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Notes from the January 2013 IASB meeting

Jan 31, 2013

The IASB's January meeting was held in London on January 29–31, 2013; some of it was a joint meeting with the FASB. Deloitte observer notes are posted from several sessions.

Click for direct access to the notes:

Wednesday, January 30, 2013

Thursday, January 31, 2013

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

IASB and FASB make progress on joint leases project

Jan 31, 2013

At their joint meeting yesterday, the IASB and FASB tentatively agreed on three topics related to the classification of lease components in an arrangement.

The boards tentatively decided that an entity should analyze the lease components in an agreement separately when the lessee can benefit from the use of the separately identifiable assets in the arrangement. For example, if a lease arrangement includes both a manufacturing plant and removable machinery, the contract would be evaluated as two separate lease components. In determining whether an arrangement should be separated into its components, the entity would consider whether the use of the asset depends on other assets that are readily available to the entity and whether the use of the asset is interrelated with other assets identifiable under the contract.

The boards tentatively agreed that the classification of a lease component should be based on the primary asset of the lease component. According to the boards’ agenda paper for the meeting, the “primary asset would be the predominant asset for which the lessee has contracted for the right to use — the main purpose of leasing other assets that form part of the overall lease component might be to facilitate the lessee obtaining benefits from use of the primary asset.” For example, if a lease arrangement includes both a turbine and a building that is directly tied to the life of the turbine, the entire lease component would be considered “other than property” for classification purposes.

Finally, the boards decided not to require land and building elements of a property lease to be assessed separately for classification purposes. The economic life of the building would be considered the economic life of the property in the determination of lease classification.

The boards expect to issue a revised exposure draft on leases during the first quarter of 2013.

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IFRS Foundation publishes Education Initiative's teaching material

Jan 30, 2013

The IFRS Foundation has published the first part of its Education Initiative’s comprehensive framework-based IFRS teaching material. The free-to-download teaching material was designed to assist educators in teaching IFRSs more effectively.

The material was developed to support those teaching IFRSs, helping them to progressively develop students' abilities to make the necessary estimates and judgements when applying IFRSs and IFRS for SMEs. The material is presented in three stages to accommodate students at different levels in their learning process:

    • Stage 1 — A student’s first financial reporting course.
    • Stage 2 — A financial reporting course mid way to qualifying as a CA or CPA.
    • Stage 3 — A course immediately before qualifying as a CA or CPA.

      Because Stage 3 requires students to make estimates and other judgements that are necessary when accounting for economic phenomena (transactions, conditions, and events), it is critical that the teaching guide for Stage 3 lessons not be distributed to future students. The teaching notes that supplement Stage 3 are only available via application to the Education Initiative staff.

      The material covers nonfinancial assets with a particular focus on property, plant, and equipment. The education staff is currently working on similar material on the following topics: liabilities, business combinations, and consolidations, with other topics to follow. The next batch of material is tentatively scheduled for posting on the IASB’s Web site in the second half of 2013.

      Click for:

      Additional outreach on the scope exception for "macro fair value hedge accounting"

      Jan 30, 2013

      During discussions at its January meeting, the IASB decided to postpone a decision on the staff question of whether to retain the drafting in the review draft of the hedge accounting section of IFRS 9 regarding what requirements apply if an entity uses the scope exception for "macro fair value hedge accounting."

      The staff argued that the review draft published in September 2012 is clear that an entity that uses the scope exception for macro fair value hedge accounting applies all (applicable) hedge accounting requirements in IAS 39 and not only paragraphs 81A, 89A, and AG114–AG132.

      During the discussion it became clear, however, that while some Board members believe that the standard is clear, others believe that it should permit entities to extend current practice until the macro hedging project is finalized if the current practice constitutes some sort of macro hedging. The Board finally decided against a general grandfathering of current practice, however, some further limited outreach will be conducted.

      The European Financial Reporting Advisory Group (EFRAG) conducted some field-testing of the review draft and has already started an additional consultation on existing macro hedge relationships under IAS 39.

      Darrel Scott follows Paul Pacter as chairman of the SMEIG

      Jan 29, 2013

      The IFRS Foundation Trustees have announced that IASB member Darrel Scott will become the new chairman of the SME Implementation Group (SMEIG). He will replace Paul Pacter, whose term at the IASB ended on December 31, 2012.

      The mission of the SMEIG is to support the international adoption of the IFRS for SMEs and to monitor its implementation.

      Currently, the SMEIG is working with the IASB on the first comprehensive review of the IFRS for SMEs to assess the first two years of experience that entities have had in applying the standard. The next meeting of the SMEIG in this context is scheduled for the beginning of February.

      The IFRS Foundation Trustees also approved changes to the Terms of Reference and Operating Procedures for the SMEIG that reflect the Trustees' decisions to expand the SMEIG to approximately 30 members and to stagger the members' terms. These changes will take effect as of July 1, 2014.

      Click for the press release announcing the appointment of Darrel Scott (link to the IASB's Web site).

      Hans Hoogervorst addresses consistency in financial reporting

      Jan 25, 2013

      IASB Chairman Hans Hoogervorst gave a speech at the Cass Business School in London on the search for consistency in financial reporting standards. In his speech, Mr. Hoogervorst outlines five ways that the IASB is helping to promote a more consistent application of IFRSs.

      Mr. Hoogervorst first discussed the European adoption of IFRSs — before which, it had been nearly impossible to compare financial statements across countries, competitors, and industries. Even though there are currently discrepancies among nations in the application of IFRSs, Mr. Hoogervorst said, "The truth is that even an unevenly applied global standard provides much more global comparability than an equally unevenly applied multitude of diverging national standards."

      Mr. Hoogervorst also pointed out that it was not primarily the task of the IASB to manage the uniform application of its standards. Rather, this is the task of regulators and auditors. But he also admitted that the IASB could indeed contribute to a consistent application of IFRSs. He outlined the following five areas that the IASB is taking the lead on:

      • Developing principle-based standards that are capable of being applied, audited, and enforced on an internationally consistent basis. Mr Hoogervorst cited deeper cooperation with organizations such as EFRAG and AOSSG and the important role the proposed Accounting Standards Advisory Forum (ASAF) will have in "road testing" new standards.
      • Completing a post-implementation review of major standards and interpretations two years after they have come into effect, noting the post-implementation reviews of IFRS 8 and IFRS 3.
      • Extending the scope and responsibilities of the IFRS Interpretations Committee, which provides the IFRIC with the tools it needs to react more quickly and effectively, avoiding discrepancies in practice.
      • Increasing production of educational material, with education material on IFRS 11, Joint Arrangements, expected, following the initial material on IFRS 13, Fair Value Measurement, which was released in December.
      • Expanding the cooperation with securities regulators at the international and regional levels, including "possibly through some form of MoU or other formal agreement."

      The full speech is available on the IASB's Web site.

      Final notes from the January 2013 IFRS Interpretations Committee meeting

      Jan 25, 2013

      Deloitte observer notes are posted from the IFRS Interpretations Committee meeting held in London on January 22 and 23, 2013. The notes cover the last session on the first day of the meeting and all the topics discussed on the second day.

      The topics discussed included (click to access detailed Deloitte observer notes for each topic):

      Tuesday, January 22, 2013 (09:00-17:10)

      New Items for initial consideration

      Wednesday, January 23, 2013 (09:00-17:00)

      Due Process Documents


      Annual improvements

      New Items for initial consideration

      Administrative session


      The following item was not considered at this meeting but will instead be considered at a future meeting:

      • IAS 29, Financial Reporting in Hyperinflationary Economies — Applicability of IAS 29 to financial statements prepared under the concept of financial capital maintenance in constant purchasing power units.

      Click here to go to the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

        Mary Jo White nominated as SEC chairman

        Jan 24, 2013

        President Barack Obama has nominated Mary Jo White as chairman of the SEC. If confirmed by the Senate, White would replace Elisse Walter, the acting chair since Mary Schapiro's resignation in December 2012.

        Ms. White was the first woman to be appointed as U.S. Attorney for the Southern District of New York, serving from 1993 to 2002. She specialized in white-collar crime, a key reason for her selection as chair of the SEC. She is currently chair of the litigation department at Debevoise & Plimpton.

        Click to view the press release on the White House's Web site.

        First results of the IASB disclosure survey

        Jan 24, 2013

        The International Accounting Standards Board (IASB) has published first results of a survey aimed at assisting the IASB to gain a clearer picture on the perceived "disclosure problem". The survey was conducted in preparation for the discussion forum on disclosures that will be hosted by the IASB on 28 January 2013.

        The 225 responses received by the IASB gave the following overall picture:

        • Over 80 percent those who completed the survey felt that improvements could be made to the way financial information is disclosed. Many also indicated that there was a need for improvements across all parts of the annual report.
        • Most preparers of financial statements (50 percent of all responses were received from preparers) said that the disclosure requirements were extensive and too little attention was being paid to exclude immaterial information.
        • Users of financial statements (making up 20 percent of all respondents) felt to a large extent that preparers should do more to focus on relevant information to improve communication.
        • Several causes for the overload problem were identified, among them the way the standards are set and the way that preparers, auditors, and regulators apply the standards.

        The numbers and results above were drawn from the press release available on the IASB's Web site. The IASB announced that the full results of the survey will be published as part of a Feedback Statement that will also contain the feedback from the disclosure forum.

          Notes from the first day of the January IFRS Interpretations Committee meeting

          Jan 24, 2013

          The IFRS Interpretations Committee held its meeting in London on January 22 and 23, 2013. Deloitte observer notes from the first day of the meeting are now available.

          The topics discussed on the first day of the meeting include (click to access detailed Deloitte observer notes for each topic):


          Tuesday, January 22, 2013 (09:00-17:10)


          Review of Tentative Agenda Decisions published in September IFRIC Update

          Items for continuing consideration

          Active Committee Projects

          Notes from the final session of day one, discussing the timing of the recognition of intercompany charges under IFRS 2, will be posted soon. In addition, the following items included on the initial agenda were not discussed but will be considered at a future meeting:

          • IAS 7, Statement of Cash Flows — Definitions of operating, financing, and investing.
          • IAS 7, Statement of Cash Flows — Classification of interest paid that is capitalized as part of the cost of an asset.

          Click here to go to the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

            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.