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Accounting alert 2009/08 - July 2009 AASB meeting highlights

The AASB's July meeting was held on 29-30 July. This was the first meeting of the AASB with Kevin Stevenson as its new Chairman, replacing Bruce Porter who has been Acting Chairman for the past eight months.

The big ticket item was the ongoing discussion on differential reporting. Whilst no groundbreaking decisions were made, there was debate about whether the 'reporting entity concept' has a continuing role to play in the Australian reporting framework and this is to be explored further in a white paper. Many will find this a welcome development, but is unclear how the AASB's 'umbrella' concept of the reporting entity is intended to apply, as the view seems to be that regulators should use the concept to determine who should report, rather than the AASB.

There also appears to be a suggestion that perhaps IFRS for SMEs is not necessarily appropriate for Australia, at least not in all cases (such as subsidiaries of listed companies).

It is early days in the AASB's reconsideration of these issues and much time, and probably many more meetings, will pass before final decisions are made. It's a case of 'watch this space'.

A high-level summary of the matters discussed at the meeting is presented in the tables below.

Sector-neutral matters

Topic Overview Comments and more information
Differential reporting

The Board considered the reporting entity concept and its application, and an alternative regime to the IFRS for SMEs, deciding:

  • To retain the reporting entity concept as an 'umbrella concept' to be used to determine which entities should report
  • To prepare a white paper articulating the overall policy and technical issues

Whilst these decisions are tentative at this stage, it appears that an IFRS for SMEs is not a certainty in the Australian context and that perhaps the reporting entity concept is not quite dead yet.

Agenda Paper 3.1 Memorandum from Kevin Stevenson and Ahmad Hamidi dated 14/7/09 (PDF 46kb)

Agenda Paper 3.2 Proposed Revised Differential Regime: Tentative Board Decisions to Date (PDF 76kb)

Agenda Paper 3.3 The Reporting Entity Concept and its Application (PDF 41kb)

Agenda Paper 3.4 Determining the Alternative Regime to the IFRS for SMEs (PDF 51kb)

Financial instruments

The Board considered its submissions to the IASB on various financial instrument proposals, including:

  • Derecognition - supporting the alternate approach suggested included in the IASB's ED/2009/3
  • Own credit risk in liability measurement - cannot be resolved without addressing the meaning of a 'chosen measurement basis'
  • Classification and measurement - 'level 3' fair value measurement is better than cost, but amortised cost will need to be retained
  • Expected loss model - the notion of 'expected' needs to be clarified

Agenda Paper 4.1 Memorandum from Natalie Batsakis dated 22/7/09 (PDF 30kb)

Agenda Paper 4.2 Draft: AASB comments on IASB Exposure Draft ED/2009/3 Derecognition (proposed amendments to IAS 39 and IFRS 7) (PDF 30kb)

Agenda Paper 4.3 List of Submissions to ED 177 Proposed Amendments to IAS 39 and IFRS 7 (PDF 1.32MB)

Agenda Paper 5.1 Memorandum from Raymond Yu and Maybelle Chia dated 21/7/09 (PDF 33kb)

Agenda Paper 5.2 Issues Paper for Discussion Paper 2009/2 Credit Risk in Liability Measurement (PDF 19kb)

Agenda Paper 7.5 Memorandum from Natalie Batsakis dated 22/7/09 (PDF 55kb)

Agenda Paper 7.6 Exposure Draft ED/2009/7 Financial Instruments: Classification and Measurement (PDF 246kb)

Fair value measurement The Board considered its submission on the IASB's fair value measurement proposals and tentatively agreed to support the exit price notion, to request clarification on how entity-specific factors should be taken into account in measuring performance obligations and to comment that the proposed disclosures for interim financial reports are excessive and inconsistent with IAS 34 disclosure principles.

Agenda Paper 13.1 Memorandum from Natalie Batsakis and Jim Paul dated 23/7/09 (PDF 34kb)

Agenda Paper 13.2 IASB Exposure Draft ED/2009/5 Fair Value Measurement (PDF 60kb)

Agenda Paper 13.3 Staff Issues Paper IASB Exposure Draft ED/2009/5 Fair Value Measurement Questions and Preliminary Staff Comments (PDF 52kb)

Income tax The AASB considered its comment letter on the IASB's income tax accounting proposals and decided to support the objectives of clarifying IAS 12 and IFRS/US GAAP convergence. However, a number of concerns about the complexity of the proposals will be raised.

Our Australian and global Deloitte comment letters do not support the IASB's proposals in this area.

Joint Accounting and Tax alert

Agenda Paper 12.1 Memorandum from Jessica Lion and Siva Sivanantham dated 15/7/09 (PDF 35kb)

Agenda Paper 12.3 AASB's Specific Comments on IASB Exposure Draft ED/2009/2 Income Tax (PDF 63kb)

Agenda Paper 12.4 List of Submissions to ED 178 Income Taxes (PDF 3.20MB)

Agenda Paper 12.6 Summary of responses to the IASB ED on Income Tax from comment letters received compared to the draft AASB submission in agenda paper 12.3 (PDF 17kb)

Upcoming IASB proposals

The AASB considered the following proposals likely to be issued by the IASB in the near term:

  • Amendments to IAS 19 (discount rates) and IAS 32 (foreign currency equity rights)
  • Annual improvements for the 2009-10 cycle

The proposals to require the use of corporate bond rates to discount liabilities under IAS 19 interestingly did not cause the AASB to automatically question the use of government bond rates for not-for-profit public sector entities.

Agenda Paper 17.1 Current and Expected Shortly IASB/IPSASB/NSS/IASCF Documents Open for Comment, as at 14 July 2009 (PDF 19kb)

Interpretations The Board reviewed current topics being discussed by IFRIC and finalised its submission on the proposals in IASB ED/2009/4

Agenda Paper 11.3 Memorandum from Joanna Spencer dated 15/7/09 (PDF 40kb)

Agenda Paper 11.4 Memorandum from Dean Ardern dated 22/7/09 (PDF 43kb)

Agenda Paper 11.4.1 Draft: Exposure Draft ED/2009/4 Prepayments of a Minimum Funding Requirement (Proposed amendments to IFRIC 14) (PDF 10kb)

Agenda Paper 11.4.3 List of Submissions to ED 182 Prepayments of a Minimum Funding Requirement [Proposed amendments to AASB Interpretation 14] (PDF 221kb)


Not-for-profit matters

Topic Overview Comments and more information
Disclosures by private sector not-for-profit entities The Board decided to initiate a project on disclosures by private sector not-for-profit entities. The project will focus on additional disclosures that should be required, but will also consider existing disclosures that might not be justified on a cost-benefit analysis.

This project will be welcomed by many private sector not-for-profit entities as it has the potential to make financial statements in this sector more relevant to users and more cost effective to prepare.

Agenda Paper 9.1 Memorandum from Robert Keys, Christina Ng and Maybelle Chia dated 15/7/09 (PDF 30kb)

Agenda Paper 9.2 AASB Project Proposal: Presentation and Disclosures by Private Sector Not-for-Profit Entities (including Charities) (PDF 43kb)

IPSASB/IFRS convergence The AASB considered its submissions on IPSASB EDs on intangible assets, exchange transactions and financial instruments.

Agenda Paper 8.1 Memorandum from Natalie Batsakis and Jim Paul dated 16/7/09 (PDF 41kb)

Agenda Paper 8.1A Draft submission: Exposure Draft ED 37 Financial Instruments: Presentation, Exposure Draft ED 38 Financial Instruments: Recognition and Measurement, Exposure Draft ED 39 Financial Instruments: Disclosures (PDF37kb)

Agenda Paper 8.2 Memorandum from Dean Ardern dated 22/7/09 (PDF 40kb)

Agenda Paper 8.2A Draft submission: Exposure Draft ED 40 Intangible Assets (PDF 16kb)

Agenda Paper 8.3 Memorandum from Natalie Batsakis dated 16/7/09 (PDF 30kb)

Agenda Paper 8.3A Draft submission: Exposure Draft ED 41 Entity Combinations from Exchange Transactions (PDF 15kb)

GAAP/GFS harmonisation The AASB confirmed its view that it should not proceed with Phase 2 of this project and will ask the Financial Reporting Council to reconsider its directive in this area.

This decision will be welcomed by many constituents as the comments received by the AASB to its proposals in ED 174 Amendments to Australian Accounting Standards to facilitate GAAP/GFS Harmonisation for Entities in the GGS were not supportive.

Agenda Paper 10.1 Memorandum from Robert Keys, Latif Oylan and Chris Pang dated 15/7/09 (PDF 37kb)

Agenda Paper 10.2 Progress Report on the AASB's GAAP/GFS Harmonisation Project (PDF 50kb)

Agenda Paper 10.3 Alternative view - statement of reasons (PDF 17kb)

Modifying IFRSs for not-for-profit entities The AASB considered submissions received on its proposals and will consider a revised draft Process document at its September meeting. Agenda Paper 15.3 List of Submissions to ITC 14A Invitation to Comment on FRSB and AASB Working Draft "Process for Modifying, or Introducing Additional Requirements to, IFRS's for PBE/NFP" (PDF 3.05MB)


Administrative and other matters

Topic Overview Comments and more information
Education and briefing sessions The Board received presentations on accounting for emissions trading scheme from the issuer's perspective and standard business reporting to government -


More information on the above topics can be obtained from the AASB Action Alert (PDF 146kb) for the meeting.

The next meeting of the AASB is scheduled for 23-24 September 2009 in Melbourne.

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