June

IFRS Foundation Education Initiative publishes briefing for chief executives

12 Jun 2012

The IFRS Foundation Education Initiative has published the 2012 edition of International Financial Reporting Standards — A Briefing for Chief Executives, Audit Committees and Boards of Directors to the eIFRS site. These briefing notes provide summaries of all IFRSs issued at 1 January 2012 at a high level and in non-technical language. It is specially prepared for chief executives, members of audit committees, company directors and others who want a broad overview of IFRSs and of the business implications of implementing them.

The downloadable PDF is available in the eIFRS Online Subscriber Area of the IASB's website for access by both Comprehensive and eIFRS subscribers.

Note: On 27 June 2012, the IFRS Foundation announced that this publication is also available for purchase in hard copy printed form.  Click for more information (link to IASB website).

EFRAG Financial Instruments Working Group calls for new members

12 Jun 2012

EFRAG has put out a call for new applicants for its Financial Instruments Working Group (EFRAG FIWG) because some of the members of the existing working group are unable to continue their membership.

The purpose of the EFRAG FIWG "is to advise and provide other input to EFRAG TEG’s discussions on all aspects of financial instrument financial reporting matters to support EFRAG influencing the development of IFRS and IFRS interpretations on financial instruments specific matters and their application within Europe through technical analysis and consultation with organisation representatives of the financial services world in Europe and others". The size of the group is limited to up to 15 members.

The EFRAG FIWG meets once every two months (or as necessary) in Brussels.

For more information, see the press release on the EFRAG website.

IFRS Foundation Annual Report 2011

12 Jun 2012

The IFRS Foundation under which the IASB operates has published its Annual Report for 2011. Next to the section on 'Financials' the report also contains sections on the 'Trustees of the IFRS Foundation' and the 'Standard-setting activities'.

In his "Report of the Chairman of the IASB" Hans Hoogervorst assures constituents: "It is not surprising that our friends around the world want some time for the dust to settle. That is why determining the IASB’s future work programme will involve cherry-picking the most important areas where change is required. Let’s fix what needs fixing, and no more."

Regarding the question how things will be fixed, Hoogervorst again speaks about the research programme that the IASB wants to introduce as a means to formalise relations with national standard setters. He admits that involvement of national standard setters will be weighted by their relative strengths and the networks they represent.

Since the IASB started we have maintained a healthy and positive relationship with national standard-setters. [...] As extensive and positive as those interactions have been, now is the time to add more structure and formality to our relationships with these important members of the IFRS community. [...] For some bodies, the new model will replace joint convergence programmes. Those bodies will want to be assured that they remain involved in a meaningful way. And we cannot afford to lose access to their people or to their networks of investors and preparers. [...] It is also clear that some of these bodies are more able to participate in our standard-setting processes because they are better resourced and more experienced in standard-setting. Any formalisation of our structure will need to reflect their relative strengths.

The full report can be downloaded from the IASB's website. In addition, the IFRS Foundation has made available XBRL instance documents of the financial statements.

EFRAG draft comment letter on the IFRS Interpretations Committee's tentative rejection of an agenda item on the restructuring of Greek government bonds

11 Jun 2012

The European Financial Reporting Advisory Group (EFRAG) has issued its draft comment letter on the recent decision made by the IFRS Interpretations Committee to not add to its agenda a project related to Greek Government Bonds (GGBs). The Committee had received a request for guidance related to the restructuring of GGBs and whether such restructuring should result in derecognition of the whole financial asset, or only part of the financial asset.

In its comment letter, EFRAG agrees with the IFRS Interpretations Committee's conclusion during its May 2012 meeting that restructuring of the GGBs would result in derecognition of the old GGBs, and EFRAG agrees with the tentative decision to not add a project to the Committee's agenda. However, EFRAG believes that guidance on debt restructurings should be explicitly stated in IFRSs. As such, it noted that the Committee should recommend to the IASB that accounting for debt restructurings and modifications should be part of the IASB's finalisation of IFRS 9 Financial Instruments.

Comments on the letter are invited by 12 July 2012. The draft comment letter can be downloaded via the press release on EFRAG's website.

EFRAG draft comment letter on annual improvement proposals 2010-2012

08 Jun 2012

The European Financial Reporting Advisory Group (EFRAG) has issued its draft comment letter on IASB Exposure Draft ED/2012/1 'Annual Improvements to IFRSs 2010-2012 Cycle'. EFRAG expresses reservations regarding to proposed amendments.

EFRAG agrees with most proposals in the Exposure Draft that was published in May 2012. However, EFRAG is concerned about the proposed amendments to the following two standards:

  • IFRS 3 Business Combinations — Accounting for contingent consideration in a business combination
    EFRAG supports the proposed amendments but believes that the IASB should also propose consequential amendments to IAS 39 Financial Instruments: Recognition and Measurement and reiterates its request to amend IAS 39 to align the accounting for own credit risk on financial liabilities measured at fair value with the requirements in IFRS 9 Financial Instruments.
  • IAS 12 Income Taxes — Recognition of deferred tax assets for unrealised losses
    EFRAG appreciates the IASB’s responsiveness to this practice issue, but has concerns about the wider implications of the proposed amendments in other circumstances.

Comments on the letter are invited by 22 August 2012. The draft comment letter can be downloaded via the press release on EFRAG's website.

IASB issues updated work plan

08 Jun 2012

The International Accounting Standards Board (IASB) has publicly released a revised work plan updated the expecting timing of various due process steps in its projects. A number of expected timing of some projects have been deferred or clarified, and the IASB has formally added a project on IAS 8 effective date and transition methods.

The following is a summary of the changes in the revised work plan, which is dated 1 June 2012:

  • Limited reconsideration of IFRS 9 (classification and measurement) - the target date for the exposure draft is now expected in the fourth quarter of 2012 (previously second half of 2012)
  • Macro hedge accounting - the target date for a consultative document remains the second half of 2012, however the work plan now confirms the IASB's decision to issue a Discussion Paper rather than an Exposure Draft
  • IAS 8 effective dates and transition methods - the work plan reflects the IASB's recent decision (at the May IASB meeting) to add a topic to its agenda to amend the requirements in IAS 8 in relation to the disclosures about new and revised accounting standards
  • Annual improvements 2010-2012 - the target completion date for this cycle of annual improvements (for which the exposure draft was recently issued) has now been scheduled for the first quarter of 2013 (previously not scheduled)
  • Investment entities - a target completion date for the finalised IFRS on the proposed exemption from consolidation for certain investment entities has been introduced, and is expected in the second half of 2012.

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

Click for IASB work plan as of 1 June 2012 (link to IASB website). We have updated our project pages to reflect the updated work plan and other known developments.

IAASB issues assurance standard on greenhouse gases

07 Jun 2012

The International Auditing and Assurance Standards Board (IAASB) released a new International Standard on Assurance Engagements (ISAE) 3410 'Assurance Engagements on Greenhouse Gas Statements'. The standard addresses the practitioner's responsibilities in identifying, assessing, and responding to risks of material misstatement.

The standard’s requirements and guidance also recognise that most engagements will be undertaken by a multidisciplinary team, so they address the need for the assurance practitioner to integrate experts – in engineering or environmental science, for example – into various stages of the engagement. The new standard is effective on or after 30 September 2013.

EFRAG publishes endorsement advice and effects study report, updates endorsement status report

06 Jun 2012

The European Financial Reporting Advisory Group (EFRAG) has submitted to the European Commission its endorsement advice letter and effects study report on the amendments to IFRS 1.

In its report, EFRAG recommends Government Loans (Amendments to IFRS 1) for endorsement. EFRAG notes that the benefits of adopting the amendments outweigh the costs.

Click for EFRAG press release on Government Loans (Amendments to IFRS 1) (link to EFRAG website). A link to the endorsement advice letter is provided in the press release.

Concurrently, EFRAG has also updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. Click to download the Endorsement Status Report as of 6 June 2012 which now also reflects the fact that the European Commission has endorsed the Amendments to IAS 1 Presentation of Items of Other Comprehensive Income and Amendments to IAS 19 Employee Benefits.

Communiqué from the Emerging Economies Group meeting in Buenos Aires published

06 Jun 2012

The Emerging Economies Group (EEG) of the IASB met in Argentina on 28 and 29 May 2012. A communiqué from this meeting has been published today. The meeting reconfirmed the role of the EEG as the voice of the emerging economies in the process of IFRS standard setting.

The EEG was established by the IFRS Foundation to further enhance the influence of emerging economies in the development process of IFRSs and is a response of the IASB to the G20 recommendation to introduce more involvement from emerging economies into its standard setting.

Attendants at the Buenos Aires meeting included IASB Board member Amaro Gomes, IASB Director of International Activities and Chairman of IFRS Interpretations Committee Wayne Upton and delegates from Argentina, Brazil, China, Indonesia, Republic of Korea, Malaysia, Russia, Saudi Arabia, South Africa and Turkey. The topics discussed included agriculture accounting, accounting for telecommunication towers, clarification of terms in IFRSs and translation issues.

The next EEG meeting will be held in Sao Paulo, Brazil on 4 and 5 December 2012. The main discussion topic will be business combinations under common control.

Please click for further information on the IASB website:

The Bruce Column — Strengthening its global support

06 Jun 2012

The IASB now has a formidable network of interested parties, both national and regional, around the world. Robert Bruce, our regular, resident columnist takes a look at the opportunities, and the possible problems, ahead.

There is always a balance to be sought between the flexibility of informal arrangements and the greater complexity of more structured systems. And as the IASB has grown in stature and influence it has become more obvious that the balance needs to be recalibrated. The IASB Chairman, Hans Hoogervorst, has made this clear in recent months and now Michel Prada, Chairman of the IASB’s parent body, the IFRS Foundation, has emphasised the point.

It is an inevitable result of steady change not just in the IASB itself but also in the environment which it serves. In Prada’s view, as he made clear at the recent conference of IOSCO, the organisation of national regulators, in Tokyo, there needs to be change in how the IASB creates standards and also in how the consistency in their implementation can be improved.

The IASB, he said, ‘cannot do this alone’. ‘It must find ways to work in close cooperation with standard-setting bodies around the world, to tap into the best thinking in financial reporting, but also to make sure that jurisdictional requirements are fully taken into consideration’. The growth of the IASB has been reflected, particularly in recent years, by the growth in regional bodies seeking to influence or put across their own particular points of view. Meanwhile national standard-setters maintain their own voices. All of these many voices need to be heard and their needs satisfied.

Much of this is simply a reflection of the success of the IASB. As Prada pointed out two-thirds of countries in the G20 are required to use IFRSs and almost half of the Global Fortune 500 Companies now report using IFRSs. It is this scale of use of IFRS around the world which demands a more formal structure to ensure that, as far as is possible, everyone feels they have a stake in the system. ‘The IASB has been given the responsibility to develop international standards’, said Prada, ‘but it does not have the authority to say how those standards should be endorsed, implemented or enforced. Neither is it equipped to easily identify the consequences of the standards without the contribution of those entities that implement them in the field’.

So a more formal process should help to create greater buy-in and, most usefully, ensure that the practical issues of implementation are dealt with at an early stage. The IASB needs to avoid the present system where, all too often, outreach and field testing is done late in the process of producing a standard and the inevitable delay starts, perhaps, to endanger the success of any subsequent endorsement. Under a more formalised relationship the relevant outreach, for example, could be instigated earlier and the work done in a more collaborative way.

Flexibility is fine when the number of participants is low and their interests are close. Now that the world of IFRS has grown well beyond critical mass the participants need certainty in the ways in which they work with the IASB.

All this is a consequence of the complexity of maintaining a consistent global system. It is not unique to the accounting world. All truly global bodies, the IMF or the World Bank for example, strive for consistency of approach.

It does mean that the world of the IASB will steadily become more political and more difficult as it strives to satisfy all its constituents that it is taking their concerns on board and producing solutions which will keep them happy. But hopefully it will be more about collaboration and shared endeavour than turf battles.

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.