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IAS 10 — Reissue of financial statements

Date recorded:

In October 2012, the Committee received a request for guidance on the accounting implications of applying IAS 10 when previously issued financial statements are reissued in connection with an offering document. The Committee was asked to clarify whether IAS 10 permits only one date of authorisation for issue when considered in the context of reissuing previously issued financial statements in connection with an offering document.

The staff proceeded to provide background information and analysis on the issue raised in the submission and made a recommendation that the Committee should propose an amendment to IAS 10.

The staff focused on the securities laws and regulatory practices in certain jurisdictions, which require an entity to reissue its previously issued audited annual financial statements in connection with an offering document when the most recently filed interim financial statements reflect matters that are accounted for retrospectively under the applicable accounting standards. For example, an entity that issues IFRS financial statements will reissue its previously issued annual financial statements if it, for example, is issuing an offering document in North America markets.

In these jurisdictions an entity in its reissued financial statements does not recognise events or transactions occurring between the date on which the financial statements were first issued and the time the financial statements were reissued, unless the adjustment is required by national regulation. This approach is called ‘dual dating’, because the financial statements include two dates: the date when financial statements were issued and the date when the financial statement were reissued.

The issue that exists is whether IAS 10 permits only one date of authorisation for issue (i.e., ‘dual dating’ is not permitted) when considered within the context of reissuing previously issued financial statements in connection with an offering document.

The staff noted that two views exist in practice; namely that dual dating is not permitted under IAS 10 and dual dating is permitted under IAS 10. In presenting their recommendation to the Committee, the staff took into consideration the scope of IAS 10 and that implicit in IAS 10 is that the financial statements can have only one date of authorisation for issue. The staff considered if a new set of financial statements supersedes the previously issued set of financial statements, the investors will want to know about any adjusting and non-adjusting events occurring up to the new date of authorisation for issue.

The staff concluded that the Committee should propose an amendment to IAS 10 in order to clarify that if an entity reissues a new set of financial statements that supersedes the previously issued set, then this entity should in the new set of financial statements account for any adjusting events and disclose any non-adjusting events that have occurred between the previous date that the financials were authorised for issue and the new date the financial statements were authorised for issue.

The Committee in their discussions noted the key driver of this amendment was the securities regulators. Several Committee members discussed the implications of not amending IAS 10 and issuing “Pro-forma” or “General Purpose” financials with offering documents, however the majority of the Committee members noted that where possible, the quality that IFRS financial statements affords, should be something that is extended to the situations where financial statements are reissued for the purpose of offering.

Several Committee members reiterated the point that IAS 10 is inextricably linked to the concept of accounting for any adjusting events and disclose any non-adjusting events.

One Committee member talked about the reissue of financial statements in the context of offering as the problem for the regulators and how IAS 10 could not encompass a “one size fits all” solution to the scope and breadth of regulation in the global capital markets.

In the interests of time, the Chair summarised the key arguments tabled. The first being that if regulatory rules are being brought into IFRS, then the staff analysis seems to be the right approach, however the second key argument was to do nothing and leave in the realm of the regulator since the issue of dual dating was not for IFRS to deal with. A vote was taken and it was decided to do nothing, however the Chair made the suggestion that any reflections would be welcomed at the proceeding Committee meeting.

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