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Monthly roundup - November 2009

Staying on top of developments

In this edition:

Monthly highlight: IASB pushes ahead with financial instrument reform in the face of opposition 

The headline release for November 2009 was IFRS 9 Financial Instruments, the first instalment of the IASB’s replacement for IAS 39.

Released with more of a whimper than a bang, IFRS 9 is not mandatory until 2013 and will not have a widespread impact on many companies other than financial institutions. However, there may be some attraction in early adoption for some entities.

Of more interest is the release of the IASB’s exposure draft which proposes moving to an ‘expected loss’, rather than ‘incurred loss’ model for impairment testing and the IASB’s anticipated exposure draft dealing with changes to hedge accounting, with all hedges likely treated in a ‘simplified’ method akin to the current requirements for cash-flow hedging.

However, contrary to the IASB’s intentions, it appears increasing unlikely that early adoption of IFRS 9 will be permitted in Europe at December 2009, due to a lack of endorsement by the relevant European bodies. There is talk of a ‘mutiny’ of sorts with the possibility of a European standard setter being established in response. However, not all in Europe are against IFRS 9 and some companies have publicly stated an intention to provide ‘pro forma’ IFRS 9 information in their 2009 reports if IFRS 9 is not endorsed.

All of this makes for difficult decisions for Australian entities in coming to grips with the new financial instruments regime – another regulatory uncertainty to add to a long list, including overdue Corporations Act reform and the ructions over carbon trading. Interesting times indeed.

More information: Deloitte Australia press release, IAS Plus Update Newsletter on IFRS 9 (PDF 226kb), IAS Plus Update Newsletter on the Impairment proposals (PDF 90kb).

Financial reporting resources

With the December reporting season rapidly approaching, a timely reminder of some of our financial reporting resources. We have recently published our updated Illustrative half-year report for 31 December 2009 and also have Global IFRS illustrative financial statements for the year ended 31 December 2009 (PDF version (PDF 613kb), Word version (ZIP 684kb)). Our What's new in the December 2009 financial reporting cycle resource also provides a summary of all mandatory and optional pronouncements, updated as new developments occur throughout the reporting season.

More information: Australian financial reporting tools, Global IFRS Illustrative financial reports and checklists.

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 December 2009 financial reporting cycle summary)

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

ED 189 Financial Instruments: Amortised Cost and Impairment

Propose a significant change to how impairment of financial assets are measured, proposing an 'expected loss' model in place of the 'incurred loss' model currently required by AASB 139/IAS 39 Financial Instruments: Recognition and Measurement.

Comments due by 17 May 2010 to the AASB and by 30 June 2010 to the IASB

ED 189 (PDF 514kb)

IAS Plus Update Newsletter (PDF 90kb)

Heads Up Newsletter (PDF 172kb)

ED 190 Limited Exemption from Comparative AASB 7 Disclosures for First-time Adopters (proposed amendment to AASB 1)

Proposes to amend AASB 1 First-time Adoption of Australian Accounting Standards to state that an entity need not provide the comparative prior-period information required by the March 2009 amendments to AASB 7/IFRS 7 Improving Disclosures about Financial Instruments for first-time adopters adopting before 1 January 2010

Comments are due to the AASB by 9 December 2009 and to the IASB by 29 December 2009

ED 190 (PDF 145kb)

IASB Press Release (PDF 101kb)

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

IFRS 9 Financial Instruments*

First step in the IASB's project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring financial assets, as follows:

  • Debt instruments meeting both a 'business model' test and a 'cash flow characteristics' test are measured at amortised cost (the use of fair value is optional in some limited circumstances)
  • Investments in equity instruments can be designated as 'fair value through other comprehensive income' with only dividends being recognised in profit or loss
  • All other instruments (including all derivatives) are measured at fair value with changes recognised in the profit or loss (other than derivative in hedging relationship)
Applies on a modified retrospective basis to annual periods beginning on or after 1 January 2013

Deloitte Australia press release

IAS Plus Update Newsletter (PDF 226kb)

US Heads Up Newsletter (PDF 171kb)

IFRIC Interpretation 19 Extinguishing Liabilities with Equity Instruments*

Requires the extinguishment of a financial liability by the issue of equity instruments to be measured at fair value (preferably using the fair value of the equity instruments issued) with the difference between the fair value of the instrument issued and the carrying value of the liability extinguished being recognised in profit or loss. The Interpretation does not apply where the conversion terms were included in the original contract (such as in the case of convertible debt) or to common control transactions.

Applies to annual periods beginning on or after 1 July 2010 IASB Press release (PDF 109kb)

IAS 24 Related Party Disclosures (revised 2009)*

Amends the requirements of the previous version of IAS 24 to provide a partial exemption from related party disclosure requirements for government-related entities, clarify the definition of a related party and include an explicit requirement to disclose commitments involving related parties.

Applies to annual periods beginning on or after 1 January 2011 IAS Plus Update Newsletter (PDF 68b)

Prepayments of a Minimum Funding Requirement (Amendments to IFRIC 14)*

Makes limited-application amendments to IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The amendments apply when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements, permitting the benefit of such an early payment to be recognised as an asset.

Applies to annual periods beginning on or after 1 January 2011 IASB Press release (PDF 101kb)

IASB ED/2009/12 Financial Instruments: Amortised Cost and Impairment

Equivalent to ED 189 issued by the AASB, as noted above.

Comments due by 17 May 2010 to the AASB and by 30 June 2010 to the IASB

IAS Plus Update Newsletter (PDF 90kb)

US Heads Up Newsletter (PDF 171kb)

ED/2009/13 Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters - Proposed amendment to IFRS 1

Equivalent to ED 190 issued by the AASB, as noted above.

Comments are due to the AASB by 9 December 2009 and to the IASB by 29 December 2009 IASB Press Release (PDF 101kb)

* 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
IFRIC meeting 5-6 November 2009 IFRIC finalised its Interpretation on debt for equity swaps, decided to proceed with a project on accounting for stripping costs by resources companies, discussed the unit of account for forward contracts with ‘volumetric optionality’ and confirmed and/or consider a number of agenda decisions

Deloitte observer notes

IFRIC Update

IASB meeting 17-19 November 2009 Highlights include the ratification of IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments, joint debate with the FASB on accounting for emissions trading schemes, formalisation of joint IASB-FASB views on accounting for leases, and a change in direction for the accounting for income taxes project (abandoning the ED in favour of a limited scope project)

Australian meeting summary

Deloitte observer notes

IASB Update

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 IAS Plus Update Newsletters)

IFRS publications
Other publications of interest
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 November historical summary on IAS Plus)

  • On 2 November 2009, the IASB held a roundtable at the FASB offices in Norwalk, CT to discuss its Fair Value Measurements exposure draft (Notes Taken by Observers at the Roundtable (PDF 34kb))
  • On 9 December 2009 Deloitte United States will host a Deloitte Dbriefs webcast on the joint IASB and FASB financial instruments project (More Information and Registration)
  • The European Commission has launched a consultation on the IFRS for SMEs (Consultation Paper (PDF 58kb))
  • In a Letter to the European Commission (PDF 64kb), Deloitte has recommended the endorsement of IFRS 9 Financial Instruments, relating to the classification and measurement of financial instruments, for use in the European Union
  • On 5 November 2009 Deloitte hosted a live webcast between The Hundred Group of Finance Directors in the UK and the IASB on the future of hedge accounting under IFRSs. A recording of the webcast is available here (if prompted, the ID is 63023 and the pass code is 91918367)
  • The IASB and the US Financial Accounting Standards Board (FASB) have issued a joint statement reaffirming their commitment to improve IFRSs and US GAAP and to bring about their convergence (IASB-FASB Joint Statement (PDF 75kb))
  • ASIC has released a consultation paper outlining proposed guidance to directors on their duty to prevent insolvent trading (ASIC press release)
  • The ASX has released a Companies Update discussing deadlines for periodic reports, non-business days and non-trading days in 2010 (Companies Update 08/09).



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