As mentioned in our previous article, the paper answers the ten frequent criticisms concerning IFRSs. The views expressed in this paper are the personal views of Mr Danjou and not the official views of the IASB.

The English and French versions of the paper are available on the IASB website.

The Financial Reporting Lab was launched in October 2011 and is designed to focus on helping listed UK companies communicate more effectively with investors and analysts through participation of listed companies, professional investors and the retail shareholder community.

The bank whose financial reports were used as a basis for discussion (HSBC¹⁾) volunteered a project to look at changes made to its risk disclosure during 2011 when static policy information was separated from current measures of key risk figures and changes to assumptions. The updated presentation moves a significant amount of recurring information into an appendix immediately following the primary risk disclosure. The result of this change is a primary risk disclosure that is focused on current period results and dynamic risk trends facing the bank and the industry.

Investors were evenly split as to whether the amended presentation improved the clarity and usability of the risk section of the annual report or neither enhanced nor hindered the quality or clarity of the risk disclosures.

Please click for the FRC press release and access to the report (all links to FRC website).

^{1) In October 2012, the Enhanced Disclosures Task Force (EDTF), published a report Enhancing the Risk Disclosures of Banks, reflecting industry and investor views on risk reporting. The EDTF was co-chaired by HSBC’s Chief Accounting Officer. About half of the investor participants in the Lab project were also members of the EDTF.}

Click through for direct access to the notes:

Tuesday, 19 February 2013

• Conceptual Framework - ASBJ research on the use of OCI (IASB education session)
• Conceptual Framework - Definition of elements (IASB)

Wednesday, 20 February 2013

• Conceptual Framework - Reporting entity (IASB)
• Conceptual Framework - Purpose and status (IASB)

In addition, education sessions where held on revenue recognition and leases.  No decisions were made at these sessions and our observer notes for those sessions will be incorporated into the meeting notes for the later decision-making sessions.

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

The podcast summarises the discussion that took place during Monday's conceptual framework session. Also, IAS Plus and IFRS Monitor notes on this session are available on the IASB website. The podcast and notes are part of an emergency measure the IASB has taken due to a technical issue with their recording system. IAS Plus is pleased to have the opportunity to provide the IASB with our observer notes.

As with all IASB meetings, Deloitte observer notes on all the sessions are available on the IAS Plus meeting page.

After submitting the first comment letter in December 2012, ESMA has come to "understand that some interested parties argue that governments and regulatory authorities in each individual jurisdiction should be able to decide whether publicly traded entities should be able to use the IFRS for SMEs, a set of accounting standards developed for private companies whose equity and debt instruments are not traded in a public market."

ESMA believes there are significant drawbacks related to introducing a subset of listed companies on regulated markets that apply less stringent accounting principles than other companies listed on the same markets. According to ESMA this would lead to:

• a lesser degree of investor protection in combination with potentially increased risks,
• the believe that the size of a company is an indicator for the complexity of transactions it engages in,
• a higher cost of capital as a result of less transparency,
• a potential loss in market confidence.

Please click for access to ESMA's full comment letter on the ESMA website.

The agenda paper (link to IASB website) for the presentation on the ASAF includes commentary that the "purpose of ASAF is technical advice [whereas the] Advisory Council plays strategic role" and that the "ASAF focuses on standard setting, rather than implementation and consistent application".  The agenda includes breakout discussions on the ASAF.

The full agenda is set out below:

Agenda papers from this meeting are available on the IASB's website.

The changes are a results of the Monitoring Boards governance review 2010-2011, which stated that the Chair of the IASB no longer serves as CEO of the IFRS Foundation. Instead, this responsibility has been included in a new role of Executive Director. They have already implemented this change with the appointment of Yael Almog as Executive Director of the IFRS Foundation in 2012.

The changes were approved by the IFRS Foundation Trustees on 23 January 2013 and are effective immediately.

Please click for (links to IASB website):

• IASB press release
• IFRS Foundation Constitution

In the endorsement advice letter, EFRAG concludes that the investment entities amendments satisfy the technical criteria for endorsement and accordingly, recommends the adoption of the amendments in the European Union.

The investment entities amendments were issued on 31 October 2012 to amend IFRS 10 Consolidated Financial Statements to provide entities that meet the definition of an 'investment entity' an exemption from consolidating certain investments in subsidiaries.

In the endorsement advice letter, EFRAG makes the following comments regarding the consolidation exemption:

EFRAG generally believes that a reporting entity should not differentiate between types of entities when applying the control model of consolidation in IFRS 10 Consolidated Financial Statements. However, EFRAG notes that the Amendments respond to the concerns of users of financial statements, who expressed support for a consolidation exception for subsidiaries of investment entities, and argued that their interests are best served by having a single line measurement basis based on fair value, instead of consolidation of subsidiaries of investment entities.

The accompanying effects study report discusses the costs and benefits of implementing the investment entities amendments and notes they "would result in significant cost savings for investment entity preparers and users of the financial statements of investment entities".

Click for:

• EFRAG endorsement status report dated 18 February 2013
• EFRAG endorsement advice letter on the investment entities amendments (link to EFRAG website)
• EFRAG effects study report (link to EFRAG website).