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IAS Plus Newsletter on management commentary

09 Jul 2009

On 23 June 2009, the IASB published an exposure draft (ED) of proposed non-mandatory guidance for preparing and presenting a 'management commentary' – sometimes called 'management's discussion and analysis' or 'operating and financial review'.

In a management commentary, which normally accompanies but is not part of the financial statements, management explains how the entity's financial position, financial performance and cash flows relate to management's objectives and its strategies for achieving those objectives. Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – IASB Issues Proposals Regarding Management Commentary (PDF 62k) explaining the proposals. Click to go to the Project Page on the IAS Plus Website. Past issues of all IAS Plus newsletters are Here.


Notes from the IASC Foundation Trustees meeting

09 Jul 2009

The Trustees of the IASC Foundation, under which the IASB operates, met in public session in Amsterdam on 7 July 2009.

Presented below are the preliminary and unofficial notes taken by Deloitte observers at the public portion of the meeting.

Key decisions include:

  • Renaming the IASC Foundation as the IFRS Foundation
  • Renaming the IASB as the International Financial Reporting Standards Board (IFRSB)
  • Creating two Vice-chairman positions for the IFRSB
  • Modifying the length of renewal terms for IASB members from 5 years to 3 years (with some exceptions)
  • Creating an SME Implementation Group to address implementation questions relating to the IFRS for SMEs, to be chaired by Paul Pacter
  • Adding Africa and Latin America to the required geographical mix of IASCF trustees
The Trustees also held a joint meeting with the IASCF Monitoring Board on 6 July. Our notes of that meeting are Posted Separately Below.

Notes from the Meeting of the IASC Foundation Trustees - 7 July 2009

IASB's response to the financial crisis

The IASB Chairman made a short presentation similar to that given at the meeting of the Monitoring Board on 6 July 2009. He reiterated that the proposed timing of the financial instruments project would allow all the revised standards to be in place by 2012, even allowing for any 'true-up' necessary between the IASB and the FASB.

In response to a question from a Trustee, Sir David acknowledged that there had been a breakdown in communication between the IASB and senior policymakers, as was evidenced in the encounter with the ECOFIN in June 2209. In that meeting, it became apparent that the finance ministers were not aware of the considerable efforts being made by the IASB (and the FASB) to respond to the G20, Financial Stability Board and others. The IASB now realised the importance of regular dialogue with ECOFIN and others at the governmental level and were establishing such open lines of communication.

A Trustee noted that the IASB's financial instruments project would not address some sensitive political issues, especially with respect to certain equity investments, such as 'strategic' investments for which an OCI-only solution is proposed. Although the categories proposed solved some impairment issues, the larger issues of debt impairment (loss provisioning) would not be solved in time for 2009 year-ends, but expectations were high. Several Trustees noted that such issues and expectations would need to be managed carefully if the IASB was to succeed.

In addition, several Trustees were concerned that the IASB and FASB, in spite of their best efforts, seemed to be in different places. The current climate really required sequential rather than consecutive decision-making.

Trustees were also concerned that the expected loss model currently being investigated by both Boards might not be the ideal solution either, citing several of the reasons outlined in the recent staff paper on credit risk. The IASB was encouraged to take a thoughtful approach to providing for losses.

IASB Work Programme

The Trustees noted the IASB's current work programme. In particular, they welcomed the forthcoming publication of the IFRS for SMEs, scheduled for 9 July 2009. Some Trustees were concerned that, notwithstanding that many of the items on the IASB's agenda were either responding to the financial crisis or else items on the FASB/IASB Memorandum of Understanding, the agenda was too full, and asked whether there was any way to trim it.

The Trustees approved the appointment of Dr Paul Pacter as chair of the SME Implementation Group. This group would be responsible for:

  • Encouraging jurisdictions to adopt the IFRS for SMEs;
  • Ensuring consistent and high quality implementation across jurisdictions and within jurisdictions;
  • Addressing the pervasive implementation questions that inevitably will arise on initial adoption of the standard globally; and
  • Identifying and fixing lack of clarity, key omissions, and possible errors in the standard.

In connection with the IFRS for SMEs, Jeff van Rooyen noted that the IOSCO Emerging Markets conference would be held in November 2009. Dr Pacter should attend this conference, and the Trustees were willing to work with him in advance. Mr van Rooyen noted that the IFRS for SMEs was very important on the African continent. The IASCF Chairman noted that support for the IFRS for SMEs was not universal, and that some EU Member States, Germany in particular, might not support it. There was a need for 'active propaganda' to encourage the standard's adoption.

The IFRIC Chairman reported on the activities of the IFRIC, noting that the vast majority of issues raised to the IFRIC are addressed by means other than an Interpretation.

IASCF Constitution review

The IASCF Trustees reviewed the staff proposals for changes to the IASCF Constitution. These had been previewed during the meeting with the Monitoring Board on 6 July. The Trustees agreed that the Invitation to Comment would propose the following changes to the Constitution:

  • Section 1 (Name): that the name of the organisation be changed from the IASC Foundation to the IFRS Foundation; and that the IASB be renamed the International Financial Reporting Standards Board.
  • Section 2 (Objectives): that the Objectives include in (a) 'to develop, in the public interest, a single set of high quality, understandable, and enforceable and globally-accepted global accounting standards...'. No reference to principles-based is needed in the Constitution, that reference in the IASB's Due Process Handbook was thought sufficient.
  • Section 2 (Sectors and Consultation): the Trustees concluded that, for the period under review, the scope of the IASB's responsibility should not be expanded to other sectors (such as public sector accounting standards or not-for-profit entities). However, they did agree that the Constitution should be explicit that the IASB may and should consult with those bodies with a legitimate interest in financial reporting standards (not national standard-setters alone).
  • Section 3 (Governance): the position of the Monitoring Board in the governance structure of the organisation will be acknowledged in paragraph 3 of the Constitution and elaborated in sections 18-23. Section 3 would be amended to state that the governance of the organisation rests 'primarily' with the IASCF Trustees and other governing bodies as the IASCF shall appoint.
  • Sections 6 and 10 (Trustees): there will be specific mention of Africa and South America in the geographical distribution requirements for Trustees (leaving two 'at large' seats); and the Constitution should provide for at least two vice-chairmen.
  • Section 15 (Trustees' oversight of the IASB's agenda): the Trustees are to be consulted in the 'exceptional circumstances' in which the IASB is considering having an exposure period of less than 30 days (the shortest period permitted by the Constitution).
  • Section 30 (IASB): there should be two vice-chairmen of the IASB; the Trustees will consider whether the roles of the IASB Chairman and the CEO of the IASCF should be separated.
  • Section 32 (terms of IASB members): terms should be set at an initial term of 5 years renewable once for a further 3 years, unless the member is a potential chairman or vice-chairman, in which case the renewal would be for a further 5 years. (Flexibility on this matter was urged by many around the table; there was also considerable discussion of transitional arrangements for existing renewable appointments.)
  • Section 37 (IASB agenda setting): the required consultation with the IASCF Trustees and the SAC remain, decisions remaining with the IASB absolutely (no changes to the Constitution would e necessary). However, the IASB's Due Process Handbook would be amended to note that comments from constituents would be invited during this period (the agenda candidates and relative priorities are in publicly-available documents). It is likely that the onus would be on constituents to respond to these documents and they would not be the subject of a formal request for views.

Some Trustees noted that the Trustees' needed to be responsive to constituents' concerns about their oversight activities. This need was not something to be addressed in the Constitution itself, but elsewhere (Deloitte's comment letter recommended that the Trustees develop their own Handbook, describing their responsibilities and how they discharge them). The Constitution Committee is aware of the stress in this area and is likely to address it once the Constitution review is concluded.

The IASCF staff noted that they hoped to have the proposals issued by early August 2009 allowing for a three month comment period. It might be possible to analyse comments and propose final amendments to the Constitution at the January 2010 Trustees' meeting, or the April 2010 meeting at the latest. Round-table discussions during the exposure period are being arranged and will take place in London, New York and Tokyo. At each round-table, at least three members of the Trustees (the Chairman and some members of the Constitution Committee) will attend. 'Local' Trustees, if available, were also encouraged to attend. In addition, individual Trustees will interact with constituents in their own jurisdictions.

Due Process Oversight Committee

Trustee Antonio Vegezzi presented several matters related to the Trustees' oversight of the IASB.

Balloting IASB documents by retiring IASB members

The Trustees agreed that, for operational reasons, retiring IASB members would be permitted to ballot a due process document or final IFRS after their term expired provided that all technical decisions had been made by the expiry of the member's term. The Trustees were prepared to allow for some flexibility provided that the distinction between the 'mere administrative elements of balloting versus the decision-making process' was respected absolutely.

Statement of support for the IASB's approach to the financial instruments project

The Trustees agreed to incorporate their formal support for the IASB's revised approach to the financial instruments project:

The Trustees support the IASB's agreed timetable for the comprehensive revision of IAS 39. The Trustees believe that the IASB's decision to give priority to the comprehensive project, rather than to piecemeal changes, remains appropriate. At the same time, the Trustees emphasise the importance of the IASB's concluding the accelerated portion of the project by year end as part of IASB's response to accounting issues arising from the financial crisis.

The Trustees recognise that this is a challenging task due to the time constraints and the complexity of the issues involved, and may required reallocation of resources and reprioritization of priorities to be achieved. The Trustees will monitor the IASB's progress against the agreed and urgent time lines.

Complaint received on due process related to the Leases project

The Trustees considered (at considerable length) a due process concern raised to them by Leaseurope, a leasing industry association. Leaseurope had raised three major concerns:

  • The IASB's decision to defer lessor accounting from the project and then its decision to include a chapter on lessor accounting in the discussion could lead to decisions regarding an important area of lease accounting without sufficient consultation.
  • At the same time, Leaseurope thought that any new standard on lease accounting should address lessor accounting.
  • In general, Leaseurope was disappointed that the IASB has not used its leasing working group effectively.

The Due Process Oversight Committee had satisfied itself that the issues raised were factually correct. As part of its own review of the IASB's Working Groups, the IASB had noted that the Leasing Working Group had not been engaged by the project staff in an appropriate manner. In particular, a staff member's maternity leave had not been handled well and had resulted in a breakdown in communications that was acknowledged. The Leases Working Group has subsequently been re-engaged and will be involved as comments on the Leases Discussion Paper are analysed and an exposure draft developed. Trustees were unhappy with this state of affairs and hoped that lessons had been learned.

In a discussion that strayed closely on the technical aspects of the leasing project, Trustees questioned whether the scope of the project, criticised by Leaseurope in its letter, could be defended. Several IASB members and IASB senior staff expressed the view that (i) lessee accounting was the major problem, and was the real focus of the criticism of the US Securities and Exchange Commission when the Memorandum of Understanding was being developed; (ii) the issues from the lessor side of the equation were really matters of revenue recognition and derecognition of the leased asset – items being addressed in other IASB projects. However, IASB members and Trustees accepted that the IASB's proposals represented a threat to the leasing industry and that they would use any and all reasons to object and delay any changes to the status quo. For that reason alone, Trustees urged the IASB to adhere rigorously to its due process and, if it does address lessee accounting alone at first, it must be confident that other IFRSs will address the lessor side of the equation.

XBRL matters

The work on providing quality assurance to the IASCF's activities developing an IFRS XBRL taxonomy was noted. The IFRS taxonomy continues to be developed and this raised issues of balancing the need for improvements and the need for stability in the product. A further report on this matter will be made in October.

Report of the Standards Advisory Council Chairman

Paul Cherry, the SAC Chairman, reviewed the activities of the reconstituted SAC since it began operating in January 2009. Although it was a large group, he noted a strong sense of commitment. However, the fact that SAC members now represented constituencies meant that more time was required before meetings; that led to longer lead times for draft agendas and more staff time. The SAC had spent a substantial part of its first meeting agreeing and understanding its role, one with which it was now content and allowed it to frame its discussions properly. Mr Cherry thanked the Trustees that the SAC now had dedicated staff support, which should help it meet its mandate and be effective.

The SAC expected 'engagement' on major changes to the IASB's agenda and was willing to use technology to provide it. The SAC had participated in the IASB's request for views on the FASB's FSPs in April and had also responded to the FCAG on its activities, assembling those responses quickly. In addition, there was a sense that emphasis on 2011 was creating an artificial deadline, one that was often seen as more of a stumbling block than a useful target. Finally, the SAC was beginning to turn its attention to the post-2011 agenda and to consider what should be in the next wave of standard-setting activities.

Mr Cherry noted that the US equivalent body (the FASAC) had expressed concerns about the size of the IASB's technical agenda: this was not a weakening of support for convergence, but rather a concern about the volume of work and the potential consequences for the quality of the standards produced. His own view was that the US, and in particular the US SEC, had to clarify their position on convergence: many in the US are confused on the time-line for adopting IFRS and the strategy for getting there.

In response to Trustees' questions, Mr Cherry thought that the SAC had been chosen well: there was a good mix of technical and business backgrounds, one that kept the SAC focussed on strategic issues rather than technical matters. The size of the group really prevented spirited debate, but the work done at the outset on agreeing its role has helped to focus the SAC's discussions. What was needed was a proper feedback mechanism-most likely in the Basis for Conclusions accompanying an ED or IFRS-that specifically identified SAC concerns and how they were addressed or why the IASB disagreed with them.

Mr Cherry noted that the SAC had been given two vice-chairs: he intended to use these to assist in regional communications, especially between SAC meetings, to engage with regional standard-setters, users, preparers and other stakeholders and to help them feel engaged in the IASB process.


Immediately prior to closing the public session, the IASCF Chairman noted the presence of Tom Jones, recently retired as IASB vice-chair. He thanked Mr Jones for his eight years' service to the IASB and noted that he would remain as an advisor to the Trustees and the IASB.

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


IASB issues IFRS for SMEs

09 Jul 2009

The IASB has issued the IFRS for SMEs. This is the first set of international accounting requirements developed specifically for small and medium-sized entities (SMEs)

IFRS for SMEs has simplifications that reflect the needs of users of SMEs' financial statements and cost-benefit considerations. Compared with full IFRSs, it is less complex in a number of ways:

  • Topics not relevant to SMEs are omitted.
  • Where full IFRSs allow accounting policy choices, the IFRS for SMEs allows only the easier option.
  • Many of the principles for recognising and measuring assets, liabilities, income and expenses in full IFRSs are simplified.
  • Significantly fewer disclosures are required.
  • And the standard has been written in clear, easily translatable language.

To further reduce the reporting burden for SMEs, revisions to the IFRS will be limited to once every three years.

It is suitable for all entities except those whose securities are publicly traded and financial institutions such as banks and insurance companies.

The 230-page standard is a result of a five-year development process with extensive consultation of SMEs worldwide. Accompanying the standard is implementation guidance consisting of illustrative financial statements and a presentation and disclosure checklist.

The IFRS for SMEs is available for any jurisdiction to adopt whether or not it has adopted the full IFRSs. It is up to each jurisdiction to determine which entities should use the standard. It is effective immediately on issue.

The standard and accompanying guidance and basis for conclusions may be downloaded immediately without charge from the IASB's website. To support the implementation of the IFRS for SMEs the IASC Foundation is developing comprehensive training material.

The Foundation is also working with international development agencies to provide instructors for regional workshops to 'train the trainers' in the use of the training material, particularly within developing and emerging economies. The training material will be published in a number of languages. The English language material will be downloadable free of charge from the IASB's website in late 2009.

Click for:

  • IASB Press Release (PDF 39k)
  • IFRS for SMEs Fact Sheet (PDF 182k). The Fact Sheet includes details of:
    • Project history
    • Outreach and consultation
    • Five types of simplifications
    • Omitted topics
    • Examples of options in full IFRSs not included in the IFRS for SMEs
    • Recognition and measurement simplifications
    • Main changes from the exposure draft

The IASB also announced that Paul Pacter, Director of Standards for SMEs for the IASB, has agreed to lead a group to support international adoption of the standard. Details of this group will be announced shortly.


Accounting Roundup – second quarter 2009 review

08 Jul 2009

We have posted Accounting Roundup: Second Quarter in Review–2009, prepared by the Accounting Standards and Communications Group of Deloitte LLP (USA). This newsletter provides brief descriptions of pronouncements affecting accounting, financial reporting, and corporate governance issued during 2Q-2009 by standard setters and regulators including FASB, EITF, AICPA, SEC, FASAB, PCAOB, GASB, IASB, IFRIC, and IAASB.

This quarterly review consists of articles, adapted as necessary, from issues of Accounting Roundup published in April and May 2009, as well as new articles for the month of June. There's also information about upcoming Dbriefs Webcasts. You will find past issues Here. International and IFRS-related developments covered in this edition of Accounting Roundup are:
  • IASB Seeks Feedback on Impairment Model
  • IASB Proposes Guidance on Fair Value Measurement
  • IASB Publishes Discussion Paper on Accounting for Credit Risk in the Measurement of Liabilities
  • IASB Proposes Amendments to Clarify Accounting for Pension Plan Prepayments
  • IASB Amends Accounting for Share-Based Payments
  • IASB Issues Annual Improvements Standard
  • IASC Foundation Issues IFRS Taxonomy 2009 and Publishes XBRL Handbook for Public Comment
  • IASB Proposes Guidance on Management Commentary


IAESB proposes education work plan

08 Jul 2009

IFAC's International Accounting Education Standards Board (IAESB) has invited organisations and individuals with an interest in accounting education to comment on its proposed 2010-2012 Strategy and Work Plan.

The IAESB's proposed strategy focuses on projects and activities aimed at developing International Education Standards (IESs), while providing adoption and implementation guidance to interested stakeholders in accounting education.
The IAESB proposes to undertake three high-priority activities, beginning in 2010. These are:
  • Conducting a revision of the IESs, considering results of the IAESB's drafting conventions project and recent developments in the accountancy profession.
  • Developing implementation guidance in areas of measurable implementation of the IESs, competency frameworks, and quality control measures for education providers.
  • Promoting greater awareness among academics, regulators, and others of the IAESB's pronouncements and its role in advancing international debate on emerging issues relating to development and assessment of professional accountants.
The direction of further activities during the period of 2010-2012 will depend on the outputs from these three projects, although the IAESB's proposed work program for 2010-2012 contains a number of potential projects for consideration. Comments are requested by 5 October 2009.
Click for Press Release (PDF 38k), which has hyperlinks for downloading the IAESB exposure draft.


IAS Plus Newsletter on IFRS 2 amendments

07 Jul 2009

On 18 June 2009, the IASB issued amendments to IFRS 2 Share-based Payment that clarify the accounting for group cash-settled share-based payment transactions.

The amendments clarify how an individual subsidiary in a group should account for some share-based payment arrangements in its own financial statements. In these arrangements, the subsidiary receives goods or services from employees or suppliers but its parent or another entity in the group must pay those suppliers. Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Clarification of Accounting for Group Cash-settled Share-based Payment Transactions (PDF 114k) explaining the amendments. Click to go to the Related Information on IAS Plus Website. Past issues of all IAS Plus newsletters are Here.


IFRS insurance accounting newsletter

07 Jul 2009

Deloitte (United Kingdom) has published the July 2009 edition of its monthly newsletter focussing on the joint IASB and FASB project to develop a new, comprehensive, global financial reporting standard for insurance.

Among other things, this issue reports on decisions made by the IASB in June, particularly the important conclusion, in line with FASB, to abandon the Current Exit Price model. The IASB rejected the revised timetable proposed by its staff, which included a publication date of April 2010. The Board asked the staff to reformulate its plans to ensure that an exposure draft is published in December 2009 as originally intended, with a final standard in 2011. Click to download July 2009 Issue of the Insurance Accounting Newsletter (PDF 198k). There are permanent links all issues of the newsletter on Here.


Notes from the IASCF Monitoring Board meeting

07 Jul 2009

The Trustees of the IASC Foundation held a joint meeting with the IASCF Monitoring Board on 6 July 2009 in Amsterdam. It was the second meeting of the Monitoring Board.

Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting.

Notes from the Joint Meeting of the IASCF Monitoring Board and IASCF Trustees - 6 July 2009, Amsterdam

Hans Hoogervorst, the chairman of the Monitoring Board, welcomed participants to the meeting and introduced briefly the topics for public discussion. It was noted that the Board had met in private session prior to the public meeting.

IASB's response to the financial crisis

Sir David Tweedie outlined the IASB's activities in response to the financial crisis, in particular the current status of the financial instruments project and the IASB's efforts to find an acceptable and robust replacement for IAS 39. In particular, he outlined the IASB's conclusions in the forthcoming exposure draft on the classification of financial instruments. He noted that the IASB had been asked by some constituents to adopt certain requirements in US GAAP with respect to impairment. The IASB had concluded that, were they to do so, greater complexity would have been introduced to an already complex standard. The IASB had therefore decided that it should simplify the classification of financial instruments to two categories (fair value and amortised cost) and the impairment approach to one (impairment would be triggered by a deterioration in credit standing). The IASB was working closely with the FASB, but the two were currently in different places. As a result, it was likely that the IASB and the FASB would expose each other's potential solutions and invite comments from constituents. Alternatives to the IASB approach likely to be included in the IASB's exposure draft as alternatives are that debt instruments traded in an active market would be measured at fair value in all cases; and a fair value option for all financial assets.

The EU Commissioner for Internal Markets noted that he was increasingly of the view that for financial institutions, accounting and financial reporting should be more biased towards the needs of prudential regulators than the investor. Responding immediately to this comment, the IASCF Chairman, Gerrit Zalm, noted that the banking industry representatives on the IASB's Standards Advisory Council meeting in June 2009 had expressed exactly the opposite view.

Other participants urged the IASB and the FASB to work as hard as possible to achieve a common position on this critical project.

Hans Hoogervorst, who is also a Co-Chairman of the FASB/IASB Financial Crisis Advisory Group, gave an overview of the FCAG's final report, which is due to be completed in July 2009. He noted that the report was likely to stress four fundamental principles and make recommendations in support of those principles. These principles were likely to be:

  • Financial reporting plays an integral role in the financial system by providing unbiased, transparent information about the economic performance and condition of businesses. It assists in resource allocation decisions by investors and provides important information to prudential regulators and others. However, reporting to investors should have primacy and when regulatory requirements differ from financial reporting requirements the effects should be displayed in a manner that does not compromise the transparency and integrity of financial reporting.
  • Financial reporting is but one of the information inputs available to financial markets. All users should recognize the limitations of financial reporting. There should be better and more rigorous processes for price verification and asset valuation.
  • The global nature of the financial markets makes it critical to achieve a single set of high quality, globally converged financial reporting standards that provide consistent, unbiased and transparent information, regardless of the geographical location of the reporting entity.
  • To develop standards that are high quality and unbiased, accounting standard-setters must enjoy a high degree of independence from undue commercial and political pressures, but must also have a high degree of accountability through appropriate due process and oversight ('no independence without accountability; no accountability without independence').

There was no substantive discussion of this matter.

IASCF Constitution review

The IASCF Chairman noted the following developments:

The Standards Advisory Council now has dedicated staff to assist it in discharging its role in the organisation.

As a result of the consultation with constituents about issues to be included in the IASCF Constitution Review, the Trustees are likely to propose the following:

  • Re-branding: that the name of the organisation be changed from the IASC Foundation to the IFRS Foundation; and that the IASB be renamed the International Financial Reporting Standards Board.
  • Consultation: that the Constitution be explicit that the IASB may and should consult with those bodies with a legitimate interest in financial reporting standards (not national standard-setters alone).
  • Monitoring Board: the position of the Monitoring Board in the governance structure of the organisation will be acknowledged in paragraph 3 of the Constitution.
  • Trustees: there will be specific mention of Africa and South America in the geographical distribution requirements for Trustees; the Constitution should provide for at least two vice-chairmen.
  • 'Fast track' agenda items: the Trustees are to be consulted in the 'rare circumstances' in which the IASB is considering having an exposure period of less than 30 days (the shortest period permitted by the Constitution).
  • IASB: there should be two vice-chairmen of the IASB; terms should be set at an initial term of 5 years renewable once for a further 3 years, unless the member is a potential chairman or vice-chairman, in which case the renewal would be for a further 5 years.
  • IASB agenda setting: the required consultation with the IASCF Trustees and the SAC remain, decisions remaining with the IASB absolutely. However, comments from constituents would be invited during this period (the agenda candidates and relative priorities are in publicly-available documents). However, it is likely that the onus would be on constituents to respond to these documents and they would not be the subject of a formal request for views. In this way, the Trustees were trying to balance the openness of the agenda-setting process without making it too bureaucratic.
In response to a question from a member of the Monitoring Board, it was agreed that, in the event that the IASB was considering using a comment period of less than 30 days, that the Monitoring Board be informed. It was unlikely that they would be involved in the decision process (that was for the Trustees), but they did want to be aware of the situation.

Funding the IASCF

The IASCF staff noted that in April 2009 they had presented to the Monitoring Board a draft five-year plan that outlined resource requirements for the IASCF. As a result of further work on this budget, it is apparent that the IASCF could be in an operating deficit from FY 2010 based on current funding commitments (this assumes that the national schemes in EU Member States ceases once the central budget commitment comes on stream in FY 2011 and that the voluntary contributions from the major accounting networks and central banks is also discontinued).

An IASCF Trustee noted that the funding shortfall had the potential to put in jeopardy the extensive discretionary due process activities that the IASB was following: were these to be curtailed, the organisation would attract criticism, probably from those jurisdictions that had contributed to the funding shortfall! The European Commissioner for Internal Markets noted that the presence of a central EU budget allocation for the IASCF did not preclude Member States from continuing national contribution schemes. The EU funding started in 2011 and the number in the presentation ($4.4m) was only indicative but about right. However, it was subject to review on an annual basis as part of the EU's budget-setting process. In response to a question, the Commissioner noted that governance issues were at the heart of the concerns at the ECOFIN and the European Parliament.

The Chairman of the US Securities and Exchange Commission acknowledged that the voluntary contribution system was not working in the US. The SEC was working to achieve a solution that was fair and stable and avoided a Congressional budget line item. It was likely that this would be a levy system on listed companies, but this was still being worked out. The introduction of a stable, independent funding regime for the US was a priority for her.

There was a brief discussion of the IASCF's budget and programme spending requirements, but little new came to light.

IOSCO and regulatory developments

The representative of the Japanese Financial Services Agency noted that the FSA recently had adopted a roadmap for the adoption of IFRS in Japan. Issuers would be permitted to use IFRS for fiscal years ending on or after 31 March 2010. A decision on mandatory adoption would be made in 2012. In the meantime, there was also a convergence programme in place between the IASB and the ASBJ, which should be completed by 2011. It was hoped that this two-pronged approach would mean that the transition to IFRS would be relatively easy in Japan.

The SEC Chairman noted that the SEC had received about 220 comment letters on its IFRS Roadmap - a large proportion of these were from issuers; with users, the accounting profession and academics also well represented. A large proportion agreed that a single set of global financial reporting standards was desirable; there was less agreement that they should be IFRS. However, issuers with international operations were overwhelmingly in favour of IFRS. Areas of concern with respect to IFRS were regional/ national carve-ins and carve-outs. Many commentators had concerns that the proposed timeline for implementation was too short. The SEC Chairman noted that analysis of the comments was continuing and that the Commission would resume consideration of the Roadmap in 4Q 2009.

A Trustee asked whether the European Commission had signed the Monitoring Board's Memorandum of Understanding. The Commissioner replied that he had not yet been able to do so, but that the topic would be discussed when the Economic and Monetary Affairs Committee (ECON) was reconstituted later in July 2009 (after the new European Parliament convenes), and he hoped that as a result of these consultations and consultations with Parliament, that the MoU could be signed on behalf of the Commission.

In response to a question from the Trustees, the Monitoring Board Chairman noted that the MB had yet to agree any formal modus operandi with respect to the IASB. An IOSCO representative noted that he expected that IOSCO would operate as before: operational matters would be raised with the IASB in the normal manner. The MB was put in place to add strength and assurance at a governance level and that IOSCO would raise only policy and governance matters at the MB level.

The Chairman closed the public session.

This summary is based on notes taken by observers at the Joint Monitoring Board and IASCF Trustees meeting and should not be regarded as an official or final summary.

IASCF publishes guide to IAS 32, IAS 39, IFRS 7

06 Jul 2009

The IASC Foundation has published Financial Instruments – A Guide Through the Official Text of IAS 32, IAS 39 and IFRS 7 (July 2009). This 688-page book presents the full text of the standards (along with all related IFRIC Interpretations) with extensive hyperlinked cross-references and annotations.

The guide also includes footnotes that describe financial instruments issues on which the IFRIC decided not to develop an interpretation. In addition, to provide guidance on measuring and disclosing the fair value of financial instruments in markets that are no longer active (illiquid markets), the volume contains the report of the IASB Expert Advisory Panel and the accompanying IASB staff summary. The publication (ISBN: 978-1-905590-69-8, IASB Product Code: 10135) sells for £38. You can order it from the IASCF/IASB Shop. IASB comprehensive subscribers will automatically receive a copy.


Updated EFRAG endorsement report

05 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 25 June 2009 (PDF 130k). This update reflects minor modifications in the expected timing of future steps in the process of endorsing the nine IASB pronouncements awaiting endorsement (see our News Story of 15 June 2009).


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.