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Deloitte comment letter on annual improvements to IFRSs

05 Sep 2012

Deloitte's IFRS Global Office has submitted a letter of comment to the International Accounting Standards Board (IASB) on its Exposure Draft ED/2012/1 — 'Annual improvements to IFRSs 2010–2012 cycle'.

In the comment letter, we express our agreement with most of the proposed amendments in the 2010–2012 cycle of annual improvements, but also note that there are more effective ways in which the issues could be resolved. Examples include:

  • [T]he proposed amendments to IAS 1 and IAS 12 are interpretative issues that the Board should consider addressing primarily through the addition of examples rather than by introducing changes to the standards that may have unintended consequences and give rise to further interpretative issues.
  • [W]e do not believe that changes to, or clarifications of, requirements should be expressed only in a standard’s basis of conclusions (as is the case for the exposure draft’s proposals in respect of IFRS 13 and, to some extent, IFRS 2).

Please click for full summary and access to our comment letter.

Deloitte comment letter on the IFRS Foundation Due Process Handbook

05 Sep 2012

Deloitte's IFRS Global Office has submitted a letter of comment to the IFRS Foundation on the proposed IFRS Foundation Due Process Handbook that was published for public comment in May 2012.

In the comment letter, we agree with much of the content of the proposed Due Process Handbook. However, we disagree with incorporating into the Due Process Handbook amendments that have not been incorporated into the IFRS Foundation’s Constitution or the IASB’s Conceptual Framework, we disagree with reducing the time period for re-exposure of proposed IFRSs or Interpretations, and we are concerned that the Due Process Handbook is not entirely clear in relation to the roles, the responsibilities and the competences of the Trustees’ Due Process Oversight Committee and the IASB staff.

Please click for full summary and access to our comment letter.

UK FRC questions draft IFRIC Interpretation on levies

03 Sep 2012

The UK Financial Reporting Council (FRC) has responded to the International Accounting Standards Board (IASB) regarding the draft IFRIC Interpretation 'Levies Charged by Public Authorities on Entities that Operate in a Specific Market'. The FRC does not believe that the draft interpretation always leads to decision useful information for users.

The FRC agrees that the interpretation is a technically correct analysis of how IAS 37 Provisions, Contingent Liabilities and Contingent Assets should be applied to levies. However, the FRC argues, it does not always result in the substance of the transaction being reported. (The example presented in the comment letter is the UK bank levy.) The lack of faithful representation of the effects of transactions, other events and conditions is a contradiction to IAS 1 Presentation of Financial Statements which requires that financial statements should always present the position and performance of an entity fairly.

The fact that a technically correct interpretation leads to conclusions that do not reflect the substance of the underlying transaction prompts the FRC to suggest that the underlying principle in IAS 37 is wrong or in conflict with IAS 1 and should be revisited. The FRC concludes in its comment letter:


We are concerned that accounting and reporting that diverges so significantly from the underlying substance of the transaction has the potential for bringing accounting into disrepute. As a result, we would recommend that rather than issuing this IFRIC in final form the underlying principle in IAS 37 should be referred to the IASB for review.

In issuing this comment letter, the FRC also contradicts the preliminary EFRAG view that the consensus in the draft IFRIC Interpretation will lead to decision useful information for users of financial statements.

Please click for (both links to FRC website):

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