May

IFRS Interpretations Committee membership update

09 May 2013

The Trustees of the IFRS Foundation have announced the appointments of Tony de Bell, Reinhard Dotzlaw, and Martin Schloemer as new members of the IFRS Interpretations Committee (IFRIC) and the reappointment of Feilong Li. Also, in an effort to broaden the number of accountancy firms represented in the IFRIC membership, the Trustees have appointed Andrew Watchman and Andrew Buchanan to serve on a single three-year rotating seat.

Tony de Bell, Reinhard Dotzlaw, and Martin Schloemer will begin their first three-year term on 1 July 2013, after which an additional three-year term may be renewed. Feilong Li’s second three-year term will also begin 1 July 2013. Andrew Watchman will begin serving his membership on the rotating seat on 1 July 2013, after his three-year term, Andrew Buchanan will take over the rotating seat on 1 July 2016.

Current members, Guido Fladt, Bernd Hacker, Andrew Vials, and Margaret Smyth will be departing the Committee.

The press release for this announcement is available on the IASB website.

Further training material on the IFRS for SMEs available

09 May 2013

The IFRS Foundation Education Initiative has developed a training module for Section 19 of the IFRS for SMEs 'Business Combinations and Goodwill'. This section of the IFRS for SMEs provides guidance on identifying the acquirer, measuring the cost of the business combination, and allocating that cost to the assets acquired and liabilities and provisions for contingent liabilities assumed. It also addresses accounting for goodwill both at the time of a business combination and subsequently.

Within the context of the IFRS for SMEs, the learning objectives of the Section 19 training module are designed to allow participants to:

  • identify a business combination
  • identify the acquirer in a business combination
  • recognise and measure the cost of a business combination
  • recognise and measure the identifiable assets acquired, the liabilities and contingent liabilities assumed and any non-controlling interest in the acquiree
  • recognise and measure any goodwill acquired in a business combination or any gain on a bargain purchase
  • account for goodwill after its initial recognition
  • determine what information should be disclosed to enable users of the financial statements to evaluate the nature and financial effects of a business combination
  • demonstrate an understanding of the significant judgements that are required in accounting for business combinations and goodwill.

Ultimately, the IFRS for SMEs training material will include 35 stand-alone modules – one for each section of the IFRS for SMEs. Currently, 33 modules are available, with the remaining two modules on section 12 (Additional Financial Instruments Issues) and section 26 (Share-based Payment) expected to be released in the coming months.

Most of the existing modules are also available in Arabic, Russian, Spanish, and Turkish. The IFRS Foundation hopes to expand the number of languages in which the modules are available.

Please click for more information on the Section 19 training module or access all training modules on the IASB website (free registration is required to access the individual modules).


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EFRAG consultation on a "long-term investment" business model

08 May 2013

Connecting a European green paper on possible ways for supporting long-term investment and the IASB's suggested new separate business model of "held to collect and sell", the European Financial Reporting Advisory Group (EFRAG) has launched a public consultation on long-term investing activities business models.

The European Commission green paper considers possible ways for supporting long-term investment and asks in one paragraph whether fair value accounting is or can be detrimental to long-term investment. At the same time the IASB has proposed limited scope amendments to IFRS 9 Financial Instruments that would introduce a 'fair value through other comprehensive income' (FVOCI) measurement category for particular financial assets thus indicating that fair value measurement and long-term horizons are not mutually exclusive.

Into the tension between those two positions EFRAG has launched its consultation to determine

  • how a 'long-term investment' business model could be characterised in the context of financial reporting,
  • whether this ‘long-term investment’ business model could be supported by objective evidence (and what the observable characteristics would be),
  • whether the 'long-term investment' business model arrived at would be similar to long-term models found in practice (eg with insurance companies or pension funds), and lastly
  • whether such a business model would justify specific accounting.

Results from the survey will be used to give feedback to the European Commission as well as the IASB. The EFRAG consultation closes on 25 June 2013.

Please click for:

IASB survey on proposals for limited amendments to IFRS 9

08 May 2013

The IASB has initiated a survey on its exposure draft 'Classification and Measurement: Limited Amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010))'. The survey requests financial statements users to provide input on the amendments proposed in the exposure draft.

In particular, the IASB will be using the survey to gather information from users on the proposed third category in IFRS 9 known as Fair Value through Other Comprehensive Income (FVOCI). The proposed FVOCI category was introduced by the IASB to better portray how financial assets are managed.

The IASB requests that all responses to the survey be received by 31 May 2013.

Click for:

Agenda for May 2013 IFRS Interpretations Committee meeting

07 May 2013

The IFRS Interpretations Committee will meet at the IASB's offices in London on Tuesday and Wednesday 14-15 May 2013. The agenda for the meeting is now available.

The meeting will include discussions regarding the finalisation of tentative agenda decisions (IAS 10, IAS 28/IFRS 3, IAS 7, and IFRS 2) and further analysis on IFRS 3, IAS 19, IAS 28, IFRS 10, and IFRS 5. Also, discussions will be held on annual improvements, limited scope amendments to IFRSs, IFRS 2, and new issues concerning IAS 32, IFRS 7, and IFRS 13.

The tentative agenda is available on our meeting page.

US SEC Chair discusses regulation in a global context

05 May 2013

In a speech given recently to the Investment Company Institute (ICI) in Washington, US Securities and Exchange Commission (SEC) Chair, Mary Jo White, has given a broad analysis of the impact of globalisation on regulation. In relation to accounting standards, Ms White highlights the need to "accommodate different but equally legitimate financial reporting standards".

In the speech, Ms White highlights the importance of global regulatory collaboration and cooperation "in a way that does not lower the bar or relax the regulatory and oversight standards that protect investors and stablize markets". Discussing the example of the global regulation of derivatives, Ms White discusses "substituted compliance" as a means to avoid demands on market participants to comply with two or more possibly conflicting sets of rules, by allowing foreign market participants to comply with their home country's requirements so long as regulatory outcomes are comparable to those under U.S. law.

When later discussing accounting standards, Ms White reinforced this concept by highlighting the removal of the U.S. GAAP reconciliation for foreign private issuers, the easing of the deregistration procedures, and a simplified Exchange Act registration exemption for foreign companies, the latter "recognizing that it is not necessary to require registration and reporting by a thinly-traded foreign company already listed on a foreign stock exchange and subject to similar oversight in its home country".

Ms White went on to comment on the SEC's participation in global standard setting, the IASB-FASB convergence projects, and the FASB's founding membership of the IASB's Accounting Standards Advisory Forum (ASAF), before reinforcing the need for global regulation:

But the promise of global accounting standards fades if there is not consistency in their application, implementation, and enforcement. Here again we are active participants not only through the staff’s filing review process of foreign private issuers, but also through our collaboration with foreign counterparts bilaterally as well as through IOSCO.

There was no specific mention in the speech of the possible broader use of International Financial Reporting Standards (IFRS) in the United States context. The speech concluded on a broader theme of "maintain[ing] a regulatory structure that accommodates jurisdictional differences without lowering standards" whilst accepting "an exclusively, or even largely, domestically-focused regulatory approach is no longer acceptable or effective".

Click for full text of the speech (link to SEC website).

Monitoring Board announces procedure and timetable for review of existing members and selection of new ones

02 May 2013

The Monitoring Board (MB) of the IFRS Foundation today announced the outcome of its meeting held on 11 April 2013 in London where the MB determined the procedure and time table for the assessment of existing members and selection of new ones against the membership criteria announced in March.

The Monitoring Board's Final Report on the Review of the IFRS Foundation's Governance published in February 2012 identified a number of enhancements to the governance framework including expanding the Monitoring Board’s membership and beginning periodic assessments of the members against membership criteria.

These criteria were announced on 1 March 2013:

  • The jurisdiction has made a clear commitment to IFRSs and promotes global acceptance of a single set of high quality international accounting standards. It mandates or permits the application of IFRSs to consolidated financial statements of companies raising capital in its relevant market.
  • The IFRSs to be applied are essentially aligned with IFRSs developed by the IASB.
  • The jurisdiction can be regarded a major market for capital-raising in the global context.
  • The jurisdiction makes financial contributions to the setting of IFRSs on a continuing basis.
  • The jurisdiction has in place and in operation a robust enforcement mechanism.
  • The relevant national or regional standard-setting body actively contributes to the development of IFRSs.

At the meeting held on 11 April, the MB agreed on the following three procedures for expending the current membership and assessing the existing members:

Selection of new member candidates (with the exception of rotating members)

  1. The Monitoring Board will issue a public call for nominations.
  2. The Monitoring Board will complete the selection of new members in accordance with the Monitoring Board membership criteria.

Selection of new rotating members (to be selected in consultation with IOSCO)

  1. The MB determines the selection procedure in consultation with IOSCO, and IOSCO will be asked to recommend candidates.
  2. The Monitoring Board will complete the selection of rotating members in accordance with the Monitoring Board membership criteria.

Assessment process of existing members

  1. All existing Monitoring Board members will be assessed in accordance with the Monitoring Board membership criteria.

The timetable for these procedures, which are to be conducted in parallel, is rather vague, however, the MB "anticipates completion of the process in 2013".

Please click for access to the press release on the Monitoring Board website.

Free access to research papers in renowned accounting journals

02 May 2013

In an effort to promote accounting research, the publisher Taylor & Francis Online has pulled together four freely available collections of research papers on currently much debated issues. The topic groups are: 'International Financial Reporting Standards', 'Sustainability in Accounting', 'The Financial Crises', and 'Accounting Education'.

The research papers are sourced from Accounting and Business Research, Accounting Education, Accounting in Europe, European Accounting Review, Social and Environmental Accountability Journal, Journal of Sustainable Finance & Investment, and Accounting History Review.

Among the articles are contributions by such distinguished researches as former IASB member Professor Mary Barth (Stanford Graduate School of Business), past IAAER president Professor Donna Street (Dayton University), and Professor Sidney Gray (University of Sydney Business School), mentor in the Deloitte IAAER Scholarship Programme.

Access to the collections of research papers is available through the links below (all links to Taylor & Francis Online). Please note that free access expires at the end of July 2013.

On IAS Plus, we offer a dedicated subpage on Research and education and a collection of research papers on financial reporting.

Correction list for hyphenation

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