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Monthly roundup - April 2009

Staying on top of developments

In this edition:

Monthly highlight: IASB responds to G20

The Group of Twenty (G20) meeting held in London early in April has attracted a lot of attention. The G20 called for standard-setters 'to reduce the complexity of accounting standards for financial instruments' and to address issues arising from the financial crisis, such as loan-loss provisioning.

This is further intensified in light of the issue of Staff Positions (FSPs) on fair value measurement and impairment published recently by the US Financial Accounting Standards Board (FASB) which perhaps provide a relaxation in mark-to-market accounting in the US context.

However, the IASB has decided not to duplicate the US approach but instead has committed itself to a six-month time frame to for publishing a proposal to replace its existing financial instruments standard, IAS 39 Financial Instruments: Recognition and Measurement. An additional IASB meeting has been called for 5 May to continue work on the project.

What shape or form the replacement for IAS 39 will take is uncertain. It is likely that the number of categories financial instruments and how they are accounted for may be reduced. What seems less likely is a move away from an 'incurred' to 'expected' model for loan loss provisioning as it might be considered a triumph of regulatory requirements over conceptual accounting. Will fair value feature less prominently in the proposals? Will hedge accounting survive?

More information: IASB press release  Accounting alert 2009/04, IAS Plus Update Newsletter - G20: Implications for IFRSs (PDF 100kb), G20 Declaration on strengthening the financial system (PDF 137kb) 

We've also released our What's new for the June 2009 financial reporting summary. With financial reporting requirements changing rapidly in an uncertain environment, this publication is a key resource in staying on top of changes during the June 2009 reporting season. We keep this publication up-to-date as new developments occur throughout the reporting season. Access the What's new publication.

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
AASB 2009-1 Amendments to Australian Accounting Standards - Borrowing Costs of Not-for-Profit Public Sector Entities 
Amends AASB 123 Borrowing Costs to reintroduce the option to allow public sector not-for-profit entities to expense all borrowing costs.
Applies to annual reporting periods beginning on or after 1 January 2009 that end on or after 30 April 2009

AASB 2009-1 (PDF 94kb)

Accounting alert 2009/05

AASB 2009-2 Amendments to Australian Accounting Standards - Improving Disclosures about Financial Instruments
Significantly extends the disclosure requirements of AASB 7 Financial Instruments: Disclosures. Extensive fair value disclosures are required by reference to a new three-level hierarchy, including which level has been used to measure each instrument, transfers between levels and a reconciliation of the movement in financial instruments classified in each level during the period. There are also amendments to liquidity risk disclosures, an expansion of the maturity analysis and a further enhancement of the relationship between qualitative and quantitative disclosures.
Applies to annual reporting periods beginning on or after 1 January 2009 that end on or after 30 April 2009

AASB 2009-2 (PDF 136kb)

IAS Plus Update Newsletter (PDF 115kb)

AASB 2009-3 Amendments to Australian Accounting Standards - Embedded Derivatives 
Amends Interpretation 9 Embedded Derivatives and AASB 139 Financial Instruments: Recognition and Measurement to clarify that on reclassification of a financial asset out of the 'fair value through profit or loss' category, all embedded derivatives in the reclassified instrument have to be assessed and, if necessary, separately accounted for in financial statements.
The amendments apply retrospectively and are effective for annual periods ending on or after 30 June 2009

AASB 2009-3 (78kb)

IAS Plus Update Newsletter (PDF 96kb)

AASB 1048 Application and Interpretation of Standards
Public release of this 'service standard' giving force of law to recently issued Interpretations.
Applies to annual reporting periods ending on or after 31 March 2009

AASB 1048 (PDF 257kb)

ED 177 (PDF 660kb)

IAS Plus Update Newsletter (PDF 148kb)

ED 178 Income Tax
Proposes a new standard to replace AASB 112 Income Taxes. The ED proposes to retain the 'temporary difference' approach to accounting for income taxes and harmonise with the equivalent United States standard in a number of areas. Major changes include the treatment of 'uncertain tax positions' (a high risk area with commercial implications), a new calculation methodology for deferred taxes, elimination of various exceptions to the recognition of deferred tax and changes to the allocation of income taxes between financial statement components.
Comments are due to the AASB by 19 June 2009 and to the IASB by 31 July 2009

ED 178 (PDF 794kb)

Asia-Pacific Dbriefs webcast

Deloitte Australia press release

Deloitte (United States)  Heads Up Newsletter (PDF 98k)

ED 179 Superannuation Plans and Approved Deposit Funds
Proposes to replace AAS 25 Financial Reporting by Superannuation Plans. Key proposals include the measurement of all assets and liabilities at 'fair value less transaction costs' (rather than at 'net market value'), the explicit requirement for super funds and similar entities to consolidate with an annual remeasurement of goodwill or discount and changes to the format and content of the financial statements.
The ED is expected to be published shortly with a four month comment period Accounting alert 2009/05
ITC 20 Request for Comment on IASB Discussion Paper DP/2009/1 Leases - Preliminary Views
Proposes a possible new model for lease accounting. The model is based on the principle that all leases give rise to liabilities for future rental payments and assets (the right to use the leased asset) that should be recognised in an entity's statement of financial position. The effect of the proposals would be to eliminate the concepts of 'finance' and 'operating' leases and recognise all leases on the balance sheet.
Comments are due to the AASB by 12 June 2009 and to the IASB by 17 July 2009

ITC 20 (PDF 655kb)

IAS Plus Update Newsletter (PDF 129kb)

International Accounting Standards Board (IASB)
Pronouncement Key dates More information
 Improvements to IFRSs  
Implements changes to 12 IFRSs as part of the IASB's program of annual improvements to its standards. The amendments are largely technical, such as clarifying particular terms, making changes to scope requirements to bring them into line between standards or eliminating unintended consequences. Other changes are more substantial, such as the current/non-current classification of convertible instruments, the classification of expenditures on unrecognised assets in the statement of cash flows and the classification of leases of land and buildings.
The amendments are effective for annual periods beginning on or after either 1 July 2009 or 1 January 2010

IAS Plus Update Newsletter (PDF 108kb)

IASB Press Release (PDF 45kb)

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
AASB meeting 22 April 2009 The AASB's one day April meeting saw the issue of a new exposure draft on financial reporting by superannuation plans and a number of new amending standards. AASB Action Alert (PDF 48kb)
IASB meeting 22-24 April 2009 The IASB's April 2009 meeting reflected the continued frantic pace of global accounting standard setting as the IASB pushed forward on a number of projects that promise significant changes in financial reporting - including the IFRS for SMEs, the IASB's response to the global financial crisis, the non-financial liabilities project and a proposed exposure draft on rate-regulated activities.

Australian meeting summary

Deloitte observer notes

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 Newsletters)

IFRS publications
Other publications of interest
  • Property Intellectual 'Investment allowance'
  • Deloitte United States Heads Up Newsletter (PDF 141kb) - FASB issues guidance on measuring fair value when market activity declines, other-than-temporary impairments, and interim fair value disclosures
  • Accounting Roundup: First Quarter in Review-2009 (PDF 536k, 45 pages), prepared by the Accounting Standards and Communications Group of Deloitte LLP (USA). This newsletter provides brief descriptions of pronouncements affecting accounting, financial reporting, and corporate governance issued during the first quarter of 2009 by standard setters and regulators including FASB, EITF, AICPA, SEC, FASAB, PCAOB, GASB, IASB, IFRIC, and IAASB
  • Deloitte (United Kingdom) has published Issue 2 of its Insurance Accounting Newsletter (PDF 130kb) focussing on the joint IASB and FASB project to develop a new, comprehensive, global financial reporting standard for insurance. This issue focuses on the estimate of insurance cash flows.
Deloitte comment letters
  • Deloitte Comment Letter on the Joint IASB-FASB Discussion Paper: Preliminary Views on Financial Statement Presentation (PDF 214kb). While we agree with many of the proposals in the discussion paper, we have identified a number of issues that we feel are essential to the development of a financial statement presentation model that provides useful information for users and can be practically implemented by preparers.
  • Deloitte Comment Letter (PDF 116kb) on IASB's Request for Views on Proposed FASB Amendments on Fair Value Measurement and Impairment Requirements. We believe that the FASB Staff Position FAS 157-41 is broadly consistent with the principles of fair value in IFRSs and the Expert Advisory Panel document and therefore an amendment to IFRSs is not necessary As there are already significant differences in the accounting models under IFRSs and U.S. GAAP for debt securities, changes to the underlying IFRS model to try to incorporate the guidance in FASB Staff Position FAS 115-23 would create unnecessary complexities and therefore we would not favour a short-term fix to attempt to converge IFRS with the requirements in US GAAP for other-than-temporary impairments for securities
  • Deloitte Comment letter ( Cover letter and Appendix A (PDF 193kb), Appendices B-D (PDF 428kb)) to the Financial Crisis Advisory Group (FCAG) in response to FCAG's 11 March 2009 Invitation to Comment. The FCAG invited responses to seven questions, to assist FCAG in discussing accounting and reporting matters related to the global financial crisis and making recommendations thereon to the IASB and the US FASB
  • Deloitte Comment Letter on the Review of the IASCF Constitution: Identifying Issues for Part 2 of the Review (PDF 165kb)
  • Deloitte & Touche LLP Comment Letter (PDF 81kb) on the US Securities and Exchange Commission proposed Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers. The letter expresses support for allowing foreign registrants to use IFRSs and for the convergence efforts of the IASB and the FASB. However, the letter suggests that there are some areas of the Roadmap that require further consideration by the SEC before it is adopted.

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 April historical summary on IAS Plus)

  • IFAC's International Public Sector Accounting Standards Board ( IPSASB) has published a number of exposure drafts part of its global convergence program, scheduled for completion by 31 December 2009, to substantially converge International Public Sector Accounting Standards (IPSASs) with IFRSs approved at 31 December 2008. During the month, the IPSASB published ED 36 Agriculture, ED 37 Financial Instruments: Presentation, ED 38 Financial Instruments: Recognition and Measurement, and ED 39 Financial Instruments: Disclosures. The EDs may be viewed by going to www.ifac.org/EDs.

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