Meeting of Financial Crisis Advisory Group

16 Dec 2009

The Financial Crisis Advisory Group (FCAG) was established by the IASB and US FASB in response to the recent global financial crisis. Its purpose is to advise both Boards about the role of accounting during the crisis and potential changes.

In July 2009, the FCAG published a Comprehensive Report (PDF 377k) with its recommendations related to accounting standard-setting activities and other changes to the international regulatory environment. The FCAG held its sixth meeting in London on 15 December 2009 to review progress made on its recommendations. Presented below are the preliminary and unofficial notes taken by a Deloitte observer at the meeting. For related information please see our Credit Crunch Page.

IASB-FASB Financial Crisis Advisory Group Meeting - 15 December 2009

The Financial Crisis Advisory Group was established by the IASB and FASB in response to the recent global financial crisis. Its purpose is to advise both Boards about the role of accounting during the crisis and potential changes.

Both co-chairs of FCAG reminded participants in their introductory remarks about the recent developments that gained so much attention, particularly the publication of IFRS 9, failure to endorse IFRS 9 by the European Union through the fast-track procedure, as well as the Joint statement of the IASB and the FASB reaffirming their commitment to convergence. Both co-chairs were highly appreciative of the IASB and the FASB as well as the opportunity for convergence that was created. Nonetheless, both noted that they saw 'dark clouds' both in the U.S. as well as in Europe regarding external pressure on the Boards and their independence.

The IASB Chairman summarised the developments in the IASB crisis-related agenda in 2009, including the publication of IFRS 9, an exposure draft on the expected cash flow model, various outreach activities, and the creation of the Expert Advisory Panel on Impairment. He explained that as soon as the FASB publishes its complete financial instruments proposal (expected in Q1 2010) the IASB would expose the document for comments. Based on the comments, the Boards will strive for a converged solution. Sir David also noted that the Boards would, to the extent possible, try to remove differences in the Fair Value Measurement, Consolidation, and Derecognition Standards. He also noted the decision of the EU to 'delay' endorsement of IFRS 9 and expressed his belief that IFRS 9 would be endorsed in Europe in 2010 as part of the normal endorsement process.

The FASB Chairman reinforced the message that convergence is a priority, explaining that the Boards have introduced monthly joint meetings (they plan to have six face to face meetings in 2010, five of them in London and the remaining by videoconference). In his words, the Boards try to avoid leapfrogging and to align their timelines for projects. To reinforce this message the Boards will issue public quarterly progress reports.

Nonetheless, the FASB Chairman also reiterated that the feedback they received from the U.S. constituents was more positive about a comprehensive project (rather than a phase approach) and about a fair value model. Therefore, the FASB will try to have a converged solution, or a solution that would ensure broad comparability of the financial statements if full convergence on the specific issue of fair value and amortised cost proved impossible (as many think that a fully converged solution would have to lead to identical equity). He stressed that the Boards were very close in the dividing line between what goes into earnings and 'the other category' but some differences remain. He underlined that the main aim of Boards was at least to have a fully converged income statement but that the Boards appreciated that both amortised cost and fair value was important information. On impairment, he cited reluctance amongst U.S. regulators about the viability of through-the-cycle-provisioning. He noted that both Boards aimed at a forward-looking model. While the FASB is concerned about the rigour and auditability of the expected-loss model, FASB has pledged full participation in the Expert Advisory Panel.

On independence of the standard setter, the FASB Chairman noted that an amendment authorising a Systemic Risk Council to override a Standard without a due process was defeated in the U.S. House of Representatives. The FCAG Co-chair noted that the Council was one of the 'dark clouds' he mentioned earlier.

Many members noted that the timing of the comprehensive financial instruments review was crucial as there was a 'window of opportunity for convergence' created by the delay of endorsement of IFRS 9 in the EU. The FASB chairman noted that the comprehensive project should be published for comments in February or March 2010 to allow the Boards time for discussions on convergence.

Many members discussed the EU decision not to endorse IFRS 9 speedily. One FCAG member was particularly concerned about the impact of that decision on the rest of the world and whether IFRS 9 was implemented as written. Some members saw the EU failure to endorse IFRS 9 in the fast track procedure as a positive development as it took pressure from the IASB that should not be there in the first place and re-instated a due process in the EU endorsement mechanism. Other members were more sceptical and saw a hidden agenda of interference that may endanger the independence of the Board. In response, the IASB Chairman noted that the actions of Europe raised concerns in other countries. He mentioned that a newly formed group of Asian standard setters might help to counteract the pressure from the U.S. and Europe. He noted that the IASB is a global standard setter that is not bound by agenda solely in Europe.

The FASB chairman noted in response to a question that the biggest risk to convergence was 'that the Boards come to different answers' and reiterated that the IFRS solution on financial instruments was not popular in the U.S. He also stated that the amortised cost model omitted very important information from the balance sheet.

On the issue of an extended role for banking regulators, most members agreed that a common solution should be found in a way that facilitates common inputs but that differences would still exist as the purpose of financial reporting and prudential regulation is different.

The Basel Committee representative clarified that the EU did not delay the endorsement of IFRS 9 but that it just decided not to accelerate it – which, in her opinion, was a fundamental difference. She also noted that the European Commission had not asked for IFRS 9 and the decision not to invoke fast-track needed to be read in that context. IASB Chairman responded that the complete overhaul of IAS 39 was required to ensure a level playing field, short of adopting the U.S. Standards. The Basel Committee representative acknowledged progress of IFRS 9 but cited some arguments raising concerns (for example, the treatment of uncertainty, no recycling for equity instruments at fair value through other comprehensive income, increased usage of fair value in particular as fair value for loans has no economic substance in continental Europe as there is no active secondary market). She also pledged the willingness of the Basel Committee to participate on the EAP discussion but raised concerns about how operational the proposed expected-loss model would be for the banking industry.

The CESR representative praised the IASB for IFRS 9 and noted that in CESR's opinion IFRS 9 was an improvement to IAS 39. On endorsement, he noted that the endorsement process was a normal part of the 'politics of the EU' and should be not taken as 'the end of the world'.

Concluding remarks

On balance, FCAG members reached a consensus that the Boards were responsive to FCAG's recommendations and appreciated the work done by the Boards. As the next step, the FCAG members would like to discuss and address the progress of convergence. Consequently, the FCAG decided to have an additional meeting in October 2010 in New York to assess the progress on convergence and the financial instruments project. At that meeting the FCAG will prepare a letter to G20 (meeting scheduled for November 2010) on the progress to achieve a global set of high-quality accounting standards.

This summary is based on notes taken by observers at the FCAG meeting and should not be regarded as an official or final summary.

Two Deloitte IFRS newsletters in Chinese

16 Dec 2009

Deloitte China has published the Chinese translations of the following IAS Plus Update IFRS newsletters:

IFRIC 19 - Accounting for Debt for Equity Swaps
Chinese Translation (PDF 157k)
Here is the English Version (PDF 79k)

Amendment to IFRIC 14 - Prepayments of a Minimum Funding Requirement
Chinese Translation (PDF 154k)
Here is the English Version (PDF 60k)

The Chinese newsletters are permanently available at Deloitte's CAS Plus Website and on our China Page. All past English versions are on our Newsletters Page.

Notes from December 2009 IASB meeting day 1

16 Dec 2009

The IASB is holding its December 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 15-18 December 2009. The portion of the meeting on 16-17 December will be a joint meeting with the US Financial Accounting Standards Board.

Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.


New edition of IASCF XBRL Update

15 Dec 2009

The December 2009 edition of XBRL Update from the IASC Foundation is now available on the IASB's Website.

XBRL Updates from the IASC Foundation are available on the IASB's Website.

Revised financial reporting guidelines from CEBS

15 Dec 2009

The Committee of European Banking Supervisors has published revised guidelines on financial reporting (FINREPrev2).

The revision of the guidelines is part of CEBS's effort to enhance and streamline reporting requirements for supervised institutions. CEBS recommends that EU Member States make the guidelines mandatory effective 1 January 2012 (CEBS's current authority is limited to making recommendations). In releasing the guidelines CEBS states:

IAS/IFRS amendments. In order to avoid redundant and costly IT system changes CEBS will take into account agreed changes to IAS/IFRSs before starting implementing the revised FINREP framework (in particular, the recent IASB project on IAS 39 replacement and the proposal on IAS 1). A dedicated team consisting of accounting and reporting experts will monitor IASB proposals in order to assess the impacts on the FINREP framework. The revised guidelines on financial reporting will be reviewed in due course to take account of changes that are agreed in the future.

Click for:

Summary of IPSASs in Czech

14 Dec 2009

Deloitte Czech Republic has published Vydání na rok 2009: Přehled standardů IPSAS (Summary of International Public Sector Accounting Standards or IPSASs) in the Czech language. It provides key information on IPSAS, including a summary of IPSASs as of 1 January 2009.

The Summary also describes the major differences between IPSASs and the current Czech legislation relating to financial reporting by the public sector (entities that are territorial self-governing units, institutions receiving contributions from the state budget, state funds, and governmental organisational units. Click to download Vydání na rok 2009: Přehled standardů IPSAS (link to Deloitte Czech Republic website; please register and then download).


SEC staff comments at AICPA conference

14 Dec 2009

The American Institute of CPAs held its 37th Annual National Conference on Current SEC and PCAOB Developments in Washington on 7-9 December 2009.

We previously posted stories about the presentations of:

The following additional presentations are available on the SEC's website:


SEC Staff Speaker - With Hyperlink to Presentation


Slide Presentation (PDF 242k), Joel K Levine, Assistant Director, Office of Interactive Disclosure

XBRL filings

Remarks of Jason S Flemmons, Associate Chief Accountant, Division of Enforcement

Investor protection and fraud prevention

Slide Presentation (PDF 127k), Wayne Carnall, Chief Accountant, Division of Corporation Finance, and others on the Division staff

Current developments in the Division of Corporation Finance

Remarks of Robert S Khuzami, Director, Division of Enforcement

Changes in the SEC's Enforcement Division and financial statement and accounting fraud

Remarks of Paul A Beswick, Deputy Chief Accountant, Office of the Chief Accountant

Loan loss provisioning and use of assumptions and accounting judgments

Remarks of Doug Besch, Professional Accounting Fellow, Office of the Chief Accountant

Disclosure of material weaknesses in internal controls

Remarks of Brian W Fields, Professional Accounting Fellow, Office of the Chief Accountant

Transfers of financial assets, redeemable equity shares and contracts on own stock, and derivatives and hedging issues

Remarks of Joshua S Forgione, Associate Chief Accountant, Office of the Chief Accountant

Revenue recognition and joint venture formation

Remarks of Douglas T Parker, Professional Accounting Fellow, Office of the Chief Accountant

Whether and under what circumstances a newly-formed entity should be considered the accounting acquirer in a business combination (new basis accounting)

Remarks of Allison M Patti, Professional Accounting Fellow, Office of the Chief Accountant

International auditing standards

Remarks of Evan Sussholz, Professional Accounting Fellow, Office of the Chief Accountant

Goodwill impairments and the development of market participant assumptions for fair value measurements

Remarks of Arie S Wilgenburg, Professional Accounting Fellow, Office of the Chief Accountant

Consolidation of variable interest entities and separating revenue arrangements with multiple deliverables

Slide Presentation (PDF 403k), Angela Crane, Associate Chief Accountant, and Michael Stehlik, Staff Accountant, Division of Corporation Finance

Best practices for working with SEC staff

Recent changes in financial reporting in Singapore

14 Dec 2009

Changes in Financial Reporting in Singapore, published by Deloitte & Touche (Singapore), is an annual update of the recent changes to Singapore's financial reporting framework.

This 2009 edition includes a summary of the new and revised Singaporean FRSs (standards) and INT FRSs (interpretations) issued since the previous edition in October 2008 and up to 12 November 2009. Overview of the publication:
  • Section I: Financial Reporting Standards
    • New/Revised FRS issued in 2007
    • Revised/amended FRS and INT FRS issued in 2008
    • Revised/amended FRS and INT FRS issued in 2009
    • Exposure Drafts in issue
    • Summary of differences between FRS and IAS/IFRS
  • Section II: Other Financial Reporting Matters
    • Update on auditing standards
    • Amendments to SGX Listing manual
Click to Download the Booklet (PDF 1,492k, November 2009, 82 pages). Links to this and earlier editions may be found on our Singapore Page. Comparisons of national GAAP with IFRSs for other jurisdictions may be found Here.


SEC Commissioner's comments on IFRS Roadmap

14 Dec 2009

In her remarks at the AICPA National Conference on Current SEC and PCAOB Developments in Washington on 9 December 2009, SEC Commissioner Elisse B Walter spoke about 'convergence of US accounting standards with international accounting standards' and the next steps for the proposed Roadmap for the use of IFRSs by domestic US SEC registrants.

Click to download Commissioner Walter's Remarks (PDF 43k). Here is an excerpt:

Proposed IFRS Roadmap

The Commission's staff, in particular the folks in the Office of the Chief Accountant and the Division of Corporation Finance, have been working to help me and my fellow Commissioners evaluate the comments we received on the proposed IFRS Roadmap. In terms of where we are in the process of moving forward, the comment period ended in April with over 200 thoughtful letters received. We are, as always, carefully reading all of these responses – most of them, more than once. The comment letters raise a number of complex issues, including issues related to the workability of various aspects of the proposed approach. We are very thankful to all who took the time to share their knowledge and experience with us.

Our next steps will, of course, be determined in part by the feedback we received. Commenters appear to generally agree on the benefits of a single set of high quality global accounting standards. Commenters differ, however, and differ strongly, on the best plan for getting there. Reading through many of the comments, I have been struck not only by the diversity, but also by the intensity of opinions on the issues.

As with any important policy question, we are proceeding deliberately and thoughtfully. We are working diligently to make sure we understand all of the advantages and disadvantages. Chairman Schapiro has said that we would soon turn to the proposed IFRS Roadmap, and we are doing just that. At this stage in our review process, I expect we will likely consider further action sometime in early 2010.


Call for sustainability disclosure standards

13 Dec 2009

More than a dozen accountancy institutes around the world have jointly written an open letter to the political leaders attending the Copenhagen Convention on Climate Change calling for a single set of universally accepted standards for climate change related disclosures.

The signatories believe that an 80% reduction in greenhouse gas emissions by 2050, supported by the G8 summit in July 2009, requires clear measurement and disclosure standards. They call on the political leaders in Copenhagen to endorse the establishment of an independent standard setting body to develop universal standards for those disclosures. And they urge development of an assurance standard for sustainability disclosures. Click to Download the Open Letter (PDF 159k). Here is an excerpt:

We call for a set of universally accepted standards for the disclosure to shareholders of climate change-related information1 connected to financial performance and to mainstream financial reporting.2 We propose that policy makers endorse collaboration between all relevant stakeholders to form an independent standard setter charged with achieving these goals.

We call on policy-makers to endorse the establishment of an independent, stakeholder-led standard setting body with appropriate accountability to public authorities, tasked with the development of a single set of universal standards for businesses to make climate change-related disclosures, linked to financial performance and mainstream financial reports. We believe that this will promote provision of more trusted, accurate and reliable information to investors and other stakeholders, thus enabling them to make better-informed decisions and drive the scale of behavioral change necessary to achieve a low-carbon economy.

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