Blending convention with innovation
A review of the IASB Working Group’s Extractive Industries 2009 Discussion Paper
In August 2009, the International Accounting Standards Board’s (IASB) Working Group on Extractive Industries published a Working Draft of a Discussion Paper outlining its preliminary conclusions on significant financial reporting matters in extractive industries. While the conclusions of the paper do not affect the conversion of Canadian entities to International Financial Reporting Standards (IFRS) in 2011, they will likely form the basis for a potential future IASB project on extractive industries.
While this project is in the research stage, it will presumably culminate in a proposal to the IASB to develop a full-fledged IFRS standard on extractive industries. Preparers should consider providing input to the Working Party’s deliberations: views on capitalizing exploration expenditures, on the nature and extent of the disclosure, and on the general ability of financial statements to meet the needs of users without incurring excessive costs or disclosing competitively sensitive information would be useful in the Working Party’s development of its final positions.
Meanwhile, for the benefit of busy mining company executives, Deloitte has taken the time to review and summarize the discussion paper’s key proposals and recommendations in the attached report, Blending convention with innovation. “We understand the priorities of entities in the Canadian mining sector in the short-run should be on the execution of a successful conversion to IFRS,” says Glenn Ives, Deloitte’s North American Mining Leader. “It is, therefore, important to note that the DP is a research paper, not a proposal to establish an IFRS standard. Extensive discussion and consultation will ensue before the DP proceeds to IFRS accounting standards.”
Moreover, following the conversion process, it will behoove Canadian preparers to monitor this project and make their views known on as timely basis as possible.