IFRS Interpretations Committee publishes proposed guidance on levies and put options

31 May 2012

Today, the IFRS Interpretations Committee published for public comment proposed guidance on accounting for (1) levies charged by public authorities on entities that operate in a specific market and (2) a put option written by a parent entity on the shares of its subsidiary held by a non-controlling-interest shareholder.


The Committee considered how an entity would account for the payment of levies, other than income taxes, in its financial statements; specifically, when the liability to pay a levy should be recognised. The proposed guidance, DI/2012/1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market, clarifies that "the obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy as identified by the legislation".

Comments on the levies proposal are due by 5 September 2012.

Click for DI/2012/1 and the press release, both available on the IASB website.


Put options

The Committee considered how to measure the financial liability created when a parent entity is obliged to purchase the shares of its subsidiary for cash or for another financial asset, and the parent must recognise a financial liability in its consolidated financial statements for the present value of the option exercise price.

The proposed guidance, DI/2012/2 Put Options Written on Non-controlling Interests, clarifies that all changes in the measurement of that financial liability should be recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments.

Comments on the put options proposal are due by 1 October 2012.

Click for DI/2012/2 and the press release, both available on the IASB website. A french translation of DI/2012/2 is also available.

Final report on establishing the new Private Company Council

31 May 2012

The Financial Accounting Foundation has issued its final report on establishing the new Private Company Council (PCC) that will determine whether exceptions or modifications to existing US GAAP are necessary to address the needs of users of private company financial statements. The final report spells out the details on the new council.

As reported earlier, the United States Financial Accounting Foundation (FAF) Board of Trustees have announced the establishment of a new body (Private Company Council, PCC) to improve the process of setting accounting standards for private companies. The final report published yesterday gives all the details concerning the role and the responsibilities of the new PCC (the summary below is based on extracts from the final report).


  • Authority and Critical Responsibilities - The PCC will have two principal responsibilities: (1) determine whether exceptions or modifications to existing non-governmental U.S. Generally Accepted Accounting Principles (U.S. GAAP) are required to address the needs of users of private company financial statements; (2) serve as the primary advisory body to the Financial Accounting Standards Board (FASB) on the appropriate treatment for private companies for items under active consideration on the FASB’s technical agenda.
  • Membership and Terms - The PCC will comprise 9 to 12 members, including a Chair, all of whom will be selected and appointed by the Board of Trustees. The PCC Chair will not be affiliated with the FASB and will have had substantial experience with and exposure to private companies during the course of his or her career. PCC members will include users, preparers, and practitioners who have significant experience using, preparing, and auditing (and/or compiling and reviewing) private company financial statements. Members will be appointed for a three-year term and may be reappointed for an additional term of two years.
  • FASB Liaison and Staff Support - A FASB board member will be assigned as a liaison to the PCC. FASB technical and administrative staff will be assigned to support and work closely with the PCC to leverage the FASB’s resources and avoid duplication of efforts.
  • Meetings - During its first three years of operation, the PCC will hold at least five meetings each year, with additional meetings if determined necessary by the PCC Chair. The meetings of the PCC will be open to the
  • PCC Agenda Setting and Due Process for existing U.S. GAAP - The PCC will determine its agenda in consultation with the FASB and with input from stakeholders. Based on agreed-upon decision-making criteria, the PCC will conduct a review of existing U.S. GAAP and identify standards that it will
    consider for possible exceptions or modifications. Proposed modifications or exceptions to U.S. GAAP approved by the PCC will be provided to the FASB for a decision on endorsement.
  • PCC Role in Projects on FASB Agenda - For projects under active consideration on the FASB’s technical agenda, the PCC is the primary advisory body to the FASB about the implications for private companies.
    Recommendations of the PCC will be considered by the FASB in its deliberations, and the FASB will be responsible for documenting, in the basis for conclusions of its proposed and final Accounting Standards Updates, how
    it separately considered the needs of private companies and the recommendations from the PCC.
  • Oversight - The FAF Board of Trustees will create a special-purpose
    committee of Trustees, the Private Company Review Committee (Review Committee), which will have primary oversight responsibilities for the PCC for its first three years of operation. The Review Committee will hold both the PCC and the FASB accountable for achieving the objective of ensuring
    adequate consideration of private company issues in the standard-setting process.
  • FAF Trustees’ Three -Year Assessment - Following its first three years of operation, the FAF Trustees will conduct an overall assessment of the PCC
    to determine whether its mission is being met and whether further changes to the standard-setting process for private companies are warranted.

Please click for access to the full report on the FASB website.

Agenda for the IASB June education session meeting

31 May 2012

The International Accounting Standards Board will be meeting in London on 6 June 2012 for an education session to discuss leases and revenue recognition.

The agenda, dated 30 May 2012, has been released.

The full agenda for the meeting can be found here.

Final notes from the May IASB meeting

30 May 2012

The IASB held its May meeting in Norwalk, CT. Much of the meeting was a joint meeting with the FASB. We have posted Deloitte observer notes from the effective dates session and IFRS 8 post-implementation review session held on Wednesday and the leases session held on Thursday.

Click through for direct access to the notes:

Wednesday 23 May 2012 (US time)

Thursday 24 May 2012

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

US SEC report on IFRS due 'within weeks'

29 May 2012

United States Securities Exchange Commission Commissioner Elisse B. Walter has recently given a speech announcing that the "staff expects to publish its final report under the Work Plan in a matter of weeks", after which the SEC will "consider the next steps" on the question of the possible adoption of IFRS in the United States.

The personal remarks were made at the United States Financial Accounting Foundation's 2012 Annual Board of Trustees Dinner, held on 22 May 2012, but did not provide any further level of detail on the exact nature of the "next steps".

Ms. Walter did however, comment that it was"critical that the FASB and the IASB continue to make satisfactory progress on the major convergence projects" and that "a robust IFRS interpretive process and rigorous, coordinated application and enforcement of IFRS" was essential.

Commenting further on the involvement of the United States in the global standard-setting process, Ms Walter noted:


Everyone is asking whether, and when, the U.S. will incorporate IFRS. We should also be asking how the U.S. should continue its participation in the development of global accounting standards.

On that front, my view is that any decision to incorporate IFRS should include the FASB determining to endorse newly issued IFRS standards following a robust due process by the IASB that appropriately considers the U.S. perspective.

The FASB is best positioned to represent the U.S. interest in the IASB standard setting process and, thus, I believe it is critical for the FASB to play a substantial role throughout that process.

The full text of the speech is available on the SEC's website.

New Zealand regulator seeks comments on non-GAAP financial information

29 May 2012

The New Zealand Financial Markets Authority (FMA) has issued a draft guidance note on the disclosure of non-GAAP financial information. The guidance note sets out the FMA's expectations on the use of financial information in corporate documents, such as transaction documents and market announcements, and is largely based on equivalent guidance recently issued in Australia.

The draft guidance note deals with financial information presented other than in accordance with generally accepted accounting practice (GAAP, as defined under New Zealand law and including New Zealand equivalents to IFRSs).  The guide deals with common forms of non-GAAP information such as the alternative performance measures of 'underlying profit' or 'normalised profit'.

The guidance note states FMA's view that it "is reasonable for users of financial information to expect information to be presented in accordance with GAAP".  In order to ensure that non-financial information is not misleading, FMA sets out a number of factors to consider, such as disclosure as to why the non-GAAP financial information is useful, how it is calculated, and the need for a reconciliation to financial information included in the financial statements.  The guide also notes information should be unbiased and not describe items as "one-off" or "non-recurring".

Also included is guidance on information included in transaction documents such as prospectuses, noting that financial information in such documents are required under New Zealand law to comply with GAAP in certain respects.   The guide goes on to state that other financial information, such as pro-forma information, should be presented in accordance with the recognition and measurement requirements of GAAP and provides further guidance on how this information should be presented.

The draft guidance note borrows heavily from similar guidance issued by the Australian regulator, the Australian Securities & Investments Commission (ASIC).  The ASIC Regulatory Guide (link to ASIC website), issued in December 2011, goes further than the FMA document by providing additional guidance on the disclosure of financial information within the financial statements themselves, giving ASIC's sometimes controversial views on topics such as whether additional line items and subtotals are appropriate in the statement of comprehensive income.  (More information on the ASIC guide is available in this Accounting Alert from Deloitte (Australia)).

The FMA consultation document is open for comment until 29 June 2012.  Click for more information (link to FMA website).

Insurance contracts notes from the May IASB meeting

28 May 2012

We have published Deloitte observer notes from the insurance sessions of the May IASB meeting. The discussions, many jointly with the FASB, spanned twelve hours over the course of three days and covered unbundling, whether to abandon the risk adjustment, the use of other comprehensive income and acquisition costs.

Click through for direct access to the notes:

Tuesday, 22 May 2012

Wednesday, 23 May 2012

Thursday, 24 May 2012

Meeting notes from the remaining sessions will be posted soon.

You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

Further notes from the May IASB meeting

25 May 2012

The IASB held its May meeting in Norwalk, CT. Much of the meeting was a joint meeting with the FASB. We have posted Deloitte observer notes from the investment entities session held on Monday and IFRS 10 transition guidance session held on Wednesday.

Click through for direct access to the notes:

Monday, 21 May 2012 (US time)

    Wednesday, 23 May 2012

    Meeting notes from the remaining sessions will be posted soon.

    You can also access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

    IFRS Foundation's framework-based teaching workshops

    25 May 2012

    The IFRS Foundation has developed Framework-based teaching workshops for those teaching IFRSs. As part of the IASB's education initiative, the workshops train teachers to develop their students' skills in interpreting and applying IFRSs (including IFRS for SMEs).

    At a recent workshop on 14 May in London, the IASB welcomed 30 participants from 20 countries for a Framework-based IFRS teaching session. Following this session, the IASB project staff provided updates on the investment entities, financial instruments, leases, and insurance projects currently on the IASB's active agenda. Further, there was a Q&A session for IFRS teacher with the IASB Staff on the new and amended IFRSs that would become mandatory in 2013.

    Please click for:

    Accounting for emission rights an urgent topic for national standard setters

    25 May 2012

    In November 2010, the IASB deferred its project on emission trading schemes in its movement to concentrate on the major projects of the MoU that were to be finalised by June 2011. With those projects still not finalised and with global sustainability moves resulting in new laws and regulations, national standard setters are beginning to move forward on their own.

    The French standard setter Autorité des normes comptables (ANC) has recently presented a discussion paper Accounting for Emissions Trading Schemes Reflecting Companies’ Business Models that is intended "to inspire the international debate and, as soon as possible, the development of an international accounting standard by the IASB."

    The European Union Emissions Trading System (EU ETS) launched in 2005 will move into Phase III in 2013 which will lead to the gradual phasing out of free emission rights and a move towards auctioning of emission rights. Consequently, the questions of whether tradeable permits in emission trading schemes (allowances and credits) are assets and how they should be accounted for need to be addressed. The ANC proposes an accounting approach that builds on the business model of a company as "under IFRS, a uniform measurement of purchased allowances, regardless of the use they are put to, would be irrelevant".

    In Australia, the newly introduced Carbon Pricing Mechanism (CPM) is split into phases as well. The fixed price phase in which a carbon tax is levied on certain entities is to run from 1 July 2012 to 30 June 2015. In the following flexible price phase, permits (carbon units) can be traded.

    In an agenda paper published by the staff of the Australian Accounting Standards Board (AASB) that is predominently dealing with possible financial reporting implications of the fixed price phase, the staff announces: "The financial reporting implications of the flexible price phase will be considered when the IASB progresses its project on accounting for ETSs." However, the staff also notes: "The AASB has contingency plans in place to provide any necessary financial reporting guidance under Australian Accounting Standards in regard to the flexible price phase, should it be established that a pronouncement from the IASB will not be forthcoming in time to provide a basis for accounting treatments in the flexible price phase."

    It is likely that the IASB will be taking up the project on emission trading schemes (ETS) again since during the discussion of the agenda consultation last Wednesday research on emissions trading schemes was named as one of the possible priority projects for the future agenda.

    Please click for:

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