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We comment on earnings per share proposals

  • Deloitte Comment Letter Image

19 Dec 2008

Deloitte has submitted a Letter of Comment on the IASB's exposure draft (ED) of Proposed Amendments to IAS 33 'Earnings per share'.

Below is an excerpt from our letter.

We believe the proposals in the ED are an improvement to existing standards, and we support the issuance of the proposed Statement as a final standard. However, we do have concerns related to some of the proposed changes to EPS which we believe need to be addressed. In particular:

  1. Although we support the proposal to make the EPS treatment consistent with the statement of financial position with respect to forward purchases and written puts over own equity we believe the EPS result highlights a wider flaw in the underlying treatment of these arrangements which we commented on in our responses to Reducing Complexity in Reporting Financial Instruments and Financial Instruments with the Characteristics of Equity.
  2. We support the proposed simplification in which EPS for instruments that are measured at FVTPL is not adjusted. However, we believe due consideration should be given to the disclosure needs of users as to whether the lack of disclosure of these instruments will prove problematic. We note that IFRS does not currently require separate disclosure of the fair value of these instruments, nor the fair value changes of such instruments.
  3. We recommend the inclusion of an explicit statement in the final standard that arrangements that result in the issue or acquisition of shares at fair value should not result in any dilutive effect. The current drafting of the ED infers that such arrangements, for example, issuing shares to the value of a fixed amount, are potentially dilutive.

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