March

IASB Chairman addresses EU finance ministers

16 Mar 2010

On 16 March 2010, IASB Chairman Sir David Tweedie addressed a meeting of the Finance and Economic Ministers of the European Union member states.

He reported on the progress that the IASB has made in achieving the 2011 convergence target set out by the G20, and issues related to the financial crisis raised by the G20 and the European Union. Click to download Sir David's Prepared Statement (PDF 26k).

IOSCO principles of data collection for hedge funds

15 Mar 2010

The International Organization of Securities Commissions' (IOSCO) Technical Committee has published details of an agreed template for the global collection of hedge fund information.

The template is intended to enable the collection and exchange of consistent and comparable data amongst regulators and other competent authorities to facilitate international supervisory cooperation in identifying possible systemic risks in this sector. IOSCO believes that participants are best monitored through their trading activities, the markets they operate in, funding and counterparty information, amongst others.

There are 11 proposed categories of information which incorporate both supervisory and systemic data and build on the data collection recommendations set out in its final report on Hedge Fund Oversight (June 2009). Those categories are:

  • General manager and adviser information
  • Performance and investor information related to covered funds
  • Assets under management
  • Gross and net product exposure and asset class concentration
  • Gross and net geographic exposure
  • Trading and turnover issues
  • Asset/liability issues
  • Borrowing
  • Risk issues
  • Credit counterparty exposure
  • Other issues
IOSCO recommends that the first data gathering exercise should be carried out on a best efforts basis (given pending legislation in many jurisdictions) in September 2010. Click for:

Updated summary of IFRIC agenda rejections

13 Mar 2010

We have updated our Summary of Issues Not Added to IFRIC's Agenda to reflect the IFRIC's final decisions at its March 2010 meeting not to add the following topics to its agenda.

Our summary now includes 180 issues:
  • IAS 21 The Effects of Changes in Foreign Exchange Rates – Determination of functional currency of an investment holding company
  • IAS 32 Financial Instruments: Presentation – Shareholder discretion
  • IAS 36 Impairment of Assets – Interaction with transition requirements of IFRS 8
  • IAS 39 Financial Instruments: Recognition and Measurement – Unit of account for forward contracts with volumetric optionality

 

DTT members respond to EC consultation on the IFRS for SMEs

13 Mar 2010

The member firms of Deloitte Touche Tohmatsu (DTT) located in the European Economic Area (EEA) have submitted a joint response to the European Commission's consultation on the IFRS for Small and Medium-sized Entities.

The Commission launched the consultation in November 2009 to gain an understanding of EU stakeholders' views on the IFRS for SMEs. The Commission said that the responses will assist the Commission in its ongoing review of the Accounting Directives. The firms' overall view:

We believe that the IFRS for SMEs is suitable for widespread use within Europe and for companies of any type and size, providing such entities are preparing general purpose financial statements. IFRS for SMEs is a high quality, global, principles-based standard that has been developed by specialists from around the world through an extensive consultative process and we believe its adoption would benefit users (by increased comparability of financial statements) and preparers (through reduced costs for groups of companies and economies of scale generally) and would serve to facilitate cross-border trade, services, including accounting and audit, and movement of capital. In the European context, we believe this can contribute to making the internal market a reality for smaller businesses as well as benefit the many companies not listed on a regulated market that do operate across borders in the EU. There may also be reduced costs for Member State standard setters.

Click to download:

Notes from Special 11 March Joint IASB-FASB meeting

12 Mar 2010

The IASB and FASB held a special joint meeting at the IASB's offices in London on Thursday, 11 March 2010. Click here to go to the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.

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

Conceptual Framework ED on reporting entity

11 Mar 2010

The IASB and the US Financial Accounting Standards Board (FASB) have published for public comment an exposure draft (ED) on the reporting entity concept.

The proposals form part of a Joint Project to develop a common and improved conceptual framework that provides the basis for developing future accounting standards. The boards published a discussion paper on the Reporting Entity Concept in May 2008. Respondents broadly supported the boards' preliminary views. In response to those comments the ED proposes what a reporting entity is and when an entity controls another entity. A summary is below:

What is a reporting entity?

A reporting entity is a circumscribed area of economic activities whose financial information has the potential to be useful to existing and potential equity investors, lenders and other creditors who cannot directly obtain the information they need in making decisions about providing resources to the entity and in assessing whether the management and the governing board of that entity have made efficient and effective use of the resources provided.

When does one entity control another entity (resulting in a combined reporting entity)?

An entity controls another entity when it has the power to direct the activities of that other entity to generate benefits for (or limit losses to) itself. If an entity that controls one or more entities prepares financial reports, it should present consolidated financial statements.

Can a portion of an entity be a reporting entity?

A portion of an entity could qualify as a reporting entity if the economic activities of that portion can be distinguished objectively from the rest of the entity and financial information about that portion of the entity has the potential to be useful in making decisions about providing resources to that portion of the entity.

Comments on the ED are invited by 16 July 2010.

 

IASB webcast on presenting comprehensive income

10 Mar 2010

On 15 March and again on 19 March 2010, the IASB will host live webcasts on the Board's deliberations about the presentation of items in Other Comprehensive Income.

The two webcasts are identical. The second one will be held on a different day to fit around the Board meeting schedule that week. There is no charge to participate, but registration is required. Participants will have an opportunity to submit written questions during the webcast.
  • Webcast Topic: Presentation of items in Other Comprehensive Income
  • Date and Time:
    • Monday, 15 March 2010, 10:00-11:00am London time, and again on
    • Friday, 19 March 2010 15:30-16:30pm London time
  • IAS Plus Project Page: Comprehensive Income.

 

New IAS Plus country page for Kuwait

10 Mar 2010

We have created a new Country Page for Kuwait on IAS Plus.

Kuwait has long been an IFRS country. Since 1990, the Kuwait Ministry of Commerce has required companies and institutions of all legal types, listed and unlisted, to prepare their financial statements in accordance with IFRSs. Possible adoption of the IFRS for SMEs is under study.

 

Possible exemption of EU micros from financial reporting

10 Mar 2010

The European Parliament has voted to exempt very small companies ('micro-entities') from the existing EU-wide laws that require them to prepare annual financial statements.

The Parliament's action still must be approved by the EU Council before it becomes law. If approved, it would then be up to each EU Member State to grant such exemptions. Parliament's resolution also calls for a general revision of the 4th and 7th Company Law Directives in 2010. Currently, about 7.2 million EU companies are subject to reporting rules under EU accounting directives. Of those, 5.4 million (around 75%) are 'micro-entities' primarily engaged in business at local or regional level, with little or no cross-border activity. Click for EU Parliament Press Release (PDF 109k).

UK FSA warns of an 'accounting mismatch'

10 Mar 2010

The United Kingdom's Financial Services Authority (FSA, the banking and securities regulator) has published a report Financial Risk Outlook 2010.

The report cautions financial institutions that 'accounting mismatches' have the potential to report profits in a deteriorating economy – which the FSA is predicting. This could happen because accounting allows asset-backed securities to be measured at amortised cost while related credit default swaps are measured at fair value through profit or loss. FSA reminds financial institutions to be clear in their disclosures about this.

The future evolution of risks may be misinterpreted due to accounting mismatches. Accounting mismatches created by the different treatment of trading books and banking books create the danger that the future evolution of risks will not be clearly understood and communicated. Prior to the crisis, many banks and investment banks executed negative basis trades, holding asset-backed securities (ABS) and buying CDS [credit default swap] protection against them. Both parts of the trade were initially held in the trading book. Subsequently, some banks have – under permitted accounting treatment – transferred the ABS to the banking book, while leaving the CDS in the trading book. Under this treatment, any future deterioration in the economy, with a resulting widening of credit spreads, will deliver an immediate profit in trading books, with ABS values unchanged in the banking books, until actual default leads to impairment of assets.

Click for:

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.