September 2008 © 2008 IASC Foundation. 30 Cannon Street ...

International Financial Reporting Standards

The views expressed in this presentation are those of the presenter, not necessarily those of the IASC Foundation or the IASB

September 2008

© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org

Progress and plans

Implementation Update

Tricia O’Malley

IASB implementation activities

• Working with adopting countries

• Participating in/liaising with implementation groups

• IFRIC

• Annual improvements project


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Groups and standard setters

• Implementation activities governed by Statement of Best Practice

– Develop joint proposals on common problems requiring interpretation

– Be familiar with implementation in jurisdiction

– Submit issues needing interpretation to the IFRIC


3



IFRIC process

September 2008


IFRIC due process handbook

• Identification of issues

• Setting the agenda

• Meetings and voting

• Development of a draft interpretation

• Comment period and redeliberation


5

Agenda setting

• No Agenda Committee

• All issues submitted are discussed by IFRIC in public based on staff analysis

• Publish reasons for not adding issue to agenda


6

Agenda criteria

• Widespread and practical relevance

• Significant divergence (existing or emerging)

• Improved financial reporting

• Efficient, cost-effective resolution

• Reach consensus on a timely basis

• No current IASB project will be completed before IFRIC could respond


7

Communication

• Observer notes– all IFRIC papers

• Webcasting– live and archived by topic

• IFRIC Update– decision summary published one week after meeting

• Website – project summaries


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Solutions to implementation questions

• Explain via IFRIC agenda decision – reasons for not adding to IFRIC agenda

• Develop IFRIC interpretation

• Change existing standard– Annual Improvements project

• Include in a current IASB project


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Recent activities

September 2008


2007 Interpretations


11

IFRIC 13 Customer Loyalty Programmes

IFRIC 14 Defined Benefit Assets and Minimum Funding Requirements

2008 Interpretations


12

IFRIC 15 Arrangements for the Construction of Real Estate

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

IFRIC 15: Issue

• Is the arrangement :– a construction contract (IAS 11)? or

– a sale of goods (IAS 18)?


13

IFRIC 15: Consensus

• To be construction contract, buyer must be able to specify major structural elements

• Contract may result in continuous transfer but not meet definition of construction contract

– in IAS 18 but use % of completion

• D21 said either was construction contract


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IFRIC 15: Other items

• Changes from D21– added flowchart to illustrate application of consensus

and how contract segmenting requirements fit

– added new examples

• Effective 1/1/09– retrospective


15

IFRIC 16: Issues

• Which entity(s) can hedge a net investment?

• Where within the group can the hedging instrument be held?

• How to measure ineffectiveness

• Reclassification to P+L on disposal


16

IFRIC 16: Consensus

• Parent can hedge risk of net investment held indirectly

• Only functional currencies are eligible risks

• Any entity in the group can hold the hedging instrument

• Maximum amount hedged can be carrying amount of net investment in parent designating hedge


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IFRIC 16: Consensus continued

• Ineffectiveness measured in relation to functional currency of relevant parent

• On disposal reclassify to P+L– Amount identified by IAS 39 for hedging instrument

– Amount in parent’s FCTR for that foreign operation (may depend on consolidation method)


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IFRIC 16: Other items

• Changes from D22– application guidance added on designation and

effectiveness

• Effective 1/10/08– discontinue non-compliant hedges prospectively


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2008 draft interpretations/ED


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IFRS 2 and IFRIC 11

Group Cash-settled Share-based Payments

DC 23 Non-cash Distributions to Owners

DC 24 Customer Contributions

• Comment periods closed

• IFRIC/Board redeliberating

IFRS 2 and IFRIC 11

• Issue: – Subsidiary receives services and issues share-based

payment that will be settled in cash by another group entity

• Conclusion: – amend IFRS 2 to clarify these arrangements are

included and apply IFRIC 11


21

D23

• Issue: – How should distributions be measured?

• Conclusions:– Recognise dividend payable at fair value of assets

to be distributed– Recognise gain on settlement in P+L– If asset distributed is a discontinued operation,

apply IFRS 5


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D24

• Issue: – Recognition and measurement of assets contributed

by customers

• Conclusions:– Recognise asset at fair value when received

– Recognise obligation to provide any future services

– Recognise revenue when service is provided


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IFRIC agenda decisions


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Rejections (2 tentative) 10

Refer to Annual Improvements 4

Add to agenda 2

Not yet considered 1



Annual improvements

September 2008


Annual improvements

• For non-urgent amendments– resolve inconsistencies between standards

– clarify fuzzy wording

• Process– website publication of ED wording when finalised

– annual ED

– 90 day exposure

• Benefits– improved use of IASB time

– less burdensome for constituents© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org

26

Annual improvements continued

• Process changes– Separate editorial changes from those affecting

recognition, measurement, disclosure

– Consider effective date and transition for each proposal

– Proposals balloted as discussed and posted

– ED August 01, final standard April 02, effective January 03


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Annual improvements 2008

• Scope of IFRS 2 and IFRS 3R (IFRS 2)

• Detail of disclosures (IFRS 5)

• Disclosures about segment assets (IFRS 8)

• Classification of expenditures (IAS 7)

• Agency arrangements (IAS 18)

• Unit of accounting for goodwill impairment test (IAS 36)


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Annual improvements 2008 continued

• Valuation guidance and consequential amendments from IFRS 3R (IAS 38)

• Business combination contracts exception (IAS 39)

• FVO and contracts with non-financial hosts (IAS 39)

• Recognising cash flow hedges in P+L (IAS 39)

• ‘Routinely denominated’ currency (IAS 39)


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30Questions or comments?

Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the presenter. Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation.

September 2008 © 2008 IASC Foundation. 30 Cannon Street ...

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