June

Suriname plans to adopt IFRS for SMEs

28 Jun 2010

The government of Suriname is deliberating a new accountancy law that would require the IFRS for SMEs (with full IFRSs as an option) for large and medium-sized unlisted companies and any other unlisted company whose financial statements are audited.

Full IFRSs would be required for listed companies. The proposed law is supported by the Association of Accountants of Suriname. Currently, Suriname does not have any legislation on accounting principles or financial statements. The local securities exchange also does not prescribe a specific set of accounting principles to be used by its listed companies. However, while IFRSs are not mandatory, a company is free to use IFRSs if it wishes.

 

G20 reiterates support for global accounting standards

28 Jun 2010

Following their summit meeting in Toronto on 26-27 June 2010, the leaders of the G20 group of nations have issued a Declaration reaffirming their support for a single set of global accounting standards as a means for strengthening the global financial market infrastructure.

Unlike the G20 leaders' Declaration in September 2009 following their Pittsburgh summit, this new Declaration does not make reference to a June 2011 deadline. The G20 was first organised in the wake of the Asian financial crisis of the late 1990s. With the onset of the global financial crisis in 2008, the G-20 has become the principal forum to lead global efforts to stem the crisis and mitigate its effects. Below is an excerpt from the Declaration following the Toronto summit. Click here to go to our Credit Crunch Page.

Financial Sector Reform

We agreed to strengthen financial market infrastructure by accelerating the implementation of strong measures to improve transparency and regulatory oversight of hedge funds, credit rating agencies and over-the-counter derivatives in an internationally consistent and nondiscriminatory way. We re-emphasized the importance of achieving a single set of high quality improved global accounting standards and the implementation of the FSB's standards for sound compensation.

Accounting Standards

We re-emphasized the importance we place on achieving a single set of high quality improved global accounting standards. We urged the International Accounting Standards Board and the Financial Accounting Standards Board to increase their efforts to complete their convergence project by the end of 2011.

We encouraged the International Accounting Standards Board to further improve the involvement of stakeholders, including outreach to emerging market economies, within the framework of the independent accounting standard setting process

Click for G20 Leaders Declaration (PDF 509k).

Updated EFRAG 'endorsement status report'

27 Jun 2010

The European Commission has endorsed the IASB's 23 July 2009 Amendments to IFRS 1: Additional Exemptions for First-time Adopters.

Consequently, 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 2010 (PDF 118k). Currently, the following six IASB pronouncements await endorsement action:
  • IFRS 9 Financial Instruments
  • Amendment to IFRIC 14 Prepayments of a Minimum Funding Requirement
  • IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
  • Revised IAS 24 Related Party Disclosures
  • Amendment to IFRS 1 Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters
  • Improvements to IFRSs
You can always find the endorsement status report Here.

 

IASB has posted its amended work plan

26 Jun 2010

The IASB has posted on its website its Amended Work Plan and Project Timetable as of 25 June 2010 reflecting the Changes announced on 24 June 2010 and sent to the G20, as well as other changes to IASB-only projects.

We have updated the IAS Plus Agenda Projects Page accordingly.

 

IFAC urges G-20 to adopt global standards

26 Jun 2010

The International Federation of Accountants (IFAC) has submitted a Series of Recommendations for consideration by the G-20 at its meeting on 26-27 June 2010 in Toronto, Canada.

The recommendations emphasise the need for greater transparency and accountability in public sector finances and urge the G-20 to support adoption of International Financial Reporting Standards globally. IFAC's recommendations:
  1. The G-20 should strongly encourage all governments to provide greater transparency and accountability in public sector finances.
  2. The G-20 should encourage all governments to provide transparency and greater accountability in respect to stimulus programs and bailout plans designed to alleviate the global financial crisis.
  3. The G-20 should encourage all nations to monitor government debt and liabilities for their true economic implications.
  4. In order to better assess systemic risks in government debt and liabilities on a global level, the G-20 should urge the adoption and implementation of International Public Sector Accounting Standards (IPSASs) in countries throughout the world.
  5. The G-20 should encourage all governments to adopt and implement common global standards not only for public sector accounting, but also for accounting, auditing, and auditor independence.
Regarding recommendation 5 above, IFAC's letter states:

In order to improve the ability of capital markets to work globally, to allow investments to move more efficiently across borders, and to reduce risks and uncertainties in the capital markets, the G-20 should encourage the early adoption and implementation of International Financial Reporting Standards (IFRS), International Standards on Auditing (ISAs), and the auditor independence requirements set out in the Code of Ethics for Professional Accountants. This will assist the G-20's goal of strengthening transparency and accountability in the context of financial and capital markets and creating a level playing field in the interpretation and exchange of financial information. Consistent financial information around the world can do much to facilitate cross-border activity and economic and financial stability.

Click here for IFAC's Recommendations for the G-20 Nations (PDF 201k).

 

New IFAC SMP practice management guide

25 Jun 2010

The Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) has issued the Guide to Practice Management for Small- and Medium-sized Practices, to provide guidance on how this sector can better manage their practices and ultimately operate in a safe, profitable, and professional manner.

Click here to Download the 455-page Guide without charge from IFAC's website.

 

Accounting Roundup – special edition

25 Jun 2010

Deloitte (United States) has published a special edition of Accounting Roundup titled The Tidal (Coming In) Waves of Accounting and Financial Reporting Changes.

This edition updates a special edition issued in May 2010 titled The Tidal Wave of Financial Accounting and Reporting Changes.

On June 24, 2010, in response to concerns from constituents, the Financial Accounting Standards Board (FASB) revised its agenda and timeline for completing its (1) joint projects with the International Accounting Standards Board (IASB) and (2) FASB-only projects. [See IAS Plus story directly below.] Many of those concerns focused on the FASB's due process procedures and whether exposing so many proposed standards at one time would cause the Board to 'shortcut' those procedures or would allow constituents enough time to provide public comments to the FASB. Taking those concerns into consideration, the FASB and IASB have spread out their standard-setting agendas, limiting the number of joint projects that can be exposed in any one calendar quarter to four.

This update to Accounting Roundup – Special Edition reflects (1) the FASB's revisions to its agenda and timeline (discussed in the Next Steps sections of the articles in this publication) and (2) developments that have occurred in the joint and FASB-only projects since the original issuance of this publication, in particular the offsetting, financial instruments with characteristics of equity, and leases projects.

Click to download: Accounting Roundup Special Edition June 2010 (PDF 163k). You will find past issues Here.

 

Notes from special 23 June 2010 IASB-FASB meeting

24 Jun 2010

The IASB and FASB held a special joint meeting on 23 June 2010 at the IASB's office in London.

Click to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.

 

IASB and FASB update G20 on project timetables

24 Jun 2010

The IASB and FASB have submitted to the G20 leaders a Progress Report on Commitment to Convergence of Accounting Standards and a Single Set of High Quality Global Accounting Standards.

Here is the IASB-FASB Transmittal Letter to the G20 (PDF 53k). The progress report identifies and explains changes to the approach and timetables of a number of the boards' joint projects. The boards had previously Announced their Plan to Make these Changes on 3 June 2010, with three objectives:
  • prioritise the major projects to permit a sharper focus on issues and projects that they believe will bring about significant improvement and convergence of IFRS and US GAAP.
  • phase the publication of exposure drafts (EDs) and related consultations to enable the broad-based and effective stakeholder participation in due process that is critically important to the quality of our standards. This includes limiting to four the number of significant or complex EDs issued in any one quarter.
  • issue a separate consultation document seeking stakeholder input about effective dates and transition methods.
Some of the key changes, from an IASB perspective, are noted below.

Progress Report and Latest IASB Project Timetable

  • Consolidation. Completion of a standard that would replace IAS 27 is planned for 4Q 2010, including improved disclosures about structured entities. Additionally, in 3Q 2010, IASB will issue an ED of proposed changes to its consolidation requirements relating to investment companies to align with existing US GAAP. IASB would finalise this in 1Q 2011.
  • Derecognition of financial instruments. In March 2009, the IASB had issued an ED setting out a proposed derecognition model and an alternative model proposed by some Board members. Respondents favoured the alternative model. The IASB had anticipated issuing a revised ED in 3Q 2010 and a final standard by 1Q 2011. The new timetable would split the project into three components:
    • Disclosure. The IASB will finalise new disclosure requirements for derecognitions by 3Q 2010.
    • Balance sheet offsetting (netting) of derivatives. This is, in a sense, a presentation alternative to complete derecognition. IASB and FASB will jointly issue a separate ED in 4Q 2010 proposing changes to address differences in their standards on balance sheet netting of derivative contracts and other financial instruments and related disclosures. Those differences can materially affect financial reporting by financial institutions. Final converged netting standards are planned for 2Q 2011.
    • Comprehensive standard on derecognition. At a future date, following additional staff research, the IASB and FASB will make a decision about the nature and scope of any further improvement and convergence efforts.
  • Financial Instruments
    • Hedge accounting. In 3Q 2010 the IASB will publish an ED on hedge accounting (previously scheduled for Q2 2010), with a final standard planned for 2Q 2011. Meanwhile, the FASB will hold public roundtable meetings with stakeholders on its 27 May 2010 Comprehensive Financial Instruments Proposals, which include hedge accounting. IASB will participate in those roundtables.
    • Classification and measurement of Financial Liabilities. IASB issued an ED in May 2010. Final standard planned for 2Q 2011.
    • Impairment of Financial Assets Measured at Amortised Cost. IASB issued an ED in November 2009. Final standard planned for 2Q 2011.
  • Financial statement presentation. This project has essentially been split into three parts:
    • Presentation of comprehensive income. The IASB issued a Proposal on 27 May 2010 that would require all entities to present results of operations in a single, continuous statement of comprehensive income (a two-statement presentation would be prohibited). FASB published a Similar Proposal. They expect to issue converged final standards in 4Q 2010.
    • A comprehensive standard on financial statement presentation. In 2008, the boards published a Discussion Paper proposing comprehensive principles for presenting financial statements. Among those principles were (a) a cohesive structure for the balance sheet, statement of comprehensive income, and cash flow statement, (b) a subtotal of profit or loss in the comprehensive income statement, and (c) presentation of operating cash flows by the direct method. The boards have now decided to engage in additional outreach activities in 4Q 2010 before finalising and publishing an ED. Meanwhile, in 3Q 2010 they will post to their websites a staff draft of proposed standards that reflect tentative decisions made to date. An ED is now planned for 1Q 2011, with a final standard in 4Q 2011.
    • Discontinued operations. This is a limited scope project to eliminate differences between the IFRS and US GAAP definitions of discontinued operations and related disclosures. The two boards plan an ED in 1Q 2011 and converged final standards in 4Q 2011.
  • Financial instruments with characteristics of equity. In February 2008, IASB published a Discussion Paper that invited comment on a similar November 2007 FASB discussion document. Subsequently both boards decided to pursue an approach that differs from the proposals in the FASB discussion document. The plan had been for an ED in June 2010 and final IFRS by 2Q 2011. The new plan is for an ED in 1Q 2011 and a final standard in 4Q 2011.
  • Leases. Because discussions between IASB and FASB on lessor accounting are taking longer than previously anticipated, publication of an ED has moved to 3Q 2010. However, a final converged standard is still expected in 2Q 2011.
  • Fair value measurement. The IASB has decided to issue (in late June 2010) a limited exposure draft proposing relatively minor amendments to the proposals in its May 2009 ED on fair value measurement. The amendments relate to the proposed disclosure of a 'sensitivity analysis' for Level 3 fair value measurements for all assets and liabilities measured at fair value. As a consequence, IASB's final fair value measurement standard is now planned for 1Q 2011.
  • Revenue recognition. An Exposure Draft was issued on 24 June 2010, and a final IFRS is planned for issue by 2Q 2011.
  • Post-employment benefits. An Exposure Draft was issued in April 2010. A final IFRS is planned for 1Q 2011.
  • Insurance contracts. The joint progress report acknowledges that IASB and FASB have reached different conclusions on several important technical issues in this project. The IASB plans to publish an ED in July 2010. In light of their differing views, the FASB plans to decide in July the best means for obtaining stakeholder input on the IASB proposal (for example, by publishing it as an exposure draft or in some other way). The progress report does not indicate a timetable for a final IFRS. However, the IASB's work plan on its website indicates final IFRS in 2Q 2011.
  • Emissions trading schemes. In May 2010, the boards agreed that other MoU projects had a higher priority. The boards now plan a joint ED in 2H 2011, with a final converged standard sometime in 2012.

Click for Progress Report on Commitment to Convergence of Accounting Standards and a Single Set of High Quality Global Accounting Standards (PDF 64k).

Exposure Draft on revenue

24 Jun 2010

The IASB and FASB have jointly published for public comment an exposure draft (ED) on Revenue from Contracts with Customers.

If adopted, the proposals would supersede IAS 11 Construction Contracts and IAS 18 Revenue and related interpretations. The core principle proposed in the ED would require an entity to recognise revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to receive in exchange for those goods or services. To apply that principle, an entity would:
  • Identify the contract(s) with a customer. Normally each revenue transaction is a single contract, but sometimes the elements of a multiple-element contract must be accounted for separately or, less commonly, two contracts are combined.
  • Identify the separate performance obligations in the contract. If an entity promises to provide more than one good or service, it would account for each promised good or service as a separate performance obligation only if the good or service is distinct – that is, it is or could be sold separately.
  • Determine the transaction price. Transaction price is the probability-weighted amount of consideration that an entity expects to receive. This would take into account collectibility, the time value of money, the fair value of noncash consideration, and consideration payable to a customer.
  • Allocate the transaction price to the separate performance obligations in proportion to the standalone selling prices of the goods or services underlying each performance obligation.
  • Recognise revenue when the entity satisfies each performance obligation by transferring the promised good or service to the customer. A contract for the development of an asset (for example, construction, manufacturing, and customized software) would result in continuous revenue recognition only if the customer controls the asset as it is developed.
The ED also specifies the accounting for contract costs. Costs of obtaining a contract are charged to expense when incurred. If the costs incurred in fulfilling a contract are not eligible for capitalisation in accordance with other standards (for example, IAS 2 Inventories), an entity would recognise an asset only if those costs:
  • relate directly to a contract (or a specific contract under negotiation);
  • generate or enhance resources of the entity that will be used in satisfying performance obligations in the future; and
  • are expected to be recovered.
For many companies the new approach will not change the amount or timing of revenue recognition. However, in some cases there could be a significant impact. For example, the standard would require separate up-front recognition of revenue from providing a mobile phone that is bundled, without a separate charge, as part of a contract for mobile phone services. Comment deadline on the ED Revenue from Contracts with Customers is 22 October 2010. Click for IASB Press Release (PDF 116k). Link to IAS Plus Project Page.

 

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.