Monthly roundup - August 2009
Staying on top of developments
In this edition:
- Monthly highlight: time for reform in financial reporting
- New pronouncements
- Standard-setter meetings
- New Deloitte publications
- Other developments.
The pace of global accounting standard setting continues to quicken - evidenced by such events as continual 'fast-tracked' changes to standards and the IFRS for SMEs - and yet Australia's financial reporting framework continues to falter under the strain. Our Australian regulatory framework needs to be flexible, responsive and neutral in light of these developments.
August saw some thawing in questionable regulation, with ASIC announcing a more flexible approach in obtaining relief under certain class orders. However, the 'elephant in the room' - the Corporations Act 2001 - desperately needs modernisation in response to IFRS and commercial reality.
During the month, there were also some intriguing insights into what the Federal Government might be planning in its red tape reform proposals, with suggestions of moving to a solvency, rather than an 'out of profits', test for the payment of dividends - a long overdue reform with IFRS muddying the waters on exactly what a 'profit' might be.
But much more radical reform is needed. Examples include: exempting wholly-owned subsidiaries from financial reporting, to fall into line with much of the world; doing away with parent-entity financial statements, which many consider an anachronistic view of an entity's performance and position; and increasing the 'size tests' for financial reporting by all companies, not just proprietary companies.
Treasury proposals in this regard may be imminent, and may well be welcomed with rapturous applause. We will keep you informed of developments as they occur.
(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 2008-9 Amendments to Australian Accounting Standards - Group Cash-Settled Share-based Payment Transactions
Amends AASB 2 Share-based Payment to clarify the accounting for group cash-settled share-based payment transactions. An entity receiving goods or services in a share-based payment arrangement must account for those goods or services no matter which entity in the group settles the transaction, and no matter whether the transaction is settled in shares or cash.
|Applies retrospectively to annual periods beginning on or after 1 January 2010||
AASB 2009-8 (PDF 157kb)
IAS Plus Update Newsletter (PDF 114kb)
|ED 186 Classification of Rights Issues (proposed amendment to AASB 132)
Proposes to amend AASB 132 Financial Instruments: Presentation to specify that a rights issue offered pro rata to all of an entity's existing shareholders on the exercise of which the entity will receive a fixed amount of cash for a fixed number of the entity's own equity instruments is classified as an equity instrument regardless of the currency in which the exercise price is denominated.
|Comments are requested to the AASB by 24 August 2009 and to the IASB by 7 September 2009.||
ED 186 (PDF 203kb)
IASB Press Release (PDF 101kb)
International Accounting Standards Board (IASB)
|Pronouncement||Key dates||More information|
|ED/2009/9 Classification of Rights Issues (proposed amendment to IAS 32)
Equivalent exposure draft to AASB ED 186, proposing equity treatment for certain rights issues. The IASB intends on making an amendment that can be adopted in December 2009 financial reports.
|Open for comment until 7 September 2009||
IASB Press Release (PDF 101kb)
|ED/2009/10 Discount Rate for Employee Benefits (Proposed amendments to IAS 19)
Proposes to eliminate the use of market yields on government bonds in determining the rate to discount employee benefit obligations under 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.
|Open for comment until 30 September 2009||
Click for Press Release (PDF 99kb)
|ED/2009/11 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 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 IAS 34 Interim Financial Reporting; and removal of the requirements in IAS 40 Investment Property to transfer investment property carried at fair value to inventories when it will be developed for sale.
|Open for comment until 24 November 2009.||
IASB press release (PDF 100kb)
|IFRIC D25 Extinguishing Financial Liabilities with Equity Instruments
Addresses the appropriate accounting under IFRSs when a creditor agrees to accept an entity's shares or other equity instruments to settle the financial liability fully or partially, proposing that equity instruments should be measured at either their fair value or the fair value of the financial liability extinguished, whichever is more reliably determinable.
|Comments are requested to the AASB by 7 September 2009 and to the IASB by 5 October 2009||
IASB press release (PDF 107kb)
|Draft Discussion Paper Extractive Activities
Addresses financial reporting issues associated with exploring for and finding minerals, oil, and natural gas deposits, developing those deposits, and extracting the minerals, oil, and natural gas. The paper notes that an absence of comprehensive IFRS literature on the subject has contributed to a divergence in practice under IFRSs.
|Not yet open for comment, may be formally published for comment in 2010||Draft Discussion Paper|
(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)
|IFRIC meeting 4 August 2009||A special meeting by teleconference to finalise and approve the consensus on the draft interpretation of IAS 39 regarding debt to equity swap||
IFRIC Update (PDF 104kb)
|IASB meeting 4 August 2009 (special meeting)||An additional meeting held by teleconference to decide the transitional arrangements to be proposed for the amendment to IAS 19 with respect to the discount rate..||
IASB Update (PDF 49kb)
(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)
- IAS Plus Update Newsletter - IASB proposes guidance on rate-regulated activities (PDF 77kb) - an overview of IASB ED/2009/8 Rate-regulated Activities (AASB equivalent is ED 185 Rate-regulated Activities)
- Deloitte LLP (UK) has issued a Comprehensive Newsletter - Time for New Measures (PDF 241kb) on the IASB's proposals to replace the financial instruments classification and measurement requirements in IAS 39
- Issue 7 of the Insurance Accounting Newsletter (PDF 88kb) - highlights the possibility that "two significant differences of opinion have emerged and there is a risk now that convergence between IFRS and US GAAP could be more difficult on accounting for insurance contracts
Other publications of interest
- US Reporting Newsletter for Non-US Based Companies May-June 2009 Edition - includes news through 15 July 2009 (PDF 123kb)
- July 2009 Edition of Accounting Roundup (PDF 302kb) published by Deloitte & Touche LLP (United States)
- Deloitte United States has published an issue of Heads Up, FASB Continues Deliberations on Financial Instruments and Decides on Presentation (PDF 111kb) - discussing the FASB's progress on its financial instruments standards
- Deloitte United States has published an issue of Heads Up, FASB Issues Guidance on Measuring Fair Value of Liabilities (PDF 114kb)
Deloitte comment letters
- Deloitte Comment Letter (PDF 189k) on the IASB's proposals in ED/2009/2 Income Tax
- Deloitte Comment Letters (ZIP 76kb) on four recent IFRIC tentative decisions not to add an item to its agenda.
(A brief listing of other financial reporting developments during the month. A full summary of all IFRS-related developments can be found in our August historical summary on IAS Plus)
- On 6 August 2009 Deloitte hosted a live webcast with the IASB on their proposals to replace IAS 39 Financial Instruments: Recognition and Measurement. A recording of the webcast is available by clicking here. The webcast included John Smith, IASB Board member; Gavin Francis, IASB Director of Capital Markets; Sue Lloyd, IASB Senior Technical Consultant; Jens Berger, IASB Practice Fellow; Veronica Poole, Deloitte, Head of UK IFRS Centre of Excellence; Andrew Spooner, Deloitte, Lead Financial Instrument Partner.
- ASIC has announced changes to form-lodging arrangements for companies wishing to take advantage of relief under Class Order 98/98 Small proprietary companies which are controlled by a foreign company but which are not part of a large group and Class Order 98/1418 Wholly-owned entities. The changes mean that companies relying on relief in [CO 98/98] will be able to lodge opt-in and opt-out forms at any time during a 19-month period commencing three months before the start of the relevant financial year and ending four months after the end of the financial year. (ASIC press release)
- the ASX has released Companies Update 04/09 dealing with ASX Markets Supervision (ASXMS) first review of corporate governance reporting under the Revised Principles and Recommendations conducted for listed entities with a 31 December balance date. The Update includes recommendations for June reporting entities to consider in their Corporate Governance statement and annual reports (Companies Update, ASX review, [PDF 511kb])
- the Treasurer, the Hon Wayne Swan MP and the Hon Chris Bowen MP, Minister for Financial Services, Superannuation and Corporate Law announced that the Government will look to ASIC to take over the supervision and surveillance of financial markets and market participants effective third quarter 2010 (Treasurer's press release, ASIC press release)
- the IASB has updated its comprehensive overview of measures undertaken by the IASC Foundation and the IASB in response to the G20 conclusions on financial reporting (IASB summary, PDF 52kb)
- the International Valuation Standards Council (IVSC) has invited comment on an exposure draft (ED) of a Proposed Guidance Note The Valuation of Investment Property under Construction, which takes into account the recent annual improvements to IAS 40 Investment Property. Comments are requested by 31 October 2009 ( IVSC Press Release, PDF 15kb)