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July

New chairman of EFRAG Supervisory Board

17 Jul 2009

Pedro Solbes Mira, the former Member of the European Commission responsible for Economic and Financial Affairs (1999-2004) and Minister of Economy and Finance (2004-2009) of Spain has been appointed Chairman of the EFRAG Supervisory Board, effective immediately.

Click for Press Release (PDF 89k).

 

Global Preparers Forum to meet 28 July

17 Jul 2009

The IASB's Global Preparers Forum will meet on Tuesday 28 July 2009 from 10;00am to 16:00pm at the Board's offices in London.

The purpose of the Global Preparers Forum is to provide input into concepts and proposals that the IASB is developing and offer advice to the IASB on the practical implications of its intended proposals for preparers of financial statements. Meetings are open to public observation. The agenda for the meeting is below. Agenda papers are Here.

Agenda for the Global Preparers Forum -- 28 July 2009

Morning (10:00-12:30):

  • IASB work plan and activities
    • IASB work plan
    • Feedback on comment letters received for recent projects
    • Specific jurisdiction developments (European Union/US/Asia)
  • Leasing
  • Post-employment benefit obligations (including pensions)
  • Financial Statement Presentation – discussion of performance reporting and other comprehensive income
Afternoon (13:15-16:00):
  • Financial instruments (IAS 39 replacement)
    • Current thinking
    • Classification other than fair value
    • Impairment model
    • Expected loss
    • Hedge accounting
  • Income taxes
  • Conceptual Framework – Measurement

 

 

ARC supports endorsing five IFRSs

17 Jul 2009

At the meeting of the European Commission's Accounting Regulatory Committee (ARC) yesterday, all EU Member States voted in favour of Commission Regulations endorsing the following standards for use in Europe:

  • IFRIC 9/IAS 39 Embedded Derivatives
  • IFRS 1 First-time Adoption of IFRS (revised)
  • IFRS 7 Financial Instruments: Disclosures (amended)
  • IFRIC 17 Distributions of Non-cash assets to owners
  • IFRIC 18 Transfers of Assets from Customers
The next step for endorsement is for the Commission to adopt the necessary regulations.

 

Do not change the fundamental purpose of accounting

17 Jul 2009

Paul Boyle, Chief Executive of the UK Financial Reporting Council (FRC), argued in a speech to the FRC Annual Open Meeting against proposals to use accounting as a public policy tool to reduce pro-cyclicality and challenged the proposition that accounting measures that show volatility should be adjusted to create an impression of stability.

Mr Boyle also warned that the risks to confidence in corporate reporting and governance remained higher than normal and that there was no room for complacency. Click to Download Mr Boyle's Remarks (PDF 98k). Here is an excerpt:

It is not clear that accounting has the potential to be a public policy tool to reduce pro-cyclicality, or that it would be appropriate to use it in this way. An equally, or perhaps even more, dangerous argument now gaining currency is that accounting should be given an explicit role in promoting financial stability, rather than its traditional role of providing information useful to investors in their decision-making. The implication of this view is that accounting measures that show volatility should be adjusted to create an impression of stability.

Accounting is a measurement system that presents the financial performance and position of a company in as neutral a way as possible. It is not surprising that banks report substantial profits when the economy is doing well and reduced profits, or even losses, when the economy is doing badly. This is accounting reflecting the economic cycle, which is a good characteristic of a financial measurement system.

It is worth considering the dangers of altering measurement systems to make them less pro-cyclical. It could be argued, for example, that unemployment statistics and house prices have damaging pro-cyclical effects. Yet no-one seriously argues that it would be in the public interest for these statistics to be adjusted because the public cannot be trusted to react in a way consistent with financial stability.

This is not to say that current accounting standards need no improvement. But the merits of proposed 'improvements' need to be assessed against a clear understanding of the purposes of accounting. It may well be appropriate to attempt to reduce the volatility of economic cycles, but there are more appropriate tools than accounting to achieve this.

 

CESR's report on reclassification of financial instruments

16 Jul 2009

The Committee of European Securities Regulators (CESR) has completed a study of the application of the amendments to IAS 39 and IFRS 7 regarding Reclassification of Financial Instruments in 100 large EU financial companies' annual financial statements for 2008. The objectives of the study were (a) to consider how financial companies in Europe applied the reclassification amendments and (b) to analyse whether companies have complied with the related disclosure requirements in IFRS 7.

The 100 companies consisted of the 22 financial companies included in the FTSE Eurotop 100 index and 78 other financial companies across Europe. CESR found:
  • 61% of all the companies analysed used the option to reclassify in the annual financial statements for 2008.
  • 68% of the FTSE Eurotop companies used the option to reclassify in the annual financial statements for 2008 compared to only 36% in the interim financial statements for the 3rd quarter of 2008.
  • The impact of the reclassifications was positive on the profit and loss account and on other comprehensive income. If no reclassifications had been made, the total amount reported in the profit and loss account and in other comprehensive income would have been 28 billion Euros lower than the figures actually reported.
  • Inadequate compliance with the disclosure requirements in IFRS 7 when a reclassification took place:
    • 40% of all companies analysed (and around one third of the FTSE Eurotop companies) did not disclose the fair value gain or loss on the reclassified financial asset (whether recognised in profit or loss or in other comprehensive income) prior to the reclassification (IFRS 7.12A (d)).
    • Around half of all companies analysed (and around one quarter of the FTSE Eurotop companies) did not disclose the effective interest rate and the estimated amounts of cash flows that they expected to recover (IFRS 7.12A (f)).
    CESR's report expresses concern about the lack of disclosures.
CESR plans to review other aspects of the application of IFRS 7 in 2008 in light of the financial crisis and expects to publish the results of that analysis later in 2009. Click to download CESR Statement on Application of and Disclosures Related to the Reclassification of Financial Instruments (PDF 191k).
Click for IAS Plus summary page.

 

IFRS para PYMEs (IFRS for SMEs)

16 Jul 2009

Deloitte (Colombia) has published the first in a series of Spanish language bulletins about the new IFRS for SMEs.

This bulletin includes background information about the Standard, an overview of its contents, and examples of the recognition and measurement simplifications reflected in the Standard. Click to Download the Bulletin (PDF 182k). Nuestros Recursos en Español.

 

CESR's review of IFRS enforcement in Europe

16 Jul 2009

The Committee of European Securities Regulators (CESR) has published reports of a self-assessment and a peer review of the enforcement of IFRSs and other financial disclosure requirements (such as in prospectuses) by 29 'national enforcers' across Europe.

Enforcement in Europe is governed by two related standards: CESR Standard No. 1 Enforcement of Standards on Financial Information in Europe (March 2003, PDF 151k) and CESR Standard No. 2 Coordination of Enforcement Activities (PDF 92k, April 2004). Many of the principles in Standard 1 relate directly to IFRSs, including, for example, principle 20:

Principle 20: In order to promote harmonization of enforcement practices and to ensure a consistent approach of the enforcers to the application of the IFRSs, coordination on ex-ante and ex-post decisions taken by the authorities and/or delegated entities will take place. Material controversial accounting issues will be conveyed to the bodies responsible for standard setting or interpretation. No general application guidance on IFRSs will be issued by the enforcers.

CESR's 2009 review was conducted in two stages:
  • First, CESR members self-assessed their application of each of the four principles of CESR's Standard No. 2 by answering questions that have been established for each principle against a set of benchmarks.
  • Second, CESR's peer pressure group, the Review Panel, conducted a peer review of how National Enforcers applied the Standard.
Among the findings:
  • The self-assessment showed that less than half (45%) of CESR's members fully apply the Standard in their day-to-day enforcement.
  • The peer review by the Review Panel revealed that slightly less than one-third of CESR members were fully applying the Standard, and that significantly more than half of the CESR members did not apply the principles overall
Click to download:

IFRS – Consideraciones para la industria automotriz

15 Jul 2009

Deloitte (Colombia) has published the Spanish translation of a Deloitte (United States) IFRS conversion report.

This booklet provides practical industry insights on IFRSs and includes useful sections on:
  • Understanding the implications of IFRS – including the impact in accounting and finance, tax, systems and human resources – for the automotive industry
  • Key technical accounting differences between IFRS and US GAAP for the automotive industry
  • Evaluating approaches to IFRS conversion
  • Developing an IFRS road map
  • IFRS lessons from the European experience
Nuestros Recursos en Español.

 

Deloitte IFRS resources in Japanese

15 Jul 2009

Deloitte Touche Tohmatsu LLC (Japan) has created a website with a range of IFRS resources in Japanese.

The link is: www.deloitte.com/view/ja_JP/jp/knowledge/ifrs/index.htm. The site includes an IFRS Publications Page with Japanese language publications including a Japanese version of Deloitte's iGAAP Financial Instruments, with information about how to obtain the publications. We have permanent links to this website on our Japan Country Page.

 

Guía de la NIIF 3 y la NIC 27 revisadas

15 Jul 2009

Deloitte (Spain) has published Combinaciones de Negocios y Cambios en las Participaciones: Guía de la NIIF 3 y la NIC 27 Revisadas – a Spanish version of Business Combinations and Changes in Ownership Interests: A Guide to the Revised IFRS 3 and IAS 27.

This 244-page guide deals mainly with accounting for business combinations under IFRS 3 (revised 2008). Where appropriate, it deals with related requirements of IAS 27 (revised 2008) – particularly as regards the definition of control, accounting for non-controlling interests, and changes in ownership interests. Other aspects of IAS 27 (such as the requirements to prepare consolidated financial statements and detailed procedures for consolidation) are not addressed. There are 16 chapters plus appendices that (a) compare the 2008 versions of IFRS 3 and IAS 27 with their predecessors and (b) identify the continuing differences between IFRSs and US GAAP. Nuestros Recursos en Español.

 

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