ifrs update for 31 december 2013 year ends by katerina rafalska, ifrs partner

IFRS Update for 31 December 2013 year ends

ar ends

МСФО и интегрированная отчетность: настоящее и будущее

Update for 31 December 2013 year ends

• New, amended, and revised standards effective for

periods ending 31 December 2013

• New, amended, and revised standards effective for

periods beginning on or after 1 January 2014

• Status of IASB projects

Overview



New, amended, and revised standards effective

for periods ending 31 December 2013

New, amended, and revised standards Reporting periods beginning on after 1 July 2012

Amendments

i. Presentation of Items of Other Comprehensive Income (IAS 1)


New, amended, and revised standards (31 Dec 2013) i. Presentation of Items of Other Comprehensive Income (1/2)

• Amendment to IAS 1 Presentation of Financial Statements

• Amends the presentation of OCI - now split into two categories (by nature):

1) Those that could subsequently be reclassified to profit or loss

(reclassification adjustments)

- Foreign currency translation differences

- Revaluation of Financial assets classified as Available for Sale.

2) Those that that will not be reclassified

- Revaluation of property, plant and equipment

- Remeasurement of net defined benefit


New, amended, and revised standards (31 Dec 2013) i. Presentation of Items of Other Comprehensive Income (2/2)

Title of the statement

• Change to ‘Statement of profit or loss and other comprehensive income’

(however flexibility to use other names remains in IAS 1)

Presentation of items of OCI before or net of tax

• Option to present items of OCI before or net of tax remains

• If presenting before tax, tax is required to be allocated and disclosed

separately for each of the two OCI groups


New, amended, and revised standards Reporting periods beginning on after 1 January 2013

Consolidation suite (new and revised)

ii. IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IAS 27(R) Separate Financial Statements

IAS 28(R) Investments in Associates and Joint Ventures

New Standards

iii. IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine



Amendments

iv. Employee Benefits (IAS 19)

v. Government loans (IFRS 1)

vi. Offsetting Financial Assets and Financial Liabilities (IFRS 7)

vii. Annual Improvements to IFRSs 2009-2011 Cycle


New, amended, and revised standards (31 Dec 2013) ii. Consolidation suite - Consolidated Financial Statements (1/5)

• New standard IFRS 10 Consolidated Financial Statements

• High level summary:

- Replaces IAS 27 Consolidated and Separate Financial Statements and SIC-12

Consolidation – Special Purposes Entities

- Introduces a single control model (power, variable returns, linkage), that is the

sole basis for consolidation

- Requires potential voting rights to be substantive

- Specifically includes guidance relating to:

De-facto control

Agency relationships

Silos (i.e. ring-fenced assets and liabilities


New, amended, and revised standards (31 Dec 2013) ii. Consolidation suite - Joint Arrangements (2/5)

• New standard IFRS 11 Joint Arrangements


- Replaces IAS 31 Interests in Joint Ventures

- Uses the same control model as IFRS 10

- Only two categories of joint arrangement

- Option for proportionate consolidation removed (only equity method)

- Structure of the arrangement no longer the principal factor in determining the

accounting approach – must consider other facts and circumstances

- Joint de-facto control (via IFRS 10)


New, amended, and revised standards (31 Dec 2013) ii. Consolidation suite - Disclosure of Interests in Other Entities (3/5)

• New standard IFRS 12 Disclosure of Interests in Other Entities


- All disclosure requirements relating to subsidiaries, joint arrangements, associates,

and any other interest held in another entity are solely within IFRS 12.

- Disclosures aim to help a user to understand:

1) The nature of, and risks associated with, its interests in other entities

(whether these are subsidiaries, joint operations, joint ventures, associates

or interests in structured entities that are not consolidated)

2) The effects of those interests on the reporting entity’s financial position,

financial performance and cash flows.


New, amended, and revised standards (31 Dec 2013) ii. Consolidation suite - Separate Financial Statements (4/5)

• Revised standard IAS 27 Separate Financial Statements


- Deals only with the requirements of separate financial statements

- Previous consolidation requirements moved to IFRS 10 and IFRS 12

- Disclosure requirements related to separate financial statements previously in IAS

28 and IAS 31 moved to IAS 27(R)

- Expanded disclosure - principal place of business.


New, amended, and revised standards (31 Dec 2013) ii. Consolidation suite - Investments in Associates and Joint Ventures (5/5)

• Revised standard IAS 28 Investments in Associates and Joint Ventures


- Most requirements have been carried forward unchanged

- Accounting for joint ventures now included


New, amended, and revised standards (31 Dec 2013) iii. Stripping Costs in the Production Phase of a Surface Mine (1/2)

• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

• Entities in surface mining may find it necessary to remove (‘strip’) mine

waste materials (‘overburden’) to gain access to mineral ore deposits

• In the development phase before production these costs are capitalised

• In the production phase, diversity in practice existed

• IFRIC 20 clarifies that in the production phase of a surface mine:

- Overburden that can be used to build up inventory is accounted for under IAS 2

- Other overburden, that provides access to deeper levels of material that will be

mined in future periods, is recognised as a non-current asset subject to certain

criteria being met.

• Effective for annual periods beginning on/after 1 January 2013, with earlier

application permitted


New, amended, and revised standards (31 Dec 2013) iii. Stripping Costs in the Production Phase of a Surface Mine (2/2)

• Criteria to recognise ‘stripping activity asset’:

- It is probable that the future economic benefit (improved access to the ore body)

associated with the stripping activity will flow to the entity

- The entity can identify the component of the ore body for which access has been

improved

- The costs relating to the stripping activity associated with that component can be

measured reliably.

• The stripping activity asset is not recognised separately - added to an existing

asset (tangible or intangible).


New, amended, and revised standards (31 Dec 2013) iv. Employee benefits (1/2)

• Amendment to IAS 19 Employee Benefits

• Main changes to defined benefit plans (DBP) include:

- Elimination of the ‘corridor’ approach for deferring gains/losses

- Actuarial gains/losses to be recognised in OCI rather than in P&L (and cannot be

reclassified in subsequent periods).

• Other changes include:

- Subtle amendments to timing for recognition of termination benefits.

- Employee benefits expected to be settled (vs. due to settled) wholly within 12

months after the end of the reporting period are short-term benefits, all others are

non-current (and will require discounting)




New, amended, and revised standards (31 Dec 2013) iv. Employee benefits (2/2)

Impacts for entities with DBP

• Full recognition of actuarial gains through OCI and a decrease in the net defined

benefit plan deficit

• Immediate recognition of past service cost in profit or loss and an increase in the net

defined benefit plan deficit

• Reversal through OCI of the difference in the gain arising in the expected rate of

return on defined benefit plan assets and the discount rate.

Impacts for all entities

• Reassessment of measurement and presentation of all employee benefits (particularly

annual leave balances) – will vary entity-by-entity


New, amended, and revised standards (31 Dec 2013) v. Government loans (1/1)

• Amendment to IFRS 1 First-Time Adoption of IFRS

• Applies to first time adopter that had received a government loan at a below-

market rate

• Difference between the proceeds received and the fair value of the loan is

recognised prospectively

• Already incorporated in IAS 20

• Retrospective application is permitted if fair value information was available

when loan was granted




New, amended, and revised standards (31 Dec 2013) vi. Offsetting Financial Assets and Financial Liabilities (1/2)

• Amendments to IFRS 7 Financial Instruments: Disclosure and IAS 32 Financial

Instruments: Presentation

• Amendment clarifies that right of set-off:

a) Must not be contingent on a future event

b) Must be legally enforceable in all of the following circumstances

i. The normal course of business

ii. The event of default

iii. The event of insolvency or bankruptcy of the entity and all counterparties.

• Effective date

- Disclosures (IFRS 7): Annual periods beginning on or after 1 January 2013

and interim periods within those annual periods (early adoption permitted).

- Presentation (IAS 32): Annual periods beginning on or after 1 January 2014

(early adoption permitted)


New, amended, and revised standards (31 Dec 2013) vi. Offsetting Financial Assets and Financial Liabilities (2/2)

• New disclosure requirements (in a tabular format):

a) The gross amounts of those recognised financial assets and liabilities

b) The amounts that are set off when determining the net amounts presented in the

statement of financial position;

c) The net amounts presented in the statement of financial position;

d) The amounts subject to an enforceable master netting arrangement or similar

agreement that are not otherwise included in paragraph b), including:

i. amounts related to recognised financial instruments that do not meet some

or all of the offsetting criteria; and

ii. Amounts related to financial collateral (including cash collateral); and

e) The net amount after deducting the amounts in d) from the amounts in c) above.


New, amended, and revised standards (31 Dec 2013)

• vii(a) Repeat application of IFRS 1 (IFRS 1)

• vii(b) Borrowing costs (IFRS 1)

• vii(c) Clarification of requirements for comparative information (IAS 1)

• vii(d) Classification of servicing equipment (IAS 16)

• vii(e) Tax effect of distribution to holders of equity instruments (IAS 32)

• vii(f) Interim financial reporting and segment information for total

assets and liabilities


vii. Annual Improvements 2009-2011 Cycle

New, amended, and revised standards effective

for periods beginning on or after 1 January 2014


Amendments

i. Investment Entities (IFRS 10)

ii. Offsetting Financial Assets and Financial Liabilities (IAS 32 requirements)

- Refer to previous section (vi)

New Standards

iii. IFRS 9


New, amended, and revised standards (31 Dec 2013) i. Investment Entities (1/1)

• Amendment to IFRS 10 Consolidated financial Statements

• Effective for periods on/after 1 January 2014 (early adoption permitted)

• Note: Not yet EU endorsed


- Prohibits consolidation accounting for Investment Entities, instead use FVTPL

- Must meet three criteria

- There are also four characteristics to assess – additional disclosures required if any

not met but the entity considers the definition to still be met


Status of IASB projects

IASB Work Plan (1/9) As at 29 July 2013

2013

Q3

2013

Q4

2014

Q1

2014

Q2

Financial Crisis related projects

Classification & measurement

(Limited amendments) Redeliberations

Impairment (comment period

ended 5 July 2013) Redeliberations

General hedge accounting Target IFRS

Macro hedge accounting Target DP



2013

Q3

2013

Q4

2014

Q1

2014

Q2

Previous Memorandum of Understanding projects

Leases (comment period ends

13 September 2013)

Redeliberations

Revenue recognition Target IFRS



2013

Q3

2013

Q4

2014

Q1

2014

Q2

Other Significant Projects

Insurance contracts

(comment period ends 25

October 2013)

Redeliberations

Rate-regulated Activities

- Interim IFRS (comment

period ends 4 September

2013)

Redeliberatio

ns

Rate-regulated Activities

- Comprehensive project

Target DP



2013

Q3

2013

Q4

2014

Q1

2014

Q2

Narrow-scope amendments

Acquisition of an Interest in a

Joint Operation (IFRS 11) Target IFRS

Actuarial Assumptions: Discount

Rate (IAS 19)

Target ED

Annual Improvements 2010–2012 Target IFRS

Annual Improvements 2011–2013 Target IFRS

Annual Improvements 2012–2014 Target ED



2013

Q3

2013

Q4

2014

Q1

2014

Q2

Narrow-scope amendments (Cont’d)

Bearer Plants – amendments to IAS

41 (comment period ends 28

October 2013)

Redeliberati

ons

Clarification of Acceptable

Methods of Depreciation and

Amortisation (IAS 16, IAS 38)

Target IFRS

Defined Benefit Plans: Employee

Contributions (IAS 19)

Target IFRS

Disclosure Requirements about

Assessment of Going Concern

(IAS 1)

Target ED



2013

Q3

2013

Q4

2014

Q1

2014

Q2


Equity Method: Share of Other Net

Asset Changes (IAS 28) Target IFRS

Fair Value Measurement: Unit of

Account (IFRS 13)

Target ED

Put Options Written on Non-

controlling Interests (IAS 32)

Target ED



2013

Q3

2013

Q4

2014

Q1

2014

Q2


Recognition of Deferred Tax Assets

for Unrealised Losses (IAS12) Target ED

Sale or Contribution of Assets

between an Investor and its

Associate or Joint Venture

(IFRS10 and IAS28)

Target IFRS

Separate Financial Statements

(Equity Method) (IAS27)

Target ED



2013

Q3

2013

Q4

2014

Q1

2014

Q2

Post-implementation reviews

IFRS 8 Operating Segments Published

Report on 18

July 2013

IFRS 3 Business Combinations Publish

Request for

Information



2013

Q3

2013

Q4

2014

Q1

2014

Q2

Conceptual Framework

Conceptual Framework chapters

• Elements of financial

statements

• Measurement

• Reporting entity

• Presentation and disclosure

(comment period ends 14

January 2014)

Redeliberatio

ns

Disclosures: Discussion Forum

• Feedback statement

published 28 May 2013

To double check



ar ends

МСФО и интегрированная отчетность: настоящее и будущее
