IASB seeks user views on the offsetting of assets and liabilities

31 Jul, 2010

The IASB has released a questionnaire for financial statement users regarding the offsetting of financial assets and liabilities. The survey focuses on whether and how users of financial statements adjust for offsetting of financial instruments.

This project was added to the agenda at the June IASB-FASB meeting in response to stakeholder concerns (including those of the Basel Committee on Banking Supervision and the Financial Stability Board) about differences between IFRS and US-GAAP standards on balance sheet netting of derivative contracts and other financial instruments that can result in material differences in financial reporting by financial institutions.

The questionnaire is targeted at users of financial statements, requesting feedback in areas such as:

  • Which of gross or net values of financial asset and liability positions, and in particular derivatives, is useful for financial statement analysis
  • Whether gross or net values should be presented on the face of the statement of financial position (balance sheet)
  • When offsetting (netting) should be permitted (conditional or unconditional rights, different types of risk).

The deadline to complete the questionnaire is 20 August 2010. The questionnaire can be accessed through the IASB website. More information on the project is available in our Financial Instruments - Balance Sheet Offsetting project page.

Deloitte press release on IASB Insurance Contracts proposals

30 Jul, 2010

Further to our earlier story, Deloitte has issued a press release commenting on the issue of ED/2010/8 Insurance Contracts. The ED proposes fundamental changes to the financial reporting of insurance companies applying IFRS, with a goal of making it more consistent and transparent than it has been so far.

Excerpts from the press release:

"Given the increased adoption of IFRS worldwide, it is no exaggeration to suggest that this proposed accounting standard would have a global impact and could fundamentally change the way insurance companies measure, report, and evaluate performance of their insurance contracts," said Joel Osnoss, Global IFRS Leader, Clients & Markets, Deloitte Touche Tohmatsu.

Francesco Nagari, Global IFRS Insurance Leader at Deloitte United Kingdom, commented: "The publication of the Exposure Draft is a landmark stage in the IASB's 13-year project to develop a consistent standard for insurance accounting and will have a significant impact on insurers across the world. Under the proposed IFRS, all insurance contracts, both life and non-life, will be measured using the same building blocks based on discounted probability-weighted best estimate cash flows."

Click for:

Deloitte comment letter on the discussion paper on extractive activities

30 Jul, 2010

Deloitte's IFRS Global Office has submitted a letter of comment to the IASB on Discussion paper DP/2010/1 'Extractive Activities'.

Below is an excerpt from the letter (PDF 82k):

...We agree with the view expressed in the Discussion Paper that the use of a market-based measure is not justifiable on cost-benefit grounds and is not supported by industry participants, analysts and other users of the financial statements.

We agree with the project team's recommendation with respect to the definitions of reserves and resources to be used in any IFRS on extractive activities and the need for common definitions for all extractive activities within the scope of any future IFRS. However, we believe that it is important that the definitions ultimately chosen are accepted by industry and consistent across all jurisdictions to avoid the need for multiple reserve and resource determinations and reconciliations. Therefore, we urge the Board to cooperate closely with national standard-setters, securities markets regulators and industry bodies to ensure acceptance and consistency in definitions.

In our view, the Discussion Paper does not articulate clearly the nature of the asset arising from extractive activities. Further research is required to determine the nature of the asset(s) and the justification for capitalising subsequent expenditures within the context of the Conceptual Framework. We also believe that further research is necessary to develop an appropriate impairment model for such assets.

We agree with the overall disclosure objectives proposed by the Discussion Paper, provided that those objectives do not lead to a requirement to disclose fair values. However, we have significant concerns about the nature and extent of the disclosures proposed, in particular the level of disaggregation required, the need for sensitivity analyses and the cost of preparing the proposed disclosures.

All of our past letters of comment to the IASB are Here.
Click for DP/2010/1, Extractive Activities (IASB website)


IASB publishes exposure draft for new IFRS – Insurance Contracts

29 Jul, 2010

The IASB has published for public comment an exposure draft of a proposed IFRS for insurance contracts. Exposure Draft ED/2010/8 'Insurance Contracts' proposes a single IFRS that all insurers, in all jurisdictions, could apply to all contract types on a consistent basis. The proposed IFRS would apply to writers of both insurance and reinsurance contracts.

A summary of the key proposals follows:

Scope and recognition

The proposed IFRS would apply to all insurance contracts as defined. An insurance contract would be recognised at the earlier of:

  • the insurer being on risk to provide coverage to the policyholder for insured events; and
  • the signing of the insurance contract.

An insurer would derecognise an insurance liability when it is extinguished.


Measurement of the insurance contract is based on a 'building block approach' that portrays a current assessment of the contract, using the following:

  • an unbiased, probability-weighted average (expected value) of future cash flows expected to arise as the insurer fulfils the contract;
  • the effect of time value of money; and
  • a margin.

The building blocks would be used to measure the combination of rights and obligations arising from an insurance contract rather than to measure the rights separately from the obligations. The combination of rights and obligations would be presented on a net basis.


With respect to disclosure, the ED proposes that entities should disclose qualitative and quantitative information about:

  • the amounts, recognised in its financial statements, arising from insurance contracts; and
  • the nature and extent of risks arising from insurance contracts.

ED/2010/8 is open for comment until 30 November 2010. Click for:

Stay Tuned Online – IFRS and UK GAAP update

29 Jul, 2010

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 July 2010 webcast:
  • Latest IFRS developments
  • IFRS 3(2008) – now in force
  • ED/2010/6 Revenue from Contracts with Customers
  • New UK Corporate Governance Code
  • Other UK GAAP developments
To access the recording Click Here. There is a permanent link on our UK Country Page.


IAASB Chairman reappointed

29 Jul, 2010

The Board of the International Federation of Accountants (IFAC) has reappointed Prof. Arnold Schilder to lead the International Auditing and Assurance Standards Board (IAASB).

The IAASB is the independent standard-setting board supported by IFAC. Prof. Schilder's reappointment is for the period 2012–2014.


Click for IFAC press release (link to IFAC website). Background information about the IAASB is available on our IAASB page.

IASB targets analyst views in fair value measurement questionnaire

28 Jul, 2010

The IASB has published a questionnaire for financial statement users on its June 2010 exposure draft ED/2010/7 Measurement Uncertainty Analysis Disclosure for Fair Value Measurements - Limited re-exposure of proposed disclosure.

The ED proposes that companies disclose sensitivity information ('measurement uncertainty analysis') about all 'Level 3' fair value measurements included in financial statements - not just for financial instruments, but also other items such as investment properties, biological assets and property, plant and equipment measured on the revaluation basis.

The questionnaire is targeted at users of financial statements, particularly analysts, and requests feedback in areas such as:

  • The usefulness of 'measurement uncertainty analysis' to different categories of assets and liabilities
  • How measurement uncertainty analysis information is used - 'worst case' or 'best case' scenarios, or for other uses
  • Whether information presented by class of asset and liability is sufficient
  • Additional disclosures that would be useful.

The deadline to complete the questionnaire is 7 September 2010. The questionnaire can be accessed on the IASB website. More information on the proposals is available in our IFRS in Focus newsletter (PDF 60k) and our Fair value measurement project page.

Updated EFRAG 'endorsement status report'

27 Jul, 2010

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 26 July 2010 (PDF 122k). Currently, the following two IASB pronouncements await endorsement action:
  • IFRS 9 Financial Instruments
  • Improvements to IFRSs
You can always find the endorsement status report Here.


Illustrative Examples in XBRL for the IFRS Taxonomy 2010

27 Jul, 2010

The IFRS Foundation has published illustrative examples in eXtensible Business Reporting Language (XBRL) for the IFRS Taxonomy 2010.

The purpose of these examples is to illustrate the use of the IFRS Taxonomy in financial statements, in accordance with the XBRL architecture outlined in The IFRS Taxonomy Guide. Click Here to access the illustrative examples in XBRL on the Foundation's website.


IFRS Foundation podcast summary of July 2010 IASB meeting

27 Jul, 2010

The IFRS Foundation has made available a podcast summary of discussions and decisions at the IASB meeting held on 19-23 July 2010. The summary covers insurance, leases, rate-regulated activity, financial instruments, impairment and income taxes.

The podcast is available on the IFRS Foundation website. Our Deloitte observer notes from the meeting are available here.

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