In the comment letter, we agree that the consensus in the draft Interpretation appropriately (1) analyses the treatment of levies within its scope under current IFRSs and (2) applies the IAS 37 definition of a liability to levies. However, we go on to raise concern that the draft Interpretation does not deal with levies that are (1) due only if a minimum revenue threshold is achieved, (2) calculated as a fixed amount or (3) based on a graduated rate calculation.

Expressing similar concerns to those raised by the UK Financial Reporting Council (FRC), the comment letter also notes:

[W]e would still encourage the Board to consider whether non-reciprocal transactions in general, and government levies in particular, are best dealt with by IAS 37 and whether an approach similar to the current tax requirements of IAS 12 could be developed to reflect better the nature of government levies.

Please click for full summary and access to our comment letter.

In the comment letter, we express our agreement with most of the proposed amendments in the 2010–2012 cycle of annual improvements, but also note that there are more effective ways in which the issues could be resolved. Examples include:

Please click for full summary and access to our comment letter.

In the comment letter, we agree with much of the content of the proposed Due Process Handbook. However, we disagree with incorporating into the Due Process Handbook amendments that have not been incorporated into the IFRS Foundation’s Constitution or the IASB’s Conceptual Framework, we disagree with reducing the time period for re-exposure of proposed IFRSs or Interpretations, and we are concerned that the Due Process Handbook is not entirely clear in relation to the roles, the responsibilities and the competences of the Trustees’ Due Process Oversight Committee and the IASB staff.

Please click for full summary and access to our comment letter.

The FRC agrees that the interpretation is a technically correct analysis of how IAS 37 Provisions, Contingent Liabilities and Contingent Assets should be applied to levies. However, the FRC argues, it does not always result in the substance of the transaction being reported. (The example presented in the comment letter is the UK bank levy.) The lack of faithful representation of the effects of transactions, other events and conditions is a contradiction to IAS 1 Presentation of Financial Statements which requires that financial statements should always present the position and performance of an entity fairly.

The fact that a technically correct interpretation leads to conclusions that do not reflect the substance of the underlying transaction prompts the FRC to suggest that the underlying principle in IAS 37 is wrong or in conflict with IAS 1 and should be revisited. The FRC concludes in its comment letter:

We are concerned that accounting and reporting that diverges so significantly from the underlying substance of the transaction has the potential for bringing accounting into disrepute. As a result, we would recommend that rather than issuing this IFRIC in final form the underlying principle in IAS 37 should be referred to the IASB for review.

In issuing this comment letter, the FRC also contradicts the preliminary EFRAG view that the consensus in the draft IFRIC Interpretation will lead to decision useful information for users of financial statements.

Please click for (both links to FRC website):

• FRC comment letter to the IASB
• FRC letter to EFRAG

In its evaluation of Annual Improvements to IFRSs 2009–2011 Cycle, EFRAG supports the Amendments made and recommends their adoption. EFRAG notes that the benefits of adopting the amendments outweigh the costs.

In a separate endorsement advice letter, EFRAG supports Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) for endorsement. In keeping with the fact that EFRAG recommended deferring the mandatory effective date of IFRS 10, IFRS 11, IFRS 12, IAS 27(2011) and IAS 28(2011) from 1 January 2013 to 1 January 2014, with early adoption permitted, EFRAG also recommends deferring the mandatory effective date of the amendaments to IFRS 10, IFRS 11 and IFRS 12 to 1 January 2014.

Click for:

• EFRAG press release on Annual Improvements to IFRSs 2009–2011 Cycle (link to EFRAG website).
• EFRAG press release on Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) (link to EFRAG website).

Links to the endorsement advice letters and effects study reports are provided in the respective press releases.

Firstly, EFRAG was split on the weight that different factors (such as stability, changes in user’s needs and alignment with full IFRS) should have when amending the IFRS for SMEs.

• View 1: IFRS for SMEs should only be amended when a problem has been identified through post-implementation reviews or there is other evidence that the standard does not work appropriately.
• View 2: All available and relevant information should be considered when amending the IFRS for SMEs, such as identified problems and changes to full IFRS.
• View 3: Most changes to full IFRS regarding measurement and recognition should also be reflected in the IFRS for SMEs as a result of the periodic reviews.

Secondly, EFRAG had differing views on including options in the IFRS for SMEs that would allow entities to apply accounting policies that would result in more similar outcomes to full IFRS.

• View A: Options would increase the costs and complexity of the standard and the resulting financial statements would be less comparable.
• View B: IFRSs for SMEs should include the same options for entities that are non-publicly accountable as for those that are, although they may be formulated in a simplified manner.

The draft comment letter also includes a 39-page appendix with questions for constituents related to the different views. Comments on EFRAG's draft comment letter are invited by 12 November 2012.

Click for:

• EFRAG press release with link to the draft comment letter (link to EFRAG website).
• Our previous story on the IASB's Request for Information: Comprehensive Review of the IFRS for SMEs.

This 136-page guide includes information about:

• The IASB organisation — its structure, membership, due process, contact information, and a chronology
• Use of IFRSs around the world, including updates on Europe, United States, Canada and elsewhere in the Americas, and Asia-Pacific
• Recent pronouncements — those which are effective and those which can be early adopted
• Summaries of current Standards and related Interpretations, as well as the Conceptual Framework for Financial Reporting and the Preface to IFRSs
• IASB agenda projects and active research topics
• IFRS Interpretations Committee current agenda topics
• Other useful IASB-related information

Please contact your local Deloitte practice office to request a printed copy.

Click to view IFRSs in your pocket 2012.

The comment letter is dated 26 July 2012, but was only made available by ESMA now.

In April 2012, ESMA had submitted a request to the IFRS Interpretations Committee asking to clarify the accounting of the exposure to Greek sovereign debt arguing that IAS 39 Financial Instruments: Recognition and Measurement does not offer enough guidance in this respect. ESMA wrote: "This results in difficulties to understand how the standard should be applied [...] and could raise enforcability issues."

After the Interpretations Committee tentatively decided not to add the issue to its agenda in May 2012, ESMA published the original submission, which also contained several suggested accounting treatments, in order to underline its point.

ESMA has now published its comment letter on the tentative agenda decision in which stresses its view once more:

European enforcers of IFRS note varying accounting practices for debt restructurings by lenders due to the lack of clear guidance which leads in turn to decreased comparability between financial statements

ESMA does not agree with the Committee’s conclusion not to add the subject to its active agenda nor to recommend the Board to perform further work. It now encourages the IASB to consider the concerns as part of its ongoing deliberations on IFRS 9 Financial Instruments.

Please click for:

• Original ESMA submission (link to ESMA website)
• ESMA comment letter on the tentative agenda decision (link to ESMA website)
• Deloitte observers notes from the discussion of this matter at the May 2012 Interpretations Committee meeting

In November 2011, ESMA published a consultation paper in order to seek comments from interested parties on their understanding of various aspects of materiality in an effort to contribute to a consistent application of this important concept in financial reporting. ESMA made available all comments received on the consultation paper in April 2012 and has now consolidated these into a summary of responses.

The main findings are:

• The majority of all respondents believe that the concept of materiality is generally well understood, however, they see diversity in application.
• Diversity in application was attributed to management judgement, separate perspectives of different stakeholder groups, and general difficulties in applying the concept to certain issues.
• Many respondents believe that the application of materiality concept to disclosures could help address the problem of too many disclosures obscuring the reporting about an entity’s financial position and performance.
• The majority of respondents were of the opinion that the principles to be applied in assessing materiality in interim and annual financial reports should be the same.
• Respondents clearly indicated that if there is a need for further guidance on the application of the concept of materiality this issue should be addressed by the IASB.

Please click for access to the full summary of responses (link to ESMA website).

ESMA has decided to organise a public roundtable on materiality in financial reporting where some of the issues raised in the consultation paper will be further discussed. The roundtable will be held on 1 October 2012 in Paris. Please click for further information (link to ESMA website).

The release of the two additional exposure drafts follows on from an earlier exposure draft outlining the G4 project development process and the proposed significant changes to the current 'G3' guidelines.  The two topics covered by the new exposure drafts were signalled in the original draft.

Proposed new guidance on anti-corruption is designed to enable companies to report information on their policy, their publicly stated commitment to zero tolerance of corruption, their training of employees, governance bodies and business partners on anti-corruption, and their collective action initiatives towards combating corruption.

The exposure draft on GHG proposes new content for the G4 guidelines that are designed to more closely align GRI’s guidance with the GHG Protocol set of standards, jointly released by the World Resources Institute and the World Business Council for Sustainable Development, and the ISO 14064 standard produced by the International Standards Organization for Standardization.

Comments on the two new exposure drafts close on 12 November 2012.  Click for press release (link to GRI website).