The newsletter contains a summary from the EFRAG meeting held in October 2012 between the EFRAG Technical Expert Group and Consultative Forum of Standard Setters. The topics discussed were:

• The FRC note for the IFRIC’s The Sharman Report and disclosure of material uncertainties under IFRS,
• Update on IAS 28,
• EFRAG operational and due process improvements,
• Update on the latest developments on the proposed EU Accounting Directive,
• IFRIC draft interpretation Put-option written on non-controlling interests,
• Canadian Institute of Chartered Accountants paper Toward a Measurement Framework for Financial Reporting by Profit-Orientated Entities,
• Autorité des Normes Comptables paper Proposals for Accounting for GHG Emissions Rights reflecting companies’ business models,
• IASB Review Draft General Hedge Accounting,
• IASB Project Leases, and
• EFRAG’s Proactive Project The Role of the Business Model in Financial Reporting.

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

Agenda for the meeting

We support the IFRS Foundation’s change to separate the role of IASB Chair and the Executive Director and commend them for acting quickly to implement the change recommended by both the Trustees’ Strategy Review Report and the IFRS Foundation Monitoring Board governance review.

The comment letter notes the following:

[W]e support the changes to the IFRS Foundation's Constitution, subject to our proposed changes that aim to reinforce the separation between the IFRS Foundation Executive Director and the IASB Chair.

Please click for access to our comment letter.

See our previous articles on:

• IFRS Foundation draft review.
• Trustees' Strategy Review Report and Monitoring Board governance review.

The full agenda for the meeting, dated 8 October 2012, can be found here.  We will post any updates to the agenda, and our Deloitte observer notes from the meeting, on this page as they are available.

The updated report reflects that the Accounting Regulatory Committee (ARC) has voted in favour of the adoption of the Amendments to IFRS 1 Government Loans.

Click to download the Endorsement Status Report as of 8 October 2012.

You can find all past endorsement status reports here.

The IOSCO Board, which was formed as part of a restructure of IOSCO earlier this year, agreed to consider the move in response to a request in a meeting with Michel Prada, the Chairman of the Trustees of the IFRS Foundation, "as a means to improve the comparability and integrity of financial statements across the globe".

IOSCO’s Committee on Multinational Disclosure and Accounting will take up the proposal.  The Committee was previously a standing sub-committee of the IOSCO Technical Committee which has now been subsumed within the IOSCO Board.  The proposals would extend the previously stated responsibilities of the Committee, which include monitoring the development and interpretation of IFRS, providing comments on proposed standards and interpretations, and promoting consistent regulatory interpretation and enforcement of IFRS.

The development was announced by IOSCO as part of outlining the outcomes of the IOSCO Board's inaugural meeting held on 3-4 October 2012.  The meeting also saw discussion on work mandated by the G20 Leaders and the Financial Stability Board (FSB) on regulatory reform, together with other projects, including such topics as global legal entity identifiers, over-the-counter derivatives, regulation of money market funds and oil price reporting.  The meeting also considered emerging market perspectives and noted support for the possible creation of an IOSCO Foundation.

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

Under these regulations, GHG emission rights and energy saving certificates are accounted for differently based on the entity’s business model.  Under the “production” or “energy saving” business models, the GHG emission rights and energy saving certificates are considered as “administrative” raw materials consumed by GHG emissions or energy sales.  Accordingly, an asset (raw materials valued at cost) is recognised when GHG emissions or energy sales are lower than emission rights or energy saving certificates held. A liability is recognised when GHG emissions or energy sales are higher than emission rights or energy saving certificates held. Under the “trading” business model, GHG emission rights and energy saving certificates are recognised as inventory at cost (subject to depreciation) until sold.

The GHG emission rights regulation shall be applied for annual periods beginning on or after 1 January 2013 and the energy saving certificates regulation shall be applied for annual periods beginning on or after 1 January 2014. Earlier application for annual periods beginning on or after 1 January 2012 is permitted for these two regulations.

Full texts of the regulations are available on the ANC website (French language only):

• Règlement de l’ANC n° 2012-03 du 4 octobre 2012 relatif à la comptabilisation des quotas d'émission de gaz à effet de serre et unités assimilées.
• Règlement de l’ANC n° 2012-04 du 4 octobre 2012 relatif à la comptabilisation des certificats d'économie d'énergie.

The new regulations follow from the ANC discussion paper Accounting for Emissions Trading Schemes Reflecting Companies’ Business Models published in May 2012.

During the session, BAC member reviewed and exchanged views on developments around IFRS since the last BAC meeting in June. Matters reviewed include 1) the final report by the U.S. SEC Staff issued in July, 2) recent IASB activities, and 3) responses to Invitation to Comment on IASB/IFRS IC due process handbook. On future courses, a FSA official commented that matters identified in the interim discussion paper would be continued to be considered in future. It was clarified that such matters include identification of acceptable/unacceptable requirements in IFRSs and accumulation of voluntary use of IFRS, leading to evaluation of merits and issues in using IFRS, among others. The official also mentioned that additional understanding of effects in countries that adopted IFRS such as Canada and Korea would be obtained.

The handouts for the meeting as well as minutes are expected to be posted to the FSA website (Japanese only).

The next session is yet to be scheduled.

Click for our previous article on the BAC's interim discussion paper on IFRS.