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Monthly roundup - November 2011

Staying on top of developments

Author: Deepesh Malik and Debbie Hankey, Accounting Technical Group

November 2011 edition
Issued 06 December 2011

In this edition:

Monthly highlights

AASB released a revised exposure draft on Revenue

The Australian Accounting Standards Board (AASB) released a re-exposure draft ED 222 Revenue from contracts with customers (‘the revised ED’) on 18 November 2011, which incorporates ED 2011/6 issued by the International Accounting Standards Board (IASB). The revised ED is the next step in developing an entirely new revenue recognition standard that would replace AASB 118 Revenue and AASB 111 Construction Contracts; and follows extensive outreach and redeliberations on the proposals in the original ED that was issued in July 2010.

The underlying conceptual basis is broadly consistent with that of the original ED and, like AASB 118 and AASB 111, is driven primarily by a model of recognising revenue as an entity delivers goods and services to a customer. However, the IASB and the US Financial Accounting Standards Board (FASB) (collectively ‘the Boards’) changed many detailed aspects of the original ED’s proposals.

  • one significant change from the original ED is the introduction of a restriction on ‘unbundling’ performance obligations within a contract when an entity provides a significant service of integrating the elements of the contract into a combined item and the elements are significantly modified or customised
  • the revised ED would require estimates of expected credit losses (both initial and subsequent) to be recognised in a separate line item adjacent to the gross revenue line item in the statement of comprehensive income
  • the revised ED proposes that the estimate of variable or uncertain revenue would be based on either the probability weighted amount or the most likely amount depending on the method the entity expects to better predict the amount of consideration which it will be entitled to. The amount recognised however, should not exceed the amount which is reasonably assured
  • the revised ED contains considerably more guidance on recognising revenue from service performance obligations
  • there is also a subtle but significant shift in focus for construction type activity. Existing standards focus on whether an item is a customer specific design whereas the revised ED assesses whether the asset under construction has ‘alternative use’ to the entity constructing the asset. This may result in a different timing for revenue recognition especially for some property construction contracts.

The revised proposals would be effective no earlier than annual periods beginning on or after 1 January 2015 with early adoption permitted. The comment period ends on 13 March 2012, with a final standard expected to be published at the end of 2012.

Please refer below for further 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 2011 financial reporting cycle summary.)

International Accounting Standards Board (IASB)


Pronouncement Key dates More information

Exposure Draft ED/2011/6 Revenue from Contracts with Customers 

A revised draft standard that converges the revenue recognition standard for IFRSs and US GAAP

The core principles of the earlier exposure draft ED/2010/6 have remained largely unchanged. However, the boards have clarified and simplified the proposal in a number of areas.

Comments due by 13 March 2012  

ED/2011/6 (PDF 470kb)

IFRS in Focus newsletter (PDF 112kb)

Heads Up newsletter (PDF 172kb)

Deloitte Podcast (30 min MP3, 13mb)

IASB Podcast (10 min MP3)

New editorial corrections to IFRSs* 

The IASB has posted to its website a revised version of the batch of Editorial Corrections to IFRSs.

This batch makes editorial corrections and changes to ED/2011/4 Investment Entities (issued August 2011), IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (issued March 2004), IFRS 7 Disclosures – Transfers of Financial Assets (Amendments to IFRS 7) (issued October 2010), IFRS 9 Financial Instruments, IFRS 13 Fair Value Measurement (issued May 2011), IAS 19 Employee Benefits (issued June 2011), Bound Volume (Red Book) 2011, Bound Volume (Education) 2011, Bound Volume (Blue Book) 2012 and IFRS for SMEs (issued July 2009).

As minor editorial corrections, these changes are effectively immediately applicable under IFRS Editorial Corrections to IFRSs (PDF 34kb)

* Equivalent pronouncement not yet issued by the AASB

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

ED 222 Revenue from Contracts with Customers 

Incorporates IASB ED/2011/6 to clarify the principles for recognising revenue; and is a re-exposure of revised proposals first exposed by the AASB in ED 198 in July 2010.

Comments due to the AASB by 9 February 2012 and to the IASB by 13 March 2012

ED 222 (PDF 639kb)

see above

AASB Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine (and related AASB 2011-12 Amendments to Australian Accounting Standards arising from Interpretation 20)

Incorporates IFRIC Interpretation 20 recently issued by the IASB

Clarifies the requirements for accounting for stripping costs associated with waste removal in surface mining, including when production stripping costs should be recognised as an asset, how the asset is initially recognised, and subsequent measurement.

Effective for annual periods beginning on or after 1 January 2013, with early application permitted IFRS in Focus newsletter (PDF 66kb)

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
1 November 2011

Topics discussed were as follows (click on the links for direct access to the Deloitte observer notes for that topic):

Tuesday, 1 November 2011

Detailed Deloitte Observer notes
IFRIC meeting
3-4 November 2011

Topics discussed were as follows (click on the links for direct access to the Deloitte observer notes for that topic):

Thursday 3 November 2011

Friday 4 November 2011

Detailed Deloitte Observer notes

IFRIC review newsletter (PDF 122kb)

IASB special meeting
7 November 2011

Topics discussed were as follows (click on the links for direct access to the Deloitte observer notes for that topic):

Monday, 7 November 2011

Detailed Deloitte Observer notes
IASB regular meeting
15-16 November 2011

Topics discussed were as follows (click on the links for direct access to the Deloitte observer notes for that topic):

Tuesday, 15 November 2011

Wednesday, 16 November 2011

Detailed Deloitte Observer notes


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, IFRS in Focus Newsletters, Webcasts, and Podcasts)

IFRS publications
Other publications of interest
Deloitte comment letters
Deloitte Webcasts and Podcasts
  • Exposure Draft: Revenue from Contracts with Customers (30 min MP3, 13mb) discusses the proposals in the revised exposure draft on revenue recognition released by the IASB in November 2011
  • Stay Tuned Online — IFRS and UK GAAP update by Deloitte London IFRS Centre of Excellence that is aimed at helping finance teams keep up to speed with IFRSs and other financial reporting issues. The topics covered include:
    • Latest IFRS developments
    • IAS 19 (2011) Employee Benefits — update
    • The IASB’s revised revenue proposals.

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 November 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 topics
  • The future of the Financial Reporting Panel (FRP) is currently under review with Treasury recently issuing a discussion paper (PDF 159kb) on this topic. The FRP was established in 2006 as an alternative and more timely dispute resolution mechanism to legal actions that might otherwise be involved when ASIC and the preparers of a lodged financial report disagreed on the application of an accounting standard. Since its inception, it has only ruled on four cases, referred to by ASIC in 2010 that FRP resolved quickly in proficient manner. The discussion paper presents options designed to enhance the process by which cases are referred to the FRP. It also considers whether there is a continuing role for the FRP in the financial reporting framework, in light of the costs of maintaining an inactive body
  • The AASB has released summary and detailed work programs updated to reflect recent IASB changes
  • The Third Annual Asian-Oceanian Standard-Setters (AOSSG) Group Meeting was held recently 23-24 November 2011 (Communiqué) (PDF 271kb).
International Accounting Standards Board
  • Summary of the October 2011 Trustees' meeting (IAS plus article)
  • The SME Implementation Group (SMEIG) has published two draft questions and answers (Q&As) on the IFRS for SMEs (IAS plus article)
External webcasts and Podcasts
  • IASB Podcast (10 min MP3) discusses the proposals in the revised exposure draft on revenue recognition released by the IASB in November 2011
  • IIRC webcast on integrated reporting (15 November) (60 mins) by the International Integrated Reporting Committee (IIRC) discusses the rationale behind the move towards integrated reporting, recent developments and the future directions
  • Insurance contracts podcast (mp3, 22 mins) on the discussion held in the recent IASB meeting in November 2011
  • Setting the IASB's Agenda for the Next Decade: Investor Update and Input Opportunity (9 November 2011) (60 mins) – a webcast by the IASB and CFA Institute discusses the IASB's first public agenda consultation, how the Board will decide what should be on its agenda and why investor input is crucial in that process.
Other global news
  • The International Public Sector Accounting Standards Board (IPSASB) has released a new standard IPSAS 32 Service Concession Arrangements: Grantor that seeks to address a lack of international guidance on how governments and other public sector entities should report their involvement in service concession arrangements, often used to build the infrastructure necessary to maintain and improve critical public services (IAS Plus article)
  • The Chartered Financial Analyst (CFA) Institute, a global association of investment professionals, has published a report entitled User Perspectives on Financial Instrument Risk Disclosures under IFRS (Part 1), providing user insights and recommendations regarding risk disclosures under IFRS 7 Financial Instruments: Disclosures (IAS Plus article)
  • The United States Securities and Exchange Commission (SEC) have released two additional Staff Papers as part of the SEC's work plan for convergence of US-GAAP with IFRS: An analysis of IFRS in Practice (PDF 377kb) and A Comparison of U.S. GAAP and IFRS (PDF 411kb) (IAS Plus article)
  • The European Securities and Markets Authority (ESMA) has posted to its website Public Statement: Sovereign Debt in IFRS Financial Statements(PDF 3,060kb) concerning the accounting treatment in relation with sovereign debt exposures in connection with current market developments. Special consideration is given to the accounting treatment of Greek sovereign debt.

Related links

Related links

  • Monthly roundup - January 2014
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  • Monthly roundup - January 2012
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  • Monthly roundup - July 2013
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  • 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 - December 2012
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  • Monthly roundup - March 2011
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  • 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.
  • Monthly roundup - May 2010
    Summary of developments in financial reporting during May 2010. Monthly highlight discusses the financial reporting impacts of recent and proposed tax changes.


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