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Monthly roundup - May 2010

Staying on top of developments

In this edition:

Monthly highlight: Financial reporting implications of recent or proposed tax changes

Similar to IFRS, changes to Australian tax law continues unabated with widespread impacts across many industries. The interaction of these tax changes with IFRS creates numerous new financial reporting challenges, ranging from impacts on effective tax rates to impairment and disclosure considerations – even though some of the changes have not yet been made into law.

As a guide to the impact of these changes on upcoming financial reports, we’ve released the following publications:

  • Accounting alert 2010/06 focuses on the near-term financial reporting implications of some of the tax changes, such as the ‘rights to future income’ amendments to the tax consolidation rules and the Federal Government’s responses to the Henry Review
  • Extracting Value Issue 8 provides a more in-depth analysis of the financial reporting impacts of the proposed Resources Super Profits Tax (RSPT).

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 2010 financial reporting cycle summary)

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

Improvements to IFRSs (2010)*

Amends seven pronouncements (plus consequential amendments to various others) as a result of the IASB's 2008-2010 cycle of annual improvements.

Key amendments include:

  • IFRS 3/IAS 27 - clarification of transition requirements, measurement of non-controlling interests, unreplaced and voluntarily replaced share-based payment awards
  • Financial statement disclosures - clarification of content of statement of changes in equity (IAS 1), financial instrument disclosures (IFRS 7) and significant events and transactions in interim reports (IAS 34)
  • IFRIC 13 - fair value of award credits
  • IFRS 1 - accounting policy changes in year of adoption and amendments to deemed cost (revaluation basis, regulatory assets).
Generally effective for annual reporting periods beginning on or after 1 January 2011
(IFRS 3/IAS 27 transition clarifications 1 July 2010)

IAS Plus Update 10-09

IAS Plus Newsletter (PDF 77kb)

IASB ED/2010/4 Fair Value Option for Financial Liabilities

Proposes to amend the way the fair value option in IAS 39 Financial Instruments: Recognition and Measurement is applied with respect to financial liabilities.

Gains and losses resulting from changes in 'own credit risk' for those financial liabilities that an entity chooses to measure at fair value should be recognised as a component of other comprehensive income, not in profit or loss. The ED does not propose any other changes for financial liabilities.

Comments to the IASB close on 16 July 2010 (comments to AASB close on 2 July 2010)

IASB ED/2010/4

IAS Plus Update Newsletter (PDF 63kb)

IASB ED/2010/5 Presentation of Items of Other Comprehensive Income - Proposed amendments to IAS 1*

Proposes to require a single "Statement of profit or loss and other comprehensive income" containing two distinct sections-- profit or loss and items of other comprehensive income. The OCI section would be further split between items that may be recycled from those that would never be recycled.

Comments to the IASB close on 30 September 2010

IASB ED/2010/5

IAS Plus Project Page

FASB Exposure Draft Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities*

Contains proposals for a new comprehensive standard on financial instruments under US GAAP. The IASB is asking constituents to submit comment letters on the FASB proposals.

The IASB will use that feedback when it considers how to reconcile any differences between IFRS requirements and US GAAP. Because this project is part of the global convergence project, the IASB considers it important for the FASB to receive feedback on the proposed model from the international community.

The IASB has requested comments be sent directly to the FASB, comment letter deadline is 30 September 2010

IASB request for comment

FASB Exposure Draft (PDF 823kb)

US Heads Up Newsletter (PDF 216kb)

IASB Editorial Corrections*

Includes editorial corrections and changes to IFRS 9 Financial Instruments (issued November 2009), Bound Volume 2010, and Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters (issued January 2010)

These editorial corrections are effectively operative immediately IASB Editorial corrections

* Equivalent pronouncement not yet issued by AASB

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

ED 195 Defined Benefit Plans (Proposed amendments to AASB 119)*

Proposes that entities should recognise all changes in defined benefit obligations and in the fair value of plan assets when those changes occur, eliminating the ‘corridor’ option currently available under AASB 119.

Also proposes a new presentation approach for changes in defined benefit obligations and the fair value of plan assets. Entities would split changes in the defined benefit obligation and the fair value of plan assets into three components: service cost (presented in profit or loss), finance cost (also presented in profit or loss) and a remeasurement component (presented in other comprehensive income (OCI)).

In the Australian context, the proposals may impact accounting for long service leave and annual leave not expected to be taken within 12 months (remeasurement impacts may be reflected in OCI).

Comments are due to the AASB by 9 August 2010 and to the IASB by 6 September 2010

AASB ED 195 (PDF 568kb)

IASB ED/2010/3

IAS Plus Update Newsletter (PDF 85kb)

ED 196 Fair Value Option for Financial Liabilities

Australian equivalent to IASB ED/2010/4 above.

Comments to the AASB close on 2 July 2010 (comments to IASB close on 16 July 2010)

AASB ED 196 (PDF 262kb)

IAS Plus Update Newsletter (PDF 63kb)

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
IFRS Interpretations Committee (IFRIC) meeting Topics discussed include stripping costs in the production phase of a mining operation, share-based payment conditions, puts on non-controlling interests (NCIs), annual improvements 2009-2011 and various agenda decisions.

IAS Plus Update 10-08

Deloitte observer notes

IASB May meetings (4, 17-20 May 2010)

(included a special meeting and joint meetings with the FASB)

Highlights include:

  • Considering a ‘partial derecognition’ approach to lessor accounting
  • Lack of consensus on whether to adopt a risk adjustment with a residual margin or a composite margin approach in accounting for insurance contracts
  • Substantive discussions on eligible hedged items
  • Finalisation of various ‘sweep’ issues in preparation for the issue of a new IFRS on joint arrangements.

Australian meeting summary

Deloitte observer notes: meeting 4 May, meeting 17-20 May

AASB meeting 15 May 2010

The majority of the meeting was devoted to considering the proposed ‘Reduced Disclosure Regime’ (RDR), where the AASB tentatively agreed to a two-stage implementation of the proposed RDR.

Stage 1 will involve a reduction in disclosure for reporting entities without ‘public accountability’ and may be available for early adoption at 30 June 2010. Stage 2 will contemplate extending the RDR to all financial reports prepared under Accounting Standards.

Accounting alert 2010/05

AASB Action alert (PDF 52kb)

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 IAS Plus Update Newsletters)

IFRS publications
Other publications of interest
Deloitte comment letters

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 May historical summary on IAS Plus)

Australian-specific matters
  • The Corporations Amendment (Corporate Reporting Reform) Bill 2010 has been introduced into Parliament – including proposed changes to the payment of dividends, presentation of financial information about parent entities, permitting changes in financial years, and reporting by companies limited by guarantee (Accounting alert 2009/11, Government press release)
  • Numerous ASX listing rule amendments are expected to have effect from 1 June 2010. Of interest is an added requirement to Appendix 5B requiring mining explorers will have to include an estimate of the cash outflows for the next quarter for production and administration (ASX Companies Update 05/10)
International Accounting Standards Board
  • The IASB and FASB will hold additional meetings on 1 June 2010 and 10 June 2010
  • IASB staff will host a live web presentation to provide an update on the IASB's project on Accounting for Leases on 10 June 2010.
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