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IASB ED on consolidation

19 Dec 2008

The IASB has issued an exposure draft (ED) of proposed amendments to IAS 27 'Consolidated and Separate Financial Statements'.

The objective is to strengthen and improve the requirements for identifying which entities a company controls and, therefore, must include in its consolidated financial statements.

The proposals form part of the IASB's comprehensive review of off balance sheet activities and address an area cited in a Declaration of the G20 Leaders at their 15 November meeting. The proposals also respond to the recommendations contained in a Report by the Financial Stability Forum published in April 2008.

Further proposals on off balance sheet items, covering the derecognition of assets and liabilities, are due to be published in the first quarter of 2009, consistent with the G20 target date of 31 March 2009. The new standard would replace IAS 27 Consolidated and Separate Financial Statements and Interpretation SIC-12 Consolidation - Special Purpose Entities. The proposal ED 10 Consolidated Financial Statements, may be downloaded without charge from the IASB's website.

The comment letter deadline is 20 March 2009. The proposed effective date is 1 July 2009. Click for press release (PDF 48k).

Proposed definition of control of an entity

The consolidation ED proposes a new, principle-based, definition of control of an entity that would apply to a wide range of situations and be more difficult to evade by special structuring. The proposals also include enhanced disclosure requirements that would enable an investor to assess the extent to which a reporting entity has been involved in setting up special structures and the risks to which these special structures expose the entity. The proposed definition:

A reporting entity controls another entity when the reporting entity has the power to direct the activities of that other entity to generate returns for the reporting entity.

Under IAS 27, the definition is 'power to govern the financial and operating policies'. 'Power to direct the activities' is broader than 'power to govern the financial and operating policies' and, therefore, would broaden the scope of consolidation. The ED also clarifies that a reporting entity can have power even if it has not exercised its voting rights or options to acquire voting rights, or is not actively directing the activities of another entity. The ED proposes guidance on how to assess power and returns when:
  • a reporting entity has less than a majority of the voting rights
  • assessing control of a structured entity (called special purpose entity in SIC 12)

IAS 1 (2007) endorsed for use in Europe

18 Dec 2008

The European Commission has endorsed, for use in Europe, IAS 1 'Presentation of Financial Statements' as revised in 2007.

The revised standard was published in the Official Journal of 17 December 2008 (PDF 203k).

Notes from day 3 of the IASB December meeting

18 Dec 2008

The International Accounting Standards Board is holding its December 2008 meeting at its offices in London on Monday to Friday, 15-19 December 2008.

Unlisted companies in Lithuania may use IFRSs

17 Dec 2008

The Law on Financial Statements of Entities of the Republic of Lithuania was amended on 26 June 2008 to permit unlisted companies to choose to prepare their financial statements using IFRSs.

Alternatively, unlisted entities may use Business Accounting Standards (Lithuanian national standards). Once an entity has made its choice, it may not change for five years (unless the entity joins a group of entities). Our comprehensive table on use of IFRSs is here.


We support enhanced IFRS 7 disclosures

17 Dec 2008

Deloitte has submitted a Letter of Comment on the IASB's exposure draft (ED) of Proposed Amendments to IFRS 7.

The ED, Improving Disclosures about Financial Instruments, would introduce a three level hierarchy when disclosing fair values (comparable to the US SFAS 157 hierarchy) and would expand disclosures about fair value measurements. The ED would also enhance disclosures about liquidity risks. Deloitte is supportive of these proposals. Here is an excerpt from our letter:

We support the Board's efforts to enhance the disclosures about financial instruments and to converge the disclosure requirements with Statement of Financial Accounting Standards No. 157, Fair Value Measurements (Statement 157), issued by the U.S. Financial Accounting Standards Board (FASB). We believe the proposal to converge with the fair value hierarchy disclosures in Statement 157 is appropriate because it provides useful information to users of the financial statements. Specifically, we believe that the proposed amendment will result in more consistent fair value hierarchy disclosures among IFRS preparers and improve comparability with entities using Statement 157. We also support the Board's efforts to clarify the liquidity risk disclosure requirements.

Click to view the Letter of Comment (PDF 93k).

IFRS en Turismo, hospitalidad y ocio

17 Dec 2008

Deloitte (Colombia) has published IFRS en Turismo, Hospitalidad y Ocio: Más que Sólo Contabilidad.

This is the Spanish translation of IFRS in Tourism, Hospitality and Leisure: More Than Just Accounting published by Deloitte (United States). This report provides practical industry insights on IFRSs including implications of IFRSs, approaches to IFRS conversion, and planning for IFRS adoption. Click to download:

Updated newsletter on recent revisions to IFRS 1

17 Dec 2008

On 8 December 2008 we posted a special edition of our 'IAS Plus Update' newsletter explaining the revised version of IFRS 1 'First-time Adoption of IFRSs' that the IASB had published on 25 November 2008.

At its meeting yesterday, the Board decided to change the effective date of the revised version of IFRS 1 from 1 January 2009 to 1 July 2009, effective immediately. Therefore, we have posted an updated version of the IAS Plus Update Newsletter – Revisions to IFRS 1 on First-time Adoption of IFRSs (PDF 113k) to reflect the change in effective date of restructured IFRS 1.

New FASB disclosures are effective immediately

17 Dec 2008

Deloitte (United States) has published a Heads Up newsletter discussing the FASB's recently released FSP FAS 140-4 and FIN 46(R)-8, which accelerates the requirement for public companies to provide disclosures that are similar to those proposed in pending amendments to Statement 140 and Interpretation 46(R).

This disclosure-only FSP improves the transparency of transfers of financial assets and an enterprise's involvement with variable interest entities, including qualifying special-purpose entities. Public companies are required to provide the new disclosures in their first reporting period (interim or annual) that ends after 15 December 2008. Click to download the Heads Up newsletter (PDF 166k).


Notes from day 2 of the IASB December meeting

17 Dec 2008

The International Accounting Standards Board is holding its December 2008 meeting at its offices in London on Monday to Friday, 15-19 December 2008.

Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting. Among other things, the Board decided to change the effective date of the recent revisions of IFRS 1 from 1 January 2009 to 1 July 2009, effective immediately.

Four standards endorsed for use in Europe

17 Dec 2008

The European Commission has endorsed four standards for use in Europe.

The standards were published in the Official Journal on 17 December 2008, as follows:

Correction list for hyphenation

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