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A Driving Wind for IFRS from Asia-Oceania

08 Jun 2011

The Asian-Oceanian Standard-Setters Group (AOSSG) has published today "A Vision Paper of the Asian-Oceanian Standard-Setters Group 2011 — A Driving Wind for IFRS from Asia-Oceania".

The paper describes activities of the AOSSG to date and future activities for the medium- and long-term.
The AOSSG was founded in April 2009 as a platform for the standard setters of the region to discuss problems and share experiences in the convergence process, to participate in the development of IFRSs, and to make contributions to a single set of high quality global accounting standards. The AOSSG works towards being recognised as a flag-bearer of global standard setting and sees communication with the IASB and other bodies of the IFRS Foundation to enable the IASB to prioritise its strategic initiatives with better understanding of issues in the region as one of its roles.

Please click for:


The Bruce Column – Condorsement still in the pending file

07 Jun 2011

Ugly word, interesting concept.

The US regulator, the Securities and Exchange Commission, has recently produced a staff paper on 'condorsement', an idea which first saw the light of day at the end of last year. Back then Paul Beswick, deputy chief accountant at the SEC, said that he was always being asked: 'What do I think the model looks like if the Commission decides to incorporate IFRS into the US capital markets for domestic companies'. And he then went on, without making any commitments to any particular future course of action, to describe what he thought would be 'a reasonable approach for the US'.

And this was where the word 'condorsement' made its debut. 'In our October update we highlighted that the majority of jurisdictions are following either a convergence or an endorsement approach', he said. 'In my opinion, if the U.S. were to move to IFRS, somewhere in between could be the right approach. I will call it a "condorsement" approach. Yes, I admit I just made up a word. And by the way, the patent is pending as we speak'.

Now we have some more formal and extensive thoughts on how it might work. Under the overall rubric of a : 'Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for US Issuers', and with the snappy subtitle of: 'Exploring a Possible Method of Incorporation', the idea is laid out in full.

Essentially what the staff paper does is explain what a route through the middle way might look like. It would be a journey into the land of compromise. But that is only to be expected. The whole issue of bringing the US into the IFRS fold where the rest of the world is largely now working is fraught. The largest organisations, recognising that their subsidiaries around the world already operate under IFRS, are mostly keen to join in. Smaller companies, for a wide variety of reasons, are often not so enthusiastic.

Hence 'condorsement'. This is how the staff paper explains the idea and its implications: 'This approach to incorporation is in essence an Endorsement Approach that would share characteristics of the incorporation approaches with other jurisdictions that have incorporated or are incorporating IFRS into their financial reporting systems. However, during the transitional period, the framework would employ aspects of the Convergence Approach to address existing differences between IFRS and US GAAP. Importantly, the framework would retain a US standard setter and would facilitate the transition process by incorporating IFRSs into US GAAP over some defined period of time (e.g., five to seven years)'.

This is a way of squaring the circle without upsetting any vested interests too much. In particular the US standard-setter, the FASB, would continue to have a role. 'The FASB', the paper suggests, 'would continue to promulgate US GAAP primarily through its endorsement of standards promulgated by the IASB'. It is a way of reassuring smaller corporate organisations that their voice will still be heard. As the paper says in its overview of the benefits and risks of this approach: 'Incorporation of IFRS through the framework could advance the United States toward the broader objective of a single set of high-quality, globally accepted accounting standards, while enabling US constituents to more effectively manage the costs and efforts necessary to reach that objective, through phased transition to and, in many cases, prospective application of IFRSs'.

But the paper also recognises a serious downside when it comes to the largest corporate organisations in the US. 'However', it says, 'some US issuers might contend that a gradual transition would not be in their best interest or in the interests of their investors, particularly in the absence of an option to voluntarily report under IFRS today. Through its outreach, the Staff has been informed that certain US issuers may prefer date-certain, full adoption of IFRS or at least have the option to move to IFRS using a big-bang approach. In many cases, these issuers are among the largest multinational corporations with foreign subsidiaries that have already incorporated or are prepared to incorporate IFRS into their local financial reporting systems. Therefore, these issuers may have financial and human capital resources to facilitate a big-bang incorporation of IFRS. For these issuers, the slower pace of gradual transition may be viewed as unnecessary, and any benefit diminished by the complexities of operating in an environment of change for an extended period'.

And it then goes on to say that: 'Additionally, a gradual transition to IFRS could be perceived by certain constituents as evidence of a current lack of US commitment to fully incorporate IFRS. A transition plan that was executed over some period and that was deliberately designed to allow for change based on unknown future circumstances could introduce elements of uncertainty into the US overall commitment to transition. This uncertainty may cause certain foreign constituents to question whether the ultimate goal of IFRS incorporation would be achieved successfully in the United States despite any assurances provided by those integral to the transition plan'.

The word 'uncertainty' is not something which enthuses global businesses. And, as the staff paper points out, there is more uncertainty, if not downright confusion, possible in this approach. 'A further risk associated with a gradual transition to IFRS is that such a strategy could cause confusion for US constituents during the transition period', it says. 'Until the date at which US GAAP was fully aligned with IFRS (potentially five or more years into the future), US GAAP would be an evolving set of standards that was neither US GAAP as applied currently, nor IFRS as issued by the IASB. During the transition period, US constituents would need to actively monitor progress on the transition plan and stay abreast of the potentially frequent changes made to US GAAP. As noted previously, the measure of success of any approach to incorporation would include focus on whether US constituents were provided meaningful and understandable financial information during transition. This measure of success could be impacted adversely if the pace and volume of change during transition was a source of confusion'.

The SEC wants feedback on its 'condorsement' paper before the end of July. But it is abundantly clear from the paper that the SEC staff believes 'condorsement' comes into the category of a 'could do' idea for now, rather than a 'should do'. And it is also clear that the SEC is committed to the option of IFRS being the effective financial reporting language for the US, bringing it into line with the rest of the world, within a few years time. That option is still there, 'condorsement' or not. The patent on 'condorsement' may be pending for a while longer.

Robert Bruce June 2011

Related links

Agenda for the regular June IASB meeting

07 Jun 2011

The IASB's regular monthly meeting is scheduled for 13-15 June 2011 in London, much of it a joint meeting with the FASB.

You can access the agenda on our June 2011 IASB meeting page.  We will also post Deloitte observer notes on this page as they are available.

Near Final Draft of amendments to IAS 1

07 Jun 2011

The IASB has released a Near Final Draft (NFD) of amendments to IAS 1 Presentation of Financial Statements to change how components of other comprehensive income (OCI) are presented.

The IASB has released a Near Final Draft (NFD) of amendments to IAS 1 Presentation of Financial Statements to change how components of other comprehensive income (OCI) are presented.

The amendments:

  • preserve the amendments made to IAS 1 in 2007 to require profit or loss and OCI to be presented together, i.e. either as a single statement of comprehensive income, or separate income statement and a statement of comprehensive income (rather than requiring a single continuous statement as was proposed in the exposure draft)
  • require entities to group items presented in OCI based on whether they are potentially reclassifiable to profit or loss subsequently. i.e. those that might be reclassified and those that will not be reclassified
  • do not change the option to present items of OCI either before tax or net of tax, however tax associated with items that are presented before tax must be shown separately for each of the two groups of OCI items.

The amendments are expected to be issued later this month and will apply to reporting periods beginning on or after 1 July 2012. Click for:


Near Final Draft of amendments to IAS 19

06 Jun 2011

The IASB has released a Near Final Draft (NFD) of amendments to its standard on accounting for pensions and other postretirement benefits (OPEB).

This project forms part of the Memorandum of Understanding between the IASB and the FASB and represents the first step in a broader reconsideration of the accounting for pensions and OPEB. The IASB believes the amendments will yield significant improvements to the transparency and comparability of pension obligations. The following areas are affected by the amendments:
  • recognition of changes in the net defined benefit liability (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements;
  • disclosures about defined benefit plans;
  • accounting for termination benefits, including distinguishing benefits provided in exchange for service and benefits provided in exchange for the termination of employment and affect the recognition and measurement of termination benefits;
  • miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features; and
  • other matters submitted to the IFRS Interpretations Committee.

Access to the NFD on the IASB's website is for subscribers only. The publication of the amended IAS 19 is expected later this month.

Proposed guidance from AICPA on evaluating XBRL information

06 Jun 2011

The XBRL Assurance Task Force of the AICPA Assurance Services Executive Committee (ASEC) has issued an exposure draft titled Proposed Principles and Criteria for XBRL-Formatted Information.

The exposure draft includes a set of principles and criteria for preparers, reviewers, and practitioners to use in evaluating information formatted in eXtensible Business Reporting Language (XBRL).

The exposure draft outlines the following four principles for use in evaluating the quality of XBRL-formatted information, designed to be applied in accordance with the requirements of the entity's reporting environment:

  • Completeness – All required, and only permitted, information is formatted at the required levels
  • Mapping – The elements selected are consistent with the meaning of the associated concepts in the source information
  • Accuracy – The amounts, dates, other attributes (for example, monetary units), and relationships (order and calculations) in the instance document and related files are consistent with the source information
  • Structure – XBRL files are structured in accordance with the requirements of the entity's reporting environment.

Comments on the exposure draft are requested by 15 July 2011. Click for Press release (link to AICPA website).

New appointments to the IFRS Interpretations Committee

06 Jun 2011

The Trustees of the IFRS Foundation, the oversight body of the International Accounting Standards Board (IASB), has announced appointments and reappointments to the IFRS Interpretations Committee.

The Trustees of the IFRS Foundation, the oversight body of the International Accounting Standards Board (IASB), has announced appointments and reappointments to the IFRS Interpretations Committee.

The new members of the Committee are as follows:

  • Charlotte Pissaridou, Managing Director, Head of Accounting Policy for Europe, Middle East and Africa, Goldman Sachs International, UK (three-year term, replacing Jean-Louis Lebrun)
  • Kazuo Yuasa, General Manager, IFRS Office, Corporate Finance Unit, Fujitsu Limited, Japan (one-year term, replacing Takatsugu Ochi, who has been appointed as a member of the IASB from 1 July 2011)

In addition, five members of the Committee complete their term at the end of June 2011 and have been reappointed for a further three-year term. They are: Joanna Perry, Luca Cencioni, Jean Paré, Margaret Smyth and Scott Taub.

Click for IFRS Foundation announcement (link to IASB website).

IVSC releases updated proposals on ethical principles for professional valuers

06 Jun 2011

The International Valuation Standards Committee (IVSC) has released revised proposals for a Code of Ethical Principles aimed at providing better regulation of the global valuation profession.

The International Valuation Standards Committee (IVSC) has released revised proposals for a Code of Ethical Principles aimed at providing better regulation of the global valuation profession.

The exposure draft is an update to an initial set of proposals issued during 2010. Key changes include:

  • expanding the guidance on the application of the five 'Fundamental Ethical Principles' (integrity, objectivity, professional competence and due care, confidentiality and professional behaviour)
  • replacing the original material focusing on the application of the Fundamental Principles with guidance that has a broader context and generally avoids detailed rules requiring or forbidding specific actions
  • removing some rules that dealt with the execution of a valuation assignment rather than ethical issues.

Comments on the exposure draft are requested by 31 August 2011. Click for access to the exposure draft (link to IVSC website).

Deloitte publications update

05 Jun 2011

The following Deloitte publications are now available: .

The following Deloitte publications are now available:

Global Publications

Deloitte (Australia)

  • Monthly Roundup May 2011 – highlights the new batch of standards forming the 'next wave', new Accounting alerts on topical issues for 30 June 2011 reporting and Trans-Tasman convergence.

Deloitte (China)

Deloitte (Japan)

Deloitte (United States)

FASB launches educational webcast series

03 Jun 2011

The Financial Accounting Standards Board (FASB) has announced the launch of an educational 'IN FOCUS' webcast series focusing on financial accounting and reporting developments of importance to the FASB's stakeholders, such as recently issued final standards, Exposure Drafts, or changes to the US GAAP Financial Reporting Taxonomy.

The first in the series, entitled IN FOCUS: FASB Update for Nonpublic Entities (link to FASB website) will take place on Friday, June 17, from 1:00 to 2:40 p.m. EDT (US). The webcast will include topics such as the FASB's strategic review of standard setting for nonpublic entities, progress on the FASB-IASB convergence programme, and other active projects or recently-issued standards of interest to nonpublic entities. A subsequent webcast focused on the US GAAP Financial Reporting Taxonomy will be held on Wednesday, June 22, 2011.

Continuing professional education (CPE) credit is available for those participating in the live broadcasts. Click for FASB announcement (link to FASB website).

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