Monthly roundup - December 2010
Staying on top of developments
December 2010 edition
Issued 10 January 2011
In this edition:
- Monthly highlight: Happy New Year – what a year it will be
- New pronouncements
- Standard setter meetings
- New Deloitte publications
- Other developments.
2010 dawned with the promise of much change in financial reporting, and 2011 promises to go one step further with a slew of pronouncements expected before June 2011.
The key difference between the financial reporting landscape from 12 months ago and that we find ourselves facing at the beginning of 2011 is more certainty on exactly what changes can be expected in the months ahead. 2010 saw a rapid paring back of expectations, as the International Accounting Standards Board and Financial Accounting Standards Board grappled with the need to converge accounting standards before the ‘deadline’ of June 2011.
During the course of 2010, whole projects were deferred or abandoned, and others reduced in scope, as a single-minded focus on core projects emerged – including financial instruments, leases, revenue recognition, consolidation and insurance contracts.
And whilst the key projects are known, there remains uncertainty as to their final shape and form and even their application date. Some proposals – such as the measurement requirements under the new leasing proposals – have not received positive feedback to date. There is a strong push for a long lead time in implementing the new requirements. As the months progress, more details will emerge, and if past history is anything to go by, there will be changes and unexpected developments along the way.
So, Happy New Year to all our readers. We will continue to bring you news and analysis of the developments as they occur over this crucial period of change in financial reporting.
(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|
ED/2010/13 Hedge Accounting
Forms part of the IASB’s overall project to replace IAS 39 Financial Instruments: Recognition and Measurement.
Proposes revised hedge accounting requirements designed to enable companies to better reflect their risk management activities in their financial statements, and, in turn, help investors to understand the effect of those activities on future cash flows.
The proposed model is principle-based, and is designed to align hedge accounting more closely with risk management activities undertaken by companies when hedging their financial and non-financial risk exposures.
|Comments are due to the IASB by 9 March 2011 (AASB by 18 February 2011)||
Access to the Exposure Draft (link to IASB's website)
IFRS in Focus newsletter (PDF 86kb)
Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12)*
The amendments provide an exception to the general principles of IAS 12 Income Taxes for investment property measured using the fair value model in IAS 40 Investment Property.
For the purposes of measuring deferred tax, the amendments introduce a rebuttable presumption that the carrying amount of such an asset will be recovered entirely through sale. The presumption can be rebutted if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits over time, rather than through sale.
|Applicable to annual periods beginning on or after 1 January 2012||IFRS in Focus newsletter (PDF 61kb)|
Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to IFRS 1)*
Amends IFRS 1 First-Time Adoption of International Financial Reporting Standards to provide additional relief by:
Note: These amendments (particularly the changes to derecognition) may be relevant for entities moving to ‘Tier 1’ under the AASB’s revised differential reporting regime.
|Applicable to annual periods beginning on or after 1 July 2011||IFRS in Focus newsletter (PDF 77kb)|
International Financial Reporting Standard (IFRS) Practice Statement Management Commentary*
A broad, non-binding framework for the presentation of narrative reporting to accompany financial statements prepared in accordance with IFRSs.
Management commentary is a narrative report that accompanies but is presented outside of the financial statements, setting out management's explanation of the enterprise's financial condition, changes in financial condition, results of operations, and causes of changes in material line items.
The Practice Statement is not an IFRS. Consequently, entities applying IFRSs are not required to comply with the Practice Statement, unless specifically required by their jurisdiction.
Note: The AASB is expected to consider whether to issue this pronouncement in the Australian context in due course.
|An entity may apply the Practice Statement to management commentary presented prospectively from 8 December 2010||IFRS in Focus newsletter (PDF 91kb)|
A new batch of Editorial Corrections to IFRSs, issued on 23 December 2010. Includes editorial corrections and changes to Bound Volume (Red Book) 2010, Bound Volume (Blue Book) 2011, IFRS 7 Financial Instruments: Disclosures – Transfers of Financial Assets (issued October 2010), IFRS 9 Financial Instruments (issued October 2010) and The Conceptual Framework for Financial Reporting (issued September 2010).
|As these are minor corrections, they are in essence immediately effective||Editorial Corrections to IFRSs|
* Equivalent pronouncement not yet issued by the AASB
Australian Accounting Standards Board (AASB)
|Pronouncement||Key dates||More information|
AASB 9 Financial Instruments (December 2010), AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)
A revised version of AASB 9 incorporating revised requirements for the classification and measurement of financial liabilities, and carrying over the existing derecognition requirements from AASB 139 Financial Instruments: Recognition and Measurement.
The revised financial liability provisions maintain the existing amortised cost measurement basis for most liabilities. New requirements apply where an entity chooses to measure a liability at fair value through profit or loss – in these cases, the portion of the change in fair value related to changes in the entity's own credit risk is presented in other comprehensive income rather than within profit or loss.
|Applies on a modified retrospective basis to annual periods beginning on or after 1 January 2013||
IFRS in Focus Newsletter (PDF 82kb)
ED 207 Amendments to AASB 7: Tier 2
Proposes disclosure exemptions under the ‘Reduced Disclosure Requirements’ (RDR) in AASB 7 Financial Instruments: Disclosures in relation to disclosures amended by AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets, the revised AASB 9 Financial Instruments and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9.
|Comments are due to the AASB by 28 February 2011||
ED 207:Tier 2 (PDF 168kb)
ED 208 Hedge Accounting
AASB request for comment on IASB ED/2010/13 Hedge Accounting discussed above, proposing to introduce a new hedge accounting model.
|Comments are due to the AASB by 18 February 2011 and to the IASB by 9 March 2011||
ED 208 (PDF 803)
IFRS in Focus newsletter (PDF 86kb)
(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)
|AASB meeting 8-9 December 2010||The AASB closed out 2010 with agreement to finalise a number of pronouncements early in 2011 (some by out-of-session vote) – Trans-Tasman convergence standards, superannuation exposure draft, consolidation suite of standards and a revised Conceptual Framework.||Accounting Alert 2010/13|
|IASB meetings 1, 3, 8 13-17 December 2010||The IASB held a series of meetings throughout December. Special meetings were held on impairment of financial instruments, where a new model is emerging as the preferred option of both the IASB and FASB. A special meeting was also held to discuss amendments to IAS 12. The main meeting saw further progress on the impairment of financial assets, post-employment benefits and asset and liability offsetting, together with a number of other topics.|
(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 Model Financial Statements for 2010 including early adoption of IFRS 9 (Word file, Zipped 461kb)
- IFRS in Focus Newsletter – Closing out 2010 (PDF 119kb). This special edition of IFRS in Focus provides an overview of new and revised International Financial Reporting Standards issued by the IASB and Interpretations issued by the IFRS Interpretations Committee that are effective for December 2010 calendar year-ends and subsequent accounting periods (Australian entities may prefer to refer to What’s new in the December 2010 financial reporting cycle)
- iGAAP 2011 A guide to IFRS reporting is now available and can be ordered via http://www.lexisnexis.co.uk/deloitte
- IFRS on Point – IFRS Accounting Developments and Information: November 2010 (PDF 73kb)
- IFRS on Point – IFRS Accounting Developments and Information: December 2010 (PDF 92kb)
- The Bruce Column ‘Death of Tommaso Padoa-Schioppa’
- The Bruce Column ‘Governance: Everything to Play for at the IASB’
- Harnessing the forces of change: IFRS for Investment Funds (PDF 510kb)
- Harnessing the forces of change: Illustrative investment fund financial statements 2010 (PDF 279kb)
Other publications of interest
- Heads Up newsletter Sharing Views on the Revenue Project (PDF 126kb)
- Heads Up newsletter FASB Proposes to Delay Effective Date of Disclosures About TDRs by Creditors (PDF 89kb)
- December 2010 edition of EITF Snapshot (PDF 88kb)
- November 2010 edition of Accounting Roundup (PDF 390kb)
- The top 10 issues mining companies will face in the coming year (PDF 3,834kb)
- IFRS Insights December 2010/January 2011 (PDF 992kb)
Deloitte comment letters
- Deloitte comment letter (PDF 146kb) on Exposure Draft ED/2010/9 Leases
- Deloitte comment letter (PDF 125kb) on Exposure Draft ED/2010/8 Insurance Contracts
(A brief listing of other financial reporting developments during the month. A full summary of all IFRS-related developments can be found in our December 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)
- The AASB has made available compilations of its pronouncements for reporting periods beginning on or after 1 January 2011 (AASB announcement)
- A number of minor amendments to the ASX listing rules, principally in relation to periodic financial reporting, came into effect on 17 December 2010. The amendments update references to Financial Reporting standards, update some references to ASIC Regulatory Guides, delete some obsolete references to time periods that have passed, and correct some minor typographical errors (ASX Companies Update 12/10)
- New ASX Listing Rules about the policies governing trading in a listed entity's securities by its directors and other key management personnel came into effect on 1 January 2011. At the same time, consequential amendments to the Appendix 3Y 'Change of Director's Interests Notice' came into effect (ASX Companies Update 11/10)
- The Parliamentary Secretary to the Treasurer has released an exposure draft of the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011 and associated explanatory material. The draft Bill contains measures to strengthen the regulatory framework relating to the remuneration of company directors and executives. Submissions close on 20 January 2011 (consultation paper)
- The Parliamentary Secretary to the Treasurer has released a discussion paper on a proposal to ‘clawback’ remuneration paid to company directors and executives where a company’s financial statements are materially misstated. The discussion paper seeks comments on whether a clawback requirement should be introduced in Australia, and if so, how it should be implemented. Submissions close on 30 March 2011 (consultation paper)
International Accounting Standards Board
- The IASB has released a new edition of Investor Perspectives, where Paul Pacter discusses Capital providers need good small business reporting, too
- The IASB has posted to its website a section of the keynote speech entitled 'Regulatory Reform and IFRS at a Critical Crossroad' at the FEI conference, given by IFRS Foundation Trustee Harvey Goldschmid (IAS Plus article)
Other global news
- The International Federation of Accountants (IFAC) and The Prince's Accounting for Sustainability Project (A4S) have created a 'community website' on sustainability reporting (IAS Plus article)