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Monthly roundup - October 2010

Staying on top of developments

Author: Deepesh Malik, Frank Betkowski and Debbie Hankey, Accounting Technical Group

October 2010 edition
Issued 1 November 2010

In this edition:

Monthly highlight: Getting ready for the ‘great leap forward’? 

October saw two important developments that will shape the future financial reporting landscape.

Firstly, in a surprise announcement, the IASB announced that Sir David Tweedie would be replaced in effect by two people: Hans Hoogervorst as Chairman and Ian Mackinntosh as his Deputy. The appointment of a ‘non accountant’ as Chair of an accounting body has caused quite a stir in accounting circles, but is being seen as positive by most on reflection. Managing expectations and politics on a global scale is of crucial importance in ensuring success of the global IFRS experiment. Tweedie himself last week noted current circumstances represents the ‘last chance’ to implement a global accounting framework,. Read more about the appointments in The Bruce Column on IAS Plus.

The second development is the joint IASB and FASB documents seeking input on how the swathe of forthcoming new pronouncements – financial instruments, fair value measurement, leases, revenue, insurance contracts and more – should be implemented. The documents ask whether there should there be a ‘big bang’ or ‘phased in’ approach and when the transformation should begin. With some such as the US AICPA already calling for a five year implementation period for IFRS in the United States, there is much at stake here in how the transition occurs, and its success. Read more about the consultation process in this IAS Plus article.

Will these developments represent a ‘great leap forward’? History aside, the consultative process being undertaken offers hope and opportunity, but also great responsibility. Great responsibility on the IASB, its current and new chair (and deputy chair) to listen to constituent concerns and to ensure a fair and balanced system that is effective in its goals. And great responsibility on all those affected – preparers, users, auditors, regulators and others – to consider the proposals, provide insightful feedback and participate in the process.

Given the public holiday for some on Melbourne Cup Day, we will issue our Accounting alert on the October AASB meeting on Wednesday 3 November 2010.

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)

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

Exposure Draft ED 206 Severe Hyperinflation (Proposed amendment to AASB 1)

It 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 financial currency was subject to severe hyperinflation.

Comments are due to the AASB by 8 November 2010 or to the IASB by 30 November 2010

ED 206 (PDF 163kb)

IFRS in Focus newsletter (PDF 65k)

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

Request for Views Effective Dates and Transition Methods*

The IASB and FASB have published documents seeking views on when new financial reporting standards resulting primarily from their work to improve and achieve convergence of IFRS and US-GAAP should become effective.

With a number of major projects planned to be completed in 2011, the boards are seeking views on whether or how to sequence effective dates in order to reduce the burden to interested parties. Feedback from the consultation will inform the boards as they jointly develop an implementation plan for those new standards that helps stakeholders to manage both the pace and cost of change.

Open for comment until 31 January 2011

IAS Plus article

IASB press release

IFRS 9 Financial Instruments (October 2010)*

A revised version of IFRS 9 which now incorporates requirements for the classification and measurement of financial liabilities.

The requirements maintain the existing amortised cost measurement basis for most liabilities. New requirements apply where an entity chooses to measure a liability at fair value through profit or loss – in these cases, the portion of the change in fair value related to changes in the entity's own credit risk is presented in other comprehensive income rather than within profit or loss.

Applies to annual periods beginning on or after 1 January 2013

IAS Plus article

IASB press release (PDF 33kb)

Amendments to IFRS 7 Financial Instruments: Disclosures* 

Issued by IASB as part of its comprehensive review of off balance sheet activities.

The amendments will allow users of financial statements to improve their understanding of transfer transactions of financial assets (for example, securitisations), including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period

Entities shall apply the amendments for annual periods beginning on or after 1 July 2011

(In the first year of application, comparative information is not required.)

IAS Plus Update 10-21

IFRS in Focus newsletter (PDF 139kb)

IASB Press Release (PDF 36kb)

IAS Plus article

Editorial corrections*

This batch includes editorial corrections and changes to IFRS for SMEs (issued July 2009), IFRS 9 Financial Instruments (issued November 2009), Bound Volume (Red Book) 2010, Bound Volume (Blue Book) 2010, Improvements to IFRSs (issued May 2010) and IFRS 7 Financial Instruments: Disclosures – Transfers of Financial Assets (issued October 2010)

As minor editorial corrections, these changes are effectively immediately applicable IAS Plus article

* Equivalent document not yet issued by the 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
IASB special meeting 5 October 2010

The topics discussed were as follows (click through to detailed Deloitte observer notes for that topic):

Notes Taken by Deloitte Observers
IASB regular meeting 19-22 October 2010 The topics discussed were effective dates and transition, annual improvements, extractive activities, hedge accounting, leases, fair value measurement guidance, emissions trading schemes, impairments, asset and liability offsetting, conceptual framework, financial instruments with characteristics of equity, other comprehensive income, and financial statement presentation.

Australian meeting summary

Detailed Deloitte observer notes

IASB special meeting 27 October 2010

This special meeting was held to finalise deliberations on the hedge accounting project. Topics discussed included use of intragroup non-derivative financial instruments as hedging instruments, eligible hedged items, time value of options, cash instruments as eligible hedging instruments and transition.

The exposure draft will now be drafted with the view of issuing it before the end of calendar 2010.

Detailed Deloitte observer notes
AASB meeting 27-28 October 2010 This meeting was partially a joint meeting with the New Zealand Financial Reporting Standards Board (FRSB). Topics discussed included comment letters on various IASB/IFRIC projects, trans-Tasman convergence and IPSASB developments. We will issue an Accounting alert once the official outcomes from the meeting are known. AASB meetings page

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 IFRS in Focus Newsletters)

IFRS publications
Other publications of interest
  • Heads Up Newsletter FASB and IASB Complete First Phase of Joint Project on Conceptual Framework for Financial Reporting (PDF 116kb)
  • Accounting Roundup: Third Quarter in Review–2010 (PDF 1,552kb) published by Deloitte & Touche LLP (United States) – covers United States and international accounting and auditing matters, including IASB-FASB convergence
  • Revenue recognition for technology companies (PDF 2,295kb) Describes the key proposals in the recently issued Exposure Draft (ED) on Revenue from Contracts with Customers and provides insights on how the proposed approach in the ED will be applied in scenarios common to technology companies who report under both IFRS and US GAAP
  • Enhancing the quality of IFRS financial statements (PDF 153kb) Presents 10 easy ways to improve the quality of IFRS financial statements, including how information is presented, the level of detail provided and the linkages between disclosures.
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 October 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 Financial Reporting Panel has released its first four reports on complex accounting matters referred to it. The Panel is an independent statutory authority which was established in 2006 to determine disputes between ASIC and entities concerning the application of accounting standards and other financial reporting requirements of the Act in lodged financial reports. The Panel supported ASIC’s view on two of the matters, but supported the company’s adopted accounting treatment in the other two matters (FRP press release [first batch], FRP press release [second batch], ASIC press release)
International Accounting Standards Board
Other global news
  • The Asian-Oceanian Standard Setters Group (AOSSG) meeting was held in Tokyo on 29-30 September, topics discussed included emissions trading, Islamic finance and various IASB projects (Communiqué from the meeting [PDF 40kb])
  • AICPA comment letter to SEC (PDF 269kb) warns that companies will need five years preparation time to adopt IFRS if the SEC requires two years of historical comparative financial statements (IAS Plus article)
  • The Committee of European Securities Regulators (CESR) has published its ninth batch of extracts from its confidential database of enforcement decisions taken by EU national enforcers of financial information. The extracts are a source of information to foster appropriate and consistent application of IFRSs in the EU (IAS Plus article).

Related links

  • Monthly roundup - August 2012
    Financial reporting developments during August 2012. Monthly highlights discuss the IASB’s post-implementation review of IFRS 8 'Operating Segments' and withdrawl of AASB Interpretation 1039 'Substantive Enactment of Major Tax Bills in Australia'
  • 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 - November 2013
    ASIC has announced its areas of focus for 31 December 2013 financial reports of listed entities and other significant economic entities due to wide range of stakeholders and number of employees.
  • Monthly Roundup - June 2011
    Financial reporting developments during June 2011. Highlights include two new standards issued by IASB, likely application date for other major outstanding projects, Deloitte resources for the June 2011 reporting season.
  • Monthly roundup - February 2012
    Financial reporting developments during February 2012. Monthly highlights include the AASB discussion on MRRT and Carbon pricing issue.
  • 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 - May 2013
    Financial reporting developments during May 2013. Monthly highlights discuss the revised lease accounting proposals issued by the IASB as ED/2013/6 Leases
  • Monthly Roundup - April 2011
    Financial reporting developments during April 2011. Monthly highlight discusses updated resources for the June reporting season, the IASB-FASB convergence process and a webcast on IFRS developments.
  • Monthly roundup - March 2009
  • Monthly roundup - November 2009
    Summary of developments in financial reporting during November 2009. Monthly highlight discusses progress with the IASB project to reform accounting for financial instruments.

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