As reported in this month's roundup, the new EU commissioner for the internal market is targetting financial services reform. By Nick Topazio, reporting specialist, CIMA.
New EU commissioner pushes reform agenda
Michel Barnier, the new EU commissioner for the internal market, has set out proposals for reform of the financial services sector. There will be changes to the regulation of derivatives and tougher rules on bank capital requirements. However in a conciliatory move he stressed ‘I don't want us to provoke an exit’ from Europe for such an important industry, promising to take ‘precautions’ and put in place ‘intelligent regulation’. The proposals form part of Barnier’s hearing before the European Parliament to confirm his new position. Read more.
Argentina to adopt IFRS in 2012
The National Securities Commission of Argentina has announced that all entities with publicly traded equities or debt must prepare their financial statements in accordance with IFRS for accounting periods beginning on or after 1 January 2012.
IASB proposes measurement principle for liabilities
In 2005, the IASB published an exposure draft of a standard to replace IAS 37 provisions, contingent liabilities and contingent assets. The board has reached decisions on most of the principles to be included in the new standard, which will be an IFRS.
In response to comments, the board has also developed more guidance on measurement requirements. The new IFRS will apply to liabilities such as:
- liabilities arising from legal disputes
- statutory asset decommissioning obligations
- other environmental obligations
- liabilities arising under contracts that have become onerous.
However, it will not apply to items such as financial, pension, income tax and insurance liabilities, because they are within the scope of other standards. The exposure draft proposes that the measurement should be the amount that the entity would rationally pay at the measurement date to be relieved of the liability. Normally, this amount would be an estimate of the present value of the resources required to fulfil the liability.
The estimate would take into account the expected outflows of resources, the time value of money and the risk that the actual outflows might ultimately differ from the expected ones. The exposure draft is open for comment until 12 April 2010 and the IASB expects to issue the new IFRS in the third quarter of 2010.
IASB releases free SME standard training
The first twelve of the 35 training modules on the IFRS for Small and Medium Sized Enterprises have been released.
United Kingdom
Board amends financial instruments standard
The IASB amended IAS 32 in October 2009 and the UK and Ireland Accounting Standards Board has replicated these changes in its own financial instruments standard – FRS 25. The changes relate to the classification of rights issues involving foreign currencies.
The amendment ensures that such instruments are designated as equity in nature.
FRRP concerned with segmental reporting
The UK Financial Reporting Review Panel has looked into how companies have been applying IFRS 8 segmental reporting. The panel has looked at a sample of 2009 interim and 2008 full year accounts and found a number of common themes:
- only one operating segment is reported, but the group appears to be diverse with different businesses or with significant operations in different countries
- the operating analysis set out in the narrative report differs from the operating segments in the financial statements
- the titles and responsibilities of the directors or executive management team imply an organisational structure which is not reflected in the operating segments
- the commentary in the narrative report focuses on non IFRS measures whereas the segmental disclosures are based on IFRS amounts.
Council targets better M&A accounting
A study by the Financial Reporting Council has found that the IFRS on business combinations has been poorly applied by UK companies due to unfamiliarity with its requirements and the complexity of valuing intangible assets such as brands and customer relationships. As a result preparers have reported that the new requirements are costly and difficult.
At the same time users are saying the information produced is not useful. The FRC intends to return to the subject in 18 months to determine whether improvements have been made. In the meantime it will work with preparers and users and provide feedback to the IASB.
Board announces a review of accounting services
The Professional Oversight Board is reviewing the monitoring regimes of the UK Professional Accountancy bodies in relation to the provision of accounting services by their members. Accounting services include accounts preparation, payroll, tax and bookkeeping but exclude audit.
The POB encourages all users of external accountancy services to complete this questionnaire and asks members in practice to encourage their clients to do the same; in order to provide them with details of the factors that are important to users of external accountancy services.
Complete the questionnaire.
Council consults on stewardship code for institutional investors
The FRC is consulting on the content, operation and oversight of a stewardship code that will set out good practice for institutional investors when engaging with the UK listed companies in which they invest. One important question is whether the code published by the Institutional Shareholders’ Committee provides a suitable basis for the FRC code. The consultation closes on 16 April 2010 and the outcome will be announced in May or June.