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Whats coming up

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FASB projects: Fair value option. Investment properties. Research and development ... Joint IASB/FASB project. Very long-term progressive project (phases A to H) ... – PowerPoint PPT presentation

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Title: Whats coming up


1
Whats coming up?
  • SOLGM October 2006

2
Agenda
  • New NZ IFRS and amendments to existing NZ IFRS
  • IFRS and NZ IFRS exposure drafts
  • IPSAS exposure drafts
  • And F Y I

3
Section Heading
  • New NZ IFRS and
  • amendments to existing NZ IFRS
  • NZ IAS 1 Presentation of Financial Statements
  • NZ IFRS 7 Financial Instruments Disclosures
  • NZ IAS 1 amendment Capital Disclosures
  • NZ IAS 36 Impairment
  • NZ IAS 39 Financial Instruments

4
NZ IAS 1 Presentation of Financial Statements
  • Added an appendix New Zealand Application
    Guidance When is an Entity a Public Benefit
    Entity?
  • Classification is based on an entitys primary
    objective
  • Provides guidance on determining an entitys
    primary objective
  • Provides illustrative examples

5
NZ IFRS 7 Financial Instruments Disclosures
  • New standard
  • Applicable for 2007/08 year
  • But can apply earlier
  • It replaces
  • NZ IAS 32 Financial Instruments Disclosure and
    Presentation

6
NZ IFRS 7 Financial Instruments Disclosures
  • Whats different?
  • Principles based not prescriptive
  • Qualitative disclosure objectives, policies,
    processes
  • Quantitative extent of exposure
  • Audit New Zealand local government model annual
    report includes NZ IFRS 7 disclosures

7
NZ IFRS 7 Financial Instruments Disclosures
  • Information that allows readers to evaluate
  • The significance of financial instruments for an
    entity's financial position and performance
  • Nature extent of risks arising from financial
    instruments
  • Qualitative quantitive information
  • Qualitative management's objectives, policies
    and processes for managing those risks.
  • Quantitative the extent to which the entity is
    exposed to risk
  • Extract from Introduction

8
NZ IAS 1 amendment Capital Disclosures
  • How an entity manages its capital
  • Objectives, policies processes
  • Description of what entity views as its capital
  • Externally imposed capital commitments
  • Based on information provided internally
  • Applicable for 2007/08
  • How to do this for the public sector?

9
NZ IAS 36 Impairment
  • Now applies to all PBE assets
  • Including infrastructural assets
  • Including assets that are revalued
  • Good news
  • Value in use Depreciated Replacement Cost
  • Available for PBEs only
  • Impact classification?

10
NZ IAS 39 Financial instruments
  • Financial guarantee contracts
  • E.g. guarantee of a sports club loan
  • Now have to be recognised in the balance sheet
  • Valuation next slide
  • Applies to the 2006/07 financial statements

11
NZ IAS 39 Financial instruments
  • Financial guarantee contracts - Amount
  • Determine in accordance with NZ IAS 37
    (provisions contingencies)
  • Based on probability that will have to reimburse
    the holder
  • Discount to present value
  • Balance contingent liability

12
NZ IAS 39 Financial instruments
  • Financial guarantee contracts definition
  • A contract that requires the issuer to make
    specified
  • payments to reimburse the holder for a loss it
    incurs
  • because a specified debtor fails to make payment
    when
  • due in accordance with the original or modified
    terms of a
  • debt instrument.

13
Section Heading
  • IFRS and NZ IFRS exposure drafts
  • IASB moratorium
  • FRSB new releases
  • NZ IAS 1 Presentation
  • NZ IAS 23 borrowing costs
  • NZ IAS 37 provisions, contingencies

14
IASB moratorium
  • The IASB will not require the application of
  • new IFRS under development or
  • major amendments to existing standards
  • before periods beginning on or after January 2009
  • But
  • Whats major?

15
Exposure draft of proposed amendments to NZ IAS
1 Presentation of Financial Statements
  • 3 statements of financial position
  • Current year 2 comparative years
  • (Not a balance sheet anymore)
  • 1 or 2 statements of recognised income
    expenditure
  • Everything in 1 or
  • 2nd for unrealised gains/losses
  • Including the items currently in statement of
    movements in equity

16
Proposals for NZ IAS 23 Borrowing Costs
  • Eliminate the option of expensing borrowing costs
  • That is, must capitalise borrowing costs
  • Not major
  • Impact on revaluations?
  • New Zealand considerations
  • Differential reporting
  • Continue expense option

17
Proposals for NZ IAS 37 Provisions , Contingent
Liabilities and Contingent Assets
  • New terms
  • Non-financial liability ( provision)
  • Contingency
  • Recognise contingencies on the balance sheet
  • Uncertainty reflected in the amount

18
Proposals for NZ IAS 37 Provisions , Contingent
Liabilities and Contingent Assets
  • Recognising contingencies on the balance sheet
  • Uncertainty reflected in the amount
  • E.g. court case at balance date
  • Certain that will have to pay what the court
    orders
  • Uncertain how much (if anything) that will be
  • How much to settle the liability or transfer it?

19
Section Heading
  • International Public Sector Accounting Standards
  • IPSAS
  • Exposure Drafts
  • Revenue from non-exchange transactions
  • Heritage assets

20
International Public Sector Accounting Standards
Board IPSASB
  • Committee of the International Federation of
    Accountants IFAC
  • IPSASB focuses on the accounting and financial
    reporting needs of national and local
    governments.
  • Its accounting standards may provide us with
    authoritative support

21
Revenue from Non-Exchange Transactions
  • NZ IAS 18 doesnt cover revenue such as rates
    taxes
  • These are non-exchange transactions
  • There is no other standard dealing with
    non-exchange revenue.
  • IPSAS ED 29
  • Recognise as revenue unless
  • There is a condition that have to return if not
    used as specified e.g. some grants
  • Then can defer recognition

22
Accounting for Heritage Assets consultation paper
  • Record at current values if reliable current
    values can be obtained
  • Measurement at a notional value or at historical
    cost not permitted
  • If reliable current values cant be obtained at
    reasonable cost
  • Dont record on the balance sheet
  • Provide additional disclosures instead

23
Section Heading
  • And For Your Information . . .
  • IFRS and NZ IFRS exposure drafts
  • FRSB new releases
  • ED 108 Omnibus Exposure
  • ED 109 Consolidations
  • NZ ED 8 segment reporting
  • Small and medium sized entities
  • IASB Differential reporting
  • IFRS and US GAAP convergence
  • . . . at the back . . .

24
And in conclusion . . .
  • Any Questions?

25
ED 108 Omnibus Exposure Draft proposes
amendments to
  • NZ IAS 1 Presentation of Financial Statements
  • reinstate fair presentation override
  • But only where no legislative requirement to
    comply with GAAP
  • NZ IAS 2 Inventories
  • inventories held for distribution PBE
  • Have to consider obsolescence
  • NZ IAS 24 Related Party Disclosures
  • Exemption where entities under common control of
    the Crown

26
ED 108 Omnibus Exposure Draft proposes
amendments to
  • NZ IAS 34 Interim Financial Reporting
  • align assertions of compliance with NZ IAS 1
  • NZ IAS 36 Impairment of Assets
  • increase differential reporting exemptions
  • NZ IAS 40 Investment Property
  • align valuation requirements with NZ IAS 16
    Property, Plant and Equipment

27
ED 109 proposes amendments to
  • FRS 37 Consolidating Investments in Subsidiaries
    ,and
  • NZ IAS 27 Consolidated and Separate Financial
    Statements
  • Introduction of the autonomous and independent
    public sector entity
  • Central government only.

28
NZ ED 8 Operating Segments
  • Segments are to be a reflection of how management
    regards the business
  • Disclosed segments to reflect internal reporting
  • Focus on chief operating decision maker(s) (CODM)
  • Measures reported externally must be those
    reported to the CODM

29
IASB version of Differential Reporting
  • IASB project
  • develop an IFRS to meet the needs of Small
    Medium size Entities SMEs
  • IASB approach Bottom Up
  • Develop standards for SMEs
  • Same underpinning framework
  • Set out as one standard including illustrative
    financials
  • NZ differential reporting framework Top Down
  • Same standards
  • But disclosure exemptions

30
SME reporting
  • Each country will choose size criteria
  • Intended to be updated every two years
  • NZ will need to decide whether to
  • adopt SME IFRS or
  • retain differential reporting framework

31
IFRS and US GAAP convergence
  • commitment to the convergence of US GAAP and IFRS
  • Make existing standards fully compatible as soon
    as possible
  • Co-ordinate future work programmes

32
Short-term convergence
  • FASB projects
  • Fair value option
  • Investment properties
  • Research and development
  • Subsequent events

33
Short-term convergence
  • IASB projects
  • Segment reporting ED published, IFRS 4th
    quarter 2006
  • Borrowing costs ED published, IFRS 1st half
    2007
  • Joint ventures ED 4th quarter 2006
  • Government grants ED 2nd half 2007
  • Joint IASB/FASB projects
  • Impairment not yet started
  • Income taxes ED 4th quarter 2006

34
Other convergence projects
  • Business combinations ED IFRS-3, IFRS 2nd half
    2007
  • Consolidations ED 1st half 2007
  • Fair value measurement DP 4th quarter 2006
  • Financial statement presentation phase A ED
    published
  • Revenue recognition DP 2nd half 2007

35
Conceptual framework
  • Joint IASB/FASB project
  • Very long-term progressive project (phases A to
    H)
  • Phase A Objectives and qualitative
    characteristics
  • Phase B Elements, recognition and measurement
  • Phase C Measurement
  • Phase D Reporting entity
  • Phase E Presentation and disclosure
  • Phase F Purpose and status
  • Phase G Application to not-for-profit entities
  • Phase H Finalisation

36
Whats coming up?
  • SOLGM October 2006
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