Exposure Draft ED/2013/3 Financial Instruments: Expected Credit Losses proposes a model according to which credit losses are no longer recognised if incurred; rather, entities would recognise expected credit losses on financial assets and on commitments to extend credit based upon current estimates of expected shortfalls in contractual cash flows as at the reporting date.

The field-test launched today is designed to shed light on the following aspects of the proposed new model:

• How does the expected credit losses model reflect the amount, timing and uncertainty of future cash flows?
• Are the requirements clear and operational?
• What is the impact of the proposed expected credit losses model?
• What are costs and benefits of the proposed expected credit losses model?

The field-test is conducted through a questionnaire developed by EFRAG and National Standard Setters. In addition European workshops will be held for participants by industry, in which IASB staff will participate. These will be held during May and June 2013. Participation to the workshops will be limited to the respondents of the questionnaire. The workshops will be based on written case studies provided by respondents.

EFRAG and the National Standard Setters encourage all entities that believe they are significantly impacted by the proposals to participate in the field-test. Entities registering as participants will be supplied with a copy of the questionnaire. Completed questionnaires should be returned by 2 June 2013. Please see the press release on the EFRAG website for more details.

The assessment of our Deloitte observer was that the overall tone of this meeting was positive, collaborative and constructive. Personalities did not get in the way, but that did not preclude lively and pointed discussions. Although it is difficult to extrapolate on the basis of one meeting, it did seem that ASAF members brought their richly diverse experience to the table with a shared objective of helping the IASB develop high-quality products—in this case a Framework that would support standard-setting and be informed by it for some time to come.

A listing of the topics discussed at the meeting follows (click through to access detailed Deloitte observer notes for each topic):

Monday 8 April (11:05-16:00)

• Introduction and Signing of the Memorandum of Understanding
• Conceptual Framework:
  • Measurement
  • Performance and Other Comprehensive Income (OCI)

Tuesday 9 April (09:00-16:00)

• Conceptual Framework:
  • Uncertainty components of elements
  • Open session to raise issues
• Impairment
• Summary/Any other business/Wrap up

A listing of the topics discussed at the meeting follows (click through to access detailed Deloitte observer notes for each topic):

Thursday, 11 April 2013 (9:30-13:00)

Meeting of the Monitoring Board with the IFRS Foundation Trustees (09:30-11:00)

• Update from the Monitoring Board — Monitoring Board governance review
• Update from the IASB — Update on IASB developments, including IASB-FASB convergence projects
• Update from the IFRS Foundation
  • Accounting Standards Advisory Forum (ASAF)
  • Update on financials
  • Funding
  • Recent Due Process Oversight Committee activities
  • Profiles project
• Transparency

Meeting of the IFRS Foundation Trustees (11:15-13:00)

• Report of the IFRS Foundation Chair
• Report of the IASB Chair and Senior Technical Directors
• Report of the Due Process Oversight Committee

You can also access the preliminary and unofficial notes taken by Deloitte observers for both meetings.

The Conceptual Framework Bulletins are intended to promote discussion and to inform about European views on the IASB's Conceptual Framework project. They are also designed to elicit feedback on these views therefore come with specific questions at the end of the publication. Each bulletin is between 10 and 15 pages long.

Please click for access to the first the bulletins:

• Prudence
• Reliability of financial information
• Uncertainty

We have also created an archive of all bulletins available. We are grateful to EFRAG and the National Standard Setters for giving us permission to host them on IAS Plus.

EFRAG believes that in developing its discussion paper, the IASB should consider existing regimes in Europe so that a future standard on the topic fully considers them. Therefore, EFRAG is asking European constituents to share with EFRAG information about rate-regulated regimes currently in force in Europe and their experience with them. EFRAG is asking for this information by 30 May 2013. Should European constituents prefer to react directly to the IASB's RFI, EFRAG would appreciate to receive a copy of the submission so the European picture EFRAG is collating will be as complete as possible.

EFRAG will also supplement its submission with input obtained from EFRAG’s Rate-Regulated Activities Working Group, which is currently being set up. The call for applicants for this group was published on 19 March and is open until 30 April 2013.

Please click for EFRAG press release (link to EFRAG website).

Mr Hoogervorst opened his speech with general comments how short-term horizons that seem to be detrimental to sustainable growth seem to dominate the financial markets and pointed out that there have been suggestions that accounting standards could be made more helpful for investors with a long-term perspective.

After a short excursion on accountability in general, Mr Hoogervorst turned to the question of whether and how IFRSs could support taking long-term views. He refuted the claim that "excessive use of fair value" had aggravated the financial crisis and he pointed out that fair value accounting had often provided "more timely information on the poisonous instruments that had been injected into the system". For the same reasons, Mr. Hoogervorst said, the IASB had rejected proposals regarding the forthcoming exposure draft on insurance accounting that would reduce volatility in an artificial way. According to the IASB chairman, closing your eyes to current developments because you have a long term goal would mean turning 'buy-and-hold' into 'buy-and-hope'.

Hoogervorst commented that "even long-term investors cannot afford to ignore short-term fluctuations, if only because you never know how short the short-term will be". There will always be the need to make continuous short-term corrections in order to arrive at the long-term goal and in order to find out whether these corrections are necessary you have to evaluate every day:

So, beware of people who tell you that they only care about the long term and who do not want to be bothered by market values. For a company to take a long term view, it has to be able to withstand the inevitable short-term fickleness of the market place.

In answering the question of how the IFRSs could support taking the long-term view, Mr. Hoogervorst closed on the remarks that the IASB cannot contribute to taking a long-term view by pretending short-term risks are not there. On the contrary, he said, IFRSs provide maximum transparency both for the short and the long term and thus offer the long term-investors the information they need at all times.

Please click for access to the full text of the speech on the IASB website.

In accordance with the policy statement published in December 2012, FEE expresses the firm belief that accounting and auditing are not administrative burdens but rather "essential tools to enable managers to manage, investors to invest and enterprises to trade, grow and create wealth and employment". Against this backdrop FEE comments on other EC proposals:

• FEE believes that general accounting principles should be applicable to all aspects of financial reporting. Among these FEE sees the true and fair view as well as materiality, substance over form and prudence.
• FEE questions the real benefits of a fully prescribed reporting regime for small companies. The EC proposals seek to harmonise small company reporting in the Member States by introducing a common  reporting frame which would see less disclosures load. FEE believes some of the disclosures (especially those on off-balance sheet transactions, related party transactions and post balance sheet events) are a critical element of transparency and should not be disbanded. On the contrary, FEE supports giving the Member States an option to require further disclosures they deem necessary.
• FEE believes that fair value accounting should be permitted as a Member State option. While the EC Proposals intended to keep a Member State option to permit or require fair value accounting for specific assets, JURI proposed to prohibit this practice. FEE urges all parties involved in the trilogue discussions to retain a Member State option permitting or requiring fair value accounting for certain relevant account balances.
• FEE suggests making the use of IFRS for SMEs possible. From a European perspective, FEE regrets that the EC Proposals do not seize the opportunity to allow EU Member States to make their own decision to opt to use IFRS for SMEs or not as this would help especially the smaller Member States with limited standard-setting capacities.
• FEE suggest permitting merger accounting as a simplification measure. The provisions allowing merger accounting are removed from the EC proposals, however, merger accounting is widely used in practice. This accounting option would also simplify accounting and thus reduce costs for preparers.
• FEE believes requiring cash flow statements would benefit enterprises and stakeholders. FEE sees the cash flow statement as an essential tool to provide relevant information about the cash generating capacity of a company which would allow for a more rounded and complete view of companies especially in periods of instability. Therefore, FEE suggests a mandatory inclusion in the annual financial statements of a cash flow statement for large companies and a Member State option to require it for medium-sized companies.
• FEE asks for a swift finalisation of the debate on country-by-country reporting. FEE encourages all parties involved in the trilogue discussion to close the gap between the different views on country-by-country reporting to allow for a successful finalisation of the Accounting Directive as a whole.

Please click for access to the full letter on the FEE website.

Shortly after Ms. Schapiro’s resignation, President Obama nominated Ms. White to complete Ms. Schapiro’s term as well as to serve a full five-year term as head of the SEC. It is unclear when the Senate will vote on the longer-term nomination. Ms. White replaces Elisse Walter, who has been serving as SEC chairman since Ms. Schapiro’s resignation.

In addition, the U.S. Financial Accounting Foundation (overseer of the FASB and GASB) issued a congratulatory statement for the confirmation of Ms White as chairman of the SEC.

Ms White was sworn in on 10 April, by SEC Secretary Elizabeth Murphy, officially becoming the 31st Chair of the SEC.

In relation to the key proposals in ED/2012/6, the comment letter notes the following:

We .. agree that whether the subsidiary or assets sold or contributed constitute a business is a reasonable basis for distinguishing between a ‘downstream’ transaction that should be subject to the requirements of IAS 28(2011) and a disposal that should be subject to the requirements of IFRS 10. However, we note that distinguishing between transactions on this basis (as would also be the case under the proposals of Exposure Draft ED 2012/7 Acquisition of an Interest in a Joint Operation) places additional emphasis on the definition of a business. As such, we support the work of the IFRS Interpretations Committee to produce additional guidance on the application of this concept as part of the IASB’s post-implementation review of IFRS 3.

The full comment letter can be accessed here.