February

EFRAG recommends adoption of investment entities amendments, updates endorsement status report

18 Feb 2013

The European Financial Reporting Advisory Group (EFRAG) has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. The latest report follows the issue of an endorsement advice letter on the IASB's investment entities amendments.

In the endorsement advice letter, EFRAG concludes that the investment entities amendments satisfy the technical criteria for endorsement and accordingly, recommends the adoption of the amendments in the European Union.

The investment entities amendments were issued on 31 October 2012 to amend IFRS 10 Consolidated Financial Statements to provide entities that meet the definition of an 'investment entity' an exemption from consolidating certain investments in subsidiaries.

In the endorsement advice letter, EFRAG makes the following comments regarding the consolidation exemption:

EFRAG generally believes that a reporting entity should not differentiate between types of entities when applying the control model of consolidation in IFRS 10 Consolidated Financial Statements. However, EFRAG notes that the Amendments respond to the concerns of users of financial statements, who expressed support for a consolidation exception for subsidiaries of investment entities, and argued that their interests are best served by having a single line measurement basis based on fair value, instead of consolidation of subsidiaries of investment entities.

The accompanying effects study report discusses the costs and benefits of implementing the investment entities amendments and notes they "would result in significant cost savings for investment entity preparers and users of the financial statements of investment entities".

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Notes from the February 2013 IASB meeting

18 Feb 2013

The IASB's February meeting is being held in London on 18-22 February 2013, some of it a joint meeting with the FASB. We have posted Deloitte observer notes from Monday's session on conceptual framework.

Click through for direct access to the notes:

Monday, 18 February 2013

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

Deloitte comment letter on annual improvements ED (2011-2013 cycle)

18 Feb 2013

Deloitte's IFRS Global Office has submitted a letter of comment responding to the IASB Exposure Draft 2012/2 — Annual improvements to IFRSs 2011–2013 Cycle.

We believe that the Annual Improvement Project is an efficient and effective method of handling isolated issues within IFRSs that are leading to divergent practice and support the proposed amendments in the exposure draft. However, we offer some recommendations for drafting changes and amendments to transitional provisions.

Click to access the comment letter.

FASB Proposed ASU on Classifying and Measuring Financial Instruments

18 Feb 2013

On 14 February 2013 the FASB issued proposed Accounting Standards Update (ASU) ‘Recognition and Measurement of Financial Assets and Financial Liabilities.’ The proposed ASU is the equivalent to the IASB’s exposure draft issued November 2012 on proposed limited changes to IFRS 9 (2010).

In January 2012, the FASB began redeliberations with the IASB to converge key aspects of their respective approaches to classifying and measuring financial instruments. Although important differences between U.S. GAAP and IFRSs remain, the proposed ASU would result in greater convergence between the two models for classifying and measuring financial instruments. More details on the proposed ASU as well as an outline of key similarities and differences between the FASB’s proposed ASU and IFRS 9 (2010) as it would be amended by IASB Exposure Draft ED/2012/4 are available in the recent Deloitte (United States) Heads Up publication.

Comments on the proposed ASU are due by 15 May 2013.

A press release and the proposed ASU are available on the FASB website.

Trustees publish revised IFRS Due Process Handbook

18 Feb 2013

The Trustees of the IFRS Foundation have published a revised version of their IFRS Foundation Due Process Handbook. The Handbook describes the steps followed by the IASB and the Interpretations Committee in developing or revising International Financial Reporting Standards (IFRSs) and Interpretations.

The updated Handbook includes due process enhancements recommended by the Monitoring Board Governance Review and Trustees' Strategy Review. It also includes recommendations from the Trustees' Review of the Efficiency and Effectiveness of the IFRS Interpretations Committee.

The updated Handbook is a significant rewrite of existing requirements, introducing many new policy level objectives and formalising current practice. It consolidates the due process requirements of the IASB and the IFRS Interpretations Committee into a single document, outlines the responsibilities and activities of the Trustees’ Due Process Oversight Committee (DPOC), includes a more extensive discussion of the process of assessing the likely effects of an IFRS, describes the new research programme forming the development base from which potential standards-level projects will be identified, outlines the practice that the IASB and Interpretations Committee follow for addressing matters that are narrow in scope, describes how the IASB expects to conduct and complete post implementation reviews, and includes consideration of due process requirements related to the extensive programme of outreach activities that is now routinely conducted by the IASB as part of its standard-setting activities.

The proposed revised version of the Handbook had been published for public comment in May 2012. The majority of the proposals included in the draft Handbook were supported by the public. On basis of the comment letters received, however, some changes were made. Some of the changes were clarifications (regarding the status of rejection notices for example), some were alignments (regarding the quorum of the IASB and the Interpretations Committee for example), some regarded omissions (for example an objective of the Due Process Oversight Committee has now been included). The most noticeable change regards the suggestions that re-exposures of IASB proposals could have a minimum comment period of 60 days. This suggested change did not find the desired support, and the minimum comment period has been changed to 90 days. Further changes were warranted by current developments, for example the establishing of the ASAF which is now also described in the Due Process Handbook.

Please click for the following documents on the IASB website:

Canada defers mandatory IFRS adoption for certain rate-regulated entities to 2015

18 Feb 2013

The Accounting Standards Board (AcSB) of Canada has decided to extend the existing deferral of the mandatory IFRS changeover date for entities with qualifying rate-regulated activities by an additional year to 1 January 2015.

The deferral extends the previous deferral to 2014 announced in September 2012, and comes in light of the IASB's project on rate-regulated activities outlined in its response to the Agenda Consultation 2011.  The IASB's project is being pursued in two phases, with an exposure draft of an interim standard arising from the first phase expected in the first half of 2013.  The interim standard would allow entities adopting IFRS to continue to use their local GAAP requirements for rate-regulated activities until the main project is completed provided certain requirements yet to be agreed in the interim standard are met.

In light of these developments, the AcSB's extended deferral seeks to provide first-time adopters of IFRSs adequate time to prepare comparative figures based on any new interim IFRS that results from this project.

The new mandatory IFRS changeover date decided by the AcSB also coincides with the expiration of the Canadian Securities Administrators’ (CSA) exemptive relief for entities that aren’t registered with the U.S. Securities and Exchange Commission (SEC) to temporarily apply U.S. GAAP instead of IFRSs.

Click for further information on the AcSB website.

G20 Finance Ministers and Central Bank Governors remain concerned about convergence

17 Feb 2013

The Communiqué from meeting of the G20 Finance Ministers and Central Bank Governors held in Moscow on 15-16 February 2013 expresses 'concern' about the delay in the convergence of accounting standards, and also calls for improvements in public sector reporting.

The Communiqué states the following:

We note with concern the delays in the convergence of accounting standards to date and ask the IASB and the FASB to finalize by the end of 2013 their work on key outstanding projects for achieving a single set of high-quality standards.

The meeting received a report from the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) on the status and timeline of their remaining projects on converging their standards.  The report responds to a request from an earlier November 2012 meeting of the G20 Finance Ministers and Central Bank Governors where concern was also noted on the slow progress of convergence, with a particular focus on financial instruments impairment.

The IASB-FASB report was submitted to the meeting by the Financial Stability Board (FSB). The FSB's accompanying summary and analysis of the report, communicated in an FSB Chairman's letter entitled Progress of Financial Regulatory Reforms, is as follows:

The two Boards expect to make progress on the two key outstanding issues of impairment of loans, where they expect to complete their deliberations in 2013, and insurance contracts, where both Boards will be holding public consultations this year. Of these two outstanding issues, the need for convergence on a new forward-looking expected loss approach to provisioning is of most immediate concern for end-users and from a financial stability perspective. We note with concern the delays in convergence to date. We therefore recommend that the G20 ask the IASB and FASB to prepare by end-2013 a roadmap for converging to a common approach for impairment and for achieving the G20 objective of a single set of high quality accounting standards.

The Communiqué also deals with many other topics, many related to the response to the global financial crisis.  To this end, the Communiqué acknowledges the important role of public sector reporting in financial stability:

In pursuit of our goal of strengthening the public sector balance sheet, work is needed to better assess risks to public debt sustainability. This includes, inter alia, taking into account country-specific circumstances, looking at transparency and comparability of public sector reporting, and monitoring the impact of financial sector vulnerabilities on public debt.

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FEE publishes an analysis of combined and carve-out financial statements

15 Feb 2013

The European Federation of Accountants (FEE) has published a paper ‘Combined and Carve-out Financial Statements Analysis of Common Practices’. The paper summarises the most common practices as well as the main issues and challenges related to the preparation of combined and carve-out financial statements in compliance with IFRS.

This Analysis of Common Practices paper builds upon the FEE Discussion Paper Combined Financial Statements (issued in April 2011) and takes into consideration the feedback it has received by respondents concerning relevant issues not initially covered by the April 2011 discussion paper. Also, the Analysis of Common Practices paper includes additional input from the FEE Capital Markets Working Party that was deemed necessary in developing a more comprehensive and useful document.

The FEE believes this paper will:

    1. be useful for stakeholders with an interest in the subject matter (preparers, users, practitioners, regulators, researchers and professional bodies);
    2. encourage the IASB to consider a project on combined financial statements in its future agenda (currently, the IASB does not have a specific IFRS standard regarding the preparation of combined financial statements);
    3. be informative for securities regulators such as the ESMA and other national entities; and
    4. encourage public debate.

The FEE is welcoming comments and will update the document as needed.

The press release and Analysis of Common Practices are available on the FEE website.

New European newsletter on the debate on Conceptual Framework

15 Feb 2013

The European Financial Reporting Advisory Group (EFRAG), the French Autorité des Normes Comptables (ANC), the Accounting Standards Committee of Germany (ASCG), the Organismo Italiano di Contabilità (OIC) and the UK Financial Reporting Council (FRC) have published the first issue of their new newsletter ‘Keeping up with getting a better framework’ informing European constituents on the latest developments regarding the progress of the Conceptual Framework project with the IASB and other stakeholders.

In this newsletter, an update is given on sessions held at the IASB regarding its plan to issue a Discussion Paper in July 2013. Topics discussed were:

  • the reporting entity
  • measurement
  • liability and equity
  • definitions of assets and liabilities
  • presentations (including other comprehensive income)

As outlined in by project partners (EFRAG, ANC, ASCG, OIC and FRC) in their strategy on conceptual framework, specific newsletters will be issued as new developments become available. In addition, the project partners intend on issuing bulletin reports on specific issues during the course of the project in an effort to stimulate debate that may be used in discussions with the IASB.

The press release and newsletter are available on the EFRAG website.

IFRS Advisory Council membership update

15 Feb 2013

The IFRS Foundation Trustees have announced the appointment of Roger Best, Daniel McMahon, and Markus Grund as new members of the IFRS Advisory Council.

Roger Best. Mr Best is a former Partner of Deloitte (Hong Kong). He will be representing the Hong Kong Institute of Certified Public Accountants.

Daniel McMahon. Mr McMahon is the current President and CEO of the Ordre des comptables professionnels agréés of Québec, Canada. He will be representing the Fédération Internationale des Experts-Comptables Francophones.

Markus Grund. Mr Grund is the Chief Accountant of the Federal Financial Supervisory Authority in Germany. He will be representing the International Association of Insurance Supervisors.

The new members will replace Carlson Tong, Benoit Onana and Richard Thorpe.

In accordance with the IFRS Foundation Constitution, Advisory Council members are appointed for an initial term of three years and, depending upon the need to maintain a proper balance and for continuity, may be asked to remain for a further period of up to three years. A maximum period of service of six years is permitted.

A press release and a full list of Advisory Council members are available on the IASB website.

Correction list for hyphenation

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