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Accounting alert 2008/16 - December 2008 AASB meeting

The AASB's December meeting saw continued progress on a large number of projects and issues. The AASB approved a new Interpretation, two Amending Standards and agreed to defer the withdrawal of the option to expense borrowing costs for public-sector not-for-profit entities.

Continuing with our practice for recent meetings, a summary table of the other matters discussed at the meeting is immediately below. Given the large number of items discussed, they have been grouped under relevant topic headings.

Topic Overview Comments and more information
SECTOR-NEUTRAL MATTERS
Non-cash distributions The AASB approved Interpretation 17 Distributions of Non-cash Assets to Owners and made AASB 2008-13 Amendments to Australian Accounting Standards Arising from AASB Interpretation 17 - Distributions of Non-cash Assets to Owners.

The issue of Interpretation 17 finalises a long-running issue which had its origin in Australia. Entities will be required to recognise a gain/loss on distributing non-cash assets to owners.

IAS Plus Newsletter (PDF 104kb)

Agenda paper 6.4.1 Draft AASB Interpretation Distributions of Non-cash Assets to Owners (PDF 125kb)

Agenda paper 6.4.2 Draft Proposed AASB 2008-X Amendments to Australian Accounting Standards arising from AASB Interpretation 17 (PDF 48kb)

Reclassification of financial assets Mirroring similar moves by the IASB, the AASB made AASB 2008-12 Amendments to Australian Accounting Standards - Reclassification of Financial Assets - Effective Date and Transition to clarify the transitional arrangements under AASB 2008-10.

Accounting alert 2008/14 - Financial reporting developments from the credit crunch

IAS Plus Newsletter on IASB reclassification amendments (PDF 96kb)

Agenda paper 12.11.1 Draft Proposed AASB 2008-X Amendments to Australian Accounting Standards - Reclassification of Financial Assets - Effective Date and Transition (PDF 46kb)

Differential reporting The AASB agreed that financial statements made available to the public at large would be 'general purpose financial statements' (including those voluntarily made available). We remain concerned whether the AASB's views on this matter are broader than intended by the IASB, particularly in light of the IASB's deliberations in its financial statements projects.
Australian superannuation contributions tax The AASB considered a further draft Interpretation Australian Superannuation Contributions Tax Agenda paper 6.5.1 Draft Proposed Interpretation 10XX Australian Superannuation Contributions Tax for Defined Benefit Obligations (PDF 140kb)
Assets backing insurance liabilities The AASB decided not to continue development of an exposure draft that would have proposed that entities applying AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts cannot take advantage of the reclassifying requirements introduced into AASB 139 Financial Instruments: Recognition and Measurement by AASB 2008-10.

This decision is consistent with the AASB's wider general objective of not restricting options available under IFRS in the Australian context.

Agenda paper 8.2 Draft ED 1XX Amendment to AASB 139 - Reclassification of Financial Assets backing Insurance Liabilities or Life Investment Contract Liabilities (PDF 53kb)

Key management personnel (KMP) under AASB 124 The AASB is to liaise with the New Zealand FRSB staff preparing a submission to IFRIC on whether an entity can be a KMP under IAS 24 Related Party Disclosures. This is another long-running issue in the Australian context and may take some time to be finally resolved.
Upcoming IASB consultation documents The AASB will issue Australian 'wrap arounds' on a number of recently issued or soon to be issued IASB documents, including a discussion paper on revenue recognition, and exposure drafts on embedded derivatives, related party disclosures, consolidated financial statements and income taxes.

The number of upcoming and existing proposals emanating from the IASB are a direct result of the revised Memorandum of Understanding between the IASB and FASB and will see vast swathes of existing accounting literature re-written in preparation for the eventual move to full adoption of IFRS in the United States.

Entities that may be affected by the proposals should ensure that they make submissions to the IASB and AASB on key issues, both directly and through industry representative groups.

Read more in our Future waves of IFRS transition summary.

AASB submissions on IASB exposure drafts The AASB considered draft submissions on the IASB's exposure drafts on earnings per share, discontinued operations, first-time adoption of IFRS and financial instruments disclosures.
NOT-FOR-PROFIT MATTERS
Borrowing costs (IPSASB) The AASB decided to defer the withdrawal of the option to expense borrowing costs for public-sector not-for-profit entities and also considered its submission on IPSASB ED 35 Borrowing Costs.

The AASB will reconsider the treatment of borrowing costs for public-sector not-for-profit entities once the IPSASB has finalised an IPSAS and that IPSAS is considered for suitability in the Australian context.

Agenda paper 10.2 Draft AASB submission on IPSASB ED 35 IPSAS 5 Borrowing Costs (PDF 20kb)

Superannuation plans and approved deposit funds The AASB continued its deliberations on the draft exposure draft. A further draft of the ED will be considered at the February 2009 meeting.

It is understood that the AASB is intending to issue the ED for public comment after the February 2009 meeting and is hoping to finalise the Standard by the end of 2009.

Agenda paper 3.2 Draft Exposure Draft ED 16X Superannuation Plans and Approved Deposit Funds (PDF 774kb)

Income from non-exchange transactions The AASB considered a draft ED based on IPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers), focussing on how the IPSAS 23 requirements would be applied in the Australian context, such as government rates and transfers and taxes that are 'for a period'. The AASB is to request further information from the IPSASB on certain aspects of IPSAS 23.
GAAP/GFS harmonisation The AASB considered a draft ED proposing GAAP/GFS harmonisation requirements for entities within the General Government Sector. The ED is expected to be issued in January 2009 with a four-month comment period.

The final ED is expected to adopt an 'additional disclosure' approach in light of recommendations from constituents.

Agenda paper 4.2 Draft Exposure Draft ED XX Amendments to Australian Accounting Standards to facilitate GAAP/GFS Harmonisation for Entities within the GGS (PDF 100kb)

Other not-for-profit matters The AASB considered the most recent draft Process for Modifying IFRSs document being developed by the New Zealand FRSB. The AASB is hopeful of developing a common document on this topic with FRSB, or if not, a document that 'mirrors' the
ADMINISTRATIVE AND OTHER MATTERS
Board membership Kevin Stevenson has been appointment Chairman of the AASB with effect from 1 July 2009, and Jan McCahey has retired from the AASB -

More information on the above topics can be obtained from the AASB Action Alert (PDF 90kb) for the meeting.

The next meeting of the AASB is scheduled for 5 February 2009 in Melbourne.

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