The newsletter is developed by Deloitte's Global IFRS and Offerings Services (GIOS) team – Deloitte practitioners assisting non-US companies and non-US practice office engagement teams in applying US GAAP and IFRSs and in complying with the SEC's financial reporting rules. The GIOS Newsletter is an update on relevant GAAP, regulatory, and other matters, webcasts, and publications, with hyperlinks to source material. 

In the October 2008 issue of the GIOS newsletter

IFRS Matters FASB and IASB Update The MOU IASB Proposes Amendments to IFRS 1 IASB Issues Draft Document on Fair Valuation of Financial Instruments in Inactive Markets IASB Proposes Amendments to Discontinued Operations Standard IFAC Issues Exposure Draft of IPSAS 5 on Borrowing Costs Tips on Applying IFRS Share Based Payments Regulatory Matters SEC Approves PCAOB's New Rules on Evaluating Financial Statement Consistency SEC Advises Registrants to Further Explain Fair Value in MD&A SEC Updates EDGAR US GAAP Matters FASB Issues Exposure Documents on Amendments to Statement 140 and Interpretation No. 46(R) FASB Issues Final FSP on Disclosures About Credit Derivatives and Certain Guarantees Clarification on Fair Value Accounting FASB Issues Proposed FSP on Discontinued Operations FASB Delays Contingencies Project FASB Issues Exposure Drafts on Going Concern and Subsequent Events FASB Updates Codification for Insurance Industry EITF Meeting Highlights The Impact of the New Economic Stabilization Act on Investments' Impairment SEC Clarifies Accounting for Bank Support of Money Market Funds

Click to view US Reporting Newsletter for Non-US Based Companies (PDF 169k).

• Financial assets presently classified as fair-value-through-profit-or-loss using the Fair Value Option can be classified into other categories and not measured at fair value, for the same reasons, and under the same conditions as the assets reclassified out of the held-for-trading category.
• Clarification on whether synthetic collateralised debt obligations (CDOs) include embedded credit derivatives. Currently, IAS 39 is interpreted as requiring separation and fair value measurement for such embedded credit derivatives, whereas US GAAP does not require an embedded derivative to be recognised separately.
• Adjustments to impairment rules applicable to available-for-sale (AFS) interest-bearing financial assets, so that AFS would be treated the same way as loans and receivables and held-to-maturity debt instruments, The effect of such a change would be to keep a portion of the fair value decline on AFS in equity rather than recognising it in profit or loss as IAS 39 currently requires.

An annex to the letter also asks for a fourth change – allowing reversal of impairment losses not only for debt securities but also for equity instruments. The Commission's Letter (PDF 249k) also states that:

Recent developments raise broader issues related to the role of fair value accounting for financial instruments which we intend to explore further with all stakeholders as a matter of urgency. This issue should also be comprehensively addressed in the context of ongoing IASB projects. There may be a need to adjust the timetable of ongoing projects to reflect the immediate needs of the current crisis.

The task force will consist of government officials and representatives of the Taiwan Stock Exchange, OTC, Big 4 accounting firms, CPA associations, and the Accounting Research and Development Foundation. Adoption details such as the time table and the extent (public company or private company, consolidated or separate financial statements, etc) will be discussed and determined by the task force.

 

The purpose of this Global Preparers Forum is to provide input into concepts and proposals that the IASB is developing and offer advice to the IASB on the practical implications of its intended proposals for preparers of financial statements. The meeting is open to public observation. Agenda topics are:

• IASB work plan and activities
• Financial statement presentation
• Revenue recognition
• Impact of the credit crunch on IFRS
• Consolidation
• ED on IFRS 7 – disclosures re liquidity risk and fair value measurement guidance hierarchy
• Impairment of available-for-sale financial instruments
• Future IASB activity
• Derecognition
• Post retirement benefits – initial constituency views and IASB thinking

 

The roundtable will take place at the SEC's headquarters in Washington D.C. from 9:00am to 1:00pm, and will be webcast. It will begin with opening remarks from SEC Chairman Christopher Cox followed by two roundtable panels. The panel discussions will focus on:

• Usefulness of mark-to-market accounting to investors and regulators.
• Potential market behavior effects from mark-to-market accounting.
• Whether aspects of current accounting standards can be improved, and how?

IASB Vice Chairman Thomas Jones will participate in both panel discussions as an observer, as will representatives of the FASB and several other organisations. The roundtables will provide input to the SEC as part of a Congressionally mandated study pursuant to the Emergency Economic Stabilization Act of 2008. Click for:

• SEC Press Release Announcing the Panels and Agenda (PDF 30k).
• SEC Press Release Announcing the Roundtables (PDF 48k).

 

Essentially, the group supports the guidance recently provided by the IASB and FASB in this regard. The four French authorities are the national accounting board (Conseil national de la comptabilité), securities regulator (Autorité des marchés financiers), banking supervisor (Commission bancaire) and insurance oversight authority (Autorité de contrôle des assurances et des mutuelles). Click to download the Statement of French Authorities (English) (PDF 44k) and French Language Version (PDF 51k).

 

The statement was prompted by views expressed recently about the IASB's standards requiring fair value measurements of certain debt securities and loans. An excerpt:

The FRC believes that the most appropriate standards are developed when standard setters are able to exercise independent judgment, relying on their skills and experience and supported by effective consultation with market participants and other stakeholders. That has been the position in the UK since 1990, with the establishment of the Accounting Standards Board (ASB), and the FRC believes it is equally appropriate for the development of standards for use globally.

The FRC therefore believes that it is important that the responsibility for the setting of accounting standards remains with the relevant standard-setters. We support the IASB in its role as the standard setter for listed companies in the EU and elsewhere, including financial institutions, many of which raise capital from international investors.

Click to view Statement on Development of Accounting Standards (PDF 15k).

The changes to IAS 39 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. Such reclassifications will trigger additional disclosure requirements. Deloitte (Canada) has published the French translation of our IAS Plus Newsletter explaining the changes. Click to download:

• Modifications à l'IAS 39 et à l'IFRS 7 – Le Reclassement de Certains Actifs Financiers (PDF 223k, Français)
• Amendments to IAS 39 & IFRS 7 – Reclassification of Financial Assets (PDF 97k, English)

 

All listed companies will be required to prepare their annual financial statements under K-IFRSs beginning in 2011. Listed companies other than financial institutions will be permitted to do so beginning in 2009. Unlisted companies will be allowed to use K-IFRSs. Click for:

• 2007 IFRS Compliance Questionnaire - Korean (PDF 2,129k, 307 pages)
• 2007 IFRS Presentation and Disclosure Checklist - Korean (PDF 1,174k, 154 pages)
• Our Korea country page

 

The meeting is open to the public and will be webcast. The tentative agenda is shown below.

Agenda for the IFRIC Meeting Thursday 6 November 2008, London Introduction, including minutes of previous meeting D24 Customer Contributions – Redeliberations Compliance Costs for REACH (European Commission Regulation Concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals) Customer-related Intangible Assets Review of Tentative Agenda Decisions published in September 2008 IFRIC Update IAS 39: – Restricted securities IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction – Application to prepaid employer's contribution reserve Staff Recommendations for Tentative Agenda Decision Regulatory assets and liabilities IAS 32 – Classification of puttable and perpetual instruments IAS 28 Associates – Potential effect of IFRS 3 and IAS 27 (as revised in 2008) on equity method accounting IAS 39 – Derecognition Fair Value Measurement of Financial Instruments in Inactive Markets – Determining the Discount Rate Administrative Session IFRIC work in progress