June

Agenda for the Capital Markets Advisory Committee meeting

18 Jun, 2012

The Capital Markets Advisory Committee is meeting in London on 20 June 2012. The agenda for the meeting is now available.

The agenda for the meeting is set out below:

Agenda for the meeting

Wednesday, 20 June 2012

  • Work plan update
  • Leases project update
  • Disclosure framework (introduction - breakout sessions - feedback)
  • Revenue Recognition project – onerous contracts
  • Agenda consultation – next steps
  • Narrow scope amendments
  • Financial Instruments
    • Classification and measurement
    • Impairment

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

IASB issues updated work plan with slight clarification of timings and a new project on the IFRS for SMEs

18 Jun, 2012

The International Accounting Standards Board (IASB) has publicly released a revised work plan updating the expecting timing of various due process steps in its projects. The expected timing of a revised ED in the leases project has been clarified, and a new project added on the comprehensive review of the IFRS for SMEs.

The following is a summary of the changes in the revised work plan, which is dated 14 June 2012:

  • Leases - the target date for the re-exposure of the proposals is now fourth quarter of 2012 (previously second half of 2012)
  • IFRS for SMEs - comprehensive review 2012-2014 - the updated work plan formally includes this new project which was confirmed at the June 2012 IASB meeting.  An Invitation to Comment (later retitled to a Request for Information) is expected in late June or early July, with further due process steps to occur over 2013-2014, and 2015 set as the target effective date for any amendments resulting from the review.

The work plan confirms the following milestones are expected to be reached by the end of June:

Click for IASB work plan as of 14 June 2012 (link to IASB website). We have updated our project pages to reflect the updated work plan and other known developments.

Final notes from June IASB meeting

17 Jun, 2012

We have posted the Deloitte observer notes from the IASB-only insurance session held during the IASB's 12-14 June 2012 meeting. The session was an education session to discuss the treatment of acquisition costs in insurance contracts.

Click through for direct access to the notes:

Thursday, 14 June 2012

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

Deloitte comment letter on discussion paper on income taxes

15 Jun, 2012

Deloitte's IFRS Global Office has submitted a letter of comment responding to the European Financial Reporting Advisory Group's (EFRAG's) and the UK Accounting Standards Board's (ASB's) Discussion Paper, Improving the Financial Reporting of Income Tax.

In the comment letter, we agree with the discussion paper's observation that a focus on user needs when re-assessing financial reporting of income taxes, such as the need for additional clarity on current and likely future tax payments, should be a central consideration.

Click for a full summary and our comment letter on the EFRAG's discussion paper.

Further notes from the June IASB meeting

15 Jun, 2012

The IASB's June meeting was held in London on 12-14 June 2012, some of it a joint meeting with the FASB. We have posted Deloitte observer notes from the sessions on post-implementation review of IFRS 8 and IFRS for SMEs.

Click through for direct access to the notes:

Thursday, 14 June 2012

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

IASB podcast on insurance contracts

15 Jun, 2012

The IASB has made available a podcast on the current state of debate in the IASB/FASB joint project on insurance contracts. The podcast, by Stephen Cooper (IASB member) and Andrea Pryde (Senior Technical Manager) report on developments in the project following the joint IASB/FASB meeting on 12-14 June.

In particular, this podcast focuses on the boards' discussion on a possible method for determining a revenue-like measure, 'earned premiums'.

To listen to the podcast, please click here (link to IASB website).

IIRC publishes feedback summary, commits to integrated reporting framework by end of 2013

15 Jun, 2012

The International Integrated Reporting Council (IIRC) has released a summary of feedback received on its 2011 Discussion Paper 'Towards Integrated Reporting—Communicating Value in the 21st Century' and committed to publishing its 'Integrated Reporting Framework' by the end of 2013.

The IIRC received 214 responses to its Discussion Paper from organisations and individuals from over 30 countries.  Reporters, accounting bodies and standard setters represented well over a third of all responses, but responses were also received from a broad spectrum of other organisations and individuals.

The responses received revealed strong stakeholder support for the IIRC to begin the next phase of its framework development. This will include specific work streams on several topics including materiality, the concept of value and business models. The IIRC has stated its intention to conduct this phase in close dialogue with a full range of stakeholders to ensure the process is transparent and informed by market participants.

The IIRC’s analysis identifies four significant areas that need to be explored further to develop the framework:

  • Basic concepts underlying Integrated Reporting — including the definition of Integrated Reporting, what Integrated Reporting is (or is intended to become) and how Integrated Reporting should relate to existing reporting strands (e.g. financial, management commentary, governance and remuneration, and sustainability reporting)
  • Target audience for Integrated Reporting — While the primary audience of an Integrated Report is investors, the IIRC believes it clear that investors are not the only audience
  • From whose perspective “value” should be considered — value to the organisation, to investors, to other stakeholders, or to society at large?
  • Timing of the release of the framework — inter-relationship with the IIRC's pilot programme, the need for more conceptual work, and that time should be taken to ensure a high-quality product.

Partly in response to the points above, the IIRC has announced the deferral of its original plans to finalise an integrated reporting framework in 2012, and instead is now targeting completion of the framework by the end of 2013.

Click for more information (link to IIRC website).

Notes from the June IASB meeting

15 Jun, 2012

The IASB's June meeting was held in London on 12-14 June 2012, some of it a joint meeting with the FASB. We have posted Deloitte observer notes from the sessions on investment entities, insurance contracts, leases, and various IFRS Interpretations Committee matters.

Click through for direct access to the notes:

Tuesday, 12 June 2012

  • Insurance contracts (IASB-FASB)
    • Educational session on measuring earned premiums
    • Allocation of cash flows to the unbundled component

Wednesday, 13 June 2012

  • Leases (IASB-FASB)
    • Lease expense recognition patterns (see also our earlier story)
    • Determination of a dividing line for different types of leases
  • Financial instruments - Limited reconsideration of IFRS 9 (classification and measurement) (IASB-FASB)
    • Scope of fair value through other comprehensive income for debt instruments
    • Fair value option
  • Investment entities (IASB-FASB)
    • Accounting by an investment entity parent for an investment entity subsidiary
    • Accounting by a non-investment entity parent for the investments of an investment entity subsidiary

Thursday, 14 June 2012

The meeting originally scheduled for Friday 15 June is no longer proceeding.  Meeting notes from the other sessions during the meeting will be posted soon.

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

Agenda for Insurance Working Group meeting

14 Jun, 2012

The Insurance Working Group is meeting in London on 25 and 26 June 2012. The agenda for this meeting is now available.

The agenda for this meeting is reproduced below:

 

Agenda for the meeting

 

Monday 25 June 2012

  • Introductions
  • Overview of papers for this meeting
  • Taking stock: Progress towards an IFRS on insurance contracts (for information)
  • Progress on the IASB's work plan (for information)
  • Progress on the IASB's financial instruments projects
  • Reporting back on previous board decisions:
    • Definition of an insurance contract and the scope of the insurance contracts standards
    • Premium-allocation approach
    • Accounting for non-insurance components in an insurance contract
    • Use of OCI to present the effects of discount rate changes
  • Presentation in the statement of comprehensive income, Presentation 'earned premiums' in the statement of comprehensive income

Tuesday 26 June 2012

  • Continuation of Presentation in the statement of comprehensive income, Presenting 'earned premiums' in the statement of comprehensive income
  • Adjusting the residual margin for changes in estimates
  • Estimating the residual margin on transition
  • Next steps

Further details of this meeting are also available on the IASB's website.

UK Sharman inquiry calls for global consistency in interpretation of "going concern"

14 Jun, 2012

The United Kingdom Sharman Panel of Inquiry, established at the invitation of the UK Financial Reporting Council (FRC) to consider going concern and liquidity risks, has published its final report and recommendations ('Sharman report'). One of the recommendations is that the FRC should engage with the IASB and IAASB "to agree a common international understanding of the purposes of the going concern assessment and financial statement disclosures about going concern, and of the related thresholds and descriptions of a going concern".

In support of the recommendation, the report builds on observations in the Panel's preliminary report and notes current divergence in the consideration of going concern:

It is important that what constitutes a going concern and the relationships between the elements of information relating to the entity’s going concern status... – and their purposes and the thresholds used – should be clearly and consistently understood and applied. The Panel found that the descriptions of these matters in the various sources (UK GAAP and IFRS, auditing standards, the Code and guidance for directors and auditors) are at worst inconsistent and at best open to different interpretations, and are in fact interpreted differently, by different people. While recognising the judgmental nature of going concern, such inconsistencies may undermine the effectiveness of the assessment process and the disclosure about the entity’s going concern status and may create expectation gaps.

The report also discusses the concept of "prudence" in accounting.  The following observations are included in the section dealing with integrating the going concern assessment with business planning and risk management:

The Panel also heard evidence that IFRS had resulted in a move away from prudence towards neutrality in providing financial information. Prudence involves weighting downside risks more heavily than upside opportunities. The Panel concluded that, although financial reporting may benefit from this shift in terms of enhanced comparability, prudence remains important in making going concern assessments. Therefore, in making such judgments, directors should seek to ensure that the company is solvent and liquid on a prudent basis.

The report discusses a wide range of related topics, such as the role of auditors and the FRC, considering whether there should be a special going concern disclosure regime for banks, and even whether separate financial reporting and auditing regime for banks is warranted.  On this latter point, the report supports the view that such a system would undermine comparability of corporate reports but notes that regulatory requirements for banks permits incremental (and even separate) reporting.

The Sharman report is to be discussed at the forthcoming IFRS Advisory Council meeting, being held in London on 18-19 June 2012 (the Council meeting will also discuss the related topic of the interaction between the IASB and the IAASB).

Click for access to the Sharman report (link to FRC website).

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