The live webcast is offered free of charge. Viewers will have the opportunity to email questions during the event.

Topic:	Revenue Recognition Project: Potential Effects on the Construction Industry
Date and time:	Monday, 13 September 2010, 11:00–12:15pm EDT (US) / 4:00–5:15pm BST (UK)
More information on the webcast and registration:	Via IASB
More information about the revenue project on IAS Plus:	Click here

To assist the IASB in its efforts to gather views from European constituents, as well as to inform itself of whether, and to what extent, preliminary views of the European Financial Reporting Advisory Group (EFRAG) are representative of European views, EFRAG has decided to organise outreach events throughout Europe from September to November 2010, in partnership with European National Standard Setters. To avoid any duplication of effort, EFRAG has decided to invite the IASB to participate in these events. The objective of these events is to

• present the IASB's tentative decisions to constituents;
• present EFRAG's tentative views, highlighting areas of support and focusing on areas of concern;
• seek views from constituents in Europe on the proposals; and
• seek views from constituents in Europe on possible improvements to those proposals.

Tentative locations and dates are, as follows:

• Amsterdam: Tuesday 26 October 2010
• Helsinki: Monday 15 November 2010
• Warsaw: Friday 26 November 2010
• Stockholm: Monday 22 November 2010
• Oslo: Friday 19 November 2010
• Madrid: Tuesday 23 November 2010
• Italy: timing and location to be confirmed
• UK: timing and location to be confirmed

 

The exposure draft proposed minor amendments to the May 2009 ED on fair value measurement. The May 2009 ED proposed a three-level fair value hierarchy that categorises observable and non-observable market data used as inputs for fair value measurements. Under that hierarchy, Level 3 inputs are 'unobservable inputs' used for the fair value measurement of assets or liabilities for which market data are not available. Required disclosures would include a 'measurement uncertainty analysis' (sometimes called a 'sensitivity analysis'). The June 2010 ED would enhance the original proposal by requiring the measurement uncertainty analysis disclosure to reflect the interdependencies between unobservable inputs used to measure fair value in Level 3.

Below is an excerpt from the comment letter:

We support the Board’s efforts to enhance the disclosures for fair value measurements that are categorised within Level 3 of the fair value hierarchy and the concept of a measurement uncertainty analysis disclosure for Level 3 fair value measurements. However, we have concerns about whether the proposed measurement uncertainty disclosure in the ED is operational. Entities are likely to encounter operational difficulty in applying the proposed guidance because of a lack of clarity about: the threshold for identifying alternative inputs; the inputs to use when there is a range of reasonable inputs and which techniques to use when there are multiple techniques (each with a range); and the objective of the correlation assessment.

Click for:

• Complete letter of comment to IASB (PDF 40k)
• Our fair value measurement project page
• Summary of ED/2010/7
• IFRS in Focus Newsletter IASB issues Exposure Draft on Fair Value Measurement Disclosures (PDF 60k).

 

Click for:

• Our previous story
• CEBS statement
  

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

This newsletter describes the recent IFRS Interpretations Committee draft Interpretation DI/2010/1 Stripping Costs in the Production Phase of a Surface Mine. The draft Interpretation was developed in response to a request for guidance on accounting for waste removal costs incurred in the production phase of a surface mine. The draft Interpretation addresses the following issues:

• whether the definition of an asset is met;
• when the stripping campaign component should be recognised; and
• how the stripping campaign component should be measured at initial recognition and subsequently.

The draft Interpretation comment period ends on 30 November 2010.

Click for:

• IFRS in Focus Newsletter – IFRS Interpretations Committee issues Draft Interpretation on Stripping Costs in the Production Phase of a Surface Mine (PDF 74k)
• Past editions of IFRS in Focus
• Our IAS 16: Accounting for Stripping Costs in the Production Phase of a Mine project page

 

Currently, the financial services sector in Europe is overseen at EU level by three "coordinating committees" that only have advisory powers:

• the Committee of European Banking Supervisors (CEBS)
• the Committee of European Insurance and Occupational Pensions Committee (CEIOPS)
• the Committee of European Securities Regulators (CESR)

These will now be replaced by the following regulatory authorities offering direct EU supervision of systemically important financial institutions:

• European Banking Authority (EBA)
• European Insurance and Occupational Pensions Authority (EIOPA)
• European Securities and Markets Authority (ESMA)

The EBA, EIOPA and ESMA will be empowered to draft regulatory financial standards, which will be made legally binding by the Commission (and then legislated into effect in the member states). The agencies would be able to over-ride national decisions that do not conform to EU regulations.

In addition, a European Systemic Risk Board (ESRB) will be established which will monitor and assess potential threats to financial stability that arise from macro-economic developments and from developments within the financial system as a whole.

The legislation is expected to be passed by the plenary assembly of the European Parliament on 21 September 2010. The new regulatory authorities could start working as early as 1. January 2011. More information about the new authorities can be found here (link to the European Commission page).

They provide a high level summary of proposals and are available to download free of charge from this website.

So far snapshots on the following projects have been made available (click through for project summaries on IAS Plus):

• Derecognition
• Fair Value Measurement
• Financial Statement Presentation
• IFRS 9: Financial Instruments (replacement of IAS 39)
• Insurance Contracts
• Leases
• Liabilities
• Post-employment Benefits (including pensions)
• Rate-regulated Activities
• Revenue Recognition
• XBRL (eXtensible Business Reporting Language)

Click for the Library of Snapshot documents (link to IASB website).

 

The recommendations include a comment that the strategy, work plan and priorities of the IASB should reflect its objectives as set out in the IASB Constitution. The recommendations also seek to allow the new IASB Board to become better oriented before making extensive longer-term commitments, and would ease the transition from the old to the new Board. It also notes "convergence is not an objective as such and is intended merely as an interim step to facilitate adoption of IFRS".

In summary terms, the recommendations are:

Basic policies Focus on serving those who have adopted or wish to adopt IFRS. Convergence is no longer a prime consideration. Retain the current objective of serving the reporting needs of capital market participants for profit-oriented entities. Short- to medium-term objectives Provide a period of calm in issuing new standards to bed down the numerous new and revised standards coming into effect. Stand ready to assist in resolving implementation issues. Assess proposals for new standard-setting projects against strict selection criteria. Provide some capacity and flexibility to deal with unforeseen urgent issues without disrupting the work plan. Allocate significant resources to ensuring that the standards are interpreted and applied with an appropriate degree of consistency, and that they are producing the intended results. Post-implementation reviews become a significant activity. Expedite completion of the conceptual framework project and developing a disclosure framework. Monitor trends and developments that are likely to affect financial reporting in the future. Interaction with constituents Manage the relationship between IFRS and IFRS for SMEs. The first periodic update of IFRS for SMEs will be particularly challenging because of the recent spate of new or revised standards. Continue and expand outreach activities with particular emphasis on users and emerging markets.

Click for access to the recommendations (link to IASB website). We have a page on the Advisory Council Here.

The proposals would amend the accounting for defined benefit plans through which some employers provide long-term employee benefits, such as pensions and post-employment medical care. Key proposals include the elimination of the 'corridor' approach for accounting for pensions, splitting of gains and losses on defined benefit plans (and other long-term employee benefits) into three components with remeasurements being presented as part of other comprehensive income (OCI), and new disclosures.

Below is an excerpt from the comment letter:

We support the Board’s proposal to eliminate the option to defer recognition of changes in defined benefit assets and liabilities because the current deferred recognition represents a smoothing mechanism that often fails to capture and present relevant information on the status of the defined benefit plans. Further, the deferred recognition approach is inconsistent with the definition and recognition criteria of assets and liabilities in the Framework and it represents a source of complexity within IAS 19. However, we do not support introducing other proposed changes, including a new presentation method, the elimination of the expected rate of return on plan assets and changes in definitions of employee benefits, in this short-term project. We believe these issues should be reconsidered as part of the Board’s planned fundamental review of the accounting for employee benefits and some should be timed to coincide with the Financial Statement Presentation Project (FSPP) which we would expect to address what is financial performance, what is other comprehensive income (OCI) and why, when and how amounts recognised in OCI are recycled to profit or loss. Therefore, until the completion of these projects, we support the status quo with respect to many of the issues addressed in the ED.

Click for:

• Complete letter of comment to IASB (PDF 61k)
• Our employee benefits project page
• Summary of ED/2010/3
• IAS Plus Update Newsletter Closing the Corridor – IASB Proposes Significant Changes to Pension Accounting (85k)