On The Horizon For IFRS - February 19, 2013

IASB / FASB JOINT MEETING JANUARY 2013

IASB issues January 2013 joint IASB / FASB meeting highlights

Key issues

At the January 2013 joint IASB / FASB meeting the following issues were discussed:

Conceptual Framework ‒ education session: The IASB held an education session on the Conceptual Framework project and discussed the definition of an asset and a liability, and presentation. No decisions were made. Financial instruments: hedge accounting: The IASB discussed issues raised in comments on the draft requirements on the new hedge accounting. The matters discussed included using hypothetical derivatives to measure the change in the value of a hedged item; the transition requirement for designation of own use contracts as at fair value through profit or loss; and the interaction of the scope of the new hedge accounting requirements with macro hedge activities. Financial instruments: hedge accounting (IFRS Interpretations Committee matters): The IASB decided to amend IFRS to allow the novation of a hedging instrument to a central counterparty, as a result of legislation, to be considered a continuation of the existing hedging relationship. The IASB directed the staff to prepare an exposure draft with a 30 day comment period. Insurance contracts (IASB-only meeting): During an education session on the proposed Standard on insurance contracts, the IASB discussed the presentation of insurance contract revenue when there are changes in the pattern of expected claims, the transition proposals for insurance contract revenue, and how to measure insurance contracts that had been previously acquired in a business combination on transition. No decisions were made. In addition, the IASB considered and reached certain tentative decisions on sweep issues for the proposed Standard on insurance contracts. Insurance contracts: The IASB and the FASB continued their joint discussions of the proposed Standard on insurance contracts, specifically discussing the presentation of insurance contract revenue when there are changes in the pattern of expected claims and the transition proposals for insurance contract revenue. The Boards reached certain tentative decisions. Integrated reporting ‒ education session: The staff conducted an education session that provided the IASB with an overview of the Board's involvement with integrated reporting, in their capacities as members of the International Integrated Reporting Council (IIRC) and its working group. No decisions were made. Subsequent to the Board meeting the IASB and the IIRC issued a Memorandum of Understanding that will allow the two organizations to deepen their cooperation on the IIRC's work to develop an integrated corporate reporting framework. Leases: The Boards reached tentative decisions on the following topics: Identification of separate lease components within a contract Determining the nature of the underlying asset for classification purposes when a lease component contains the right to use more than one asset Applying the classification criteria to a property lease component that contains both land and a building The Boards plan to publish a revised Exposure Draft in the second quarter of 2013. Post-implementation review: IFRS 8, Operating Segments: The IASB discussed the staff's papers on the information received in response to the IASB's Request for Information (RFI), Post-implementation Review: IFRS 8, Operating Segments. The IASB reaffirmed the staff view that they had now received sufficient information for the IASB to report on its post-implementation review of IFRS 8 and requested that the staff prepare a feedback statement for presentation at a future IASB meeting. Rate regulated activities (IASB-only meeting): The IASB held an education session on a proposal for an interim IFRS for rate-regulated activities. No decisions were made. The IASB continued discussions on the proposed interim standard for rate-regulated activities to allow entities adopting IFRS to continue to use their local GAAP to account for rate-regulated activities until the final guidance is completed. The staff will prepare an exposure draft based on the IASB's tentative decisions. Revenue recognition: The Boards reached tentative decisions on the following topics: Scope Repurchase agreements Impact of revenue recognition guidance on asset managers Transfers of assets that are not an output of an entity's ordinary activities Work plan: The work plan as of February 4, 2013, reflecting decisions made at the January 2013 meeting is available on the IASB website. All decisions reached at IASB meetings are tentative and may be changed or modified at future meetings. Board decisions become final only after completion of a formal ballot to issue a Standard or Interpretation or to publish an Exposure Draft.

The International Accounting Standards Board has issued an IASB Update, which summarizes the joint IASB / FASB meeting that was held on January 20-31, 2013. The IASB met alone for certain sessions.

Highlights of the meeting are discussed below.

Conceptual Framework ‒ education session

The IASB held an education session on the Conceptual Framework project and discussed the definition of an asset and a liability, and presentation. No decisions were made.

The IASB will continue its discussions on the Conceptual Framework project at the February 2013 meeting.

See the IASB project summary for more information on this project.

Financial instruments: hedge accounting

In September 2012 a draft of the forthcoming hedge accounting requirements was released. At this meeting the IASB discussed the following issues raised in comments on the draft requirements.

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