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New Accounting Act brings changes for Czech separate financial statements

25 Apr 2011

On 1 January 2011, the amended Accounting Act came into force in the Czech Republic.

It brings a significant change in the use of IFRS as adopted by the EU for unlisted entities operating in the Czech Republic in terms of separate financial statements. Companies which follow IFRSs as adopted by the EU for their consolidated financial statements and companies which are part of a group which reports consolidated financial statements under IFRS as adopted by the EU are now permitted to use IFRSs as adopted by the EU also for their separate financial statements.

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EFRAG welcomes extension of the convergence deadline

23 Apr 2011

The European Financial Reporting Advisory Group (EFRAG) has posted to its website a press release welcoming the extension of the convergence deadline the IASB and FASB announced earlier this month.

Françoise Flores, EFRAG Chairman, is convinced that "[t]he supplementary consultation steps the IASB and FASB have introduced will help tremendously in the finalisation of the standards on Revenue Recognition, Leases, Insurance Contracts and Financial Instruments. It will give European stakeholders the comfort that their concerns will be properly addressed." The European National Standard Setters (NSS) and EFRAG have organised outreach events throughout Europe in May 2011, in order to provide useful input to the IASB for completion of the projects and to ensure that the final standards are suitable for use in Europe.

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Push for sustainability reporting

21 Apr 2011

The push towards the more widespread adoption of sustainability reporting continues, with two recent developments.

The Global Reporting Initiative (GRI) has launched the 'Report or Explain Campaign Forum' to encourage more companies to be transparent about their impacts on the world. The Campaign Forum spotlights initiatives that are driving a 'report or explain approach' to sustainability reporting, and features an information bank on global policy developments.

Carbon Action is a new investor led initiative from the Carbon Disclosure Project (CDP) to request companies to implement cost-effective greenhouse gas emissions reductions. The world's largest companies in the FTSE Global Equity Index Series (the Global 500) are being sent a request to join the Carbon Action programme. Companies will be asked to demonstrate their actions by disclosing them, including any examples of best practice, through the established 2011 CDP information system.

The International Integrated Reporting Committee (IIRC) is working towards presenting an integrated reporting proposal to the G20 later in 2011, which may include a 'report or explain' regulatory proposal. The Climate Disclosure Standards Board (CDSB), of which the CDP is the Secretariat, and the GRI are both involved in the IIRC. Click for:


Agenda for May 2011 IFRS Interpretations Committee meeting

21 Apr 2011

The IFRS Interpretations Committee will meet at the IASB's offices in London on Thursday and Friday 5 and 6 May 2011. The meeting is open to the public and will be webcast.

The tentative agenda is shown below.

Agenda for the Interpretations Committee MeetingThursday and Friday, 5 and 6 May 2011

Thursday 5 May (10:00h-17:45h)

Friday 6 May (09:00h-14:15h)
  • New items for initial consideration (continued)
    • IAS 19 Employee Benefits – Defined contribution plans with vesting conditions
    • IAS 27 Consolidated and Separate Financial Statements – Group reorganisation in separate financial statements
    • IAS 27 Consolidated and Separate Financial Statements – Contributions to a jointly-controlled entity or associate
    • IAS 28 Investments in Associates – Accounting for share of changes in associate's net assets
    • IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRS 6 Exploration for and Evaluation of Mineral Resources – Use of IFRIC 6 by analogy
  • Administrative session – Interpretations Committee work in progress



IASB and FASB issue progress report on convergence programme

21 Apr 2011

The International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have published a progress report on improvements to International Financial Reporting Standards and US generally accepted accounting practices and their convergence.

The report notes that the boards have:
  • Completed five projects — as mentioned in our previous article, the IASB will be issuing new standards on consolidation, joint ventures, and disclosures.
  • Given priority to the three remaining MoU projects and insurance accounting — the boards have made substantial progress on their projects on financial instruments, leases, revenue recognition, and insurance projects.
  • Extended the timetable on convergence projects — the convergence projects are now scheduled for completion in the second half of 2011.

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IASB publishes near final drafts on consolidation, joint ventures and disclosures

21 Apr 2011

The IASB published a 'near final draft' of the forthcoming package of five new and revised standards addressing the accounting for consolidation, involvements in joint arrangements and disclosure of involvements with other entities.

The final standards are expected to be published in the next few weeks.

Each of the five standards will have an effective date for annual periods beginning on or after 1 January 2013, with earlier application permitted so long as each of the other standards in the package of five' are also early applied. However, entities will be permitted to incorporate any of the disclosure requirements in IFRS 12 into their financial statements without technically early applying the provisions of IFRS 12 (and thereby each of the other four standards).

The 'package of five' standards

IFRS 10 Consolidated Financial Statements

IFRS 10 will replace the consolidation guidance in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities by introducing a single consolidation model for all entities based on control, irrespective of the nature of the investee (i.e., whether an entity is controlled through voting rights of investors or through other contractual arrangements as is common in special purpose entities). Under IFRS 10, control will be based on whether an investor has 1) power over the investee; 2) exposure, or rights, to variable returns from its involvement with the investee; and 3) the ability to use its power over the investee to affect the amount of the returns.

IFRS 11 Joint Arrangements

IFRS 11 will introduce new accounting requirements for joint arrangements, replacing IAS 31 Interests in Joint Ventures. The option to apply the proportional consolidation method when accounting for jointly controlled entities will be removed. Additionally, IFRS 11 will eliminate jointly controlled assets to now only differentiate between joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities. A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets.

IFRS 12 Disclosures of Involvement with Other Entities

IFRS 12 will require enhanced disclosures about both consolidated entities and unconsolidated entities in which an entity has involvement. The objective of IFRS 12 is to require information so that financial statement users may evaluate the basis of control, any restrictions on consolidated assets and liabilities, risk exposures arising from involvements with unconsolidated structured entities and non-controlling interest holders' involvement in the activities of consolidated entities.

IAS 27 Separate Financial Statements (2011)

The requirements relating to separate financial statements will remain unchanged and will be included in the amended IAS 27. The other portions of IAS 27 will be replaced by IFRS 10.

IAS 28 Investments in Associates and Joint Ventures (2011)

IAS 28 will be amended for conforming changes based on the issuance of IFRS 10, IFRS 11 and IFRS 12.

The near final drafts are available to eIFRS subscribers (link to IASB website).

Special Due Process Oversight Committee section on the IASB's website

21 Apr 2011

The IFRS Foundation Trustees' Due Process Oversight Committee (DPOC) has a new section dedicated to its work on the IASB's website.

You can browse the section by date of the DPOC activity or by standard, find out about DPOC membership and read meeting summaries, agenda papers and press releases. Click for the new DPOC section on the IASB's website.


Latest batch of editorial corrections to IFRSs released by the IASB

21 Apr 2011

The IASB has posted to its website a new batch of Editorial Corrections to IFRSs.

This batch makes editorial corrections and changes to IFRS 9 Financial Instruments (issued October 2010), Bound Volume (Blue Book) 2011 and Bound Volume (Red Book) 2011.

Deloitte issues comment letter on offsetting exposure draft

20 Apr 2011

Deloitte's IFRS Global Office has submitted a letter of comment on exposure draft ED/2011/01 'Offsetting Financial Assets and Financial Liabilities'.

The comment letter expresses Deloitte's views on the IASB and FASB's efforts to converge presentation requirements for offsetting financial assets and financial liabilities. The following is an excerpt from the letter:

The Boards have concluded that the presentation of gross amounts of financial assets and financial liabilities generally provides more relevant information than a net presentation and that a gross presentation aligns more closely with the Conceptual Framework's emphasis on providing users with information about the reporting entity's future cash flows. We agree with this conclusion.

We also observe, however, that during the Boards' outreach efforts, users expressed a view that both gross and net information is useful and necessary for analysing financial statements. We therefore encourage the Boards to explore a linked presentation model...where a right of setoff will occur only upon a party's failure to pay or deliver (including in bankruptcy or insolvency), either because (1) the right is conditional or (2) the right is unconditional but the entity otherwise does not have the intent to invoke such right except upon default.

Click to Download our Comment Letter (PDF 71k). All of our past comment letters are here.

SEC announces roundtable on IFRS

20 Apr 2011

The U.S. Securities and Exchange Commission (SEC) will hold a roundtable on 7 July in Washington to discuss benefits and challenges in incorporating International Financial Reporting Standards (IFRS) into the financial reporting system for U.S. issuers.

The roundtable will feature three panels representing investors, small public companies, and regulators. The focus of the discussion will be on investor understanding of IFRS and the impact on smaller public companies and on the regulatory environment of incorporating IFRS.

Click for SEC press release (link to SEC website).

Correction list for hyphenation

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