On 6 May 2010, the IASB issued Improvements to IFRSs– a collection of amendments to seven IFRSs – as part of its program of annual improvements to its standards. Some of the amendments are effective for annual periods beginning on or after 1 January 2011, and others for annual periods beginning 1 July 2010, although entities are generally permitted to adopt them earlier. Sections of the newsletter include:

• Changes from the exposure draft
• Amendments likely to significantly change current practice
• Details of amendments, including effective dates and transition

Click for IAS Plus Update Newsletter: Improvements to IFRSs 2010

During this roundtable we will provide updates on:

• FASB's expected ED and the proposed changes to financial instruments accounting, including fair value, impairment, and hedge accounting, resulting from the issuance of the ED
• IASB's project to replace IAS 39 including IFRS 9 Financial Instruments, and the most recent deliberations on the impairment of financial assets, hedge accounting, and the derecognition ED

 

He said that Europe is getting impatient regarding convergence of IFRSs and US GAAP:

And let me also briefly mention the issue of accounting standards. I appreciate that the US authorities have made progress towards convergence. But in the EU, we are getting impatient. Going forward, it is crucial that we converge further.

Click for Mr Barnier's Remarks (PDF 152k). IAS Plus has comprehensive recent and historical news about IFRSs in the European Union Here.

Many investors and others have said that volatility in profit or loss resulting from changes in an entity's own credit risk is counter-intuitive and does not provide useful information – except for value changes relating to derivatives and liabilities held for trading (such as short sales). The IASB is proposing, therefore, that all gains and losses resulting from changes in 'own credit' for those financial liabilities that an entity chooses to measure at fair value should be recognised as a component of 'other comprehensive income' (OCI), not in profit or loss. Such gains or losses would be presented using a 'two-step approach':

• As a first step, an entity would present the full change in fair value in profit or loss.
• In the second step, the portion relating to changes in an entity's own credit risk would be presented as an offsetting entry in profit or loss and presented in OCI.

The ED does not propose any other changes for financial liabilities. Consequently, the proposals will affect only those entities that elect to apply the fair value option to their financial liabilities. Importantly, those who prefer to bifurcate financial liabilities when relevant may continue to do so. That is consistent with the widespread view that the existing requirements for financial liabilities work well, other than the 'own credit' issue that these proposals cover.

The proposals in the ED are presented as a self-contained issue for public comment. However, any finalised requirements would be included in IFRS 9 Financial Instruments in the chapter on classification and measurement of financial liabilities. Also, any guidance in IAS 39 or IFRS 7 Financial Instruments: Disclosures that is still relevant to the finalised requirements would be moved to IFRS 9 as well.

Comment deadline on ED/2010/4 Fair Value Option for Financial Liabilities is 16 July 2010. Click for IASB Press Release (PDF 100k). Link to IAS Plus Project Page.

The ED was issued on 5 January 2010. IAS 37 currently requires an entity to record an obligation as a liability only if it is probable (likelihood greater than 50%) that the obligation will result in an outflow of cash or other resources from the entity. The ED proposes to drop the 'probability of outflows' criterion. Instead, an entity would account for uncertainty about the amount and timing of outflows by using a measurement that reflects their expected value, namely the probability-weighted average of the outflows for the range of possible outcomes. Therefore, liabilities within the scope of IAS 37 would be measured at the amount that the entity would rationally pay at the measurement date to be relieved of the liability. Normally, this amount would be an estimate of the present value of the resources required to fulfil the liability, which would take into account the expected outflows of resources, the time value of money, and the risk that the actual outflows might ultimately differ from the expected outflows.

Click for Exposure Draft: Measurement of Liabilities in IAS 37

 

Portions of the meeting are joint meetings with FASB. The meeting will be open to public observation and will be webcast. Presented below is the agenda for the meeting.

IASB Board Meeting Agenda17-20 May 2010, London

Monday 17 May 2010 IASB-FASB Joint Meeting (13:00-18:45pm London Time) Transition Insurance Contracts Consolidation Derecognition Tuesday 18 May 2010 IASB-FASB Joint Meeting (08:30-18:15pm London Time) Leases Revenue Recognition Insurance Contracts Conceptual Framework – Qualitative Characteristics Wednesday 19 May 2010 IASB-FASB Joint Meeting (08:00-13:30pm London Time) Leases Insurance Contracts IASB Meeting (14:00-17:30pm London Time) IFRS Interpretations Committee (IFRIC) Update Annual Improvements 2009-2010 Replacement of IAS 39: Hedge Accounting Thursday 20 May 2010 IASB Meeting (09:30-14:45pm London Time) Management Commentary Emissions Trading Consolidation Joint Ventures Replacement of IAS 39: Hedge Accounting

In two volumes, the handbook contains all current IPSASB pronouncements, including 31 accrual-based standards and the IPSASB's cash basis standard. Five of those standards were approved by the IPSASB in 2009, including requirements and guidance for all aspects of accounting for financial instruments, as well as intangible assets and agriculture. Click for Press Release (PDF 40k). It includes a link to download the handbook from the IPSASB website.

The IASB uses the annual improvements project to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project. These amendments had been proposed in exposure drafts issued in August 2008 and August 2009. Most of the amendments are effective for annual periods beginning on or after 1 January 2011, although entities are generally permitted to adopt them earlier.

Click for IASB Press Release(PDF 104k).

 

IFRS	Subject of amendment
IFRS 1 First-time Adoption of IFRSs	Accounting policy changes in the year of adoption Revaluation basis as deemed cost Use of deemed cost for operations subject to rate regulation
IFRS 3 Business Combinations	Transition requirements for contingent consideration from a business combination that occurred before the effective date of the revised IFRS Measurement of non-controlling interests Un-replaced and voluntarily replaced share-based payment awards
IFRS 7 Financial Instruments: Disclosures	Clarification of disclosures
IAS 1 Presentation of Financial Statements	Clarification of statement of changes in equity
IAS 27 Consolidated and Separate Financial Statements	Transition requirements for amendments arising as a result of IAS 27
IAS 34 Interim Financial Reporting	Significant events and transactions
IFRIC 13 Customer Loyalty Programmes	Fair value of award credits

 

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