The overall package of pronouncements issued consists of:

• Standard XRB A1 Accounting Standards Framework (For-profit Entities plus Public Sector Public Benefit Entities Update) that will apply to all reporting entities and sets the requirements for which entities apply which set of pronouncements under New Zealand's new Accounting Standards Framework issued by the XRB Board in April 2012
• A suite of 39 standards comprising both:
  • PBE Standards, applied by 'tier 1' PBE entities, which are those with 'public accountability' based on the IASB's definition or which are 'large' as defined. These entities are not eligible to adopt any of the disclosure concessions available for 'tier 2' entities
  • PBE Standards 'Reduced Disclosure Regime' (PBE Standards RDR), applied by 'tier 2' entities, which are those that do not meet the criteria to be a 'tier 1' entity, and which additionally are not eligible to apply the 'transitional' requirements for certain (mostly smaller) entities that qualify for classification as 'tier 3' and 'tier 4' entities. 'Tier 2' entities are exempt from particular disclosure requirements in the standards, such disclosures being identified throughout the standards with an asterisk (*)
• The Public Benefit Entities (conceptual) Framework

The initial suite of PBE Standards are broadly similar to the proposals contained in a suite of exposure drafts issued in June 2012. However, there are some changes, including a significant decision to introduce the notion of Other Comprehensive Income (OCI). Although OCI is not included in IPSAS, the NZASB decided to include it based on the strong degree of support in submissions for its continuing use.

A further issue reflected in many submissions on the exposure drafts was a desire for minimal differences between the PBE Standards and New Zealand IFRS applied by for-profit entities. Constituent comment included 'big picture' and detailed standards concerns, and were primarily driven by concerns about the implications for 'mixed groups' (PBEs groups with for-profit subsidiaries). The Feedback Statement published with the new suite of standards notes:

With this in mind the NZASB and the XRB Board have established a joint working group to establish with greater clarity exactly when it is appropriate for the PBE Standards to depart from IPSAS – as this is the only practical way of minimising differences between the two suites of standards given that it is not possible to amend International Financial Reporting Standards and still be able to assert compliance with IFRS. One of the factors being considered by the working group is the impact unnecessary differences will have on preparers who are mixed groups. The deliberations of the working group are on-going and it is expected that the results will be reported later in 2013.

The financial years of the majority of New Zealand PBEs end on 30 June, and accordingly the new requirements will be applied by these entities for the first time in the 2014/15 financial year ending on 30 June 2015. As the standards require comparative information, this means that the new requirements will effectively be applied to relevant transactions and balances from 1 July 2013.

Click for more information (link to XRB website).

Click through for direct access to the notes:

Tuesday, 21 May 2013

• Fair value measurement — Unit of account for investments
• Comprehensive review of IFRS for SMEs

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

From a business perspective, the formula linkbase provides additional validation opportunities for preparers to help ensure that the facts reported in their filings are of a high quality. From a technical perspective, it improves the quality of IFRS Taxonomy filings based on the final IFRS Taxonomy 2013.

For more information, please view the IASB press release.

For lessees, the ED published on 16 May 2013 proposes the recognition of a liability and a right-of-use asset for all leases with a profit or loss impact dependent on the classification of a lease. The lessor model in the ED is similar to current lease accounting with some nuances for the recognition of revenue and discounting of the residual asset.

The field-test initiated by EFRAG and the big national standard-setters in Europe is meant to help to understand the nature, terms and conditions of lease arrangements currently in use and the implications of the proposed guidance. It is designed to find out whether the proposed guidance creates implementation or operational difficulties, and one of the aspects is also the question what effort would be required to implement and apply the proposed guidance.

The field-test is conducted with the help of a survey. It will start on 3 June 2013 and completed questionnaires should be returned by 31 July 2013. Entities wishing to participate in the field-test are asked to contact their national standard-setters (where applicable) or EFRAG. Copies of the questionnaire will be sent to them.

Further information is available through the press release on the EFRAG website.

The agenda for the meeting is presented below.

More information on the meeting is available on the IASB website.

Each Deloitte e-learning module provides training in the background, scope and principles of each pronouncement, and provides practical insights into their application.

Details of the modules are as follows:

• IFRS 3 Business Combinations — Topics covered include the definition of a business combination, amounts included in consideration transferred, recognition and measurement principles, and accounting for goodwill.
• IFRS 11 Joint Arrangements — Topics covered include the concept of 'joint control', classifying joint arrangements in practical situations, and accounting treatments for joint arrangements
• IFRS 13 Fair Value Measurement — Topics covered include the identification of assets and liabilities, market characteristics and market participants, determining the highest and best use of non-financial assets, the measurement of liabilities, appropriate valuation techniques, determining the level in the hierarchy and the correct price, and disclosure
• IAS 1 Presentation of Financial Statements — Topics covered include financial statements, aggregation and set off, classifying items as current or non-current, classifying items between profit or loss and other comprehensive income, items disclosed on the face of the statement of changes in equity, items disclosed, and the notes, nature of information and key assumptions required to complete the set of financial statements
• IAS 16 Property, Plant and Equipment — Topics covered include the initial measurement of assets, accounting for dismantling costs, depreciation, subsequent measurement of property, plant and equipment and the impact of impairment
• IAS 27 Separate Financial Statements (2011) — Topics covered include when and how to apply the standard, and accounting for investments in subsidiaries, joint ventures and associates in the separate financial statements

(Note: Links above are direct links to each e-learning module.  You may be asked to register to access each module - no personally identifying information is requested in the registration process.)

The updated modules for IFRS 3, IFRS 11, IAS 1, IAS 16 and IAS 27 (2011) reflect the amendments arising from Annual Improvements 2009–2011 Cycle and Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance.  The new e-learning module on IFRS 13 takes about 2.5 hours to complete.

The IFRS e-learning modules are available free of charge and may be used and distributed freely, without alteration from the original form and subject to the terms of the Deloitte copyright over the material.

For details on the full range of e-learning modules go to Deloitte’s IFRS e-learning website. A listing of available e-learning modules is also available on our IAS Plus IFRS e-learning page.

Following the recommendation in the MB’s 2012 Final Report on the Review of the IFRS Foundation’s Governance, the MB began its process to expand its membership and develop the criteria for membership. The criteria and assessment processes for membership were completed at its 6 February 2013 meeting.

The nomination period continues until the end of June 2013. For more information, please view the Monitoring Board press release.

The topics discussed were as follows (click through to access detailed Deloitte observer notes for each topic):

Tuesday, 14 May 2013

New issues

• IFRS 7 Financial Instruments: Disclosures — Servicing agreements

IFRS IC/ IASB requests for further analysis

• IFRS 10 Consolidated Financial Statements — Effect of protective rights on an assessment of control

Annual Improvements (2011-2013 cycle)

• IFRS 1 First‑time Adoption of International Financial Reporting Standards — Meaning of effective IFRSs
• IFRS 3 Business Combinations — Scope exceptions for joint ventures
• IFRS 13 Fair Value Measurement — Portfolio netting exception
• IAS 40 Investment Property — Definition of a business

Wednesday, 15 May 2013 (09:00-11:50)

IFRS IC/ IASB requests for further analysis

• IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations
  • Classification in conjunction with a planned IPO
  • Classification in conjunction with a planned IPO and change of disposal method

Limited scope amendments to IFRSs

• IAS 12 Income Taxes — Recognition of deferred tax assets for unrealised losses

Old issues to revisit

• IFRS 2 Share-based Payment — Transactions in which the manner of settlement is contingent on future events

New issues

• IFRS 13 Fair Value Measurement — Portfolios

Administrative session

• Committee work in progress
• Acknowledgements of retiring members

Click to view the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

Background

The genesis of the Interpretation is a request to the IFRS Interpretations Committee to determine whether, under certain circumstances, IFRIC 6 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment should be applied to other levies charged for participation in a market on a specified date to identify the event that gives rise to a liability.

The specific examples provided to the Committee included the United Kingdom bank levy, fees paid to the Federal Government by pharmaceutical manufacturers in the United States, a bank levy in Hungary, and the railway tax in France.  The final Interpretation covers a broad range of levies, rather than a focus on levies charged to participate in a market.

The key issues considered by the Committee in developing the Interpretation included when a liability should be recognised and to the definition of a present obligation in IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

The Committee published a draft Interpretation in May 2012 and concluded redeliberations in the first quarter of 2013.  The IASB ratified the Interpretation at its April 2013 meeting.

Requirements of the Interpretation

IFRIC 21 identifies the obligating event for the recognition of a liability as the activity that triggers the payment of the levy in accordance with the relevant legislation. The Interpretation clarifies that 'economic compulsion' and the going concern principle do not create or imply that an obligating event has occurred.

IFRIC 21 provides the following guidance on recognition of a liability to pay levies:

• The liability is recognised progressively if the obligating event occurs over a period of time
• If an obligation is triggered on reaching a minimum threshold, the liability is recognised when that minimum threshold is reached.

The same recognition principles are applied in interim financial reports.

The Interpretation provides numerous examples to provide guidance on its application.  For instance, the Interpretation provides the example of a levy that is triggered by operating as a bank at the end of the reporting period.  In applying the requirements of the Interpretation, the obligating event is considered to be operating as a bank on the last day of the reporting period and so the liability for the levy is not recognised prior to that date.  Furthermore, the levy would only be recognised in any interim report that covers the period including the last day of the annual reporting period.

A full summary and history of the Interpretation can be found on our summary page for IFRIC 21.

Changes made in finalising the Interpretation

The IFRS Interpretations Committee made a number of changes from the original proposals in Draft Interpretation DI/2012/1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market as a result of its redeliberations, including:

• Broadening the scope to include all levies, rather than a focus on levies charged to participate in a market
• New guidance on how to account for levies that have a minimum threshold
• Removing guidance on determining whether a liability to pay a levy gives rise to an asset or expense
• Excluding emissions trading schemes from the scope of the Interpretation (as this topic is subject to an IASB project)

Interaction with other pronouncements and effective date

The Interpretation does not supersede IFRIC 6 Liabilities arising from Participating in a Specific Market — Waste Electrical and Electronic Equipment, which remains in force and is consistent with IFRIC 21.  The IFRS Interpretations Committee believes IFRIC 6 provides useful information on accounting for liabilities within its scope.

IFRIC 21 is effective for annual periods beginning on or after 1 January 2014. Initial application is in accordance with the requirements of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, i.e. the requirements are applied on a retrospective basis.

Please click for:

• Press release on the IASB website
• Our IAS Plus summary of IFRIC 21 Levies
• Information on the project leading to the issue of the Interpretation