Monthly roundup - September 2010
Staying on top of developments
In this edition:
- Monthly highlight: Sunshine optimism
- New pronouncements
- Standard-setter meetings
- New Deloitte publications
- Other developments.
As the world awaits the latest instalment of the SEC's thinking on when or if the US will move across to IFRS, a meeting behind closed doors cast some light on the direction in which the SEC is moving. At the latest Biannual Forum of National Standard Setters from around the world held in Rome last month, SEC’s accounting chiefs provided a session on "Convergence and Global Accounting Standards".
This rare appearance of both of the two accounting chiefs at the SEC only weeks before the SEC is expected to release a progress report on the “Work Plan” which aims to prepare the ground for a decision over whether or not the US will transition to IFRS raised expectations. The presentation did not disappoint. Both men were appropriately guarded in their comments but left the audience with the impression that no insurmountable problems had been identified.
As Robert Bruce, IAS Plus commentator on financial reporting developments, put it:
There is a long way to go. But in the Rome sunshine optimism was in the air.
More information: The Bruce Column on IAS Plus
(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 2010 financial reporting cycle summary)
Australian Accounting Standards Board (AASB)
|Pronouncement||Key dates||More information|
ED 202R Leases
The AASB has reissued ED 202 Leases, as ED 202R Leases to incorporate editorial changes made by the IASB to the original exposure draft.
The exposure draft aims to improve the transparency of lease accounting and make financial statements more comparable for investors.
|Comments to the AASB close on 12 November 2010 and to IASB by 15 December 2010||ED 202R (PDF 669kb)|
ED 203 Removal of Fixed Dates for First-time Adopters (proposed amendments to AASB 1)
Equivalent to IASB ED/ 2010/10.
The ED proposes to provide relief to first-time adopters of IFRSs by amending IFRS 1 as follows:
It amends the date of prospective application of the derecognition of financial assets and liabilities from '1 January 2004' to 'the date of transition to IFRSs' so that first-time adopters of IFRSs do not have to apply the derecognition requirements in IAS 39 retrospectively.
It amends the date of prospective application of the requirement to fair value financial assets and liabilities to transactions entered into 'on or after the date of transition to IFRSs', which would relieve first-time adopters from recalculating 'day 1' differences on initial recognition for those transactions occurring before the date of transition to IFRSs.
|Comments to the AASB close on 4 October 2010 and to the IASB on 27 October 2010||
ED 203 (PDF 141kb)
IFRS in Focus newsletter (PDF 63kb)
ED 204 Deferred Tax: Recovery of Underlying Assets
The ED proposes to introduce a presumption that an asset is recovered entirely through sale unless the entity has clear evidence that recovery will occur in another manner. The presumption would apply when investment properties, property, plant and equipment or intangible assets are remeasured at fair value or revalued at fair value.
|Comments to the AASB close on 25 October 2010 and to the IASB on 9 November 2010||
ED 204 (PDF 205kb)
ED 205 Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation.
Currently, parent entities with a ‘higher-up’ parent that prepares IFRS-compliant consolidated financial statements are themselves exempt from preparing consolidated financial statements in certain circumstances.
The proposals in ED 205 extend that relief, in certain circumstances, to entities whose higher-up parent is a not-for-profit entity complying with the Australian Accounting Standards or Tier 2 entity complying with the Australian Accounting Standards – Reduced Disclosure Requirements.
It would permit more Australian entities to avoid consolidation under AASB 127 Consolidated and Separate Financial Statements, equivalent to IAS 27 of the same name. Similarly, extensions of the exemptions in the Australian equivalents to IAS 28 and IAS 31 are also proposed.
|Comments to the AASB close on 12 January 2011||ED 205 (PDF 76kb)|
New Compiled AASB Standards
The following Standards, compiled for the amendments made by AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project (June 2010) have been released:
|These compiled versions apply to annual reporting periods beginning on or after 1 July 2010||
International Accounting Standards Board (IASB)
|Pronouncement||Key dates||More information|
Exposure Draft ED/2010/11 Deferred Tax: Recovery of Underlying Assets (Proposed amendments to IAS 12)
Equivalent to AASB ED 204 Deferred Tax, noted above. The proposal would amend one aspect of IAS 12 Income Taxes. Under IAS 12, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using the asset or by selling the asset. In some cases, it is difficult and subjective to assess whether recovery will be through use or through sale.
The proposed amendment would introduce a presumption that an asset is recovered entirely through sale unless the entity has clear evidence that recovery will occur in another manner. The presumption would apply when investment properties, property, plant and equipment or intangible assets are remeasured at fair value or revalued at fair value.
|Comments to the IASB close on 9 November 2010.||
ED/2010/11 (PDF 179kb)
Exposure Draft ED/2010/12 Severe Hyperinflation (Proposed amendment to IFRS 1)
The amendment proposes guidance on how an entity should resume presenting financial statements in accordance with International Financial Reporting Standards (IFRSs) after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation.
According to the proposed amendment an entity that has been subject to severe hyperinflation would be allowed to measure assets and liabilities at fair value and use that fair value as the deemed cost of those assets and liabilities in the opening IFRS statement of financial position.
|Comments to the IASB close on 30 November 2010.||
ED/ 2010/12 (PDF 127kb)
IASB Press Release (PDF 31kb)
Conceptual Framework (Chapters 1 and 3)
IASB and FASB complete first stage of conceptual framework - the joint project to develop an improved conceptual framework for International Financial Reporting Standards (IFRSs) and US generally accepted accounting practices (GAAP).
This first phase of the conceptual framework deals with the objective and qualitative characteristics of financial reporting. The following chapters have been published:
IASB press release (PDF 45kb)
(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 1-2 September 2010||This two day meeting largely consisted of the AASB considering its responses to numerous exposure drafts and requests for comment from the IASB, FASB and other bodies. However, a number of other important matters were also considered.||Accounting alert 2010/11|
|IFRIC meeting 2-3 September 2010||Highlights include discussion on whether entities can be key management personnel, accounting for put options over non-controlling interests and the classification of loans with callable features.||
IFRIC Review (PDF 83kb)
IASB regular monthly meeting
14-16 September 2010
Biannual Forum of National Standard Setters
23 September 2010
The highlight of the meeting was the participation and presentation by SEC heads, that raised expectations on US transition to IFRS
IASB special meeting
24 September 2010
||Notes Taken by Deloitte Observers|
(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 IFRS in Focus Newsletters)
- Lease Accounting- Retail Accounting in the Retail Industry: A new view of lease accounting emerges Describes the key proposals in the recently issued Exposure Draft on Leases and provides insights on how these proposals may affect the retail industry.
- IFRS in Focus Draft Interpretation on Stripping Costs in the Production Phase of a Surface Mine (PDF 74kb) and Extracting Value Draft Interpretation on stripping costs - understanding the impacts
- IFRS in Focus Insurance Contracts (PDF 128kb)
- IFRS Insights August 2010 edition including discussion on revenue recognition exposure drafts, and an industry feature for oil and gas companies.
Other publications of interest
- CFO Survey (PDF 1,184kb)- ACCA (the Association of Chartered Certified Accountants) in partnership with Deloitte has conducted a survey into the views of CFOs in leading listed and ‘public interest’ companies across nine markets on the challenges around narrative reporting, specifically in annual reports
- The Deloitte Islamic Finance leaders survey in the Middle East - Benchmarking practices, report released by The Deloitte Islamic Finance Knowledge Center (IFKC). It reveals support for harmonisation of Islamic accounting standards with IFRS
- IFRS: Important Third Quarter Developments Q&A report from recent Deloitte global financial reporting Dbriefs webcast, and topics covered include the IASB's proposals on financial statement presentation, revenue recognition and leases
- Heads up Newsletter FASB Proposal - Disclosure About an Employer’s Participation in a Multiemployer Plan (PDF 92kb)
- Heads up Newsletter PCAOB Standing Advisory Group meeting (July 2010) (PDF 120kb)
- August 2010 Edition of Accounting Roundup (PDF 350kb) published by Deloitte & Touche LLP (United States) – covers United States and international accounting and auditing matters, including IASB-FASB convergence
Deloitte comment letters
- Deloitte comment letter on the IASB's proposed changes to fair value measurements Exposure Draft ED/2010/07 Measurement Uncertainty Analysis Disclosure for Fair Value (PDF 40kb)
- Deloitte comment letter on the IASB's proposed changes to defined benefit plan accounting: Exposure Draft ED/2010/3 Defined Benefit Plans-Proposed amendments to IAS 19 Employee Benefits (PDF 61kb)
- Deloitte comment letter on the FASB's proposed accounting for financial instruments FASB Proposed Accounting Standards Update Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities (PDF 377kb)
- Deloitte comment letter on the IASB's proposed changes to fair value measurements Exposure Draft ED/2010/5 Presentation of Items of Other Comprehensive Income (PDF 23kb)
(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. You can also subscribe to our Deloitte IAS Plus RSS feed to be kept informed of developments as they happen)
- ASIC released Consultation Paper 140 (PDF 81kb), setting out issues for consultation regarding the financial requirements for responsible entities (REs) of managed investment schemes (MISs).
International Accounting Standards Board
- The International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) plan to hold a series of public roundtable meetings between November 2010 and January 2011 for the Revenue Recognition, Insurance Contracts and Leases projects (IAS Plus article)
- Employee Benefits Working Group meeting was held on 27 September, to discuss the issues arising from the Exposure Draft Defined Benefit Plans (Proposed Amendments to IAS 19) and the responses received (Meeting details)
- AASB has made a submission to the IASB on ED/2010/7 [AASB ED 199] Measurement Uncertainty Analysis Disclosure for Fair Value Measurements. The submission generally agrees with the ED’s objective but disagrees with the way that objective would be met
- IASB posted a new batch of Editorial Corrections to IFRSs on its website
- An online library of ‘Snapshot’ documents has been made available on the IFRS Foundation website that provides a high level summary of proposals
- IASB decides to continue to develop an IFRS to replace IAS 37 Provisions, Contingent Liabilities and Contingent Assets with an expected measurement model (IAS Plus article)
- IASB posted a staff draft of a forthcoming IFRS on consolidation that reflects the tentative decisions made to date by the IASB for the board’s project to replace IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities with a single standard on consolidation (IAS Plus article)
Other global news
- On September 17, 2010, the SEC unanimously approved a proposed rule, Short-Term Borrowings Disclosure, to address temporary declines in short-term borrowings – usually around a period-end – commonly referred to as "window dressing." (IAS Plus article)
- The FASB has released Accounting Standards Update (ASU) No. 2010-25 – Plan Accounting – Defined Contribution Pension Plans (Topic 962): Reporting Loans to Participants by Defined Contribution Pension Plans. The ASU clarifies how loans to participants should be classified and measured by defined contribution plans and how IFRS (IAS 26 Accounting and Reporting by Retirement Benefit Plans) compare to these provisions. The amendments in this update are effective for fiscal years ending after 15 December 2010. The IASB is also currently working on a project on ‘Post-employment Benefits including Pensions’. A final IFRS is expected in the first quarter 2011 (IAS Plus article)
- FASB to host two roundtable meetings on the IASB staff draft on consolidated financial statements, with which the IASB plans to replace IAS 27, Consolidated and Separate Financial Statements and SIC-12, Consolidation — Special Purpose Entities, on consolidated financial statements (IAS Plus article)
- The Institute of Chartered Accountants in England and Wales (ICAEW) has submitted a comment letter to the United States AICPA/FAF/NASBA "Blue-Ribbon" Panel on Standard Setting for Private Companies. The 'Blue Ribbon' Panel appears to prefer a 'home grown' alternative to the possible adoption of the IFRS for SMEs in the United States. The ICAEW's comment letter recommends the Panel reconsiders the IFRS for SMEs (IAS Plus article)
- The US Financial Accounting Standards Board (FASB) has issued a Discussion Paper (DP) to solicit broad-based input on how to improve, simplify, and converge the financial reporting requirements for insurance contracts. The DP is part of the FASB’s joint project with the International Accounting Standards Board (IASB). (FASB News, IAS Plus article)
- The International Valuation Standards Council (IVSC) has released Discussion Paper Valuation Uncertainty (PDF 638kb) which summarises the Board's preliminary views on the nature and causes of valuation uncertainty and on how this should be communicated to valuation users