This weekly provides regular thought leadership and events on accounting, regulatory and financial services industry topics to help readers better understand trends and developments in Asia Pacific and prepare for navigating the rapid changes.

May 25, 2012: Reflecting on the future - A study of global corporate treasuries

Ernst & Young's Corporate Treasury team recently conducted Reflecting on the future - A study of global corporate treasuries (pdf 3.9mb) survey of over 100 global corporate treasurers of leading international companies -- covering 14 countries and 21 industry sectors -- in order to better understand the extent to which the treasury has been impacted by recent changes, the key challenges they face, and where treasurers see their role in the future.

The survey's key findings include:

• 40% of treasurers highlighted financing as the biggest issue they had to deal with in
    the past year, while accuracy of cash forecasts and cash management remain a
    significant challenge
• Financial risks dominate treasurers’ top concerns while operational risk is not high
    on their agenda
• Almost half of treasurers believe better use of technology is key but admitted that
    their use of technology is out of date
• Over 60% of treasurers reported difficulty in recruiting

Click the links below to read the past issues:

May 2012

• May 18, 2012: IFRS Update of standards and interpretations in issue at 31 March 2012

  This publication provides an overview of the upcoming changes in IFRS and related interpretations (pdf 1mb), highlighting key aspects of these changes. It focuses on the 30 June 2012 year-end reporting period and considers the effect on periods subsequent to the next reporting period.

  The publication provides high-level summaries of the IFRS pronouncements together with possible financial statement implications.

  This publication can be used for audit committee presentations about new IFRS standards, amendments and interpretations in issue at 31 March 2012 that are effective for annual periods beginning on or after 1 July 2011.



• May 11, 2012: Toward effective governance of financial institutions

  Toward effective governance of financial institutions (pdf 2.8mb), a report with research works carried by Tapestry Networks in collaboration with Ernst & Young, discusses a detailed post-crisis governance action plan and enhancements to risk governance.

  In this report, the Group of Thirty, the international forum of public and private sector financial leaders, states that although many financial services firms have drawn lessons from the 2008-2009 financial crisis and implemented substantial governance reforms, governance in leading financial institutions has not yet been fully addressed.

  The stability of individual financial institutions and the global financial system itself demands far-reaching governance reforms on the parts of boards of directors, firm management, regulators and supervisors, as well as long-term shareholders. Improvements in governance need to fully complement the extensive regulatory reforms that are now being implemented.



• May 4, 2012: Classification and measurement of financial instruments–narrowing the GAAP

  This issue of IFRS Developments explains the latest tentative decisions as the IASB and the FASB align their respective classification and measurement models (pdf 1.1mb), including business model assessment for the amortised cost classification category of financial assets and bifurcation requirements for financial assets and financial liabilities.





April 2012

• April 27, 2012: IFRS 9 Impairment of financial assets — a step closer to completion

  The IASB and the FASB (collectively, the Boards) continue to make progress on their "three-bucket" expected loss approach for estimating the impairment of financial assets.

  This issue of IFRS Developments (pdf 591kb) summarises the discussions and clarifications of certain terms and methods made by the Boards at their joint meeting, including:

  • The clarification of the key components of an expected loss calculation
  • The clarification of the impairment measurement objective for financial assets classified in Bucket 1
  • The application of an expected loss approach to all trade receivables without a significant financing component



• April 20, 2012: Market risk management

  This publication focuses on the market risk management for banks (pdf 921kb) planning to set up a dedicated market risk management function or invest in the required tools. It provides a high-level summary of how each component can be put together for a risk management system, as well as how market risk management fits in.



• April 13, 2012: The new FASB and IASB impairment model: financial institutions weigh in

  Read our survey of credit risk and accounting policy (pdf 901kb) executives at 14 different financial institutions to learn their reactions to the three-bucket proposal. The survey was designed to determine how financial institutions view the Boards’ direction, including whether they think it is operationally viable and consistent with current internal credit risk management practices.



• April 6, 2012: Navigating global business issues

  The April issue of BoardMatters Quarterly focuses on international business matters and discusses the risks and key considerations related to global economic events, international taxes, changing trade patterns and political instability.

  Highlights of this issue include:

  1. European debt crisis affects business worldwide: companies with exposure to the Eurozone are becoming increasingly concerned with the financial and political crisis in the European Union and are preparing their businesses to meet these challenges.
  
  2. Considering global tax risk and uncertainty: the global tax environment is volatile and contentious. Find out why — and what audit committee members think about the issue.
  
  3. The shifting tide of international trade: world trade recovered strongly from the global financial crisis, but it’s not necessarily a return to business as usual.
  
  4. International political risk: considerations for audit committees: audit chairs are increasingly concerned about political instability, economic uncertainty and the related risks to overseas investments.





March 2012

• March 30, 2012: Global banking outlook 2012-13

  This paper discusses the issues that banks need to consider as they adapt to a new global banking landscape and highlights the urgent need for change (pdf 1.83mb). In addition to a global outlook, the report provides an outlook for select markets, including Asia-Pacific. We examine three key areas:

  1. Renew focus on the right customers and develop a "whole-customer" view to increase share-of-wallet with current clients
  
  2. Conduct a thorough review of products, services and markets to define the institution's core business and develop new business and operating models
  
  3. Deploy technology to aid and differentiate product delivery, improve customer management and strengthen regulatory compliance



• March 23, 2012: Good Bank (International) Limited

  This publication provides a practical working model of consolidated financial statements prepared in accordance with IFRS (pdf 1.37mb) for a fictitious banking entity, Good Bank (International) Limited, and its subsidiaries, incorporated and listed in "Goodland," with a reporting date of 31 December 2011.

  This edition of Good Bank (International) Limited reflects professional pronouncements issued as at 30 September 2011.



• March 16, 2012: Boards weighing effects of leases on the balance sheet

  The IASB and the FASB remain committed to putting leases on the balance sheet. However, they continue to struggle with how to recognise related lease revenue and expense. This will likely to delay the issuance of a new exposure draft.

  IFRS Developments Issue 25 (pdf 110kb) summarises what you need to know about the status of the leases project.



• March 9, 2012: Impairment – assessing the impact of the new proposal

  This IFRS Practical Matters provides a summary of the currently proposed "three-bucket" credit impairment approach (pdf 1mb) as well as our views on the next steps for financial institutions.

  This publication complements IFRS Developments Issue 21: Impairment — a major step forward in achieving convergence (pdf 1.5mb).



• March 2, 2012: US GAAP versus IFRS the basics December 2011

  While convergence efforts continued to be a high priority on the agendas of both the FASB and the IASB in 2011, differences continue to exist between US GAAP and IFRS.

  In this guide, we provide an overview by accounting area of where the standards are similar. This publication also focuses on differences most commonly found in practice and, when applicable, provides an overview of how and when those differences are expected to converge (pdf 1mb).





February 2012

• February 24, 2012: Audit committee: leading practices and trends

  Audit committee: leading practices and trends outlines key considerations for audit committees as they focus on risk oversight, committee composition and self-assessment (pdf 569 kb).

  Also included are suggestions for executive sessions, interaction with other board committees, continuing education and new member orientation.

  This publication serves as a good guide for those involved in audit governance roles as the year end reporting is being completed.



• February 17, 2012: Global Banking Recovery and Resolution Planning Survey 2012

  According to our Global Banking Recovery and Resolution Planning Survey 2012, considerable progress has been made by financial institutions regarding recovery and resolution plans (RRPs), also known as living wills. However, their approach to living wills still varies considerably from region to region across cost, timescales, and definition of what a complete plan looks like.

  The survey secured responses from 19 globally systemically important financial institutions, including Japanese financial institutions in the Asia Pacific region. The majority of respondents agree the living wills process has potential business benefits. The development of living wills, however, has proved more complex and expensive than expected.

  National regulators are interpreting the policy in a variety of ways. They are at different stages of implementation and are providing different levels of guidance.

  From a cost and operational perspective, it is important that financial institutions work on living wills and other related regulations, such as Basel, and capital and liquidity requirements.



• February 10, 2012: Facing the challenge: Business implications of IFRS 4, 9 and Solvency II for insurers

  Insurers in Asia Pacific face a huge challenge in synchronising the implementation of IFRS 4 Phase II with IFRS 9 in the coming years. (pdf 2.7mb)

  Managing the timelines and interdependencies between these frameworks, along with other new IFRS standards, Solvency II and other finance transformation and change programmes that may be underway will place many companies in a conflicting position.

  Systems and processes are being significantly updated to comply with an earlier regulatory deadline to implement Solvency II. This heightens the need to assess overlapping requirements with other projects, and evaluate the risk and cost of making large investments - data warehouses and actuarial systems - against the risk and cost of deferring them with interim solutions.



• February 3, 2012: Coping with the global economic slowdown: a survey of China’s leading entrepreneurs

  This survey, jointly developed by Ernst & Young and Cheung Kong Graduate School of Business, reveals how China’s leading entrepreneurs plan to cope with the global economic slowdown (pdf 3.4mb).

  Findings of the report are derived from the ideas of CEOs from 100 leading private enterprises in China and the roundtable discussion at the Entrepreneur Of The Year China Academy.





January 2012

• January 27, 2012: Applying IFRS in Banking and Capital Markets

  The recent financial crisis highlighted the need for better accounting to reflect the substance of relationships between entities. It also highlighted the need for consistency, transparency and comparability in the accounting for and disclosure of such relationships.

  In May 2011, the International Accounting Standards Board issued IFRS 10 and IFRS 12 (pdf 939kb) Disclosure of Interests in Other Entities, with the aim of increasing consistency, transparency and comparability across these areas. These new standards are effective for annual periods beginning on or after 1 January 2013, and must be applied retrospectively.



• January 20, 2012: A tale of two markets

  This report explores the CFO's role in balancing investments across developed and rapid-growth markets (pdf 3.68mb) and examines the way CFOs communicate this balance to investors.

  The study is based on interviews with leading CFOs and investors around the globe, as well as two surveys conducted with the Economist Intelligence Unit – one of 759 CFOs globally and another of 244 professional investors.

  The findings will be relevant to those who have contact with CFOs during busy season as CFOs prepare to communicate with investors about results.



• January 13, 2012: Doing business in India

  India is among the fastest-growing economies in the world with tremendous potential in the country’s domestic market. It is also emerging as a hub for outsourced services for many financial institutions.

  Along with its liberalised foreign investment regime, India is encouraging large multinational companies to invest in the country. Foreign direct investment rose 31.5% from 2005 to 2011, reaching INR 885 billion.

  Banking is a key area in the financial services sector. The aggregate limit for all foreign institutional investors in banking is restricted to 24%. This can be raised to 49% with the requisite approvals.

  Doing business in India (pdf 2.57mb) provides executives a quick overview of the investment climate, taxation, forms of business organisations, and business and accounting practices in India.

  Key highlights include:

  ‧Investment climate and foreign trade
  ‧Entry options in India
  ‧Funding of Indian businesses
  ‧Repatriation of funds
  ‧Forms of business enterprise
  ‧Economic laws and regulations
  ‧Mergers and acquisitions
  ‧Direct taxes, transfer pricing and indirect taxes
  



• January 6, 2012: Offsetting of financial instruments

  The recent amendments to IAS 32 and IFRS 7 on offsetting of financial instruments are intended to clarify the existing application issues relating to offsetting rules, reduce the level of diversity in current practice, and to overcome the differences in the offsetting requirements under IFRS and US GAAP.

  The amendments to IAS 32 are effective for the annual periods beginning on or after 1 January 2014. The new disclosures in IFRS 7 are to be applied for annual periods beginning on or after 1 January 2013 and interim periods within those annual periods. Both require retrospective application for comparative periods.

  Our IFRS Developments: Offsetting of financial Instruments (pdf 1.44mb) summarises what you need to know about the amendments to IAS 32 and IFRS 7.