The International Accounting Standards Board held its July 2006 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 18-21 July 2006. Click here to go to our Notes Taken by Deloitte Observers at the July 2006 Board Meeting.

The Interpretation addresses an apparent conflict between the requirements of IAS 34 Interim Financial Reporting and those in other standards on the recognition and reversal in financial statements of impairment losses on goodwill and certain financial assets.

IFRIC 10 concludes that:

• An entity shall not reverse an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost.
• An entity shall not extend this consensus by analogy to other areas of potential conflict between IAS 34 and other standards.

IFRIC 10 is effective for annual periods beginning on or after 1 November 2006. Earlier application is encouraged.

Click for Press Release (PDF 63k).

 

The International Accounting Standards Board held its July 2006 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 18-21 July 2006. Click here to go to our Notes Taken by Deloitte Observers at the July 2006 Board Meeting.

IFRS 2006/7 will be held on 10 October 2006 in London. Speakers include:

• Sir David Tweedie, Chairman of the IASB
• Robert H Herz, Chairman of the FASB
• Ken Wild, Deloitte's Global IFRS Leader

Click to download the (PDF 234k), which includes a detailed programme and registration form.

Two of the four appointments will be from North America, one from Europe, and one from any area of the world. In selecting a Trustee from any area of the world, the Trustees have expressed a preference for candidates from Africa. The appointments will be for three years, commencing on 1 January 2007 and ending on 31 December 2009. Terms may be renewed for a further three years. Click for IASCF Announcement (PDF 25k).

The IASB has announced two changes to the Agenda of its July 2006 Board Meeting:

• The following topic previously scheduled for Friday morning has been removed from the agenda: Proposed Amendments to IFRS 1 – Cost of investment in a subsidiary
• Discussion and possible agenda decision for Related Party Disclosures has been moved from last agenda item on Thursday to Friday morning.

Those concerns relate to:

• the proposal that the objective of financial reporting should focus only on decision-usefulness, with stewardship being subsumed within this rather than a specific part of the objective, or a separate objective.
• the focus on financial reporting, not just the financial statements – can the same framework be more widely applied?
• the widening of the definition of the primary users of financial reports to cover 'present and potential investors and creditors, and their advisors' – does this mean that the focus will move even further away from meeting the needs of the existing shareholders?
• the proposal to drop 'reliability' as a qualitative characteristic and to replace it with 'faithful representation'; and
• the introduction of verifiability as a component of faithful representation. Click to download:
  • IASB-FASB Press Release on the Discussion Paper (PDF 37k).
  • (PDF 66k)
  The ASB's second release relates to work that the ASB is doing jointly with the accounting standard setters in Australia, Canada, and New Zealand on the applicability of the concepts in the Discussion Paper to not-for-profit entities in the private and public sector. The chairs and senior staff of the four boards have jointly published a background paper that highlights three issues relating to the objective of financial reporting:
  • an insufficient emphasis on accountability/stewardship;
  • a need to broaden the identified users and establish an alternative primary user group; and
  • the inappropriateness of the pervasive cash flow focus. Click to download:
    • (PDF 60k)
    • (PDF 146k)

Our overall view:

We do not think the proposals in the ED are desirable at this time, given that the more fundamental issues related to financial statement presentation are under consideration by the IASB and the US Financial Accounting Standards Board within Segment B of the Financial Statement Presentation Project. We are particularly concerned that, notwithstanding the IASB's statements to the contrary, the proposals in the ED, if issued as amendments to IAS 1. will inevitably have an impact on the boards' deliberations on financial statement presentation generally. In addition, we are concerned that, although many IFRS users made the transition to IFRSs in 2005, there are significant jurisdictions preparing for transition in the period 2007-2009. In our view, both existing and prospective users and preparers of IFRS financial statements would be better served by changing their financial statement presentation once: to the accounting standard that is the result of the IASB-FASB joint project.

All of Deloitte's past comment letters to the IASC and the IASB may be Found Here.

During the second quarter of 2006, accounting standard-setters and accounting regulators issued a number of final and proposed FASB Interpretations, FSPs, EITF consensuses, SEC rules, PCAOB rules, IFRSs, etc. affecting accounting, financial reporting, and corporate governance. Accounting Roundup: 2nd Quarter in Review–2006, presents brief descriptions of those pronouncements, as well as certain other regulatory and professional developments in accounting and financial reporting. The articles included derive from issues of the Accounting Roundup newsletters published in the second quarter of 2006, with updates added where appropriate. You will find past issues Here.

109. This interpretation is effective for financial years beginning after 15 December 2006, with early adoption encouraged. The interpretation takes a two-step approach for recognising and measuring tax benefits:

• 1. Recognition: For each tax deduction or other tax position, an entity must make a hypothetical assessment: if a dispute with the taxing authority were taken to the court of last resort, is it more likely than not that the tax position would be sustained as filed? If it is, the recognition threshold is met.
• 2. Measurement: An entity should recognise the largest amount of tax benefit that is greater than 50 percent likely of being realised upon ultimate settlement with the taxing authority. In this step, the enterprise should also presume that the taxing authority has full knowledge of all relevant information.

This matter is within the scope of the Joint IASB-FASB Convergence Project on Income Taxes. Since the policy of the two Boards is generally to look to the most recently issued pronouncement of the two Boards in reaching convergence decisions, the conclusions in FASB Interpretation 48 could well become the proposed answer in the joint project. You can download the full FASB Interpretation from the FASB Website without charge.