued a letter in which it concludes entities which it regulates should not early adopt many standards recently issued by the IASB.
In making its decision, the OSFI considered a number of factors such as industry consistency, OSFI policy positions on accounting and capital, operational capacity and resource constraints of Federally Regulated Entities (FREs), the ability to benefit from improved standards arising from the financial crisis and the notion of a level playing field with other Canadian and international financial institutions. OSFI concluded that FREs should not early adopt the following new or amended IFRSs, but instead should adhere to their mandatory effective dates:
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