FAF seeks participants for post-implementation review survey of Statement 141R

31 Jul 2012

The US Financial Accounting Foundation (FAF) is seeking participants for the post-implementation review (PIR) survey of FASB Statement No. 141R 'Business Combinations'. The FAF will use the information from the PIR survey to evaluate the effectiveness of the standard-setting process of the Financial Accounting Standards Board (FASB). The FAF will give the results of the PIR to the FASB for it to consider in its future standard-setting processes.

The PIR process conducted by the FAF is independent of the standard-setting process of the FASB.  This differs from the PIR process for IFRSs where only the IASB conducts the PIR; there is no independent reviewing organisation.

The IASB expects to begin its PIR on business combinations (IFRS 3) later this year. The IASB and FASB worked together in developing their business combination standards as part of their convergence efforts. However, it is unclear at this time the extent to which the IASB and the FASB will coordinate their PIR processes.

More information on the FAF post-implementation review of Statement 141R is available on the FAF website.

EFRAG and OIC issue questionnaire on impairment requirements for goodwill

31 Jul 2012

The European Financial Reporting Advisory Group (EFRAG) and the Italian standard setter Organismo Italiano di Contabilita (OIC) have jointly issued a questionnaire on impairment requirements for goodwill. The results of the survey are intended as input to the IASB's post-implementation review of IFRS 3 'Business Combinations' which is expected to begin in 2013.

The questionnaire developed by EFRAG and OIC focuses on the value to users of financial reporting based on the current requirements for the impairment test of goodwill (IAS 36). It is aimed to provide input for the post-implementation review in relation to the assessment of the current prohibition to amortise goodwill, which was a contentious issue when introducing IFRS 3 Business Combinations.

Interested parties are invited to complete the questionnaire before 30 September 2012. It is available through the press release on the EFRAG website.

Latest batch of editorial corrections to IFRSs released by the IASB

31 Jul 2012

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

This batch makes editorial corrections and changes to:

  • IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (issued March 2004)
  • IFRS 7 Financial Instruments: Disclosures (issued August 2005)
  • IFRS 10 Consolidated Financial Statements (issued May 2011)
  • IFRS 11 Joint Arrangements (issued May 2011)
  • IFRS 13 Fair Value Measurement (issued May 2011)
  • IAS 19 Employee Benefits (issued June 2011)
  • IAS 27 Separate Financial Statements (issued May 2011)
  • Mandatory Effective Date of IFRS 9 and Transition Disclosures (Amendments to IFRS 9 and IFRS 7) (issued December 2011)
  • Annual Improvements 2009–2011 Cycle (issued May 2012)

The IASB has also changed the format and timing of the issue of editorial corrections, and will now only issue editorial corrections three times a year, before each of the 'Green book', 'Red book' and 'Blue book' are published.  However, major corrections will continue to be published as soon as they are identified.

Access the editorial corrections on the IASB's website.

Summary of the July 2012 DPOC meeting

30 Jul 2012

The IASB has posted to its website a summary of the 11 July 2012 Due Process Oversight Committee (DPOC) meeting.

The DPOC is responsible for approving due process and overseeing the IASB’s compliance with due process, and reviewing the Trustees’ fulfilment of their oversight function in accordance with the Constitution of the IFRS Foundation.

Please click for a summary of the meeting (link to IASB website).

EFRAG Update with a summary of the July 2012 EFRAG meetings

30 Jul 2012

The European Financial Reporting Advisory Group (EFRAG) has released the July 2012 issue of its EFRAG Update newsletter.

The newsletter contains a summary from the EFRAG meetings held in July 2012. Highlights were the finalisation of the draft endorsement advice in relation to the amendments to IFRS 10 (transition guidance), the finalisation two draft comment letters to the IFRS Interpretations Committee (on levies and on put options) and the finalisation of EFRAG's comment letter on the IFRS Interpretations Committee rejection notice in relation to the restructuring of Greek government bonds.

Click for the EFRAG Update (link to EFRAG website).

EFRAG calls for evidence of experiences with IFRS 8, will offer outreach events

28 Jul 2012

In order to prepare a response to the Request for Information that the IASB issued as part of the post-implementation review (PIR) of IFRS 8 'Operating Segments', the European Financial Reporting Advisory Group (EFRAG) is calling for evidence from preparers, users, auditors and academics across Europe. EFRAG has also announced that it will be organising events across Europe in partnership with National Standard Setters and in association with user organisations.

On 19 July 2012, the International Accounting Standards Board (IASB) initiated the public consultation phase of IFRS 8 Operating Segments post-implementation review (PIR) process by publishing for comment a Request for Information (RFI) on the effect of implementing the standard.

In order to support the IASB, EFRAG encourages European users to complete the questionnaire published by the IASB. However, EFRAG has also developed a supplemental questionnaire that European constituents can use to share their practical experiences with IFRS 8. EFRAG would also like to receive examples of practices that are perceived as particularly noteworthy. EFRAG will use evidence supplied by constituents as the basis for its response to the IASB and as basis outreach events to be organised in partnership with the National Standard Setters and with the participation of the IASB.

Please click for more information and access to the questionnaire in the press release on the EFRAG website.

FASB issues ASU to simplify testing of indefinite-lived intangible assets for impairment

27 Jul 2012

The US Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) 2012-02 'Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment'. The ASU simplifies the guidance for testing the decline in the realisable value (impairment) of indefinite-lived intangible assets other than goodwill.

The FASB issued ASU 2012-02 based on feedback received from stakeholders concerning the recurring costs of performing impairment tests for indefinite-lived intangible assets other than goodwill where there was a low likelihood of impairment. The amendments in the ASU allows an entity the option of first performing a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. The FASB believes that the amendments made by ASU 2012-02 will reduce the cost of accounting for indefinite-lived intangible assets.

In addition, the FASB realises that the guidance in this ASU will not result in the convergence of impairments between US GAAP (Topic 350) and IFRS (IAS 36).

The ASU applies to all public, private, and not-for-profit organisations. The amendments are effective for annual and interim impairment tests performed in fiscal years beginning after 15 September 2012. Early adoption is permitted.

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New IASB work plan issued

27 Jul 2012

The International Accounting Standards Board (IASB) has publicly released a revised work plan updating the expecting timing of various due process steps in its projects. There are a number of projects for which deliverables have been deferred, and a target date for the publishing of an IFRS from the revenue recognition project has been formally included (being the first-half of 2013). We've prepared a summary of the changes, together with a listing of the projects where a due process document is expected in the near future.

Summary of changes

The following is a summary of the changes in the revised work plan, which is dated 26 July 2012:

  • Agenda consultation - the timing for the issuance of the feedback statement from the consultation has been pushed back to the third quarter of 2012 (previously second quarter) and development of a strategy previously indicated for the second half of 2012 has been removed. This may be considered to be consistent with comments made by Hans Hoogervorst in earlier speeches acknowledging that the future agenda is not really contentious
  • Financial instruments - general hedge accounting - a review draft of the finalised general hedge accounting chapter of IFRS 9 is expected in the third quarter of 2012 (previously second quarter), with the target date for completion of the chapter expected in the fourth quarter of 2012 (previously second half 2012)
  • Revenue recognition - the work plan confirms deliberations will continue to the end of 2012, but introduces a formal target date of a new IFRS in the first half of 2013
  • Post-implementation reviews:
    • IFRS 8 Operating Segments - the work plan adds that the IASB expects to consider comments received from the Request for Information in the first quarter of 2013
    • IFRS 3 Business Combinations - the post-implementation review on IFRS 3 is now not expected to commence before the fourth quarter of 2012 (previously not earlier than the third quarter 2012).

Projects where a due process document is expected in the near future

The work plan confirms the following milestones are expected to be reached by the end of September:

In addition, the following milestones are expected to be reached by the end of calendar 2012 (in some cases, this may also mean they are issued in the third quarter):

Click for IASB work plan as of 26 July 2012 (link to IASB website). We have updated our project pages to reflect the updated work plan and other known developments.

IASB staff to develop guidance for micro-sized entities applying the IFRS for SMEs

26 Jul 2012

The International Accounting Standards Board (IASB) staff, along with the SME Implementation Group, will be working together to develop guidance suitable for micro-sized entities that are applying the IFRS for SMEs.

The IASB staff will use the IFRS for SMEs to identify requirements that are necessary for most micro-sized entities. Guidance will then be developed based on those requirements and without changing the principles for recognising and measuring assets, liabilities, income, and expenses.

In addition, the guidance will cross-references the "IFRS for SMEs for matters not dealt with in the guidance booklet. Subsequently, having applied the guidance, an entity’s notes to financial statements and auditor’s report could refer to conformity with the IFRS for SMEs because there is no modification."

Click to view the IASB press release.

ESMA publishes review of accounting for Greek sovereign debt

26 Jul 2012

The European Securities and Markets Authority (ESMA) has published a review of the accounting for Greek Government Bonds (GGB) in Europe. The review focuses on IFRS Financial Statements for the year ended 31 December 2011 and considered a sample of 42 European financial institutions with significant exposures to GGB.

The review found a good level of consistency regarding the level of impairment losses. However, the review also found that issuers fell short of meeting IFRS disclosure requirements in particular in relation to transparency of gross exposure, maturities, valuation methodologies and fair value levels used, as well as the impact of impairment on profit or loss. The main findings were:

  • The impairment amount and in most cases the net exposure were reported. However, only a few issuers disclosed gross exposures, maturities or explanations of yearly variations, which made it difficult for investors to assess the real effect of GGB on the financial performance over the period. ESMA also found that some information presented through other channels (e.g. press releases) did not make it into the finanical statements.
  • The valuation methodology used for GGB was disclosed by most issuers but lacked in quality. Especially, adjustments made to market prices in order to determine level 2 values were not explained. Also, reasons leading to the choice of a fair value level were not always explained.
  • Impacts of shadow accounting in connection with insurance activities were generally not disclosed.
  • Disclosures on credit default swaps (CDS) related to GGB lacked transparency and did not provide sufficient information to allow users to understand the impact of these holdings on exposures at the reporting date.
  • Reclassifications of GGB from one category to another were not always mentioned explicitly and informatione was only provided in an aggregated manner. More reasons for reclassifications and disaggregated amounts showing which country’s sovereign debt had been reclassified should have been disclosed.

As a result of these findings, ESMA will pay attention to the quality of country-by-country disclosures and more generally to the granularity of information provided on significant sovereign exposures. ESMA will continue to monitor further developments related to financial instruments accounting and in particular for sovereign debt in the 2012 IFRS financial statements.

In connection with the publication ot the report  Steven Maijoor, ESMA Chair, said:


While the report only focused on the accounting treatment of Greek sovereign debt and related instruments, I would emphasise that the principles we have highlighted in relation to disclosure and transparency are applicable more generally, and should be applied to any material exposures to financial instruments that become subject to enhanced risk.

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