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Monthly roundup - September 2009

Staying on top of developments

In this edition:

Monthly highlight: Winners and losers in financial reporting reforms 

Last month we discussed the need for reform in financial reporting and flagged the pending proposals from Treasury for amendments to the Corporations Act 2001. During September, the likely framework for financial reporting began to emerge and may surprise many in its likely application date of 30 June 2010.

The AASB's decision this month not to adopt the IFRS for SMEs in Australia is part of the grand plan. It is expected that the AASB's consultative document will be issued in conjunction with the Treasury proposals in the coming weeks.

Where might the biggest impacts be? We hazard a guess:

  • Dividends - possible introduction of a 'solvency' rather than 'profits' test will revolutionise dividend planning strategies but may face opposition from some quarters
  • Parent entity financials - reducing or eliminating the parent columns and/or notes may result in financial reports which are easier to prepare, audit and understand
  • Non-reporting entities (including subsidiaries) - likely to have to comply with the 'second tier' disclosure reporting, leading to increases in required disclosure
  • Smaller companies -possibly benefit from an increase in thresholds for small proprietary companies, eliminating reporting obligations
  • Companies limited by guarantee and public companies - may benefit from a size or similar test for lodgement of financial statements
  • Reporting entities without 'public accountability' - likely to be able to take advantage of the reduced disclosure regime
  • Subsidiaries of foreign parents - subsidiaries of foreign parents reporting under the IFRS for SMEs may still need to report under IFRS in Australia - it is unclear whether ASIC may contemplate Class Order relief in this area.

Managing systems and other requirements for a likely June 2010 implementation without concrete proposals presents a significant challenge. Whether the Treasury proposals will be combined with, or derailed by, the Federal Government's mooted regulation of executive compensation remains to be seen. On this latter front, the Productivity Commission released a draft report Executive Remuneration in Australia on 30 September, which includes recommended changes to the Corporations Act 2001, including proposals to amend the content and approval of s.300A remuneration reports.

We will continue to bring you news of these important developments as they occur.

More information: Accounting alert 2009/09, Productivity Commission draft report.

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 2009 financial reporting cycle summary)

Australian Accounting Standards Board (AASB)
Pronouncement Key dates More information
ED 187 Discount Rate for Employee Benefits (Proposed amendments to AASB 119)
Fast-tracked proposal to eliminate the use of market yields on government bonds in determining the rate to discount employee benefit obligations under AASB 119/IAS 19 Employee Benefits, and instead requiring the determination of the rate with reference to market yields on high quality corporate bonds at the end of the reporting period in all cases. The AASB proposes to retain the requirement for not-for-profit public sector entities to discount post-employment benefit obligations denominated in Australian currency using market yields on government bonds.
Comments closed to the AASB on 14 September 2009 and to the IASB on 30 September 2009

ED 187 (PDF kb)

IASB press Release (PDF 99kb)

ED 188 Improvements to IFRSs
Includes proposals for 15 separate amendments which would affect 11 different Standards. The most significant proposals address the measurement of non-controlling interests under AASB 3/IFRS 3 Business Combinations, impairment of investments in subsidiaries, associates and jointly controlled entities in the separate financial statements of the parent/investor/joint venturer, amendments to the disclosure principles for interim reporting under AASB 134/IAS 34 Interim Financial Reporting; and removal of the requirements in AASB 140/IAS 40 Investment Property to transfer investment property carried at fair value to inventories when it will be developed for sale.
Comments are due to the AASB by 30 October 2009 and to the IASB by 24 November 2009

ED 188 (PDF 376kb)

IAS Plus Update Newsletter (PDF 71kb)

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 meeting 15-18 September 2009 Highlights include progress on the fast-tracked replacement of IAS 39, expansion of the scope of the 'rights denominated in foreign currencies' amendments to IAS 32, constituent reaction to the leases discussion paper and the possibility of a change in approach in the derecognition project.

Australian meeting summary

Deloitte observer notes

IASB Update

IASB meeting 22 September 2009 (special meeting) The IASB agreed to a simplified measure (perhaps cost) for equity instruments if determining fair value is impracticable (IAS 34 will be amended to allow 'carry forward' of that measure in some cases). On impairment, the Board discussed portfolio vs. individual assessments, agreed the ED will clarify the measurement objective and discussed transition.

Deloitte observer notes

IASB Update

AASB meeting 23-24 September 2009 The meeting saw the AASB decide not to adopt the IFRS for SMEs in Australia at the current time. Instead, the AASB is developing a new second tier of reporting with significantly reduced disclosures, but using full IFRS recognition and measurement requirements, which is expected to be implemented in time for June 2010 year ends.

Accounting alert 2009/09

AASB Action alert (PDF 83kb)

IASB meeting 29 September 2009 (special meeting) The IASB continued deliberations on the classification and measurement of financial instruments, agreeing to retain liabilities within scope, to confirm the classification basis, but acknowledging a need for clarity on 'basic loan features', guidance on 'managed on contractual yield basis' and measurement of equity instruments. In relation to the forthcoming ED on impairment, discussed transitional requirements and likely effective date (2014).

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
  • Property Intellectual Edition 27 - International Valuations Standards Council (IVSC) issues new guidance on valuation of investment property under construction
  • Extracting Value Issue 6 - commercial and pragmatic perspectives on the IASB draft Discussion Paper Extractive Activities
Other publications of interest
  • September 2009 edition of EITF Snapshot (PDF 115kb) summarising the September 2009 meeting of FASB's Emerging Issues Task Force
  • August 2009 Edition of Accounting Roundup (PDF 245kb) published by Deloitte & Touche LLP (United States)
  • Deloitte United States has published a Heads Up Newsletter (PDF 151kb) discussing the FASB's recently issued Exposure Draft (ED) of a proposed Accounting Standards Update, Oil and Gas Reserve Estimation and Disclosures
  • Deloitte United States has published a Heads Up Newsletter (PDF 108kb) titled Deferred No Longer: FASB Provides Guidance on Accounting for Uncertainty in Income Taxes and Eliminates Certain Disclosure Requirements for All Nonpublic Entities
  • Deloitte United States has published a Heads Up Newsletter (PDF 96kb) explaining the FASB's proposals for new and revised disclosures about fair value measurements
  • Deloitte United States has published a Heads Up Newsletter discussing the September 2009 meeting of the FASB's Valuation Resource Group
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 September historical summary on IAS Plus)

  • The Productivity Commission has released a discussion draft of its report on Executive Remuneration in Australia, which includes recommended changes to the Corporations Act 2001, including proposals to amend the content and approval of s.300A remuneration reports (draft report)
  • The IASB is to hold an additional Board meeting on 6 October 2009 to continue work on the project to replace existing requirements for financial instruments
  • The IASB and the US FASB jointly held Roundtables on Financial Instruments - Classification and Measurement during September (IAS Plus notes: London 10 September 2009, Norwalk Connecticut 14 September)
  • Following their meeting in Pittsburgh, Pennsylvania USA on 24-25 September 2009, the leaders of the G20 nations issued a Final Statement (PDF 102kb) identifying a range of additional steps that should be taken to strengthen international financial regulatory systems to avoid a future global financial crisis. One of their stated goals is to complete convergence of accounting standards across the G20 member nations by June 2011
  • The IASB will hold a webcast on its project on rate-regulated activities on Monday, 5 October 2009, 9:30am London time and again at 14:30pm London time (More information and registration)
  • The AASB is looking for people with an interest in financial reporting by not-for-profit entities in the private sector to join a Project Advisory Panel to assist with the development of the AASB project Disclosures by Private Sector Not-for-Profit Entities (AASB press release)
  • The Trustees of the International Accounting Standards Committee Foundation (IASCF), the oversight body of the IASB, have published for public comment proposals that form the second part of a two-part review of the IASC Foundation constitution (IASCF Press Release [PDF 105kb], details of IASCF proposals [PDF 402kb])

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