Monthly roundup - March 2009
Staying on top of developments
In this edition:
- Monthly highlight: guidance on non-statutory profit measures
- New pronouncements
- Standard-setter meetings
- New Deloitte publications
- Other developments
|We've released the June 2009 version of our Illustrative Annual Report. This publication is a key tool to assist you in meeting your financial reporting obligations during the June 2009 reporting season, particularly in light of the pervasive impacts that the global financial crisis has when reporting under IFRS. Access the 2009 Illustrative Annual Report.|
The Australian Institute of Company Directors (AICD) and the Financial Services Institute of Australia (Finsia) has released guidance for entities disclosing a non-statutory profit measure. The disclosure of non-statutory profit measures has been of concern to ASIC for some time as there is widespread and inconsistent use of additional profit measures in market communications.
The AICD/Finsia guidance refers to 'underlying profit' and encourages companies to use this term where an adjusted statutory profit figure is disclosed in the directors report or other company announcements. The purpose of the guidance is to encourage a more uniform and transparent approach to the use of non-statutory profit measures.
AICD and Finsia have compiled seven principles to be complied with when disclosing 'underlying profit' measures. These principles include the nature of items that might be adjusted in deriving an 'underlying profit' measure, a reconciliation between 'underlying profit' and net profit after tax together with an explanation of the adjusting items, and a consistent approach from period to period.
Whilst the presentation of alternate profit measures is generally discouraged internationally, Australian entities that choose to make such disclosures should consider the impacts of the guidance on their disclosures.
More information: Finsia/AICD press release.
(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.)
International Accounting Standards Board (IASB)
|Pronouncement||Key dates||More information|
Improving Disclosures about Financial Instruments (Amendments to IFRS 7)
Significantly extends the disclosure requirements of IFRS 7 Financial Instruments: Disclosures. Extensive fair value disclosures are required by reference to a new three-level hierarchy, including which level has been used to measure each instrument, transfers between levels and a reconciliation of the movement in financial instruments classified in each level during the period. There are also amendments to liquidity risk disclosures, an expansion of the maturity analysis and a further enhancement of the relationship between qualitative and quantitative disclosures.
|Applies to annual reporting periods beginning on or after 1 January 2009||IAS Plus Update Newsletter (PDF 115kb)|
IASB Amending Standard Embedded Derivatives - Amendments to IFRIC 9 and IAS 39
Amends IFRIC 9 Embedded Derivatives and IAS 39 Financial Instruments: Recognition and Measurement to clarify that on reclassification of a financial asset out of the 'fair value through profit or loss' category, all embedded derivatives in the reclassified instrument have to be assessed and, if necessary, separately accounted for in financial statements.
|The amendments apply retrospectively and are effective for annual periods ending on or after 30 June 2009||IAS Plus Update Newsletter (PDF 96kb)|
IASB ED/2009/2 Income Tax
Proposes an IFRS to replace IAS 12 Income Taxes. The ED proposes to retain the 'temporary difference' approach to accounting for income taxes and harmonise with the equivalent United States standard in a number of areas. Major changes include the treatment of 'uncertain tax positions' (which is a high risk area with commercial implications), a new calculation methodology for deferred taxes, elimination of various exceptions to the recognition of deferred tax and changes to the allocation of income taxes between financial statement components.
|Open for comment until 31 July 2009||
IASB press release (PDF 101kb)
|IASB ED/2009/3 Derecognition (Proposed Amendments to IAS 39 and IFRS 7)
Proposes to improve derecognition requirements for financial instruments by focuses on a single derecognition element, i.e. control. An alternative approach is also included in the ED, which assesses control differently and has a different perspective of the nature of the asset that is the subject of the transfer. Also proposes to enhance disclosure requirements, especially in situations where an entity continues to have an ongoing involvement in a financial asset that would be derecognised under the proposals.
|Open for comment until 31 July 2009||
ED/2009/3 (PDF 611kb)
Discussion Paper DP/2009/1 Leases - Preliminary Views
Proposes a possible new model for lease accounting. The model is based on the principle that all leases give rise to liabilities for future rental payments and assets (the right to use the leased asset) that should be recognised in an entity's statement of financial position. The effect of the proposals would be to eliminate the concepts of 'finance' and 'operating' leases and recognise all leases on the balance sheet.
|Open for comment until 17 July 2009||
DP/2009/1 (PDF 612kb)
IASB press release (PDF 61kb)
Heads Up Newsletter (PDF 117kb)
Request for views on Proposed FASB Amendments on Fair Value Measurement and Proposed FASB Amendments to Impairment Requirements for Certain Investments in Debt and Equity Securities
The IASB has published a request for views on proposals from the US FASB that deal with guidance on fair value measurement and impairments of financial instruments. Though the proposed FASB Staff Positions (FSPs) are a direct response to US-specific requests, the IASB believes that, in the light of its commitment to work jointly with the FASB to address issues arising from the financial crisis, it would be useful to seek the views of interested parties on the FASB's proposed FSPs before deciding whether to publish formal proposals for public comment.
|Open for views until 20 April 2009||
IASB request for views (PDF 60kb)
Heads Up Newsletter on the FSPs (PDF 118kb)
(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)
|AASB meeting 4-5 March 2009||The AASB's decisions around differential reporting represent a potential softening in its stance on what financial statements are to be considered general purpose. A new Interpretation on customer contributions was also approved and progress made on a multitude of other projects.||Accounting alert 2009/02
AASB Action Alert (PDF 53kb)
|IFRIC meeting 5 March 2009||IFRIC agreed to consider whether to develop an Interpretation on accounting for 'split investments' in associates and discussed whether IAS 38 principles for intangible assets that provide a 'unique' right can be applied to 'non-unique' rights (which may lead to further guidance on the types of costs that might be able to be capitalised under IAS 38)||
IFRIC Update (PDF 142kb)
|IASB meeting 16 -20 March 2009||The IASB agreed to proceed with its IFRS for non-publicly accountable entities without re-exposure, decided that free permits issued under an emissions trading scheme should give rise to an asset measured at fair value, discussed the measurement of revenue, and finalised a number of outstanding annual improvements amendments.||Australian meeting summary
Deloitte observer notes
(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 IAS Plus Newsletters)
- Interim Financial Reporting - A guide to IAS 34 (PDF 1,205kb) - an updated guide to IAS 34 Interim Financial Reporting
- IAS 34 Interim Reporting Compliance Checklist for 2009 (PDF 128kb) - a checklist of the requirements of IAS 34 formatted to allow the recording of a review of interim financial statements, with a place to indicate yes/no/not-applicable for each item
Deloitte comment letters
- Deloitte Comment Letter (PDF 186kb) on the IASB's exposure draft (ED) on Relationships with the State (Proposed amendments to IAS 24)
- Deloitte Comment Letter (PDF 219kb) on the IASB's exposure draft of Consolidated Financial Statements
- Deloitte Comment Letter (PDF 177kb) on the IASB's exposure draft of Post-implementation Revisions to IFRIC Interpretations - Proposed amendments to IFRIC 9 and IFRIC 16
Other publications of interest
- Property Intellectual 'Unlisted property schemes - improving disclosure for retail investors'
- Issue #1 of the Insurance Accounting Newsletter (PDF 244kb) - a new monthly newsletter launched by Deloitte (United Kingdom) focussing on the joint IASB and FASB project to develop a new global financial reporting standard for insurance
- US Reporting Newsletter for Non-US Based Companies February 2009 Edition - includes news through 15 February 2009 (PDF 241kb)
- February 2009 Edition of Accounting Roundup (PDF 234kb) published by Deloitte & Touche LLP (United States).
(A brief listing of other financial reporting developments during the month. A full summary of all IFRS-related developments can be found in our March historical summary on IAS Plus)
- The IASB and the US FASB have announced further steps in response to the global financial crisis, agreeing to work jointly and expeditiously towards common standards that deal with off-balance sheet activity and accounting for financial instruments. They will also work towards analysing loan loss accounting within the financial instruments project (Joint IASB/FASB press release, PDF 50kb)
- The Financial Crisis Advisory Group (FCAG), established by the IASB and US FASB in response to the recent global financial crisis, held its third meeting in New York on 5 March 2009 (Deloitte observer notes)
- The AASB has issued an invitation to attend roundtable discussions on ITC 18 Preliminary Views on Revenue Recognition in Contracts with Customers, which was held in Melbourne (31 March) and will be held in Sydney (2 April).
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