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Monthly roundup - December 2012

Staying on top of developments

Author: Deepesh Malik and Debbie Hankey, Accounting Technical Group

December 2012 edition
Issued 10 January 2012

In this edition:

Monthly highlights

Key considerations for the December reporting season

Prospects for the global economy continue to be challenging, and the uncertainty would have broad financial reporting implications for many entities. A wide range of impacts for financial reporting might need to be considered – including impairment (as well as the possibility of reversals of previous impairment losses in some cases), fair value determination (for tangible, intangible and financial assets as appropriate), provisions and contingencies. On top of the recognition and measurement requirements, there is an ever growing list of disclosure requirements to consider.

Deloitte Global has issued a special year end edition (PDF) that summarises year-end financial reporting considerations with a particular focus on those related to the financial crisis in the Eurozone. It also includes an overview of new and revised International Financial Reporting Standards and IFRS Interpretations that are either mandatorily effective for December 2012 calendar year-ends and subsequent accounting periods or can be early adopted. Please see our previous edition for the Deloitte resources for the December reporting season.

AASB releases a series of accounting pronouncements

The weeks before Christmas, witnessed a flurry of new pronouncements by the AASB, with five exposure drafts and four amendments released in that period (see details below in this newsletter).

In its exposure drafts, the AASB generally has followed the IASB’s lead, in all but one case. The AASB had a difference of opinion on the IASB’s investment entities amendments that has now been drafted as an exposure draft (ED 233) on which the AASB seeks comment. In our previous edition we had discussed the AASB’s deliberations on this issue. The issue was further discussed in the December AASB meeting followed by the release of exposure draft ED 233 Australian Additional Disclosures - Investment Entities that outlines AASB’s proposals of how to implement the IASB's investment entities amendments in the Australian context. The ED reflects the AASB’s decision that additional disclosures were necessary to the IASB standard to compensate for the resulting loss of consolidation information that the investment entity standard will bring. The ED also includes 2 alternative views of AASB members:

  • alternative view 1 argues against the adoption of IASB investment entities amendments
  • alternative view 2 is to adopt the IASB's investment entity amendments as it is, without any additional Australian specific disclosure requirements. AASB members supporting this view nevertheless would accept the additional disclosure proposals in the exposure draft in order to retain Australia's compliance with IFRS.

The comments to the AASB are due by 29 March 2013. For further information, please see AASB media release, IAS Plus article.


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 2012 financial reporting cycle summary.)

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

Exposure Draft ED/2012/5 Clarification of acceptable methods of depreciation and amortisation (Proposed amendments to IAS 16 and IAS 38)

Proposes to ban revenue based depreciation methods as such methods are not considered to be consistent with the principle underlying IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets, that requires depreciation and amortisation to be based on the expected pattern of consumption of the future economic benefits embodied in an asset, whereas revenue based methods are based on the economic benefits the asset is generating.

Comments due by 2 April 2013

IFRS in Focus

IAS Plus article

ED 2012/5 (PDF)

Exposure Draft ED/2012/6 Accounting for the sale or contribution of assets between an investor and its associate or joint venture (Proposed amendments to IFRS 10 and IAS 28)

Addresses the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011), in dealing with the sale or contribution of a subsidiary.

Proposes that a full gain or loss would be recognised on the loss of control of a business (whether it is housed in a subsidiary or not), including cases in which the investor retains joint control of, or significant influence over, the investee.

Comments due by 23 April 2013

IAS Plus article

ED 2012/6 (PDF)

Exposure Draft ED/2012/7 Acquisition of an interest in a joint operation (Proposed amendments to IFRS 11)

Proposes to add new guidance to IFRS 11 Joint Arrangements on the accounting for the acquisition of an interest in a joint operation that constitutes a business consistent with the requirements of IFRS 3 Business combinations on this issue

Comments due by 23 April 2013

IAS Plus article

ED 2012/7 (PDF)

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

Exposure Draft ED 230 Classification and Measurement: Limited Amendments to AASB 9 (proposed amendments to AASB 9 (2010))

Incorporates IASB ED/2012/4.

Proposes limited amendments to classification and measurement requirements of AASB 9 that includes a proposal to introduce a fair value through other comprehensive income (OCI) measurement category for particular financial assets when two conditions are met:

  • the contractual cash flows of the assets are solely payments of principal and interest and
  • the assets are used in a business model which is neither to exclusively hold nor sell
Comments to the AASB due by 13 February 2013 and to the IASB by 28 March 2013

IFRS in focus

ED 230 (PDF)

Exposure Draft ED 231 Clarification of Acceptable Methods of Depreciation and Amortisation (Proposed amendments to AASB 116 and AASB 138)

Incorporates IASB ED/2012/5, discussed above

Comments to the AASB due by 1 March 2013 and to the IASB by 2 April 2013

ED 231 (PDF)

Exposure Draft ED 232 Accounting for the sale or contribution of assets between an investor and its associate or joint venture (Proposed amendments to AASB 10 and AASB 128)

Incorporates IASB ED/2012/6, discussed above

Comments to the AASB due by 22 March 2013 and to the IASB by 23 April 2013

ED 232 (PDF)

Exposure Draft ED 233 Australian Additional Disclosures - Investment Entities (proposed amendments to AASB 1054)

Proposes Australian additional disclosures for inclusion in AASB 1054 Australian Additional Disclosures in the form of consolidated financial statements.

It reflects the concerns expressed by a number of constituents and AASB members on the IASB's recently issued exception to consolidation requirements for investment entities.

Comments to the AASB due by 29 March 2013

ED 233 (PDF)

Exposure Draft ED 234 Accounting for the sale or contribution of assets between an investor and its associate or joint venture (Proposed amendments to AASB 11)

Incorporates IASB ED/2012/7, discussed above

Comments to the AASB due by 22 March 2013 and to the IASB by 23 April 2013

ED 234 (PDF)

AASB 2012-8 Amendments to AASB 1049 – Extension of Transitional Relief for the Adoption of Amendments to the ABS GFS Manual relating to Defence Weapons Platforms

Amends AASB 1049 Whole of Government and General Government Sector Financial Reporting to provide a further two year period of transitional relief from the requirement to adopt Chapter 2 Amendments to Defence Weapons Platforms of the Australian Bureau of Statistics (ABS) publication 'Amendments to Australian System of Government Finance Statistics, 2005' in financial statements prepared in accordance with AASB 1049

Applies to annual reporting periods beginning on or after 1 July 2012

AASB 2012-8 (PDF)

AASB 2012-9 Amendment to AASB 1048 arising from the Withdrawal of Australian Interpretation 1039

Removes Interpretation 1039 Substantive Enactment of Major Tax Bills in Australia from the list of ‘other Australian interpretations’ contained in AASB 1048 Interpretation of standards (Table 2), thereby removing its legal status as a mandatory reporting requirement.

As a consequence of its decision to withdraw Australian Interpretation 1039, the AASB also issued an Agenda Decision addressing the issue of when it would be appropriate to conclude that substantive enactment of major tax Bills has occurred in Australia.

Applies to annual reporting periods beginning on or after 1 January 2013

AASB 2012-9 (PDF)

Agenda decision (PDF)

AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments

The transition guidance amendments to AASB 10 and related Standards and interpretations clarify the circumstances in which adjustments to an entity’s previous accounting for its involvement with other entities are required and the timing of such adjustments

Applies to annual reporting periods beginning on or after 1 January 2013

AASB 2012-10 (PDF)

AASB 2012-11 Amendments to Australian Accounting Standards – Reduced Disclosure Requirements and Other Amendments

Amends AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures to extend relief from consolidation and the equity method for entities complying with Australian Accounting Standards – Reduced Disclosure Requirements

Applies to annual reporting periods beginning on or after 1 July 2013

AASB 2012-11 (PDF)

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
12-13 December 2012

Key issues discussed include:

  • Investment Entities
  • Substantive Enactment of Major Tax Bills
  • Financial Instruments
  • Application of AASB 10 to Unit Linked Funds in the Insurance Industry (AASB 1038)
  • Differential Reporting
  • The Conceptual Framework as a basis for a Disclosure Framework
  • Annual Improvements
  • Amendments to Standards
AASB alert

IAS Plus article
IASB regular meeting
13-17 December 2012

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

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
  • 'iGAAP 2013 — A guide to IFRS reporting' - the latest edition in Deloitte's iGAAP series that provides comprehensive guidance on IFRS requirements with focus on practical issues faced by reporting entities (IAS Plus article).
Deloitte comment letters
  • Deloitte comment letter to the IFRS Foundation on its Invitation to Comment 'Proposal to Establish an Accounting Standards Advisory Forum'
  • .

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 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)

Australian-specific topics
  • The Australian Securities & Investment Commission (ASIC) has released its public audit inspection report for the 18 months ended 30 June 2012 (ASIC media release)
  • The Federal Government has released an options paper outlining alternatives for the use of eXtensible Business Reporting Language (XBRL) for financial reporting in Australia, and focuses on the possibility of introducing mandatory XBRL reporting (IAS Plus article)
  • The Federal Government has released exposure draft legislation and explanatory material in relation to the disclosure of executive remuneration and for the payment of dividends under the Corporations Act 2001 (IAS Plus article)
  • The Australian Accounting Standards Board (AASB) has released the drafts of its new budgetary reporting requirements for not-for-profit entities within the GGS of the Federal, State and Territory Governments - AASB 105X Budgetary Reporting and AASB 2012-XX Amendments to AASB 1049 – Relocation of Budgetary Reporting Requirements for a fatal flaw review until 31 January 2013 (AASB media release).
International Accounting Standards Board
  • IASB Investor perspectives 'IFRS 9—Limited Amendments, Significant Improvements' discusses the proposed limited amendments to the classification and measurement requirements in IFRS 9 Financial Instruments
  • Measuring the fair value of unquoted equity instruments- education material released by the IFRS foundation addresses the fair value measurement of unquoted equity instruments within the scope of IFRS 9 Financial Instruments.
Other global news
  • The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment paper discussing the need for accounting guidance on emissions trading schemes (IAS Plus article).

Related links

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 - January 2012
    Financial reporting developments during January 2012. Monthly highlights include the IASB and the FASB discussion to reduce differences in classification and measurement models for financial instruments.
  • 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 - December 2012
    Financial reporting developments during December 2012. Monthly highlights discuss the key considerations for the December 2012 reporting season and a series of pronouncements by the AASB
  • 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 - 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.
  • 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.

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