News

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

Public consultation on EFRAG enhancement

23 Jul 2008

The Supervisory Board of the European Financial Reporting Advisory Group (EFRAG) has invited public comment on a proposal for the enhancement of EFRAG.

The proposal is in response to calls for strengthening the European contribution to the work of IASB. EFRAG is seeking input on:
  • enhancing the EU's pro-active input to the IASB by building on EFRAG's structures and experience;
  • further involvement of National Standard Setters and coordination of European resources and the creation of a Planning and Resource Committee
  • enhanced governance, transparency of EFRAG and accountability to European organisations and institutions;
  • balanced involvement of European stakeholders in EFRAG;
  • a significant increase in EFRAG's human and financial resources.

The proposal envisions a new EFRAG structure as shown in the diagram below. Public consultation on EFRAG enhancement

The structure would include:

  • A new General Assembly (GA) with a Governance and Nominating Committee. The GA would consist of representatives of major European organisations. It would meet annually to approve the budget and appoint Supervisory Board (SB) members. The Governance and Nominating Committee would make recommendations on appointments to the SB.
  • The Supervisory Board (17 members) would have responsibilities for oversight, financing, and some external liaisons (including IASCF, EC, and EP). It would also appoint members of the Technical Expert Group (TEG) and Planning and Resource Committee (PRC).
  • The PRC would coordinate EFRAG's pro-active work with the IASB agenda and EFRAG technical surveys.
  • There would be a new Consultative Group, similar to SAC, to advise TEG, PRC, and SB. It would meet annually.
  • Regarding TEG, no major changes are proposed to the existing structure (9 to 12 voting members plus 3 non-voting members from major EU standard-setters).
The proposal envisions a budget for EFRAG of €3 million in 2009. That would double to €6 million in 2010, with the European Commission contributing half. EFRAG would have a technical staff of 20. The proposal envisages that the new structure will be put in place during the first half of 2009. Click to download EFRAG Enhancement Proposal (PDF 352k). Comment deadline is 22 September 2008.
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2008 Ken Spencer Memorial Lecture is posted

22 Jul 2008

Prof. Stephen A. Zeff of Rice University recently delivered the 2008 Ken Spencer Memorial Lecture, titled IFRS Developments in the USA and EU, and Some Implications for Australia.

The lecture is available on the Australia Financial Reporting Council Website or as a PDF Download from that site (PDF 105k).

 

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EFRAG report – 13 IASB pronouncements await EU endorsement

22 Jul 2008

The European Financial Reporting Advisory Group (EFRAG) has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments.

Click to download the Endorsement Status Report as of 21 July 2008 (PDF 40k). Currently, there are 13 IASB pronouncements that have not yet been endorsed for use in Europe, as follows:
  • IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary, Jointly-Controlled Entity, or Associate
  • IFRS 2 Share-based Payment: Vesting Conditions and Cancellations
  • IFRS 3 Business Combinations (2008)
  • IAS 1 Presentation of Financial Statements (revised September 2007)
  • IAS 23 Borrowing Costs (revised March 2007)
  • IAS 27 Consolidated and Separate Financial Statements (2008)
  • IAS 32 and IAS 1 Amendments for Puttable Instruments and Obligations Arising on Liquidation
  • IFRIC 12 Service Concession Arrangements
  • IFRIC 13 Customer Loyalty Programmes
  • IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements, and their Interaction
  • IFRIC 15 Agreements for the Construction of Real Estate
  • IFRIC 16 Hedges of a Net Investment in a Foreign Operation
  • Improvements to IFRSs – 2007 (affects various standards)

 

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IAS Plus quarterly newsletter for July 2008

22 Jul 2008

The July 2008 IAS Plus Quarterly Newsletter has been published.

The newsletter reports on the 2nd quarter 2008 activities of the IASB, the IFRIC, and the IASC Foundation, and also on worldwide issues and events relating to international financial reporting:

 

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IASB posts 'near final' amendments to IAS 39 on hedge accounting

22 Jul 2008

The IASB has made available to its Subscribers a near final draft of amendments to IAS 39 relating to eligible hedged items.

The amendments will clarify two hedge accounting issues:
  • identifying inflation as a hedged risk, and
  • hedging with options.
The amendments are based on the September 2007 exposure draft Exposures Qualifying for Hedge Accounting, but focus more narrowly only on the two foregoing areas.
Click to view the IASB subscriber site.

 

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG letter to IASB on work programme and MOU

22 Jul 2008

The European Financial Reporting Advisory Group (EFRAG) has written to the IASB expressing support and also some concerns and the IASB's work programme and the IASB/FASB memorandum of understanding.

The EFRAG Letter (PDF 39k) states:

We have noted that in recent months the IASB has been working on an update of the existing IASB/FASB Memorandum of Understanding to incorporate new milestones covering the period to 2011.... As Europe is currently by far the biggest user of IFRS (in terms of companies), we are very interested in those priorities and in the IASB's work programme in general. We therefore thought it important to let you know our views on the issues discussed. Those views are set out in the numbered paragraphs that follow.

Issues discussed in EFRAG's letter include:

  • Getting IFRS ready for the US and other countries transitioning to IFRS: The need for stability.
  • The credit crunch: EFRAG recognises that, as a result of the current market turmoil, the IASB is carrying out a lot of work over a very short space of time and that this work has to be given a high priority.
  • Balance the work programme between needs of Europe and other jurisdictions: 'The key issue for jurisdictions like Europe in these circumstances is whether an appropriate balance has been achieved between the interests of those jurisdictions using IFRS and those that are currently not using IFRS. There are several aspects of the work programme that concern us in this respect.' EFRAG is concerned about:
    • De-emphasis of the insurance project
    • Placing 'US views above the views of other jurisdictions'
    • Implementing views on fair value measurement 'without even being redebated'
    • The IASB limiting its consideration of the distinction between liabilities and equity to the three approaches mentioned in the recent FASB Preliminary Views document.
  • Cross cutting issues: The IASB should allocate resource to addressing cross-cutting issues and should not cut back its work on the Conceptual Framework. These must be resolved before the IASB can decide on measurement, the difference between equity and liabilities, and revenue recognition.
  • Discontinue work on the projects formerly known as the short-term convergence projects: 'In our view the projects will achieve relatively little but will be resource-hungry because they are relatively controversial'.
  • Special-purpose entities: The IASB should look beyond FASB's FIN 46R for principles that can be used to account for SPEs.
  • IASB comment documents: 'It is clear from the revised Technical Plan that the IASB will need to issue consultative papers and final documents at an almost unprecedented rate over the next few years. This will undoubtedly place a strain on the IASB's constituents. We would encourage the IASB to do all that it can to help constituents cope with that burden. Advance warning about publication dates and careful selection of comment deadlines and effective dates will all help ease that burden.'
  • Public consultation on the IASB's agenda decisions: IASB should consult.

 

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IASCF publishes constitution review proposals for comment

21 Jul 2008

The Trustees of the IASC Foundation have published, for public comment, proposals arising from the first part of their 2008 review of the IASC Foundation's Constitution.

The proposals address two issues – a new Monitoring Group for the IASCF and the size and geographical composition of the IASB:

The IASCF Has Invited Comment on These Proposals:
  • Monitoring group. The IASCF Constitution would be amended to establish a formal link between the IASCF and a new Monitoring Group comprising representatives of public authorities and international organisations that have requirements for accountability to public authorities. The Monitoring Group would have the responsibility of approving the selection of IASCF Trustees. The Trustees would also report to the Monitoring Group regularly to enable it to address whether and how the Trustees are fulfilling their role set out in the Constitution. A Memorandum of Understanding will be agreed between the Monitoring Group and the Trustees describing the interaction of the Monitoring Group with the Trustees. Under the proposal, the initial members of the Monitoring Group would be:
    • the responsible member of the European Commission,
    • the managing director of the International Monetary Fund,
    • the chair of the IOSCO Emerging Markets Committee,
    • the chair of the IOSCO Technical Committee,
    • the commissioner of the Japan Financial Services Agency,
    • the chairman of the US Securities and Exchange Commission, and
    • the president of the World Bank.
  • IASB size and composition. The proposal would expand the IASB from 14 to 16 members by not later than 1 July 2012. Up to three members could be part-time. Approval of IFRSs and EDs would require 10 affirmative votes (9 if there are fewer than 16 IASB members serving). The proposal would also adopt new guidelines regarding the geographical diversity of the members of the IASB. The required geographical split of the IASB would be:
    • four members from the Asia/Oceania region,
    • four members from Europe,
    • four members from North America,
    • one member from Africa,
    • one member from South America, and
    • two members appointed from any area, subject to maintaining overall geographical balance.
Comment deadline is 20 September 2008. The Trustees expect to reach final decisions on this part of the Constitution Review at their meeting in Beijing on 9-10 October 2008. The changes would take effect from 1 January 2009. Click for Press Release (PDF 52k). You can download the proposal from www.ifrs.org. The second part of the Constitution Review, covering other aspects of the IASC Foundation's Constitution, will begin after the Trustees' October 2008 meeting. The Trustees will publish a further discussion document inviting respondents to suggest topics for consideration by the Trustees. Consultations will be held during the course of 2009, with changes taking effect from 1 January 2010.

 

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Upcoming Deloitte dBriefs webcast on IFRSs

20 Jul 2008

Deloitte (United States) will present a dBriefs webcast relating to IFRSs as follows:

Topic: International Financial Reporting Standards: Opportunities and Challenges Facing Consumer Businesses
Date: 24 July 2008
Time: 11:00 AM EDT (15:00 GMT)
Host: Stacy Janiak, Partner - Deloitte LLP

By 2010 or 2011, it is expected that US companies will have the option of using IFRSs for their financial reporting.
What can leading consumer business and retail companies do to position themselves for such a transition? We'll discuss:
  • Regulatory updates, including recent SEC activity.
  • Benefits, challenges, and the broader implications of IFRSs.
  • Approaches and strategies for adopting IFRSs.
Learn more about how consumer businesses can effectively respond to the global movement toward IFRSs.

 

 

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ARC okays endorsement of 5 IFRSs, defers on IFRIC 12

20 Jul 2008

The European Commission's Accounting Regulatory Committee (ARC) met on 11 July 2008. Here are meeting highlights: By formal votes, it agreed to recommend endorsement of the following pronouncements for use in the European Union: IAS 1 (revised 2007), IAS 23 (revised 2007), IFRS 2 (revised 2008), IFRIC 13, and IFRIC 14. EFRAG has also recommended that those pronouncements be adopted.

They will now continue through the next step in the adoption process – the European Parliament's Regulatory Procedure with Scrutiny Committee. IFRIC 14 is effective for calendar 2008 financial years, IFRIC 13 for years beginning 1 July 2008, and the others starting in 2009.
  • IFRIC 12, which is effective for annual periods beginning on or after 1 January 2008, was discussed, but discussions will continue at the ARC's October meeting.
  • The ARC discussed the equivalence of third country GAAPs and EU-endorsed IFRSs, IASB governance, and EFRAG enhancement, but no decisions or recommendations were made.
  • Draft proposals for reorganising EFRAG were agreed and will be issued as a consultation document in third quarter 2008.
    XBRL (eXtensible Business Reporting Language) (mid blue) Image

    Why you need to know about XBRL

    18 Jul 2008

    Here are the questions.

    Download Deloitte's new booklet Why You Need to Know About XBRL (PDF 153k) for answers. The booklet is written from the point of view of a US SEC registrant, but most of the answers are relevant in a global context as well.

    Why you need to know about XBRL

    1. What is XBRL or 'interactive data'?
    2. How does XBRL make data interactive?
    3. What if a registrant reports a financial statement line item that is unique to it (i.e., other companies would not use this line item)? Will the registrant be forced to use one of the predefined tags?
    4. What are the principal elements of the SEC proposed rules?
    5. What is the phase-in schedule?
    6. What filings and other financial information are subject to the proposed rules?
    7. At what level of detail must the footnotes be tagged in the first year and subsequent years?
    8. Under the proposed rules, when must the interactive data (XBRL-based information) be submitted to the SEC?
    9. Will XBRL replace the EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system? Will current filing formats in the EDGAR system be replaced by XBRL (i.e., will registrants be required to file XBRL documents rather than conventional financial statements, or will they be required to file both)?
    10. What steps can a registrant take now to prepare for the SEC's XBRL mandate?
    11. What implementation options are available to a registrant for preparing XBRL-based financial statements?
    12. Will XBRL documents submitted to the SEC be subject to an audit requirement? What might assurance on XBRL-formatted financial statements include?
    13. Do the current proposed rules apply to mutual funds?
    14. Where can I find more information about XBRL?
    15. How can Deloitte help companies prepare for and make the most of XBRL?
    Our XBRL page is Here.

     

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