March

UK 'lab' publishes report on remuneration

05 Mar, 2013

The United Kingdom Financial Reporting Council (FRC) has published another project report from its Financial Reporting Lab. The report on 'Reporting of pay and performance’ focuses on the UK draft reporting regulations on remuneration.

The project was undertaken at the request of the Department of Business Innovation and Skills (BIS). It was designed to explore the views of investors and companies on two aspects of the draft reporting regulations on remuneration:

  • scenario charts demonstrating how directors’ pay varies with performance, and
  • a chart comparing CEO pay based on the single figure for remuneration, with company performance, measured using Total Shareholder Return (TSR).

The report shows that participants in the project favoured a simplified version of the scenario charts proposed by BIS. They also concluded that, rather than replacing the current five year TSR chart, this should be retained and be supplemented with a simple table setting out historic levels of CEO pay together with information on the level of performance-related elements of pay. All participants agreed that there is a need to educate the market and market commentators on the new regulations.

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

    EU formally adopts amendments to IFRS 1

    05 Mar, 2013

    The European Union has published a Commission Regulation endorsing the amendments to IFRS 1 regarding government loans published by the IASB on 13 March 2012.

    The European Union has published the Commission Regulation (EC) No 183/2013 of 4 March 2013 amending Regulation (EC) No 1226/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council in the Official Journal on 5 Mach 2013. This means that the amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards published by the IASB on 13 March 2012 have now been incorporated into European law.

    This amendment addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRSs. It also adds an exception to the retrospective application of IFRS, which provides the same relief to first-time adopters granted to existing preparers of IFRS financial statements when the requirement was incorporated into IAS 20 in 2008.

    The amendments to IFRS 1 must be applied, at latest, to annual periods beginning on or after 1 January 2013.

    IASB publishes further editorial corrections

    05 Mar, 2013

    The International Accounting Standards Board (IASB) has published its first batch of editorial corrections for 2013. The editorial corrections are in respect of the 2013 IFRS 'Blue Book' and remove incorrect references to IFRS 9 'Financial Instruments'. The IASB has issued an 'Blue Book errata' in addition to its usual compilation of editorial corrections which are published three times each year.

    The 2013 IFRS 'Blue Book' consolidates all new standards and amendments to International Financial Reporting Standards (IFRS) which are applicable on 1 January 2013, but without early application of other standards and amendments that apply in later periods.

    Due to the deferral of the mandatory effective date of IFRS 9 to annual reporting periods beginning on or after 1 January 2015, the 2013 IFRS 'Blue Book' should not contain references to IFRS 9.  The Blue Book 2013 errata removes these references and replace them with equivalent references and other requirements related to IAS 39 Financial Instruments: Recognition and Measurement.

    The compilation of editorial corrections includes the following:

    • consequential amendments that should have been included in the stand-alone Standards at the time of publication. These corrections will need to be made to either 2012 IFRS (Red Book), A Guide through IFRS 2012 or 2013 IFRS (Blue Book), or all of them
    • notification that an Error Note was issued in January 2013 to correct the Exposure Draft Recoverable Amount Disclosures for Non-financial Assets (separately available on the IASB website)
    • notification of minor changes made to the content of the Illustrative examples to accompany IFRS 13 Fair Value Measurement Unquoted equity instruments within the scope of IFRS 9 Financial Instruments (separately available on the IASB website)
    • editorial corrections to various individual publications, which may need to be made to 2012 IFRS (Red Book), A Guide through IFRS 2012 (Green Book) and 2013 IFRS (Blue Book)
    • editorial corrections to 2012 IFRS (Red Book), A Guide through IFRS 2012 and 2013 IFRS (Blue Book) as a consequence of errors that were made when compiling those volumes.

    Click for the following on the IASB website:

    IIRC and GRI agree to cooperate

    04 Mar, 2013

    The International Integrated Reporting Council (IIRC) and the Global Reporting Initiative (GRI) have announced that they have entered into a memorandum of understanding (MoU) which seeks to formalise the principles for ongoing cooperation, coordination and alignment between the two organisations.

    The MoU seeks to assist both organisations in reaching their mutual interests, which include the following:

    • Efforts to promote the global harmonisation and clarity of corporate reporting frameworks, standards and requirements
    • The development of their respective reporting frameworks, guidelines and standards
    • Transparency and sharing of relevant and significant information.

    The MoU follows similar agreements with the International Federation of Accountants (IFAC) announced in October 2012, and International Accounting Standards Board (IASB) announced in February 2013.

    The MoU is effective from the date of signing on 1 February 2013 until 30 September 2014, but may be extended by mutual agreement.

    Click for:

    Monitoring Board announces final membership criteria and processes for review of existing members and selection of new ones

    01 Mar, 2013

    The Monitoring Board of the IFRS Foundation today announced the successful conclusion of its assessment approach for the membership criteria of the Monitoring Board. The criteria will be used in the selection of new members and in the periodic review of existing members that will take place every three years. At the same time, the Monitoring Board announced the appointment of Masamichi Kono, current Acting Chair of the Monitoring Board, to serve as its Chairman.

    The Monitoring Board's Final Report on the Review of the IFRS Foundation's Governance published in February 2012 identified a number of enhancements to the governance framework including expanding the Monitoring Board’s membership and beginning periodic assessments of the members against membership criteria yet to be developed. The criteria and the assessment processes were finalised at the Monitoring Board’s 6 February 2013 meeting.

    The main focus of the membership criteria is the use of IFRSs with some quantitative and qualitative additional aspects:

    • The jurisdiction has made a clear commitment to IFRSs and promotes global acceptance of a single set of high quality international accounting standards. It mandates or permits the application of IFRSs to consolidated financial statements of companies raising capital in its relevant market.
    • The IFRSs to be applied are essentially aligned with IFRSs developed by the IASB.
    • The jurisdiction can be regarded a major market for capital-raising in the global context.
    • The jurisdiction makes financial contributions to the setting of IFRSs on a continuing basis.
    • The jurisdiction has in place and in operation a robust enforcement mechanism.
    • The relevant national or regional standard-setting body actively contributes to the development of IFRSs.

    These criteria will be applied in selecting new members. This process will begin in 2013. Candidate not meeting certain criteria, but demonstrating clear commitment to do so can be invited for reapplication.

    Additionally, a periodic review of existing members will take place every three years, beginning in 2013. Eligibility of continued Monitoring Board membership will be assessed against the criteria with due consideration of the evolution over time towards full compatibility with all criteria. If an existing member is found not to be fully or materially meeting the criteria, its voting rights could be suspended and at worst its membership could be revoked.

    The members of the Monitoring Board currently include the US Securities and Exchange Commission (SEC). Although the application of IFRSs by domestic companies is not permitted in the United States, the SEC does permit application of IFRSs in consolidated financial statements of companies raising capital in its relevant market (foreign private issuers) and the US market is a major market for capital-raising. Behind the EU and Japan is also the third largest contributor to the IFRSF funding, the SEC’s enforcement is robust and the FASB as the national standard-setter continues to be committed to contributing to the development of high-quality IFRSs. The decision whether this means the SEC fully meets the membership criteria rests with the other Monitoring Board members and will have to be taken during the periodic review of the existing members.

    Please click for access to the press release on the Monitoring Board website.

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.