This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

May

IFRS Interpretations Committee publishes proposed guidance on levies and put options

May 31, 2012

The IFRS Interpretations Committee published for public comment proposed guidance on accounting for (1) levies charged by public authorities on entities that operate in a specific market and (2) a put option written by a parent entity on the shares of its subsidiary held by a noncontrolling interest shareholder.

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 recognized. 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 September 5, 2012.

Click for DI/2012/1 and the press release, both available on the IASB's Web site.

 

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.

Final report on establishing the Private Company Council

May 31, 2012

The Financial Accounting Foundation (FAF) has issued its final report on establishing the Private Company Council (PCC), which will determine whether exceptions or modifications to existing U.S. GAAP are necessary to address the needs of users of private company financial statements. The final report spells out the details on the new council.

As reported earlier, the FAF Board of Trustees have announced the establishment of a new body, the PCC, to improve the process of setting accounting standards for private companies. The final report published yesterday gives all the details concerning the role and the responsibilities of the PCC (the summary below is based on extracts from the final report).

 

  • Authority and critical responsibilities  The PCC will have two principal responsibilities: (1) to determine whether exceptions or modifications to existing nongovernmental U.S. GAAP are required to address the needs of users of private company financial statements and (2) to serve as the primary advisory body to the FASB on the appropriate treatment for private companies for items under active consideration on the FASB’s technical agenda.
  • Membership and terms  The PCC will be comprised of 9 to 12 members, including a chair, all of whom will be selected and appointed by the Board of Trustees. The PCC chair will not be affiliated with the FASB and will have had substantial experience with and exposure to private companies during the course of his or her career. PCC members will include users, preparers, and practitioners who have significant experience using, preparing, and auditing (or compiling and reviewing) private company financial statements. Members will be appointed for a three-year term and may be reappointed for an additional term of two years.
  • FASB liaison and staff support  A FASB member will be assigned as a liaison to the PCC. FASB technical and administrative staff will be assigned to support and work closely with the PCC to leverage the FASB’s resources and avoid duplication of efforts.
  • Meetings  During its first three years of operation, the PCC will hold at least five meetings per year, with additional meetings if determined necessary by the PCC Chair. The meetings of the PCC will be open to the public.
  • PCC agenda setting and due process for existing U.S. GAAP  The PCC will determine its agenda in consultation with the FASB and with input from stakeholders. On the basis of agreed-upon decision-making criteria, the PCC will conduct a review of existing U.S. GAAP and identify standards that it will consider for possible exceptions or modifications. Proposed modifications or exceptions to U.S. GAAP approved by the PCC will be provided to the FASB for a decision on endorsement.
  • PCC role in projects on the FASB agenda  For projects under active consideration on the FASB’s technical agenda, the PCC is the primary advisory body to the FASB about the implications for private companies. Recommendations of the PCC will be considered by the FASB in its deliberations, and the FASB will be responsible for documenting, in the basis for conclusions of its proposed and final Accounting Standards Updates, how it separately considered the needs of private companies and the recommendations from the PCC.
  • Oversight  The FAF Board of Trustees will create a special-purpose committee of Trustees, the Private Company Review Committee (Review Committee), which will have primary oversight responsibilities for the PCC for its first three years of operation. The Review Committee will hold both the PCC and the FASB accountable for achieving the objective of ensuring adequate consideration of private company issues in the standard-setting process.
  • FAF Trustees’ three-year assessment  After its first three years of operation, the FAF Trustees will conduct an overall assessment of the PCC to determine whether its mission is being met and whether further changes to the standard-setting process for private companies is warranted.

Click for access to the full report on the FASB's Web site.

Final notes from the May IASB meeting

May 30, 2012

The IASB held its May meeting in Norwalk, CT, on May 21–24, 2012; much of it was a joint meeting with the FASB. Deloitte observer notes are posted from Wednesday's effective dates session and the IFRS 8 post-implementation review session and Thursday's leases session.

Click for direct access to the notes:

Wednesday, May 23, 2012 

Thursday, May 24, 2012

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

Insurance contracts notes from the May IASB meeting

May 28, 2012

Deloitte observer notes are posted from the insurance sessions of the May IASB meeting, which took place in Norwalk, CT, on May 21–24, 2012. The discussions, many jointly with the FASB, covered unbundling, whether to abandon the risk adjustment, the use of other comprehensive income, and acquisition costs.

Click for direct access to the notes:

Tuesday, May 22, 2012

Wednesday, May 23, 2012

Thursday, May 24, 2012

Meeting notes from the remaining sessions will be posted soon.

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

Additional notes from the May IASB meeting

May 25, 2012

The IASB held its May meeting in Norwalk, CT, on May 21–24, 2012; much of it was a joint meeting with the FASB. Deloitte observer notes are posted from the investment entities session held on Monday and the IFRS 10 transition guidance session held on Wednesday.

Click for direct access to the notes:

Monday, May 21, 2012 

    Wednesday, May 23, 2012

    Meeting notes from the remaining sessions will be posted soon.

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

    IFRS Foundation's framework-based teaching workshops

    May 25, 2012

    The IFRS Foundation has developed framework-based teaching workshops for those teaching IFRSs. As part of the IASB's education initiative, the workshops train teachers to develop their students' skills in interpreting and applying IFRSs (including IFRS for SMEs).

    At a recent workshop on May 14 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 teachers with the IASB staff on the new and amended IFRSs that would become mandatory in 2013.

    Click for:

    Chairman Michel Prada speech to IOSCO

    May 24, 2012

    On May 16, 2012, Michel Prada, chairman of the IFRS Foundation Trustees, addressed the 2012 IOSCO conference in Beijing, China. In his speech, Mr. Prada highlighted the IOSCO's role in developing IFRSs, discussed the future of the IASB as a global standard-setter, and shared his goal of greater coordination between the IASB and IOSCO.

    Mr. Prada began his speech congratulating the IOSCO on its governance reform, noting that the reform will enhance the IOSCOs visibility and efficiency. He spoke about the IOSCO being a catalyst for the the global accounting standards movement in May 2000, when it endorsed for cross-border listings. These were the "core standards" of the Accounting Standards Committee, which later became the IASB.

    In his speech, Mr. Prada discussed the success of IFRSs and that he was hopeful that the remaining countries, including the United States, India, and China, will come "fully on board" to see the full benefits of a single set of global accounting standards.

    Mr. Prada also spoke about the future role of the IASB as a global accounting standard setter. He cited the reviews by the IFRS Foundation Monitoring Board and the IFRS Trustees, which released jointly in February 2012. He believes that one of the most important findings in the Trustees' strategy review is the recommendation to "formalise the IASB's relationship with others involved in the financial reporting supply chain — accounting standard-setters, audit and securities regulators, and others. The purpose of this is twofold."

    Mr. Prada goes on to explain:

     

    The first relates to the IASB’s ability to create standards that can be applied around the world and without modification. The IASB cannot do this alone. It must find ways to work in close cooperation with standard-setting bodies around the world, to tap-into the best thinking in financial reporting, but also to make sure that jurisdictional requirements are fully taken into consideration.

    The second purpose is to improve consistency in the implementation of those standards. The IASB has been given the responsibility to develop international standards, but it does not have the authority to say how those standards should be endorsed, implemented or enforced.

    Neither is it equipped to easily identify the consequences of the standards without the contribution of those entities that implement them in the field.

    Mr. Prada then asked for more cooperation and collaboration between the IOSCO and the IASB, noting that the Trustees' strategy review provided a framework for a better-developed relationship.

    Click for the full text of Mr. Prada's speech on the IASB's Web site.

    Further notes from the May IASB meeting

    May 24, 2012

    The IASB held its May meeting in Norwalk, CT, May 21–24, 2012; much of it was a joint meeting with the FASB. Deloitte observer notes are posted from Wednesday's sessions on the agenda consultation and an IFRS Interpretations Commitee issue.

    Click for direct access to the notes:

    Wednesday, May 23, 2012 

    Meeting notes from the remaining sessions will be posted soon.

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

    ISDA compares derivative reporting under U.S. GAAP and IFRSs

    May 24, 2012

    The International Swaps and Derivatives Association (ISDA) has published a paper "Netting and Offsetting: Reporting Derivatives Under US GAAP and Under IFRS." The paper describes the key differences between the approaches used by the IASB and FASB in balance sheet offsetting and explains how each Board arrived at its current position. The paper examines why U.S. GAAP allows for derivatives to be reported as net rather than gross on the balance sheet and why the ISDA favors this method.

    The ISDA's paper provides insight into the different offsetting requirements under IFRSs and U.S. GAAP and their impact on liquidity, collateral, and the new Basel III Leverage Ratio.

    The paper also covers:

    • Why is netting/offsetting an issue?
    • Differences among securities, loans and receivables, and derivatives.
    • Portfolio management.
    • The interest rate swap and credit default swap markets.
    • The efficacy of netting and collateral as risk mitigation techniques.
    • The offsetting rules under U.S. GAAP and IFRSs.
    • Criteria for derivatives and repo markets.
    • New offsetting disclosures.
    • The new Basel III Leverage Ratio.

    The paper, Netting and Offsetting: Reporting Derivatives Under US GAAP and Under IFRS, is available on the ISDA's Web site.

    New IFRS for SMEs training module

    May 24, 2012

    The IFRS Foundation Education Initiative has developed a training module for Section 31 of the IFRS for SMEs, "Hyperinflation." This section establishes financial statement requirements for entities whose functional currency is the currency of a hyperinflation economy.

    Ultimately, the IFRS for SMEs training material will include 35 stand-alone modules — one for each section of the IFRS for SMEs. Currently, 29 modules are available. Most are also available in Arabic, Russian, Spanish, and Turkish.

    Click for more information on the Section 31 training module or access all training modules on the IASB's Web site.

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.