Two of the four main articles in the first issue of GAA Accounting deal with IFRSs:

• Auditor Liability
• Significantly Stronger Corporate Governance under SOX: Survey
• The collapse of the US sub-prime mortgage market: Understanding the impacts under IFRS
• IFRS for SMEs

There have been calls to temporarily disregard fair value accounting in order to neutralise possible pro-cyclical effects and avoid having to write-down assets. Intervention right now risks adding to the confusion and create even greater distrust in companies' accounts. What is needed is additional guidance on the valuation of complex and illiquid financial instruments. This has also been underscored in a report published by the Committee of European Banking Supervisors (CEBS) last month. It highlighted a number of accounting issues that may require further attention of accounting standards setters in order to improve consistency, comparability and transparency of valuation practices.

• Introduction
• Exposure Draft IFRS 2 Share-Based Payment and IFRIC 11 IFRS 2 – Group Treasury Share Transactions – Preliminary Comment Letter Analysis
• D23 Distributions of Non-cash Assets to Owners – First redeliberations
• D24 Customer Contributions – First redeliberations

Friday 11 July 2008 (9:00-Noon)

• Review of Tentative Agenda Decisions published in May IFRIC Update
  • IAS 39: Application of the Effective Interest Rate Method
• Staff Recommendations for Tentative Agenda Decision
  • Recognition of Lease Expense under an Operating Lease
  • Accounting for Trailing Commissions
  • Transaction Costs Deducted from Equity
  • Compliance Costs for REACH (an EU regulation on the Registration, Evaluation, Authorisation, and Restriction of Chemicals)
• Administrative Session
  • IFRIC work in progress

Observations about IFRIC 15:

• Fundamental issue. The fundamental issue is whether the developer is selling goods – the completed apartment or house – or is selling a service – a construction service as a contractor engaged by the buyer. Revenue from selling goods is normally recognised at delivery. Revenue from selling services is normally recognised on a percentage-of-completion basis as construction progresses. IFRIC 15 provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and, accordingly, when revenue from the construction should be recognised.
• IAS 11 or IAS 18? An agreement for the construction of real estate is a construction contract within the scope of IAS 11 only when the buyer is able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress (whether it exercises that ability or not). If the buyer has that ability, IAS 11 applies. If the buyer does not have that ability, IAS 18 applies.
• If IAS 18, service or goods? Even if IAS 18 applies, the agreement may be to provide construction services rather than goods. This would likely be the case, for instance, if the entity is not required to acquire and supply construction materials. If the entity is required to provide services together with construction materials in order to perform its contractual obligation to deliver real estate to the buyer, the agreement for the sale of goods under IAS 18.
• Implications of IFRIC 15. The main expected change in practice is a shift for some entities from recognising revenue as construction progresses to recognising revenue at a single time – at completion upon or after delivery. Agreements that will be affected will be mainly those currently accounted for in accordance with IAS 11 that do not meet the definition of a construction contract as interpreted by the IFRIC and do not transfer to the buyer control and the significant risks and rewards of ownership of the work in progress in its current state as construction progresses.