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Monthly roundup - October 2011

Staying on top of developments

Author: Deepesh Malik and Debbie Hankey, Accounting Technical Group

October 2011 edition
Issued 02 November 2011

In this edition:

Monthly highlights

AASB discusses accounting implications of the carbon pricing scheme

The Australian Accounting Standards Board (AASB) discussed at its meeting in October 2011 its approach to issuing guidance on accounting for the carbon pricing scheme which will likely be effective in Australia from 1 July 2012. The AASB is restricting its discussion of the accounting to the fixed-price period, expected to be the first 3 years, in the hope that the International Accounting Standards Board will develop guidance on accounting for emissions trading schemes before the flexible period comes into effect from 1 July 2015.

The AASB has confirmed that it does not expect to issue an Interpretation on the topic but confirmed that it saw merit in the AASB staff publishing a paper that draws out the relevant accounting issues. Based on the AASB discussion it is likely that the paper will address the following:

  • recognising permits (both purchased and received freely) as assets
  • possible classification of such assets as intangible or financial assets
  • the recognition and measurement of liabilities for carbon tax
  • the expensing or capitalisation of the carbon liability
  • the possible accounting treatments by the Government, including the nature of any Government liability in respect of funds received through sale or grant of permits.

The staff paper will not be prescriptive in the method of accounting used and entities should therefore assess the impact of various accounting policy options on reported earnings and net asset positions.

However the introduction of the carbon pricing scheme in Australia results in a number of financial reporting considerations for entities in addition to the mere mechanics of the accounting for the resulting permit assets and liabilities including matters such as asset impairment due to the cost of carbon, determination of fair values, disclosure of uncertainties and hedging programs. Consideration will also need to be given to the financial impacts of the cost of carbon on major capital investment and restructure decisions, cash flow / funding implications of purchasing and trading permits and the continuous disclosure obligations for ASX listed companies in relation to the impact of the carbon pricing mechanism.

For more information refer to the staff paper (PDF 348kb) submitted to the October AASB meeting, and the AASB Alert (PDF 253kb) for October. Further details on the carbon pricing mechanism can be obtained at Australia's carbon price - June 2011 financial reporting implications (PDF 1,123kb) and webinar Carbon Price 2012: Presenting big change and incredible opportunity (53 mins)

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 2011 financial reporting cycle summary.)

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

ED 221 Government Loans (proposed amendments to AASB 1 First-time Adoption of Australian Accounting Standards)

Incorporates IASB ED/2011/5; proposes to provide the same relief in relation to accounting for a government loan with a below-market rate of interest to first-time adopters of Australian Accounting Standards as is granted to existing preparers of financial statements when applying AASB 120 Accounting for Government Grants and Disclosure of Government Assistance.

Comments due to the AASB by 5 December 2011 and to the IASB by 5 January 2012 ED 221 (PDF 287kb)

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

Exposure Draft ED/2011/5 Government Loans (proposed amendments to IFRS 1)

Addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRSs.

Adds an exception to the retrospective application of IFRS, which would then provide the same relief to first-time adopters granted to existing preparers of IFRS financial statements when the requirement was incorporated into IAS 20 Accounting for Government Grants and Disclosure of Government Assistance in 2008.

Comments due by 5 January 2012

ED/2011/5 (PDF 122kb)

IFRS in Focus newsletter (PDF 58kb)

IFRIC Interpretation 20  Stripping Costs in the Production Phase of a Surface Mine*

Clarifies the requirements for accounting for stripping costs associated with waste removal in surface mining, including when production stripping costs should be recognised as an asset, how the asset is initially recognised, and subsequent measurement.

Effective for annual periods beginning on or after 1 January 2013, with early application permitted IFRS in Focus newsletter (PDF 66kb)

New editorial corrections to IFRSs*

The IASB has posted to its website a revised version of the batch of Editorial Corrections to IFRSs originally issued on 29 June 2011.

This batch makes editorial corrections and changes to IFRS for SMEs (issued July 2009), Conceptual Framework for Financial Reporting (issued September 2010), Bound Volume (Red Book) 2011, Bound Volume (Blue Book) 2011, IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 11 Joint Arrangements (issued May 2011), IAS 19 Employee Benefits (issued June 2011) and Presentation of Items of Other Comprehensive Income (issued June 2011).

As minor editorial corrections, these changes are effectively immediately applicable under IFRS

Editorial Corrections to IFRSs (PDF 18kb)


* Equivalent pronouncement 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
AASB regular meeting
26 October 2011

At this meeting the Board, amongst other things:

  • Discussed aspects of accounting for Australia's carbon pricing scheme
  • Progressed its project on Service Performance Reporting
  • Continued to monitor and form views on the core IASB projects/consultation documents – financial instruments, revenue recognition, leases and insurance contracts
  • Received progress reports on four of its domestic projects – superannuation entities; control in the not-for-profit sector, not-for-profit entities within the general government sector (ED 212) and extending related party disclosures to the not-for-profit public sector (ED 214)
  • Received reports relating to a range of other topics and organisations – an IPSASB Report, IASB Agenda Consultation, IFRS Advisory Council, IFRS Interpretations Committee, Integrated Reporting, and AOSSG.
AASB alert (PDF 253kb)
IASB regular meeting
19-20 October 2011

Topics discussed were as follows (click on the links for direct access to the Deloitte observer notes for that topic):

Wednesday, 19 October 2011

Thursday, 20 October 2011

Detailed 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, IFRS in Focus Newsletters, Webcasts, and Podcasts)

IFRS publications
Other publications of interest
  • Sustainable finance — The risks and opportunities (some) CFOs are overlooking (PDF 768k) provides a unique view into how CFOs think about the challenges and opportunities associated with sustainability, based on an independent global survey of 208 CFOs undertaken by Verdantix on behalf of Deloitte
  • Heads Up — Proposed Council to Improve Standard Setting for Private Companies (PDF 97kb) discusses the recent proposal by the Board of Trustees of the Financial Accounting Foundation to create a council that would work toward improving the accounting standard-setting process for private companies in the United States
  • Robert Bruce Column 'Allaying the Fears' discusses the speech by Hans Hoogervorst, the Chairman of the IASB, at the AICPA conference in United States, urging the SEC to make affirmative decisions for adoption of IFRS in the US
  • Robert Bruce Column 'Ten Years of EFRAG Achievement' discusses the role and achievements of the European Financial Reporting Advisory Group, as it celebrates its tenth anniversary
  • Robert Bruce Column 'The Route for the Largest US Corporates' discusses the Deloitte IFRS Summit in New York on review and assessment of IFRS adoption in US, at which leading corporates favoured IFRS adoption and the benefits that it provides.
Deloitte comment letters
  • Deloitte Comment Letter (PDF 28kb) to the IASB on its Exposure Draft ED 2011/3 Mandatory Effective Date of IFRS 9
Deloitte Webcasts and Podcasts
  • IFRS: Important Developments (18 October 2011) (link to external site, registration required) discusses the standard-setting developments at the International Accounting Standards Board (IASB). The topics covered in this webcast include:
    • The IASB's timeline for the issuance of exposure drafts and new accounting standards
    • An update on the revenue recognition project
    • Recent developments including the issuance of the IASB's agenda consultation and the exposure draft on investment entities.

    The 'Q&A Report' (PDF 165kb) contains a summary of audience questions submitted during the live webcast, together with suggested responses.

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 Chairman of the Australian Accounting Standards Board (AASB), Kevin Stevenson, has addressed the public in a media release expressing a number of concerns about the proposals in the IASB's Exposure Draft: Investment Entities (IAS Plus article)
  • The AASB has submitted comments to the IFRS Interpretations Committee on the IFRS Interpretations Committee’s tentative agenda decision relating to IAS 12 Income Taxes – Rebuttable presumption to determine the manner of recovery
  • The ASX has released a consultation paper (PDF 512kb) that aims to review the listing rule reporting requirements applying to the reserves and resources of companies operating in the mining, oil and gas (MOG) industries.
International Accounting Standards Board
External webcasts and Podcasts
  • IASB October meeting podcast (20 October 2011; mp3, approx 30 min) provides a short summary of the main topics and projects discussed in the IASB regular meeting
  • Upcoming webcast (9 November 2011) by the IASB and the CFA Institute 'Setting the IASB's Agenda for the Next Decade: Investor Update and Input Opportunity' to discuss the IASB's first public agenda consultation.
Other global news
  • The European Financial Reporting Advisory Group (EFRAG) and the Organismo Italiano di Contabilità (OIC) have published a Discussion Paper Accounting for Business Combinations under Common Control (PDF 1,844kb) that aims to start a debate on business combinations under common control and how it should be reflected in financial statements (IAS Plus article)
  • The International Public Sector Accounting Standards Board (IPSASB) has published Consultation Paper Reporting Service Performance Information which aims to present a principles-based approach to developing a consistent framework for public sector entities to improve the consistency and comparability of service performance information across jurisdictions and between entities (IAS Plus article)
  • The IPSASB has published Exposure Draft (ED) 46 Recommended Practice Guideline, which is designed to provide good practice guidelines on reporting on the long-term fiscal sustainability of a public sector entity (IAS Plus article)
  • The Association of Chartered Certified Accountants (ACCA) has published a study Towards greater convergence Assessing CFO and investor perspectives on global reporting standards (PDF 166kb) that shows that the global financial crisis has increased support for IFRSs (IAS Plus article)
  • The United Kingdom Financial Reporting Council (FRC) has launched a 'Financial Reporting Lab' which aims to bring together companies and investors to identify practical solutions to reporting problems, such as the length and complexity of reports and financial statements (IAS Plus article)
  • The New Zealand Accounting Standards Board (NZASB) would consider a short-term action plan to encourage the reduction of excessive disclosures at its upcoming meeting on 2 November 2011 (IAS Plus article)
  • The French national standard setter Autorité des Normes Comptables (ANC) has published a proposal for the simplification of the accounting requirements for small listed companies in Europe (IAS Plus article)

Related links

Related links

  • 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 - July 2012
    Financial reporting developments during July 2012. Monthly highlights discuss the financial reporting implications of tax ruling on frankable dividends, IASB revised work plan and Transitional relief and guidance on IFRS 10, IFRS 11, and IFRS 12
  • Monthly roundup - November 2011
    Financial reporting developments during November 2011. Monthly highlight is the discussion on the revised exposure draft on revenue
  • Monthly roundup - July 2013
    Financial reporting developments during July 2013. Monthly highlights discuss the ASIC areas of focus for July 2013 reporting period.
  • 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 - March 2011
    Financial reporting developments during March 2011. Monthly highlight discusses the updated IASB work plan, ASIC's proposed guidance on additional financial information and a joint UK/NZ project to reduce disclosures under IFRS.
  • Monthly roundup - March 2009
  • Monthly roundup - November 2010
    Financial reporting developments during November 2010. Monthly highlight discusses resources available for the December reporting season and the IASB's updated work plan issued late in the month.
  • Monthly roundup - August 2010
    Summary of developments in financial reporting during August 2010. Monthly highlight discusses the possible impact of changes in the IASB and FASB chairs on global standard setting.
  • Monthly roundup - June 2010
    Summary of developments in financial reporting during June 2010. Monthly highlight discusses recent financial reporting reform.


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