January

IASCF trustees will meet next week in New Delhi

08 Jan 2009

The Trustees of the IASC Foundation, under which the IASB operates, will meet at the Oberoi Hotel in New Delhi, India, on 15-16 January 2009. The portion of the meeting open to public observation begins at 11:00am on 15 January and continues for the rest of that day.

The agenda for the public session is as follows:

iascfagenda.gif

New Delhi, India, 15 January 2009 (Public Session)

  • Constitution Review 2008 – next steps
  • Funding Status and Resource Requirements
  • IASCF's Publications Activities
  • Report of the IASB Chairman
  • Report of the Due Process Oversight Committee
  • XBRL Review

 

Most EU financial institutions have not reclassified assets

08 Jan 2009

A study by the Committee of European Securities Regulators (CESR) has found that many banks in the European Union have chosen, up to now, not to use the option that the IASB added to IAS 39 in October 2008 to permit reclassification of some financial instruments out of the fair-value-through-profit-or-loss and available-for-sale categories.

CESR reviewed the application of the reclassification amendment by financial institutions within the EU in their third quarter interim financial statements and interim management statements. CESR's analysis covered all 22 financial institutions in the FTSE Eurotop 100 index and 78 other financial institutions. The 100 companies are based in 21 EU member states. CESR found:
  • More than half of the financial companies concerned did not reclassify any financial instruments in their 3rd quarter 2008 financial statements.
  • For the companies in the FTSE Eurotop 100 index almost two thirds of these companies did not reclassify any financial instruments in any of the categories.
CESR's report also responds to a request from the European Commission for CESR's views on accounting issues in addition to reclassification:
  • Fair value option. CESR believes that 'there is a need to examine the effects of the use of the fair value option in more detail within a short timeframe', including whether reclassification should be permitted for financial assets measured using the fair value option.
  • Embedded derivatives. CESR welcomes the IASB's recent ED on amendments to IFRIC 9 and IAS 39 and encourages the IASB and the FASB to work together to assess whether further clarification is needed relating to embedded derivatives. 'Furthermore, CESR would recommend that the IASB provides guidance on the main types of synthetic structures covered and on which factors are important for issuers in determining whether an embedded derivative exists and if so, whether it should be measured separately. This clarification should also state that embedded financial guarantee-types do not need to be separated out.'
  • Impairment of available-for-sale items. CESR recommends the IASB examines the issues surrounding impairment for available for sale financial instruments.
CESR's report also recommends that 'the IASB should develop due process procedures – including public consultation – that, in rare circumstances, would enable it to 'amend its standards in response to emergency circumstances'. Click to Download the CESR Report (PDF 97k).

Heads Up on revenue recognition discussion paper

07 Jan 2009

The National Office Accounting Standards and Communications Group of Deloitte (United States) has published a Heads Up FASB and IASB Issue Discussion Paper on Revenue Recognition.

The newsletter discusses the FASB's and IASB's recently released Discussion Paper Preliminary Views on Revenue Recognition in Contracts With Customers, which outlines the boards' preliminary views on a single, contract-based revenue recognition model.

 

Deloitte IFRS curriculum materials are now available

07 Jan 2009

Deloitte (United States) is making available a complete set of IFRS course materials through Deloitte's IFRS University Consortium.

Featuring on-campus lectures and transcripts from Deloitte subject matter leaders, actual case studies and case solutions, and other materials, the course is available free to all colleges and universities. Course materials are divided into eight sessions, with each session containing a unique set of presentations, case studies, and lecture notes. The materials include a detailed introduction to IFRS and provide an overview of the differences between IFRS and US generally accepted accounting principles. Specific topics covered in the Deloitte IFRS curriculum materials include:
  • financial statement presentation;
  • revenue, inventory and income tax;
  • business combinations, discontinued operations and foreign currency;
  • intangibles and leases;
  • property and asset impairment;
  • provisions, pensions and share-based payments;
  • financial instruments; and
  • consolidation policy, joint ventures and associates.
For more information about Deloitte's IFRS University Consortium please go to the website: www.deloitte.com/us/ifrs/consortium. Links to the course materials are Here.

 

Report on IFRS for investment funds

07 Jan 2009

Deloitte (United States) has published IFRS for Investment Funds: More Than Just Accounting and Reporting.

The report provides regulatory background and steps to consider moving forward, including the following sections:
  • Industry Views on IFRS for Investment Funds
  • Challenges and Opportunities for Investment Funds
  • Your Roadmap
  • Technical Accounting Issues for Investment Funds
  • More Than Accounting and Financial Reporting
  • Smoothing the Transition
  • Time for Leadership
  • Resources & Contacts
The report points out that an IFRS conversion is not primarily an exercise in reshuffling the chart of accounts, nor is it principally a technical accounting and financial reporting matter. Companies are likely to spend significant amounts of time addressing concerns around tax, valuation, legal and compliance, people, technology, and communications. And the impact of consolidation differences will likely have a significant impact on private equity funds and the companies that manage these funds.

 

James Kroeker is Acting SEC Chief Accountant

07 Jan 2009

The US Securities and Exchange Commission has appointed James L Kroeker as the Acting Chief Accountant in the SEC's Office of Chief Accountant.

Mr Kroeker replaces Conrad W Hewitt, who retired from government service earlier this week. Mr Kroeker came to the SEC from Deloitte and Touche LLP (United States), where he had been a partner in the firm's National Office Accounting Services Group. Click for SEC Press Release (PDF 29k).

 

Accounting considerations in 'turbulent times'

07 Jan 2009

Deloitte's IFRS Global Office has published Turbulent Times: Key Accounting Considerations in Today's Volatile Markets.

This accounting alert highlights the accounting issues and literature most likely to be relevant when assessing the accounting implications of today's financial environment. It focuses on the following:
  • determining fair values in inactive markets,
  • revised projections of economic outlook indicating impairment and lack of recoverability for many assets,
  • reduced availability of credit and increasing cost of finance,
  • increased levels of bankruptcy,
  • the impacts on hedge accounting, and
  • critical enhanced disclosure requirements.
The accounting considerations described apply to all entities – they are not unique to financial institutions. The alert does not introduce new accounting guidance. Rather, it highlights the provisions of current IFRSs that are most likely to be relevant when assessing the accounting in markets characterised by volatility, a credit crunch, and recession.

New UK Financial Reporting Faculty

07 Jan 2009

The Institute of Chartered Accountants in England and Wales has created a Financial Reporting Faculty 'in response to fundamental changes in the financial reporting environment and the increasing complexity of relevant laws and standards'.

The goal of the Faculty is to help members keep up-to-date and understand the implications of new standards, regulations, and practice in financial reporting. Members of the Faculty get access to:
  • The Faculty website – a peer-to-peer platform encouraging the sharing of news, uncertainties, concerns, and possible solutions
  • Faculty factsheets – practical assistance on UK GAAP and IFRS written by experts in the field
  • All of the most up-to-date material issued by the IASB – the full IASB 'eIFRS' subscription service
  • The 'Standards tracker' – an online facility for checking current standards and recent amendments
  • Discounts on ASB standards and other financial reporting publications and UK courses
  • Specialised training and CPD services, including e-learning and online resources
Deloitte UK partner Andy Simmonds chairs the board of the Faculty. For more information on the benefits of membership or to join the Faculty visit www.icaew.com/frf.

 

Financial reporting issues facing the resources sector

06 Jan 2009

Deloitte (Australia) has published the December 2008 issue of Extracting Value – an occasional series addressing the issues facing the resources industry (mining and oil and gas companies). This issue focuses on the financial reporting implications for the resources sector of the global financial crisis.

Click to download Extracting Value - December 2008 (PDF 2,051k). The publication includes the following table highlighting some financial reporting areas that resources companies should consider in responding to the global credit crisis in the upcoming reporting season. Many of these are equally applicable to companies in other industries:

Area

Example considerations

Impairment

  • likelihood of increased risk premiums being built in discount rates due to a lower risk appetite in current market
  • rapid changes in short term interest rates and their effects on discount rates
  • assumptions underlying reserve and resource amounts may need revision
  • long-term commodity price and exchange rate assumptions need careful consideration
  • on the cost side, inflation assumptions may be difficult to determine as growth slows and reverses simultaneously across many of the world's economies

Loans, borrowings and other financing

  • project financing plans may require reassessment
  • classification of debt as current or non-current in light of potential covenant breaches and unusual embedded terms which may be triggered in the current economic climate
  • fair value considerations where longer-term funding is not based on current margin spreads and the effects of a rapidly falling interest rate environment
  • possibility of embedded derivatives in old or newly renegotiated contracts that may have value in the current climate, even if previously immaterial or not identified

Provisions and other long-term obligations

  • long-term discount rates may materially impact the carrying amount of decommissioning and similar provisions, triggering adjustments under Interpretation 1 [IFRIC 1]
  • consideration of whether contractual obligations may have become onerous in light of current market conditions

Financial instruments

  • counterparty risk and fair values may require reassessment
  • effectiveness testing of hedging arrangements may come under pressure in volatile markets
  • consideration of terms in loan and other agreements which may contain embedded derivatives, particularly those that were previously of little value or not previously identified
  • consider whether items classified as 'cash equivalents' still meet the definition
  • whether contracts which previously met the 'own use' exemption under AASB 139 [IAS 39] are still able to meet the exemption requirements due to net settlement

Depreciation, amortisation and depletion

  • reserve and resources estimates may need revision
  • the effect and timing of changes in estimates on current year amortisation needs to be considered

Share-based payments

  • accounting for cancellation or modification of share-based payment schemes can have a significant impact on reported profits
  • valuation of share-based payment arrangements under AASB 2 [IFRS 2] can be more judgemental in a volatile environment

Deferred taxes

  • careful reassessment of the recognition criteria for deferred tax assets may be required, particularly in relation to capital losses recognised on the basis of anticipated capital gains and tax losses that may be subject to loss integrity measures under the tax law (same business test, continuity of ownership test, etc)

Investments

  • many resources companies have 'strategic' interests in other entities, these must generally be fair valued to current market prices
  • 'available-for-sale' reserves that are in debit (losses) may need to be recycled to the income statement, directly impacting profits

Disclosures

  • market reaction to disclosures around impairment, particularly key assumptions and sensitivity analyses (whether impairment losses have been recognised or not)
  • consideration should be given to enhancing disclosures around significant estimates and judgements under AASB 101 [IAS 1] – this is an area where Australian entities sometimes trail global best practice
  • AASB 7 [IFRS 7] disclosures around risks, how they are managed, and sensitivity analyses may take on increased importance
  • increased scrutiny of liquidity disclosures might be expected
  • fair value disclosures will need to be carefully considered and measured

 

Two upcoming IFRS webcasts

06 Jan 2009

Two upcoming public webcasts may be of interest to IAS Plus visitors.

Both webcasts allow listeners to submit questions to the presenters. Both are free of charge:

The IASB's Exposure Draft 10 Consolidated Financial Statements

  • Webcast organiser: IASB
  • Date: Thursday, 8 January 2009
  • Times: 10:00am London time and repeated at 3:00pm London time
  • Presenters: Alan Teixeira, Patrina Buchanan, and Michael Buschhueter, all IASB staff

Discussion Paper Preliminary Views on Financial Statement Presentation issued jointly by FASB and IASB

  • Webcast organiser: FASB
  • Date: Tuesday, 27 January 2009
  • Times: 11:00am to 12:00 noon (US EST, which is GMT-5)
  • Presenters: Peter Bridgman (PepsiCo, Inc), Greg Jonas (Moody's Investors Service), Joe Joseph (Putnam Investments), and Kim Petrone (FASB staff)

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