ifrs in your pocket 2013.pdf
TRANSCRIPT
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IFRS in your pocket2013
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Foreword 1
ForewordWelcome to the 2013 edition o IFRS in Your Pocket, which provides an
update on developments up to the rst quarter o 2013. We cover all o thematerial which has made this publication an annual world-wide avourite:
background inormation on the structure and workings o the IASB; analysis
o the use o IFRSs around the world; summaries o all current Standards and
Interpretations; and up-to-date details o IASB and IFRIC agenda projects. It
is the ideal guide, update and reresher or everyone either contemplating a
move to IFRSs or already reporting under the IFRS ramework.
Last year was one o change and a gradual strengthening o the standard-
setting process even though progress on the most dicult projects proved
complex and contentious. It was a year when the results o a variety o
governance reviews and strategy reviews brought a strengthening o the
process o the IASB. And it was a year o taking stock on progress. In the
words o Michel Prada, the new Chairman o the IFRS Foundation Trustees,
the IASB in its short history has gone rom an innovative international
start-up to an international standard-setter that issued words that wouldbe written into law verbatim by the nations o the world. Over hal o the
Fortune Global 500 Companies now report using IFRS. The establishment o
an Accounting Standards Advisory Forum, (ASAF), by the IASB was intended
to expand dialogue with the global standard-setting community, and this
turned into one o the themes o the year. Having spent the rst decade
working one-to-one with other standards setters, said IASB Chairman Hans
Hoogervorst, we have now set a new, more inclusive and multi-lateral path.
Eorts were concentrated on speeding up the progress on some o the key
projects and publication o exposure drats on revenue recognition, nancial
instruments, leases and insurance contracts. This once again brought into
ocus convergence eorts with the US standard-setter, the FASB. Reerring
to revenue recognition in particular Hoogervorst made the point that a ully
converged standard is, in my view, the jewel in the crown o the convergence
programme.
In terms o improvements more broadly to nancial reporting, the IASB
responded to what Hoogervorst reerred to as concerns that nancial reports
contain too much irrelevant and unconnected inormation by instituting a
process o round-tables and other eorts to rationalise what was increasingly
reerred to simply as clutter. And a revitalised programme to bring a ull
conceptual ramework into being also got under way.
The hope is that the combination o eorts to bring about an endgame or
some o the most contentious topics which the IASB has ever aced, along
with greater cooperation and understanding around the world, will bring
greater gains or IFRS.
Veronica Poole
Global IFRS Leader
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Our IAS Plus website
Deloittes IAS Plus (www.iasplus.com) is one o the most comprehensive
sources o global nancial reporting news on the Web. It is a central repositoryor inormation about International Financial Reporting Standards (IFRSs) as
well as the activities o the International Accounting Standards Board (IASB).
The site, which is also available in German, will soon include portals tailored to
the United Kingdom and the United States, each with a ocus on local GAAP
and jurisdiction-specic corporate reporting requirements. More portals are
planned or the uture.
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Our IAS Plus website 3
IAS Plus eatures:
news about global nancial reporting developments, presented intuitively
with related news, publications, events and more;
summaries o all standards, interpretations and projects, with completehistories o developments and standard-setter discussions together with
related news and publications;
rich jurisdiction-specic inormation, including background and nancial
reporting requirements, links to country-specic resources, related news
and publications and a comprehensive history o the adoption o IFRSs
around the world;
detailed personalisation o the site, which is available by selecting particular
topics o interest and viewing tailored views o the site;
dedicated resource pages or research and education, sustainability and
integrated reporting, accounting developments in Europe, global nancial
crisis, XBRL and Islamic accounting;
important dates highlighted throughout the site or upcoming meetings,
deadlines and more;
a library o IFRS-related publications available or download and
subscription including our popular IFRS in Focus newsletter and other
publications;
model IFRS nancial statements and checklists, with many versions available
tailored to specic jurisdictions;
an extensive electronic library o both global and jurisdiction-specic IFRSresources;
expert analysis and commentary rom Deloitte subject matter experts,
including webcasts, podcasts and interviews, and urther analysis rom
respected nancial journalist Robert Bruce;
e-learning modules or most International Accounting Standards (IASs) and
IFRSs;
enhanced search unctionality, allowing easy access to topics o interest
by tags, categories or ree text searches, with search results intuitively
presented by category with urther ltering options;
Deloitte comment letters to the IASB and numerous other bodies; and
reedom to access the inormation through the Web, mobile, RSS, Twitter
and more.
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Contents
Page
Abbreviations 5
IASB structure 6
Members o the IASB 9
IASB due process 11
IASB contact inormation 13
Obtaining IASB pronouncements and publications 14
IASB chronology 15
Use o IFRSs around the world 19
Recent pronouncements 25
Summaries o current Standards and related Interpretations 27
Current IASB agenda projects 102Interpretations 106
IFRS Interpretation Committee current agenda issues 108
Deloitte IFRS resources 109
Deloitte IFRS e-learning 110
Website addresses 111
Subscribe to our IFRS publications 112
Contacts 113
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Abbreviations 5
Abbreviations
DI Drat interpretation
DP Discussion paper
EC European Commission
ED Exposure drat
EEA European Economic Area (EU 28 + 3 countries)
EFRAG European Financial Reporting Advisory Group
ESMA European Securities and Markets Authority
EU European Union (28 countries)
FASB Financial Accounting Standards Board (US)
FEE Federation o European Accountants
GAAP Generally Accepted Accounting Principle(s)
IAS(s) International Accounting Standard(s)
IASB International Accounting Standards Board
IASC International Accounting Standards Committee (predecessor
to the IASB)
IASCF IFRS Foundation (predecessor to the IFRSF)
IFRIC IFRS Interpretations Committee (previously International
Financial Reporting Interpretations Committee o the IASB,and Interpretations issued by that committee see below)
IFRS(s) International Financial Reporting Standard(s)
IFRSF IFRS Foundation, parent body o the IASB
IOSCO International Organization o Securities Commissions
NCI Non-controlling interest(s) (previously minority interests)
RFI Request or inormation
SAC IFRS Advisory Council (previously Standards Advisory
Council see below) advisory to the IASB
SEC Securities and Exchange Commission (US)
SIC Standing Interpretations Committee o the IASC, and
Interpretations issued by that committee
SME(s) Small and medium-sized entity(ies)
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IASB structure
Monitoring Board
The primary purpose o the Monitoring Board provides a mechanism or
ormal interaction between capital markets authorities responsible or theorm and content o nancial reporting and the IFRS Foundation (IFRSF).
In particular, it assures public accountability o the IFRSF through a ormal
reporting line rom the IFRSF through a ormal reporting line rom the IFRSF
Trustees to the Monitoring Board.
Monitoring Board
Approve and oversee trustees
Board
Set technical agenda, Approve
Standards, Exposure Drats and
Interpretations
IFRS Interpretations Committee
Appoints
Reports to
Advises
IFRS Advisory Council
IFRS Foundation
Appoint, oversee, revieweectiveness and unding
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IASB structure 7
The responsibilities o the Monitoring Board include:
participating in the process or appointing trustees and approving the
appointment o trustees according to the guidelines set out in the IFRSFs
Constitution;
to review the adequacy and appropriateness o Trustee arrangements or
nancing the IASB;
review the Trustees oversight o the IASBs standard-setting process. In
particular, with respect to its due process arrangements;
to coner with the Trustees regarding the responsibilities, particularly in
relation to the regulatory, legal and policy developments that are pertinent
to the IFRS Foundations oversight to the IASB; and
reerring matters o broad public interest related to nancial reporting to
the IASB through the IFRS Foundation.
As at 30 June 2013, the Monitoring Board comprised the relevant Member
o the European Commission, and the chairs o the Financial Services
Agency o Japan, the US Securities and Exchange Commission (SEC), the
Emerging Markets Committee o the International Organisation o SecuritiesCommissions (IOSCO) and the Chair o the IOSCO Board. The Basel Committee
on Banking Supervision is a non-voting observer.
In May 2013, the Monitoring Board commenced a process to appoint up
to a urther our members. Prospective members must be a capital markets
authority responsible or setting the orm and content or nancial reporting
in its jurisdiction and meet certain requirements about the use o IFRSs inthat jurisdiction and continuing participation in the IFRS Foundations unding
arrangements.
IFRS Foundation
Composition: 22 individual trustees, one appointed as Chair and up to two
as Vice-Chairs. Trustees are appointed or a three-year term, renewable once.
Regardless o prior service, a trustee may be appointed to serve as Chair orVice-Chair or a term o three years, renewable once, provided total years
service as a trustee does not exceed nine years.
Geographical balance: six trustees rom the Asia/Oceania region; six rom
Europe; six rom North America; one rom Arica; one rom South America
and two rom any area (subject to maintaining overall geographical balance).
Backgrounds o trustees: the IFRSF Constitution requires an appropriate
balance o proessional backgrounds, including auditors, preparers, users,
academics, and other ocials serving the public interest. Two will normally be
senior partners o prominent international accounting rms.
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International Accounting Standards Board
Composition: 16 Board Members, o whom one is appointed as chair and
up to two as vice-chairs. Up to three members may be part-time members.
IASB members are appointed or an initial term o ve years, renewable or a
urther three years. The chair and vice-chairs may serve second terms o veyears, subject to an overall maximum term o ten years.
Geographical balance: to ensure a broad international diversity, there will
normally be our members rom the Asia/Oceania region; our rom Europe;
our rom North America; one each rom Arica and South America; and two
appointed rom any area, subject to maintaining overall geographical balance.
Backgrounds o Board members: the main qualication or membership is
proessional competence and practical experience. The group is required to
represent the best available combination o technical expertise and diversity o
international business and market experience.
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Members o the IASB 9
Members o the IASBHans Hoogervorst, Chairman was ormerly Chairman o the
executive board, the Netherlands Authority or the FinancialMarkets, and a ormer chairman o the IOSCO technical
committee. He was appointed as a co-chair o the Financial
Crisis Advisory Group, a high level group o business leaders
with experience o international markets, to advise the IASB
and the FASB on their joint response to the nancial crisis. He
also served as Chairman o the Monitoring Board o the IFRS
Foundation, oversight body o the IASB.
Mr Hoogervorst held a number o positions in the Dutch
Government, including minister o nance between 1998 and
2007. Term expires 30 June 2016.
Ian Mackintosh, Vice-Chairman was ormerly Chairman o
the United Kingdom Accounting Standards Board.
Mr Mackintosh has played an active role in standard-setting
since 1983. He was a member, and later Deputy Chairman, o
the Australian Accounting Standards Board, as well as chairing
its Urgent Issues Group. Term expires 30 June 2016.
Stephen Cooper was Managing Director and head o
valuation and accounting research at UBS Investment Bank
prior to his appointment in 2007. Term expires 31 July 2017.
Philippe Danjou has previously served as director o the
accounting division o the Autorit des Marchs Financiers, the
French securities regulator. Term expires 30 June 2016.
Martin Edelmann has previously served as a member o the
German Accounting Standards Board rom 2006 until 2011.
He is a ormer Head o Group Reporting at Deutsche Bank AG.
Term expires 30 June 2017.
Jan Engstrm held senior nancial and operating positions
with the Volvo Group, including serving on the managementboard as Chie Financial Ocer and as Chie Executive Ocer
o Volvo Bus Corporation. Term expires 30 June 2014.
Patrick Finnegan was a Director o the Financial Reporting
Policy Group, CFA Institute or Financial Market Integrity.
Term expires 30 June 2014.
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Amaro Luiz de Oliveira Gomes was Head o the Financial
System Regulation Department o the Central Bank o Brazil
prior to his appointment to the IASB. Term expires 30 June
2014.
Gary Kabureck was the Chie Accounting Ocer (and since
2003 as a Corporate Vice President) or Xerox Corporation.
Term expires 30 June 2017.
Prabhakar Kalavacheria (PK) was an audit partner at KPMG
LLP in the US, and ormerly in India, where he led KPMGs US
GAAP practice, and in Europe. Retiring 31 December 2013.
Patricia McConnell is a ormer Senior Managing Director
in Equity Research and Accounting and Tax Policy Analyst or
Bear Stearns & Co. Term expires 30 June 2014.
Takatsugu (Tak) Ochi is a ormer Assistant General Manager,
Financial Resources Management Group o Sumitomo
Corporation. Term expires June 2016.
Darrell Scott was CFO o the FirstRand Banking Group, one o
the largest nancial institutions in South Arica. Term expires
31 October 2015.
Mary Tokar has served or more than 10 years as the global
leader or KPMGs International Financial Reporting Group.
Term expires 30 June 2017.
Dr Chung Woo Suh was an advisor to the Korea Accounting
Standards Board (KASB) and is a Proessor o Accounting at
Kookmin University, Seoul. Term expires 30 June 2017.
Zhang Wei-Guo was Chie Accountant o the China Securities
Regulatory Commission (CSRC) between 1997 and 2007.
Term expires 30 June 2017.
The ollowing appointment has been announced:
Sue Lloyd currently serves as a Senior Director o Technical
Activities or the IASB. Term begins 1 January 2014 and expires
31 December 2019.
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IASB due process 11
IASB due processIn developing IFRSs (including Interpretations), the IASB ollows a
comprehensive, open due process. The due process requirements are builton the principles o transparency, ull and air consultation considering the
perspectives o those aected by IFRSs globally and accountability. The
IFRS Foundation Trustees, through its Due Process Oversight Committee, is
responsible or overseeing all aspects o the due process procedures o the
IASB and the Interpretations Committee (IC), and or ensuring that those
procedures refect best practice.
Transparencyis provided by holding all technical discussions in public (and
usually webcast), providing public access to sta papers, ensuring that the
IASB and IC have sucient inormation to be able to make decisions based
on the sta recommendations. A nal Standard or Interpretation must be
approved by at least 10 o the 16 members o the IASB.
Full and air consultation includes mandatory steps:
conducting, every three years, a public consultation on the IASBs technical
work programme;
debating any standard-setting proposals in public meetings;
issuing an exposure drat o any proposed new Standard, amendment to a
Standard or proposed Interpretation, with the related basis or conclusions
and alternative views (dissenting opinions), or public comment, and
subject to minimum comment periods;
considering in a timely manner those comment letters received on the
proposals. Comment letters are placed on the public record;
considering whether the proposals should be exposed again;
issuing nal Standards together with a basis or conclusions and any
dissenting opinions;
consulting the Advisory Council on the technical programme, major
projects, project proposals and work priorities; and
ratication o an Interpretation by the IASB.
In addition, the IASB is committed to conducting post-implementation reviews
o each new Standard or major amendment o an existing Standard.
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In addition, and subject to a comply or explain condition, the IFRS
Foundation Constitution includes the ollowing steps that are not mandatory:
consulting on major projects with the Accounting Standards Advisory
Forum1 (ASAF);
publishing a discussion document (or example, a Discussion Paper) beore
an Exposure Drat is developed. This document will usually include the
IASBs preliminary views on issues in the project;
establishing consultative groups or other types o specialist advisory groups;
holding public hearings; and
undertaking eldwork.
Accountabilityis provided through such means as eects analysis and the
basis or conclusions (and dissenting views) accompanying an IFRS.
1 This item was not included in the IFRS Foundation Constitution at the time o
publication. The ASAF was established in March 2013. The ASAF will be consulted
on all major IASB projects.
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IASB contact inormation 13
IASB contact inormationInternational Accounting Standards Board
30 Cannon Street, London EC4M 6XH, United Kingdom
General enquiries:
Telephone: +44-20-7246-6410
Fax: +44-20-7246-6411
General e-mail: [email protected]
Website: www.irs.org
Publications department orders and enquiries:
Telephone: +44-20-7332-2730
Fax: +44-20-7332-2749
Website : http://shop.irs.org
Publications e-mail: [email protected]
Oce hours: Monday-Friday 09:30-17:30 London time
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Obtaining IASBpronouncements and
publicationsIASB pronouncements and publications can be purchased in printed and
electronic ormats on the IASBs website (www.irs.org). The IASBs Standards
(including mandatory application guidance, but not implementation guidance
or bases or conclusions) are available on its website or ree download. The
complete IFRS or SMEs, including implementation guidance and basis orconclusions, is available without charge. Discussion papers and exposure
drats may be downloaded rom the IASBs website without charge.
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IASB chronology 15
IASB chronology
1973 Agreement to establish IASC is signed by representatives othe proessional accountancy bodies in Australia, Canada,
France, Germany, Japan, Mexico, the Netherlands, the United
Kingdom/the Republic o Ireland and the United States.
Steering committees or the IASCs rst three projects are
appointed.
1975 First nal IASs published: IAS 1 (1975) Disclosure o AccountingPolicies, and IAS 2 (1975) Valuation and Presentation o
Inventories in the Context o the Historical Cost System.
1982 IASC Board is expanded to up to 17 members, including 13
country members appointed by the Council o the International
Federation o Accountants (IFAC) and up to 4 representatives
o organisations with an interest in nancial reporting. IFAC
recognises the IASC as the global accounting standard-setter.
1989 The Federation o European Accountants (FEE) supports
international harmonisation and greater European involvement
in the IASC. IFAC adopts a public-sector guideline to require
government business enterprises to ollow IASs.
1994 IASC Advisory Council is established, with responsibilities or
oversight and nances.
1995 European Commission (EC) supports the agreement
between IASC and IOSCO to complete core standards and
concludes that IASs should be ollowed by European Union
multinationals.
1996 US SEC announces its support o the IASCs objective to
develop, as expeditiously as possible, accounting standards
that could be used in preparing nancial statements or thepurpose o cross-border oerings.
1997 SIC is ormed with 12 voting members. Mission to develop
interpretations o IASs or nal approval by IASC.
Strategy Working Party is ormed to make recommendations
regarding the uture structure and operation o IASC.
1998 IFAC/IASC membership expands to 140 accountancy bodies in101 countries.
IASC completes the core Standards with approval o IAS 39.
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1999 G7 Finance Ministers and International Monetary Fund urge
support or IASs to strengthen the international nancial
architecture.
IASC Board unanimously approves restructuring into14-member board (12 ull-time) under an independent board
o trustees.
2000 IOSCO recommends that its members allow multinational
issuers to use IASC standards in cross-border oerings and
listings.
Ad hoc nominating committee is ormed, chaired by US SECChairman Arthur Levitt, to nominate the trustees who will
oversee the new IASB structure.
IASC member bodies approve IASCs restructuring and a new
IASC Constitution.
Nominating committee announces initial trustees.
Trustees name Sir David Tweedie (chairman o the UK
Accounting Standards Board) as the rst Chairman o the
restructured IASB.
2001 Members and new name o IASB are announced.
IASC Foundation is ormed. On 1 April 2001, the new IASB
assumes its standard-setting responsibilities rom the IASC.
Existing IASs and SICs adopted by IASB.
IASB meets with chairs o the eight liaison national accounting
standard-setting bodies to begin coordinating agendas and
setting out convergence goals.
2002 SIC is renamed as the IFRIC with a mandate not only to
interpret existing IASs and IFRSs but also to provide timely
guidance on matters not addressed in an IAS or IFRS.
Europe requires IFRSs or listed companies starting 2005.
IASB and FASB issue joint agreement on convergence.
2003 First nal IFRS and rst IFRIC drat Interpretation are published.
2004 Webcasting o IASB meetings begins.
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IASB chronology 17
2005 Constitutional changes.
Meetings o Working Groups opened to the public.
2006 IASB/FASB update agreement on convergence.
IASB issues statement on working relationships with other
standard setters.
2007 IFRIC is expanded rom 12 to 14 members.
Board proposes separate IFRS or small and medium-sized
entities (SMEs).
2008 IASBs response to global nancial crisis includes new air
value measurement guidance, ast-track amendments to
IAS 39; acceleration o projects on air value measurement and
consolidation; enhanced nancial instrument disclosures; and
establishment o two expert advisory groups.
2009 IASB is expanded to 16 members (including maximum three
part-time) and geographic mix established.
IASCF orms a Monitoring Board o public authorities.
Response to global nancial crisis continues, with projects on
the replacement o IAS 39, including measurement o loan
impairments.
2010 Trustees complete part 2 o 2008-2010 Constitution Review,including name changes as ollows: IFRS Foundation (ormerly
the IASC Foundation); IFRS Interpretations Committee
(ormerly the IFRIC) and IFRS Advisory Council (ormerly the
Standards Advisory Council).
2011 Hans Hoogervorst takes over the Chairmanship o the IASB
rom Sir David Tweedie.
IASB issues request or views on its rst three-yearly agenda
consultation.
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2012 Report o the Trustees Strategy Review 2011, IFRSs as the
Global Standards: Setting a Strategy or the Foundations
Second Decade, is issued.
IASB and FASB set a new target or completing the remainingmajor convergence projects to the rst hal o 2013 in their
report to G20.
Trustees complete their review o the eciency and
eectiveness o the IFRIC.
IFRSF issues invitation to comment on the new due process to
be ollowed by IASB and IFRIC as well as Due Process Oversight
Committee (DPOC) o the IFRSF.
The rst international oce outside o London was opened in
Tokyo.
2013
(as at
30 June
2013)
IASB establishes the ASAF which holds its rst meeting in April.
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Use o IFRSs around the world 19
Use o IFRSs around the worldIFRSs are now used extensively around the world as the basis or preparing
nancial reports.
We maintain an up-to-date summary o the adoption o IFRS around the world
on IAS Plus at www.iasplus.com/country/useias.htm.
The status o IFRS in major capital markets is discussed below.
Use o IFRSs in EuropeEuropean Accounting Regulation
Listed companies To implement a nancial reporting strategy adopted
by the European Commission (EC) in June 2000, the EU in 2002 approved
a Regulation (the IAS Regulation) requiring all EU companies listed on a
regulated market (about 8,000 companies in total) to ollow IFRSs in their
consolidated nancial statements starting in 2005. The IFRS requirement
applies not only in the 28 EU member states but also in the three European
Economic Area (EEA) countries. Most large companies in Switzerland (not an
EU or EEA member) also use IFRSs.
Non-EU companies listed on an EU regulated market must le nancial
statements prepared using either IFRSs as adopted by the EU, IFRSs as
issued by the IASB or a GAAP designated by the EC as equivalent to IFRSs.
This includes companies rom jurisdictions that have adopted IFRSs as theirlocal GAAP, as long as the companies state a ull compliance with IFRSs in
their audited nancial statements. As at July 2012, the GAAPs o the United
States, Japan, Canada, China and South Korea have been designated as
equivalent to IFRSs and nancial statements prepared using the national
GAAP o India accepted or a transitional period ending 31 December 2014.
Unlisted companies and separate-company statements EU Member States
may also extend the IFRS requirement to non-listed companies and to separate
(i.e. company-only) nancial statements. Nearly all Member States permit
some or all non-listed companies to use IFRSs in their consolidated nancial
statements, and some permit it in separate nancial statements.
Endorsement o IFRSs or use in Europe
Under the EU IAS Regulation, IFRSs must be individually endorsed or use inEurope. The endorsement process involves the ollowing steps:
EU translates the IFRSs into all European languages;
the private-sector European Financial Reporting Advisory Group (EFRAG)
gives its endorsement advice to the EC;
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the ECs Accounting Regulatory Committee (ARC) makes an endorsement
recommendation; and
the EC submits the endorsement proposal to the European Parliament and
to the Council o the EU. Both must not oppose (or in certain circumstances
approve) endorsement within three months, otherwise the proposal is sentback to the EC or urther consideration.
By the end o June 2013, the EU had to endorsed all IFRSs and all
Interpretations with the exception o:
endorsement o IFRS 9 has been postponed.
amendments in respect o investment entities to IFRS 10, IFRS 12 and IAS 27
are expected to be endorsed in the ourth quarter o 2013.
amendments to IAS 36 in respect o disclosures o recoverable amounts or
non-nancial assets are expected in the ourth quarter o 2013.
amendments to IAS 39 in respect o novation o derivatives and
continuation o hedge accounting are expected in the rst quarter o 2014.
IFRIC Interpretation 21 Levies is expected in the rst quarter o 2014.
Enorcement o IFRSs in Europe
European securities markets are regulated by individual Member States.
However, since 1 January 2011, EU-level Authorities are responsible or
ensuring that rules applicable to the nancial sector are implemented
adequately to preserve nancial stability and to ensure condence in the
European nancial system as a whole and sucient protection o consumers
o nancial services.
These authorities are the European Banking Authority (EBA), the European
Securities and Markets Authority (ESMA), and the European Insurance and
Occupational Pensions Authority (EIOPA). The European Parliament and the
Council have delegated powers to the Authorities such that the Authorities
may drat regulatory technical standards within their areas o competence,
which, ollowing a set procedure, the EC may endorse or use throughoutthe EU. The EC must orward all proposed regulatory technical standards to
the European Parliament and the Council and report at various points during
the endorsement process. The Authorities are also able to over-ride national
decisions that do not conorm to EU regulations.
The European Systemic Risk Board (ESRB) monitors and assesses potential
threats to nancial stability that arise rom macro-economic developmentsand rom developments within the nancial system as a whole.
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Use o IFRSs around the world 21
EU-wide regulations include:
standards adopted by the Committee o European Securities Regulators
(CESR), a consortium o national regulators (the predecessor o ESMA).
Standard No. 1 Enorcement o Standards on Financial Inormation in
Europe sets out 21 high level principles that EU member states should adopt
in enorcing IFRSs. Standard No. 2 Coordination o Enorcement Activities
adopts guidelines or implementing Standard No. 1. These Standards remain
in orce;
the Directive on Statutory Audit o Annual Accounts and Consolidated
Accounts which was issued in September 2006. The new Directive replaced
the 8th Directive and amended the 4th and 7th Directives. Amongother things, the Directive adopted International Standards on Auditing
throughout the EU and required Member States to orm auditor oversight
bodies;
the TransparencyDirective established a common nancial disclosure
regime across the EU or issuers o listed securities; and
amendments to EU directives that establish the collective responsibility o
board members or a companys nancial statements.
In January 2011, the European Commission adopted a rst decision in
recognising the equivalence o the audit oversight systems in 10 third
countries. This decision allows or reinorced cooperation between member
states and third countries which have been declared equivalent, so that they
can mutually rely on each others inspections o audit rms. The countries
assessed as equivalent are Australia, Canada, China, Croatia (then an
Accession State, now an EU Member State), Japan, Singapore, South Arica,
South Korea, Switzerland and the United States o America.
Use o IFRSs in the United States
SEC recognition o IFRSs
Since November 2007, the SEC permits oreign private issuers to submit
nancial statements prepared using IFRSs as issued by the IASB without havingto include a reconciliation o the IFRS gures to US GAAP.
In addition, the SEC has been exploring whether and, i so, how to incorporate
IFRSs into the nancial reporting system or US domestic issuers. The SEC
issued several consultation documents, including a Concept Release (August
2007), and a proposed IFRS roadmap (November 2008).
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In February 2010, the SEC published a Statement in Support o Convergence
and Global Accounting Standards in which it directed its sta to develop and
execute a Work Plan with a view to enabling the SEC to make a decision
regarding incorporating IFRS into the nancial reporting system or US issuers.
As part o that Work Plan, the SEC issued urther sta papers: A PossibleMethod o Incorporation (May 2011); Comparison o US GAAP and IFRS and
An analysis o IFRS Practice (both November 2011).
In July 2012 the SEC issued its Final Sta Report Work Plan or the Consideration
o Incorporating International Financial Reporting Standards into the
Financial Reporting System or U.S. Issuers. The Final Report did not include a
recommendation to the Commission. As at July 2013, the SEC had not signalled
when it might make a policy decision about whether (and i so, when and how)IFRS should be incorporated into the US nancial reporting system.
Use o IFRSs in Canada
Entities that le their nancial statements in Canada in accordance with the
continuous disclosure or oering document requirements or by a reporting
issuer (other than acquisition statements), are required to prepare their
nancial statements in accordance with Canadian GAAP applicable to publiclyaccountable entities or IFRS.
SEC issuers, entities that have a class o securiities registered under section 12
o the Securities Exchange Act (1934) or that le reports under section 159(d)
o that Act, ling their nancial statements in Canada may prepare them in
accordance with US GAAP.
Foreign issuers, an issuer incorporated or organised under the laws o aoreign jurisdiction, may prepare their nancial statements in acordance
with (a) IFRS; (b) US GAAP (i they are an SEC oreign issuer); (c) accounting
principles that meet the disclosure requirements or oreign private issuers as
set out in the Securities Exchange Act (1934); or (d) accounting principles that
meet the oreign disclosure requirement o the designated oreign jurisdiction
to which the issuer is subject, i the issuer is a designated oreign issuer.
Not-or-prot entiities and pension plans are excluded and will not be requiredto adopt IFRSs.
Use o IFRSs elsewhere in the Americas
Nearly all countries in South America require or permit IFRSs (or are in the
process o introducing such requirements) as the basis or preparing nancial
statements. Argentina adopted IFRSs or all companies (except banks and
insurance companies which continue to apply domestic requirements) rom2012. Brazil adopted IFRSs or all listed companies and banks eective 2010.
Chile adopted IFRS or all public interest companies in 2012. IFRS has been
adopted in Mexico has adopted IFRSs or all listed entities other than banks
and insurance companies which apply Mexican Financial Reporting Standards
(MFRS). A convergence project is underway to eliminate dierences between
MFRS and IFRS. IFRSs are already required in a number o other Latin American
and Caribbean countries.
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Use o IFRSs around the world 23
Use o IFRSs in Asia-Pacifc
Asia-Pacic jurisdictions are taking a variety o approaches toward
convergence o national GAAP or domestically listed companies with IFRSs.
Use o IFRSs in Japan
The Accounting Standards Board o Japan (ASBJ) has been working
with the IASB to converge accounting standards under the August 2007
Memorandum o Understanding known as the Tokyo Agreement between
two organisations. In June 2011 the IASB and ASBJ jointly announced that
two boards have made good progress and agreed to continue eort or
convergence.
While convergence is in process, in December 2009, Financial Services Agency
o Japan announced that certain listed companies meeting specied criteria
were permitted to use IFRSs in their consolidated nancial statements starting
in 2010. Since that time, voluntary adoptions (where permitted) o IFRSs has
been increasing to approximately 20 out o 3,600 companies listed on stock
exchanges in Japan have voluntarily adopted IFRS. This trend is expected to
continue, in particular, among large public companies with signicant marketcapitalisation and international operations.
In June 2013, the Business Accounting Council o Japan issued a report
recommending certain initiatives to urther increase voluntary use o IFRSs in
Japan. Such initiatives, including relaxation o eligibility requirements to use
IFRSs voluntarily, are expected to be refected in relevant regulations in Japan
in due course.
Use o IFRSs elsewhere in Asia-Pacifc
Requirement or IFRSs in place o national GAAP
Mongolia requires IFRSs or all domestic listed companies.
All national standards are virtually word-or-word IFRSs
Australia, Hong Kong, Korea (eective 2011), Malaysia, New Zealand, and Sri
Lanka (eective 2011) are taking this approach. Eective dates and transitions
may dier rom IFRSs as issued by the IASB.
Nearly all national standards are word-or-word IFRSs
The Philippines and Singapore have adopted most IFRSs word-or-word, but
have made some signicant modications.
Some national standards are close to word-or-word IFRSs
India, Pakistan and Thailand have adopted selected IFRSs quite closely, but
signicant dierences exist in other national standards, and there are time lags
in adopting new or amended IFRSs.
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IFRSs are looked to in developing national GAAP
IFRSs are considered to varying degrees in Indonesia, Taiwan and Vietnam.
In February 2006, China adopted the Chinese Accounting Standards or
Business Enterprises (ASBE), which are generally consistent with IFRSs with ewexceptions.
In May 2009, the Financial Supervisory Commission (FSC) o Taiwan
announced its roadmap or the ull adoption o IFRSs in two phases starting
rom 2013. Early adoption is permitted or certain companies rom 2012.
Some domestic listed companies may use IFRSs
Hong Kong (companies based in Hong Kong but incorporated elsewhere),
Laos and Myanmar permit the use o IFRSs or some domestic listed
companies.
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Recent pronouncements 25
Recent pronouncements
Eective or 31 December 2013 year ends
New Standards
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure o Interests in Other Entities
IFRS 13 Fair Value MeasurementAmended Standards
IFRS 1 Government Loans
IFRS 7 Disclosures Osetting Financial Assets
and Financial Liabilities
IAS 1 Presentation o Items o Other
Comprehensive IncomeIAS 19 Employee Benefts (2011)
IAS 27 Separate Financial Statements (2011)
IAS 28 Investments in Associates and Joint
Ventures (2011)
Various Improvements to IFRSs issued in May 2012
(see our previous edition o IFRS in your
pocket)
New Interpretations
IFRIC 20 Stripping Costs in the Production Phase o
a Surace Mine
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Available or early adoption or 31 December 2013 year
ends
Note: Transitional provisions are complex, and there are
interdependencies among Standards. See Standards andInterpretations or details. Transitional provisions are highlighted
below or new or amended standards with an eective date o
1 January 2013 or later.
New and amended Standards Eective or
annual periods
beginning on or
ater
IFRS 1 Exemption rom the
requirement to restate
comparative inormation or
IFRS 9
Concurrent with
adoption o IFRS 9
IFRS 9 Financial instruments:
classifcation and measurement
1 January 2015
Additions to IFRS 9 or fnancial
liability accounting
1 January 2015
IFRS 10 Investment entities:
exemption rom consolidation
requirements
1 January 2014
IAS 32 Osetting fnancial assets and
fnancial liabilities
1 January 2014
IAS 36 Recoverable amount disclosures
or non-fnancial assets
1 January 2014
IAS 39 Novation o derivatives
and continuation o hedge
accounting
1 January 2014
New Interpretations
IFRIC 21 Levies 1 January 2014
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Summaries o current Standards and related Interpretations 27
Summaries o current Standardsand related InterpretationsOn pages 27 to 101, the requirements o all International Financial Reporting
Standards in issue at 30 June 2013 are summarised, as well as the Preace to
IFRSs and the Conceptual Framework or Financial Reporting.
These summaries are intended as general inormation and are not a substitute
or reading the entire Standard or Interpretation.
Eective date means the eective date o the last comprehensive revision o
the Standard or Interpretation, not necessarily original issuance.
Preace to International Financial Reporting Standards
Adoption Adopted by the IASB in May 2002, amended in 2007,
2008 and 2010.
Summary Covers, among other things:
the objectives o the IASB;
the scope o IFRSs;
due process or developing Standards and
Interpretations;
equal status o bold type and plain type
paragraphs;
policy on eective dates; and
use o English as the ocial language.
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Conceptual Framework or Financial Reporting
Adoption Approved by the IASC Board in April 1989.
Adopted by the IASB in April 2001.
The Conceptual Framework is in the process o being
revised. In September 2010, the IASB issued Chapter 1
The objective o general purpose nancial reporting
and Chapter 3 Qualitative characteristics o useul
nancial inormation.
Summary Denes the objective o general purpose nancialreporting. The objective is to provide nancial
inormation about the reporting entity that is useul
to existing and potential investors, lenders and
other creditors in making decisions about providing
resources to the entity.
Identies the qualitative characteristics that make
nancial inormation in nancial reporting useul.
To be useul, it must be relevant and aithully
represent what it purports to represent. Useulness
is enhanced i it is comparable, veriable, timely and
understandable.
Denes the basic elements o nancial statements
and the criteria or recognising them in nancial
statements. Elements directly related to nancial
position are assets, liabilities and equity. Elements
directly related to perormance are income and
expenses.
Denes the concept o capital and capital
maintenance.
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Summaries o current Standards and related Interpretations 29
The IASB has restarted its project on the
development o the Conceptual Framework.
The Conceptual Frameworkproject is ocusing
on the ollowing: reporting entity, elements o
nancial statements (including recognition andderecognition), measurement, presentation and
disclosure. The IASB has published a discussion
paper addressing these issues in July 2013. The
comment period closes on 14 January 2014
IFRS 1 First-time Adoption o International FinancialReporting Standards
Eective date IFRS 1(2008) issued November 2008, replacing IFRS
1(2003). IFRS 1(2008) is eective rst IFRS nancial
statements or a period beginning on or ater 1 July
2009.
Amendments (March 2012) providing an exceptionto the retrospective application o IFRS guidance or
government loans at below-market rates o interest
are eective 1 January 2013, with earlier application
permitted.
Amendments resulting rom Improvements to IFRSs
(May 2012) relating to repeated application o IFRS 1
and borrowing costs capitalised under previous GAAPare eective 1 January 2013, with earlier application
permitted.
Objective To prescribe the procedures when an entity adopts
IFRSs or the rst time as the basis or preparing its
general purpose nancial statements.
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Summary Overview or an entity that adopts IFRSs or the
rst time (by an explicit and unreserved statement
o compliance with IFRSs) in its annual nancial
statements or the year ended 31 December 2013.
Select accounting policies based on IFRSs eective
at 31 December 2013 (with early application o new
IFRS not yet mandatory permitted).
Prepare at least 2013 and 2012 nancial statements
and restate retrospectively the opening statement
o nancial position by applying the IFRSs in orce at
31 December 2013, except or those matters dealtwith in specic exemptions in IFRS 1:
the opening statement o nancial position is
prepared at 1 January 2012 at the latest (but may
be earlier i the entity elects to present more than
one year o comparative inormation under IFRSs);
the opening statement o nancial position
is presented in the entitys rst IFRS nancialstatements (thereore, three statements o
nancial position); and
i a 31 December 2013 adopter reports selected
nancial data (but not ull nancial statements)
on an IFRS basis or periods prior to 2012, in
addition to ull nancial statements or 2012
and 2013, that does not change the act that its
opening IFRS statement o nancial position is as
at 1 January 2012.
Interpretations None.
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Summaries o current Standards and related Interpretations 31
IFRS 2 Share-based Payment
Eective date Annual periods beginning on or ater 1 January 2005.
Objective To prescribe the accounting or transactions in which
an entity receives or acquires goods or services either
as consideration or its equity instruments or by
incurring liabilities or amounts based on the price o
the entitys shares or other equity instruments o the
entity.
Summary All share-based payment transactions are recognised
in the nancial statements, using a air value
measurement basis.
An expense is recognised when the goods or
services received are consumed.
IFRS 2 also applies to share-based payment
transactions in which the entity cannot specically
identiy some or all o the goods or services
received.
IFRS 2 applies to both public and non-public entities.
However, in rare cases where the air value o
equity instruments o non-public entities cannot be
measured reliably, intrinsic value measurements are
used.
In principle, transactions in which goods or servicesare received rom non-employees as consideration
or equity instruments o the entity are measured
at the air value o the goods or services received.
Only i the air value o the goods or services cannot
be measured reliably is the air value o the equity
instruments granted used.
For transactions with employees and othersproviding similar services, the entity measures the
air value o the equity instruments granted, because
it is typically not possible to estimate reliably the air
value o employee services received.
For transactions measured at the air value o the
equity instruments granted (such as transactions
with employees), air value is estimated at grantdate.
For transactions measured at the air value o the
goods or services received, air value is estimated at
the date o receipt o those goods or services.
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The air value o equity instruments granted is
based on market prices, i available, and takes into
account the terms and conditions on which those
equity instruments were granted. In the absence
o market prices, air value is estimated using avaluation model to estimate what the price o
those equity instruments would have been on the
measurement date in an arms length transaction
between knowledgeable, willing parties. IFRS 2 does
not speciy which particular valuation model should
be used.
Vesting conditions are either service conditions orperormance conditions. Perormance conditions
require the completion o a specied period o
service in addition to specied perormance targets.
For goods or services measured by reerence to
the air value o the equity instruments granted,
in general, vesting conditions (other than market
conditions) are not taken into account whenestimating the air value o the shares or options at
the relevant measurement date (as specied above),
but are subsequently taken into account by adjusting
the number o equity instruments included in the
measurement o the transaction.
Market-based vesting conditions and non-vesting
conditions are taken into account when estimatingthe air value o the shares or options at the relevant
measurement date, with no subsequent adjustments
made in respect o such conditions.
IFRS 2 includes specic guidance on the accounting
or share-based payment transactions among group
entities.
Interpretations None.
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Summaries o current Standards and related Interpretations 33
IFRS 3 Business Combinations
Eective date IFRS 3(2008) issued January 2008, replacing
IFRS 3(2004).
Eective or business combinations in periods
beginning on or ater 1 July 2009.
Core principle An acquirer o a business recognises the assets
acquired and liabilities assumed at their acquisition-
date air values and discloses inormation that enables
users to evaluate the nature and nancial eects o the
acquisition.
Summary A business combination is a transaction or event in
which an acquirer obtains control o one or more
businesses. A business is dened as an integrated
set o activities and assets that is capable o
being conducted and managed or the purpose
o providing a return directly to investors or other
owners, members or participants.
IFRS 3 does not apply to the ormation o a joint
venture, combinations o entities or businesses
under common control, nor to the acquisition o an
asset or a group o assets that do not constitute a
business.
The acquisition method is used or all businesscombinations.
Steps in applying the acquisition method are as
ollows:
1. Identication o the acquirer the combining
entity that obtains control o the acquiree.
2. Determination o the acquisition date the
date on which the acquirer obtains control o the
acquiree.
3. Recognition and measurement o the identiable
assets acquired, the liabilities assumed and any
non-controlling interest (NCI) in the acquiree.
4. Recognition and measurement o goodwill or a
gain rom a bargain purchase.
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Assets and liabilities are measured at their
acquisition-date air values (with a limited number
o specied exceptions). An entity may elect to
measure components o NCI in the acquire that are
present ownership interests and entitle their holdersto a proportionate share o the entitys net assets in
liquidation either at (a) air value or (b) the present
ownership instruments proportionate share in the
recognised amounts o the acquirees identiable
net assets (option available on a transaction-by-
transaction basis). All other components o NCI shall
be measured at their acquisition-date air value,
unless another measurement basis is required by
IFRS.
Goodwill is measured as the dierence between:
the aggregate o (a) the acquisition-date air value
o the consideration transerred, (b) the amount
o any NCI, and (c) in a business combination
achieved in stages (see below), the acquisition-date air value o the acquirers previously-held
equity interest in the acquiree; and
the net o the acquisition-date amounts o the
identiable assets acquired and the liabilities
assumed (measured in accordance with IFRS 3).
I the dierence above is negative, the resulting gain
is recognised as a bargain purchase in prot or loss.
For business combinations achieved in stages, i the
acquirer increases an existing equity interest so as to
achieve control o the acquiree, the previously-held
equity interest is remeasured at acquisition-date air
value and any resulting gain or loss is recognised in
prot or loss.
I the initial accounting or a business combination
can be determined only provisionally by the end
o the rst reporting period, the combination is
accounted or using provisional values. Adjustments
to provisional values relating to acts and
circumstances that existed at the acquisition date
are permitted within one year. No adjustments are
permitted ater one year except to correct an error
in accordance with IAS 8.
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Summaries o current Standards and related Interpretations 35
Consideration or the acquisition includes
the acquisition-date air value o contingent
consideration. Changes to contingent consideration
classied as a liability resulting rom events ater the
acquisition date are generally recognised in protor loss.
All acquisition-related costs (e.g. nders ees,
proessional or consulting ees, costs o internal
acquisition department) are recognised in prot
or loss except or costs to issue debt or equity
securities, which are recognised in accordance with
IFRS 9/IAS 39 and IAS 32 respectively. Expanded guidance on some specic aspects o
business combinations, including:
business combinations achieved without the
transer o consideration;
reverse acquisitions;
identiying intangible assets acquired;
un-replaced and voluntarily replaced share-based
payment awards;
pre-existing relationships between the acquirer
and the acquiree (e.g. reacquired rights); and
the reassessment o the acquirees contractual
arrangements at the acquisition date.
Interpretations None.
Useul Deloitte
publication
Business combinations and changes in ownership
interests: A guide to the revised IFRS 3 and IAS 27
Published in July 2008. Publication supplementing the
IASBs own guidance or applying these Standards and
addressing practical implementation issues. Available
or download at www.iasplus.com/guides
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IFRS 4 Insurance Contracts
Eective date Annual periods beginning on or ater 1 January 2005.
Objective To prescribe the nancial reporting or insurance
contracts until the IASB completes the second phase o
its project on insurance contracts.
Summary Insurers are exempted rom applying the IASB
Framework and certain existing IFRSs.
Catastrophe reserves and equalisation provisions are
prohibited.
Requires a test or the adequacy o recognised
insurance liabilities and an impairment test or
reinsurance assets.
Insurance liabilities may not be oset against related
reinsurance assets.
Accounting policy changes are restricted.
New disclosures are required.
Financial guarantee contracts are in the scope o
IAS 39, unless the issuer had previously (prior to
initial adoption o IFRS 4) asserted explicitly that
it regards such contracts as insurance contracts
and has used accounting applicable to insurance
contracts. In such circumstances, the issuer may
elect to apply either IAS 39 or IFRS 4.
Interpretations None.
The IASB has a major convergence project with
the FASB on developing a comprehensive IFRS or
insurance contracts to replace IFRS 4 Insurance
Contracts. The IASB issued a revised set oproposals in June 2013: Exposure Drat Insurance
Contracts. The comment period closes 25 October
2013.
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Summaries o current Standards and related Interpretations 37
IFRS 5 Non-current Assets Held or Sale and DiscontinuedOperations
Eective date Annual periods beginning on or ater 1 January 2005.
Objective To prescribe the accounting or non-current assets
held or sale, and the presentation and disclosure o
discontinued operations.
Summary Introduces the classication held or sale (available
or immediate sale and disposal within 12 months
is highly probable) and the concept o a disposal
group (a group o assets to be disposed o in a
single transaction, including any related liabilities
also transerred).
Non-current assets or disposal groups held or sale
are measured at the lower o carrying amount and
air value less costs to sell.
Such non-current assets held or sale (whether
individually or as part o a disposal group) are notdepreciated.
Non-current assets classied as held or sale,
and the assets and liabilities in a disposal group
classied as held or sale, are presented separately
in the statement o nancial position.
Assets and liabilities o a subsidiary should be
classied as held or sale i the parent is committed
to a plan involving loss o control o the subsidiary,
regardless o whether the entity will retain a non-
controlling interest ater the sale.
A discontinued operation is a component o
an entity that either has been disposed o or
is classied as held or sale and (a) represents
a separate major line o business or major
geographical area o operations, (b) is part o a
single co-ordinated plan to dispose o a separate
major line o business or geographical area o
operations, or (c) is a subsidiary acquired exclusively
with a view to resale.
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An entity presents as a single amount in the
statement o comprehensive income the sum o the
post tax prot or loss rom discontinued operations
or the period and the post tax gain or loss arising
on the disposal o discontinued operations (oron the reclassication o the assets and liabilities
o discontinued operations as held or sale).
Thereore, the statement o comprehensive income
is eectively divided into two sections continuing
operations and discontinued operations.
The April 2009 amendments conrm that IFRS 5
requires disclosures in respect o non-current assets(or disposal groups) classied as held or sale or
discontinued operations. Consequently, disclosures
in other IFRSs do not apply to such assets (or
disposal groups) unless those IFRSs specically
require disclosures or the disclosures relate to
the measurement o assets or liabilities within a
disposal group that are outside the scope o the
measurement requirements o IFRS 5.
Interpretations None.
Useul Deloitte
publication
Assets held or sale and discontinued operations:
A guide to IFRS 5
Published March 2008. Guidance on applying IFRS 5.
Available or download at www.iasplus.com/guides
IFRS 6 Exploration or and Evaluation o Mineral Resources
Eective date Annual periods beginning on or ater 1 January 2006.
Objective To prescribe the nancial reporting or the exploration
or and evaluation o mineral resources until the IASB
completes a comprehensive project in this area.Summary Does not require or prohibit any specic accounting
policies or the recognition and measurement o
exploration and evaluation assets. An entity is
permitted to continue to use its existing accounting
policies provided that they comply with the
requirements o paragraph 10 o IAS 8, i.e. that
they result in inormation that is relevant to theeconomic decision-making needs o users and that
is reliable.
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Summaries o current Standards and related Interpretations 39
Grants a temporary exemption rom applying
paragraphs 11 and 12 o IAS 8 which speciy a
hierarchy o sources o authoritative guidance in
the absence o a specic IFRS.
Requires an impairment test when there is anindication that the carrying amount o exploration
and evaluation assets exceeds recoverable amount.
Also, exploration and evaluation assets are tested
or impairment beore reclassication o those
assets as development assets.
Allows impairment to be assessed at a level higher
than the cash-generating unit under IAS 36,but requires measurement o the impairment in
accordance with IAS 36 once it is assessed.
Requires disclosure o inormation that identies
and explains amounts arising rom exploration and
evaluation o mineral resources.
Interpretations None.
IFRS 7 Financial Instruments: Disclosures
Eective date and
transition
Annual periods beginning on or ater 1 January 2007.
Amendments (December 2011) to the required
disclosures or osetting arrangements are eective1 January 2013, with earlier application permitted.
Objective To prescribe disclosures that enable nancial
statement users to evaluate the signicance o
nancial instruments to an entity, the nature and
extent o their risks, and how the entity manages
those risks.
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Summary Requires disclosure o inormation about the
signicance o nancial instruments or an entitys
nancial position and perormance. These include:
disclosures relating to the entitys nancial
position including inormation about nancialassets and nancial liabilities by category; special
disclosures when the air value option is used;
reclassications; derecognition; pledges o assets;
embedded derivatives; breaches o terms o
agreements and osetting o nancial assets and
liabilities;
disclosures relating to the entitys perormance
in the period including inormation about
recognised income, expenses, gains and losses;
interest income and expense; ee income; and
impairment losses; and
other disclosures including inormation about
accounting policies; hedge accounting; and theair values o each class o nancial asset and
nancial liability.
Requires disclosure o inormation about the
nature and extent o risks arising rom nancial
instruments:
qualitative disclosures about exposures to each
class o risk and how those risks are managed;
and
quantitative disclosures about exposures to each
class o risk, separately or credit risk, liquidity risk
and market risk (including sensitivity analyses).
Interpretations None.
Useul Deloitte
publication
iGAAP 2013 (Volume C): Financial Instruments
IAS 39 and related Standards
Guidance on how to apply these complex Standards,
including illustrative examples and interpretations.
Inormation at www.iasplus.com/igaap
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Summaries o current Standards and related Interpretations 41
IFRS 8 Operating Segments
Eective date Annual periods beginning on or ater 1 January 2009.
Core principle An entity shall disclose inormation to enable users
o its nancial statements to evaluate the nature and
nancial eects o the business activities in which it
engages and the economic environments in which it
operates.
Summary Applies to the consolidated nancial statements
o a group with a parent (and to the separate or
individual nancial statements o an entity):
whose debt or equity instruments are traded in a
public market; or
that les, or is in the process o ling, its
(consolidated) nancial statements with a
securities commission or other regulatory
organisation or the purpose o issuing any class
o instruments in a public market.
An operating segment is a component o an entity:
that engages in business activities rom which it
may earn revenues and incur expenses (including
revenues and expenses relating to transactions
with other components o the same entity);
whose operating results are regularly reviewed
by the entitys chie operating decision maker to
make decisions about resources to be allocated to
the segment and assess its perormance; and
or which discrete nancial inormation is
available.
Start-up operations may be operating segments
beore earning revenues.
Guidance is provided on which operating segments
are reportable (generally 10% thresholds or
revenue, absolute amount o its reported prot or
loss, and assets).
At least 75% o the entitys revenue must be
included in reportable segments.
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Does not dene segment revenue, segment
expense, segment result, segment assets or
segment liabilities, nor does it require segment
inormation to be prepared in conormity with
the accounting policies adopted or the entitysnancial statements.
Some entity-wide disclosures are required even
when an entity has only one reportable segment.
These include inormation about each product
and service or groups o products and services,
geographical areas and major customers (see
below). Analyses o revenues and certain non-current
assets by geographical area are required rom all
entities with an expanded requirement to disclose
revenues/non-current assets by individual oreign
country (i material), irrespective o the entitys
organisation.
There is also a requirement to disclose inormationabout transactions with major external customers
(10% or more o the entitys revenue).
Interpretations None.
IFRS 9 (2010) Financial Instruments (as o now only partially
completed)
Eective date and
transition
Annual periods beginning on or ater 1 January
2015, with earlier application permitted. Supersedes
and modies certain parts o IAS 39 rom date o
application.
This standard includes specic transitional provisions
that need to be considered or the current reportingcycle. IAS 8 requires changes to IFRSs to be applied
retrospectively unless an IFRS sets out dierent
requirements.
Objective The part o IFRS 9 completed to date sets out
recognition and derecognition, classication and
measurement requirements or nancial assets
and nancial liabilities. Eventually, IFRS 9 will be acomprehensive standard on accounting or nancial
instruments.
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Summaries o current Standards and related Interpretations 43
Summary IFRS 9 carries orward the requirements in IAS 39
related to the recognition and derecognition o
nancial assets and nancial liabilities (see IAS 39
Summary).
Recognised nancial assets (that are currently inthe scope o IAS 39) will be measured at either
amortised cost or air value.
A debt instrument that (1) is held within a business
model whose objective is to collect the contractual
cash fows and (2) has contractual cash fows that
are solely payments o principal and interest on the
principal amount outstanding must be measured atamortised cost unless it is designated at air value
through prot and loss (see below).
All other debt instruments must be measured at air
value through prot or loss (FVTPL).
A air value option is also available as an alternative
to amortised cost measurement (provided thatcertain conditions are met) or debt instruments
allowing such instruments to be designated as
nancial assets at FVTPL.
All equity instruments (or example, shares) are
to be measured at air value with the deault
recognition o gains and losses in prot or loss.
Only i the equity instrument is not held or tradingcan an irrevocable election be made at initial
recognition to measure it at air value through
other comprehensive income (FVTOCI) with only
dividend income recognised in prot or loss and no
reclassication o gains and losses on disposal.
Generally, recognised nancial liabilities (that are
currently in the scope o IAS 39) will be measuredat amortised cost except or certain liabilities (or
example, derivatives) that shall be measured at
air value and liabilities irrevocably designated as
measured at FVTPL at initial recognition.
For nancial liabilities designated as at FVTPL,
the amount o change in air value attributable
to changes in the entitys own credit risk shall berecognised in OCI with the remaining change being
recognised in prot or loss, unless the treatment
o the credit risk creates or enlarges an accounting
mismatch in prot or loss.
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44
All derivatives, whether assets or liabilities, within
the scope o the Standard are required to be
measured at air value.
Derivatives embedded in a nancial asset shall
not be accounted or separately rom the nancialasset. Embedded derivatives not closely related to
nancial liabilities will be accounted or separately
at air value in the case o nancial liabilities not
designated at FVTPL (as in IAS 39).
Interpretations IFRIC 19 Extinguishing Financial Liabilities with
Equity Instruments (see IAS 39 Interpretations)
Useul Deloitte
publication
iGAAP 2013 (Volume B): Financial Instruments
IFRS 9 and related Standards
Guidance on how to apply these complex Standards,
including illustrative examples and interpretations.
Inormation at www.iasplus.com/igaap
IFRS 9 is part o the IASBs major convergenceproject with the FASB on nancial instruments.
The IASB issued proposals in 2013 to (a) make
limited amendments to classication and
measurement; and (b) introduce an expected credit
loss model or impairment o nancial instruments.
Both Boards are in the process o redeliberating
these proposals. New requirements or general
hedge accounting are expected to be nalised by
Q4, 2013 as an addition to IFRS 9. The IASB is in
the process o developing a DP or macro hedge
accounting.
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Summaries o current Standards and related Interpretations 45
IFRS 10 Consolidated Financial Statements
Eective date
and transition
Annual periods beginning on or ater 1 January 2013.
This standard includes specic transitional provisionsthat need to be considered or the current reporting
cycle. IAS 8 requires changes to IFRSs to be applied
retrospectively unless an IFRS sets out dierent
requirements.
Amendments (October 2012) provide an exemption
rom consolidation o subsidiaries or entities which
meet the denition o an investment entity, such as
certain investment unds. Instead, such entities would
measure their investment in particular subsidiaries at air
value through prot or loss in accordance with IFRS 9 or
IAS 39. They are eective 1 January 2014, with earlier
application permitted.
Objective To prescribe a single consolidation model or all entities
based on control, irrespective o the nature o the
investee (i.e., whether an entity is controlled through
voting rights o investors or through other contractual
arrangements as is common in special purpose entities).
Summary A subsidiary is an entity controlled by another entity,
the parent.
Control is based on whether an investor has 1) powerover the investee; 2) exposure, or rights, to variable
returns rom its involvement with the investee; and
3) the ability to use its power over the investee to
aect the amount o the returns.
IFRS 10 includes guidance on the assessment o
control, including material on: protective rights;
delegated power; de acto control; and de actoagency arrangements.
Consolidated nancial statements are nancial
statements o a group (parent and subsidiaries)
presented as those o a single economic entity.
When a parent-subsidiary relationship exists,
consolidated nancial statements are required(subject to certain specied exceptions).
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Consolidated nancial statements include all
subsidiaries. No exemption or temporary control,
dierent lines o business or subsidiary that
operates under severe long-term unds transer
restrictions. However, i, on acquisition, a subsidiarymeets the criteria to be classied as held or sale
under IFRS 5, it is accounted or under that Standard.
The Standard contains an exemption rom
consolidation o subsidiaries or entities which meet
the denition o an investment entity, such as
certain investment unds. Instead, such entities would
measure their investment in particular subsidiaries atair value through prot or loss in accordance with
IFRS 9 or IAS 39.
Intragroup balances, transactions, income and
expenses are eliminated in ull.
All entities in the group use the same accounting
policies and, i practicable, the same reporting date.
Non-controlling interests (NCI) are reported in equity
in the statement o nancial position separately
rom the equity o the owners o the parent. Total
comprehensive income is allocated between NCI and
the owners o the parent even i this results in the NCI
having a decit balance.
Acquisition o a urther ownership interest in asubsidiary ater obtaining control is accounted or as
an equity transaction and no gain, loss or adjustment
to goodwill is recognised.
Partial disposal o an investment in a subsidiary while
control is retained is accounted or as an equity
transaction with owners, and no gain or loss is
recognised in prot or loss.
Partial disposal o an investment in a subsidiary that
results in loss o control triggers remeasurement
o the residual holding to air value. Any dierence
between air value and carrying amount is a gain
or loss on the disposal, recognised in prot or loss.
Thereater, IAS 28, IFRS 11 or IFRS 9/IAS 39 is applied,
as appropriate, to the residual holding.
Interpretations None.
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Summaries o current Standards and related Interpretations 47
IFRS 11 Joint Arrangements
Eective date
and transition
Annual periods beginning on or ater 1 January 2013.
This standard includes specic transitional provisionsthat need to be considered or the current reporting
cycle. IAS 8 requires changes to IFRSs to be applied
retrospectively unless an IFRS sets out dierent
requirements.
Objective To establish principles or nancial reporting by entities
that have an interests in joint arrangements.
Summary Applies to all entities that are a party to a joint
arrangement. A joint arrangement is one in which
two or more parties have joint control.
A joint operation is a joint arrangement whereby
the parties that have joint control have rights to the
assets and obligations or the liabilities.
A joint venture is a joint arrangement whereby theparties that have joint control have rights to the net
assets.
The distinction between a joint operation and a joint
venture requires assessment o the structure o the
joint arrangement, the legal orm o any separate
vehicle, the terms o the contractual arrangement and
any other relevant acts and circumstances.
Joint operations: a joint operator recognises the
assets it controls, and expenses and liabilities it incurs,
and its share o income earned, in both its separate
and consolidated nancial statements.
Joint ventures: a joint venture applies the equity
method, as described in IAS 28, except joint ventures
where the investor is a venture capital rm, mutual
und or unit trust, and it elects or is required to
measure such investments at air value through prot
or loss in accordance with IFRS 9 or IAS 39 with
certain disclosures.
Interests in joint operation and joint ventures that are
classied as held or sale in accordance with IFRS 5
are accounted or in accordance with that Standard.
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Even i consolidated nancial statements are
not prepared (e.g. because the venturer has no
subsidiaries), the equity method is used to account or
joint ventures. However, in the venturers separate
nancial statements as dened in IAS 27, interests injoint ventures are accounted or either at cost or as
investments in accordance with IFRS 9 or IAS 39.
Interpretations None.
IFRS 12 Disclosure o Interests in Other Entities
Eective dateand transition
Annual periods beginning on or ater 1 January 2013.
This standard includes specic transitional provisions
that need to be considered or the current reporting
cycle. IAS 8 requires changes to IFRSs to be applied
retrospectively unless an IFRS sets out dierent
requirements.
Objective To require inormation to be disclosed in an entitysnancial statements that will enable users o those
statements to evaluate the nature o, and risks
associated with, the entitys interests in other entities
as well as the eects o those interests on the entitys
nancial position, nancial perormance and cash fows.
Summary Requires disclosures or the ollowing broad
categories: signicant judgements and assumptions such as
how control, joint control and signicant infuence
has been determined;
interests in subsidiaries including details o
the structure o the group, risks associated with
consolidated structured entities, restrictions on use
o assets and settlement o liabilities; changes inownership levels, non-controlling interests in the
group, etc.;
interests in joint arrangements and associates the
nature, extent and nancial eects o interests in
joint arrangements and associates (including names,
details and summarised nancial inormation) and
the risks associated with such entities; interests in unconsolidated structured entities the
nature and extent o interests in unconsolidated
structured entities and the nature o, and changes
in, the risks associated with its interests in
unconsolidated structured entities.
Interpretations None.
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Summaries o current Standards and related Interpretations 49
IFRS 13 Fair Value Measurement
Eective date
and transition
Annual periods beginning on or ater 1 January 2013.
This standard includes specic transitional provisionsthat need to be considered or the current reporting
cycle. IAS 8 requires changes to IFRSs to be applied
retrospectively unless an IFRS sets out dierent
requirements.
Objective To establish a denition o air value, provide guidance
on how to determine air value and prescribe the
required disclosures about air value measurements.However, IFRS 13 does not stipulate which items should
be measured or disclosed at air value.
Summary Applies when another IFRS requires or permits air
value measurements or disclosures about air value
measurements (and measurements such as air value
less costs to sell).
Fair value is dened as the price that would be
received to sell an asset or paid to transer a liability in
an orderly transaction between market participants at
the measurement date.
Requires, with some exceptions, classication o these
measurements into a air value hierarchy based on
the nature o the inputs:
Level 1 quoted prices in active markets or
identical assets and liabilities that the entity can
access at the measurement date;
Level 2 inputs other than quoted market prices
included within Level 1 that are observable or the
asset or liability, either directly or indirectly; and
Level 3 unobservable inputs or the asset or
liability.
Requires various disclosures depending on the nature
o the air value measurement (e.g. whether it is
recognised in the nancial statements or merely
disclosed) and the level in which it is classied.
Interpretations None.
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IAS 1 Presentation o Financial Statements
Eective date Annual periods beginning on or ater 1 January 2009.
Amendments (June 2011) requiring: 1) to group items
presented in OCI based on whether they are potentially
reclassiable to prot or loss at a later date and 2)
when OCI items are presented beore tax, to present
tax separately or each o the two groups are eective
1 July 2012.
Amendments resulting rom Improvements to IFRSs
(May 2012) clariying the requirements or additional
comparative inormation are eective 1 January 2013.
Objective To set out the overall ramework or presenting general
purpose nancial statements, including guidelines or
their structure and the minimum content.
Summary Fundamental principles established or the
preparation o nancial statements, including going
concern assumption, consistency in presentationand classication, accrual basis o accounting, and
materiality.
Assets and liabilities, and income and expenses, are
not oset unless osetting is permitted or required
by another IFRS.
Comparative prior-period inormation is presented or
amounts shown in the nancial statements and notes.
Financial statements are generally prepared annually.
I the end o the reporting period changes, and
nancial statements are presented or a period other
than one year, additional disclosures are required.
A complete set o nancial statements comprises:
a statement o nancial position;
a statement o prot or loss and other
comprehensive income;
a statement o changes in equity;
a statement o cash fows;
notes; and
(only when an accounting policy has been applied
retrospectively or items in the nancial statements
have been restated or reclassied) a statement o
nancial position as at the beginning o the earliest
comparative period. (Thereore, in these limited
circumstances, generally three statements o
nancial position).
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Summaries o current Standards and related Interpretations 51
Entities may use titles or the individual nancial
statements other than those used above.
Species minimum line items to be presented in
the statement o nancial position, statement o
prot or loss and other comprehensive incomeand statement o changes in equity, and includes
guidance or identiying additional line items. IAS 7
provides guidance on line items to be presented in
the statement o cash fows.
In the statement o nancial position, current/non-
current distinction