While the SEC approved a statement supporting the adoption of global accounting standards for U.S. companies, the Chairman Mary Schapiro cautioned that, “Incorporating International Financial Reporting Standards (IFRS) into our financial reporting system would involve a significant undertaking. We must carefully consider and deliberate whether such a change is in the best interest of U.S. investors and markets.
“The Commission also voted to approve a Work Plan developed by SEC staff that would gather information to aid the Commission as it evaluates the impact that the use of IFRS by U.S. companies would have on our securities market,” Schapiro said. The Work Plan will be completed in 2011, the target date set by the 2008 Proposed Roadmap.
Schapiro said, however, that no decision had been made about the timing of a possible conversion to IFRS. “We must still determine what this means for U.S. companies and markets; should we incorporate IFRS into our reporting system and, if so, when and how?
Source: http://www.accountingweb.com/topic/cfo/sec-approves-work-plan-assess-us-adoption-global-accounting-standards
The much-anticipated International Financial Reporting Standards (IFRS) is likely to be rolled out only partially in India from April 1, 2011.That’s because a core group on IFRS implementation, set up by the ministry of company affairs and headed by renowned chartered accountant Y H Malegam, is set to recommend that it be made mandatory only for big corporates in the first phase.
Source: DNA India
Central Board of Direct Taxes (CBDT) and accounting rule-maker Institute of Chartered Accountants of India (ICAI) have jointly constituted a study group to identify and address direct tax issues that will affect convergence of India’s accounting standards with International Financial Reporting Standards (IFRS).With IFRS convergence due for April 2011 and the government coming up with the new Direct Taxes Code (DTC), the suggestions of the study group finds relevance.
Source: Economic Times
There is a new course on IFRS 9 and you can take the course here: Accounting for Investments
On 12 November 2009, IASB published IFRS 9 Financial Instruments on the classification and measurement of financial assets. The present IAS 39 is proposed to be replaced in three phases as follows by International Accounting Standards Board (IASB):
Phase 1: Classification and measurement. This is presently published as IFRS 9 Financial Instruments on the classification and measurement of financial assets.
Phase 2: Impairment methodology. On 25 June IASB published a Request for Information on the feasibility of an expected loss model for the impairment of financial assets. The exposure draft published in November 2009.
Phase 3: Hedge accounting. IASB is currently conducting outreach with its constituents and intends to issue an exposure draft on hedge accounting in the first quarter of 2010.
On 12 November 2009, the International Accounting Standards Board (IASB) issued IFRS 9 Financial Instruments.
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Salient differences between IAS 39 and IFRS 9
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Parameter
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IAS 39
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IFRS 9
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Name
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Financial Instruments:
Recognition and Measurement |
Financial Instruments
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Applicability
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Currently effective
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Effective from 1st Jan 2013 with early adoption permitted
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Scope
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All aspects of Financial
assets & Financial Liabilities including hedge accounting |
Only Financial assets included. Presently the standard does not include Financial liabilities, derecognition of financial instruments, impairment and hedge accounting
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Classification
of debt instruments |
Fair Value Through Profit & Loss (FVPL)
Available-for-sale (AFS)
Held-to-maturity (HTM)
Loan and Receivable (LAR) |
Fair Value Through Profit & Loss (FVPL)
Amortised Cost (AC) |
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Classification
of equity instruments |
Fair Value Through Profit
& Loss (FVPL)
Available-for-sale (AFS) |
Fair Value Through
Profit & Loss (FVPL)
Fair Value Through Other Comprehensive Income (FVOCI) |
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Basis of classification
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Intention to hold till maturity, trading for short term profits, derivative, loan or receivable, or intentional designation subject to certain restrictions
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Classification based on business model and the contractual cash flow characteristics
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Measurement
- Debt Instruments |
Measured at amortised cost if classified as held-to-maturity or as loan or receivable.
Other classifications are measured at fair value. |
Measured at amortised cost (AC) if business model objective is to
collect the contractual cash flows and the contractual cash flows represent solely payment of principal and interest on the principal amount outstanding.
Debt instruments meeting the above criteria can still be measured at fair value through profit or loss (FVPL) if such designation would eliminate or reduce accounting mismatch.
If not, measured at fair value through profit or loss (FVPL)
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Measurement
- Equity Instruments |
Measured at fair value.
Exception: Unquoted equity
investments are measured at cost where fair valuation is not sufficiently reliable. |
Measured at fair value through profit or loss.
An entity can irrevocably designate at initial recognition as fair value through other comprehensive income, provided the equity investment is not held for trading. |
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Embedded
derivatives |
Embedded derivatives are
separated from the hybrid contract and are measured at FVPL. |
No bifurcation of asset.
The financial asset is assessed in its entirety as to the contractual cash flows and if any of its cash flows do not represent either payments of principal or interest then the whole asset is measured at FVPL. |
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Fair value option
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An entity can designate a financial asset to be measured at fair value on initial recognition.
The entity has the freedom to do so and need not satisfy any other criteria |
A financial asset can be designated as FVPL on initial recognition only
if that designation eliminates or significantly reduces an accounting
mismatch had the financial asset been measured at amortised
cost. |
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Reclassifications
- Debt instruments |
Reclassification between the various four categories allowed under specific circumstances with the gain/loss being treated differently depending upon the movement between the classifications.
Reclassification from held-to-maturity (HTM) is viewed seriously if does not fall within the permitted exceptions.
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If entity’s business model objective changes, reclassification is permitted between FVPL and AC or vice versa. Such changes should be demonstrable to external parties and are expected to be very infrequent.
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Reclassifications
- Equity instruments |
Reclassification is permitted between the FVPL and AFS.
When transferred from AFS to FVPL, unrealized gain/loss is recognized in P&L based on fair value.
When transferred from FVPL to AFS, no reversal of gain/loss recognized as unrealized is permitted.
However all gain/loss on disposal of AFS are recognized in P&L by transfer from equity. |
Reclassification between FVPL and FVOCI not permitted as FVOCI classification is done at the
irrevocable designation of the entity as such.
Only dividend income is recognized in P&L of assets designated as FVOCI.
Even on disposal of such assets, the gain/loss is not transferred from equity, but remains permanently in equity. |
