Notes from IFRS Foundation Trustees meeting

30 Mar, 2010

The Trustees of the IFRS Foundation (formerly IASC Foundation) are meeting in London on 30-31 March 2010. The meeting on 30 March is open to public observation.

Presented below are the preliminary and unofficial notes taken by Deloitte observers at the 30 March session. The Trustees will hold a public meeting with the Monitoring Board on 1 April.

Meeting of the Trustees of the IFRS Foundation, 30 March 2010, London

Review of status of IASB-FASB convergence efforts

For the key messages on this topic, please refer the Notes of the Sub-committee Meeting held on 29 March. However, there were a number of interesting points that had not been made at that meeting.

IASB Chairman Sir David Tweedie acknowledged that financial instruments is the MoU project on which the IASB was 'most likely' not to converge with the FASB. However, a US Trustee noted that it was far from clear that the FASB's 'full fair value on the balance sheet' approach would be accepted. He noted that, for debt instruments in particular, the amortised cost approach was seen as the better, more useful measure – especially for many small and medium-sized financial institutions. Another US Trustee noted that it was important that the FASB issue their comprehensive ED so that an informed debate could begin.

Trustees asked where the IASB was in relation to the milestones contained in the MoU. The IASB Chairman said that he was confident that the seven necessary exposure drafts would be issued by the end of June 2010 as required. The Board and the staff were determined that the milestones would be met, and the Board will hold additional meetings as necessary to achieve that goal.

Other IASB technical projects

The IASB Chairman reviewed progress on other IASB technical projects. His only concern was that the IASB might have to expose their proposals on Insurance Contracts as an IASB-only ED, if the FASB (which is playing 'catch-up' to the IASB on this project) was unable to complete its deliberations in time. This approach was preferable to losing several years' worth of effort at the IASB.

The IFRS Foundation Chairman invited Paul Cherry, Chairman of the IFRS Advisory Council, to review with Sir David the preparatory work being done on assessing potential topics and priorities for the post-June 2011 agenda. Mr Cherry noted that the Advisory Council would not only be looking at topics for the IASB's attention, but would also identify issues related to governance and oversight that should be addressed to the Trustees.

Sir David noted that the IASB expects to initiate the public consultation on the post-June 2011 IASB agenda and priorities in December 2010.

Due Process Oversight Committee report

Antonio Vegezzi introduced several matters within the responsibility of the Trustees' Due Process Oversight Committee.

Development of IFRS XBRL Taxonomy extensions

The Trustees approved a business plan that would facilitate the inception of a new body devoted to the development and maintenance of IFRS Taxonomy extensions. Implementation of the business plan was dependent on securing funding for the project as it fell outside the current agreed budget.

Other XBRL Activities

Mr Vegezzi reported on other aspects of the Trustees' oversight of the XBRL project. There was no discussion.

Annual report of due process oversight activities

The Trustees received the Committee's summary of activities (this will be available on the Trustees' pages of the IASB's Website). There were no comments.

Benchmarking oversight activities

Mr Vegezzi noted that the Committee would be looking at how other public-interest oversight groups execute their function in order to ensure that the IFRS Foundation procedures are the most appropriate.

Mr Vegezzi also noted that the Committee would be reviewing the composition, mandate and effectiveness of the Interpretations Committee. Having reviewed the IASB, the Advisory Council, and Working Groups in the past two years or so, it is the Interpretations Committee's turn. In response to this, a Trustee suggested that, with seven critical due process documents to be issued in the next few months, the Due Process Oversight Committee should prioritise their activities to ensure that all due process is followed and be prepared to defend the IASB against any charges that it had not followed such process. This one activity was far more important, in his view, than the Interpretations Committee or XBRL.

Annual Improvements project

Mr Vegezzi noted that the French national standard-setter (ANC) had raised a formal complaint about the scope and conduct of the IASB's Annual Improvements Project. The IASB would define more closely what issues qualify for being addressed in the Annual Improvements Project and which should be addressed by other means.

IFRS Advisory Council Chairman's report

The IFRS Advisory Council Chairman Paul Cherry provided a comprehensive report on the Council's recent activities. He underlined the importance of the response to the financial crisis and expressed the Council's support for a comprehensive financial instruments standard rather than for a piecemeal approach. On loan loss provisioning Mr. Cherry expressed the Council's support for earlier recognition of credit losses whether you call it 'incurred' or 'expected' loss. In the Council's view, convergence was desirable; however, while there is widespread understanding of divergence in usage of fair value (classification and measurement) and potentially hedging, constituents would not understand divergence on impairment.

With respect to the IAS 37 exposure draft process, the Mr Cherry expressed some misgivings. In his view, the Board should draw lessons from its recent experience and re-think the communication on sensitive subjects. He emphasised that due process and participation is, in the long run, much more important than whether constituents support a particular proposal.

The Trustees emphasised that communication and outreach would play even greater role given the expected issuance of multiple exposure drafts, some of which would be controversial. Mr Cherry noted that direct outreach and engaging constituents in form of round-tables is more effective than a formal process in which comments are expected. As an example, he noted that the Board has a serious communication problem related to the direct method of cash flow. In his view, given the widespread opposition, the message of the Board is not getting out to the appropriate audience (CFO and board of directors level) sufficiently in advance.

Finally, Mr Cherry observed that the Council members expressed some need for IFRS educational guidance for emerging markets. In his view, such countries do not ask for special set of Standards but feel that the current and proposed Standards are complicated and often address very complex issues that are not widespread in their markets. Therefore, any guidance should focus on fundamental parts of the Standards.

IFRS Foundation Review

Tom Seidenstein, IFRS Foundation Chief Operating Officer, noted that the Trustees had agreed to undertake a full strategic review of the IFRS Foundation for the period immediately after June 2011. This review would likely address the period 2011-2016 and would involve public consultation with all stakeholders and involve the Monitoring Board.

In deciding the broad topics that will form the basis for the review, Trustees clarified staff proposals and offered suggestions about the broader context. For example, if the IASB completes the 2011 suite of Standards successfully, it would be appropriate that the Trustees seek to enforce the IFRS brand and promote consistency of application of the Standards. In addition, the Trustees should consider what corporate reporting might look like in 2016 and consider the IASB's involvement (if any) with such areas as sustainability and carbon reporting. These topics would be in addition to the fundamental issues of governance and funding. The assistance and expertise represented on the Advisory Council would be instrumental in both framing and executing the review.

As a result of the discussions, the Trustees agreed that the strategic review should concentrate on three major themes:

  • governance, oversight and effectiveness of the IFRS Foundation and related bodies;
  • funding the organisation; and
  • enhancing stakeholder engagement.



The IFRS Foundation staff reviewed the current funding situation of the organisation. Essentially, committed funding was as reported in January; however, some foreign exchange gains had been made as a result of the depreciation of the British Pound against the US dollar and the Euro. Counterbalancing those gains to some extent were losses on foreign exchange contracts.

The Trustees discussed this state of affairs briefly. Trustees noted that in the Asia/Oceania region, they had managed to address funding contributions from their region in such a way that most are appropriate and up to date. There were a few 'freeloaders', which jurisdictions might also be breaching copyright. Trustees from this region are working to resolve those issues.

EU Budget-based funding

The Trustees reviewed the official documents that form the basis for the proposed EU Budget-based funding for the IFRS Foundation for the period 1 January 2010 to 31 December 2013. In particular, the Trustees considered Decision 716/2009/EC of the European Parliament and the Council, which details the terms and conditions of the funding programme.

A seminal intervention was made by Trustee Sir Bryan Nicholson, who drew on his experience at IFAC Public Interest Oversight Board, which had been examining many of the same issues the day before this meeting (the PIOB is also to receive EU Budget-based funding). In his view, once the EU funding process is in place, the significant contributions from France and Germany would not be maintained. In addition, EU funding was a 'bureaucratic nightmare' and the Trustees – both the finance committee and the EU-based Trustees – had much work to do to prepare for the challenges that EU funding would bring. Most fundamentally, it would be vital to gain a proper and shared understanding with the European Commission of what the terms and conditions in Decision 716/2009/EC (described as 'opaque') actually meant; if the Trustees did not have this understanding, they would be failing in their fiduciary duties. The IASCF had to develop resources and processes that allowed it to work constructively with the EU bureaucracy in the least bureaucratic and most efficient manner.

Sir Bryan's intervention sparked a lively debate, especially among EU-based Trustees, some of whom were worried in equal measure about the potential influence of the European Commission and the European Parliament. As a result, it was agreed that the IFRS Foundation Chairman should seek a meeting with the Internal Markets Commissioner to determine whether the improvements to the Foundation's governance made in 2009 and 2010 satisfied the European Commission and the Parliament, and open a dialogue on gaining a shared understanding of the conditions attaching to the funding itself. In the Chairman's view, once the Commissioner is satisfied that the Foundation had met the conditions laid out in the Decision to qualify for the funding programme, the Commissioner should be prepared to argue the Foundation's case before the Parliament.

A US-based Trustee noted that any government-based funding came with a price, both in terms of politicking and bureaucracy. If the US Securities and Exchange Commission were to put some form of US-based funding in place, the IFRS Foundation should expect the US Congress to be interested and for some level of bureaucracy. Another US-based Trustee suggested that it would be useful to align the conditions and obligations among the funding regimes of the major funding jurisdictions, so that the Foundation did not have to face multiple and potentially conflicting requirements.

It was hoped that the SEC Chair could report some progress at the meeting of the Monitoring Board on 1 April with respect to a US funding regime.

This summary is based on notes taken by observers at the Trustees' meeting and should not be regarded as an official or final summary.

Stay Tuned Online – IFRS and UK GAAP update

30 Mar, 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 March 2010 webcast:
  • Measuring by halves: Surveying half-yearly financial reporting
  • ED/2010/1 Measurement of Liabilities in IAS 37
  • FRC and FRRP developments
  • A roundup of other UK developments
  • Other IFRS developments / endorsement summary
To access the recording Click Here. There's a permanent link on our UK Country Page.


Notes from Trustees' subgroup meeting

30 Mar, 2010

On Monday 29 March 2010, subgroups of the Trustees of the IFRS Foundation (IASB) and the US Financial Accounting Foundation (FASB) responsible for monitoring IASB-FASB convergence activities met with the Chairmen and Technical Directors of the IASB and FASB to discuss the convergence agenda.

Both the FAF and IASCF Chairmen were present, along with about five trustees from each organisation in addition to the respective chief operating officers. One FAF trustee and the technical director and Chairman of the FASB joined by video link.

Meeting of Subgroups of Trustees of IFRS Foundation and Financial Accounting Foundation
29 March 2010, London

The IASB and FASB chairman addressed each of the convergence projects in turn, highlighting where they thought they have agreement between the Boards and those topics on which there are severe challenges. FASB Chairman Robert Herz noted that meeting in joint session had proved to be much more effective, helping the Boards to understand each other's point of view and reach common decisions on many issues. He noted that 'good progress had been made on a good majority' of the MoU projects.

A few points arose in the question and answer session:

  • Resources: Both FAF and IASCF asked their respective standard-setters whether they had enough resources to complete the MoU. Both said 'yes', although financial instrument specialists were hard to find. IASB Chairman Sir David Tweedie thanked the large audit firms in particular for helping out-and giving the IASB 'real experts'.
  • Challenges: The projects most susceptible to slippage against the MoU are:
    • Financial instruments, for which much depends on the post-exposure deliberations as the IASB and FASB seek to reconcile their models.
    • Leases, for which both Boards are braced for a high volume of responses.
    • Financial statement presentation: the Boards agree, but it is likely that the changes proposed will be contentious for preparers especially.
    • Revenue recognition, if only because of the massive change in practice in some significant industries.


On the non-MoU joint projects, the most significant challenge is Insurance. Resource at the FASB is an issue, especially because the FASB is playing 'catch-up' to the IASB. It was admitted that there are a number of issues for which the exposure draft may have to expose alternative solutions, since it may be impossible to reconcile IASB and FASB views.

XBRL was noted as a sleeping issue, especially because of the challenges of data capture, but also an issue that might aid the financial statement presentation project.

The FAF and IASCF Chairmen concluded the meeting by saying that they considered it reasonable to report to the Monitoring Board (and the FAF oversight body) that the MoU was 'broadly on track' for June 2011 completion. Financial instruments and leases might be 'a challenge', but completing all other MoU projects by that date 'seems within possibility'.

The sub-committee will maintain 'open communications' out of session.

This summary is based on notes taken by observers at the Trustees' meeting and should not be regarded as an official or final summary.


iGAAP newsletter March 2010

30 Mar, 2010

Deloitte (United Kingdom) has published the March 2010 edition of their quarterly iGAAP Newsletter.

This newsletter covers the activities of the IASB and the UK Accounting Standards Board (ASB). Each issue includes updates on the activities of the IASB and the ASB, project timetables for both boards, links to new Deloitte publications, an interview of someone involved with IFRSs, and a table showing IFRSs issued but not yet effective or endorsed by the European Union. The interviewee for the March 2010 issue is Paul Pacter, webmaster of IAS Plus. Click to download iGAAP Newsletter March 2010(PDF 165k).


Ethics Board proposes three-year work plan

30 Mar, 2010

The International Ethics Standards Board for Accountants (IESBA) has invited comment an exposure draft (ED) setting out its proposed strategy and work plan for 2010-2012. Among other things, the work plan envisions completing two current high-priority projects – on Conflicts of Interest and Responding to Suspected Fraud or Illegal Acts – and beginning a project on application of the 'related entity' definition in the IESBA's Code of Ethics to audits of collective investment vehicles.

Click for Press Release (PDF 26k) which includes a hyperlink to download the ED. Comment deadline is 15 June 2010.

Monitoring Board will meet with Trustees

29 Mar, 2010

The Monitoring Board (representatives of global capital markets authorities) that oversees the IFRS Foundation will meet with the Trustees of the Foundation on 1 April 2010 from 13.30-16.00pm (London time) at the IASB's offices in London.

The meeting is open to public observation and will be webcast. The agenda for the meeting is below. More Information on the IASB's website.

Agenda for the Monitoring Board Meeting with IFRS Foundation Trustees, 1 April 2010

  • Report from the Monitoring Board and its operations
    • Statement of the Monitoring Board on Principles for Accounting Standards and Standard Setting (22 September)
    • Joint statement on convergence (11 November)
    • Signing MOU/Charter by EC (December 2009)
  • Developments and achievements since the last Monitoring Board meeting.
    • Explanation on stage of the Constitution Review (due process and decision process)
  • IASCF annual report
  • Discussion of financing strategy: implications and matters for resolution
  • Planning strategically for the work following the completion of the IASB-FASB Memorandum of Understanding
  • Enhanced stakeholder engagement and outreach relationships including enhanced technical dialogue (state of play


Expert Advisory Panel on impairment will meet

29 Mar, 2010

The Expert Advisory Panel on the impairment of financial assets will meet at the IASB's offices in London on Monday and Tuesday 26 and 27 April 2010. In November 2009, the IASB issued an Exposure Draft on Impairment of Financial Instruments Measured at Amortised Cost.

The ED proposes to move from an 'incurred loss model' to an 'expected loss model'. An incurred loss model assumes that all loans will be repaid until evidence to the contrary (known as a loss or trigger event) is identified. Only at that point is the impaired loan (or portfolio of loans) written down to a lower value. Under the proposed expected loss model, expected losses are recognised throughout the life of a loan or other financial asset measured at amortised cost, not just after a loss event has been identified. When the ED was issued, the IASB announced that because of significant practical challenges in moving to an expected loss model, the IASB will establish an Expert Advisory Panel comprising experts in credit risk management to advise the board. Click for list of Advisory Panel Members(PDF 18k).


IASB webcast on leases

28 Mar, 2010

On 31 March 2010, the IASB will host a live webcast on the Board's project on accounting for leases.

The IASB plans to issue an exposure draft (ED) of a proposed replacement for IAS 17 in the second quarter of 2010, and a final standard in mid-2011. The ED is expected to propose that all assets (property rights) and liabilities arising under lease contracts should be recognised in the balance sheet. 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 on accounting for lease contracts
  • Date and Time: Wednesday, 31 March 2010, 10:00-11:00am London time, and again at 16:00-17:00pm London time
  • More Information and Registration on IASB Website: Click Here
  • IAS Plus Project Page: Leases


ACCA-Deloitte narrative reporting survey – seeking input

27 Mar, 2010

Next month, ACCA (the Association of Chartered Certified Accountants) and Deloitte LLP will be embarking on a joint international survey, exploring current and anticipated future challenges in narrative reporting (that is the information in annual reports outside the audited financial statements).

The survey will:
  • investigate the critical challenges, principally for CFOs of publicly accountable entities, in preparing narrative disclosures; and
  • identify likely trends in narrative reporting in different reporting environments around the world.
The survey will be carried out in Australia, China, Malaysia, Singapore, Switzerland, UAE, UK, USA, and certain Central African countries. Preparers in those countries are invited to register their interest in being part of this new study by visiting: Interested parties will be invited to participate, confidentially, in the survey when it is launched on 15 April 2010. In return for participation, all survey respondents will receive a complimentary copy of the final report which is scheduled for publication in September 2010.


Updated EFRAG 'endorsement status report'

26 Mar, 2010

The European Union has endorsed the 2009 Improvements to IFRSs and Amendments to IFRS 2 Share-based Payment by publication in the Official Journal on 24 March 2010. Therefore, 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 25 March 2010 (PDF 116k). Currently, six IASB pronouncements await endorsement action. You can always find the endorsement status report Here.


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