The meeting will provide participants an opportunity to discuss the proposals in greater detail with both the FASB and IASB. In order to cover a wide range of views on the topic, the Boards are seeking participation from preparers, auditors, investors, and others.

Click for:

• More information on the roundtable meetings on the IASB website
• IAS Plus article on the leases exposure draft
• Deloitte IFRS podcasts — Revised lease accounting proposals interviews
• IAS Plus project page on the IASB’s leases project

The IVSC is convinced that the lack of globally accepted and recognised standards for the valuation of derivatives has led to a lack of trust in the valuations that are produced. The problem is particularly acute with over the counter (OTC) products which are not traded on exchanges and for which current price information is not available. And yet all companies that hold any sort of financial instrument need to value these in their accounts.

The ED lists the main types of equity derivatives with a description for each of the listed products. It describes various valuation models and includes the key assumptions and other inputs required. However, products and valuation models are not mapped to each other, i.e. the ED does not contain comments on each model's relative applications and when it is appropriate to use one rather than another.

Comments on the ED are requested by 30 September 2013.

Please click for the following information on the IVSC's website:

• Press release
• Access to the ED

The agenda for the meeting is reproduced below:

Agenda papers from this meeting are not yet available, but will be made available on the IASB's website in due course.

As reported earlier in our 13 June 2013 article, the Directive aims simplifying the accounting requirements for small companies and improves the clarity and comparability of companies' financial statements within the Union.

The Directive enters into force starting twenty days after it has been published in the Official Journal of the European Union. The EU Member States have to incorporate the rules of the Directive with their national law by 20 July 2015.

Full text of Directive 2013/34/EU is available on the European Commission website.

The revised Transparency Directive, which was also approved by the European Parliament on the same day as the new Accounting Directive, has not been published in the Official Journal yet. The text is however available in the "Texts adopted" section of the EC website.

So far, the report was only available in the Japanese language. The Financial Services Authority of Japan (FSA) has now published an English language translation of the report.

Please click for:

• Access to the BAC final report in English translation (link to FSA website)
• Our summary of the key recommendations of the report

In his speech given at the IFRS Foundation conference in Amsterdam, Hans Hoogervorst had spoken of the necessity to "break the boilerplate"; Elisse Walter called disclosures "a chance to tell your story". She focused mainly on disclosure in the management’s discussion and analysis and did so by taking the audience into the world of the playwright William Shakespeare whose plays were and still are successful because he knew three things: the stage, the audience and the players.

The Stage

Commissioner Walter introduced her audience to the idea that regulations set the stage for an entity's disclosures but they do not tell the story. They form the backdrop and the floor and maybe the wings through which the player enters, but depending on them to tell the story would make them do more than they are intended for. It is on this stage that the company needs to tell its story and identify the objects and props that will help it to bring the story across. She also admitted that "a good story may not always be a happy story. Shakespeare was a master of both tragedy and comedy. But the real story — and by that I mean the whole story — is the one that needs to be told".

The Audience

To Commissioner Walter's mind, the audience in the case of disclosures should always be the investors. This would give the company two responsibilities: knowing the audience and accepting them as equals. Knowing the audience will help an entity to identify the questions that will be asked and should not go unanswered. As Commissioner Walter reminded her audience: "Disclosure isn’t driven by what the company wants to disclose but by what the investors want to know." She also believes the audience needs to be accepted as business partners, the paying guests that determine not only the success of the play but also of the company in the long run. This, Commissioner Walter believes, should set the tone for the communication with the investors: "You wouldn’t address a business partner with boilerplate. Your investors deserve the same respect. They also deserve the whole story."

The Players

Carrying her analogy on to the players involved, Commissioner Walter encouraged directors to get know the people and the processes involved in putting disclosures together, including behind the scene. Only then they would see the full picture and could understand the music the disclosures play to. "I believe directors can influence that tone by being engaged, by reading the disclosure with a critical eye and by holding management’s feet to the fire when they believe there is more to the story that ought to be told."

The full text of the speech is available on the SEC website.

Much of the debate around the Green Paper has been focused on the question whether it is fair value accounting that leads to short-termism in investor behaviour. FEE admits that the accounting basis, whether fair value or historical cost, has an impact on investment choices. However, it also stresses "that financial information at current valuation is always useful, including for long-term investors. Even long-term investors cannot afford to ignore short-term fluctuations," thus picking up a main point IASB Chairman Hans Hoogervorst made in his April 2013 speech entitled Accounting and long term investment – 'Buy and hold' should not mean 'buy and hope'.

FEE therefore concludes that current value information of long-term investments should be provided. FEE also reminds the European Commission that "the current use of fair value is already limited to instances where it provides more useful information than historical cost".

In connection with stability and long-term financing, FEE explicitly responds to some points raised in the Green Paper:

• On the Green Paper's claim that the introduction of fair value accounting causes a shift from equity to bonds by institutional investors, FEE "is not aware of any convincing empirical evidence supporting this statement".
• On the Green Paper's claim that fair value accounting encourages an increase in risk exposure by long-term investors, if the volatility is recognised outside their profit and loss accounts, FEE "is also not aware of any empirical research underlying this assumption".

FEE generally suggests being very careful on conclusions drawn on the possible influences of the use of fair value on stability and long-term financing and to have due regard for empirical evidence. Looking back on the financial crisis and the debate around fair value accounting in that connection, FEE reminds the European Commission that research has not identified a negative role played by fair value in the financial crisis, especially in connection with instability - the majority of academic research concluded fair value accounting was not a major cause of volatility, rather, it contributed to identifying and assessing the situation early.

FEE concludes that the use of fair value accounting should not be restricted any further as applying fair value accounting can make financial information more transparent and does reflect current market conditions.

Please click for:

• FEE comment letter (link to FEE website)
• Access to the Green Paper in all languages of the European Union (link to EC website)
• The Deloitte European Economic Area member firms' comment letter on the Green Paper

The European Financial Reporting Advisory Group (EFRAG) will hold a roundtable meeting on 8 July 2013 in Brussels to facilitate a discussion with European constituents regarding “the financial reporting aspects of long-term investing business models and financial reporting issues raised in the EC Green Paper on the long-term financing, more particularly on the use of fair value accounting for long-term investments.”

Ms Haoyu is an officer in the Accounting Regulatory Department of the Chinese Securities Regulatory Commission (CSRC). Before joining the CSRC, she worked as an auditor in Hua Ming. Ms Haoyu is a CPA and holds a master’s degree in management from Peking University.

Please click for the announcement on the IASB website and more information on the work of the IFRS Advisory Council on IAS Plus.

On 27 June 2013, the International Accounting Standards Board (IASB) issued Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39 'Financial Instruments: Recognition and Measurement'). Under the amendments there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The amendments are effective for annual periods beginning on or after 1 January 2014, with earlier application being permitted.

Endorsement of the amendments for application in Europe might be expected in the first quarter of 2014.

Please click for the EFRAG Endorsement Status Report as of 27 June 2013.