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FAF seeks participants for post-implementation review survey of Statement 141R

Jul 31, 2012

The Financial Accounting Foundation (FAF) is seeking participants for the post-implementation review (PIR) survey of FASB Statement No. 141(R), "Business Combinations." The FAF will use the information from the PIR survey to evaluate the effectiveness of the standard-setting process of the FASB. The FAF will give the results of the PIR to the FASB for it to consider in its future standard-setting processes.

The PIR process conducted by the FAF is independent of the standard-setting process of the FASB. This differs from the PIR process for IFRSs when only the IASB conducts the PIR; there is no independent reviewing organization.

The IASB expects to begin its PIR on business combinations (IFRS 3) later this year. The IASB and FASB worked together in developing their business combination standards as part of their convergence efforts. However, it is unclear at this time the extent to which the IASB and the FASB will coordinate their PIR processes.

More information on the FAF post-implementation review of Statement 141(R) is available on the FAF's Web site.

IASB releases batch of editorial corrections to IFRSs

Jul 31, 2012

The IASB has posted a new batch of "Editorial Corrections to IFRSs."

This batch makes editorial corrections and changes to:

  • IFRS 5, Non-current Assets Held for Sale and Discontinued Operations (issued March 2004).
  • IFRS 7, Financial Instruments: Disclosures (issued August 2005).
  • IFRS 10, Consolidated Financial Statements (issued May 2011).
  • IFRS 11, Joint Arrangements (issued May 2011).
  • IFRS 13, Fair Value Measurement (issued May 2011).
  • IAS 19, Employee Benefits (issued June 2011).
  • IAS 27, Separate Financial Statements (issued May 2011).
  • Mandatory Effective Date of IFRS 9 and Transition Disclosures (Amendments to IFRS 9 and IFRS 7) (issued December 2011).
  • Annual Improvements 2009–2011 Cycle (issued May 2012).

The IASB has also changed the format and timing of the issue of editorial corrections and will now only issue editorial corrections three times a year, before each of the "Green book," "Red book," and "Blue book" issues are published.  However, major corrections will continue to be published as soon as they are identified.

Access the editorial corrections on the IASB's Web site.

Summary of the July 2012 DPOC meeting

Jul 30, 2012

The IASB has posted a summary of the July 11, 2012, Due Process Oversight Committee (DPOC) meeting.

The DPOC is responsible for (1) approving due process and overseeing the IASB’s compliance with due process and (2) reviewing the Trustees’ fulfilment of their oversight function in accordance with the Constitution of the IFRS Foundation.

Click for a summary of the meeting (link to the IASB's Web site).

FASB issues ASU to simplify testing of indefinite-lived intangible assets for impairment

Jul 27, 2012

The FASB has issued Accounting Standards Update (ASU) 2012-02, "Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment." The ASU simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill.

The FASB issued ASU 2012-02 on the basis of feedback received from stakeholders concerning the recurring costs of performing impairment tests for indefinite-lived intangible assets other than goodwill when there was a low likelihood of impairment. The amendments in the ASU allow an entity the option of first performing a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. The FASB believes that the amendments made by ASU 2012-02 will reduce the cost of accounting for indefinite-lived intangible assets.

The FASB realizes that the guidance in this ASU will not result in the convergence of impairments between U.S. GAAP (Topic 350) and IFRS (IAS 36).

The ASU applies to all public, private, and not-for-profit organizations. The amendments are effective for annual and interim impairment tests performed in fiscal years beginning after September 15, 2012. Early adoption is permitted.

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New IASB work plan issued

Jul 27, 2012

The IASB has released a revised work plan that updates the expected timing of various due process steps in its projects. There are a number of projects for which deliverables have been deferred, and a target date for the publishing of an IFRS from the revenue recognition project has been formally included (the first half of 2013). A summary of the changes, together with a listing of the projects for which a due process document is expected in the near future, are now available.

Summary of changes

The following is a summary of the changes in the revised work plan dated July 26, 2012:

  • Agenda consultation — The timing for the issuance of the feedback statement from the consultation has been pushed back to the third quarter of 2012 (previously second quarter), and the development of a strategy previously indicated for the second half of 2012 has been removed. This may be considered to be consistent with comments made by Hans Hoogervorst in earlier speeches acknowledging that the future agenda is not really contentious.
  • Financial instruments — general hedge accounting — A review draft of the finalized general hedge accounting chapter of IFRS 9 is expected in the third quarter of 2012 (previously second quarter), with the target date for completion of the chapter expected in the fourth quarter of 2012 (previously second half 2012).
  • Revenue recognition — The work plan confirms deliberations will continue to the end of 2012, but introduces a formal target date of a new IFRS in the first half of 2013.
  • Post-implementation reviews:
    • IFRS 8, Operating Segments — The work plan adds that the IASB expects to consider comments received from the Request for Information in the first quarter of 2013.
    • IFRS 3, Business Combinations — The post-implementation review on IFRS 3 is now not expected to commence before the fourth quarter of 2012 (previously not earlier than the third quarter 2012).

Projects for which a due process document is expected in the near future

The work plan confirms the following milestones are expected to be reached by the end of September:

In addition, the following milestones are expected to be reached by the end of calendar 2012 (in some cases, this may also mean they are issued in the third quarter):

Click for the IASB's work plan as of July 26, 2012 (link to the IASB's Web site). We have updated our project pages to reflect the updated work plan and other known developments.

IASB staff to develop guidance for micro-sized entities applying the IFRS for SMEs

Jul 26, 2012

The IASB staff, along with the SME Implementation Group, will be working together to develop guidance suitable for micro-sized entities that are applying the IFRS for SMEs.

The IASB staff will use the IFRS for SMEs to identify requirements that are necessary for most micro-sized entities. Guidance will then be developed based on those requirements and without changing the principles for recognizing and measuring assets, liabilities, income, and expenses.

In addition, the guidance will cross-reference the "IFRS for SMEs for matters not dealt with in the guidance booklet. Subsequently, having applied the guidance, an entity’s notes to financial statements and auditor’s report could refer to conformity with the IFRS for SMEs because there is no modification."

Click to view the IASB's press release.

IASB seeks candidates for the methodology for fieldwork and effects analyses consultative group

Jul 25, 2012

The IASB is seeking candidates for membership to the consultative group that will assist the IASB in developing an agreed methodology for fieldwork and effect analyses.

In accordance with the recommendations from the 2011 Trustees' Strategy Review, the consultative group will provide information on, and an assessment of, fieldwork and effect analyses methodologies that are used currently and whether and how they might be applied to the IASB’s standard-setting activities together with advice on the most appropriate methodology (or methodologies) that might be used.

The establishment of the consultative group will also assist the IASB in identifying the "extent to which it can, and should, meet the needs of bodies responsible for the endorsement of IFRSs in their jurisdictions with respect to effect analysis" so that endorsement bodies might rely on the IASB effects analyses instead of conducting their own analysis.

The IASB expects the consultative group to have 12 to 20 members and will be taking applications until September 14, 2012.

More information on the terms and candidacy for membership are available on the IASB's Web site.

SMEIG members reappointed by IFRS Foundation

Jul 25, 2012

Members of the SME Implementation Group (SMEIG) have been reappointed by the Trustees of the IFRS Foundation for an additional two-year term that ends June 30, 2014.

The SMEIG's first tasks of their second term will be to analyse the feedback from the Request for Information (part of the IASB's initial comprehensive review of the IFRS for SMEs) and to make recommendations to the IASB for possible enhancements to IFRS for SMEs.

Click to view the IASB press release (link to the IASB's Web site).

Separation of the role of chairman of the IASB and chief executive officer of the IFRS Foundation reflected in new Constitution

Jul 25, 2012

The Trustees of the IFRS Foundation have published a drafting review of the IFRS Foundation Constitution. The document reflects changes to the Constitution regarding the separation of the role of chairman of the IASB and the chief executive officer of the IFRS Foundation.

The changes are one of the results of the Monitoring Boards governance review 2010–2011. Some changes have already been implemented by appointing Yael Almog as Executive Director of the IFRS Foundation earlier this year.

The Trustees have announced that further changes to the IFRS Foundation Constitution may be considered in the future; however, they felt that the reality of this change should be reflected in the Constitution as soon as possible.

Comments on the drafting review are requested by October 23, 2012.

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Report calls for integrated reporting in light of global financial crisis

Jul 24, 2012

A joint report by the United Nations Environment Programme Finance Initiative (UNEP-FI), the International Institute for Sustainable Development (IISD), and the Blended Capital Group explores lessons learned from the global financial crises and outlines a number of recommendations, including a global integrated reporting standard.

The report, Lenses and Clocks: Financial stability and systemic risks, provides an overview of the developments during the financial and economic crisis of 2007–2012 and the ongoing response to that crisis and then highlights a number of areas related to the "re-engineering" of the global financial system, relating sustainable finance and investment thinking to these areas.

The report laments the focus on "short-term" outcomes and analyses some of the initiatives and policy responses to issues identified from the global financial crisis. In critiquing the global convergence of accounting standards, the report notes:

It appears . . . that international efforts to bring about convergence around one standard, the International Financial Reporting Standards, have faltered and the accounting community has to a large degree accepted that, at this stage, an integrated global accounting system is beyond its reach, with many of the key unresolved issues still on the table in 2012. Agreement over the valuation and pricing of banking assets, notably the complex financial products such as derivatives that sat at the heart of the initial sub-prime crisis in the United States, as well as loans and loan-like instruments, appear to be, once again, at the epicentre of the schism across the accounting world.

The recommendations of the report are outlined as a series of four "propositions":

  • Proposition 1: Build a deeper understanding of how policy makers, market regulators, and international financing institutions can support the growth and main-streaming of responsible investment and inclusive finance approaches.
  • Proposition 2: Establish a monitoring body, which ensures that global financial architecture is managed on sustainable fiduciary principles.
  • Proposition 3: Investigate why long-term pension investment has not resulted in a financial system that more obviously serves the interests of savers and supports global sustainability.
  • Proposition 4: Build on the work of the Integrated Reporting Committee and others to promote transparency in the operations of financial and commercial organizations.

The recommendations on proposition 4 include a call for a new protocol on integrated reporting which would cover at least all listed entities on the 50-plus major stock exchanges of the world:

The international community should agree to the adoption by stock exchange authorities and market regulators worldwide of a United Nations protocol that requires listed entities to abide by an integrated reporting standard covering sustainability issues promoting transparency in the operations of financial and commercial organizations. Such a protocol would build on the work of the International Integrated Reporting Committee and would embed a requirement to include a vote on the quality of the integrated report at the annual general meetings of listed corporations.


Click for access to the full report (link to the the UNEP-FI Web site)

Correction list for hyphenation

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