We comment on a number of tentative agenda decisions of the IFRS Interpretations Committee

31 Jul, 2013

We have published our comment letters on IFRS Interpretations Committee agenda decisions on IFRS 5, IFRS 10 and IAS 32, as published in the May IFRIC Update. In each case, we agree with the Committee's decision not to add the issue to their agenda, but in some cases have suggestions for improvement on how the agenda decision could be worded.

More information about the issues is set out below:

IssueMore information
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations — Classification in conjunction with a planned IPO, but where the prospectus has not been approved by the securities regulator
IFRS 10 Consolidated Financial Statements — Effect of protective rights on an assessment of control
IAS 32 Financial Instruments: Presentation — Classification of financial instruments that give the issuer the contractual right to choose the form of settlement

You can access all our comment letters to the International Accounting Standards Board, IFRS Foundation, and IFRS Interpretations Committee here.

FRC publishes revised FRSSE to reflect new UK accounting standards

31 Jul, 2013

The Financial Reporting Council (FRC) has published an updated ‘Financial Reporting Standard for Smaller Entities’ (FRSSE) effective from January 2015. This updates the Financial Reporting Standard for Smaller Entities (effective April 2008) for the changes as a result of the introduction of FRS 100 ‘Application of Financial Reporting Requirements’ FRS 101 ‘Reduced Disclosure Framework’ and FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

The Financial Reporting Standard for Smaller Entities (FRSSE) brings together in a single place the accounting standards and the accounting requirements of company law applicable to smaller companies and is optional.  

The FRSSE (effective January 2015) (link to FRC website) removes references to reporting standards and Urgent Issues Task Force (UITF) Abstracts that were withdrawn with the introduction of FRS 101 and FRS 102 which are effective for accounting periods beginning on or after 1 January 2015.  It also makes a small number of consequential amendments to provisions in the FRSSE whose underlying requirements now change as a result of the introduction of FRS 102.    

The revised FRSSE, which supercedes the FRSSE (effective April 2008), is effective for accounting periods beginning on or after 1 January 2015 with early adoption permissible.

Click for (both links to FRC website):

Summary of the July 2013 DPOC meeting

30 Jul, 2013

The IASB has posted a summary of the 10 July 2013 Due Process Oversight Committee (DPOC) meeting that was held in Johannesburg during the Trustees’ meeting.

Topics discussed during the DPOC meeting were:


Update on technical activities

Updates were given on the progress of the major projects on the IASB’s work plan. Regarding classification and measurement, the DPOC noted additional discussions will be held between the FASB and IASB in their July 2013 meeting and with the Accounting Standards Advisory Forum (ASAF) in September 2013. The next step will be to perform a ‘lifecycle’ review sometime in October 2013.

For the impairment project, the DPOC discussed the preliminary views on the exposure draft on expected credit losses, which overall supported the proposals and believed the IASB should complete the project in a timely basis. The IASB representatives also believed that convergence with the FASB was not likely to be achieved. Additional discussions will be held between the FASB and IASB in their July 2013 meeting and with the ASAF in September 2013.

Other major projects discussed were hedge accounting (EU adoption of IFRS 9/effective date), macro hedging (upcoming discussion paper/timetable), leases (ED comment period), insurance contracts, and conceptual framework (discussion paper/ASAF involvement).

In addition, the DPOC received updates on implementation and maintenance projects on the IASB’s work plan, in particular, separate financial statements, disclosure requirements about the assessment of going concern, IFRIC 21 Levies, the start of the post-implementation review of IFRS 3, educational material, and XBRL.


Production and timing of Consultative and Final Documents

The DPOC was updated by the IASB on the steps to manage the workload and burden on constituents due to the large amount of publications scheduled to be issued in the second half of 2013.


Due process ‘lifecycle’ review of revenue recognition 

The DPOC received a report on the due process steps taken to date on revenue recognition. The DPOC was satisfied with the due process steps performed for the IASB to begin the final balloting of a new Standard.


Review on consultative groups

The DPOC reviewed and were satisfied that the following consultative groups were operating effectively and should be retained:

  • ASAF;
  • Emerging Economies Group (EEG);
  • Capital Markets Advisory Committee (CMAC) and Global Preparer Forum (GPF);
  • Education and Advisory Group (EAG);
  • SME Implementation Group (SMEIG);
  • XAC and XQRT;
  • Effects Analysis Consultative Group (EACG);
  • Rate-regulated Activities Consultative Group (RRACG);
  • Financial Instruments Working Group (FIWG), Insurance Working Group (IWG) and Leases Working Group (LWG);
  • Expert Advisory Panel (EAP); and
  • Valuation Expert Group (VEG).

In addition, the DPOC was informed of another group in the formative stage representing Islamic countries (Advisory Group on Sharia-compliant instruments and transactions).


Due Process Protocol

The DPOC addressed three issues: (1) the availability of comment letters, (2) the availability of meeting papers to observers, and (3) interactions with securities and prudential regulators.


DPOC web pages

The DPOC welcomed the redesign performed on the DPOC website.


Review of correspondence

No new correspondence cases were submitted since the Committee’s previous meeting in April 2013.


The DPOC is responsible for approving due process and overseeing the IASB’s compliance with due process, and reviewing the Trustees’ fulfillment of their oversight function in accordance with the Constitution of the IFRS Foundation.

A summary of the meeting is available on the IASB website.

CIPFA/LASAAC consults on new Code of Practice on Local Authority Accounting

30 Jul, 2013

The Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local Authority (Scotland) Accounts Advisory Committee (LASAAC) are seeking comments on an exposure draft of the 2014/15 Code of Practice on Local Authority Accounting in the UK (the Code) which would apply to accounting periods beginning on or after 1 April 2014. CIPFA and LASAAC are also seeking comments on a consultation to simplify and streamline the presentation of financial statements. Comments, for both consultations, are invited until 11 October 2013.

Local authorities in the United Kingdom are required to keep their accounts in accordance with ‘proper practices’. They must comply with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom prepared by the CIPFA/LASAAC Local Authority Accounting Code Board (CIPFA/LASAAC).

The exposure draft includes proposals to incorporate the requirements of IFRS 13 Fair Value Measurement and a number of other international standards such as IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entites, IAS 27 Separate Financial Statements (as amended in 2011) and IAS 28 Investments in Associates and Joint Ventures (as amended in 2011) into the Code.  The standards have been incorporated into the Code to the extent that they are applicable in a local government context.  Among other things the amendments to the Code include changes to the definition of control introduced in IFRS 10 with the Code focusing on the concept of “returns”

Significantly, the approach proposed to incorporate IFRS 13 Fair Value Measurement would result in authorities needing to review their current measurements of property, plant and equipment and for some authorities may require remeasurement of particular assets.  CIPFA/LASAAC note that both IFRS 12 and IFRS 13 will also bring “significant new disclosure requirements for local authorities”.  A number of other changes, including minor drafting changes, are also proposed in the Exposure Draft.

The consultation also asks for respondents views on the adoption of depreciated replacement cost for transport infrastructure assets (this measurement basis is included within the CIPFA Code of Practice on Transport Infrastructure Assets) into the 2015/16 Code.  Currently such assets are measured at depreciated historical cost.  Due to a number of “difficulties” being highlighted with the adoption of depreciated replacement cost, CIPFA proposes a “dry run” in the 2014/15 Code. 

In addition, CIPFA/LASAAC are consulting on proposals to simplify and streamline the presentation of local government financial statements/statutory accounts to “better meet the needs of users” and to “remove unnecessary burdens from local authority preparers”.   They highlight that

Local authority financial statements have suffered similar problems in relation to their complexity and length as those encountered in the private sector and elsewhere in the public sector 

CIPFA and LASAAC’s review follows a similar review conducted in June 2013 (link to HM Treasury review) by HM Treasury into simplifying and streamlining the presentation of annual reports and accounts for Central Government. 

The results of the consultations, which were included within the Financial Reporting Advisory Board (FRAB) minutes for December, can be found here

Click for (all links to CIPFA website):

Updated IASB work plan

29 Jul, 2013

Following its recent meeting, the International Accounting Standards Board (IASB) has updated its work plan. The expected timing in the general hedge accounting standard has been extended to include the fourth quarter of 2013. Also, additional adjustments have been made to narrow scope projects, post-implementation reviews, and the conceptual framework project.

Details of the changes are:

Updates to major projects

Updates to narrow-scope projects

Updates to post-implementation reviews

  • IFRS 3 — Request for information is expected in the fourth quarter of 2013.

A Standard on revenue recognition is expected to be issued in the third quarter of 2013.

Click for IASB work plan dated 29 July 2013 (link to IASB website). We have updated our project pages to reflect the updated work plan and other known developments.

July 2013 IASB meeting notes — Part 4 (concluded)

29 Jul, 2013

The IASB's meeting was held in London on 23-25 July 2013, some of it a joint meeting with the FASB. We have posted Deloitte observer notes from Thursday’s sessions on macro hedge accounting and the 2010–2012 Cycle of Annual Improvements to IFRSs.

Click through for direct access to the notes: 

Thursday, 25 July 2013

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

IPSASB publishes guidance on public sector financial statement discussion and analysis

29 Jul, 2013

The International Public Sector Accounting Standards Board (IPSASB) has published a new 'Recommended Practice Guideline' (RPG) providing guidance on preparing and presenting financial statement discussion and analysis of the financial statements of public sector entities.

The release of the Recommended Practice Guideline 2 Financial Statement Discussion and Analysis (RPG 2) represents the second RPG issued by the IPSASB, and follows the recent earlier release of RPG 1 on long-term fiscal sustainability. Both RPGs are considered 'good practice', are not mandatory, and do not need to be applied in order for a public sector entity to comply with International Public Sector Accounting Standards (IPSAS).

RPG 2 is designed to encourage more public sector entities to provide financial discussion and analysis. It requires the reporting boundary and reporting period for the discussion and analysis to be the same as the financial statements themselves, be presented at least annually, and issued with the financial statements. The discussion and analysis should reflect the nature of the entity and the regulatory environment in which it operates, and be clearly identified and distinguished from the financial statements (prepared and presented in accordance with IPSAS) and other information presented in a public sector entity's annual report.

The RPG outlines that a financial discussion and analysis should include:

  • An overview of the entity’s operations and the environment in which it operates
  • Information about the entity’s objectives and strategies
  • An analysis of the entity’s financial statements including significant changes and trends in an entity’s financial position, financial performance and cash flows
  • A description of the entity’s principal risks and uncertainties that affect its financial position, financial performance and cash flows, an explanation of changes in those risks and uncertainties since the last reporting date and its strategies for bearing or mitigating those risks and uncertainties.

In some respects, RPG 2 is similar to the IASB's IFRS Practice Statement Management Commentary, but is not based upon it. The Basis for Conclusions on the RPG explains the reasons for this as follows:

In undertaking this project, the IPSASB considered, under its Process for Reviewing and Modifying IASB Documents, whether to develop guidance that was converged with Management Commentary, an IFRS Practice Statement. The IPSASB did not consider this approach to be appropriate because the users identified in the Practice Statement are investors whereas Chapter 2 of the [IPSASB] Conceptual Framework identifies different users, which results in different information needs related to the financial statements. On this basis the IPSASB decided it was important to develop guidance on financial statement discussion and analysis specific to the public sector. Financial statement discussion and analysis assists users of public sector entities’ financial statements by complementing and supplementing the financial statement explanations with insights and perspectives.

In addition, the original IPSASB proposals in ED 47 Financial Statement Discussion and Analysis, which was issued in April 2012, would have seen the issue of an IPSAS rather than an RPG.   However, in considering constituent feedback on ED 47, the IPSASB decided that on balance the ED should be developed into an RPG, and that it would consider the authority of RPG 2 in the future.

As a non-mandatory guide, RPG 2 does not have a stated effective date, but financial statement discussion and analysis should not be described as complying with the RPG unless it complies with all of its requirements. Click for IPSASB press release (link to IFAC website).

FRC issues draft new standard for Insurance Contracts

29 Jul, 2013

The Financial Reporting Council (FRC) has today issued Financial Reporting Exposure Draft (FRED) 49: ‘Draft FRS 103 Insurance Contracts’ proposing a new Financial Reporting Standard for Insurance Contracts which will be applicable for accounting periods beginning on or after 1 January 2015. The FRC are inviting comments on the Exposure Draft (ED) and the accompanying Implementation Guidance by 31 October 2013.

The new standard (link to FRC website) will be applicable to entities that have insurance contracts (including reinsurance contracts) and are applying FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’.  The new standard will also be applicable to entities applying FRS 102 who issue financial instruments with a discretionary participation feature. 

The ED, setting out the draft Financial Reporting standard (FRS) consolidates existing guidance included within the International Accounting Standard Board’s (IASB’s) IFRS 4 Insurance Contracts, the existing requirements of FRS 27 Life Assurance and elements of the Association of British Insurers’ Statement of Recommended Practice on Accounting for Insurance Business (ABI SORP).  It will allow entities to continue with their current practices for Insurance contracts whilst also allowing them the flexibility to take advantage of “improvement options” similar to those which are available to entities applying IFRS 4 in the UK and Republic of Ireland. 

FRED 49 will also require disclosure that: 

identifies and explains the amounts in an insurer’s financial statements arising from the insurance contracts (including reinsurance contracts) it issues and reinsurance contracts that it holds;

relate to the financial strength of entities carrying on long-term insurance business; and

helps users of those financial statements understand the amount 

The FRC expects the draft FRS to have a “limited life” stating: 

The FRC expects to revise the standard once the IASB has issued its updated standard on insurance contracts and changes in the regulatory regime for insurers have been finalised  

The ED is the latest addition to financial reporting standards in the UK and Republic of Ireland and follows the publishing of FRS 100 ‘Application of Financial Reporting Requirements’, FRS 101 ‘Reduced Disclosure Framework’ (both published in November 2012) and FRS 102 (published in March 2013) – the three main standards that were introduced as a package to replace UK GAAP. 

The FRC invites comments in writing by 31 October 2013. 

Click for (all links to FRC website):

July 2013 IASB meeting notes — Part 3 (continued)

26 Jul, 2013

The IASB's meeting was held in London on 23-25 July 2013, some of it a joint meeting with the FASB. We have posted Deloitte observer notes from Thursday’s sessions on contingent pricing of property, plant and equipment and intangible assets (IAS 16/IAS 38) and elimination of intercompany profits between an issuer and its joint venture (IAS 28).

IASB and FASB to create a joint revenue recognition transition resource group

26 Jul, 2013

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have formally announced the plan to create a joint transition resource group for the upcoming revenue recognition standard. The transition group will be in charge of keeping the IASB and FASB informed on interpretive issues occurring during implementation of the standard and assist in determining what action may be needed to resolve diversity in practice.

The transition group will consist of 10 to 15 specialists, which will be announced shortly after the issuance of the revenue standard. Specialists will include financial statement preparers, auditors, regulators, users, and other stakeholders as well as IASB and FASB members.

More information on the revenue recognition transition resource group is available on the IASB website.

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