May

Deloitte comment letters on liabilities

19 May 2010

Deloitte's IFRS Global Office has submitted letters of comment to the IASB on two related comment documents: Comment letter on Exposure Draft 2010/01: Measurement of Liabilities in IAS 37; Comment letter on the Working Draft IFRS: Draft IFRS Liabilities. We express an important disagreement with ED 2010/01:

We disagree with the Board's decision to limit re-exposure of the revised IAS 37 to the revised measurement proposals only, and not provide constituents with an opportunity to comment on the entire draft Standard. The aspects of the proposals in the 2005 Exposure Draft to which we (and many other respondents) were strongly opposed were not limited to the measurement guidance. Furthermore, to express a view on the proposed measurement guidance in the 2010 Exposure Draft, it is fundamental that the scope, definitions and recognition criteria, to which this guidance is expected to apply, are understood. The Board made the entire draft Standard publicly available on 19 February 2010 but has given respondents no formal opportunity to comment on other aspects of the draft Standard, which may have a bearing on the measurement guidance if adopted as proposed. In so doing, we do not believe that the Board has adhered to the spirit of due process.
We make a similar comment in our letter on the Working Draft:

We urge the IASB to consider all unsolicited comments on the sections of the working draft other than the measurement proposals. We believe that the proposed change to the recognition criteria is so significant and so inextricably linked to the measurement guidance that it cannot be understood in isolation and without putting it within the context of the entire draft Standard.

All of our past letters of comment to the IASB are Here.
Click for:
Comment letter on Exposure Draft 2010/01: Measurement of Liabilities in IAS 37
Comment letter on the Working Draft IFRS: Draft IFRS Liabilities

 

SEC Chair reaffirms commitment to global standards

19 May 2010

In a presentation to the annual conference of the CFA Institute, US SEC Chairman Mary Schapiro reaffirmed the SEC's commitment to developing a 'single set of high-quality, globally-accepted accounting standards which will benefit U.S. investors and investors around the world.'

In her presentation, she debunked several 'myths' about the SEC and IFRSs. Click to download Chairman Schapiro's Remarks (PDF 41k). Here are some excerpts about the myths:

Myth #1: The SEC's commitment to global accounting standards is not as strong as it should be.

Let's put this one to rest, right away. And, I can do that by citing the official text of our Commission Statement in Support of Convergence and Global Accounting Standards. In February we clearly stated:

'The Commission continues to believe that a single set of high quality globally accepted accounting standards will benefit U.S. investors and that this goal is consistent with our mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation. As a step toward this goal, we continue to encourage the convergence of U.S. GAAP and IFRS and expect that the differences will become fewer and narrower, over time, as a result of the convergence project.'

That should be clear. So let's move on.

Myth #2: The U.S. may be committed, but it's dragging its feet regarding adoption of IFRS

This too is wrong. To be clear, while I strongly believe in our commitment to high quality accounting standards, I believe just as strongly that this commitment is only the beginning of the discussion, not the end.

The convergence process is critical to the incorporation of IFRS into the U.S. market. The IASB and FASB must remain vigilant that investors needs and protection remain paramount throughout the process.

While the FASB and the IASB have been working diligently to reach common solutions to difficult financial reporting issues, U.S. GAAP and IFRS are currently not converged in a number of key areas. These include the accounting for financial assets (the very types of securities at the center of the financial crisis), revenue recognition, consolidation principles, and leases.

While redoubling efforts to achieve the goal of convergence in a timely manner is important, a convergence effort that fails to take into account the due processes of the standard setting bodies will not serve investors well in the long run.

It is important that we take the time to solicit, receive and analyze input from companies, investors and other stakeholders who will ultimately have to put into practice and make use of new standards.

In addition, processes put in place by the FASB and the IASB to ensure the integrity of the final standards should be respected in both spirit and letter. Giving short shrift to process and testing, would increase the risk of poor decisions. We are committed to convergence. But we are committed, above all, to a convergence exercise that yields high-quality improvements to accounting standards.

And the fact is, we are moving forward. We are executing on a comprehensive work plan, dedicating significant resources to it and providing periodic progress reports on it. Our next report will be released in October of this year.

This leads naturally to:

Myth #3: The United States is fixated on process.

Inaccurate. The United States understands the importance of process to a successful conclusion. We will not accept shortcuts that undermine our larger goals or risk compromising the achievement of high quality global standards.

A critical part of the standards-setting process is ensuring that the IASB and the FASB are shielded from undue political or commercial pressure, particularly now, as they work to finalize a number of their current joint projects.

Like the FASB, the IASB has in place structural safeguards designed to withstand commercial, political, and other influences that might obscure the goal of high-quality, neutral accounting standards. Among these safeguards is a Monitoring Board comprised of public capital market authorities, and of which I am a voting member.

The Monitoring Board creates an oversight relationship between the standard-setting organization and governmental authorities. It allows regulators to ensure that the mandate to protect investors, market integrity, and capital formation are discharged as convergence moves forward, and enhances that credibility further.

Although it makes the process of agreeing on global standards more complicated, the presence of the Monitoring Board – as well as other procedural safeguards – is critical to achieving the best possible results.

Myth #4: America is protecting its parochial interests.

No. What we are protecting are the interests of the investors in our markets, and we always will – that's what the Securities and Exchange Commission does. When investors – from anywhere across the globe – participate in our markets, they come under the SEC's umbrella of protection.

But even with this protection, we can and must continue working together across borders. The global economy is too intertwined and too interdependent to tolerate parochial interests. Our goal is to ensure a neutral process that results in rules that give capital market participants everywhere access to information on the financial performance and position of companies, so that they are able to make informed economic decisions. Accounting standards must provide transparency for investors, and must not obscure the truth, even if the truth is painful.

 

Notes from May 2010 IASB meeting day 2

19 May 2010

The IASB is holding its May 2010 monthly Board meeting at its offices in London on Monday to Thursday, 17-20 May 2010. Portions of the meeting are joint meetings with FASB.

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

 

Two appointed as IASC Foundation vice chairs

18 May 2010

Following recommendation by the IASC Foundation Trustees, the IASCF Monitoring Board has approved the appointment of two current IASCF Trustees as Vice-Chairs of the Trustees, for three-year terms: Tsuguoki (Aki) Fujinuma of Japan and Robert R. Glauber of the United States.

  • Tsuguoki (Aki) Fujinuma of Japan is Past Chairman and President, Japanese Institute of Certified Public Accountants, and Former President of IFAC (International Federation of Accountants).
  • Robert R Glauber is currently a Lecturer at Harvard's Kennedy School of Government and was a Visiting Professor at Harvard Law School. Previously, he served as Chairman and Chief Executive Officer of NASD (now FINRA), the private-sector regulator of the US securities markets, and as Under Secretary of the Treasury for Finance.
  • Click for:

     

    Notes from May 2010 IASB meeting day 1

    18 May 2010

    The IASB is holding its May 2010 monthly Board meeting at its offices in London on Monday to Thursday, 17-20 May 2010. Portions of the meeting are joint meetings with FASB.

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

     

    Newsletter on employee benefits exposure draft

    17 May 2010

    Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Closing the Corridor – IASB Proposes Significant Changes to Pension Accounting.

    On 29 April 2010, the IASB issued an exposure draft (ED) of proposed amendments to IAS 19 Employee Benefits. Among the amendments proposed to IAS 19 are:
    • Immediate recognition of all estimated changes in the cost of providing defined benefits and all changes in the value of plan assets. This would eliminate the various methods currently in IAS 19, including the 'corridor' method, that allow deferral of some of those gains or losses.
    • A new presentation approach that would clearly distinguish between different types of gains and losses arising from defined benefit plans. Specifically, the ED proposes that the following changes in benefit costs should be presented separately:
      • service cost – in profit or loss
      • finance cost (that is, net interest on the net defined benefit liability) – as part of finance costs in profit or loss
      • remeasurement – in other comprehensive income
      Comment deadline on the ED Defined Benefit Plans is 6 September 2010.

    Click for IAS Plus Newsletter: Closing the Corridor — IASB Proposes Significant Changes to Pension Accounting

     

     

    Revised agenda for May 2010 IASB meeting

    15 May 2010

    The IASB has revised the agenda for its monthly meeting for May 2010, which we had previously posted on 8 May.

    The meeting will be held at the IASB's offices in London on Monday to Thursday 17-20 May 2010 (no meeting on Friday 21 May). Portions of the meeting are joint meetings with FASB. The meeting will be open to public observation and will be webcast. Presented below is the revised agenda for the meeting.

    IASB Board Meeting Revised Agenda17-20 May 2010, London

    Monday 17 May 2010

    IASB-FASB Joint Meeting (13:00-15:00pm London Time)

    Tuesday 18 May 2010

    IASB-FASB Joint Meeting (08:00-18:30pm London Time)

    Wednesday 19 May 2010

    IASB-FASB Joint Meeting (08:00-13:15pm London Time)

    IASB Meeting (14:00-17:30pm London Time)

    Thursday 20 May 2010

    IASB Meeting (09:30-14:45pm London Time)

    IASB/IASCF complete another IFRS for SMEs workshop

    14 May 2010

    The IASB and IASCF have completed the third three-day workshop to 'train the trainers' on the IFRS for Small and Medium-sized Entities.

    The workshop was sponsored by the Eastern, Central and Southern African Federation of Accountants (ECSAFA) and hosted in Dar es Salaam, Tanzania, by the National Board of Accountants and Auditors of Tanzania. It was funded, in part, by The World Bank. Instructors were Paul Pacter, the IASB's Director of Standards for SMEs (and Board Member-designate), and Michael Wells, Director of the IASCF's IFRS Education Initiative. There were 100 participants from 10 countries: Democratic Republic of Congo, Ethiopia, Kenya, Malawi, Rwanda, South Africa, Swaziland, Tanzania, Uganda, and Zimbabwe. All participants have committed to organise similar IFRS for SMEs training workshops in their own country. The IASB will provide the training materials and PowerPoint presentations (totalling 24 contact hours) for those workshops. Similar IASB/IASCF workshops are scheduled for Cairo (June 2010) and Panama (October 2010). For more information contact Michael Wells at mwells@iasb.org.

    IFRS for Small and Medium-size Entities

     

    Newsletter on Improvements to IFRSs 2010

    13 May 2010

    Deloitte's IFRS Global Office has published an IAS Plus Update Newsletter – Improvements to IFRSs 2010.

    On 6 May 2010, the IASB issued Improvements to IFRSs – a collection of amendments to seven IFRSs – as part of its program of annual improvements to its standards. Some of the amendments are effective for annual periods beginning on or after 1 January 2011, and others for annual periods beginning 1 July 2010, although entities are generally permitted to adopt them earlier. Sections of the newsletter include:
    • Changes from the exposure draft
    • Amendments likely to significantly change current practice
    • Details of amendments, including effective dates and transition

    Click for IAS Plus Update Newsletter: Improvements to IFRSs 2010

    Deloitte IASB-FASB 'Financial instruments roundtable'

    13 May 2010

    Deloitte (United States) will hold a roundtable discussion of the joint financial instruments project by the Financial Accounting Standards Board and the International Accounting Standards Board in New York on Monday, 7 June 2010 from 8:30am to 1:00pm (New York time).

    During this roundtable we will provide updates on:
    • FASB's expected ED and the proposed changes to financial instruments accounting, including fair value, impairment, and hedge accounting, resulting from the issuance of the ED
    • IASB's project to replace IAS 39 including IFRS 9 Financial Instruments, and the most recent deliberations on the impairment of financial assets, hedge accounting, and the derecognition ED

     

    Correction list for hyphenation

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