IPSASB publishes five IPSAS based on the IASB's 'package of five'

31 Jan, 2015

The International Public Sector Accounting Standards Board (IPSASB) has published a series of five International Public Sector Accounting Standards (IPSASs) on accounting for interests in other entities. The five pronouncements are based on the 'package of five' standards issued by the IASB in May 2011 dealing with consolidation, joint arrangements, the equity method, separate financial statements and disclosure. However, the IPSASB made a number of amendments to the IASB's pronouncements to tailor them for the public sector.

The new standards IPSAS 34 Separate Financial Statements, IPSAS 35 Consolidated Financial Statements, IPSAS 36 Investments in Associates and Joint Ventures, IPSAS 37 Joint Arrangements, and IPSAS 38 Disclosure of Interests in Other Entities follow the IPSASB practice of, where relevant, developing its IPSAS based on IFRS, and follows a Memorandum of Understanding between the IASB and IFAC signed in November 2011, which among other objectives, seeks "to highlight financial reporting issues where alignment between the requirements of the IASB and the requirements of the IPSASB is necessary".

The new IPSAS are based on IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures, including the amendments made in 2012 in relation to transitional guidance and investment entities. The standards align with the requirements of these equivalent IASB pronouncements, except where departure is considered justified (e.g. modification of terminology, consideration of the interaction with the Government Finance Statistics and the System of National Accounts, reflection of differences between existing IPSAS and IFRS).

The new standards replace IPSAS 6 Consolidated and Separate Financial Statements, IPSAS 7 Investments in Associates and IPSAS 8 Interests in Joint Ventures. As these IPSASs were themselves largely based on previous IASB requirements, the changes from these standards are consistent with those faced by for-profit entities applying the 'package of five' IASB standards, e.g. a unified control model based on control and power, the elimination of proportionate consolidation, and numerous additional disclosures.

The standards are effective for annual financial statements covering periods beginning on or after 1 January 2017. Earlier application is encouraged, however, if an entity decides to apply the requirements early it shall disclose that fact and apply the whole series of standards (IPSAS 34 through IPSAS 38) at the same time.

All of the new standards can be accessed through the press release on the IPSASB website.

January 2015 IFRS Interpretations Committee meeting notes — Part 2

30 Jan, 2015

The IFRS Interpretations Committee met in London on 27 January 2015. We've posted the Deloitte observer notes for the sessions on IAS 21, IAS 32, IAS 28, and IFRIC 21.

The topics discussed were as follows (click through to access detailed Deloitte observer notes for each topic):


Items for continuing consideration

Finalisation of tentative agenda decisions

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

FRC comment letter on the IESBA consultation outlining proposed changes to the Code of Ethics for Professional Accountants

30 Jan, 2015

The Financial Reporting Council (FRC) has published a comment letter on the International Ethics Standards Board for Accountants’ (IESBA’s) consultation outlining proposed changes to the Code of Ethics for Professional Accountants (“the Code”).

The FRC are “supportive” of the IESBA undertaking a project to improve the structure of the Code, however it has concerns about the ISA type model proposed in the consultation.  The FRC comments:

ISAs establish standards that are focussed on ensuring auditors obtain sufficient appropriate audit evidence and exercise professional scepticism. Accordingly, many of the requirements are process based. Ethics, however, is not about process but rather about good behaviours, driven by high personal values/morals and a mind-set focussed on serving the public interest.

The FRC highlights that such an approach “may further encourage a rules based mind-set with an undue focus on the requirements rather than on the fundamental principles”.  Accordingly the FRC “strongly” recommends that IESBA “considers how the Code can be improved to seek to ensure that professional accountants have the right ethical ‘mind-set’ and encourages the IESBA to “prioritise clarifying and emphasising the fundamental ethical principles”.

Before proceeding further with the project, the FRC also recommends that IESBA “undertakes further research to identify and understand the structure and presentation of ethical codes issued by other bodies”.

The full comment letter is available on the FRC website.

Agenda for the February 2015 IFRS Foundation Trustees meeting

30 Jan, 2015

The agenda for the upcoming meeting of the IFRS Foundation Trustees, some of which will be held jointly with the Monitoring Board and the Due Process Oversight Committee, is now available. The meeting will be held in Zurich, Switzerland on 2 and 3 February 2015.

The agenda for the meeting is sum­marised below:

Monday, 2 February 2015

Joint IFRS Foun­da­tion Trustees and Monitoring Board meeting (10:15-11:20 BST)

  • Welcome and introductions
  • Report of the Chair of the Trustees: Strategic overview
  • Report of the Chair of the IASB: Technical update
  • IFRS use around the world

Tuesday, 3 February 2015

IFRS Foundation Trustees meeting (15:15-15:45 BST)

  • Report of the IFRS Foundation Chair
  • Report of the Due Process Oversight Committee
    • Introduction
    • Update on technical activities
    • Revised IFRS for SMEs: Due process ‘lifecycle’ review
    • Reporting on projects
    • Consultative groups and DPOC engagement update
    • Correspondence update
    • Summary

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

IPSASB releases standard for the first-time adoption of IPSAS

30 Jan, 2015

The International Public Sector Accounting Standards Board (IPSASB) has released IPSAS 33 'First-time Adoption of Accrual Basis IPSASs'.

The new International Public Sector Accounting Standard (IPSAS) addresses the transition from either a cash basis, or an accrual basis under another reporting framework, or a modified version of either the cash or accrual basis of accounting. Consequently, the IPSASB states that the new IPSAS is not aimed at IFRS convergence. Nevertheless, the IPSASB did consider the transitional exemptions included in IFRS 1 First-time Adoption of International Financial Reporting Standards in developing the standard.

Main feature of IPSAS 33 is that allows first-time adopters three years to recognise specified assets and liabilities in order to give preparers sufficient time to develop reliable models for recognising and measuring assets and liabilities during the transition period. These assets and liablilties include inventories, investment property, property, plant and equipment, defined benefit plans and other long-term employee benefits, biological assets and agricultural produce, intangible assets, service concession assets and the related liabilities, and financial instruments.

The IPSASB is aware that where a first-time adopter takes advantage of the exemptions above, fair presentation and compliance with accrual basis IPSASs will be affected and the first-time adopter will not be able to make an unreserved statement of compliance with accrual basis IPSASs until the exemptions have expired or the relevant items are recognised and measured in accordance with the applicable IPSASs. Still, the IPSASB believed that the transition period meets the needs of both preparers and users of financial statements and might be a further incentive for entities to make the decision to apply IPSASs. Nevertheless, the IPSASB encourages first-time adopters to comply in full with all the requirements of the applicable IPSASs as soon as possible.

IPSAS 33 shall be applied if a first-time adopters first IPSAS financial statements are for a period beginning on or after 1 January 2017. Earlier application is permitted. Please access the new standard and a corresponding press release on the IPSASB website.

January 2015 IFRS Interpretations Committee meeting notes — Part 1

29 Jan, 2015

The IFRS Interpretations Committee met in London on 27 January 2015. We've posted the Deloitte observer notes for the sessions on IAS 12, IAS 24, IAS 40, IAS 39, IFRS 12, IFRS 13, works in progress, and a review of 2014 activities.

FRC comment letter on the IASB's Exposure Draft regarding the unit of account

29 Jan, 2015

The Financial Reporting Council (FRC) has published a comment letter on the IASB Exposure Draft (ED) proposing amendments to six standards regarding the unit of account for investments in subsidiaries, joint ventures and associates.

The amendments (in Exposure Draft (ED) 2014/4) would confirm that the unit of account for investments in subsidiaries, joint ventures and associates is the investment as a whole, but that the fair value measurement of quoted investments in subsidiaries, joint ventures and associates should be the product of the quoted price multiplied by the quantity of financial instruments held, without adjustments.

The FRC agrees that the unit of account for investments within the scope of IFRS 10 Consolidated Financial statements, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures is the investment as a whole rather than the individual financial instruments included within that investment.

However, the FRC does not believe that an approach of multiplying the quoted price by the quantity of the individual financial instruments held (PxQ) will correspond to the fair value of quoted investments in subsidiaries, joint ventures and associates as “the fair value of the investment will include a control premium”.  The FRC also does not believe that a PxQ measurement is more relevant than one that reflects a control premium and believes that “fair value should be determined by another valuation technique”.

Nevertheless, the FRC accepts “that it may be required as a pragmatic departure that would apply in limited circumstances”.  It comments that if adopted “it is important that it is clearly identified as a departure from fair value in the standards and in the Basis for Conclusions”.  Additionally, if this method is to be required by the IASB, disclosure of its use should be required” including the write-off of any control premium paid on the acquisition of an investment”.

Regarding the placement of the amendments, the FRC believes that “if the IASB concludes that the requirement to use a PxQ measurement is a clarification of the principles of fair value” then IFRS 13 Fair Value Measurement should be revised to include this material rather than inclusion within the five IFRSs proposed (although cross references to IFRS 13 from those Standards would be helpful).  This would then keep IFRS 13 as “a comprehensive codification of the application of fair value under IFRSs”.

The full comment letter is available on the FRC website.

We comment on the Government’s consultation on charities’ audit and independent examination

28 Jan, 2015

We have published our comment letter on the Government’s consultation on increasing the audit exemption threshold for charities and widening the range of bodies whose members can carry out independent examinations.

Our key comments are as follows:

  • We agree with the proposal to increase the income thresholds at which an audit is needed from £500,000 to £1m. This increase had been proposed by an independent review of charity law by Lord Hodgson in 2012. The government also propose that an audit should continue for charities with income above £500,000 and with significant assets. We support this, and suggest that the asset threshold should be £5m rather than £3.26, mirroring the forthcoming increase in the asset threshold for small companies.
  • We suggest that the time is right for the UK’s three charity regulators to reconsider the Directions on performing an independent examination, the lighter touch assurance engagement required for smaller charities, and suggest that this be aligned with the relevant international standard.
  • We express no view as to which new bodies should be added to the list of bodies whose members are eligible to carry out independent examinations, but suggest that the list of principles used to consider the suitability of such bodies refer to the need for quality control. 

Click for the full comment letter.

BIS publishes government response to the consultation on the UK implementation of chapters 1-9 of the EU Accounting Directive

28 Jan, 2015

The Department for Business, Innovation and Skills (BIS) has published the government’s response to its earlier consultation, published in August 2014 on the UK implementation of the EU Accounting Directive.

The European Union published the EU Accounting Directive 2013/34/EU (‘the Directive’) on 26 June 2013, which amended Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC. The Directive aimed to simplify the accounting requirements for small companies and improves the clarity and comparability of companies' financial statements within the Union. In the consultation, BIS sought views on the proposed implementation of the accounting and auditing provisions of the Directive into UK law. 

There was “broad support” for the proposals.  As a result of the responses to the consultation, the government will implement chapters 1-9 of the Directive as follows:

  • The maximum thresholds permitted under the Directive will be adopted for the size of small companies. A company will be small if it meets at least two of: total assets <£5.1m (up from £3.26m), turnover <£10.2m (up from £6.5m), <50 employees (unchanged). A company will be medium-sized if it meets at least two of: total assets<£18m (up from £12.9m), turnover <£36m (up from £25.9m), <250 employees (unchanged).
  • The number of mandatory notes in small company financial statements will be reduced to 13.
  • Allowing small companies to prepare an abbreviated profit and loss account and balance sheet for members if the members agree unanimously; this is a change from the current law where full accounts must be prepared for the members with the option to prepare a separate set of abbreviated accounts for filing at Companies House.
  • Limited companies (Ltd) that are in the same group as an unlisted public company (a PLC) can have access to the small and medium-sized companies’ regimes. This is a relaxation of the existing position whereby if any member of a group is a PLC the exemptions are not available. The exemptions will not be available to a PLC itself, whether listed or unlisted.
  • Financial statements can be prepared under alternative layouts provided that the information given is at least equivalent to the information required by the formats set out in the Regulations. This is aimed at reducing the burden of consolidation for those in a group using international accounting standards – it will be particularly helpful for those adopting Financial Reporting Standard (FRS) 101.
  • Goodwill must be written off over no more than ten years (compared to 20 under current UK GAAP and 5 under extant FRS 102) in the exceptional situation where no useful economic life can be estimated.
  • Require companies to include the full details of subsidiaries in the consolidated financial statements. The current option to include just the principal subsidiaries with the full list appended to the annual return will be removed.
  • Remove the requirement for micro-entities to prepare a directors’ report.
  • Permit the use of the equity method in individual company financial statements. 

These changes apply for financial years commencing on or after 1 January 2016. Once the regulations come into force on 6 April 2015, early adoption, with one exception, will be permitted for financial years commencing on or after 1 January 2015. The exception is that the increased size limits cannot be adopted for small company audit exemption until 2016. This is to allow for time for the Government to consider responses to the questions asked on small company audit exemption as part of its consultation on implementing the EU audit reform legislation. These changes only apply to companies and ‘qualifying partnerships’ preparing accounts under the Partnerships (Accounts) Regulations 2008; at present they do not apply to limited liability partnerships. 

The Government has decided that they need to do more work on the accounting and audit for charitable companies; this work is on-going with the Charity Commission and others. 

The government intends to introduce legislation ‘The Companies and Groups (Accounts and Reports) Regulations 2015’ to implement the Directive.

The Financial Reporting Council is expected to issue a consultation document shortly on detailed proposed revisions to the accounting standards for small and micro entities which are also due to come into force on 1 January 2016.

*Update 30/03/2015 - the Companies and Groups (Accounts and Reports) Regulations 2015 were made on 26 March 2015 and come into from 6 April 2015*

Click for:

*Update 17 September 2015 - link to final Regulations *

IASB issues work plan update

27 Jan, 2015

After its January meeting, the IASB has updated its work plan. The revised plan moves — from the first quarter to the second quarter of 2015 — (1) the targeted date for an exposure draft (ED) on elimination of gains and losses arising from transactions between an entity and its associate or joint venture and (2) the feedback statement on the post-implementation review for IFRS 3. In addition, the work plan adds a new project on remeasurement related to a plan amendment, curtailment, or settlement/availability of a refund of a surplus from a defined benefit plan (an ED is targeted for the second quarter of 2015).

Current status

The revised time table for the major projects is now as follows:

Project Current status Next project step Expected timing

Conceptual Framework — Com­pre­hen­sive IASB project



Q1 2015

Financial in­stru­ments — Macro hedge accounting

Dis­cus­sion paper

Comment letter analysis

Q1 2015

Insurance contracts



Q1 2015



Target IFRS

H2 2015

Dis­clo­sure ini­tia­tive — Prin­ci­ples of dis­clo­sure

Board dis­cus­sion

Target Dis­cus­sion Paper

Q2 2015

Dis­clo­sure ini­tia­tive — Rec­on­cil­i­a­tion of li­a­bil­i­ties from financing ac­tiv­i­ties


Public con­sul­ta­tion

Q1 2015

IFRS for SMEs — Com­pre­hen­sive review


Target IFRS

Q1 or Q2 2015

Rate-reg­u­lated ac­tiv­i­ties

Dis­cus­sion paper

Comment letter analysis

Q1 2015

In addition, board discussions related to the research project on business combinations under common control now extend into the second quarter of 2015.

The revised IASB work plan (dated 27 January 2015) is available on the IASB's website. We have updated our project pages to reflect the updated work plan and other known developments.

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