ifrs in your pocket 2013.pdf

7/27/2019 IFRS in your pocket 2013.pdf

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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.



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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.


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.


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.


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 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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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 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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24

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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26

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 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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28

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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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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30

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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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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32

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.



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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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34

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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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.


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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36

IFRS 4 Insurance Contracts


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.


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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IFRS 5 Non-current Assets Held or Sale and DiscontinuedOperations


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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38

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.


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


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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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.


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).


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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IFRS 8 Operating Segments


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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42

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).


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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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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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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IFRS 10 Consolidated Financial Statements

Eective date

and transition


This standard includes specic transitional provisionsthat need to be considered or the current reporting

cycle. IAS 8 requires changes to IFRSs to be applied


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.



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IFRS 11 Joint Arrangements

Eective date

and transition





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.


IFRS 12 Disclosure o Interests in Other Entities

Eective dateand transition


This standard includes specic transitional provisions

that need to be considered or the current reporting



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.



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IFRS 13 Fair Value Measurement

Eective date

and transition





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.



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50

IAS 1 Presentation o Financial Statements


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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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

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