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IASB　UPDATE

IASB　UPDATE. Tatsumi Yamada Board Member, IASB . Disclaimer. Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the speaker.

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IASB　UPDATE

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  1. IASB　UPDATE Tatsumi Yamada Board Member, IASB

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

  3. Outline • IASCF Structure • Convergence project with USA • Convergence project with China • Convergence effort in Korea • Convergence project with Japan • IASB agenda

  4. The standard setting operation International Accounting Standards Board IFRIC (Interpretations) Staff IASCF Structure IASC Foundation (22 Trustees) Standards Advisory Council Working Groups

  5. IASC Foundation—Oversight • 22 trustees: • 6 from North America • 6 from Europe • 6 from Asia/Oceania • 4 Any area • Appoint IASB members, SAC and IFRIC • Monitor IASB’s effectiveness, raise funds, approve budget, responsible for constitution

  6. Standards Advisory Council (SAC) • 40 members—worldwide • Meets at least 3 times a year • Consultative forum, including • Input on IASB agenda and project timetable • Advise IASB on projects • Support the promotion and adoption of IFRSs

  7. Board Members • 12 full-time and 2 part-time members • Sole responsibility for setting agenda and standards • Presently from 9 countries and 5 continents

  8. Convergence with USAFASB – Norwalk Agreement • A focus is convergence with US FASB • Norwalk Agreement aims to achieve convergence in short and long term (October 2002) • MOU related to Roadmap is second step of Norwalk Agreement (February 2006)

  9. Convergence with USA FASB– ‘Roadmap’ • Agreement • SEC ‘road map’ – removal of reconciliation to US GAAP by 2009 at the latest • April 2005 – SEC/EC agreed on ‘roadmap’ • Progress of convergence by 2008 • Target • Not necessary to achieve full convergence on all standards • Working jointly and making progress on major projects by 2008 (MOU)

  10. Convergence with USA FASB– ‘MOU – Short term’

  11. Convergence with USA FASB– ‘MOU – Other projects’

  12. Convergence with USA FASB– ‘MOU – Other projects’

  13. Convergence with USA FASB– ‘MOU – Other projects’

  14. Convergence with USA FASB– ‘MOU – Other projects’

  15. Convergence Project with China • June 2005 – China agrees to make up an action plan to achieve high-quality accounting standards • October 2005 – IASB staff was in China to discuss Chinese EDs for convergence • November 2005 – the 1st convergence meeting including IASB Board members • February 2006 – issuance of new standards substantially converged with IFRS in main principles (effective from January 2007 for listed companies)

  16. Convergence Effort in Korea • February 2006 – establishment of ‘IFRS convergence task force’ to discuss the three step strategy – replacement of KAS by Korean IFRS • Phase I – Optional application of KIFRS or KAS for all entities (starts by 2009) • Phase II – Application of KIFRS to listed global entities • Phase III – Application of KIFRS to all listed entities • Timing of Phase II and III is not decided

  17. Convergence Project with Japan • October 2004 –inauguration of the Joint Convergence project • March 2005 –items to be dealt with in the 1st phase were announced (1st meeting ) • September 2005 – progress has been reported (2nd meeting) • March 2006 – a new (whole picture) approach agreed and three new items added (Asset removal obligation etc) (3rd meeting) • 4th meeting will be held in London in September 2006

  18. The IASB agenda

  19. The IASB agenda

  20. The IASB agenda

  21. Fair Value Measurement • How to measure fair value if another standard requires a FV measurement • Notwhen to measure fair value • Definition of fair value • The price that would be received for an asset or paid to transfer a liability in a current transaction between marketplace participants in the reference market for the asset or liability.

  22. FVM Application • Transaction price presumed to be FV on initial recognition • Reference market • Market entity would transact in • Valuation premise • “In exchange” or “in use” • Market observable prices or inputs preferred to entity inputs

  23. Non-financial Liabilities • Scope is all non-financial liabilities not covered by another standard • Analyse whether obligation is conditional or unconditional • Purely conditional obligations are not liabilities • No present obligation from past event

  24. Non-financial Liabilities • Unconditional ”stand ready” obligations are liabilities • Result in outflow of resources in all cases • Service provided by assuming risk • Uncertainties about amount and timing of future events affect measurement • Not a recognition threshold

  25. The IASB agenda

  26. Performance Reporting • Fresh look at presentation of financial statement package • Segment A – segregate income and expenses from equity transactions • Segment B – complete redesign

  27. Performance ReportingSegment A Decisions • Required financial statements agreed • Required comparative information agreed • Will be exposed for comment as ED in Q1 2006(IASB only) • No changes to information already required to be presented • Statement of recognised income and expense can be presented as a single statement or two statements

  28. Statement of Recognised Income and Expense Sales xxxxx Cost of sales (xxxxx) Gross profit xxxxx Expenses (xxxxx) Profit or loss before taxes xxxx Incomes taxes (xxxx) Profit or lossxxxx Changes in AFS securities (xxxx) Change in FX translation xxxx Change in cash flow hedges (xxxx) Recognised income and expensexxxx

  29. Performance ReportingFull Set of Financial Statements -- 1 Year • Beginning and end of period statements of financial position • Statement of recognised income and expense • Statement of changes in equity • Statement of cash flows

  30. Performance ReportingSegment B Activities • Consider whether there is value in the notion of recycling between subtotals of net income and other comprehensive income • If so, determine the basis for the types of transactions and events that should be recycled and when should recycling occur • Develop consistent disaggregation principles • Develop consistent definitions of totals and subtotals including financing category • Develop a reporting model applicable to all for-profit entities other than financial institutions

  31. Conceptual Framework • Long-term project • Conceptual base for all standards • Approved 1989 - Needs an overhaul • Refine, update, complete, converge • Will not stop “normal” development

  32. Revenue and Related Liabilities • Biggest source of restatements in US • Need a clearer definition of revenue • When do we recognise revenue? • At contract signing or only at delivery? • Triggering events? • Bundled offerings?

  33. The IASB agenda

  34. Insurance Contracts • IFRS 4 is an interim standard • Insurance Working Group advising on Phase II – a clean slate • Modified joint project with FASB (ie from Discussion Paper stage)

  35. Research project DPs issued

  36. Other topics becoming ‘hot’

  37. IASB Update

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