September

Our views on IASB's employee benefits discussion paper

27 Sep 2008

Deloitte has submitted a Letter of Comment on the IASB Discussion Paper Preliminary Views on Amendments to IAS 19 Employee Benefits. In general, we express serious concerns that the proposals go beyond the changes that should be introduced via a short-term project.

An excerpt from our letter is presented below. Past comment letters are Here.

We recognise that accounting for employee benefits has been the subject of criticism for failing to provide a clear indication of the obligation of sponsoring entities towards their employees under long-term defined benefits plans and for the failure of IAS 19 to provide a proper model to account for certain types of plan (mainly certain cash balance plans). We share many of these concerns. However, while we appreciate the desire of the IASB to address the most pressing of these issues, we are concerned that the DP's proposals go beyond the changes that should be introduced via a short-term project. In particular, we strongly discourage the Board from proceeding with its proposal to redefine employee benefit schemes into defined benefits promises and contribution-based promises. As we explain in our detailed comments, the changes proposed would have far reaching consequences and would introduce inconsistencies in accounting for plans that are similar in substance. Further we note that contribution-based promises are not clearly defined and we are not sure we understand exactly what the measurement approach is for contribution-based promises as proposed in the DP and how it differs from other measurement approaches currently used in IFRS.

Finally, while we generally support the Board's proposal to eliminate the option to defer recognition of changes in defined benefit assets and obligation, the elimination of this approach cannot be addressed without proper resolution of the issues linked to the presentation of these changes. Accordingly, we believe that the implementation of this proposal should be timed to coincide with the revised Standard dealing with the presentation of financial performance.

Click to view the Comment letter (PDF 174k).

'The IFRS Journey in Insurance'

26 Sep 2008

A new Deloitte Research publication The IFRS Journey in Insurance: A Look Beyond the Accounting Changes examines the implications of the use of IFRSs in the insurance industry across the globe.

The report notes that, in some markets, IFRSs will likely contribute to substantial changes in:
  • Insurance product design, price and offerings
  • Investment strategy
  • Risk management practices
  • Securitisation
  • Merger and acquisition (M&A) activity
These changes will give rise to pressure for both convergence and divergence across insurance lines, thereby adding complexity and dynamism to the market structure of the insurance industry.

By taking a proactive approach to understanding the impact of IFRS implementation on key business strategies, insurers can avoid the risk of being unprepared for the industry-wide shift while seizing on emerging opportunities for differentiation from competition.

Click to download The IFRS Journey in Insurance (PDF 438k).

 

IASB-FASB leases working group will meet

26 Sep 2008

The joint IASB-FASB Leases Working Group will meet on Tuesday 7 October 2008 at the FASB's office in Norwalk, Connecticut, USA.

The principal agenda item for the meeting is discussion of a staff draft of the Leases discussion paper (DP). The draft DP – which has not been approved by the FASB or the IASB – would express a preliminary view of the two Boards in favour of replacing the current lease accounting model with a new model. The current model classifies leases as finance leases or operating leases, with the former accounted for as, in substance, financed purchases of the leased asset. Under the proposed new model, a lessee would recognise as assets and liabilities all material rights and obligations arising in all lease contracts, including those rights and obligations that arise under leases currently classified as operating leases. Thus, a lessee would recognise:
  • an asset representing its right to use the leased item for the lease term, and
  • a liability for its obligation to pay rentals.
The operating and finance lease classifications would be eliminated. The observer note for the working group meeting includes a draft of the DP.

 

IOSCO response to subprime crisis includes accounting focus

26 Sep 2008

The Technical Committee (TC) of the International Organization of Securities Commissions (IOSCO) met on 16 September to discuss current market conditions and further prioritise IOSCO's work in response to the subprime crisis.

Accounting and valuation are among the following TC priorities:
  • Greater international coordination for the oversight of credit rating agencies
  • Safeguards for retail clients
  • Firm risk management
  • Prudential supervision
  • Valuation and accounting
Click for Technical Committee Press Release (PDF 133k). More credit crunch information is Here.

New Global IFRS and Offerings Services newsletter

25 Sep 2008

We have posted Deloitte's US Reporting Newsletter for Non-US Based Companies September 2008 Edition – includes news through 4 September 2008.

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.
Click to view US Reporting Newsletter for Non-US Based Companies September 2008 Edition (PDF 216k).
The GIOS Newsletter is an update on relevant GAAP, regulatory, and other matters, webcasts, and publications, with hyperlinks to source material.

 

IASB will hold extra meeting on 2 October 2008

25 Sep 2008

The IASB will hold an additional Board meeting on 2 October 2008 to discuss potential amendments to Amendments to IFRS 7 Financial Instruments: Disclosures and a revised version of the staff draft of the forthcoming exposure draft of a proposed IFRS on Consolidation.

The IASB has accelerated its work on these two issues in response to the recommendations of the Financial Stability Forum. The extra meeting will enable the staff to make faster progress on those projects.

2 October 2008, London

Because the meeting has been arranged at short notice, some Board members will be taking part via video conferencing facilities. To make allowance for the different time zones involved the meeting will be held in two sessions, one in the morning and the same topics of discussion repeated in the afternoon. The morning session will take place between 09:00am and 12:00 noon (London time, GMT +1), and the afternoon session between 15:00pm and 18:00pm (London time, GMT +1). Both sessions will be open to public observation and will be webcast.

 

IASB proposes amendments to first-time adoption

25 Sep 2008

The IASB has issued an exposure draft of proposed amendments to IFRS 1 'First-time Adoption of International Financial Reporting Standards'.

The amendments would provide two additional exemptions from retrospective restatement for first-time adopters of IFRSs. The proposals are aimed at ensuring that entities applying IFRSs will not face undue cost or effort in the transition process. The exposure draft proposes:
  • to exempt companies from retrospective application of IFRSs for oil and gas assets using the full cost method and for operations subject to rate regulation
  • to exempt companies with existing leasing contracts accounted for in accordance with IFRIC 4 Determining whether an Arrangement contains a Lease from reassessing the classification of those contracts according to IFRSs when the same classification has previously been made in accordance with national GAAP.
The exposure draft Additional Exemptions for First-time Adopters (proposed amendments to IFRS 1) may be downloaded without charge from the IASB's Website. Comment deadline is 23 January 2009. Click for Press Release (PDF 48k).

 

IASB proposes revised definition of discontinued operations

25 Sep 2008

The IASB has issued an exposure draft of proposed amendments to IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'.

The proposals are to revise the definition of discontinued operations and require additional disclosure about components of an entity that have been disposed of or are classified as held for sale. The proposals are the result of a joint project by the IASB and the US Financial Accounting Standards Board to develop a common definition of discontinued operations and require common disclosures about them. The FASB is publishing parallel proposals to amend its standards.

Click for Press Release (PDF 35k). The deadline for public comment is 23 January 2009. The ED may be downloaded without charge from IASB's Website.

 

Prabhakar Kalavacherla appointed to the IASB

24 Sep 2008

The Trustees of the International Accounting Standards Committee Foundation have announced the appointment of Prabhakar Kalavacherla ('PK') to the International Accounting Standards Board.

Mr Kalavacherla will join the IASB as a full time member on 1 January 2009 for the period ending on 30 June 2013. Mr. Kalavacherla, born in India, is a partner at KPMG LLP serving both as reviewing partner for IFRS financial statements and filings with the US Securities and Exchange Commission. He has worked extensively in India and in Europe and has specialised in technology and biotechnology. Mr Kalavacherla is a member of both the Institute of Chartered Accountants of India and the American Institute of CPAs.
Click here for Press Release (PDF 181k).

 

G7 statement on global financial market turmoil

23 Sep 2008

The Group of Seven Finance Ministers and Central Bank Governors released the following statement on global financial market turmoil.

Among other things, the statement urged more effective regulation. The G7 said: "We remain committed to full and rapid implementation of the Financial Stability Forum (FSF) recommendations to enhance the resilience of the global financial system for the longer term. We look forward to the FSF report this fall on progress made in strengthening prudential supervision and regulation, improving firms' risk management practices, enhancing disclosure and transparency, and strengthening accounting frameworks." Click to Download the G7 Statement (PDF 85k). Here is the link to our complete Credit Crunch Page.

 

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