Click for direct access to the notes:

Wednesday, January 30, 2013

• Financial instruments — Hedge accounting (IASB only).
• Matters arising from the IFRS Interpretations Committee (IASB only).
• Revenue recognition (IASB and FASB).
• Leases (IASB and FASB).

Thursday, January 31, 2013

• Integrated reporting — Overview and update of IASB activities (IASB only).
• Post-implementation review — IFRS 8, Operating Segments (IASB only).

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

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.

Click for:

• Deloitte observer notes for the January 2013 joint session on leases.
• Deloitte observer notes for the entire January 2013 regular meeting.

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:

• Press release on the IASB's Web site with links to the teaching material.
• Upcoming IFRS teaching sessions being held worldwide (link to the IASB's Web site).

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.

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).

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

• IFRS 2, Share-based Payment — Timing of the recognition of intercompany recharges.

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

Due Process Documents

• IAS 32, Financial Instruments: Presentation — Put options written over non-controlling interests.
• IAS 37, Provisions, Contingent Liabilities and Contingent Assets, and IFRIC 6, Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment — IFRIC Interpretation X Levies.

Annual improvements

• IFRS 2 ― Definition of ‘vesting conditions.’
• IFRS 3 ― Accounting for contingent consideration in a business combination.
• IAS 1 ― Current/non-current classification of liabilities.
• IAS 16 & IAS 38 ― Revaluation method ― proportionate restatement of accumulated depreciation.
• IAS 24 ― Key management personnel services.

New Items for initial consideration

• IAS 39, Financial Instruments: Recognition and Measurement — Novation of derivatives under EMIR legislation.
• IFRS 7, Financial Instruments: Disclosures — Whether the transfers of financial assets disclosure requirements apply to servicing rights/obligations.
• IAS 28, Investments in Associates and Joint Ventures and IFRS 3 Business Combinations — Associates and common control.
• IAS 7, Statement of Cash Flows — Identification of cash equivalents.

Administrative session

• Committee work in progress.

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.

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.

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.

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)

Introduction

Review of Tentative Agenda Decisions published in September IFRIC Update

• IFRS 3, Business Combinations — Continuing employment.
• IAS 27, Separate Financial Statements — Non-cash acquisition of non-controlling interest.
• IAS 28, Investments in Associates and Joint Ventures — Impairment of investments in associates in separate financial statements.
• IAS 39, Financial Instruments: Recognition and Measurement — Negative interest rates.

Items for continuing consideration

• IAS 19, Employee Benefits — Measurement of the net DBO for post employee benefit plans with employee contributions.
• IAS 19, Employee Benefits — Determination of discount rate.
• IAS 10, Events after the Reporting Period — Reissue of financial statements.
• IAS 40, Investment Property — Accounting for a structure that appears to lack the physical characteristics of a building.

Active Committee Projects

• IAS 16, Property, Plant and Equipment; IAS 38, Intangible Assets; and IFRIC 12, Service Concession Arrangements — Variable payments for the separate acquisition of PPE and intangible assets.
• IAS 1, Presentation of Financial Statements — Disclosures requirements about assessment of going concern.

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.