Click to download the Endorsement Status Report as of 26 July 2010 (PDF 122k). Currently, the following two IASB pronouncements await endorsement action:

• IFRS 9 Financial Instruments
• Improvements to IFRSs

You can always find the endorsement status report Here.

 

The proposed standard would supersede PCAOB AU Section 330, The Confirmation Process, which establishes the requirements for and provides guidance on the confirmation process in audits.

An extract from the newsletter:

It appears likely that the provisions in the proposed standard expanding required confirmation procedures will result in (1) an overall increase in confirmation requests being sent by auditors and therefore needing to be responded to by confirming parties and (2) requests being made of confirming parties for confirmation of data or information that may not have been historically requested.

Click for:

• Heads Up Newsletter PCAOB Issues Proposed Standard on Audit Confirmations (PDF 128k)
• PCAOB Exposure Draft (PDF 295k)
• Heads Up archive
• Our PCAOB page

 

Mr Jean-Claude Trichet, President of the European Central Bank and Chairman of the Group of Governors and Heads of Supervision, said that "the agreements reached today are a landmark achievement to strengthen banking sector resilience in a manner that reflects the key lessons of the crisis."

The proposals change the treatment of various accounting balances, including an override of local GAAP in favour of IFRSs in relation to some intangibles. Some IFRS-related extracts from the proposals follow:

Allow IFRS treatment where different from national GAAP (eg software) A level playing field is established through an option to use IFRS in determining the level of intangible assets if national GAAP results in a wider range of assets (eg certain software assets) being classified as intangible. Definition of the leverage ratio For all derivatives (including credit derivatives), apply Basel II netting plus a simple measure of potential future exposure based on the standardised factors of the current exposure method. This ensures that all derivatives are converted in a consistent manner to a "loan equivalent" amount... [This] would also strengthen the treatment of derivatives relative to the purely accounting based measure (and provide a simple way of addressing differences between IFRS and GAAP). Forward looking provisioning While capital focuses on unexpected losses, the Committee also has developed a concrete proposal to operationalise the expected loss approach to provisioning proposed by the IASB. The Committee sent a comment letter to the IASB on 30 June 2010 in which it spelled out its proposed approach. The Committee has been in close dialogue with the IASB on this topic.

The Committee is expected to finalise the regulatory buffers before the end of this year. The Governors and Heads of Supervision agreed to finalise the calibration and phase-in arrangements at their meeting in September. Click for:

• Annex summarising the key broad agreements of the Governors and Heads of Supervision (PDF 47k)
• Press release (link to Bank for International Settlements website)
• Our credit crunch page
• Our IAS 39 impairment and provisioning page

 

The podcast is available on the IFRS Foundation website. Our Deloitte observer notes from the meeting are available here.

Among the potential macro-prudential tools suggested as additions to the UK's economic policy framework, is forward-looking loss provisioning. The dynamic provisioning system employed by Spain during the financial crisis is offered as a useful practical example. This system links loss provisions to the credit cycle, so banks are forced to hold higher provisions when credit is growing strongly. The IASB has discussed a dynamic provisioning model, but has decided against it in favour of its expected loss model. Click for:

• Consulation document A new approach to financial regulation: judgement, focus and stability (PDF 1.307k)
• Press release (PDF 44k)
• Our credit crunch page
• Our IAS 39 impairment and provisioning page

 

This change will require careful planning by companies to meet this potential requirement effectively, and use this change as a foundation to prepare for IFRS requirements in other jurisdictions.

You will find more information about financial reporting in Ireland on our Ireland Page.

 

The Regulation gave EU member states the options to:

• Require or permit IFRSs for unlisted companies
• Require or permit IFRSs in parent company (unconsolidated) financial statements
• Permit companies whose only listed securities are debt securities to delay IFRS adoption until 2007
• Permit companies that are listed on exchanges outside of the EU and that currently prepare their primary financial statements using a non-EU GAAP (in most cases this would be US GAAP) to delay IFRS adoption until 2007.

The European Commission has updated its earlier surveys of EU and EEA member states concerning their decisions regarding the four options above. Click to download the results of the updated survey: Table on Use of IFRS Options 30 EU Member and EEA States (PDF 64k)

We post these regularly on our IAS Plus Insurance Project Page. Deloitte (Germany) is translating some of these newsletters into German. The latest is:

• Versicherungsbilanzierung 11: Konvergenz in letzter Minute (PDF 390k)
• Translation of UK Issue 16: Last minute convergence (PDF 125k)

All of the earlier insurance newsletters available in German are on our Germany Country Page. The Exposure Draft on insurance accounting is expected to be published later this week.

 

The Interpretation applies when a debtor extinguishes a liability fully or partly by issuing equity instruments to the creditor. IFRIC 19 addresses only the accounting by the entity that issues the equity instruments; it does not address the accounting by the creditor (lender).

Our summary now includes 185 issues:

• IFRS 1 First-time Adoption of International Financial Reporting Standards – Accounting for costs included in self-constructed assets on transition
• IFRS 5 Non-current Assets Held for Sale and Discontinued Operations – Reversal of disposal group impairment losses relating to goodwill
• IAS 1 Presentation of Financial Statements – Going concern disclosure
• IAS 26 Accounting and Reporting by Retirement Benefit Plans – Valuation of plan assets
• IAS 39 Financial Instruments: Recognition and Measurement – Impairment of financial assets reclassified from available-for-sale to loans and receivables