December 2006 financial reporting update - Deloitte Touche Tohmatsu

Welcome to our first Accounting Alert for 2007 – a financial reporting update for December 2006 reporting periods.

This Accounting alert provides a very high level overview of the new of new and revised Standards, Interpretations and other requirements that are effective for December 2006 year ends and half-year ends. Where applicable, references are provided to the past newsletters or other publications that deal with specific requirements in more detail. This will allow entities to quickly check that they have fully considered all the new requirements as part of their current reporting close process.

The tables below summarise the following:

new mandatory requirements for 31 December 2006 year ends
new mandatory requirements for 31 December 2006 year ends and half-year ends
new mandatory requirements for 31 December 2006 half-year ends, available for early adoption for 31 December 2006 year ends
non-mandatory requirements that are available for early adoption for 31 December 2006 year ends and half-year ends.

In addition to the various publications and other documents listed for each item, our Model Financial Reports provide details of changes in reporting requirements and provide comprehensive examples of new disclosure requirements.

We have also included below a copy of the Special Global Edition of our IAS Plus Newsletter, entitled Closing Out 2006. This document summarises from an IFRS perspective all of the new and revised Standards and Interpretations in effect for December 2006 year ends and beyond.

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New mandatory requirements for 31 December 2006 year ends

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	More information
New and revised Standards
AASB 2006-3 Amendments to Australian Accounting Standards [AASB 1] Inserts an “Aus” paragraph into AASB 1 to allow the use of the standard by not-for-profit public sector entities experiencing extreme difficulties in complying with some Standards subject to making certain disclosures.	(ending) 30 June 2006
Other
Corporations Regulation 2M.6.04 Amends the Corporations Act 2001 requirements surrounding key management personnel compensation in light of AASB 124 Related Party Disclosures.	amended June 2006	Accounting Alert 2006/01

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New mandatory requirements for 31 December 2006 year ends and half-year ends

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	More information
New and revised Standards
AASB 119 Employee Benefits, AASB 2004-3 Amendments to Australian Accounting Standards [AASB 1, AASB 101, AASB 124] Implements IASB Amendments to IAS 19 Employee Benefits - Actuarial Gains and Losses, Group Plans and Disclosures in the Australian context. Many entities would have early adopted this Standard on transition to A-IFRS	(beginning) 1 January 2006	Accounting Alert 2005/01
AASB 1048 Interpretation and Application of Standards Updated version of this ‘service standard’ to provide a mandatory requirement to comply with Interpretations in the Australian context	(ending) 31 December 2006	See the related Interpretations below
AASB 2005-1 Amendments to Australian Accounting Standard [AASB 139] Implements IASB Amendment to IAS 39 - Cash Flow Hedge Accounting of Forecast Intragroup Transactions in the Australian context	(beginning) 1 January 2006
AASB 2005-4 Amendments to Australian Accounting Standards [AASB 139, AASB 132, AASB 1, AASB 1023 and AASB 1038] Implements the IASB Amendment to IAS 39 - The Fair Value Option in the Australian context, restricting the ability to designate financial instruments as ‘fair value through the profit and loss’	(beginning) 1 January 2006	Accounting Alert 2005/06 IAS Plus Newsletter (July 2005, PDF 64KB)
AASB 2005-6 Amendments to Australian Accounting Standards [AASB 3] Introduces a scope exemption in AASB 3 Business Combinations for business combinations involving entities or businesses under common control, bringing AASB 3 into line with IFRS 3. Many entities with affected transactions have early adopted this Standard	(beginning) 1 January 2006	Deloitte IFRS 3 guide (PDF 1894kb) and Australian supplement
AASB 2005-9 Amendments to Australian Accounting Standards [AASB 4, AASB 1023, AASB 139 & AASB 132] Implements the IASB Amendments to IAS 39 & IFRS 4 - Financial Guarantee Contracts in the Australian context	(beginning) 1 January 2006	Accounting Alert 2007/02 Accounting Alert 2005/13 IAS Plus Newsletter (December 2005, PDF 46KB)
AASB 2006-1 Amendments to Australian Accounting Standards [AASB 121] Implements the IASB Amendments to IAS 21 - Net Investment in a Foreign Operation in the Australian context	(ending) 31 December 2006
AASB 2006-3 Amendments to Australian Accounting Standards [AASB 1045] Extends the transitional expiry date in relation to land under roads for public sector entities for a further 12 months to 31 December 2007	(ending) 31 December 2006	Accounting Alert 2006/11
AASB 2006-4 Amendments to Australian Accounting Standards [AASB 134] Eliminates an inconsistency between AASB 134 Interim Financial Reporting and AASB 1049 Financial Reporting of General Government Sectors by Governments	(interim periods ending) 31 December 2006	Accounting Alert 2006/15
New Interpretations
Interpretation 4 Determining whether an Arrangement contains a Lease, AASB 2005-5 Amendments to Australian Accounting Standards [AASB 1 & AASB 139] Equivalent to IFRIC 4 of the same name. Concludes that whether an arrangement is, or contains, a lease, should be determined based on the substance of the arrangement. The amending standard implements consequential amendments to AASB 1	(beginning) 1 January 2006	IAS Plus Newsletter (December 2004, PDF 104KB)
Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds, AASB 2005-5 Amendments to Australian Accounting Standards [AASB 1 & AASB 139] Equivalent to IFRIC 5 of the same name. Requires a contributor to a fund to recognise its obligation to pay decommissioning costs as a liability and recognise its interest in the fund separately unless the contributor is not liable to pay decommissioning costs even if the fund fails to pay. The amending standard implements consequential amendments to AASB 139	(beginning) 1 January 2006	IAS Plus Newsletter (December 2004, PDF 104KB)
Interpretation 6 Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment Equivalent to IFRIC 6 of the same name. Will only directly affect entities with operations affected by the European Union Directive on Waste Electrical and Electronic Equipment (WE&EE)	(beginning) 1 January 2006	IAS Plus Newsletter (September 2005, PDF 51kb)
Other
New/revised ASIC Class Orders: CO 05/642 Combining financial reports of stapled security issuers CO 05/644 Disclosing post balance date acquisitions and disposals CO 05/910 Auditor's independence declaration – exemption CO 06/68 Conditional relief for foreign licensees from financial reporting and record keeping obligations CO 06/441 Including different registered scheme financial reports in a single document		Accounting Alert 2006/02 Accounting Alert 2006/06

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New mandatory requirements for 31 December 2006 half-year ends, available for early adoption for 31 December 2006 year ends

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	More information
New Interpretations
Interpretation 7 Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies Equivalent to IFRIC 7 of the same name. Not expected to be of widespread importance in the Australian context, but may affect some entities with foreign operations in certain jurisdictions	(beginning) 1 March 2006	IAS Plus Newsletter (December 2005, 51kb)
Interpretation 8 Scope of AASB 2 Equivalent to IFRIC 8 Scope of IFRS 2. May impact some entities with operations in certain countries, particularly those entities affected by Black Economic Empowerment (BEE) transactions in South Africa	(beginning) 1 May 2006	IAS Plus Newsletter (January 2006, 53kb)
Interpretation 9 Reassessment of Embedded Derivatives Equivalent to IFRIC 9 of the same name. Prohibits an entity from reassessing whether an embedded derivative needs to be separated from the host contract after the initial hybrid contract is recognised unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required	(beginning) 1 June 2006	Accounting Alert 2006/04 IAS Plus Newsletter (March 2006, 58kb)

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Non-mandatory requirements available for early adoption for 31 December 2006 year ends and half-year ends

As noted in Accounting Alert 2006/07, in July of 2006 the International Accounting Standards Board (the IASB) acknowledged that entities adopting IFRSs have undergone a period of enormous change in 2005. In order to provide a further period of stability while these changes are fully absorbed by reporting entities, the IASB has made a commitment not to require the adoption of new Standards under development or any major amendments to existing Standards before 1 January 2009. This commitment does not preclude the publication of new Standards before 2009, and entities will be permitted to adopt new Standards on a voluntary basis before their effective dates.

Although entities are expected to have some breathing space with respect to the adoption of new Standards for the next few years, we expect that the number of Interpretations issued by the International Financial Reporting Interpretations Committee (the IFRIC) will increase. Such Interpretations, and minor amendments to Standards, may be effective before 2009.

In addition, entities need to be aware of new Standards and Interpretations as they are issued, in order to comply with the requirement included in AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors to disclose in their financial statements the impact of Standards and Interpretations in issue and not yet effective.

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	More information
New and revised Standards
AASB 101 Presentation of Financial Statements (revised) Removes Australian specific requirements from AASB 101. Early adoption is unlikely to be beneficial for many entities	(beginning) 1 January 2007	Accounting Alert 2006/11
AASB 7 Financial Instruments: Disclosures, AASB 2005-10 Amendments to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038] AASB 7 is equivalent to IFRS 7 of the same name and introduces new disclosure requirements in relation to financial instruments. AASB 2005-10 implements various amendments to other standards, most notably to implement the IASB Amendment to IAS 1 – Capital Disclosures	(beginning) 1 January 2007	IAS Plus Newsletter (October 2005, PDF 58kb) December 2006 model financial reports (Section C illustrates early adoption of AASB 7)
AASB 1049 Financial Reporting of General Government Sectors by Governments This Standard applies to the Australian Government and each State and Territory Government and is therefore of limited relevance to other entities	(beginning) 1 July 2008	Accounting Alert 2006/10
IFRS 8 Operating Segments The AASB has not yet issued an equivalent to IFRS 8 (AASB 8) and it would only be able to be early adopted by entities if issued before the financial statements are signed. IFRS 8 introduces a new approach to segment reporting to align IFRS with US. Early adoption may be attractive for some entities	(beginning) 1 January 2009	IAS Plus Newsletter (December 2006, PDF 113kb)
New Interpretations
Interpretation 10 Interim Financial Reporting and Impairment Equivalent to IFRIC 10 of the same name. Concludes that where an entity has recognised an impairment loss in an interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost, that impairment should not be reversed in subsequent interim financial statements nor in annual financial statements	(beginning) 1 November 2006	IAS Plus Newsletter (August 2006, 49KB)
IFRIC 11 IFRS 2 - Group and Treasury Share Transactions The AASB has not yet issued an equivalent Interpretation to IFRIC 11. Early adoption would be available if an equivalent Australian Interpretation and amended AASB 1048 are issued before the financial statements are signed	(beginning) 1 March 2007	IAS Plus Newsletter (December 2006, PDF 85kb)
IFRIC 12 Service Concession Arrangements The AASB has not yet issued an equivalent Interpretation to IFRIC 12. Early adoption would be available if an equivalent Australian Interpretation and amended AASB 1048 are issued before the financial statements are signed	(beginning) 1 January 2008	IAS Plus Newsletter (December 2006, PDF 128kb)
Other
Revised Guidance on Implementing IFRS 4	(beginning) 1 January 2007

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