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Monthly roundup - September 2011

Staying on top of developments

Author: Deepesh Malik and Debbie Hankey, Accounting Technical Group

September 2011 edition
Issued 04 October 2011

In this edition:

Monthly highlights

Forward thinking companies putting Integrated Reporting on their agendas

The importance of combining the different strands of reporting by a company (financial, management commentary, governance and remuneration, and sustainability reporting) into a coherent whole that explains an organisation's ability to create and sustain value has received renewed focus with the issue on 12 September 2011 of the International Integrated Reporting Committee’s (IIRC) Discussion Paper Towards Integrated Reporting – Communicating Value in the 21st Century. The focus of an Integrated Report is a broader explanation of performance than traditional reporting, by describing and measuring the material components of value creation and, more importantly, demonstrating the links between an organisation's financial performance and the social, environmental and economic context in which it operates. The IIRC was formed in August 2010 and aims to create a globally accepted framework for an integrated format of reporting. The IIRC is working towards presenting an integrated reporting proposal to the G20 later in 2011.

The IIRC brings together a cross section of representatives from civil society and the corporate, accounting, securities, regulatory, NGO, IGO and standard-setting sectors. It comprises a Steering Committee and a Working Group. The Steering Committee is chaired by Sir Michael Peat, Principal Private Secretary to TRH The Prince of Wales and the Duchess of Cornwall. Membership of the IIRC Steering Committee includes Hans Hoogervorst (IASB Chairman), Leslie Seidman (FASB Chairperson), Maria Helena Santana, (Chairperson, IOSCO Executive Committee), Göran Tidström (IFAC President), Jim Quigley (former global Chief Executive Officer of Deloitte), and many others.

The work of the IIRC is supported by the Global Reporting Initiative (GRI) which is a network-based organisation that developed a widely used sustainability Reporting Framework, together with accompanying Sustainability Reporting Guidelines, providing guidance on how organisations can disclose their sustainability performance. The GRI has recently called for comments on the proposed 'fourth generation' of its Sustainability Reporting Guidelines ("G4"). The GRI has also recently issued guidance on how to apply GRI's Reporting Framework and Guidelines in the construction and real estate sectors. Specific issues covered in the new Construction and Real Estate Supplement include building and materials certification, CO2 emissions, management and remediation of contaminated land and labour, health and safety issues.

Forward thinking companies have put sustainability reporting and integrated reporting on their agendas, in many cases not due to regulatory requirements but market forces. Non government players can these days easily create havoc for companies who do not focus on sustainability but even more important for companies, it is investors who are driving the focus on sustainability and integrated reporting. The United Nations Principles for Responsible Investment (UNPRI) estimates that US $22 trillion is invested in socially responsible funds, representing 10 percent of global capital markets.

AASB releases new standard on Fair value and amended standard on Employee benefits

The AASB has issued a new standard on determining fair value: AASB 13 ‘Fair Value Measurement’ as well as amending standards on other comprehensive income: AASB 2011-9 ‘Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income’ and employee benefits: AASB 119 ‘Employee Benefits’ (2011). These standards incorporate the recent IFRSs issued by the IASB as discussed in our May and June editions of  Monthly Roundup. Related Reduced Disclosure Requirement standards or exposure drafts have also been issued setting out the AASB’s application of these standards to entities applying the Reduced Disclosure Regime in Australia. Links to related newsletters and articles can be found in the tables below.


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

AASB 13 ‘Fair Value Measurement’ ’ and related AASB 2011-8 'Amendments to Australian Accounting Standards arising from AASB 13'

Replaces the guidance on fair value measurement in existing AASB accounting literature with a single standard.

AASB 13 defines fair value, provides guidance on how to determine fair value and requires disclosures about fair value measurements. However, AASB 13 does not change the requirements regarding which items should be measured or disclosed at fair value.

It incorporates IFRS 13 Fair Value Measurement that was recently released by the IASB in May 2011.

Applicable from 1 January 2013, with early adoption allowed 

Note: the requirements of AASB 13 are to be applied prospectively, with comparatives for prior years not required on initial adoption

IFRS in Focus newsletter (PDF 78kb)

Deloitte podcast (mp3: 13mb, 18 mins)

AASB press release

Exposure Draft ED 219 'AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13: Tier 2 Proposals'

Addresses the Reduced Disclosure Requirements (RDR) for the new fair value standards and sets out how the AASB intends to apply this regime to the disclosures in AASB 13 and the other standards amended by AASB 2011-8.

Comments due by 5 December 2011 AASB press release

AASB 2011-9 'Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income'

Requires entities to group items presented in other comprehensive income (OCI) on the basis of whether or not they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments).

Incorporates amendments to IAS 1 Presentation of Financial Statements recently issued by the International Accounting Standards Board (IASB).

Applicable from 1 July 2012, with early adoption allowed

 IFRS in Focus newsletter (PDF 67kb)  

IFRS podcast(mp3, 12 mins) 

AASB press release

Exposure Draft ED 218 'Presentation of Items of Other Comprehensive Income: Tier 2 Proposals'

Accompanies AASB 2011-9 and addresses the Reduced Disclosure Requirements (RDR).

The AASB is not proposing to exclude RDR disclosures on the basis that the benefits of these disaggregated disclosures outweigh their cost and is only seeking comments that disagree with this approach.

Comments due by 5 December 2011 AASB press release

AASB 119 'Employee Benefits'(2011), AASB 2011-10 'Amendments to Australian Accounting Standards arising from AASB 119' (2011) and AASB 2011-11 'Amendments to AASB 119 (2011) arising from Reduced Disclosure Requirements'

Incorporates amendments to IAS 19 Employee Benefits recently issued by the International Accounting Standards Board (IASB) and addresses the Reduced Disclosure Requirements (RDR).

The key changes are:

  • Eliminating an option to defer the recognition of gains and losses, known as the ‘corridor method’
  • Remeasurement of net defined benefit liabilities (assets) required to be recognised in OCI with no recycling
  • Net interest is calculated using high quality corporate bond yield (or government bond yield when no deep market) which may be lower than the rate currently used to calculate the expected return on plan assets. This could result in decrease in net income
  • Definition of short term benefits changed which may result in entitlements such as annual leave being discounted based on expected payments.
Applicable from 1 January 2013, with early adoption allowed

 IFRS in Focus newsletter (PDF 67kb) 

 IFRS podcast(mp3, 8 mins) 

AASB press release

Exposure Draft ED 220 'Investment Entities'

Incorporates the IASB's Exposure Draft ED/2011/4 Investment Entities.

Proposes to define 'investment entities' as a separate type of entity that would be exempt from the consolidation accounting requirements in AASB 10 Consolidated Financial Statements.

Instead, the investment entity would be required to measure those investments at fair value, with changes in fair value recognised in profit or loss.

Comments due by 5 January 2012

IFRS in Focus newsletter (PDF 88kb)

AASB press release

Exposure Draft ED 216 'AASB 12 Disclosure of interests in Other Entities: Tier 2 Proposals'

Proposals to apply the Reduced Disclosure Requirements (RDR) to the disclosures contained in the new AASB 12 Disclosure of interests in Other Entities (issued August 2011).

It sets out the disclosures in the AASB 12 from which it is proposed entities applying Tier 2 reporting requirements (RDR) should be exempt.

Comments due by 30 November 2011 AASB press release

Exposure Draft ED 217 'AASB 127 Separate Financial Statements: Tier 2 Proposals'

Proposals to apply the Reduced Disclosure Requirements (RDR) to the disclosures contained in the new AASB 127 Separate Financial Statements (issued August 2011).

It sets out the disclosures in the AASB 127 from which it is proposed entities applying Tier 2 reporting requirements (RDR) should be exempt.

Comments due by 30 November 2011 AASB press release

International Accounting Standards Board (IASB)
Pronouncement Key dates More information
No new significant pronouncements were issued by the IASB in September 2011.

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
7-8 September 2011

Some of the topics discussed include:

  • Income for NFP entities
  • Service concession arrangements- grantors
  • Financial reporting implications of the carbon tax
  • Consolidation – Investment entities
  • Deferral of mandatory effective dates of IFRS 9
AASB alert (PDF 284kb)
IFRIC meeting
8-9 September 2011

Some of the major issues discussed are listed below (click on the links for direct access to the Deloitte observer notes for that topic):

Thursday, 8 September 2011

Friday, 9 September 2011

Detailed Deloitte Observer notes

IFRIC Review(PDF 81kb)

IFRS podcast summary (mp3, 19 mins)

IASB regular meeting
19-22 September 2011

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

Monday, 19 September 2011

Tuesday, 20 September 2011

Wednesday, 21 September 2011

Thursday, 22 September 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
Deloitte comment letters
Deloitte Webcasts and Podcasts
  • Sustainability Reporting Update: One Big Global Family? [07/09/11] (first time registration required) – a Deloitte US webcast: discuss the significant progress being made in global efforts to develop integrated sustainability reporting guidelines, covering the work of the International Integrated Reporting Committee (IIRC), the Global Reporting Initiative (GRI), Carbon Disclosure Project, and other topics
  • Leases: A Comprehensive Update on the Joint Project [09/09/11] (first time registration required) – a Deloitte US webcast: discuss recent deliberations and tentative decisions of the IASB and FASB in the leases project, how the boards' decision to re-expose their proposals will impact the timeline to finalise the project, and the boards' next steps
  • Moving ahead in an IFRS world - 2011 IFRS third-quarter technical update [27/09/11] (first time registration required) – a Deloitte Canada IFRS webcast : discuss some of those IFRS requirements that are effective for 2011 as well as a review of recently and soon to be issued IFRSs, changes to the IASB project plan, and an update on regulatory matters
  • Quarterly Accounting Roundup: An Update of Important Development [29/09/11] (first time registration required) – a Deloitte US webcast: discuss accounting, standard setting, and reporting developments for the quarter, recent positions on accounting and reporting of the FASB, IASB, SEC, and PCAOB, and other hot topics

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 September 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 Australian court case (Centro) highlights the importance of directors' responsibilities for compliance with Accounting Standards (ASIC announcement)
  • The ASIC has released a Report 252 Overview of decisions on relief applications (February to May 2011) (PDF 226kb) outlining decisions on relief applications between 1 February to 31 May 2011. The report provides examples of decisions that demonstrate how ASIC has applied its policy in practice, which it expects will be of particular interest for participants in the capital markets and financial services industry. The report includes an appendix detailing the relief instruments ASIC executed (ASIC media release)
  • Australia will host its first ever IFRS Foundation conference on 25 November 2011 in Melbourne
International Accounting Standards Board
  • The IASB has posted to its website a  marked-up version of IAS 19  Employee Benefits highlighting the amendments made to the previous version of IAS 19 to match the requirements in IAS 19 as issued in June 2011
  • The IASB’s latest work plan as of 30 Sepetember has been released and shows revised 'current best estimates' for its progress. In the latest update, the IASB has announced a more definitive timing of the expected release of documents from a number of its current projects (IAS Plus article)
  • The IASB has released the cost benefit analysis documents for IFRS 10 and 12 (PDF 828kb) setting out the IASB’s findings concerning the potential impact of the new requirements. An analysis for IFRS 11 Joint Ventures (PDF 246kb) was released in August 2011
  • The SME Implementation Group has published for public comment five questions and answer documents (Q&A) on draft guidance related to the implementation of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) (IAS Plus article)
External webcasts and Podcasts
Other global news
  • The US Financial Accounting Standards Board (FASB) has amended its impairment rules to make it easier for US companies to test goodwill for impairment. The change per Accounting Standards Update No. 2011-08 Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment (PDF 268kb) introduces a qualitative concept for goodwill impairment testing, which permits the entities to first assess qualitative factors in order to determine whether it is necessary to perform the current quantitative goodwill impairment test

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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