The public meeting was attended by representatives of standard setters from Australia, Austria, Belgium, Brazil, Canada, France, Germany, Hong Kong, India, Italy, Japan, Malaysia, Mexico, Netherlands, New Zealand, Norway, Pakistan, Peoples Republic of China, Republic of Korea, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Syria, Taiwan, the United Kingdom, and the United States. Representatives of the European Financial Reporting Advisory Group (EFRAG), the International Accounting Standards Board (IASB), International Public Sector Accounting Standards Board (IPSASB) and the IFRS Advisory Council also attended.

A full summary of the topics covered is available in our earlier story where the agenda of the meeting was posted.  Some highlights from the various discussions are outlined below.

International standard setting and interpretation

The IFASS participants discussed a number of related topics on how international standard setting should be undertaken, and the role of national standard setters in that process.  In addition, the interaction with regional standard setters (such as EFRAG, AOSSG and GLASS, which also gave reports) was considered.

The participants discussed a paper A Model for National Standard Setters and noted the following.  A lot of the discussion focused on the role of national standard setters in the standard-setting process and the resolution of jurisdiction-specific issues.  Delegates noted that national standard setters should wherever possible "not deviate from or provide jurisdiction-specific interpretations of IFRSs" and should consult throughout the IFASS network to ensure there is no misinterpretation and that the interpretation is not "causing problems for others".

The meeting also discussed a draft Statement of Best Practice Between the IASB and IFASS.  Mr Mackintosh (IASB Vice Chairman) commented that the "IASB wants to formalise its relationship with national standard setters and work productively with them".  Participants commented that the relationship should be seen as a 'partnership' and "standard setters wanted to be listened to, and heard by, the IASB".  A number of suggestions to improve the drafting of the document were discussed and will be actioned before the next meeting.

The group also discussed the role and selection of an IFASS Chairman, which will be provided by a standard setter of a jurisdiction and will also have a Chairman's Advisory Committee.

Comments on the possible adoption of IFRS in the United States

Tom Linsmeier, a FASB member, spoke in a personal capacity on the possibility of the United States.

In a candid analysis, Mr Linsmeier noted that no decisions have been made and that a "the report of staff's recommendations will be made public if and when the [SEC] Commissioners make a decision about the direction forward in the U.S. but likely not before June or July".  He went on to note that the ability of the SEC to make a decision may be constrained by the presidential election in which policy activity generally ceases from July or August, which although the SEC is "not bound by such restrictions, but often voluntarily chooses to comply".  He added that there will be a need to directly engage the United States Congress on the decision and so "the timing of the final decision is not known".

In another comment, Mr Linsmeier noted that:

The SEC staff acknowledges that its current thinking generally reflects a step back from potential full adoption of IFRSs and from its original "condorsement" proposal

The other participants noted the comments.  The IASB Chairman (Hoogervorst) "expressed disappointment" with the observations and "was discouraged by the delay" and called for "the SEC to make a decision one way or the other" to eliminate uncertainty.  Various other representatives commented in similar tones and made other consequences of the United States potentially not adopting IFRSs.

Topical issues

The representatives discussed the following issues:

• Improving the financial reporting of income tax - discussion on the discussion paper on this topic published by the UK Accounting Standards Board and EFRAG
• Business combinations under common control - discussion on the paper on this topic published by the Italian standard setter and EFRAG
• Research and development costs under IFRSs - consideration of a paper prepared by the Accounting Standards Board of Japan (ASBJ) outlining issues with IAS 38 Intangible Assets
• Foreign currency convertible bonds - consideration of paper prepared by the Indian standard setter on the difficulties in applying IAS 32 Financial Instruments: Presentation to bonds issued in India
• Accounting for small (or micro)-sized entities in different jurisdictions - a report of a survey on the financial reporting framework for these entities prepared by the Korean Standard setter
• Goodwill amortisation and impairment - query from the Italian standard setter on whether representatives would support a potential project to investigate whether the current requirements for goodwill measurement are still valid
• Going concern and liquidity risks: developments in the UK
• Operating profit or loss - issues experienced by Korea in relation to 'operating profit or loss' following its adoption of IFRSs

Other matters discussed

The other items discussed at the meeting included:

• Reports from regional groups (AOSSG, EFRAG, GLASS, PAFA) and support for developing jurisdictions
• IASB post-implementation reviews
• Effects analysis
• Public Sector Conceptual Framework
• Unit of account
• IASB work programme
• Other matters

The next meeting of the IFASS is scheduled to be held in Zurich on 22-23 October 2012.

Click for access to the full summary of the meeting (link to the AASB website).

The "zero draft" of the outcome document (available on the Rio+20 website) contains the following paragraph (paragraph 24) as part of its 'framework for action':

We call for a global policy framework requiring all listed and large private companies to consider sustainability issues and to integrate sustainability information within the reporting cycle.

ACCA believes that these words express a clear goal, however, "the paragraph needs to have greater reference to the role of the private sector and accountability, and it could certainly be more action-orientated". As the implementation of resolutions has often proved to be the crux with international agreements, ACCA suggests that the paragraph should be rephrased so that it will lead to a commitment by UN member states to develop mechanisms for sustainability reporting at a national level that meet global standards at the same time.

ACCA also believes that paragraph 24 should obligate companies to report on a ‘comply-or-explain’ basis. This would force companies to consider and discuss risks and opportunities arising from sustainable development and to embed sustainability into their business strategy and key processes.

While ACCA presses for these changes there are also worries that the zero draft’s paragraph 24 will not make it intact to the final Rio+20 agreement. ACCA warns of any watering down of the paragraph (for example by replacing the Word "require" with the word "encourage") and stresses: "An effective paragraph 24 would increase the relevance of sustainability to investors and businesses and spread good practice worldwide."

Please click for the following documents on the ACCA website:

• Press release Integrating material sustainability information into corporate reports should be a key and critical outcome of Rio +20, urges ACCA
• Report Making a difference at Rio+20

Levies

The Committee considered how an entity would account for the payment of levies, other than income taxes, in its financial statements; specifically, when the liability to pay a levy should be recognised. The proposed guidance, DI/2012/1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market, clarifies that "the obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy as identified by the legislation".

Comments on the levies proposal are due by 5 September 2012.

Click for DI/2012/1 and the press release, both available on the IASB website.

Put options

The Committee considered how to measure the financial liability created when a parent entity is obliged to purchase the shares of its subsidiary for cash or for another financial asset, and the parent must recognise a financial liability in its consolidated financial statements for the present value of the option exercise price.

The proposed guidance, DI/2012/2 Put Options Written on Non-controlling Interests, clarifies that all changes in the measurement of that financial liability should be recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments.

Comments on the put options proposal are due by 1 October 2012.

Click for DI/2012/2 and the press release, both available on the IASB website. A french translation of DI/2012/2 is also available.

The agenda, dated 30 May 2012, has been released.

The full agenda for the meeting can be found here.

At a recent workshop on 14 May in London, the IASB welcomed 30 participants from 20 countries for a Framework-based IFRS teaching session. Following this session, the IASB project staff provided updates on the investment entities, financial instruments, leases, and insurance projects currently on the IASB's active agenda. Further, there was a Q&A session for IFRS teacher with the IASB Staff on the new and amended IFRSs that would become mandatory in 2013.

Please click for:

• IASB press release (link to IASB website)
• 14 May IASB staff annual event for IFRS Teachers presentation (PDF 2,146k, link to IASB website)