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Third Global IFRS Banking Survey — Still far from land?

07 Jan 2013

Deloitte has issued its ‘Third Global IFRS Banking Survey – Still far from land?’. The survey highlights the views of 70 of the world’s major banking groups and global systemically important financial institutions (G-SIFIs) on accounting change.

Key findings are:

  • Whilst there is still significant support  for the convergence process amongst banks, the majority surveyed consider the IASB and FASB are no longer on track to achieve this;
  • Banks are putting their implementation efforts on standby as the process continues to be subject to delay;
  • There is uncertainty about the ultimate outcome of financial instruments accounting change with an increase in the number of banks considering that the new requirements cannot be implemented in a way that will increase comparability between banks internationally; and
  • The capital and pricing impacts of changes such as impairment, debt valuation adjustments and the treatment of liquidity portfolios will be significant.

Please click to download Third Global IFRS Banking Survey – Still far from land?

    Earlier survey in the series aimed at capturing the views of the banking industry:

    To accompany the survey, Deloitte will hold an interactive webcast on 20 February 2013 at 12:00pm GMT. This webcast will provide attendees with an opportunity to further explore the findings of the survey and discuss current developments and their implications. Register here for this webcast.

    IASB updates on the current state of the insurance project

    04 Jan 2013

    At its December 2012 meeting, the IASB discussed unlocking the residual margin, proposals from preparers on a ‘floating residual margin’ and impairment of reinsurance assets held by an insurer. The IASB has updated its website to reflect decisions made at this meeting.

    Updates include:

    • A high level summary presenting the current status of the insurance contracts project.
    • A high level summary of the IASB's tentative decisions, showing where those decisions would affect the proposals in the Exposure Draft (ED) Insurance Contracts.
    • A detailed summary of how and where the proposals in the ED would change as a result of the IASB's and FASB's tentative decisions.
    • A podcast by Darrel Scott, IASB member and Andrea Pryde, Technical Principal on the developments made in the insurance contracts project during the meetings held in November 2012 and December 2012.

    More information on the insurance contracts project can be found on our IAS Plus project page.

    IFRS taxonomy 2012 in Japanese

    04 Jan 2013

    The IFRS Foundation has published a Japanese translation of the IFRS (International Financial Reporting Standards) Taxonomy 2012.

    Click for:

    Colombian Government confirms deferral of IFRS adoption

    04 Jan 2013

    In September 2012, the Colombian Government announced that it would defer mandatory IFRS application to 2015 in reaction to many submissions received that point at difficulties regarding the implementation of IFRSs. The deferral was now confirmed by publishing corresponding decrees in the Official Journal.

    IFRS adoption in Colombia is going to take place in three groups:

    • Group 1: Publicly traded entities, public interest entities and large companies that a) are branches of parent companies that report under IFRS, b) parent companies of branches that report under IFRS and c) companies exporting or importing over 50% of their sales or purchases will follow full IFRSs.
    • Group 2: Large and medium companies other than those included in Group 1 will apply the IFRS for SMEs.
    • Group 3: Micro entities will apply standards especially developed for their needs.

    The announced deferral of mandatory IFRS application for Group 1 and of mandatory application of the especially developed standards for Group 3 to 2015 has been confirmed by the publication of the following decrees (links to the Colombian Official Journal (Diario Oficial))

    A confirmation of the deferral of mandatory application of the IFRS for SMEs by Group 2 to 2016 is still outstanding.

    MASB releases feedback statement on discussion papers on Islamic finance transactions

    04 Jan 2013

    The Malaysian Accounting Standards Board (MASB) has published a feedback statement on three discussion papers exploring the accounting treatment of a number of Islamic financial transactions. For the time being, the MASB will refrain from issuing Technical Releases (TRs) based on the discussion papers and the feedback received although it had originally intended to do so because it wants to avoid the impression of creating local interpretations.

    The three discussion papers originally issued in December 2011 were DP i-1 Takaful, DP i-2 Sukuk and DP i-3 Shariah Compliant Profit-sharing Contracts.

    On takaful, which in many material respects can be likened to conventional insurance, respondents agreed on most points: A takaful contract should be within the scope of MFRS 4 Insurance Contracts (equivalent to IFRS 4 Insurance Contratcs); Qard, an interest-free loan, from a takaful operator to a deficient participants' fund should be measured at cost; and a retakaful contract should be subject to the same financial reporting requirements as a takaful. There was also general agreement regarding participating contracts, revenue recognition, and additional disclosures. However, there were mixed views as to whether a takaful operator should present consolidated financial statements for itself and its participants’ funds.

    On sukuk, which can be compared to a conventional bonds, there seemed to be also general agreement among the respondents. Questions discussed were the consolidation of special purpose entities (SPEs) related to the sukuk issuance, derecognition, classification, measurement, and treatment of derivatives. Regarding the derecognition of an asset that has been transferred for a sukuk issuance, respondents concluded that a reporting entity should derecognise the asset only if the relevant derecognition criteria for that asset are met, even though the transfer may be considered a true sale under Shariah. Respondents also agreed that the IASB’s proposed expected loss model for the impairment of financial assets may be applied to sukuk.

    Regarding Shariah compliant profit-sharing contracts, respondents agreed that the MFRS classification and measurement requirements (equivalent to the corresponding IFRS requirements) could be applied even if this may seem contrary to the ‘partnership’ nature of the base contract.

    Contrary to its earlier intentions, the MASB will not develop Technical Releases (TRs) based on the discussion papers and the comments received. This is to avoid that a TR could be seen as a local local interpretation of IFRSs. Nevertheless, the MASB will seek ways to help build a framework for the overall consistent treatment of Islamic finance transactions. It will also continue lobbying for the IASB itself to issue guidance on Islamic financial reporting matters. The IASB had announced in the feedback-statement to the agenda consultation that it has asked the MASB to help with setting up an expert advisory group on Islamic accounting. However, currently the IASB only aims at "learning more about Islamic (Shariah-compliant) transactions" before it makes any commitment regarding issuing any guidance.

    Please click for access to the feedback statement on the MASB website.

    IFRS taxonomy 2012 in Korean

    02 Jan 2013

    The IFRS Foundation has published a Korean translation of the IFRS (International Financial Reporting Standards) Taxonomy 2012.

    Click for:

    EFRAG draft comment letter on limited amendments to IFRS 9

    01 Jan 2013

    The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB's Exposure Draft ED/2012/4 'Classification and Measurement: Limited Amendments to IFRS 9 (proposed amendments to IFRS 9 (2010))' which was published on 28 November 2012.

    EFRAG welcomes the IASB’s decision to consider making limited amendments to IFRS 9 that are intended to address accounting mismatches arising from the application of different measurement models to financial assets and insurance liabilities. However, EFRAG also makes several suggestions regarding further improvements aiming at more clarity and at more useful information.

    Regarding the main point of the IASB proposals, the introduction of a 'fair value through other comprehensive income' (FVOCI) measurement category for particular financial assets, EFRAG members did not reach a consensus:

    With regards to the introduction of a third business model in IFRS 9, EFRAG TEG members have divergent views on the IASB’s proposals in the ED. Some EFRAG TEG members agree with the IASB’s proposals, whereas some other members believe that the measurement category at fair value through other comprehensive income (FV-OCI) should rather be introduced in IFRS 9 as an option at initial recognition for companies to avoid accounting mismatches like those arising from the interaction between the classification and measurement requirements in IFRS 9 and the future IFRS on insurance contracts. Some EFRAG TEG members are also concerned that the application of the new requirements is unclear. These members believe that there are uncertainties both with the dividing line between amortised cost and FV-OCI and between fair value through profit or loss and FV-OCI.

    Comments on the letter are invited by 18 March 2013.

    Click for:

    • EFRAG press release with link to the draft comment letter (link to EFRAG website).
    • Our previous story on the Exposure Draft ED/2012/4 Classification and Measurement: Limited Amendments to IFRS 9 (proposed amendments to IFRS 9 (2010)).
    • Deloitte's IFRS in Focus newsletter on the proposals for limited amendments to IFRS 9.

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