International Financial Reporting Bulletins

2010 Publications:

IFRB 2010/24   Conceptual Framework for Financial Reporting 2010.

BDO Global have issued an IFRB on the IASB Conceptual Framework for Financial Reporting 2010. The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have announced the completion of the first phase of their joint project to develop an improved conceptual framework for International Financial Reporting Standards (IFRSs) and US Generally Accepted Accounting Principles (US GAAP).

IFRB 2010/23   Severe Hyperinflation Proposed amendment to IFRS 1.

BDO Global have issued an IFRB on the IASB Exposure Draft " Severe Hyperinflation Proposed amendment to IFRS 1". The ED has been issued following a request that was received by the IFRS Interpretations Committee to clarify how an entity should resume presenting financial statements in accordance with IFRS after a period of severe hyperinflation, during which it had been unable to comply with IAS 29 Financial Reporting in Hyperinflationary Economies.

IFRB 2010/22   Deferred Tax: Recovery of Underlying Assets, Proposed amendments to IAS 12.

BDO Global have issued an IFRB on the IASB Exposure Draft "Deferred Tax: Recovery of Underlying Assets, Proposed amendments to IAS 12" which sets out proposed changes to IAS 12 . The proposals set out in the ED are intended to address the concerns set out above by proposing an exception to the principle in IAS 12 that the measurement of deferred tax assets and liabilities should reflect the manner of recovery of the related assets and liabilities. Instead, for those assets within the scope of the amendment, there would be a rebuttable presumption that the carrying amount at each reporting date will be recovered entirely through sale.

IFRB 2010/21 Leases

This IFRB discusses the ED on Leases recently published by the IASB. The ED proposes that lessees and lessors apply a right-of-use model in accounting for most leases (including subleases). This means that:

(a) a lessee would recognise an asset representing its right to use the leased asset, and a liability to make lease payments.

(b) a lessor would recognise an asset representing its right to receive lease payments and deal with the underlying asset, according to whether or not the risks of the asset have been transferred.

IFRB 2010/20 Stripping costs in the production phase of a surface mine

This Draft Interpretation applies IAS 16 in requiring stripping that is part of a ‘stripping campaign’ to be capitalised. The campaign is completed once the ore beneath it is ready for extraction.

IFRB 2010/19 Removal of fixed dates for first time adopters, proposed amendments to IFRS 1

This IFRB discusses proposals that would amend IFRS 1 by replacing references to a fixed transition date of 1 January 2004 with the date of transition to IFRS.

IFRB 2010/18 The Annual Improvements Process: Proposals to amend the due process handbook

This IFRB summarises the recommendations in the IASB Consultative Document for deciding whether an amendment should be made via the annual improvements process.

IFRB 2010/17 Measurement uncertainty analysis disclosure of fair value measurements, limited re-exposure of proposed disclosures.

This ED proposes that an entity should disclose for each class of assets and liabilities measured at fair value in the statement of financial position after initial recognition:

• A description of the valuation techniques and inputs used to develop those measurements; and
• For fair value measurements using significant unobservable inputs (Level 3) the effect of the measurements on profit or loss or other comprehensive income for the period. 

IFRB 2010/16 Presentation of other items of comprehensive income, proposed amendments to IAS 1

This ED proposes that entities produce a single statement of comprehensive income (currently there is an option to present two statements) and that this mandatory single statement should be in two distinct sections; one for profit and loss items and the other for other comprehensive income items.

Within other comprehensive income, items that will never be reported in profit or loss will be presented separately from those items subject to recycling.

IFRB 2010/15 Revenue from contracts with customers

The proposals are that for each contract with a customer, an entity identifies the separate performance obligations, allocates the transaction price to each separate performance obligation, and recognises revenue as the entity satisfies each performance obligation.

If the transaction is governed by a more specific IFRS, then that should be complied with.

IFRB 2010/14 Measurement of liabilities in IAS 37

It is proposed that a liability would be measured at the lowest of:

1. The present value of the resources required to fulfil the obligation;
2. The amount that the entity would have to pay to cancel the obligation; and
3. The amount that the entity would have to pay to transfer the obligation.

The carrying value would be adjusted at each year-end.  The IASB intends to incorporate these proposals in its revision of IAS 37.

IFRB 2010/13 Defined Benefit Plans: Proposed amendments to IAS 19

The IASB has issued an ED of proposed changes to the recognition, presentation and disclosures related to defined benefit plans.

The ED sets out proposals that would require entities to recognise all changes in defined benefit obligations and in the fair value of plan assets when those changes occur. This would eliminate the ‘corridor approach’ option in IAS 19 which permits entities to leave actuarial gains and losses unrecognised if they are within a corridor (being the greater of 10 per cent of the plan assets and 10 percent of the plan liabilities) and defer recognition of actuarial gains and losses outside the corridor.

IFRB 2010/12 Conceptual framework for financial reporting, the reporting entity 

The ED is proposing that a reporting entity be described as a circumscribed area of economic activities whose financial information has the potential to be useful to various users of that information who themselves are unable directly to obtain the financial information.  It is based on the responses to its May 2008 proposals.

IFRB 2010/11 Fair value option for financial liabilities

At present, where the fair-value option for financial liabilities is adopted, a gain is reported in profit or loss as the entity’s credit rating deteriorates.  The proposal is to report the element of change in fair value that relates to changes in the entity’s credit risk to be reported in ‘other comprehensive income’.

IFRB 2010/10 Improvements to International Financial Reporting Standards

This FRB summarises the changes made to IFRS 1 First-time adoption of International Financial Reporting Standards, IFRS 3 Business Combinations, IFRS 7 Financial Instruments: Disclosures and IAS 1 Presentation of Financial Statements.  There are also amended transitional arrangements for IAS 21, IAS 28, IAS 34 and IFRIC 13.

IFRB 2010/09 Financial instruments; amortised cost and impairment

This ED proposes that expected credit losses should be included in the amortised cost of financial assets.

IFRB 2010/08 Limited exemption from comparative IFRS 7 Disclosures for first time adopters

Comparative information for the ‘fair value hierarchy’ need not be presented for first time adopters, for comparative periods ending before 31 December 2009.

IFRB 2010/07 CESR's seventh extract from its database of enforcement decisions

The Committee of European Securities Regulators (CESR) has, as a source of information to assist in the appropriate application of IFRSs, developed a confidential database of enforcement decisions taken by EU National Enforcers participating in European Enforcers Co-ordination Sessions (EECS). These decisions are not made or endorsed by the EECS. From time to time CESR publishes extracts of what it regards as the more interesting decisions. This IFRB summarises CESR's seventh extract published in December 2009.

IFRB 2010/06 CESR's sixth extract from its database of enforcement decisions

The Committee of European Securities Regulators (CESR) has, as a source of information to assist in the appropriate application of IFRSs, developed a confidential database of enforcement decisions taken by EU National Enforcers participating in European Enforcers Co-ordination Sessions (EECS). These decisions are not made or endorsed by the EECS. From time to time CESR publishes extracts of what it regards as the more interesting decisions. This IFRB summarises CESR's sixth extract published in August 2009.

IFRB 2010/05 CESR's fifth extract from its database of enforcement decisions

The Committee of European Securities Regulators (CESR) has, as a source of information to assist in the appropriate application of IFRSs, developed a confidential database of enforcement decisions taken by EU National Enforcers participating in European Enforcers Co-ordination Sessions (EECS). These decisions are not made or endorsed by the EECS. From time to time CESR publishes extracts of what it regards as the more interesting decisions. This IFRB summarises CESR's fifth extract published in March 2009.

Issue 04/2010 Prepayments of a Minimum Funding Requirement: Amendments to IFRIC 14

The IFRIC have amended IFRIC 14 because in some cases the requirements of the original Interpretation had the unintended consequence of preventing a prepayment of future minimum funding requirements from being recognised as an asset. Entities subject to minimum funding requirements under their post-employment and other long-term employee benefit plans that have made, or are considering making, prepayments of contributions to cover those requirements should assess the consequences of adopting the amendments to IFRIC 14.

The effective date of the amendments is annual periods beginning on or after 1 January 2011, with earlier application being permitted.  The amendments to IFRIC 14 have yet to receive EU endorsement.

Issue 03/2010 IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

This IFRB reviews IFRIC 19. IFRIC 19 applies where an entity renegotiates the terms of a financial liability and as a result, issues its own equity instruments to the creditor to settle all or a part of the financial liability. Such situations are commonly referred to as debt for equity swaps.

The effective date of IFRIC 19 is annual periods beginning on or after 1 July 2010. Earlier application is permitted.  IFRIC 19 has yet to receive EU endorsement.

Issue 02/2010 IFRS 9 Financial Instruments

This IFRB discusses IFRS 9 Financial Instruments, recently issued by the IASB. IFRS 9 is the first part of Phase I of the IASB’s project to replace IAS 39. The scope of IFRS 9 is currently limited to the classification and measurement of financial assets. The IASB will continue its work on financial liabilities, in particular measurement issues related to the effects of changes in an entity’s own credit risk on fair value measurement, and will include the requirements for those instruments in IFRS 9 in due course.

IFRS 9 applies to annual accounting periods commencing on or after 1 January 2013, with earlier application permitted. IFRS 9 has yet to receive EU endorsement.

Issue 01/2010 Related Party Disclosures

This IFRB reviews the recent revision to IAS 24 Related Party Disclosures. The revised standard provides a partial exemption from related party disclosures by ‘government-related’ entities. In other respects, changes are limited to simplifying the definition of a related party in order to clarify the intended meaning and eliminate inconsistencies.

The revised standard is effective for annual periods beginning on or after 1 January 2011, with retrospective application. Earlier application is permitted.