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Monthly roundup - May 2012

Staying on top of developments

Author: Deepesh Malik and Debbie Hankey, Accounting Technical Group

May 2012 edition
Issued 07 June 2012

In this edition:

Monthly highlights

Accounting for emission rights an urgent topic for standard setters

In Australia, the newly introduced Carbon Pricing Mechanism (CPM) will have a two phased approach: a fixed price mechanism beginning 1 July 2012, followed by an emission trading scheme (ETS). The Australian Accounting Standards Board (AASB) is currently focusing on the 'fixed price phase', and a staff paper on the possible financial reporting implications of the fixed price phase of the CPM for emitter entities and the Government, is on the agenda discussion for the June 2012 AASB meeting.

With regards to the 'flexible price phase' of the CPM, the AASB currently has a 'wait and watch' approach for any lead from the IASB. However, the AASB has contingency plans in place to provide any necessary financial reporting guidance under Australian Accounting Standards in regard to the flexible price phase, should it be established that a pronouncement from the IASB will not be forthcoming in time to provide a basis for accounting treatments in the flexible price phase. There are however signs that the IASB will take up the project on emission trading schemes again. The agenda consultation discussion in the recent IASB meeting (May 2012), named 'research on emissions trading schemes' as one of the possible priority projects for the future agenda.

Draft IFRIC Interpretations on levies and put options

The IFRS Interpretations Committee (IFRIC) published in May 2012 proposed guidance for public comment on accounting for:

  • levies charged by public authorities on entities that operate in a specific market, and
  • a put option written by a parent entity on the shares of its subsidiary held by a non-controlling interest shareholder.

The proposed guidance on accounting for levies clarifies that "the obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy as identified by the legislation" and could provide guidance to Australian entities in accounting for such government imposts as state royalties and levies for re-cycling waste by computer and television manufacturers and importers.

The proposed guidance on put options on non-controlling interests may result in significant changes in accounting policy for those entities with these kinds of arrangements. IFRIC considered how to account for changes in the measurement of the financial liability created when a parent entity is obliged to purchase the minority shares of its subsidiary and recognises a financial liability in its consolidated financial statements for the present value of the option exercise price. The proposed guidance clarifies that all changes in the measurement of that financial liability should be recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments rather than through equity as is often the policy adopted under a current interpretation of the standards.

Preparing for the June reporting season 

For those preparing for the June reporting season, we have recently released the Illustrative Special Purpose Financial Reports (June 2012): a key tool to assist you in meeting your financial reporting obligations, particularly the preparation of special purpose financial statements. Our Illustrative General Purpose Financial Reports (June 2012) released earlier in the year are also available for those preparing general purpose financial reports.

See also our What’s new in the June 2012 financial reporting cycle summary that provides a high level overview of new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2012.

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 2012 financial reporting cycle summary.)

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

Annual Improvements 2009-2011 cycle

Amends a number of pronouncements as a result of the IASB's 2009–2011 annual improvements cycle.

Key amendments include:

  • IFRS 1- repeated application of IFRS 1
  • IAS 1- clarification of the requirements for comparative information
  • IAS 16- classification of servicing equipment
  • IAS 32- tax effect of the distribution to holder of equity instruments
  • IAS 34- interim reports and segment information for total assets and liabilities
Effective for annual periods beginning on or after 1 January 2013, with early adoption permitted

IFRS in focus (PDF 63kb)

Exposure draft ED/2012/1 Annual Improvements to IFRSs 2010 - 2012 Cycle

Proposes amendments to eleven International Financial Reporting Standards (IFRSs) under the annual improvements project.

Key amendments include:

  • IFRS 2 - definition of vesting condition
  • IFRS 3 – contingent consideration in a business combination
  • IFRS 8 – aggregation of operating segments
  • IFRS 13 – short-term receivables and payables
  • IAS 1 – current/non-current classification of liabilities
  • IAS 7 – interest paid that is capitalised
  • IAS 12 – recognition of DTAs for unrealised losses
  • IAS 16 & IAS 38 – revaluation method: proportionate restatement of accumulated depreciation
  • IAS 24 – related party definition extension to include management entity that provides key management personnel services
  • IAS 36 – harmonisation of disclosures for fair value in use and fair value less costs of disposal
Comments to the IASB due by 5 September 2012

IFRS in focus (PDF 65kb)

ED/2012/1 (PDF 312kb)

Draft Interpretation DI/2012/1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market

Proposed guidance by the IFRS Interpretations Committee (IFRIC) considers how an entity would account for the payment of levies, other than income taxes, in its financial statements; specifically, when the liability to pay a levy should be recognised

Clarifies that the obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy as identified by the legislation.

Comments due by 5 September 2012

DI/2012/1 (PDF 161kb)

IAS Plus article

Draft Interpretation DI/2012/2 Put Options Written on Non-controlling Interests

Proposed guidance by the IFRS Interpretations Committee (IFRIC) considers accounting treatment for a put option written by a parent entity on the shares of its subsidiary held by a non-controlling-interest shareholder.

Clarifies that all changes in the measurement of that financial liability should be recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments.

Comments due by 1 October 2012

DI/2012/2 (PDF 133kb)

IAS Plus article

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

Exposure draft ED 225 Annual Improvements to IFRSs 2010 - 2012 Cycle

Incorporates the Exposure draft ED/2012/1 released by the IASB on annual improvements that sets out eleven minor but essential changes to eleven separate standards

Includes the AASB decisions about the applicable Tier 2 treatments of the proposed new disclosures associated with changes to AASB 8 Operating Segments and AASB 136 Impairment of assets

Comments to the AASB due by 13 August 2012

ED 225 (PDF 500kb)

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
IFRIC meeting
15-16 May 2012

Key issues discussed include:

  • IAS 32 Financial Instruments: Presentation — Put options written on non-controlling interests
  • IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets — Contingent pricing of PPE and intangible assets
  • IFRIC 12 Service Concession Arrangements — Contingent pricing of PPE and intangible assets
  • IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRIC 6 Liabilities arising from Participating in a Specific Market — Waste Electrical and Electronic Equipment — Levies charged for operating in a specific market – Draft Interpretation
  • IAS 41 Agriculture and IFRS 13 Fair Value Measurement — Valuation of biological assets using a residual method
IFRIC update (PDF 53kb)
Deloitte observer notes
IASB regular meeting
21-24 May 2012

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

Deloitte Observer notes
IASB podcast (mp3)


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
Comment letters
  • Deloitte comment letter (PDF 23kb) to the IFRS Interpretations Committee on 'Tentative agenda decision: IAS 1 Presentation of Financial Statements and IAS 12 Income Taxes – Presentation of payments of non-income taxes'
  • Deloitte comment letter (PDF 19kb) to the IFRS Interpretations Committee on 'Tentative agenda decision: IAS 12 Income Taxes – Accounting for market value uplifts introduced by a new tax regime'

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 May 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 AASB has submitted comments (PDF 254kb) to the International Public Sector Accounting Standards Board (IPSASB) on its Consultation Paper 'Reporting Service Performance Information' (October 2011).
International Accounting Standards Board
  • The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has published an exposure draft 'International Good Practice Guidance (IGPG) — Eleven Principles for Effective Business Reporting Processes', that provides a broad range of recommendations in best practice business reporting (IAS Plus article)
External Webcasts and podcasts
  • IASB podcast (mp3): summary of the IASB regular meeting held on 21-24 May 2012.
Other global news
  • The Financial Stability Board (FSB) has announced the formation of a private sector 'Enhanced Disclosure Task Force' (EDTF) to develop principles for enhanced disclosures by financial institutions, based on current market conditions and risks, including ways to enhance the comparability of disclosures (IAS Plus article). The FSB was established through the G7 and G20 to coordinate at the international level the work of national financial authorities and international standard setting bodies (including the IASB)
  • The European Financial Reporting Advisory Group (EFRAG) has released a feedback statement reflecting input received on the discussion papers 'Business Combinations Under Common Control' and 'Improving Financial Reporting of Income Tax' in the EFRAG - UK ASB - OIC event held in April 2012 (IAS Plus article)
  • The International Swaps and Derivatives Association (ISDA) has published a paper 'Netting and Offsetting: Reporting Derivatives Under US GAAP and Under IFRS' that compares derivative reporting under US GAAP and IFRS (IAS Plus article)
  • The New Zealand Financial Markets Authority (FMA) has issued a draft guidance note on the disclosure of non-GAAP financial information. The guidance note sets out the FMA's expectations on the use of financial information in corporate documents, such as transaction documents and market announcements, and is largely based on equivalent guidance recently issued in Australia (IAS Plus article).

Related links

Related links

  • Monthly roundup - April 2014
    The International Accounting Standard (IASB) has published for public comment an Exposure Draft of proposed amendments to IAS 1 ‘Presentation of Financial Statements’ to address concerns on the existing disclosure requirements.
  • Monthly roundup - January 2014
    ASIC has extended Class Order [CO 13/1050] which allows issuers of stapled securities (stapled entities) to continue to present consolidated or combined financial statements
  • Monthly roundup - September 2013
    Financial reporting developments during September 2013. Monthly highlights discuss responds to the Joint IASB-FASB Exposure Draft on leases.
  • Monthly roundup - September 2011
    Financial reporting developments during September 2011. Monthly highlights discuss the developments in the field of Integrated Reporting and the release of new Standard on Fair Value and amended Standard on Employee Benefits by the AASB
  • 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 - January 2009
  • Monthly roundup - February 2009
  • Monthly roundup - April 2009
  • 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.
  • Monthly roundup - January 2010
    Summary of developments in financial reporting during January 2010. Monthly highlight discusses ASIC's release of the results of its review of June 2009 financial reports and its December focus areas.


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