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October

Deloitte Canada Countdown IFRS transition newsletter

31 Oct 2008

Deloitte Canada has released the October 2008 issue of their Countdown IFRS transition newsletter, to provide a snapshot of where we are now as far as Canada's transition to IFRSs is concerned – both in Canada and in Deloitte.

This edition of Countdown focuses on:
  • Credit crunch – economic slowdown driving IFRS accelerated changes
  • Acquisition accounting under IFRS – merger and acquisition strategy considerations
  • Release of iGAAP 2008 – IFRS for Canada
  • An update on current IFRS events
Click below for:

 

IFRS in the oil and gas industry (English and Spanish)

31 Oct 2008

Deloitte LLP (United States) has published IFRS Considerations for the Oil and Gas Industry as part of their IFRS Industry Series.

As acceptance of IFRS in the United States becomes imminent, more oil and gas companies are now asking questions about what IFRS mean for them. How do IFRS affect my company? What events would influence my company's pace of IFRS adoption? What obstacles might we need to consider?

This publication provides practical industry insights on IFRS and includes useful sections on:

  • Understanding the implications of IFRS for the oil and gas industry for accounting and finance, systems and tax
  • Key differences between IFRS and US Generally Accepted Accounting Principles (GAAP) for the oil and gas industry
  • Evaluating approaches to IFRS conversion
  • Developing an IFRS road map
  • IFRS lessons from the European experience
Deloitte (Colombia) has published a Spanish translation. Click to download:

 

IAS 39 reclassifications newsletter in Chinese

30 Oct 2008

Deloitte China has translated into Chinese the October 2008 IAS Plus Special Edition Newsletter explaining the IASB's recent amendments to IAS 39 that permit an entity to reclassify non-derivative financial assets out of the 'fair value through profit or loss' and 'available-for-sale' categories in limited circumstances.

You can download this newsletter from the Deloitte China CAS Plus Website.

 

Updated newsletter on IAS 39 reclassifications

30 Oct 2008

On 22 October 2008, we posted an IAS Plus Newsletter explaining the IASB's amendments to IAS 39 that permit an entity to reclassify non-derivative financial assets out of the 'fair value through profit or loss' (FVTPL) and 'available-for-sale' (AFS) categories in limited circumstances.

As noted in our news story immediately below, the IASB used its October 2008 Update newsletter to provide clarifying guidance on the effective date of the reclassifications. We have updated the Deloitte IAS Plus Newsletter Amendments to IAS 39 & IFRS 7 – Reclassification of Financial Assets (PDF 193k) to reflect the new IASB clarifying guidance. You will find all Past IAS Plus Newsletters Here

 

Study finds 'net benefits' for IFRS adoption in Europe

30 Oct 2008

A paper titled Market Reaction to the Adoption of IFRS in Europe examines the European stock market reaction to sixteen events associated with the adoption of IFRS in Europe.

The researchers – Chris Armstrong, Mary E. Barth, Alan D. Jagolinzer, and Edward J. Riedl – found that 'investors in European firms perceived net benefits associated with IFRS adoption'. The abstract states:
European IFRS adoption represented a major milestone towards financial reporting convergence yet spurred controversy reaching the highest levels of government. We find a more positive reaction for firms with lower quality pre-adoption information, which is more pronounced in banks, and with higher pre-adoption information asymmetry, consistent with investors expecting net information quality benefits from IFRS adoption. We also find that the reaction is less positive for firms domiciled in code law countries, consistent with investors' concerns over enforcement of IFRS in those countries. Finally, we find a positive reaction to IFRS adoption events for firms with high quality pre-adoption information, consistent with investors expecting net convergence benefits from IFRS adoption. Overall, the findings suggest that investors in European firms perceived net benefits associated with IFRS adoption.
You can Download the Working Paper Here.

 

Where do IAS Plus visitors come from?

30 Oct 2008

For 2008 to date, the top 10 jurisdictions from which visitors to IAS Plus come are: United States 13.9% United Kingdom 11.4% Hong Kong 3.7% Germany 3.5% Canada 3.4% Australia 3.3% India 3.3% China 3.0% Pakistan 2.6% Japan 2.4% plus 215 other jurisdictions not shown, each with less than 2.4%.

There has been a shift in visitors away from Europe and more toward Asia-Pacific, where IFRSs are gradually being adopted. For example:
  • In October 2004 the top 10 visitor jurisdictions included Netherlands, France, Belgium, and Italy. None of those was in the top 10 in 2008. Instead, the list now includes Hong Kong, India, China, and Pakistan.
  • In October 2004, Canada wasn't even in the top 20. Now, with Canada moving to adopt IFRSs in 2011, they are #5.

 

Fair value measurement needs 'further work'

30 Oct 2008

In his opening remarks at the US Securities and Exchange Commission's roundtable on mark-to-market accounting yesterday, SEC Chairman Christopher Cox said that the SEC will be considering, among other things, the impact fair value accounting standards have on the quality of financial information provided to investors, the FASB's process for developing accounting standards, and whether existing fair value measurement guidance should be modified or be replaced by an alternative approach.

The roundtable is part of the Commission's Congressionally-mandated study on the use of mark-to-market accounting by financial institutions. Click to download Chairman Cox's Opening Remarks (PDF 32k). Chairman Cox also announced that a follow-up roundtable will be held on 21 November 2008. An excerpt:

As we have learned, illiquid markets bring new challenges to the measurement of fair value that may not have been fully appreciated in past years. These challenges have brought into focus the need for further work on improving the tools that companies have at their disposal to achieve transparent, decision-useful financial reporting.

Transparency is the cornerstone of world class financial reporting. Transparent and unbiased financial reporting allows investors to make informed decisions based upon a company's financial performance and disclosures. A clear, concise, and balanced view into the companies that participate in our capital markets is fundamentally important to those who choose to invest in our markets. Informed decision making results in efficient capital allocation.

 

Six US groups urge the SEC to provide more fair value guidance

29 Oct 2008

The leaders of six US business organisations have written a joint letter to the Securities and Exchange Commission asking that "the SEC issue elaboration on the use of judgment in fair value accounting".

The letter states that the lack of guidance in this area "has the potential to cloud transparency". The letter was written by leaders of the US Chamber of Commerce Center for Capital Markets Competitiveness, Financial Services Roundtable, Property Casual Insurers Association of America, American Council of Life Insurers, Mortgage Bankers Association, and American Insurance Association.

We would respectfully request that the SEC formally elaborate on the use of judgment in the application of FAS 157. This elaboration, by the SEC should include principles-based guidance for the transparent disclosures needed by investors when judgment is exercised. The elaboration will provide the clarity needed by management to appropriately value assets in inactive markets, and give investors the transparent information needed to make informed decisions.

Click to Download the Letter (PDF 93k).

 

FAF urges SEC not to overturn FAS 157

29 Oct 2008

Robert E Denham, Chairman of the US Financial Accounting Foundation, under which the FASB operates, has written to US SEC Chairman Christopher Cox urging the SEC to reject appeals it has received to overturn or suspend the FASB Statement 157 on fair value measurements and related FASB fair value guidance.

Mr Denham notes that the US Congress considered but rejected a similar call for suspension of FAS 157 when it adopted the Emergency Economic Stabilization Act. Here is Mr Denham's Letter to Chairman Cox (PDF 504k). An excerpt:

We acknowledge that the current financial crisis is testing the limits of investor confidence. We also acknowledge that extreme measures are being taken on many fronts to restore and stabilize investor confidence. However, we believe that action by the SEC to overturn a FASB standard, in the present context of enhanced investor concern about transparency of financial information relating to financial institutions and political pressure from some industry interest groups seeking to reduce transparency, will exacerbate investors' concerns about the reliability of financial information and further erode market conditions.

 

IAS 39 reclassifications – 3 days to go!

29 Oct 2008

The IASB has issued guidance clarifying the effective date of the fast-tracked IAS 39 amendments permitting Reclassifications of certain financial assets in certain circumstances.

The guidance is set out on page 1 of the IASB Update newsletter for October 2008, which may be Downloaded from the IASB's Website without charge.

The key dates are as follows:

  • Reclassifications cannot be applied retrospectively before 1 July 2008
  • The decision to reclassify a financial asset to a date between 1 July 2008, and 31 October 2008, must be made before 1 November 2008
  • All reclassification made on or after 1 November 2008 shall be effective from the date of reclassification, irrespective of when the accounting period starts.
Therefore, those entities wishing to take advantage of the amendment to reclassify financial assets retrospectively must do so before 1 November 2008 as any reclassifications made on or after this date can only take effect from the date of the reclassification.

 

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