This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.


IFRSs in your pocket 2012

22 Aug 2012

We have published the eleventh edition of our popular guide to IFRSs — 'IFRSs In Your Pocket 2012'. This publication provides an update of developments in IFRSs through the second quarter of 2012.

This 136-page guide includes information about:

  • The IASB organisation — its structure, membership, due process, contact information, and a chronology
  • Use of IFRSs around the world, including updates on Europe, United States, Canada and elsewhere in the Americas, and Asia-Pacific
  • Recent pronouncements — those which are effective and those which can be early adopted
  • Summaries of current Standards and related Interpretations, as well as the Conceptual Framework for Financial Reporting and the Preface to IFRSs
  • IASB agenda projects and active research topics
  • IFRS Interpretations Committee current agenda topics
  • Other useful IASB-related information

Please contact your local Deloitte practice office to request a printed copy.

Click to view IFRSs in your pocket 2012.

ESMA comment letter regarding the IFRS Interpretations Committee's agenda decision on GGBs

22 Aug 2012

The European Securities and Markets Authority (ESMA) has published to its website a comment letter to the IFRS Interpretations Committee regarding its tentative agenda decision on IAS 39 'Financial Instruments: Recognition and Measurement' and the accounting for different aspects of restructuring Greek government bonds (GGBs).

The comment letter is dated 26 July 2012, but was only made available by ESMA now.

In April 2012, ESMA had submitted a request to the IFRS Interpretations Committee asking to clarify the accounting of the exposure to Greek sovereign debt arguing that IAS 39 Financial Instruments: Recognition and Measurement does not offer enough guidance in this respect. ESMA wrote: "This results in difficulties to understand how the standard should be applied [...] and could raise enforcability issues."

After the Interpretations Committee tentatively decided not to add the issue to its agenda in May 2012, ESMA published the original submission, which also contained several suggested accounting treatments, in order to underline its point.

ESMA has now published its comment letter on the tentative agenda decision in which stresses its view once more:

European enforcers of IFRS note varying accounting practices for debt restructurings by lenders due to the lack of clear guidance which leads in turn to decreased comparability between financial statements

ESMA does not agree with the Committee’s conclusion not to add the subject to its active agenda nor to recommend the Board to perform further work. It now encourages the IASB to consider the concerns as part of its ongoing deliberations on IFRS 9 Financial Instruments.

Please click for:

ESMA publishes summary of responses to its consultation on materiality in financial reporting

17 Aug 2012

The European Securities and Markets Authority (ESMA) has published a summary of the responses received on its consultation paper on materiality in financial reporting. One of the main results of the consultation was that there is a potential need for further guidance on the application of the concept of materiality but that this issue should be addressed by the IASB, rather than ESMA.

In November 2011, ESMA published a consultation paper in order to seek comments from interested parties on their understanding of various aspects of materiality in an effort to contribute to a consistent application of this important concept in financial reporting. ESMA made available all comments received on the consultation paper in April 2012 and has now consolidated these into a summary of responses.

The main findings are:

  • The majority of all respondents believe that the concept of materiality is generally well understood, however, they see diversity in application.
  • Diversity in application was attributed to management judgement, separate perspectives of different stakeholder groups, and general difficulties in applying the concept to certain issues.
  • Many respondents believe that the application of materiality concept to disclosures could help address the problem of too many disclosures obscuring the reporting about an entity’s financial position and performance.
  • The majority of respondents were of the opinion that the principles to be applied in assessing materiality in interim and annual financial reports should be the same.
  • Respondents clearly indicated that if there is a need for further guidance on the application of the concept of materiality this issue should be addressed by the IASB.

Please click for access to the full summary of responses (link to ESMA website).

ESMA has decided to organise a public roundtable on materiality in financial reporting where some of the issues raised in the consultation paper will be further discussed. The roundtable will be held on 1 October 2012 in Paris. Please click for further information (link to ESMA website).

GRI releases further elements of proposed next generation sustainability reporting guidelines

17 Aug 2012

The Global Reporting Initiative (GRI) has released two additional exposure drafts related to its next generation of its Sustainability Reporting Guidelines ('G4'). These exposure drafts seek to improve the way companies report on anti-corruption and greenhouse gas (GHG) emissions in their overall sustainability reporting.

The release of the two additional exposure drafts follows on from an earlier exposure draft outlining the G4 project development process and the proposed significant changes to the current 'G3' guidelines.  The two topics covered by the new exposure drafts were signalled in the original draft.

Proposed new guidance on anti-corruption is designed to enable companies to report information on their policy, their publicly stated commitment to zero tolerance of corruption, their training of employees, governance bodies and business partners on anti-corruption, and their collective action initiatives towards combating corruption.

The exposure draft on GHG proposes new content for the G4 guidelines that are designed to more closely align GRI’s guidance with the GHG Protocol set of standards, jointly released by the World Resources Institute and the World Business Council for Sustainable Development, and the ISO 14064 standard produced by the International Standards Organization for Standardization.

Comments on the two new exposure drafts close on 12 November 2012.  Click for press release (link to GRI website).

2012 IFRS 'Green Book' — Coming Soon

16 Aug 2012

The IFRS Foundation has announced that A Guide through IFRS 2012 will be available in September 2012.

This volume (nicknamed the "Green Book") will include the full text of the Standards and Interpretations and accompanying documents (such as the Basis for Conclusions) issued by the IASB as at 1 July 2012 with extensive cross-references and other annotations. This edition does not contain documents that are being replaced or superseded but remain applicable if a reporting entity chooses not to adopt the newer versions early.

The new requirements since 1 July 2011 include:

The Green Book will sell for £90 plus shipping for the two book set (academic, developing country, and volume discounts apply). You will find more information and ordering details here.

CFA Institute critiques SEC IFRS report

11 Aug 2012

The Chartered Financial Analysts Institute (CFA Institute) has published a brief summary of issues arising from the staff report of the United States Securities and Exchange Commission (SEC) on the possible incorporation of IFRS into the U.S. financial reporting system. The summary provides a critique of the report, pointing out a number of areas where the CFA Institute believes more analysis and evaluation is required.

The report, entitled Does the SEC have the will to find a way towards IFRS? notes that the final report is "comprehensive and organized" around a number of key themes, such as the costs and obstacles issuers would face in making a change from US GAAP to IFRS and the degree to which existing US GAAP is entrenched in U.S. regulatory regimes.

However, the report opines that "observations on investor preparedness, regulatory impact, issuer impacts, and human capital readiness offer commentary on the current state of affairs which, in our view, will evolve once a decision to adopt IFRS is made".  The report later concludes that in the CFA Institute's view "readers of the Final Report are left with data and observations but without an indication of how they will be weighed and evaluated".  The report laments the lack of analysis of whether IFRS is 'so sufficiently flawed' as not to be interests of investors, what exact modifications to IFRS would be needed to incorporate it into the US reporting regime, and whether issues of lack of comparability in IFRS is a greater obstacle than exists with multiple accounting languages.

The report outlines a number of analytical or evaluative questions that the SEC staff report does not answer, such as:

  • Which of the dimensions of the SEC IFRS Work Plan are most critical to a recommendation?
  • Which, if any, of the challenges are considered to be insurmountable and why?
  • What, if any, actions can or should be taken (and by whom) to address the challenges or obstacles, and over what time period?
  • To what degree should 'regulatory capture' of U.S. GAAP serve as an obstacle or deterrent to adopting accounting standards which are meant to serve investors rather than regulators?

The report concludes with the following observation:

Requiring most immediate attention, the Final Report leaves stakeholders wondering: What are the SEC’s next steps? Will there be a recommendation and what might be its timing? We believe it is imperative for the SEC to define the way forward, as failure to act or provide clear direction is, in substance, a decision not to incorporate IFRS. Rather than continued evaluation and delay, we believe investors would prefer the SEC to provide a path forward with an affirmative or negative decision.

Click for access to the CFA Institute report (link to CFA Institute website).

Additional resources related to the SEC report:

Indian minister suggests IFRS adoption from 2013

10 Aug 2012

In a speech given in New Delhi at a seminar organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), the Indian Minister for Corporate Affairs and Power, Dr. M. Verappa Moily, has indicated that the implementation of Indian Accounting Standards that are compatible with International Financial Reporting Standards (IFRS) may occur by April 1, 2013.

In February 2011, the Indian Ministry of Corporate Affairs (MCA) issued 35 Indian Accounting Standards (Ind AS) that are converged with, but not identical to, International Financial Reporting Standards (IFRS).  A that time, it was announced that a 'phased implementation' would only proceed once certain Indian tax and other issues were resolved.

The tax issues revolve around the Indian Direct Taxes Code (DTC), in relation to the use of accounting information in determining tax liabilities.  There have no substantive developments on the DTC to date comprehensively addressing these issues and accordingly, no timetable for the implementation of Ind AS has been announced.

However, Dr Moily noted the following in his speech:

We have taken the initiative that irrespective of whenever the DTC comes we will take it up with the Ministry of Finance and we are determined to ensure that IFRS is implemented by April 1, 2013

The comments were made in the context of a discussion about "reforms in the processes of doing business in India [that] are vital to keep pace with changing times and global trends".  Whilst the speech is not definitive, and India's IFRS implementation is subject to further due process, this development may indicate an increased likelihood of India eventually moving to IFRSs.

Click for press release (link to ASSOCHAM website).

ACCA research report discusses effects of integrated reporting

08 Aug 2012

A report from the Association of Chartered Certified Accountants (ACCA) provides insights into the impact of integrated reporting on companies' corporate reporting, based on an academic study of recent experience in South Africa. The ACCA report contains a number of specific recommendations that could be taken into account by those developing the international integrated reporting framework, under the auspices of the International Integrated Reporting Council (IIRC), or otherwise.

The ACCA's report, presented as a discussion paper entitled Reporting pre- and post-King III: what’s the difference?, summarises the findings of a full academic report called Integrated reporting: the new face of social, ethical and environmental reporting in South Africa? written for the ACCA by Jill Solomon (King’s College London) and Warren Maroun (University of the Witwatersrand, Johannesburg).

Integrated reporting has been mandatory for entities listed on the Johannesburg Stock Exchange in South Africa since 2010-11.  The research analysed the corporate reports of ten major South African companies, including a number of resources companies,  immediately before (2009) and after (2010–11) the introduction of mandatory integrated reporting.

Some of the findings of the research included:

  • Integrated reporting sees significantly more social, environmental and ethical information included in corporate reports, and in more places throughout the report - although this sometimes leads to repetition which is seen as a significant weakness
  • The impact of integrated reporting on the way that social, environmental and ethical information is disclosed can be characterised by the following themes: the crucial importance of materiality; an evolving discourse of risk and risk management; an increasing tendency towards quantification; the emergence of new reporting items; the emergence of new sections in the reports; and the increasing integration of social, environmental and ethical considerations into corporate governance structures
  • Companies have shifted from reporting that is aimed exclusively at their shareholders to reporting that expounds the directors’ claimed belief in stakeholder accountability and stakeholder engagement.

ACCA’s analysis offers five recommendations for the development of integrated reporting, based on the academic’s findings:

  1. The way in which information is set out could be more concise to avoid repetition
  2. The form of reporting could be extended to incorporate more feedback from consultation with stakeholders regarding social and environmental issues and corporate responsiveness to feedback
  3. Organisations should solicit the views of their major stakeholders about the social, environmental and ethical information (and underlying policies and practices) that they report and include these views within integrated reports
  4. Academics can and should play a significant role in researching the integrated reporting framework and its applicability
  5. Academics should, can and do play an important role in educating potential managers and users in integrated reporting through university and professional education in which they are involved.

Click for more information (link to ACCA website).

IFRS Foundation publishes Formula Linkbase 2012

07 Aug 2012

The IFRS Formula Linkbase 2012 is now available for download on the IASB's website. The formula linkbase was developed to (1) improve the data quality of IFRS taxonomy filings and (2) provide additional guidance to better understand the IFRS concepts and their meaning from a financial reporting and a technical perspective. This version of the formula linkbase is updated from the formula prototype released in October 2011. The 2012 formulae are designed to work with the IFRS Taxonomy 2012. Most of the improvements from the previous version are related to the content.

The formula linkbase can be used with software packages supporting the XBRL formula specification 1.0 and allows for additional validations of the reported facts. Developed in a generic manner, the IFRS Formula Linkbase 2012 can be used directly on the filings created, based on the IFRS Taxonomy (instance documents) or the company specific extensions to the IFRS Taxonomy (filer extension taxonomy and instance document). Guidance documentation for the formula linkbase is also available.

Technical changes in the 2012 version include (1) positive and negative formula validation is placed in separate files, (2) redundant members in the filter for the Dimension aggregation formulae are removed and (3) precondition expressions in the validation are  simplified (earnings per share formulae).

Click for the press release to access the Formula Linkbase 2012 on the IASB's website.

New research on the value of 'extra-financial' disclosure to investors and analysts

06 Aug 2012

A new research report has been issued exploring how investors and analysts source, use and are influenced by so-called 'extra-financial information', which includes Environmental, Social and Governance (ESG) information and other non-financial information. The report shows that for the majority of investors and analysts surveyed, extra-financial information is very relevant or relevant to investment decision‑making or analysis.

The report, entitled The value of extra-financial disclosure - What investors and analysts said is the result of a survey commissioned by the Global Reporting Initiative (GRI) and The Prince’s Accounting for Sustainability Project (A4S), and conducted by Radley Yeldar.  The survey involved a relatively small sample of investors and analysts but is considered "a useful snapshot of investor and analyst sentiment towards extra-financial disclosure at the present time".

Some of the findings from the survey included:

  • Over 80% of the research sample believe that extra-financial information is very relevant or relevant to their investment decision‑making or analysis
  • Investors and analysts use multiple sources to gather relevant financial and extra-financial information but show a strong preference for sources which are more comprehensive and specialised - with direct engagement with Board level representatives, followed by formal reporting channels such as the sustainability report, annual report or integrated report are most influential
  • Over 80% of investors and analysts surveyed  believe that integrated reporting will deliver benefits to their analysis and company assessments - seeing integrated reporting as useful or very useful for increasing the reliability, accessibility, relevance and comparability of extra-financial information, as well as improving assessments of future company performance
  • A majority of respondents were not familiar with eXtensible Business Reporting Language (XBRL), with less than 10% of those surveyed indicating they use XBRL and that it affects how they receive financial information.

Click for more information (link to GRI website).

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.