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New IFAC SMP practice management guide

25 Jun 2010

The Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) has issued the Guide to Practice Management for Small- and Medium-sized Practices, to provide guidance on how this sector can better manage their practices and ultimately operate in a safe, profitable, and professional manner.

Click here to Download the 455-page Guide without charge from IFAC's website.


Notes from special 23 June 2010 IASB-FASB meeting

24 Jun 2010

The IASB and FASB held a special joint meeting on 23 June 2010 at the IASB's office in London.

Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.


IASB and FASB update G20 on project timetables

24 Jun 2010

The IASB and FASB have submitted to the G20 leaders a Progress Report on Commitment to Convergence of Accounting Standards and a Single Set of High Quality Global Accounting Standards.

Here is the IASB-FASB Transmittal Letter to the G20 (PDF 53k). The progress report identifies and explains changes to the approach and timetables of a number of the boards' joint projects. The boards had previously Announced their Plan to Make these Changes on 3 June 2010, with three objectives:
  • prioritise the major projects to permit a sharper focus on issues and projects that they believe will bring about significant improvement and convergence of IFRS and US GAAP.
  • phase the publication of exposure drafts (EDs) and related consultations to enable the broad-based and effective stakeholder participation in due process that is critically important to the quality of our standards. This includes limiting to four the number of significant or complex EDs issued in any one quarter.
  • issue a separate consultation document seeking stakeholder input about effective dates and transition methods.
Some of the key changes, from an IASB perspective, are noted below.

Progress Report and Latest IASB Project Timetable

  • Consolidation. Completion of a standard that would replace IAS 27 is planned for 4Q 2010, including improved disclosures about structured entities. Additionally, in 3Q 2010, IASB will issue an ED of proposed changes to its consolidation requirements relating to investment companies to align with existing US GAAP. IASB would finalise this in 1Q 2011.
  • Derecognition of financial instruments. In March 2009, the IASB had issued an ED setting out a proposed derecognition model and an alternative model proposed by some Board members. Respondents favoured the alternative model. The IASB had anticipated issuing a revised ED in 3Q 2010 and a final standard by 1Q 2011. The new timetable would split the project into three components:
    • Disclosure. The IASB will finalise new disclosure requirements for derecognitions by 3Q 2010.
    • Balance sheet offsetting (netting) of derivatives. This is, in a sense, a presentation alternative to complete derecognition. IASB and FASB will jointly issue a separate ED in 4Q 2010 proposing changes to address differences in their standards on balance sheet netting of derivative contracts and other financial instruments and related disclosures. Those differences can materially affect financial reporting by financial institutions. Final converged netting standards are planned for 2Q 2011.
    • Comprehensive standard on derecognition. At a future date, following additional staff research, the IASB and FASB will make a decision about the nature and scope of any further improvement and convergence efforts.
  • Financial Instruments
    • Hedge accounting. In 3Q 2010 the IASB will publish an ED on hedge accounting (previously scheduled for Q2 2010), with a final standard planned for 2Q 2011. Meanwhile, the FASB will hold public roundtable meetings with stakeholders on its 27 May 2010 Comprehensive Financial Instruments Proposals, which include hedge accounting. IASB will participate in those roundtables.
    • Classification and measurement of Financial Liabilities. IASB issued an ED in May 2010. Final standard planned for 2Q 2011.
    • Impairment of Financial Assets Measured at Amortised Cost. IASB issued an ED in November 2009. Final standard planned for 2Q 2011.
  • Financial statement presentation. This project has essentially been split into three parts:
    • Presentation of comprehensive income. The IASB issued a Proposal on 27 May 2010 that would require all entities to present results of operations in a single, continuous statement of comprehensive income (a two-statement presentation would be prohibited). FASB published a Similar Proposal. They expect to issue converged final standards in 4Q 2010.
    • A comprehensive standard on financial statement presentation. In 2008, the boards published a Discussion Paper proposing comprehensive principles for presenting financial statements. Among those principles were (a) a cohesive structure for the balance sheet, statement of comprehensive income, and cash flow statement, (b) a subtotal of profit or loss in the comprehensive income statement, and (c) presentation of operating cash flows by the direct method. The boards have now decided to engage in additional outreach activities in 4Q 2010 before finalising and publishing an ED. Meanwhile, in 3Q 2010 they will post to their websites a staff draft of proposed standards that reflect tentative decisions made to date. An ED is now planned for 1Q 2011, with a final standard in 4Q 2011.
    • Discontinued operations. This is a limited scope project to eliminate differences between the IFRS and US GAAP definitions of discontinued operations and related disclosures. The two boards plan an ED in 1Q 2011 and converged final standards in 4Q 2011.
  • Financial instruments with characteristics of equity. In February 2008, IASB published a Discussion Paper that invited comment on a similar November 2007 FASB discussion document. Subsequently both boards decided to pursue an approach that differs from the proposals in the FASB discussion document. The plan had been for an ED in June 2010 and final IFRS by 2Q 2011. The new plan is for an ED in 1Q 2011 and a final standard in 4Q 2011.
  • Leases. Because discussions between IASB and FASB on lessor accounting are taking longer than previously anticipated, publication of an ED has moved to 3Q 2010. However, a final converged standard is still expected in 2Q 2011.
  • Fair value measurement. The IASB has decided to issue (in late June 2010) a limited exposure draft proposing relatively minor amendments to the proposals in its May 2009 ED on fair value measurement. The amendments relate to the proposed disclosure of a 'sensitivity analysis' for Level 3 fair value measurements for all assets and liabilities measured at fair value. As a consequence, IASB's final fair value measurement standard is now planned for 1Q 2011.
  • Revenue recognition. An Exposure Draft was issued on 24 June 2010, and a final IFRS is planned for issue by 2Q 2011.
  • Post-employment benefits. An Exposure Draft was issued in April 2010. A final IFRS is planned for 1Q 2011.
  • Insurance contracts. The joint progress report acknowledges that IASB and FASB have reached different conclusions on several important technical issues in this project. The IASB plans to publish an ED in July 2010. In light of their differing views, the FASB plans to decide in July the best means for obtaining stakeholder input on the IASB proposal (for example, by publishing it as an exposure draft or in some other way). The progress report does not indicate a timetable for a final IFRS. However, the IASB's work plan on its website indicates final IFRS in 2Q 2011.
  • Emissions trading schemes. In May 2010, the boards agreed that other MoU projects had a higher priority. The boards now plan a joint ED in 2H 2011, with a final converged standard sometime in 2012.

Click for Progress Report on Commitment to Convergence of Accounting Standards and a Single Set of High Quality Global Accounting Standards (PDF 64k).

Exposure Draft on revenue

24 Jun 2010

The IASB and FASB have jointly published for public comment an exposure draft (ED) on Revenue from Contracts with Customers.

If adopted, the proposals would supersede IAS 11 Construction Contracts and IAS 18 Revenueand related interpretations. The core principle proposed in the ED would require an entity to recognise revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to receive in exchange for those goods or services. To apply that principle, an entity would:
  • Identify the contract(s) with a customer. Normally each revenue transaction is a single contract, but sometimes the elements of a multiple-element contract must be accounted for separately or, less commonly, two contracts are combined.
  • Identify the separate performance obligations in the contract. If an entity promises to provide more than one good or service, it would account for each promised good or service as a separate performance obligation only if the good or service is distinct – that is, it is or could be sold separately.
  • Determine the transaction price. Transaction price is the probability-weighted amount of consideration that an entity expects to receive. This would take into account collectibility, the time value of money, the fair value of noncash consideration, and consideration payable to a customer.
  • Allocate the transaction price to the separate performance obligations in proportion to the standalone selling prices of the goods or services underlying each performance obligation.
  • Recognise revenue when the entity satisfies each performance obligation by transferring the promised good or service to the customer. A contract for the development of an asset (for example, construction, manufacturing, and customized software) would result in continuous revenue recognition only if the customer controls the asset as it is developed.
The ED also specifies the accounting for contract costs. Costs of obtaining a contract are charged to expense when incurred. If the costs incurred in fulfilling a contract are not eligible for capitalisation in accordance with other standards (for example, IAS 2 Inventories), an entity would recognise an asset only if those costs:
  • relate directly to a contract (or a specific contract under negotiation);
  • generate or enhance resources of the entity that will be used in satisfying performance obligations in the future; and
  • are expected to be recovered.
For many companies the new approach will not change the amount or timing of revenue recognition. However, in some cases there could be a significant impact. For example, the standard would require separate up-front recognition of revenue from providing a mobile phone that is bundled, without a separate charge, as part of a contract for mobile phone services. Comment deadline on the ED Revenue from Contracts with Customers is 22 October 2010. Click for IASB Press Release (PDF 116k). Link to IAS Plus Project Page.


IFRS insurance accounting newsletter

23 Jun 2010

Deloitte (United Kingdom) has published the June 2010 issue of Insurance Accounting Newsletter.

This issue is titled Almost There... and focuses on the discussions the joint IASB-FASB meetings in May and early June 2010. The expected publication date of the Exposure Draft is July 2010. Click to download Issue 15 of the Insurance Accounting Newsletter (PDF 113k). There are permanent links all issues of the newsletter on IAS Plus Insurance Project Page.


IASB webcast on replacement of IAS 39

23 Jun 2010

On 6 July 2010, the IASB will host a live webcast on the Board's project to replace IAS 39 Financial Instruments: Recognition and Measurement.

Discussion topics will include:
  • an update on the main outcomes of the Expert Advisory Panel on impairment of financial assets measured at amortised cost and next steps in the impairment phase,
  • an update on the hedge accounting phase, and
  • a general update on timing for the project.
There is no charge to participate in the webcast, but registration is required. Participants will have an opportunity to submit written questions during the webcast.
  • Webcast Topic: The IASB's project to replace IAS 39
  • Date and Time: Tuesday, 6 July 2010, 10:00-11:00am London time, and again at 15:00-16:00pm London time
  • More Information and Registration on IASB Website: Click Here
  • IAS Plus Project Page: Financial Instruments


IFRS Foundation Trustees will meet 6-7 July

21 Jun 2010

The Trustees of the IFRS Foundation will meet at the Algonquin Room, Four Seasons Hotel, 2800 Pennsylvania Avenue NW, Washington, DC USA, on Tuesday and Wednesday 6-7 July 2010. The portion of the meeting on 6 July from 13:45-17:00pm is open to public observation.

The agenda for that portion of the meeting is:
  • Report of the IASB Chairman
  • Report of the IFRS Advisory Council Chairman
  • Report of the Due Process Oversight Committee
  • Discussion of Strategy Review


Special joint IASB-FASB meeting 23 June 2010

20 Jun 2010

The IASB and FASB will hold a special joint Board meeting on Wednesday 23 June 2010 from 14:00 to 18:00pm London time at the IASB's offices in London.

You can access the agenda on our June 2010 special joint IASB-FASB meeting page. We will also post Deloitte observer notes on this page as they are available.

Joint meeting of two IASB advisory groups

20 Jun 2010

The IASB's Analyst Representative Group and Global Preparers Forum will meet jointly with representatives of the IASB at the IASB's offices in London on Friday, 25 June 2010, from 10:00am to 15:30pm London time.

The meeting is open to public observation and will be webcast. The agenda for the meeting is presented below.
  • Analyst Representative Group (ARG): The ARG is a group of approximately 15 professional financial analysts who meet three times a year with representatives of the IASB to provide the views of professional investors on financial reporting issues. The ARG was formed in 2003.
  • Global Preparers Forum (GPF): The GPF is a group of representatives of companies that use IFRSs with whom the IASB meets several times a year. The purpose of the Global Preparers Forum is to provide input into concepts and proposals that the IASB is developing and offer advice to the IASB on the practical implications of its intended proposals for preparers of financial statements. The meetings are open to public observation.

Agenda for the Joint Meeting
Analyst Representative Group and Global Preparers Forum
25 June 2010, London

  • Work plan update
  • Financial Statement Presentation
  • Leases
  • Post-2011 IASB Agenda


Agenda project pages updated

20 Jun 2010

We have updated the following pages on IAS Plus to reflect the discussions and decisions at the joint IASB-FASB meeting held on 15-17 June 2010:

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.