A closer look at how US GAAP and IFRS differ for share-based payment plans can reveal important issues that companies may need to focus on as they develop an IFRS transition strategy. Areas of differences examined in this publication include:

• Classification of share-based payments
• Measurement and recognition
• Effective tax rate
• Information systems

Click for: A Closer Look at Share-based Payment Plans and IFRS: Accounting Differences that Matter (PDF 908k).

 

The ICAS Announcement (PDF 47k) said the appointment "is in recognition of Sir David's outstanding contribution to the accountancy profession and to ICAS, and is made with a view to his becoming President of the Institute in 2012. Sir David retires from the IASB on 30 June 2011". The role of Vice-President is unpaid, and will not interfere in any way with Sir David's IASB responsibilities.

 

Companies told the FRC that acquisition accounting is costly and difficult, and at the same time investors said that the resulting information is not useful.

The FRC found that IFRS 3 "has been poorly applied by companies due to unfamiliarity with its requirements and the complexity of valuing intangible assets such as brands and customer relationships". The study found that companies had "provided insufficient or inconsistent information about material acquisitions in their audited accounts when compared to the rationale for these acquisitions and supporting explanations given in their business reviews".

The FRC intends to follow up on this study over the next 18 months and to provide feedback to the IASB. The FRC is the UK's independent regulator responsible for promoting confidence in corporate reporting and governance.

Click for the Accounting for Acquisition study (PDF 223k).

 

The IASB held a special joint meeting with the FASB in London on Tuesday 5 January 2010. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.

That section deals with measurement of liabilities that are within the scope of IAS 37. IAS 37 applies to liabilities not covered by other accounting standards, including liabilities to decommission assets, environmental liabilities, obligations under onerous contracts, and liabilities arising from legal disputes. In June 2005, the IASB had published Proposals to amend IAS 37, including revised measurement requirements. In the light of the comments received, the IASB has decided to issue revised proposals that include more guidance on measurement. Comment deadline is 12 April 2010. The IASB intends to replace IAS 37 in the third quarter of 2010. Click for IASB Press Release(PDF 100k).

Main provisions of the revised liability measurement ED: IAS 37 currently requires an entity to record an obligation as a liability only if it is probable (likelihood greater than 50%) that the obligation will result in an outflow of cash or other resources from the entity. The revised ED does not include the 'probability of outflows' criterion. Instead, an entity would account for uncertainty about the amount and timing of outflows by using a measurement that reflects their expected value, namely the probability-weighted average of the outflows for the range of possible outcomes. Liabilities within the scope of IAS 37 would be measured at the amount that the entity would rationally pay at the measurement date to be relieved of the liability. Normally, this amount would be an estimate of the present value of the resources required to fulfil the liability, which would take into account the expected outflows of resources, the time value of money, and the risk that the actual outflows might ultimately differ from the expected outflows. If the liability is to pay cash to a counterparty (for example to settle a legal dispute), the outflows would be the expected cash payments plus any associated costs, such as legal fees. If the liability is to undertake a service (for example, to decommission plant) at a future date, the outflows would be the amounts that the entity estimates it would pay a contractor at the future date to undertake the service on its behalf.

 

An excerpt:

Although conditions may have improved somewhat in various markets around the globe, the FCAG believes it remains critically important to achieve a single set of high quality, globally converged financial reporting standards that provide consistent, unbiased, transparent and relevant information across geographical boundaries. We are encouraged by the Boards' progress to date in developing such standards.... The next several months are likely to see a number of key developments, including: the US Securities and Exchange Commission's response to the comments it has received regarding its proposed roadmap for the potential use of International Financial Reporting Standards (IFRS) by domestic US reporting companies; the European Union's endorsement decision regarding the completed first part of the IASB's financial instruments project, IFRS 9 Financial Instruments: Classification and Measurement; the constituent feedback on the IASB's proposed standard from the second part of its financial instruments project, Financial Instruments: Amortized Cost and Impairment, and the issuance of its proposal on hedge accounting, the third and final part of its financial instruments project; and the issuance by the FASB of its comprehensive financial instruments proposals on classification and measurement, impairment, and hedge accounting. In light of all of this, the FCAG expects to meet again in the fourth quarter of 2010 to review the Boards' further progress and any relevant external developments.

Click for: Letter to G-20 Participants (PDF 26k)

 

IFRS 8 requires companies to provide an analysis of profit, assets, and liabilities so that investors can see the performance of the principal operations or 'segments'. The FRRP reviewed a sample of 2009 interim accounts and 2008 annual accounts and has asked a number of questions about the implementation of IFRS 8, in particular, where:

• only one operating segment is reported, but the group appears to be diverse with different businesses or with significant operations in different countries;
• the operating analysis set out in the narrative report differs from the operating segments in the financial statements;
• the titles and responsibilities of the directors or executive management team imply an organisational structure which is not reflected in the operating segments; or
• the commentary in the narrative report focuses on non-IFRS measures whereas the segmental disclosures are based on IFRS amounts.

In its statement, the Panel encourages Boards of Directors to test their initial conclusions about their segmental reporting by considering the following questions:

1. What are the key operating decisions made in running the business?
2. Who makes these key operating decisions?
3. Who are the segment managers (as defined in the standard) and who do they report to?
4. How are the group's activities reported in the information used by management to review performance and make resource allocation decisions between segments?
5. Is any proposed aggregation of operating segments into one reportable segment supported by the aggregation criteria in the standard, including consistency with the core principle?
6. Is the information about reportable segments based on IFRS measures or on an alternative basis?
7. Have the reported segment amounts been reconciled to the IFRS aggregate amounts?
8. Do the accounts describe the factors used to identify the reportable segments including the basis on which the company is organised?

Click for Statement FRRP Highlights the Challenge of Implementing New Segmental Reporting Requirements (PDF 36k).

 

The meeting is open to the public and will be webcast. The tentative agenda is shown below.

Agenda for the IFRIC MeetingThursday and Friday, 7 and 8 January 2010

Thursday 7 January 2010 (10:00-18:15h) Introduction IAS 16 Property, Plant and Equipment – Accounting for production phase stripping costs in the mining industry IFRS 2 Share-based Payment – Vesting and non-vesting conditions Review of Tentative Agenda Decisions published in November 2009 IFRIC Update IAS 38 Intangible Assets – Amortisation method IFRS 2 Share-based Payment – Contingent manner of settlement IAS 27 Consolidated and Separate Financial Statements – Presentation of comparatives when applying the 'pooling of interests' method IAS 27 Consolidated and Separate Financial Statements – Combined Financial Statements and Redefined Reporting Entities IAS 18 Revenue – Receipt of a dividend of treasury shares IFRS 4 Insurance Contracts and IAS 32 Financial Instruments Presentation – Scope issue for investments in REITs IAS 32 Financial Instruments: Presentation – 'Fixed for fixed' condition Annual Improvements – Deliberation of Comments Received IFRS 1 First-time Adoption of IFRSs – Revaluation basis as deemed cost IAS 27 – Impairment of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements of the investor IFRS 3 Business Combinations – Measurement of non-controlling interests IFRS 3 – Transition requirements for contingent consideration from a business combination that occurred before the effective date of the revised IFRS IFRS 7 Financial Instruments: Disclosures – Disclosures about the nature and extent of risks arising from financial instruments IAS 28 Investments in Associates – Partial use of fair value for measurement of associates IAS 39 Financial Instruments: Recognition and Measurement – Bifurcation of embedded foreign currency derivative IAS 39 – Application of the fair value option IAS 34 Interim Financial Reporting – Significant events and transactions Friday 8 January 2010 (09:00-12:30h) Staff Recommendations for Tentative Agenda Decision IFRS 8 Operating Segments and IAS 36 Impairment of Assets – Transition provisions for IFRS 8 amendment IAS 21 The Effects of changes in Foreign Exchange Rates – Determination of functional currency of investment holding company IAS 32 Financial Instruments: Presentation – Debt/equity classification of instruments with obligation to deliver cash at the discretion of shareholders IFRS 1 First-time adoption of International Financial Reporting Standards – Accounting for costs included in self-constructed assets on transition IAS 39 Financial Instruments Recognition and Measurement – Unit of account for forward contracts with volumetric optionality Administrative Session – IFRIC work in progress

Each update lasts no more than an hour, and sessions are normally held three times a year, approximately at the end of March, July, and November. We intend to make a recording of each session available on IAS Plus for a period of at least four months from the date of the presentation. The 30 July 2009 Stay Tuned Online IFRS and UK GAAP Update archive is now available, covering the following topics:

• IFRS for Small and Medium-sized Entities
• ED 2009/5 Fair-value Measurement
• DP2009/2 Credit Risk in Liability Measurement
• IAS 39 The Sequel
• ED 2009/6 Management Commentary
• FRS 30 Heritage Assets and other UK developments
• Other IFRS Developments

To access the recording Click Here (35.4mb WMV). When you click on this link, what happens will depend on how your computer is configured. The webcast may open directly in your media player, or you may be asked whether you want to open or save the file, or you may only be given a choice to save the file. You can play a saved file by clicking on it. There's a permanent link on our UK Country Page.

 

You will find past issues Here. Issues covered in the September 2006 edition include:

• Issue No. 06-6, Debtor's Accounting for a Modification (or Exchange) of Convertible Debt Instruments
• Issue No. 06-7, Issuer's Accounting for a Previously Bifurcated Conversion Option in a Convertible Debt Instrument When the Conversion Option No Longer Meets the Bifurcation Criteria in FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities
• Issue No. 06-8, Application of the Assessment of a Buyer's Continuing Investment Under FASB Statement No. 66, Sales of Real Estate, for Sales of Condominiums
• Issue No. 06-9, Reporting a Change in (or Elimination of) a Previously Existing Difference Between the Fiscal Year-End of a Parent Company and That of a Consolidated Entity or Between the Reporting Period of an Investor and That of an Equity Method Investee
• Issue No. 06-10, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements Issue No. 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
• Issue No. 06-12, Application of AICPA Audit and Accounting Guide, Brokers and Dealers in Securities, to Entities That Engage in Commodity Trading Activities and Related Issues