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Monthly roundup - February 2011

Staying on top of developments

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

February 2011 edition
Issued 1 March 2011

In this edition:

Monthly highlight: Quick recap of recent developments

Key developments this month include:

  • Leases – the IASB and FASB’s redeliberations on their joint lease accounting proposals have resulted in new positions being tentatively decided on many of the more contentious proposals, e.g. leases may be classified in ‘financing’ (amortised cost) and ‘other than financing’ (straight line expensing), lease renewals may be included less often. Whilst it is early days yet, some of the more difficult to implement features of the original proposals may be substantially ‘watered down’ in response to constituent feedback. Similar outcomes occurred in the revenue project
     
  • Consolidation and joint ventures – a suite of five new standards is expected to be released in March, implementing the new consolidation and joint venture requirements. The IASB agreed this month the new standards will apply to annual reporting periods beginning on or after 1 January 2013
     
  • Effective dates – a paper (PDF 36kb) considered at the February IASB meeting, whilst inconclusive and premature, points to the major forthcoming changes (leases, revenue, insurance) being implemented from 2014 or perhaps as late as 1 January 2015. The IASB is expected to debate effective dates and transition during its March series of meetings.
     

New guide to accounting for service concession arrangements

A new global Deloitte publication, IFRIC 12 Service concession arrangements – A pocket practical guide (PDF 241kb) has been released, intended to serve as an illustrative tool in the application of IFRIC 12 Service Concession Arrangements. The guide provides analysis of the requirements of IFRIC 12 and practical guidance with examples that address some of the more complex issues around service concession arrangements.

Click for IFRIC 12 Service concession arrangements – A pocket practical guide (PDF 241kb).


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 December 2010 financial reporting cycle summary.)

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

New editorial corrections to IFRSs*

This batch includes editorial corrections and changes to Bound Volume (Red Book) 2010, Bound Volume (Blue Book) 2011, Improvements to IFRSs (issued May 2010), The Conceptual Framework for Financial Reporting (issued September 2010), Disclosures—Transfers of Financial Assets (issued October 2010), IFRS 9 Financial Instruments (issued October 2010), Deferred Tax: Recovery of Underlying Assets (issued December 2010) and Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (issued December 2010).

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

Editorial Corrections to IFRSs (PDF 30kb)

IAS Plus article

* Equivalent pronouncement not yet issued by the AASB


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

ED 210 Financial Instruments: Impairment (incorporating IASB Supplement to ED/2009/12)

ED 210 contains further IASB proposals, in addition to ED 189, specifically related to the credit impairment of financial assets measured at amortised cost that are managed on an open portfolio basis.

The updated proposals would replace the incurred loss impairment model in AASB 139 with an expected loss impairment model including separate approaches to recognising expected losses for performing assets in a "good book" and for troubled assets in a "bad book".

Expected credit losses in the "good book" would be recognised under a time-proportional approach based on the weighted average age and expected life of the assets in the portfolio, but subject to a minimum allowance of at least those credit losses expected to occur in the foreseeable future (a period of not less than twelve months from the reporting date). When assets are transferred from the "good book" to the "bad book" the proposals would require the expected credit loss to be immediately recognised.

Also includes separate IASB-only proposals on impairment of financial assets specifically addressing scope, presentation and disclosure.

Comments are due to the AASB by 16 March 2011 and to the IASB by 1 April 2011

ED 210 (PDF 456kb)

ED 189 (PDF 515kb)

IAS Plus update

IFRS in Focus newsletter (PDF 75kb)

Robert Bruce Column

ED 209 Offsetting Financial Assets and Financial Liabilities (proposed amendments to AASB 7 and AASB 132, and proposal relating to Tier 2 disclosure requirements)

ED 209 incorporates IASB ED/2011/1, and seeks input on the proposed requirements to qualify for netting of financial assets and financial liabilities on the balance sheet, and proposed disclosures relating to those financial instruments that qualify for netting.

ED 209 also includes a proposal relating to Tier 2 disclosure requirements and is relevant for Tier 2 entities that are planning to adopt the proposed amendments in this exposure draft.

It is not expected that this proposal will have a significant impact in the Australian context, as the proposal emanates from a joint IASB-FASB project to bring US-GAAP more closely in line with existing IFRS requirements.

Comments relating to both Tier 1 and Tier 2 entities are due by 11 April 2011

ED 209 (PDF 287kb)

Proposed disclosure analysis (PDF 24kb)

IAS Plus update

IFRS in Focus newsletter (PDF 57kb)

Tier 2 Supplement to ED 195 Defined Benefit Plans (proposed amendments to AASB 119)

ED 195 was issued in May 2010, before the AASB issued AASB 1053 Application of Tiers of Australian Accounting Standards and had in place its Tier 2 reporting requirements.

The comments received on this Tier 2 Supplement will assist the AASB in determining the disclosure requirements among those included in ED 195 that should be required of entities reporting under the reduced disclosure requirements.

Comments are due by 9 May 2011

Tier 2 Supplement to ED 195 (PDF 164kb)

ED 195 (PDF 567kb)


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 meeting

1-2 February 2011

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

Tuesday, 1 February 2011

Wednesday, 2 February 2011

Detailed Deloitte Observer notes

Australian meeting summary

AASB meeting

9-10 February 2011

Highlights include the AASB deciding to eliminate the Australian-specific disclosures from AASB 124 Related Party Disclosures (with a two-year transitional period) and to extend the exemptions from consolidation in AASB 127 Consolidated and Separate Financial Statements and related standards (in two steps, pre and post RDR). Action Alert (PDF 73kb)

IASB meeting

15-18 February 2011

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

Tuesday, 15 February 2011 (IASB only)

Wednesday, 16 February 2011 (IASB-FASB)

Thursday, 17 February 2011 (IASB-FASB)

Friday, 18 February 2011 (IASB-FASB)

Detailed Deloitte Observer notes

Australian meeting summary

 

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
Deloitte comment letters
  • Deloitte Comment Letter (PDF 80kb) on IFRS Foundation Trustees' Public Consultation: Status of Trustees' Strategy Review
  • Deloitte Comment Letter (PDF 25kb) on IFRS Interpretations Committee tentative agenda decision: IAS 37 Provisions, Contingent Liabilities and Contingent Assets – Inclusion of own credit risk in the discount rate
  • Deloitte Comment Letter (PDF 23kb) on IFRS Interpretations Committee tentative agenda decision: IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors – Application of the IAS 8 hierarchy

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 February 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 AASB has made a submission (PDF 196kb) to the IASB on the IASB Request for Views on Effective Dates and Transition Methods. The submission supports a single date approach, following an appropriate implementation period to maintain comparability between annual reporting periods, for the relevant IFRSs
  • The AASB has launched an online survey of preparers, advisors, auditors and regulators on the initial accounting for intangible assets acquired under IFRS 3 Business Combinations (AASB 3) and IAS 38 Intangible Assets (AASB 138) (or similar GAAP). The survey is a part of research being undertaken by AASB staff into the accounting for intangible assets under the aegis of the National Standard Setters (NSS) group (AASB press release)
  • The Chairman of the AASB has written to the IASB seeking recognition of the 'Reduced Disclosure Regime' (RDR) within the broader IFRS framework. AASB letter to IASB (PDF 189kb)
  • The Federal Government’s executive remuneration reforms bill Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011 (PDF 83kb) has been tabled in Parliament. It implements the Government's response to the recommendations made by the Productivity Commission in its recent inquiry into Australia's remuneration framework. The Government intends the new laws to take effect from 1 July 2011.
International Accounting Standards Board
  • The IFRS Foundation Monitoring Board has released for public comment a document Consultative Report on the Review of the IFRS Foundation's Governance (PDF 344kb)
  • The IFRS Foundation Education Initiative has published the 2011 edition of International Financial Reporting Standards – A Briefing for Chief Executives, Audit Committees and Boards of Directors (IAS plus article)
  • IFRS Foundation to establish Asia-Oceania liaison office in Tokyo (press release)
  • The Trustees of the IFRS Foundation have announced the appointment of Takatsugu (Tak) Ochi as a member of the IASB for an initial five-year term from 1 July 2011 (IAS Plus article)
  • The IASB has announced an additional meeting on 1-2 March 2011 (details)
Other global news
  • The 2011 Annual Meeting of the World Economic Forum (WEF), discussed the merits and challenges of adopting a new framework for an integrated corporate reporting system (IAS Plus article)
  • The International Valuation Professional Board, an independent technical body of the International Valuation Standards Council (IVSC), has released for comment an exposure draft of Technical Information Paper 2 Depreciated Replacement Cost (IAS Plus article)

Related links

  • Monthly roundup - January 2014
    ASIC has extended Class Order [CO 13/1050] which allows issuers of stapled securities (stapled entities) to continue to present consolidated or combined financial statements
  • 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 - September 2011
    Financial reporting developments during September 2011. Monthly highlights discuss the developments in the field of Integrated Reporting and the release of new Standard on Fair Value and amended Standard on Employee Benefits by the AASB
  • Monthly roundup - April 2013
    Financial reporting developments during April 2013. Monthly highlights discuss the key considerations for the June reporting period
  • Monthly roundup - November 2012
    Financial reporting developments during November 2012. Monthly highlights discuss the Deloitte resources for the December 2012 reporting period
  • Monthly roundup - February 2009
  • Monthly roundup - April 2009
  • Monthly roundup - May 2010
    Summary of developments in financial reporting during May 2010. Monthly highlight discusses the financial reporting impacts of recent and proposed tax changes.
  • Monthly roundup - February 2010
    Summary of developments in financial reporting during February 2010. Monthly highlight discusses the AASB's 'Reduced Disclosure Regime' (RDR).
  • Monthly roundup - January 2010
    Summary of developments in financial reporting during January 2010. Monthly highlight discusses ASIC's release of the results of its review of June 2009 financial reports and its December focus areas.

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