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Below are summaries of responses by the AcSB or AcSB staff to the IASB’s Documents for Comment. The IASB posts all letters received to their website. A link to the applicable IASB project page and a link to the letter submitted by the AcSB, as posted on the IASB’s website, is provided below. Fair Value Option for Financial Liabilities
On July 16, 2010, AcSB staff submitted a comment letter responding to the IASB’s Exposure Draft. The letter does not support the IASB’s proposal because the IASB and FASB proposals in this area are not converged. As well, the proposal requires the increased use of other comprehensive income without articulating a principle that distinguishes between items to be recognized in net income and those to be recognized in other comprehensive income. The AcSB staff letter posted by the IASB is available here. Financial Instruments: Amortised Cost and Impairment
On June 29, 2010, the AcSB submitted a comment letter responding to the IASB’s Exposure Draft. The letter does not support the IASB’s proposal to require that an entity’s expectations about future credit losses on a financial asset measured at amortized cost should be incorporated into the asset’s effective interest rate with subsequent changes in expectations recognized in profit and loss immediately. The AcSB thinks that the proposal does not meet the IASB’s and the FASB’s objective of developing a single global standard for financial instruments that reduces the complexity in current standards and produces financial statements that are more easily understood. The AcSB letter posted by the IASB is available here. Liabilities — Improving IAS 37
On May 19, 2010, the AcSB submitted a comment letter responding to the IASB’s Working Draft of a new “Liabilities” standard, including the proposals in its “Measurement of Liabilities in IAS 37” Exposure Draft. The letter supports the IASB’s project to improve IAS 37, but recommends that practical changes be made before the proposals are finalized. The letter recommends adding a “more likely than not” threshold to assist an entity to determine if a present obligation exists. It also recommends requiring obligations that will be fulfilled by performing a service to be measured at the expected present value of the resources the entity expects to expend. If the project cannot be completed expeditiously, the letter recommends that the IASB defer the project and focus on developing and issuing high-quality standards in its joint projects with the FASB. The AcSB’s letter posted by the IASB is available here. Comparative IFRS 7 Disclosures for First-time Adopters
On December 15, 2009, AcSB staff submitted a comment letter responding to the IASB’s Exposure Draft. The letter agrees with the proposed amendment. The letter does recommend that the IASB revise the proposed effective date so that an entity wanting to apply the amendment would not have to early adopt the amendment. The AcSB staff letter posted by the IASB is available here. IASCF Constitution Review, Part 2
On November 24, 2009, the AcSOC and the AcSB submitted a joint response to the IASC Foundation (IASCF) Discussion Document, “Part 2 of the Constitution Review: Proposals for Enhanced Accountability.” While the response agrees with many of the proposals, the AcSOC and the AcSB strongly disagree with the proposal to establish an accelerated due process in exceptional circumstances. In addition, they disagree with a) changing the name of the IASB to the IFRS Board, b) emphasizing that governance of the IASC Foundation rests “primarily” with the Trustees, and c) reducing the length of a possible second term of IASB members. The letter posted by the IASCF is available here. Rate-regulated Activities On November 20, 2009, the AcSB submitted a comment letter responding to the IASB’s Exposure Draft. The letter broadly agrees with the proposals. However, the letter recommends two exceptions to the proposed requirement to discount the estimated cash flows associated with regulatory assets and regulatory liabilities — one for regulatory items relating to deferred income taxes and the other for items relating to employee future benefit costs. Also, the letter recommends expanding the application guidance to clarify the scope of the proposed standard. The AcSB letter posted by the IASB is available here. Improvements to International Financial Reporting Standards On November 12, 2009. AcSB staff submitted a comment letter responding to the IASB’s Exposure Draft. The letter supports the amendments proposed, except that the letter requests clarification on when a first-time adopter is required to explain any changes or update required reconciliations if the entity changes its accounting policies or its use of the exemptions in IFRS 1 First-time Adoption of International Financial Reporting Standards after it has published an interim financial report. The AcSB staff letter posted by the IASB is available here. Extinguishing Financial Liabilities with Equity Instruments On October 5, 2009, the AcSB staff submitted a comment letter responding to the IFRIC’s Draft Interpretation 25. The letter agrees with the consensus proposed in the Draft Interpretation, except that the letter raises concerns regarding the practicality of the measurement requirement. The AcSB staff letter posted by the IASB is available here. Fair Value Measurement On September 29, 2009, AcSB staff submitted a comment letter responding to the IASB’s Exposure Draft. The letter agrees that the proposed standard on how to determine a fair value measurement is a significant improvement compared to existing guidance in IFRSs. Compared to US SFAS No. 157 Fair Value Measurements, as amended (or ASC Topic 820-10), the letter identifies several significant concerns that could result in significant GAAP differences between the standards that must be addressed before finalizing the proposed IFRS. During the transition to the new fair value measurement standard, the letter also recommends that IFRS 1 First-time Adoption of International Financial Reporting Standards be amended to allow IFRS adopters to prospectively apply the new IFRS. The AcSB staff letter posted by the IASB is available here. Discount Rate for Employee Benefits On September 28, 2009, AcSB staff submitted a comment letter responding to the IASB's Exposure Draft. The letter fully supports the proposals. The AcSB staff letter posted by the IASB is available here. Financial Instruments: Classification and Measurement On September 14, 2009, the AcSB submitted a comment letter responding to the IASB’s Exposure Draft. The letter expresses concern that the speed with which the project is progressing and the apparent lack of co-ordination with the FASB will not result in the best possible standards for financial instruments. The letter also recommends that the IASB combine the three phases of the IAS 39 replacement project (classification and measurement, impairment and hedge accounting) and develop a comprehensive exposure document. The AcSB letter posted by the IASB is available here. Credit Risk in Liability Measurement On September 4, 2009, AcSB staff submitted a comment letter responding to the IASB’s Discussion Paper. The letter supports that fair value measurement of liabilities should include the market’s best estimate of credit risk at a particular point in time. However, the letter expresses concern that there are varied views among financial statement users, academics and staff as to whether there are circumstances in which liabilities should be measured at current measures that exclude the effects of the entity’s credit standing. The AcSB staff letter posted by the IASB is available here. Expected Loss (Impairment) Model On September 2, 2009, AcSB staff submitted a comment letter responding to the IASB’s Request for Information on an expected loss model for recognizing impairment of financial assets. The letter notes that the proposals would not be consistent with the measures used in current credit management and monitoring processes. In addition, the letter comments that the proposed model would blur the distinction between net interest income and credit losses as it effectively includes allowances for future credit losses in the net interest income line. The AcSB staff letter posted by the IASB is available here. Classification of Rights Issues On September 1, 2009, AcSB staff submitted a comment letter responding to the IASB’s Exposure Draft. The letter agrees with the proposals and rationale provided in the Basis for Conclusions. The letter proposes that the IASB include an explanation of why the pro rata treatment is essential to demonstrating that the transaction is conducted with owners in their capacity as owners and an explanation of why no amendments to IFRS 1 are proposed. Derecognition (proposed amendments to IAS 39 and IFRS 7) On July 31, 2009, AcSB staff submitted a comment letter responding to the IASB’s Exposure Draft. The letter does not support the proposals because they are not considered an improvement over the existing provisions in IAS 39. The letter does support the “alternative view” summarized in the accompanying Basis for Conclusions, with some concerns to be resolved. The AcSB staff letter posted by the IASB is available here. Income Taxes On July 31, 2009, the AcSB submitted a comment letter responding to the IASB’s Exposure Draft. The letter does not support the project proceeding in its current form. Instead it suggests the project be re-scoped to consider a more fundamental review of accounting for income taxes, or defer to allow constituents and the IASB to focus on projects currently of higher priority. The letter included an appendix prepared by AcSB staff providing detailed comments on a number of the proposals. The AcSB letter posted by the IASB is available here. |