Deloitte view on IASB's proposals on acquisitions of interests in joint operations

  • Deloitte Comment Letter Image

24 Apr 2013

Deloitte has submitted its comment letter on the IASB's proposals in Exposure Draft ED/2012/7 'Acquisition of an Interest in a Joint Operation'. We agree that application of the principles of IFRS 3 'Business Combinations' is an appropriate methodology when an acquired joint operation constitutes a business, but support the work of the IFRS Interpretations Committee to produce additional guidance on the meaning and application of the 'business' concept.

The comment letter notes that the proposal "places additional emphasis on the definition of a business", and the support for further guidance on this concept is consistent with our earlier views on Exposure Draft ED/2012/6 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.

The IFRS Interpretations Committee is expected to discuss the definition of a 'business' at its forthcoming meeting on 14-15 May 2013.  Whilst an agenda for the meeting is yet to be published, the Committee has published two agenda papers on the issue that are expected to be considered at the meeting (links to the IASB website):

  • The first paper provides an overview of the outreach activities undertaken by staff to identify challenges in distinguishing business combinations from asset acquisitions to help in identifying matters for which the IASB might be seeking feedback in any forthcoming Request for Information arising from the post-implementation review of IFRS 3, and asks for the Committee's feedback on whether this experience and information should be contributed to the project
  • The second paper provides a detailed analysis of the outreach activities, including liaison with the Financial Accounting Standards Board (FASB) and Financial Accounting Foundation (FAF) (which is undertaking its own post-implementation review on its equivalent business combination requirements in FAS Statement 141R), and feedback received from interested parties across a number of industries including investment property, extractive industries, pharmaceuticals, banking, shipping and solar and wind farms.  It also includes a summary of various issues which could be brought to the attention of the IASB.

Click for access to the full comment letter.

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