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Monthly roundup - November 2013

Staying on top of financial reporting developments

Author: Wendy Wang and Moana Overton, Accounting Technical Group

November 2013 edition
Issued 09 December 2013

In this edition:

Monthly highlights

IASB finalises IFRS 9 Chapter on general hedge accounting, allows for the new ‘own credit risk’ guidance to be applied in isolation and removes the mandatory effective date from IFRS 9

The International Accounting Standards Board (IASB) has published an amendment to IFRS 9 ‘Financial Instruments’ which introduces a new general hedge accounting model. This represents a significant milestone in the reformation of financial instrument accounting.

IAS 39 had long been criticised as being too rules-based and viewed by many as unnecessarily preventing hedge accounting from being applied in reasonable circumstances. This has led to more volatility in profit or loss from risk management activities. The new model represents a substantial overhaul of hedge accounting that will “enable companies to better reflect their risk management activities”, as Hans Hoogervorst, Chairman of the IASB has pointed out.  

The amendments issued also introduced the so-called ‘own credit’ issue which allow entities to present changes in its own credit risk  on liabilities that they have elected to measure at fair value, before applying any of the other requirements in IFRS 9 in other comprehensive income.

In addition to introduce a new general hedge accounting model, the IASB has removed the mandatory effective date for IFRS 9 as the impairment model is not yet finalised. However the option for early-adoption remains. Australian entities can refer to the AASB work program for the expected issuance date of the Australian equivalent pronouncement on IFRS 9 amendments.

Please click for:

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 2013 financial reporting cycle summary.)

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

AASB 2013-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities – Control and Structured Entities

The amendments provide significant guidance to assist not-for-profit entities in the private sector and in the public sector to apply AASB 10 Consolidated Financial Statements and AASB 12 Disclosure of Interests in Other Entities.  The guidance does not amend or deviate from the principles underlying the Standards.  The guidance illustrates the principles with a range of comprehensive examples.

Effective for annual periods beginning on or after 1 January 2014

AASB 2013-8 (PDF)

 

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

Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39)

The amendments:

  • bring into effect a substantial overhaul of hedge accounting that will allow entities to better reflect their risk management activities in the financial statements
  • allow the changes to address the so-called ‘own credit’ issue that were already included in IFRS 9 Financial Instruments to be applied in isolation without the need to change any other accounting for financial instrument
  • remove the 1 January 2015 mandatory effective date of IFRS 9, to provide sufficient time for preparers of financial statements to make the transition to the new requirements.
Mandatory effective date of
IFRS 9 has been removed. However, entities may still choose to early adopt IFRS 9.

IAS Plus article


IASB press release

 

IFRS in Focus
(PDF)

Narrow-scope amendments to IAS 19 Employee Benefits entitled Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)

The narrow scope amendments apply to contributions from employees or third parties to defined benefit plans.  The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary

Applicable to annual reporting
periods beginning on or after 1 July 2014 with early adoption allowed.

IAS Plus article


IASB press release

 

IFRS in Focus
(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

IASB regular meeting

28 October – 1 November 2013

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

Deloitte observer note


IASB update (PDF)

IFRIC  regular meeting

12-13 November 2013

Key issues discussed include:

  • IAS 19 Employee Benefits –
    • Employee benefit plans with a guaranteed return on contributions or notional contributions
    • Determination of discount rate
  • IFRS 2 Share-based Payment –
    • Accounting for cash-settled share-based payment transactions that include a performance  condition
    • Price difference between the institutional offer price and the retail offer price for shares in an initial public offering
  • IFRS 10 Consolidated Financial Statements – Puttable instruments that are non-controlling interests
  • IFRS 10 Consolidated Financial Statements/ IFRS 11 Joint Arrangements –
    • Transitional provisions; Impairment,
      foreign exchange and borrowing costs
    • Investment entity subsidiary that provides
      investment related services
    • The definition of investment-related services or activities
    • The exemption from preparing consolidated financial statements requirements in IFRS 10
    • IAS 39 Financial Instruments: Recognition and Measurement – Accounting for
      repo transactions
    • IFRIC 21 – Levies that are subject to a
      pro-rata threshold as well as an annual threshold
    • IAS 8 Operating Segments – Distinction between a change in accounting policy and a change in accounting estimate
  • IFRS 11 Joint Arrangements –
    • Summary of outreach on implementation issues
    • Accounting for interests in joint
      operations structured through separate vehicles
  • IAS 17 Leases – Meaning of incremental costs
  • IAS 12 Income Taxes – Recognition and measurement of deferred tax when an entity is
    loss making

Deloitte observer notes


IFRIC update (PDF)


IASB  regular meeting

20-23 November 2013

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

Deloitte observer note


IASB update (PDF)

The AASB did not hold any regular standard setting meeting in November 2013


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

Deloitte podcasts

  • Deloitte podcast on the new general hedge accounting model in IFRS 9 Financial Instruments.

Deloitte Comment letter

  • Deloitte comment letter on IFRS Interpretations Committee agenda decisions on IAS 29, as published in the September IFRIC Update.

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 November 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)

International Accounting Standards Board
  • The IFRS Foundation has announced the appointment of Maria Helena Santana and Lynn Wood as Trustees of the IFRS Foundation. Both replace retiring Trustees with similar background. The appointments will begin on 1 January 2014 and will expire on 31 December 2016 (IAS Plus article)
  • The Trustees of the IFRS Foundation have announced the appointments of 14 new members to the IFRS Advisory Council (IAS Plus article)
  • The International Accounting Standards Board (IASB) has issued 'Defined Benefit Plans: Employee Contributions (Amendments to IAS 19 'Employee Benefits')'. The amendments clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service (IAS Plus article)
  • The International Accounting Standards Board (IASB) has published its next scheduled batch of editorial corrections for 2013. The corrections impact the IASB's “A Guide Through IFRS 2013”, “2013 IFRS (Blue Book)”, and “2013 IFRS (Red Book)” (IAS Plus article)
  • The IASB has updated its work programme as at 26 November 2013.
Other global news
  • This sustainability and integrated reporting update provide a brief overview of recent topics related to sustainability reporting and integrated reporting with a focus on a FAQ on sustainability reporting, International Integrated Reporting Council (IIRC) developments, and a recent United Nations Environment Programme Finance Initiative (UNEP FI) conference (IAS Plus article)
  • The European Financial Reporting Advisory Group has released an updated endorsement status report to reflect the recent issue by the International Accounting Standards Board (IASB) of amendments to IAS 19 'Employee Benefits' (IAS Plus article)
  • The Global Reporting Initiative (GRI) has announced several new developments on the “G4 Online” tool, monitoring program, G4 XBRL taxonomy, and sustainability (IAS Plus article)
  • The European Financial Reporting Advisory Group (EFRAG) has released a feedback statement on their draft comment paper on accounting for Emission Trading Schemes. Eleven comment letters were received with most respondents agreeing that specific accounting guidance is needed for emission trading schemes (IAS Plus article)
  • The European Financial Reporting Advisory Group (EFRAG) has issued a feedback statement to summarise the comments received by the EFRAG on its draft comment letter on bearer plants (IAS Plus article)
  • The European Union has published a Commission Regulation endorsing 'Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)' (IAS Plus article).

Related links

 

Related links

  • Monthly roundup - December 2013
    Key considerations for the December reporting season and ASIC findings from 30 June 2013 financial reports.
  • 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 - January 2013
    Financial reporting developments during January 2013. Monthly highlights discuss the EFRAG concerns on Hedge Accounting proposals and identification of a 'business' in a transaction
  • Monthly roundup - January 2009
  • 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 - April 2010
    Summary of developments in financial reporting during April 2010. Monthly highlight discusses the AASB's April meeting.

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