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IFRS NewsQuarter 2 2012Welcome to IFRS News – a      Our second edition of 2012 starts by           We then turn to IFRS-r...
The IASB’s revised work planAt the end of March, the IASB released          IASB’s projected targets for 2012an updated ve...
In a speech in Mexico in March, the                                            IASB and FASB seek to reduce differences in...
IFRS issues related to currenteconomic conditionsThe end of 2011 and the first quarter of 2012 saw a slowdown in growth in...
IASB amends IFRS 1 for governmentloansThe IASB has published ‘Government                                               Gra...
SME Implementation Grouppublishes two final Q&AsThe SME Implementation Group                                             Q...
Grant Thornton International IFRSTop 20 Tracker – 2012 editionThe Grant Thornton International IFRS       • the effect tha...
Malaysian firm issues guide to IFRSOur Malaysian firm, SG Grant                 Our Malaysian firm’s publication:Thornton,...
Comment letter submitted to theEuropean Securities and MarketsAuthority (ESMA)Comment letter on the Consultation        • ...
IASB Vice-Chairman speaks atGrant Thornton New Zealand event                                             IASB Vice-Chairma...
Round-upIFRS for SMEs                                IASB and FASB roundtables                     Monitoring Board and Tr...
IVSC to address valuation of                    EFRAG study on IFRS 10 and SPEs                 EFRAG holds outreach meeti...
FRC issues an update in response to           Financial reporting in the UK                 IFRS Taxonomy 2012economic unc...
Effective dates of new standardsand IFRIC interpretationsThe table below lists new IFRS Standards and IFRIC Interpretation...
New IFRS Standards and IFRIC Interpretations with an effective date on or after 1 January 2010Title                       ...
Open for commentAt the time of writing, the IASB did nothave any documents out for publiccomment.www.gti.org© 2012 Grant T...
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Grant Thornton - Second Quarter 2012 IFRS News

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Quarterly update from the Grant Thornton International IFRS team.



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Grant Thornton - Second Quarter 2012 IFRS News

  1. 1. IFRS NewsQuarter 2 2012Welcome to IFRS News – a Our second edition of 2012 starts by We then turn to IFRS-related news at looking at the IASB’s revised work plan Grant Thornton, including several newquarterly update from the and the projected targets for the publications that we have issued. We endGrant Thornton documents it expects to issue later this with a more general round-up ofInternational IFRS team. year. We go on to consider some issues activities affecting the IASB, and the arising from current economic conditions implementation dates of newer StandardsIFRS News offers a that may affect companies using IFRS. that are not yet mandatory.summary of the moresignificant developments inInternational FinancialReporting Standards (IFRS)along with insights intotopical issues andcomments and views fromthe Grant ThorntonInternational IFRS team.
  2. 2. The IASB’s revised work planAt the end of March, the IASB released IASB’s projected targets for 2012an updated version of its work plan. Theplan shows the IASB’s projected targets Q2 2012 Q3 2012 Q4 2012for work to be undertaken in 2012, and IFRS 9: Financial Instrumentsis an important resource for companies • Classification and measurement Target ED • Impairment Re-exposurewishing to plan ahead for their future • General hedge accounting Target IFRSfinancial reporting requirements. • Macro hedging Target DP or ED Of particular interest are the revisedplans for the four remaining projects Revenue recognition Consider comments receivedfrom the Board’s convergence work with Leases Re-exposurethe US, covering revenue recognition,leases, insurance contracts and the Insurance contracts RD or revised EDreplacement of IAS 39 – the currentStandard on financial instruments. The Key: ED = Exposure Drafttiming of deliverables on these major DP = Discussion Paperprojects is set out in the table below. It is RD = Review Draft Re-exposure = a new Exposure Draft will be issuednotable that a new Standard on revenuerecognition is not expected before theend of 2012 and that no target date hasbeen set for the finalisation of a new In addition to the four main projects Overall, the revised work planleasing Standard. referred to in the table, the IASB plans indicates a slow-down in the IASB’s to undertake post-implementation pace of standard-setting. This is perhaps reviews of both IFRS 3 ‘Business to be expected as the IASB’s new Combinations’ and IFRS 8 ‘Operating leadership re-evaluates future priorities. Segments’. The IASB will also carry out Over the last ten years, the agenda of the its Annual Improvements project, being IASB has been very much pre- a process for making non-urgent, but determined. For the first five years, it necessary, minor amendments to IFRSs. was dealing with improving IFRSs in An Exposure Draft is expected on this in time for adoption by Europe and other the second quarter of the year. countries, while the next five years were largely dominated by its convergence apart from the remaining work with the US. Apart from the four convergence projects, the IASB finds remaining convergence projects referred itself with a relatively clean slate for to above, the IASB finds itself with a the first time relatively clean slate for the first time.2 IFRS News Quarter 2
  3. 3. In a speech in Mexico in March, the IASB and FASB seek to reduce differences in financial instrumentnew IASB Chairman Hans Hoogervorst accountinggave an indication of what the IASB’s The IASB and the US Financial Accounting Standards Board (FASB) announced infuture plans might be, while January that they would work together to seek to reduce differences in theiracknowledging that a period of stability respective classification and measurement models for financial instruments.will be welcomed by many. Post- The IASB will consider the results of the discussions it holds with its UScompletion of its convergence work counterpart as part of its project to undertake limited scope amendments toprogramme, he suggested that one of the IFRS 9, the Standard which will replace IAS 39 ‘Financial Instruments: RecognitionIASB’s projects would be to revise its and Measurement’.conceptual framework which serves as a Independently of this announcement, the two Boards are continuing with theirpoint of reference for the IASB’s existing work on developing a common approach to impairment of financial assetsdecision-making in general. Providing a (see table). The latest discussions in relation to this separate work stream indicateclearer conceptual definition of Other the two Boards are likely to adopt what is being labelled a “three bucket” approachComprehensive Income will also be a to impairment.priority. Other projects that the IASB On initial recognition financial assets would go into Bucket 1, with expected (asmay turn to include agriculture, business opposed to incurred) losses being recognised but only on a twelve month outlookcombinations under common control, period. Financial assets would then move from Bucket 1 to Buckets 2 and 3 shouldhyperinflation and rate-regulated there be a deterioration in recoverability. Estimates of expected lifetime lossesindustries. Finally, Mr Hoogervorst would be made for both Buckets 2 and 3. Bucket 2 would however be on aindicated a desire to address what is portfolio basis whereas Bucket 3 would be on an individual basis.perceived by many as disclosureoverload under IFRS – one proposalwhich can be expected to have the broadsupport of preparers. IFRS News Quarter 2 3
  4. 4. IFRS issues related to currenteconomic conditionsThe end of 2011 and the first quarter of 2012 saw a slowdown in growth in many European countries and talk of a return torecession in some. There continues to be uncertainty over the prospects for economic recovery throughout the Eurozone andfurther afield. As a result market conditions are difficult for many companies, with management and those charged with governancefacing a number of challenges. We outline below some of the issues that companies using IFRS will need to think about.Issues facing companies using IFRSIssue Factors to considerAusterity measures Companies that do significant business with the public sector in countries implementing austerity measures, are likely to face pressures on volumes and margins. While these are primarily business issues, there could also be a pervasive impact on various aspects of financial reporting – including the areas identified below. Even companies that do not trade directly with the public sector may nevertheless be indirectly affected.Impact on management Management will need to assess the impact that these wider economic factors will have on the future outlook for their business.commentary It is important that the management commentary (or equivalent such as MD&A or operating and financial review) and the financial statements are mutually consistent in areas such as growth expectations and the identification of operating segments.Going concern The effects of economic uncertainty, public spending cuts, and the availability of finance need to be taken into account by management in assessing risks relating to the business’s ability to continue as a going concern, and in making the related disclosures.Impairment The current economic environment can be expected to have a widespread effect on the impairment of both financial and non- financial assets. Impairment losses need to be determined on a case by case basis reflecting the specific facts and circumstances. For financial assets, some specific points to consider include: • for debt type assets, objective evidence of impairment includes financial difficulty of the debtor, breaches of the terms of the instrument and it becoming probable that the debtor will enter bankruptcy or financial reorganisation • for investments in equities, a significant or prolonged decline in fair value to below cost is one type of objective evidence of impairment • for available-for-sale assets, if objective evidence of impairment exists the entire decline in fair value that has been recognised in other comprehensive income needs to be reclassified into profit or loss. Impairment may also need to be recognised in respect of non-financial assets, while inventory write-downs may be required under IAS 2 ‘Inventories’. In addition, the Eurozone sovereign debt crisis may affect the discount rate to be used by some companies in carrying out their impairment tests. The Eurozone sovereign debt crisis has increased the yield on long-dated government bonds in what are perceived as the weaker countries in the Eurozone, while decreasing the yields on the government bonds of those countries that are perceived as being safe havens. Putting this information into the impairment test calculation may result in a significant increase in the discount rate to be used for the impairment testing of some assets and cash generating units.Consequences of restructuring The requirements of IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ may become relevant where a decision is made to sell or terminate part of a company’s business. Management will also need to consider whether provisions are required under IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’.4 IFRS News Quarter 2
  5. 5. IASB amends IFRS 1 for governmentloansThe IASB has published ‘Government Grant Thornton International commentLoans – Amendments to IFRS 1’, We welcome the Amendments, which provide the same relief to first-time adoptersproviding relief for first-time adopters of of IFRSs as is available to existing IFRS preparers when first applying IAS 20’sIFRSs from the retrospective application requirements on government loans. Prior to the Amendments a first-time adopterof the requirements of IAS 20 that received a government loan with a below-market interest rate before its‘Government Grants’ on government transition date needed to estimate the fair value of that loan retrospectively whichloans. IAS 20 requires government loans would require the use of hindsight.to be measured at fair value on initialrecognition, with the correspondingbenefit of a below-market interest rate Under the new Amendments to • applies IAS 20 to government loansbeing accounted for as a government IFRS 1, a first-time adopter: received originated after the date ofgrant. • classifies government loans received transition. as a financial liability or as equity inthe Amendments provide relief for accordance with IAS 32 ‘Financial Despite these requirements, an entityfirst-time adopters of IFRSs from the Instruments: Presentation’ may apply the requirements in IFRS 9retrospective application of the • measures government loans at the ‘Financial Instruments’ and IAS 20requirements of IAS 20 date of transition to IFRSs at their retrospectively to any government loan previous GAAP carrying value, and originated before the date of transition subsequently applies IFRS 9 to IFRSs, provided that the information Financial Instruments or IAS 39 needed to do so had been obtained at the ‘Financial Instruments: Recognition time of initially accounting for that loan. and Measurement’ IFRS News Quarter 2 5
  6. 6. SME Implementation Grouppublishes two final Q&AsThe SME Implementation Group Q&A 2012/01 Application of ‘undue cost or effort’(SMEIG) has published the following • addresses how the phrase ‘undue cost or effort’ should be interpreted in relationtwo new question and answer documents to the application of certain exemptions from the normal requirements of the(Q&As) on the IFRS for Small and IFRS for SMEsMedium-sized Entities (SMEs). The answer:• Q&A 2012/01 IFRS for SMEs • notes that ‘undue cost or effort’ is deliberately not defined in the IFRS for SMEs, General topics: Application of ‘undue because it would depend on the SME’s specific circumstances and on cost or effort’ management’s professional judgement in assessing the costs and benefits• Q&A 2012/02 IFRS for SMEs • makes it clear that if obtaining or determining the information necessary to Section 3: ‘Jurisdiction requires comply with the requirement would result in excessive cost or an excessive fallback to full IFRSs’ burden for an SME, the SME would be exempt from the requirement.Q&As published by the SMEIG arenon-mandatory guidance that will help Q&A 2012/02 Jurisdiction requires fallback to full IFRSsthose who use the IFRS for SMEs to • addresses situations where a jurisdiction has added a requirement that, wherethink about specific accounting the recognition and measurement requirements for a particular transaction arequestions. They are not intended to not specifically covered by the IFRS for SMEs, but are covered in full IFRSs, anmodify in any way the application of full SME must follow the recognition and measurement requirements in full IFRSsIFRSs. The table summarises the • the question asks whether an entity in such a jurisdiction can state complianceguidance in the two Q&As. with the IFRS for SMEs? The answer notes that: • the guidance in the IFRS for SMEs on the selection and application of accounting policies allows the full IFRS principles to be used in the absence of specific guidance in the IFRS for SMEs, provided that they do not conflict with requirements in the hierarchy set out in that part of the IFRS for SMEs • this scenario is different from allowing a free choice to follow full IFRS requirements when specific requirements exist in the IFRS for SMEs for a transaction, other event or condition. Where there are such specific requirements in the IFRS for SMEs, they must be applied even if they differ from full IFRSs.Comment letter on revenue recognitionGrant Thornton International Ltd and that takes account of costs and benefits. Nonetheless we believe there areits US member firm, Grant Thornton Practical expedients, such as the use of a certain areas in which the revisedLLP, have submitted a joint comment twelve month cut-off period for the guidance should be clarified orletter to the IASB and FASB on their recognition of onerous obligations and simplified. In particular we believe theExposure Draft ‘Revenue from embedded financing components, have guidance on performance obligationsContracts with Customers’. for instance been included in order to satisfied over time to be overly complex, In the comment letter, we welcome a reduce unnecessary disruption to and that the interaction between thenumber of improvements from the established accounting practices, while proposals on estimating variableearlier 2010 Exposure Draft and other changes clarify and simplify consideration and constraining theconsider that the overall package of application of the proposed Standard. amount recognised needs attention.changes reflects a pragmatic approach6 IFRS News Quarter 2
  7. 7. Grant Thornton International IFRSTop 20 Tracker – 2012 editionThe Grant Thornton International IFRS • the effect that adverse economicteam has published the 2012 edition of conditions may have on a company’sits IFRS Top 20 Tracker. financial statements, with particular 2012 EDITION The 2012 edition again takes emphasis on issues related to the IFRS Top 20 Trackermanagement through twenty of the top Eurozone sovereign debt crisisdisclosure and accounting issues • key areas of interest for regulatorsidentified by Grant Thornton • challenging areas of accountingInternational as potential challenges for • recent and forthcoming changes inIFRS preparers. financial reporting. Key themes driving selection of theissues in the 2012 edition are:• the need for a company’s management commentary and financial statements to complement and be consistent with each otherNew Grant Thornton Internationalfirst-time adopter’s example financialstatementsThe Grant Thornton International IFRS To obtain a copy of the publication,team has published an updated version please get in touch with the IFRS Reporting under IFRS:of its publication ‘First-time Adoption contact in your local Grant Thornton First-time adoptionof IFRS – Example Consolidated office. Example consolidated financial statements 2011 and guidance notesFinancial Statements’. The 2011 version of the publicationhas been reviewed and updated to reflectchanges in IFRSs that are effective forannual periods beginning on or after1 January 2011. Specifically, it reflectsamendments to IAS 1 ‘Presentation ofFinancial Statements’ included in‘Improvements to IFRSs 2010’. IFRS News Quarter 2 7
  8. 8. Malaysian firm issues guide to IFRSOur Malaysian firm, SG Grant Our Malaysian firm’s publication:Thornton, has issued ‘The Road to • introduces the MFRS frameworkMFRS – Transition to IFRS-compliant • discusses the general principles ofMalaysian Financial Reporting MFRS 1: First-time Adoption ofStandards (MFRS)’. Malaysian Financial Reporting 2012 marks a new milestone in StandardsMalaysian financial reporting, with IFRS • highlights certain transitionalcompliant Malaysian Financial exemptions available which may beReporting Standards (MFRS) becoming beneficial to entities in smoothingeffective. the first-time adoption process.Swedish partner looks at benefitsof IFRS for SMEsEva Törning, a partner in our Swedish The article considers the advantages using IFRS. The article demonstrates themember firm, has written an article that the Standard offers in terms of ever-growing interest in the IFRS forexamining the benefits of the IFRS for simplified group reporting for listed SMEs, with over 70 countries havingSMEs. entities using IFRS as well as for smaller adopted the Standard already or having Swedish companies that are not currently committed to doing so.UK firm featured in ICAEWmagazineThe online edition of ‘Economia’, the The article looks at the latest particular the lack of guidance on howmonthly magazine of the Institute of proposals from the UK Accounting to account for financial instrumentsChartered Accountants in England and Standards Board (ASB) for financial compared to IFRS. While the articleWales, featured an article from Jake reporting in the UK (see our round-up acknowledges that there are still issues toGreen and Katherine Martin of our UK section for more on those proposals). be resolved with the ASB’s proposals, itmember firm. It notes some of the problems that hails them as a step in the right direction. currently exist under UK GAAP, in8 IFRS News Quarter 2
  9. 9. Comment letter submitted to theEuropean Securities and MarketsAuthority (ESMA)Comment letter on the Consultation • expressed our view that materiality • expressed our belief that the currentPaper ‘Considerations of Materiality should be determined based on an definition of materiality can andin Financial Reporting’ assessment of the significance of should be used by preparers as a toolThe Grant Thornton International IFRS information to users and their to ensure their disclosures are well-Team has submitted a comment letter to decisions focusedESMA on their Consultation Paper • noted that current interest in this • agreed that a re-examination of the‘Considerations of Materiality in topic has been heightened by a current IFRS definition ofFinancial Reporting’. In the comment widely-held view that the volume of materiality, and additional guidanceletter we: disclosure required by IFRS has on its application, might be useful become excessive • stated that we firmly believe the development of any detailed guidance should fall to the IASB.Grant Thornton thought leadershiparticle on leasesJohn Hepp and Mark Scoles, two In ‘Are all leases created equal?’,partners in our US member firm, have Grant Thornton explores the genesis ofwritten a thought leadership article on the proposed Standard and argues that Technical topics in leasingthe IASB’s leases project. the single-model approach is overly Are all leases created equal? ‘Are all leases created equal?’ has simplistic. The article instead makes a Investment property is different John Hepp, Partner, Accounting Principles Consultation Group and Mark Scoles, Partner in This paper looks at the issue, beginning with the lessor. Subsequent Operating lease accounting for all other leases. The lease is in substance an Charge, Accounting Principles Consultation Group papers will look at the issue from the executory contract between the lessorbeen written against the background of case for the use of two models, based on As the Financial Accounting Standards Board (FASB) continues its deliberations on the leasing project, some important perspective of the lessee. Background and the lessee. In accounting vernacular, the lease is off-balance sheet. In the United States, leases are a flexible The main criticism of this accounting issues have been raised about the proposedthe IASB and Financial Accounting whether the lessor is managing financial contractual means of sharing risk dichotomy is the ease with which it accounting models for both the lessor and between consenting parties. Under can be abused: The explicit criteria for the lessee. In this paper, we look at one of existing GAAP, this is reflected in two recognizing a capital lease provide a road the fundamental issues: Is there a single accounting models: map for how to structure arrangements accounting model that faithfully represents so that lessees qualify for operating lease the economic substance of all leases? TheStandards Board proposals for a new assets or operating assets, and depending Capital lease accounting, for accounting. Some critics, however, object original proposed FASB Accounting situations in which substantially all to any distinction at all between capital Standards Update, Leases, issued in August the risks and rewards of ownership and operating leases because they believe 2010, included two models for lessors. have been transferred from the lessor that all executory contracts should be The International Accounting Standards to the lessee. The lease is in substance recognized on the financial statements,leasing Standard. The two Boards have on what types of risks are inherent in the Board (IASB) and the FASB (the Boards) a purchase. preferably at fair value, and that operating decided on a single approach for lessors leases are an excellent place to start. during redeliberations but subsequently decided to “scope out” leases of investment property, creating a de facto second model.proposed a single accounting model for lessor’s business model. Once again, the issue is on the table: Are all leases created equal? This paper looks at the issue from the perspective of the business model of the lessor. “Business model” is sometimes a term of derision inlessors (known as the receivable and The IASB is planning to re-expose its accounting circles, but it can be a useful means of comparing two transactions to determine whether the economic substance of the transactions is the same.residual model) with some minor proposals on leases in the second half ofexceptions for investment property and 2012.leases of one year or less. IFRS News Quarter 2 9
  10. 10. IASB Vice-Chairman speaks atGrant Thornton New Zealand event IASB Vice-Chairman, Ian Mackintosh • increasing pressure from the G20 to took time during a recent visit to his complete the financial instruments birthplace of New Zealand to speak to project senior public sector officials at an • potential Memorandums of exclusive event sponsored by Grant Understanding between the IASB Thornton and CPA Australia. and the International Valuation During his speech, Mr Mackintosh Standards Council, and the IASB gave some interesting perspectives on and the International Association of the factors affecting the IASB’s current Actuaries. agenda, including • the desire from constituents for a period of calm and a return to conceptsSpotlight on our IFRS InterpretationsGroupGrant Thornton International’s IFRS Emmanuelle Guyomard, France Emmanuelle has specialised inInterpretations Group (IIG) consists of a Emmanuelle is Head of Accounting financial reporting standards for overrepresentative from each of our member standards at Grant Thornton, France. sixteen years. In particular, she wasfirms in the United States, Canada, She joined our French member Firm in closely involved with working groupsSingapore, Australia, South Africa, India, 2006, becoming National technical set up by the CNC (the former Frenchthe United Kingdom, France, Sweden partner in 2008. standard-setter) and the CNCC (theand Germany as well as members of the national auditing body in France) duringGrant Thornton International IFRS the 2002-2005 period of transition toteam. It meets in person two to three IFRS of French listed companies. Shetimes a year to discuss technical matters has also contributed to the translation ofwhich are related to IFRS. the IFRS bound volume in French on Each quarter we throw a spotlight on behalf of the Review Committeeone of the members of the IIG. This appointed by IASC from 2005 to 2008.quarter we focus on France’s Emmanuelle is currently a memberrepresentative: of the French GAAP Commission at the ANC (the French Standard-setter). She is also a member of the board of directors of IMA France, a not-for- profit organisation affiliated with the US Institute of Management Accountants, that aims at providing training and conferences for professionals in IFRS.10 IFRS News Quarter 2
  11. 11. Round-upIFRS for SMEs IASB and FASB roundtables Monitoring Board and Trustees of theThe IASB intends to start work on a The IASB and the US Financial Accounting IFRS Foundation reviewscomprehensive review of the IFRS for Standards Board are to launch a series of The Monitoring Board and the Trustees ofSMEs in the second half of 2012. An outreach meetings on their revised the IFRS Foundation have jointlyinvitation to comment is expected in the proposals for the recognition of revenue announced the conclusions of theirfourth quarter of 2012, with an Exposure that were published in November 2011. separate reviews of the governance andDraft in 2014, and a final version of the Meetings will take place in the UK, the US, strategy of the IFRS Foundation.revised Standard planned for the first Japan, Brazil and Malaysia. The findings of the Monitoring Board’squarter of 2014. The two Boards have also held round- review are concentrated on institutional Following the publication of Q&As table meetings on the proposals for aspects of governance, particularly the2012/01 and 2012/02 (see earlier in the investment entities that were issued last composition and respective roles andnewsletter), the IASB has also stated that year. responsibilities of the Monitoring Board,it does not currently have any additional the Trustees and the IASB. The findings ofQuestions & Answers (Q&As) on the IFRS the Trustees’ strategy review meanwhilefor SMEs under development. It look to articulate a clear strategy andfurthermore expects that it will not issue vision for the organisation as it enters itsmany, if any, additional draft Q&As before second decade by considering thethe start of the comprehensive review. mission, governance, standard-setting process and financing of the IFRS Foundation. Recommendations include improvements to the oversight of the IASB’s due process and the establishment of a dedicated research function. The next steps following publication of the reviews will be for the Monitoring Board to proceed with steps to put into operation the improvement measures, while the Trustees will initiate the process for considering revisions to the Constitution. IFRS News Quarter 2 11
  12. 12. IVSC to address valuation of EFRAG study on IFRS 10 and SPEs EFRAG holds outreach meetings on itsderivatives EFRAG has invited companies to proactive discussion papersThe International Valuation Standards participate in a study on how IFRS 10 The European Financial ReportingCouncil (IVSC) has launched a project ‘Consolidated Financial Statements’ will Advisory Group (EFRAG) has announced aaimed at improving the valuation of affect the consolidation of Special number of outreach meetings regardingfinancial derivatives. Purpose Entities (SPEs). its discussion papers ‘Accounting for The IVSC hopes to bring greater The study is supplementary to the business combinations under commontransparency to the valuations placed on impact assessment of IFRS 10 by the control’ and ‘Improving the Financialthe portfolios of derivative instruments European Commission, being in addition Reporting of Income Tax’.held by financial institutions, an area which to and separate from EFRAG’s The feedback from the meetings willhas been the subject of extensive scrutiny endorsement advice. It is meant to be used by EFRAG in future work with theby financial regulators following the 2008 illustrate the impacts of IFRS 10 on the IASB that relates to income taxes andfinancial crisis. The project aims to bring scope of consolidation in relation to SPEs. business combinations under commongreater consistency and understanding of The study will be conducted by EFRAG control.the techniques used in the valuation staff in close cooperation with the staff ofprocess in order to assist management, national standard setters in Europe whoinvestors and other stakeholders in are interested in participating in the study.understanding the valuations.12 IFRS News Quarter 2
  13. 13. FRC issues an update in response to Financial reporting in the UK IFRS Taxonomy 2012economic uncertainties The UK Accounting Standards Board has The IFRS Foundation has published the IFRSThe UK Financial Reporting Council has issued revised proposals for financial Taxonomy 2012. The IFRS Taxonomy is aissued ‘An Update to Directors of Listed reporting in the UK. The proposals, which translation of IFRSs into XBRL (eXtensibleCompanies: Responding to increased are aimed at general financial reporting in Business Reporting Language). XBRL iscountry and currency risk in financial the UK rather than that of listed rapidly becoming the format of choice forreports’. companies (who are already required to the electronic filing of financial information. The Update, which aims to alert UK prepare their consolidated financial By providing the IFRS Taxonomy, the IFRSlisted companies to issues relating to statements under IFRS), would result in: Foundation is seeking to address theincreasing country and currency risk when • all current accounting standards being demand for an electronic standard tofiling their financial reports, may also be replaced with a single FRS based on transmit IFRS financial information.of interest to a wider audience. Issues the IFRS for SMEs The architectural framework of theraised in the Update include: • introduction of a reduced disclosure 2012 taxonomy is consistent with previous• exposure to country risk through framework which would permit certain versions and consolidates all IFRS financial instruments and from entities (mainly subsidiaries) to apply Taxonomy interim releases that were exposure to trading counterparties the measurement and recognition published in 2011. In addition, the IFRS• the impact of austerity measures requirements of EU-adopted IFRS Taxonomy 2012 is the first to include over being taken in some countries (effect with reduced disclosures 700 concepts reflecting common practice. on forecasts, impairment testing, • retaining the UK’s Financial Reporting These extensions were derived from an going concern, etc) Standard For Smaller Entities (FRSSE). analysis of approximately 200 IFRS financial• possible consequences of currency statements and will reduce the need events that are not factored into for preparers to customise the Taxonomy forecasts to fit their individual needs when filing IFRS• the potential need for enhanced post compliant financial statements online. balance sheet date event disclosures.The Update can be viewed athttp://www.frc.org.uk/images/uploaded/documents/Update%20for%20Directors%20Jan%2012%20FINAL.pdf IFRS News Quarter 2 13
  14. 14. Effective dates of new standardsand IFRIC interpretationsThe table below lists new IFRS Standards and IFRIC Interpretations with an effective date on or after 1 January 2010.Companies are required to make certain disclosures in respect of new Standards and Interpretations under IAS 8 ‘AccountingPolicies, Changes in Accounting Estimates and Errors’.New IFRS Standards and IFRIC Interpretations with an effective date on or after 1 January 2010Title Full title of Standard or Interpretation Effective for accounting Early adoption permitted? periods beginning on or afterIFRS 9 Financial Instruments 1 January 2015 Yes (extensive transitional rules apply)IAS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014 Yes (but must also make the (Amendments to IAS 32) disclosures required by Disclosures – Offsetting Financial Assets and Financial Liabilities)IFRS 1 Government Loans – Amendments to IFRS 1 1 January 2013 YesIFRS 7 Disclosures – Offsetting Financial Assets and Financial 1 January 2013 Not stated (but we presume yes) Liabilities (Amendments to IFRS 7)IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013 YesIFRS 13 Fair Value Measurement 1 January 2013 YesIFRS 12 Disclosure of Interests in Other Entities 1 January 2013 YesIFRS 11 Joint Arrangements 1 January 2013 Yes (but must apply IFRS 10, IFRS 12, IAS 27 and IAS 28 at the same time)IFRS 10 Consolidated Financial Statements 1 January 2013 Yes (but must apply IFRS 11, IFRS 12, IAS 27 and IAS 28 at the same time)IAS 28 Investments in Associates and Joint Ventures 1 January 2013 Yes (but must apply IFRS 10, IFRS 11, IFRS 12 and IAS 27 at the same time)IAS 27 Separate Financial Statements 1 January 2013 Yes (but must apply IFRS 10, IFRS 11, IFRS 12 and IAS 28 at the same time)IFRS Practice Statement Management Commentary: A framework for presentation No effective date as Not applicable non-mandatory guidanceIAS 19 Employee Benefits (Revised 2011) 1 January 2013 Yes14 IFRS News Quarter 2
  15. 15. New IFRS Standards and IFRIC Interpretations with an effective date on or after 1 January 2010Title Full title of Standard or Interpretation Effective for accounting Early adoption permitted? periods beginning on or afterIAS 1 Presentation of Items of Other Comprehensive Income 1 July 2012 Yes (Amendments to IAS 1).IAS 12 Deferred Tax: Recovery of Underlying Assets 1 January 2012 Yes (Amendments to IAS 12)IFRS 1 Severe Hyperinflation and Removal of Fixed Dates for 1 July 2011 Yes First-time Adopters (Amendments to IFRS 1)IFRS 7 Disclosures – Transfers of Financial Assets (Amendments 1 July 2011 Yes to IFRS 7)Various Annual Improvements 2010 1 January 2011 unless Yes otherwise stated (some are effective from 1 July 2010)IFRIC 14 Prepayments of a Minimum Funding Requirement 1 January 2011 Yes – Amendments to IFRIC 14IAS 24 Related Party Disclosures 1 January 2011 Yes (either of the whole Standard or of the partial exemption for government-related entities)IFRS 1 Limited Exemption from Comparative IFRS 7 Disclosures 1 July 2010 Yes for First-time Adopters (Amendment to IFRS 1)IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010 YesIAS 32 Classification of Rights Issues (Amendment to IAS 32) 1 February 2010 YesIFRS for SMEs International Financial Reporting Standard for Small and Immediately subject to approval N/A Medium-sized Entities within the individual jurisdictionVarious Annual Improvements 2009 1 January 2010 unless Yes otherwise stated (some are effective from 1 July 2009)IFRS 1 Additional Exemptions for First-time Adopters (Amendments 1 January 2010 Yes to IFRS 1)IFRS 2 Group Cash-settled Share-based Payment Transactions 1 January 2010 Yes (Amendments to IFRS 2) IFRS News Quarter 2 15
  16. 16. Open for commentAt the time of writing, the IASB did nothave any documents out for publiccomment.www.gti.org© 2012 Grant Thornton International Ltd. All rights reserved.References to “Grant Thornton” are to the brand under which the GrantThornton member firms operate and refer to one or more member firms,as the context requires. Grant Thornton International and the member firmsare not a worldwide partnership. Services are delivered independently bymember firms, which are not responsible for the services or activities of oneanother. Grant Thornton International does not provide services to clients.

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