This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.


IASB amends IFRS 1

23 Jul 2009

On 23 July 2009, the IASB amended IFRS to (1) exempt entities using the full cost method from retrospective application of IFRSs for oil and gas assets and (2) exempt entities with existing leasing contracts from reassessing the classification of those contracts in accordance with IFRIC 4 Determining whether an Arrangement contains a Lease when the application of their national accounting requirements produced the same result.

Click for IASB Press Release (PDF 104k).


Notes from IASB meeting with EFRAG

22 Jul 2009

The IASB is holding its July 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 21-24 July 2009. The portion of the meeting on 23-24 July will be a joint meeting with the US Financial Accounting Standards Board.

Representatives of the Board also met with representatives of the European Financial Reporting Advisory Group (EFRAG) on Monday 20 July. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting with EFRAG representatives.

The Chairman of the Board started the meeting by welcoming three new Board members (Amaro Gomes, Patrick Finnegan and Patricia McConnell).

The first item on the agenda was the meeting of representatives of IASB and an EFRAG delegation to discuss convergence related issues. The Chairman of EFRAG kicked off the discussion by appreciating the work of the Board on the financial crisis-related issues. Nonetheless, he expressed the concerns of EFRAG about the IASB's technical plan. EFRAG is of the opinion that there are too many items on the agenda and that fact may eventually affect the quality of the due process, as many constituents struggle to provide feedback to the increasing number of new proposals. EFRAG recommended that the Board focus on financial crisis-related issues, Financial Instruments, Fair Value Measurement, Insurance and Conceptual Framework and defer 'housekeeping' (for example, annual improvements process and smaller projects) to the period when the constituents are able to process the proposed changes. EFRAG also challenged the timetable of the MoU with FASB, as it has concerns whether 2011 deadline was still achievable and whether convergence always led to 'improvements' to accounting standards. EFRAG acknowledged that all the issues on the agenda are important; but urged the Board to reconsider the priorities and align the pace of change with capabilities of the constituents.

The Chairman of the Board defended its strategy. He made his case referring to the recommendations of G20 (the aim of having global standards), adoption of IFRS in many jurisdictions in 2012, by the time the major changes in the standards should have been completed (in order for new jurisdictions not to change requirements two times, what was the same strategy as before Europe adopted IFRS in 2005) and by the need for convergence with the US. In the opinion of the IASB Chairman, any delay in convergence agenda could delay IFRS adoption in the US. Moreover, some issues (such as the rights issues question that was referred to the Board by the IFRIC in July 2009 or emissions trading schemes) seem to have huge repercussions and have the support of other constituents.

IASB members asked if delaying of some projects (e.g. extractive industries DP) or extended comment periods would help to alleviate the concerns. EFRAG seemed to be in favour.

The discussion turned to an analysis of responses from constituents to the consolidation and derecognition EDs. EFRAG expressed its concerns that the Board seemed to be in a hurry to replace the parts of IFRS that appeared to be working relatively well in the crisis, especially in comparison with US Standards. The Board felt confident that the consolidation standard could be issued until the year end (after re-deliberation) and that the positions of IASB and FASB are relatively close. Regarding derecognition project, the staff acknowledged that based on the feedback received, alternative views seem to be preferred by the constituents (with net balance shown on the statement of financial position and gross disclosed in the notes). The Board defended its approach as it thought that IAS 39 requirements are complex and rule based.

Another point of discussion focused on the IAS 39 replacement project. EFRAG seems to be broadly supportive of the proposed classification criteria. Several issues were floated that cause concern, notably the border between classification criteria (definition and interpretation of the contractual yield basis), stage approach selected by the board (many constituents do want to know how will hedging be fixed before they opt for classification), the treatment of embedded derivatives, lack of possibility of reclassification of financial instruments between categories and abolishing the cost exception for equity instruments. The discussion briefly touched also the proposed US approach (fair value) with EFRAG not supportive of such alternative.

As the contemplated impairment is concerned, EFRAG urged the Board not to be in a hurry as there is no immediate impact of this change. In general several IASB and EFRAG members were supportive of the idea to reconcile accounting provisioning and prudential regulation on the basis of a kind of expected losses model.

The Board presented EFRAG with the update on other programmes like Insurance, Conceptual framework and Joint ventures. Finally, EFRAG presented its proactive activities in the area of pensions accounting, asset definition, taxes, share based payments as well as contemplated disclosure framework. The Chairman welcomed these initiatives as possible input into the agenda for the period after 2011.


IAS Plus Update newsletter on financial instruments

22 Jul 2009

On 14 July 2009, the IASB issued an Exposure Draft on Financial Instruments: Classification and Measurement.

Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Exposure Draft Proposes New Classification and Measurement Guidance for Financial Instruments (PDF 383k) explaining the proposed standard. Click to go to the Project Page on the IAS Plus Website. Past issues of all IAS Plus newsletters are Here.

Click for previous news.

Notes from the July 2009 IASB meeting day 1

22 Jul 2009

The IASB is holding its July 2009 monthly Board meeting at its offices in London on Tuesday to Friday, 21-24 July 2009. The portion of the meeting on 23-24 July 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.

Updated summary of IFRIC agenda rejections

20 Jul 2009

We have updated our Summary of Issues Not Added to IFRIC's Agenda to reflect the IFRIC's final decisions at its July 2009 meeting not to add the following topics to its agenda.

Our summary now includes over 160 issues:
  • IFRS 3: Acquisition-related costs in a business combination
  • IFRS 3: Earlier application of IFRS 3
  • IAS 7: Determination of cash equivalents
  • IAS 27: Transaction costs for non-controlling interest
  • IAS 28: Potential effect of revised IFRS 3 and IAS 27 on equity method accounting
  • IAS 28: Venture capital consolidations and partial use of fair value through profit or loss
  • IAS 28: Impairment of Investments in Associates
  • IAS 34: Interim disclosures about fair value
  • IAS 38: Compliance costs for REACH
  • IAS 39: Hedging using more than one derivative as the hedging instrument
  • IAS 39: Meaning of 'significant or prolonged'
  • IFRIC 12: Scope of IFRIC 12
  • IFRIC 18: Applicability to the customer


Revised IFAC Code of Ethics

19 Jul 2009

The International Ethics Standards Board for Accountants (IESBA) has issued a revised Code of Ethics for Professional Accountants (Revised 2009), clarifying requirements for all professional accountants and significantly strengthening the independence requirements of auditors.

The revised Code, which is effective on 1 January 2011, includes the following changes:
  • Extending the independence requirements for audits of listed entities to all public interest entities.
  • Requiring a cooling off period before certain members of the firm can join public interest audit clients in certain specified positions.
  • Extending partner rotation requirements to all key audit partners.
  • Strengthening some of the provisions related to the provision of non-assurance services to audit clients.
  • Requiring a pre- or post-issuance review if total fees from a public interest audit client exceed 15% of the total fees of the firm for two consecutive years.
  • Prohibiting key audit partners from being evaluated on or compensated for selling non-assurance services to their audit clients.
The revised Code may be downloaded from IFAC's Website.


FEE urges new approach to setting global standards

18 Jul 2009

FEE (Federation des Experts Comptables Europeens – Federation of European Accountants) has issued a policy statement on financial reporting confirming its views that a single set of global accounting standards is needed, but concluding that convergence should no longer be a key driver in the financial reporting debate.

FEE believes that:

We are now in a period of diminished returns from further convergence due to the rapid increase in complexity, without hardly any additional benefit to investors that arises when seeking to eliminate increasingly smaller differences between IFRSs and other standards. The IASB should now change its strategy and concentrate exclusively on major improvements and simplifications in IFRS over the medium term. To this end, it should work together with standard setting bodies from around the world, so that all stakeholders can be fully engaged and ensure that the quality of IFRS is not compromised.

Click for:

We comment on leases discussion paper

18 Jul 2009

Deloitte has submitted comments on the IASB discussion paper Leases: Preliminary Views.

While we acknowledge the need for an improved leases standard issued identically by the IASB and the FASB, the views of individuals within the DTT network differ on what is the best way forward. Some individuals believe strongly that, should the boards decide that the recognition of all leases 'on balance sheet' is critical in the short term, the boards should focus on lessee accounting only (as well as the limited lessor accounting issues that must be addressed as part of lessee accounting, such as subleases). Other individuals within the DTT network have significant concerns about the boards issuing a leasing standard in the short-term that is neither high-quality nor comprehensive. Because of those concerns, those individuals are not in favour of the boards focusing on lessee-only issues and believe strongly that the boards should take the necessary time to develop a comprehensive leasing standard that addresses all issues for both lessee and lessor accounting. Below is an excerpt from our letter. Click to download Our Letter of Comment (PDF 102k). All past letters comment are Here.

We have spent a considerable amount of time discussing this issue and reached out to many professionals within the DTT network to gather thoughts about how the boards should best move forward with this project. In so doing we have, through our network, also received comment from various external organisations having experience in this area which have helped us form our views. Many have expressed concern about the significant cost and effort that will be required to apply the proposed model, particularly system changes and procedures that will need to be put in place....

We continue to be very supportive of the convergence efforts between IFRS and U.S. GAAP around high quality standards and believe the boards should be working together on an improved high-quality lease standard. However, we are concerned that many of the preliminary views of both boards differ. We believe it is very important to have one set of high-quality global standards. Besides creating a truly level playing field for companies around the globe, having a single set of standards will eliminate the potential for accounting arbitrage between U.S. GAAP and IFRSs. Therefore, we believe that the IASB and FASB should issue identical standards on leasing and all other future convergence standards.

We do not consider lease accounting to be a high priority project at this very important time, when the boards' attention should be focussed on resolving other, urgent issues arising from the financial crisis, for example the financial instruments project. We therefore urge the boards to consider their priorities carefully.


Updated EU IFRS endorsement report

17 Jul 2009

The European Financial Reporting Advisory Group (EFRAG) has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments.

Click to download the Endorsement Status Report as of 17 July 2009 (PDF 132k). The update reflects the decisions of the ARC at its meeting yesterday (see our News Story) and EFRAG's draft advice on the amendments to IFRS 2.


We comment on proposed XBRL Due Process Handbook

17 Jul 2009

Deloitte has submitted comments on the IASCF exposure draft Due Process Handbook for XBRL Activities.

We support the efforts of the IASCF to formalise a high-quality due process for its XBRL activities. Rather than responding to specific questions in the exposure draft or to each element of the due process, we have identified considerations that we believe are critical both to developing an effective due process and to promoting successful deployment, adoption, and sustained use of the IFRS taxonomy. Click to download Our Letter of Comment (PDF 26k). All past letters comment are Here.


Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.