June

IASB webcast on the amendments to IAS 19

22 Jun, 2011

On June 16 the IASB published amendments to IAS 19 Employee Benefits.

Next Monday, the IASB will give a webcast introducing the amended version of IAS 19 including a live question and answer session. For the convenience of participants in different time zones two slots have been scheduled.
  • Monday, 27 June 2011 — Improvements to the accounting for post-employment benefits Webcasts will be held at 9.30am and 3.30pm, London time. Registration is available through the IASB's website.

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IASB publishes proposals for amendments under its annual improvements project

21 Jun, 2011

The International Accounting Standards Board (IASB) has published to its website an exposure draft (ED) of proposed amendments to five International Financial Reporting Standards (IFRSs) under its annual improvements project.

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.

ED/2011/2 Improvements to IFRSs proposes the following amendments:

IFRS Subject of amendment
IFRS 1 First-time Adoption of IFRSs Repeated application of IFRS 1

Borrowing costs relating to qualifying assets for which the commencement date for capitalisation is before the date of transition to IFRSs

IAS 1 Presentation of Financial Statements Clarification of requirements for comparative information

Consistency with the updated Conceptual Framework

IAS 16 Property, Plant and Equipment Classification of servicing equipment
IAS 32 Financial Instruments: Presentation Clarify that income tax relating to distributions to holders of an equity instrument and income tax relating to transaction costs of an equity transaction should be accounted for in accordance with IAS 12 Income Taxes.

IAS 34 Interim Financial Reporting Interim financial reporting and segment information for total assets

The ED proposes that all of the amendments will be effective for annual periods beginning on or after 1 January 2013, although entities shall be permitted to adopt them earlier. Click for IASB Press Release (link to IASB website).

You can access the ED via the the 'Comment on a proposal' page on the IASB's website. The IASB requests comments on the ED by 21 October 2011.

Integrated reporting and sustainability reporting update

20 Jun, 2011

Following is a summary of recent developments in integrated reporting, sustainability reporting, and related topics:

  • IIRC European roundtable.The Federation of European Accountants (FEE) hosted a European Roundtable on Integrated Reporting for the International Integrated Reporting Committee (IIRC) on Friday 17 June 2011. Topics discussed included how to operationalise integrated reporting (including possible linkages with XBRL), the necessary framework for integrated reporting, and governance of the IIRC. More information is available on the FEE website
  • IFRS Advisory Council consideration of Integrated Reporting. The IFRS Advisory Council meeting currently being held (see our story with the agenda) is receiving a presentation from the IIRC on integrated reporting. The Agenda paper (PDF 548k, link to IASB website) provides a useful summary of the IIRC's plans and the likely timetable for the issue of the IIRC Discussion Paper
  • Integrated reporting study. Harvard Business School has released the outcomes on a study of integrated reporting. To determine the extent to which corporate and investor behaviour is changing to contribute to a more sustainable society, the state of integrated reporting in 23 countries was analysed, classifying various countries by both the extent of investor interest in integrated reporting and the level of integrated reporting by companies in that country. The report can be accessed on the Harvard Business School website
  • Report on 'natural capital'. The University of Cambridge Natural Capital Leaders Platform, a business-led programme addressing the impacts of natural capital loss and degradation on business and wider society, has released a report arising from the initial phase of its work. The report highlights the need to integrate the economic importance of natural capital into the investment community (following the 2010 TEEB study), which will likely require mandatory regulation with sector-specific sub-directives to help to create an even playing field within the market. The report also recommends incorporating natural capital into national economic indicators. The summary report is available on the University of Cambridge website
  • Carbon reporting in the UK. The United Kingdom Department for Environment, Food and Rural Affairs (DEFRA) has launched a public consultation (link to DEFRA website) seeking views on whether regulations should be introduced to make it mandatory for some UK companies to report on their greenhouse gas (GHG) emissions or whether the Government should continue to encourage measuring and reporting of GHG emissions on a voluntary basis. The Carbon Disclosure Project (CDP) has responded (link to CDP website) supporting the introduction of regulations requiring British businesses to report their GHG emissions.

Click for our sustainability reporting page.

Agenda for IFRS Advisory Council Meeting

20 Jun, 2011

The IFRS Advisory Council is meeting in London on 20-21 June 2011. The agenda for the meeting is set out below.

IFRS Advisory Council Meeting Agenda
20-21 June 2011, London
Monday, 20 June 2011
  • Welcome and Chairman's preview
  • Overview of last four months
  • IASB Activities
  • EFRAG's outreach on Leases and Revenue recognition
  • SEC IFRS Workplan: status update
  • The IASB's post-2011 agenda
  • Council performance self-review
  • Crosscutting issues (follow up from the November 2010 meeting)
  • Translation issues
  • Use of underlying earnings and non GAAP measures
  • Who is implementing IFRSs – and how? (IFRS 'branding')

Tuesday, 21 June 2011

  • Monitoring Board review
  • Trustee strategy review
  • Trustee and Monitoring Board reviews
  • IFRS 'branding'
  • Integrated reporting

Click for access to the full agenda and agenda papers (link to IASB website).

Consultation on IASB's future agenda

19 Jun, 2011

The IASB has formally announced that it will be undertaking for the first time a public agenda consultation on its future work plan.

In February 2010 the Trustees of the IFRS Foundation, the IASB's oversight body, announced enhancements to their governance arrangements, including the decision to undertake a three-yearly public consultation on the IASB's future technical agenda, in addition to consulting the Trustees and the IFRS Advisory Council annually on the existing and future agenda.

A paper (link to IASB website) being considered at this week's IFRS Advisory Council Meeting (see our 20 June 2011 article) outlines the expected timetable for the consultation process:

  • July 2011: Discuss revised proposals with IFRS Foundation Trustees
  • July 2011: Board discussion and finalisation of consultation proposals
  • July 2011: Launch of Agenda Consultation, with a minimum 120 day comment period
  • 30 November 2011: Consultation period ends
  • Q1 2012: Publication of comment summary, start of Board discussions and consultation with the IFRS Advisory Council
  • Q2 2012: Publication of Feedback Statement summarising what has been learnt from the agenda consultation

The paper outlines the primary focus of the consultation will be a 'Request for Views' document which will consider the agenda from two perspectives: (1) the overall strategic direction and balance of the agenda, and (2) understanding the financial reporting needs of stakeholders and how these might be balanced with constraining factors such as stakeholder and IASB resource capacity and the IASB's existing priorities.

Click for IASB announcement (link to the IASB website).

EFRAG Update with meeting summary for the June EFRAG TEG meeting

17 Jun, 2011

The European Financial Reporting Advisory Group (EFRAG) has released the June 2011 issue of its EFRAG Update newsletter.

The EFRAG TEG meeting held on 8 to 10 June 2011 focused on:

Click for the EFRAG Update (PDF 377k, link to EFRAG website). Links to earlier issues are available here.

Joint press release on IASB-EFRAG Meeting

16 Jun, 2011

The IASB and EFRAG have issued a press release on their joint meeting held on 14 June 2011 to discuss the completion of the IASB's work plan and the future agenda of the IASB.

These meetings take place on a regular basis and are used to discuss European ideas and input into projects on the IASB's agenda. In addition to representatives from EFRAG, four European standard-setters were represented: France, Germany, Italy and the UK. The topics discussed were:

  • Revenue recognition
  • Leases
  • Insurance contracts
  • Financial instruments
  • New standards on consolidation, joint arrangements and disclosures
  • Timeline for completion of major projects

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IIRC calls for participants in its Integrated Reporting Pilot Programme

16 Jun, 2011

The International Integrated Reporting Committee (IIRC) has called for expressions of interest from companies interested in participating in its Integrated Reporting Pilot Programme.

The Pilot Programme is designed to assist the IIRC in the development of the Integrated Reporting framework over coming years. The IIRC hopes to test the principles and practicalities of Integrated Reporting through the Pilot Programme, with a view to creating a new global standard in Integrated Reporting in due course. The IIRC is intending to issue a Discussion Paper on Integrated Reporting in the third quarter of 2011.

The Pilot Programme is being conducted in three phases. The deadline for lodgement of expressions of interest by companies willing to participate in all phases of the Pilot Programme is 30 June 2011, with expressions of interest for those wishing to join later stages of the programme closing on 29 July 2011.

Click for more information (link to IIRC website).

IASB releases two new standards to complete two agenda projects

16 Jun, 2011

The IASB has amended two standards which are key planks in achieving its work plan, introducing new requirements on the presentation of comprehensive income and the accounting for employee benefits.

The changes had their genesis in more extensive objectives under wider projects. The changes to the presentation of other comprehensive income (OCI) were 'spun out' of the wider project on Performance Reporting, which promised a major overhaul of the way the primary financial statements were presented. The OCI ED had originally itself proposed the mandatory presentation of other comprehensive income in one financial statement, but constituent comment proved the change to be too controversial to be included in the final amendments. Instead, the amendments to IAS 1 Presentation of Financial Statements retain the 'one or two statement' approach at the option of the entity and only revise the way other comprehensive income is presented: requiring separate subtotals for those elements which may be 'recycled' (e.g. cash-flow hedging, foreign currency translation), and those elements that will not (e.g. fair value through OCI items under IFRS 9). In addition, the FASB has issued corresponding guidance with the issuance of ASU 2011-05. While the boards' new guidance essentially converges the requirements for presenting OCI, there are still differences between U.S. GAAP and IFRSs concerning (1) what items are included in comprehensive income and (2) reclassification requirements.

The amendments to employee benefits are somewhat more substantial, but might be considered a pragmatic subset of what the IASB had hoped to achieve when the overall project was included in the earlier stages of the convergence programme. Accounting for employee benefits, particularly pensions and other post-retirement benefits, has long been a complex and difficult area and initial plans for a full review of pension accounting had to be deferred in light of competing priorities, ultimately leaving the IASB to proceed alone on improving specific aspects of the existing requirements of IAS 19 Employee Benefits. Prior to the amendment, IAS 19 permitted choices on how to account for actuarial gains and losses on pensions and similar items, including the so-called 'corridor approach' which resulted the deferral of gains and losses. The Exposure Draft proposed eliminating the use of the 'corridor' approach and instead mandating all remeasurement impacts be recognised in OCI (with the remainder in profit or loss) – and in fact had proposed extending these requirements to all long-term employee benefits (e.g. certain long service leave schemes). The final amendments make the OCI presentation changes in respect of pensions (and similar items) only, but all other long term benefits are required to be measured in the same way even though changes in the recognised amount are fully reflected in profit or loss.

Also changed in IAS 19 is the treatment for termination benefits, specifically the point in time when an entity would recognise a liability for termination benefits. The final amendments do not adopt the equivalent US-GAAP requirements verbatim (which requires individual employees to be notified), but the recognition timeframe may be extended in some cases.

Finally, various other amendments to IAS 19 may have impacts in particular areas. For instance, employee benefits not settled wholly before twelve months after the end of the annual reporting period would be captured as an 'other long term benefit' rather than a 'short term benefit', and whilst presented as a current item in the statement of financial position, would be measured differently under the amendments.

Summary of the amendments

Amendments to IAS 1 Presentation of Financial Statements

  • Preserve the amendments made to IAS 1 in 2007 to require profit or loss and OCI to be presented together, i.e. either as a single 'statement of profit or loss and comprehensive income', or a separate 'statement of profit or loss' and a 'statement of comprehensive income' – rather than requiring a single continuous statement as was proposed in the exposure draft
  • Require entities to group items presented in OCI based on whether they are potentially reclassifiable to profit or loss subsequently. i.e. those that might be reclassified and those that will not be reclassified
  • Require tax associated with items presented before tax to be shown separately for each of the two groups of OCI items (without changing the option to present items of OCI either before tax or net of tax)
  • Applicable to annual periods beginning on or after 1 July 2012, with early adoption permitted.

Amended IAS 19 Employee Benefits

  • Require recognition of changes in the net defined benefit liability (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements
  • Introduce enhanced disclosures about defined benefit plans
  • Modify accounting for termination benefits, including distinguishing benefits provided in exchange for service and benefits provided in exchange for the termination of employment and affect the recognition and measurement of termination benefits
  • Clarification of miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features
  • Incorporate other matters submitted to the IFRS Interpretations Committee
  • Applicable on a modified retrospective basis to annual periods beginning on or after 1 January 2013, with early adoption permitted.
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Further notes from the June IASB meeting

16 Jun, 2011

The IASB's regular monthly meeting was held on 13-15 June 2011 in London, much of it a joint meeting with the FASB.

We've posted Deloitte further observer notes from the meeting (click through for direct access to the notes):

Wednesday, 15 June 2011

The next meeting of the IASB is scheduled for 18-22 July 2011. The tentative meeting originally scheduled for 1 July 2011 has been removed from the IASB's calendar.

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers for the entire meeting.

Correction list for hyphenation

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