Agenda papers from this meeting are available on the IASB's website.

The narrow scope IASB project that led to issuing this ED arose out of requests made to the IFRS Interpretations Committee seeking clarification of paragraph 93 of IAS 19 Employee Benefits. That paragraph refers to the accounting for employee contributions set out in the formal terms of a defined benefit plan. The question was whether employee contributions in respect of service should in all cases be attributed to periods of service as a negative benefit in accordance with IAS 19 paragraph 70.

The IASB discussed the matter during its February 2013 meeting and came to the conclusion that contributions from employees or third parties that are linked solely to the employee’s service rendered in the same period in which they are paid may be treated as a reduction in the service cost and accounted for in that same period instead of attributing the contributions to periods of service in accordance with paragraph 70.

As an example for contributions that may be treated as a reduction in the service cost, the ED cites contributions that are a fixed percentage of the employee’s salary, where the percentage of the employee’s salary does not depend on the employee’s number of years of service to the employer.

The IASB also decided to specify in paragraph 93 that the negative benefit from employee contributions when these are not recognised as a reduction in the service cost in the same period in which they are payable is attributed to periods of service consistently with the application of the gross benefit in accordance with paragraph 70 in order to ensure consistent attribution of the net benefit.

If finalised, the amendments would apply retrospectively whereby the exact date will only be determined after exposure. Comments must be submitted to the IASB no later than 25 July 2013.

Please click for:

• IASB press release
• Access to the exposure draft on the IASB website
• Our IAS Plus project page on employee contributions to defined benefit plans

In September 2012, EFRAG initiated a field test together with the ANC, ASCG, FRC and OIC on the Review Draft general hedge accounting. The results of the field test were communicated to the IASB in January 2013 together with the announcement that EFRAG would be undertaking a further consultation regarding macro hedge accounting, which was initiated by publishing a draft comment letter shortly after. EFRAG has now submitted the results of this second consultation to the IASB.

The input received from constituents in this supplementary consultation led to the following results:

• Significant uncertainty exists as to whether existing IAS 39 compliant portfolio hedge accounting practices will continue to be possible under the Review Draft.
• There is a significant risk that entities will be required to change their IAS 39 compliant portfolio hedge accounting practices twice.
• The term ‘macro hedging' would need to be defined as part of the development of the discussion paper on macro hedging.
• The respondents in the field test confirmed that the Review Draft introduces important improvements in the hedge accounting requirements.

EFRAG has considered several approaches including those suggested by constituents on how the above issues might be best addressed and has come to the conclusion that the most straightforward and practical way of ensuring that existing IAS 39 compliant portfolio hedging practices would not be affected by the Review Draft would be to provide entities a simple choice to either (1) retain IAS 39 hedge accounting for all of their hedges until either they decide to apply IFRS 9 irreversibly or the project on macro hedging is completed or (2) to adopt irreversibly the requirements of the Review Draft as drafted (including the exception in paragraph 6.1.3 on portfolio fair value hedges of interest rate risk).

Please click for access to the full comment letter on the EFRAG website.

The meeting summary provides the SMEIG’s recommendations and additional analysis to the issues set out in its June 2012 Request for Information. The IASB will consider the recommendations by the SMEIG when developing an exposure draft of proposed changes to the IFRS for SMEs.

The SMEIG meeting summary is available on the IASB website.

Click through for direct access to the notes:

Wednesday, 20 March 2013

• Conceptual framework (IASB)
  • Presentation and disclosure;
  • Elements of financial statements
  • Capital maintenance

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

We recommend that any solution should based off the current practice which is consistent with the approach tentatively agreed upon by the IFRS Interpretations Committee. The IFRIC approach states that indirect increases in ownership interest are substantially different from indirect decreases in ownership interest and that both should be accounted for in a manner consistent with a direct change in ownership interest.

If the Board is not in favour of this approach and needs a shorter-term solution, we recommend an approach that favours recognition of the investor's share of equity transactions in the investor's profit or loss to recognition in the investor's equity.

More information and the full Deloitte comment letter can be found here.

Click through for direct access to the notes:

Thursday, 21 March 2013

• IAS 19 — Defined benefit plans: employee contributions (IASB)
• Annual improvements 2010-2012 (IASB)
• IAS 1 — Assessment of going concern (IASB)
• Revenue recognition (IASB)
• Put options written on non-controlling interests (IASB)

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

Dr Al-Humaid chairs the Committee for Adopting International Accounting Standards of the Saudi Organization of Certified Public Accountants (SOCPA). He was Chairman of the SOCPA's Accounting Standards Committee from 1996 until 2002.

Saudi Arabia requires IFRSs for banking and insurance companies, and is considering full convergence. The SOCPA has approved an IFRS transition plan that will require listed entities to report using the "national standards that are closely converged with full IFRSs." Additionally, unlisted entities will be required to report under IFRS for SMEs as adopted in Saudi Arabia. A specific date for the IFRS transition plan has not yet been established.

Dr Al-Humaid’s appointment begins with immediate effect. His term will expire on 31 December 2015 and can be renewed once for a further three-year period.

Please click for the IFRS Foundation press release on the IASB website.

Click through for direct access to the notes:

Tuesday, 19 March 2013

• IAS 41 Agriculture — Bearer biological assets (IASB)
• IFRS for SMEs (IASB)
• Conceptual framework — Measurement and elements of financial statements (IASB)
• Fair value measurement — Unit of account for subsidiaries, joint ventures and associates (IASB)

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

Korea announced a 'roadmap' for the adoption of Korean equivalents of International Financial Reporting Standards (K-IFRS) in 2007.  Under the roadmap, all listed companies were required to prepare their annual financial statements under K-IFRSs from 2011. In addition, listed companies other than financial institutions were permitted to apply K-IFRS starting from 2009.

The report provides a summary of the number of entities applying IFRS in Korea:

• 14 entities early-adopted IFRS in 2009
• 59 entities early-adopted IFRS in 2010
• A total of 3,126 entities, including 1,783 listed entities, 201 non-listed financial institutions and 1,142 non-listed entities, started to apply IFRS in 2011.

The report asserts that Korea's adoption was successful because "interested parties have thoroughly prepared for the IFRS adoption in a multilateral manner since the announcement of the Roadmap", including prompt translations of IFRS into Korean, the effective amendment of government laws and regulations, and the support of professional accounting and business organisations, and entity preparations.

The report contains a chapter devoted to the issues encountered in Korea's transition process, including:

• The move from more "specific and detailed requirements on various different transactions and events" under Korean GAAP to a more "principles based" regime under IFRS which requires professional judgement, and sufficiently trained professional accountants
• The emphasis on reporting the economic substance of transactions, which had impacts in areas such as the classification of redeemable preference shares, the measurement of loan loss reserves and securitisations
• Changes from past Korean practice on consolidation, changing the boundaries of the reporting entity
• The expansion of the use of fair value accounting, providing more relevant information but introducing more volatility in financial statements and requiring reliable measurements to be made.

Some of the direct effects of adoption noted in the report include the elimination of the need for Korean companies raising funds in foreign markets to prepare multiple sets of financial statements under various GAAPs, improve transparency, and an enhanced international status and role for Korea.

The executive summary of the report notes the following:

The IFRS adoption process in Korea was rather a bumpy ride: there were troubles relating to unexpected additional costs, lack of accounting professionals, unwelcoming public sentiment, etc. While trying to overcome the stumbling blocks, however, Korea realised that the followings are essential in promoting successful implementation of IFRS in any country: invigorating discussions about IFRS among constituents at home and abroad; preventing the psychological stress of stakeholders from getting exaggerated by providing sufficient education and promotion of IFRS; and receiving more robust support from the IFRS Foundation. Adopting IFRS means changing the financial reporting language of a country. Thus, such a significant event would be carried out smoothly only when it is accompanied by the unwavering will of the adopting country, reorganisation of the related systems, and strong support from the Foundation.

The report is available on the KASB website.