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Monthly roundup - August 2010

Staying on top of developments

Author: Frank Betkowski and Debbie Hankey, Accounting Technical Group

Issued Wednesday 1 September 2010

In this edition:

Monthly highlight: Spring heralds a new start 

September marks the beginning of Spring. A time for new beginnings and the promise of Summer around the corner. The closing stages of Winter, perhaps a Winter of discontent for some, saw two new planks in the future of accounting standards delivered: insurance contracts and leases. These are just the beginning of the deluge expected over the coming months in the push towards June 2011.

Spring also brings, to borrow a term from the current Australian political debate, a new paradigm in the global standard setting environment. In late August, the Chairman of the United States Financial Accounting Standards Board (FASB), Robert Herz, unexpectedly announced his early retirement. This follows on from the International Accounting Standards Board (IASB) itself looking for a replacement chairman to take over from Dr David Tweedie, who must retire in July 2011. New board members are also coming on board in both organisations, which will undoubtedly slow progress, and bring new perspectives, as newcomers ‘get up to speed’.

The dynamics of change at the top of an organisation cannot be understated. The leaders set the tone for the organisation as a whole. They bring new relationships and biases. How will they make their mark? Will the new leaders be committed to global convergence? What projects will take precedence? Will fair value continue to be ‘answer du jour’ or will other, more prudent approaches be favoured?

The way forward for global accounting standard setting is certainly going to be interesting. Let’s hope both organisations get leaders that inspire the global accounting community and push for reasonable, fair and conceptually correct outcomes in standard setting.

More information: IAS Plus article on FASB developments, IASB Chair search

Upcoming webcast

A global Deloitte webcast is being held in September to discuss recent developments in International Financial Reporting Standards. Topics to be covered include revenue recognition, leases and the current work plans of the International Accounting Standards Board (IASB).

The webcast will be held on 8 September, 8:00-9:00am GMT, which is 6:00-7:00pm EST.

More information and registration information.


New pronouncements

(A listing of new accounting standards, interpretations, exposure drafts, discussion papers and similar documents issued during the month by the AASB and IASB/IFRIC, along with other IFRS-related documents by other bodies that may be of interest and related links to Deloitte publications and alerts. See also our What’s new in the June 2010 financial reporting cycle summary)

Australian Accounting Standards Board (AASB)
Pronouncement Key dates More information

ED 201 Insurance Contracts

Equivalent to IASB ED/2010/8 and proposes fundamental changes to the financial reporting of insurance companies applying IFRS, with a goal of making it more consistent and transparent than it has been so far.

The ED proposes a single standard that all insurers, in all jurisdictions, could apply to all contract types on a consistent basis. The proposed standard would apply to writers of both insurance and reinsurance contracts.

The proposals in ED 201 would replace the requirements in AASB 4, AASB 1023 and AASB 1038. In many respects, the proposals in the ED are broadly consistent with the current requirements in AASB 1023 and AASB 1038. There are, however, some key exceptions, including the proposals for:

  • acquisition costs
  • residual margins
  • the extent to which diversification benefits are included in the risk adjustment.

Note: The AASB intends to issue a supplementary ED outlining proposals for entities reporting under the reduced disclosure regime in respect of the disclosure proposals in ED/2010/8.

Comments to the AASB close on 8 November 2010 and to the IASB on 30 November 2010

ED 201 (PDF 930kb)

IFRS in Focus newsletter (PDF 105kb)

Insurance accounting newsletter (PDF 148kb)

US Heads Up newsletter

Deloitte global press release

ED 202 Leases

The proposals would result in a major overhaul in how leases are accounted for, both for lessors and lessees.

Under the proposed ‘right-of-use’ model, all leases would effectively be ‘on balance sheet’. The calculation of recognised amounts would be based on an ‘expected outcome’ approach, requiring both up-front and continuous estimates of lease term, contingent rentals and residual guarantees. Extensive disclosures would also be required.

Comments to the AASB close on 12 November 2010 and to the IASB on 15 December 2010

ED 202 (PDF 684kb)

IAS Plus Update 10-17

IFRS in Focus newsletter (PDF 111kb)

US Heads Up newsletter


International Accounting Standards Board (IASB)
Pronouncement Key dates More information

Draft IFRIC Interpretation DI/2010/1 Stripping Costs in the Production Phase of a Surface Mine*

Proposes that the costs of stripping activity in a surface mining activity that are part of a ‘stripping campaign’ be accounted for as an addition to, or an enhancement of, an existing asset. Routine stripping costs that are not incurred as part of a stripping campaign would be accounted for as current costs of production.

A stripping campaign would be defined as a systematic process undertaken to gain access to a specific section of the ore body, which is a more aggressive process than routine waste clearing activities.

Stripping campaign component shall be depreciated or amortised in a rational and systematic manner, over the specific section of the ore body that becomes directly accessible as a result of the stripping campaign.

Comments to the IASB close on 30 November 2010.

IAS Plus article

IASB press release (PDF 35kb)

ED/2010/9 Leases

Equivalent to AASB ED 202 Leases (which incorporates ED/2010/9), discussed above.

Comments to the AASB close on 12 November 2010 and to the IASB on 15 December 2010

ED 202 (PDF 684kb)

IAS Plus Update 10-17

IFRS in Focus newsletter (PDF 111kb)

ED/2010/10 Removal of Fixed Dates for First-time Adopters (proposed amendments to IFRS 1)*

The proposal would amend IFRS 1 by replacing references to a fixed transition date of ‘1 January 2004’ with ‘the date of transition to IFRSs’. As a result, entities adopting IFRSs for the first time would not have to restate derecognition transactions that occurred before the date of transition to IFRSs. In addition, first-time adopters would also not have to recalculate ‘day 1’ differences on initial recognition of financial instruments, where the transaction occurred before the date of transition to IFRSs.

Note: These proposals may be of importance where entities apply AASB 1 on moving between Tiers under the AASB’s revised differential reporting regime

Comments to the IASB close on 20 October 2010 IAS Plus article

* Equivalent pronouncement not yet issued by AASB

Standard setter meetings

(A listing of meetings of various standard setters during the month or where documents were issued during the month in respect of the previous month’s meetings, with links to our analysis, agenda papers and so on)

Meeting Highlights More information
IASB special meeting 3 August 2010

The topics discussed were as follows (click through to detailed Deloitte observer notes for that topic):

Notes Taken by Deloitte Observers
IASB special meeting 24 August 2010

The topics discussed were as follows (click through to detailed Deloitte observer notes for that topic):

Notes Taken by Deloitte Observers

New Deloitte publications

(Key IFRS-related and other publications issued by Deloitte during the month, not covered elsewhere. You can find full details and back issues of our various publications by following these links: Accounting alerts, IAS Plus publications and IFRS in Focus Newsletters)

IFRS publications
Other publications of interest
  • Heads Up Newsletter (PDF 173kb) The Final Act - Financial Reporting Implications of the Dodd-Frank Wall Street Reform and Consumer Protection Act
  • July 2010 Edition of Accounting Roundup (PDF 379kb) published by Deloitte & Touche LLP (United States) – covers United States and international accounting and auditing matters, including IASB-FASB convergence.
Deloitte comment letters

Other developments

(A brief listing of other financial reporting developments during the month. A full summary of all IFRS-related developments can be found in our August historical summary on IAS Plus. You can also subscribe to our Deloitte IAS Plus RSS feed to be kept informed of developments as they happen)

Australian-specific matters
  • ASIC has released Class Order [CO 10/545], varying ASIC Class Order [CO 98/1417] Audit relief for proprietary companies (ComLaw document)
International Accounting Standards Board
  • The IASB has released an edition of Investor Perspectives discussing the proposals in exposure draft ED/2010/7 Measurement Uncertainty Analysis Disclosure for Fair Value Measurements
  • The IASB has posted to its website a staff draft of a forthcoming IFRS on fair value measurement, reflecting the tentative decisions made to date by the IASB and the FASB (access to IASB staff draft)
  • The IFRS Interpretations Committee will meet at the IASB's offices in London on Thursday and Friday 2 and 3 September 2010 (IAS Plus article, including agenda)
  • The IFRS Foundation, the oversight body of the IASB, has published for public comment proposed enhancements to the criteria for the IASB’s annual improvements process (details, press release [PDF 35kb])
Other global news
  • The Securities and Exchange Commission (SEC) has released two Requests for Comment on behalf of its staff on a number of topics related to its ongoing consideration of incorporating International Financial Reporting Standards (IFRS) into the financial reporting system for United States issuers (IAS Plus article)
  • The Prince's Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) have announced the formation of the International Integrated Reporting Committee (IIRC). The IIRC aims to create a globally accepted framework for accounting for sustainability, bringing together financial, environmental, social and governance information in an "integrated" format (IAS Plus article)
  • The New Zealand Financial Reporting Standards Board (FRSB) and Accounting Standards Review Board (ASRB) have issued an updated Communiqué discussing the treatment of deferred taxes arising on buildings in New Zealand as a result of a recent tax change (IAS Plus article).

Related links

  • Monthly roundup - July 2012
    Financial reporting developments during July 2012. Monthly highlights discuss the financial reporting implications of tax ruling on frankable dividends, IASB revised work plan and Transitional relief and guidance on IFRS 10, IFRS 11, and IFRS 12
  • Monthly roundup - May 2012
    Financial reporting developments during May 2012. Monthly highlights discuss the Draft IFRIC Interpretations on levies and put options, and Deloitte's resources for June 2012 reporting period
  • Monthly roundup - November 2011
    Financial reporting developments during November 2011. Monthly highlight is the discussion on the revised exposure draft on revenue
  • Monthly roundup - July 2013
    Financial reporting developments during July 2013. Monthly highlights discuss the ASIC areas of focus for July 2013 reporting period.
  • Monthly roundup - June 2013
    Financial reporting developments during June 2013. Monthly highlights discuss the ASIC areas of focus for June 2013 reporting period.
  • Monthly roundup - October 2012
    Financial reporting developments during October 2012. Monthly highlights discuss the recently issued investment entity consolidation amendments by the IASB; and the developments in the IASB lease project
  • Monthly roundup - March 2011
    Financial reporting developments during March 2011. Monthly highlight discusses the updated IASB work plan, ASIC's proposed guidance on additional financial information and a joint UK/NZ project to reduce disclosures under IFRS.
  • Monthly roundup - March 2009
  • Monthly roundup - August 2010
    Summary of developments in financial reporting during August 2010. Monthly highlight discusses the possible impact of changes in the IASB and FASB chairs on global standard setting.
  • Monthly roundup - June 2010
    Summary of developments in financial reporting during June 2010. Monthly highlight discusses recent financial reporting reform.

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