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May

IFRS Interpretations Committee publishes proposed guidance on levies and put options

31 May 2012

Today, the IFRS Interpretations Committee published for public comment proposed guidance on accounting for (1) levies charged by public authorities on entities that operate in a specific market and (2) a put option written by a parent entity on the shares of its subsidiary held by a non-controlling-interest shareholder.

Levies

The Committee considered how an entity would account for the payment of levies, other than income taxes, in its financial statements; specifically, when the liability to pay a levy should be recognised. The proposed guidance, DI/2012/1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market, clarifies that "the obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy as identified by the legislation".

Comments on the levies proposal are due by 5 September 2012.

Click for DI/2012/1 and the press release, both available on the IASB website.

 

Put options

The Committee considered how to measure the financial liability created when a parent entity is obliged to purchase the shares of its subsidiary for cash or for another financial asset, and the parent must recognise a financial liability in its consolidated financial statements for the present value of the option exercise price.

The proposed guidance, DI/2012/2 Put Options Written on Non-controlling Interests, clarifies that all changes in the measurement of that financial liability should be recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments.

Comments on the put options proposal are due by 1 October 2012.

Click for DI/2012/2 and the press release, both available on the IASB website. A french translation of DI/2012/2 is also available.

Agenda for the IASB June education session meeting

31 May 2012

The International Accounting Standards Board will be meeting in London on 6 June 2012 for an education session to discuss leases and revenue recognition.

The agenda, dated 30 May 2012, has been released.

The full agenda for the meeting can be found here.

Final notes from the May IASB meeting

30 May 2012

The IASB held its May meeting in Norwalk, CT. Much of the meeting was a joint meeting with the FASB. We have posted Deloitte observer notes from the effective dates session and IFRS 8 post-implementation review session held on Wednesday and the leases session held on Thursday.

Click through for direct access to the notes:

Wednesday 23 May 2012 (US time)

Thursday 24 May 2012

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

Insurance contracts notes from the May IASB meeting

28 May 2012

We have published Deloitte observer notes from the insurance sessions of the May IASB meeting. The discussions, many jointly with the FASB, spanned twelve hours over the course of three days and covered unbundling, whether to abandon the risk adjustment, the use of other comprehensive income and acquisition costs.

Click through for direct access to the notes:

Tuesday, 22 May 2012

Wednesday, 23 May 2012

Thursday, 24 May 2012

Meeting notes from the remaining sessions will be posted soon.

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

Further notes from the May IASB meeting

25 May 2012

The IASB held its May meeting in Norwalk, CT. Much of the meeting was a joint meeting with the FASB. We have posted Deloitte observer notes from the investment entities session held on Monday and IFRS 10 transition guidance session held on Wednesday.

Click through for direct access to the notes:

Monday, 21 May 2012 (US time)

    Wednesday, 23 May 2012

    Meeting notes from the remaining sessions will be posted soon.

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

    IFRS Foundation's framework-based teaching workshops

    25 May 2012

    The IFRS Foundation has developed Framework-based teaching workshops for those teaching IFRSs. As part of the IASB's education initiative, the workshops train teachers to develop their students' skills in interpreting and applying IFRSs (including IFRS for SMEs).

    At a recent workshop on 14 May in London, the IASB welcomed 30 participants from 20 countries for a Framework-based IFRS teaching session. Following this session, the IASB project staff provided updates on the investment entities, financial instruments, leases, and insurance projects currently on the IASB's active agenda. Further, there was a Q&A session for IFRS teacher with the IASB Staff on the new and amended IFRSs that would become mandatory in 2013.

    Please click for:

    Accounting for emission rights an urgent topic for national standard setters

    25 May 2012

    In November 2010, the IASB deferred its project on emission trading schemes in its movement to concentrate on the major projects of the MoU that were to be finalised by June 2011. With those projects still not finalised and with global sustainability moves resulting in new laws and regulations, national standard setters are beginning to move forward on their own.

    The French standard setter Autorité des normes comptables (ANC) has recently presented a discussion paper Accounting for Emissions Trading Schemes Reflecting Companies’ Business Models that is intended "to inspire the international debate and, as soon as possible, the development of an international accounting standard by the IASB."

    The European Union Emissions Trading System (EU ETS) launched in 2005 will move into Phase III in 2013 which will lead to the gradual phasing out of free emission rights and a move towards auctioning of emission rights. Consequently, the questions of whether tradeable permits in emission trading schemes (allowances and credits) are assets and how they should be accounted for need to be addressed. The ANC proposes an accounting approach that builds on the business model of a company as "under IFRS, a uniform measurement of purchased allowances, regardless of the use they are put to, would be irrelevant".

    In Australia, the newly introduced Carbon Pricing Mechanism (CPM) is split into phases as well. The fixed price phase in which a carbon tax is levied on certain entities is to run from 1 July 2012 to 30 June 2015. In the following flexible price phase, permits (carbon units) can be traded.

    In an agenda paper published by the staff of the Australian Accounting Standards Board (AASB) that is predominently dealing with possible financial reporting implications of the fixed price phase, the staff announces: "The financial reporting implications of the flexible price phase will be considered when the IASB progresses its project on accounting for ETSs." However, the staff also notes: "The AASB has contingency plans in place to provide any necessary financial reporting guidance under Australian Accounting Standards in regard to the flexible price phase, should it be established that a pronouncement from the IASB will not be forthcoming in time to provide a basis for accounting treatments in the flexible price phase."

    It is likely that the IASB will be taking up the project on emission trading schemes (ETS) again since during the discussion of the agenda consultation last Wednesday research on emissions trading schemes was named as one of the possible priority projects for the future agenda.

    Please click for:

    Chairman Michel Prada speech to IOSCO

    24 May 2012

    On 16 May 2012 Michel Prada, Chairman of the IFRS Foundation Trustees, addressed the 2012 IOSCO conference, in Beijing, China. In his speech, Mr Prada highlighted the IOSCO's role in developing IFRSs, discussed the future of the IASB as a global standard-setter, and shared his goal of greater coordination between the IASB and IOSCO.

    Mr Prada began his speech congratulating the IOSCO on its governance reform, noting that the reform will enhance the IOSCOs visibility and efficiency. He spoke about the IOSCO being a catalyst for the the global accounting standards movement in May 2000, when it endorsed for cross-border listings. These were the 'core standards' of the Accounting Standards Committee, which later became the IASB.

    In his speech, Mr Prada discussed the success of IFRSs and he is hopeful that the remaining countries, including the US, India and China, will come "fully on board" to see the full benefits of a single set of global accounting standards.

    Mr Prada also spoke about the future role of the IASB as a global accounting standard-setter. He cited the reviews by the IFRS Foundation Monitoring Board and the IFRS Trustees which released jointly in February 2012. He believes that one of the most important findings in the Trustees' strategy review is the recommendation to "formalise the IASB's relationship with others involved in the financial reporting supply chain — accounting standard-setters, audit and securities regulators, and others. The purpose of this is twofold."

    Mr. Prada goes on to explain:

    The first relates to the IASB’s ability to create standards that can be applied around the world and without modification. The IASB cannot do this alone. It must find ways to work in close cooperation with standard-setting bodies around the world, to tap-into the best thinking in financial reporting, but also to make sure that jurisdictional requirements are fully taken into consideration.

    The second purpose is to improve consistency in the implementation of those standards. The IASB has been given the responsibility to develop international standards, but it does not have the authority to say how those standards should be endorsed, implemented or enforced.

    Neither is it equipped to easily identify the consequences of the standards without the contribution of those entities that implement them in the field.

    Mr. Prada then asked for more cooperation and collaboration between the IOSCO and the IASB, noting that the Trustees' strategy review provided a framework for a better-developed relationship.

    Please click for the full text of Mr Prada's speech on the IASB website.

    Further notes from the May IASB meeting

    24 May 2012

    The IASB held its May meeting in Norwalk, CT. Much of the meeting was a joint meeting with the FASB. We have posted Deloitte observer notes from the agenda consultation session and an IFRS Interpretations Commitee issue session, both held on Wednesday.

    Click through for direct access to the notes:

    Wednesday, 23 May 2012 (US time)

    Meeting notes from the remaining sessions will be posted soon.

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

    ISDA compares derivative reporting under US GAAP and IFRS

    24 May 2012

    The International Swaps and Derivatives Association (ISDA) has published a paper 'Netting and Offsetting: Reporting Derivatives Under US GAAP and Under IFRS'. The paper describes the key differences between the approaches used by the IASB and FASB in balance sheet offsetting, and explains how each Board arrived at its current position. The paper examines why US GAAP allows for derivatives to be reported as net rather than gross on the balance sheet and why the ISDA favours this method.

    The ISDA's paper provides insight into the different offsetting requirements under IFRS and US GAAP and their impact on liquidity, collateral and the new Basel III Leverage Ratio.

    The paper also covers:

    • Why is netting/offsetting an issue?
    • Differences between securities, loans and receivables and derivatives
    • Portfolio management
    • The interest rate swap and credit default swap markets
    • The efficacy of netting and collateral as risk mitigation techniques
    • The offsetting rules under US GAAP and IFRS
    • Criteria for derivatives and repo markets
    • New offsetting disclosures
    • The new Basel III Leverage Ratio

    This paper, Netting and Offsetting: Reporting Derivatives Under US GAAP and Under IFRS, is available on the ISDA website.

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