July

EFRAG discussion paper on revenue recognition

23 Jul 2007

The European Financial Reporting Advisory Group (EFRAG) and the German accounting standard setter have jointly prepared a discussion paper 'Revenue Recognition – A European Contribution' as part of EFRAG's Pro-active Accounting in Europe (PAAinE) Initiative.

The paper was prepared in recognition that the IASB and the FASB are working on a joint project on revenue recognition.

The paper notes that the IASB and FASB have tentatively decided to develop a comprehensive set of principles for revenue recognition that are in line with an asset/liability approach. The PAAinE paper first discusses what revenue is and when it arises. It then develops and compares various approaches to revenue recognition. EFRAG invites comments on the issues in the discussion paper by 10 December 2007 (send to commentletter@efrag.org).

Click for Revenue Recognition – A European Contribution (PDF 694k)

 

Notes from IASB July 2007 meeting days 3 and 4

20 Jul 2007

The International Accounting Standards Board held its July 2007 meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 17-20 July 2007. Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting. .

The International Accounting Standards Board held its July 2007 meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 17-20 July 2007. Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

Draft Interpretation on hedge of net investment

19 Jul 2007

The International Financial Reporting Interpretations Committee (IFRIC) has released for public comment a draft Interpretation, IFRIC D22 'Hedges of a Net Investment in a Foreign Operation'.

IFRIC D22 clarifies two issues that have arisen on two accounting standards – IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 39 Financial Instruments: Recognition and Measurement – about the accounting for hedging foreign currency risk within a company and its foreign operations.

The IFRIC proposal clarifies what qualifies as a risk in the hedge of a net investment in a foreign operation and where within a group the instrument that offsets that risk may be held.

 

Summary of IFRIC D22

In some companies the currency that is used to present financial statements (the presentation currency) differs from the currency that the company or its foreign subsidiaries use daily and in which they generate net cash flows (the operating, or functional, currency). At present, some companies use hedge accounting when 'translating' that functional currency into the presentation currency. The IFRIC takes the view that this mere translation of currency for presentational use does not represent a hedgeable economic risk. Consequently, IFRIC D22 proposes not to allow the use of hedge accounting when translating a functional currency into a presentation currency. The IFRIC concluded that the hedged risk is the foreign currency exposure arising between the functional currency of the foreign operation and the functional currency of any parent entity within the group structure. Clarification was needed on whether a company could account for a hedged foreign currency risk only in the immediate parent entity, only in the main parent entity, or in those or any intermediate parent entity of the foreign subsidiary.

IFRIC D22 also considers which individual entity within a group structure can hold a hedging instrument. IFRIC D22 proposes that the hedging instrument can be held by any subsidiary or parent entity within a group regardless of the entity's functional currency. To assess how effective the hedging instrument is in offsetting the risk from the foreign operation, the company must calculate the change in value of the hedging instrument in the functional currency of the parent hedging its risk and not the functional currency of the subsidiary holding the instrument.

 

IFRIC D22 would be applied prospectively, that is, for all future transactions. Comment deadline is 19 October 2007.

Click for Press Release (PDF 50k).

 

Stephen Cooper appointed to the IASB

19 Jul 2007

The Trustees of the International Accounting Standards Committee Foundation have appointed Stephen Cooper, Managing Director and head of valuation and accounting research at UBS Investment Bank, as a part-time member of the IASB.

Mr Cooper will take up his position in August 2007 and has been appointed for the five years ending on 30 June 2012. Mr Cooper brings practical experience as an active analyst on accounting and valuation matters. He has been recognised as a leader in his field and voted top European Valuation and Accounting analyst by Extel and Institutional Investor magazine in each of the last 10 surveys. In his capacity at UBS, where he will continue to work part-time, Mr Cooper advises UBS's equity research analysts and institutional clients on valuation and accounting issues. As a member of the Corporate Reporting User Forum and a member of the IASB's Analyst Representative Group and Financial Statement Presentation working group, Mr Cooper has been actively involved in the IASB's work. Click for Press Release (PDF 49k).

Notes from IASB July 2007 Board meeting day 2

19 Jul 2007

The International Accounting Standards Board held its July 2007 meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 17-20 July 2007. Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting. .

The International Accounting Standards Board held its July 2007 meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 17-20 July 2007. Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

IAS Plus Newsletter on IFRIC 14

19 Jul 2007

Deloitte's IFRS Global Office has published a special edition The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (PDF 221k).

IFRIC 14 provides general guidance on how to assess the limit in IAS 19 Employee Benefits on the amount of a pension fund surplus that can be recognised as an asset. It also explains how the pensions asset or liability may be affected when there is a statutory or contractual minimum funding requirement. IFRIC 14 is likely to have the most impact in countries that have a minimum funding requirement and where there are restrictions on a company's ability to get refunds or reduce contributions. IFRIC 14 is effective for annual periods beginning on or after 1 January 2008. Earlier application is permitted. This newsletter explains the requirements of IFRIC 14. You will find all Past IAS Plus Newsletters Here. You can sign up for Free Subscription by Email.

Listed companies in Brazil will use IFRSs starting 2010

18 Jul 2007

On 13 July 2007, the Securities and Exchange Commission of Brazil – Comissão de Valores Mobiliários, or CVM (www.cvm.gov.br) – issued Rule No.

457 requiring listed companies to publish their consolidated financial statements according to IFRSs, starting with reporting periods ending in 2010. Use of IFRSs will be optional for listed companies from 2007 through 2009. Previously (in 2006), the Central Bank of Brazil decided that any bank required by law or regulation to publish financial statements in Brazil (including domestic owned and foreign owned, listed and unlisted) will have to prepare and publish consolidated financial statements in full compliance with IFRSs starting with years ending 31 December 2010.

Recent SEC proposals for small public companies

18 Jul 2007

We have posted the (PDF 77k) published by Deloitte & Touche LLP (United States).

The newsletter summarises the newest proposals issued by the SEC to make reporting easier for smaller public companies.

Notes from IASB July 2007 Board meeting day 1

18 Jul 2007

The International Accounting Standards Board held its July 2007 meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 17-20 July 2007. Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting. .

The International Accounting Standards Board held its July 2007 meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 17-20 July 2007. Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the Meeting.

Educational guide added to IASB's eIFRS

18 Jul 2007

eIFRS, the online subscription service from the IASB, now includes the 2007 Guide through International Financial Report Standards.

The Guide is extensively annotated with thousands of cross-references to guide readers through the text of each IFRS and all the other IASB material that accompanies but does not form part of the IFRSs. Click to go to eIFRS Web Page.

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.