Monthly roundup - May 2009
Staying on top of developments
In this edition:
- Monthly highlight: IASB plans for fast-tracked replacement for IAS 39
- New pronouncements
- Standard-setter meetings
- New Deloitte publications
- Other developments
May saw the IASB announce more concrete plans for its fast-tracked project to replace IAS 39 Financial Instruments: Recognition and Measurement.
The IASB has agreed to 'split' the project into the following parts:
- Classification and measurement - an exposure draft to be issued by July 2009 and a final standard issued in time for 2009 calendar year-end financial statements. Additional board meetings are to be held on 1 June and 5 June to advance the Board's deliberations in formulating the ED
- Impairment - the IASB is considering the merits of the 'excepted loss', 'incurred loss' and 'fair value' models, with proposals expected to be issued in October 2009
- Hedge accounting - the IASB's proposals will be issued as a separate exposure draft later this year.
The replacement of IAS 39, along with the IASB's other fast-tracked projects on financial instrument disclosure, derecognition, consolidation and fair value measurement, promise substantial change in accounting for financial instruments in the near term.
There is a good chance that the pressure that has come to bear on the IASB as a result of the global financial crisis may well result in some radical changes in accounting and much more disclosure than previously required. Although accounting didn't cause the global financial crisis, the IASB will need to respond to ensure the global IFRS experiment continues to be a success.
|In a related development, IFRIC's May meeting saw an agenda decision on the meaning of 'significant or prolonged' in IAS 39 Financial Instruments: Recognition and Measurement. Although IFRIC ultimately decided not take this topic onto their agenda (due to the IASB's fast-tracked project on IAS 39), the draft agenda rejection statement takes quite a harsh approach to the determination of when an impairment loss is required to be recognised in relation to available for sale financial assets. IFRIC has taken the unusual step of highlighting its agenda decision and interested parties may wish to comment on it to the IFRIC (see below).|
(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|
|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.
|Comments close on 30 September 2009||
ED 178 (PDF 907kb)
International Accounting Standards Board (IASB)
|Pronouncement||Key dates||More information|
|IFRIC agenda statement on 'significant or prolonged'
IFRIC has taken the unusual step of drawing attention to its tentative agenda decision relating to impairment of available-for-sale equity instruments because of its particular significance in the current market environment. The IFRIC was asked to clarify the meaning and interpretation of the phrase 'significant or prolonged' as used in IAS 39.61 - which requires an entity to recognise impairment if the decline in value is 'significant or prolonged'. Although IFRIC has tentatively decided not to add the issue to its agenda because the IASB is working on an accelerated project to replace IAS 39, the IFRIC was concerned that some applications of the impairment requirements in practice are inconsistent with the standard.
|Although no formal comment deadline exists, IFRIC expects to finalise its agenda decision at its 9-10 July 2009 meeting and entities should ensure any comment letters reach IFRIC well before this date.||
IFRIC Update (PDF 95kb)
|ED/2009/4 Prepayments of a Minimum Funding Requirement - Proposed amendments to IFRIC 14
Proposes amendments aimed at correcting an unintended consequence of IFRIC 14. As a result of the interpretation, entities are in some circumstances not permitted to recognise as an asset some prepayments for minimum funding contributions.
|Comments close 27 July 2009||
IASB press Release (PDF 96kb)
|ED/2009/5 Fair Value Measurement
Proposes guidance on how fair value should be measured where it is required by existing standards. The ED does not propose to extend the use of fair value measurements. However, it would add disclosure requirements about how fair values were determined. If adopted, the proposals would replace fair value measurement guidance contained within individual IFRSs with a single, unified definition of fair value, as well as further authoritative guidance on the application of fair value measurement in inactive markets.
|Comments close on 28 September 2009||
IASB press release (PDF 101kb)
(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)
|IASB meeting 5 May 2009||This special IASB meeting was a public education session on the discounted cash flow (DCF) remeasurement method for financial instruments.||Deloitte observer notes|
|IFRIC meeting 7 May 2009||Topics discussed included fair value disclosures at interim periods, the meaning of 'significant or prolonged' in IAS 39, the determination of cash equivalents, business combinations related issues and other agenda rejection statements.||
IFRIC Update (PDF 95kb)
|AASB meeting 20-21 May 2009||The AASB debated whether or not to implement the 'IFRS for SMEs' in Australia. A number of new pronouncements were also approved.||
AASB Action Alert (PDF 48kb)
|IASB meeting 22-24 April 2009||The IASB's May meeting saw the IASB agree to publish for public comment an exposure draft on the classification and measurement of financial instruments by July 2009 and publish a final standard in time for 2009 calendar year-end financial statements. Other highlights include lessor accounting for leases, rate regulated activities and joint ventures.||
IASB Update (PDF 85kb)
(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)
- IFRSs In Your Pocket 2009 (PDF 563kb) - our popular guide to IFRSs
- IAS Plus Update Newsletter - Changes proposed for income tax accounting (PDF 102kb)
- May 2009 Edition of the Insurance Accounting Newsletter (PDF 240kb) - key tentative decisions made by the IASB at its 22 April 2009 meeting
Other publications of interest
- US Reporting Newsletter for Non-US Based Companies March-April 2009 Edition (PDF 243kb) - includes news through 15 April 2009
- Deloitte United States has published a Heads Up newsletter on What Preparers Need to Know About the FASB Codification (PDF 105kb) - the Codification replaces current US GAAP (other than rules and interpretive releases of the SEC) with just two levels of literature: authoritative and nonauthoritative
(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)
- The Financial Crisis Advisory Group (FCAG), established by the IASB and US FASB in response to the recent global financial crisis, held its fifth meeting in London on 22 May 2009 ( Deloitte observer notes)
- The IASB will be holding additional short meetings on 1 June and 5 June to progress its financial instruments project
- The International Public Sector Accounting Standards Board (IPSASB) has published two new exposure drafts - ED 40 Intangible Assets and ED 41 Entity Combinations from Exchange Transactions - proposing that governments and other public sector entities follow the related IFRS requirements (the EDs are available at EDs at www.ifac.org/EDs)
- The ASX has issued its Review of Compliance with the JORC Code (PDF 104kb)
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