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Eye on Reporting

March 2013

Welcome to the March edition of Eye on Reporting.

On 7 March 2012, the International Accounting Standards Board (IASB) issued a new exposure draft (ED) Financial Instruments: Expected Credit Losses as part of its IFRS 9 Financial Instruments project.  The ED proposals would require entities to apply an expected credit loss model to their financial assets (loans, debt securities and trade receivables), lease receivables, loan commitments and financial guarantee contracts. We summarise the main proposals contained in the ED in our latest IFRS Developments publication.

The IASB and US Financial Accounting Standards Board (FASB) have substantially completed their joint re-deliberations of the proposed revenue recognition standard. A final standard is expected to be issued by the end of June 2013 with an effective date of 1 January 2017. The effective date may seem like a long way off, but it is expected to have significant impacts for certain industries, and so warrants consideration now. Issue 52 of IFRS Developments takes a closer look at the recent decisions made by the boards.

This month we also wish to highlight that the Financial Markets Authority (FMA) has recently released a document outlining the four major themes that will influence its priority areas for monitoring and surveillance in 2013. The themes are building customer trust, raising standards in existing regimes, embedding new regimes and KiwiSaver. The FMA does not intend this document to be a comprehensive list of all the work it will undertake, but it outlines the FMA’s overall priorities and regulatory approach. The document can be found on the FMA’s website

If you would like any further information on any of these topics or the topics below, please get in touch with our Financial Accounting Advisory Services Team.



To find out more about the services we offer in this area please contact EY's Financial Accounting Advisory Services Team

 

Kimberley Crook

Partner, Auckland

+64 9 300 7094

Lara Truman

Executive Director, Wellington

+64 274 899 896

Ravi Kumar

Senior Manager, Auckland

+64 212 214 717

Jude Doliente

Senior Manager, Auckland

+64 212 417 481

David Bassett

Manager, Auckland

+64 274 899 883

 Kind regards
Kimberley Crook
Financial Accounting Advisory Services


Hot topics

  • IFRS Developments Issue 54: IASB proposes new expected credit loss model
    The International Accounting Standards Board (IASB) released a new exposure draft (ED) Financial Instruments: Expected Credit Losses on 7 March 2013 proposing that entities should recognise and measure a credit loss allowance or provision based on an expected credit loss model. The proposals would:
    • require the recognition of expected credit losses for certain financial assets;
    • require the measurement of a credit loss allowance or provision based on either 12-month or lifetime expected credit losses; and
    • likely result in earlier recognition of credit losses that not only includes losses that have already been incurred (as per IAS 39 Financial Instruments: Recognition and Measurement), but also expected future losses.
       
    Issue 54 of IFRS Developments summarises the main proposals in the ED.


  • Boards revisit disclosure, transition and effective date in the revenue project 
    In February 2013, the IASB and US Financial Accounting Standards Board (FASB) reached tentative decisions about the transition method, effective date and disclosures for its joint revenue project. A final standard is expected to be issued by the end of June 2013 with an effective date of 1 January 2017, with early adoption not permitted.

    We take a closer look at the issues discussed and decisions made in Issue 52 of our IFRS Developments publication.
     

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IFRS news and updates

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Industry in focus

Real Estate

  • Fair value implications for the real estate sector and example disclosures for real estate entities 
    This publication focuses on a number of the implications of IFRS 13 for the real estate sector. IFRS 13 establishes a single framework for fair value measurement when it is required or permitted by IFRS. It is effective for annual periods on or after 1 January 2013.

    Our publication includes recent discussions on critical issues on fair value measurement of real estate property and provides selected illustrative disclosures of a real estate entity, which has investment properties measured at fair value, in its first set of financial statements after adoption of IFRS 13.

  • Current issues, sustainability reporting and financial statements survey of real estate entities 2011/2012 
    This publication is our latest survey of the financial statements of 40 real estate companies reporting under IFRS and provides an analysis of some of the key financial reporting issues they are facing.

    The economic environment has changed significantly over recent years and the valuation of and reporting on investment properties continue to evolve. In addition, the real estate sector has been the subject of greater regulatory scrutiny of its valuation policies and disclosures. In previous years’ surveys, we analysed whether the changing environment impacted the level of disclosures in the financial reports of real estate investment companies, especially with respect to crisis-related issues such as valuation uncertainty, debt covenants and ‘going concern’ issues. In this year’s survey, we continue to focus on the issues likely to be significant in a still challenging real estate market. We also extend our survey beyond financial reporting to consider sustainability reporting.
     

Mining and Metals

Insurance

  • Boards meet to re-deliberate insurance contracts 
    This Insurance Accounting Alert covers topics addressed at both the November and December 2012 meetings of the IASB and FASB, where the boards clarified their decisions on contracts and residual margins, and discussed presentation and disclosure requirements.
     

Public finance managment

  • IPSAS Outlook 
    This publication discusses International Public Sector Accounting Standards (IPSAS) issues for public finance management entities.

    IMF Senior Economist, Abdul Khan, discusses the IMF’s plans for helping governments to achieve greater transparency and accountability in their fiscal reporting.

    Also included are responses from the Eurostat public consultation on the suitability of IPSASs for EU Member States, a comparison between IPSAS and IFRS, and an IPSASB project update.

    It should be noted that the comparison between IPSAS and IFRS is focused on comparing ‘pure’ IPSAS (being the standards issued by the International Public Sector Accounting Standards Board) and ‘pure’ IFRS (being the standards issued by the IASB).  Hence, it does not necessarily reflect any NZ-specific modifications, such as those contained in NZ IFRS as applied by public benefit entities.
     

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On the horizon

Below are recent Exposure Drafts which are currently open for comment to the New Zealand Accounting Standards Board (NZASB), IASB and/or International Public Sector Accounting Standards Board (IPSASB). Please refer to the current exposure draft section on the XRB website for more details (www.xrb.govt.nz).
 

 

Standard/Exposure Draft
Comments due to NZASB by
Comments due to IASB by
Comments due to IPSASB by

Package 4: Public Sector PBE Simple Format Accounting Standards

28 March 2013
 
 

Package 3: NFP Simple Format Accounting Standards

28 June 2013
 
 

IASB Exposure Draft ED/2012/3 Equity Method: Share of Other Net Asset Changes

1 March 2013
22 March 2013
 

Exposure Draft ED/2012/5 Clarification of Acceptable Methods of Depreciation and Amortisation (Proposed amendments to IAS 16 and IAS 38)

CLOSED 28 March 2013
 

Exposure Draft ED/2012/4 Financial Instruments: Classification and Measurement (Limited Amendments to IFRS 9)

CLOSED 28 March 2013  
Exposure Draft ED/2013/2 Proposals for amendments to IAS 39 Financial Instruments: Recognition and Measurement Novation of derivatives and continuation of hedge accounting 27 March 2013 2 April 2013  

Exposure Draft ED/2012/6 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Proposed amendments to IFRS 10 and IAS 28)

28 March 2013 23 April 2013  

Exposure Draft ED/2012/7 Acquisition of an Interest in a Joint Operation (Proposed amendment to IFRS 11)

28 March 2013 23 April 2013  

IASB ED/2013/3 Financial Instruments: Expected Credit Losses

14 June 2013 5 July 2013  

IPSASB Consultation Paper - IPSASs and Government Finance Statistics Reporting Guidelines

CLOSED   31 March 2013

IPSASB Conceptual Framework Exposure Drafts

CLOSED  
30 April 2013 

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Events and Webcasts

  • Click here to access a summary of all upcoming webcasts.
    If you missed any of the recent global webcasts you can now watch them via the webcast archive

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Contacts

 For more information on any of the points raised in this newsletter, please contact a member of EY’s Financial Accounting Advisory Services Team.

To find out more about the services we offer in this area please contact EY's Financial Accounting Advisory Services Team

Kimberley Crook

Partner, Auckland

+64 9 300 7094

Lara Truman

Executive Director, Wellington

+64 274 899 896

Ravi Kumar

Senior Manager, Auckland

+64 212 214 717

Jude Doliente

Senior Manager, Auckland

+64 212 417 481

David Bassett

Manager, Auckland

+64 274 899 883

 

  


 

The information contained in this newsletter does not constitute advice and should not be relied upon as such.  Professional advice should be sought prior to action being taken on any of the information.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contact us

Kimberley Crook
+64 9 300 7094

Graeme Bennett
+64 9 300 8191

Lara Truman
+64 274 899 896

David Pacey
+64 212 425 716

Asia Pacific Financial Accounting Advisory Services contacts.