Asia Regional Finance Conference August 23-25, 2011

IFRS UPDATES

Noreen Macayan August 23, 2011

Course Objective

Provide a brief history of IFRS Provide updates on IFRS Highlight further amendments and likely future

pronouncements

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HISTORY OF IFRS

Date 1966
1967 1973 1973-2000 2001 2001 to date

History ICAEW, AICPA and CICA formed International Study Group

The Accountants International Group was Founded IASC was formed IAS 1 to IAS 41 (numerically) IASC was replace by IASB The IASB adopted all the IAS and Standards were published in series called IFRS IAS & IFRS

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IFRS issued by IASB

IASC Accounting Standards IAS

IASB IFRS IFRIC

TO DATE IAS & IFRS SIC & IFRIC

Interpretations SIC Committee

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Summaries of IFRS up to 2010

IAS 1 Presentation of Financial Statements IAS 2 Inventories IAS 7 Statement of Cash Flows IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 10 Events After the Reporting Period IAS 11 Construction Contracts IAS 12 Income Taxes IAS 14 Segment Reporting IAS 16 Property, Plant and Equipment IAS 17 Leases IAS 18 Revenue IAS 19 Employee Benefits IAS 20 Accounting for Government Grants and Disclosure of Government Assistance IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 23 Borrowing Costs IAS 24 Related Party Disclosures IAS 26 Accounting and Reporting by Retirement Benefit Plans IAS 27 Consolidated and Separate Financial Statements IAS 28 Investments in Associates IAS 29 Financial Reporting in Hyperinflationary Economies IAS 31 Interests In Joint Ventures IAS 32 Financial Instruments: Presentation IAS 33 Earnings Per Share IAS 34 Interim Financial Reporting IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 38 Intangible Assets IAS 39 Financial Instruments: Recognition and Measurement IAS 40 Investment Property IAS 41 Agriculture IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 2 Share-based Payment IFRS 3 Business Combinations IFRS 4 Insurance Contracts IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 6 Exploration for and Evaluation of Mineral Assets IFRS 7 Financial Instruments: Disclosures IFRS 8 Operating Segments

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Superseded IASs
IAS 3 Consolidated Financial Statements IAS 27 and IAS 28

IAS 4 Depreciation Accounting

IAS 5 Information to Be Disclosed in Financial Statements IAS 6 Accounting Responses to Changing Prices IAS 9 Accounting for Research and Development Activities IAS 13 Presentation of Current Assets and Current Liabilities IAS 22 Business Combinations IAS 25 Accounting for Investments IAS 35 Discontinuing Operations

IAS 16, 22, and 38

IAS 1 IAS 15, then withdrawn in 2003 IAS 38 IAS 1 IFRS 3 IAS 39 and IAS 40 IFRS 5

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Whats new for 2011 and beyond?

IAS 27 Consolidated and Separate Financial Statements Superseded by IFRS 10, IFRS 12 and IAS 27 (rev. 2011) effective 2013 IAS 28 Investments in Associates Superseded by IAS 28 (rev. 2011) and IFRS 12 effective 2013

IAS 31 Interests In Joint Ventures Superseded by IFRS 11 and IFRS 12 effective 2013
IAS 39 Financial Instruments: Recognition and Measurement Superseded by IFRS 9 effective 2015

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Recap - New IFRS

IAS 27 (rev. 2011) effective 2013 Separate Financial Statements IAS 28 (rev. 2011) effective 2013 Investments in Associates and Joint Venture IFRS 9 Financial Instruments effective 2015 IFRS 10 Consolidated Financial Statements effective 2013

IFRS 11 Joint Arrangements effective 2013

IFRS 12 Disclosure of Interests in Other Entities effective 2013 IFRS 13 Fair Value Measurement effective 2013

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Which IFRS to use?

Control

>50%

20% - 50%

<20%

Common Control

Investment
Accounting Method Standard to apply up to 2013 2013 onwards

Subsidiary
Consolidatio n IAS 27

Associate
Equity Method IAS 28

Financial Instrument
AFS, HTM, L&R, FVTPL IAS 32 and IAS 39

Joint Venture
Proportionat e of Equity IAS 31

IFRS 10

IAS 28 IAS 32 and revised 2011 IFRS 9 (effective 2015)

IFRS 11

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Consolidated and separate financial statements

Yes

Do any control relationship exist?

No Yes

Is parent exempt from preparing consolidated financial statements?

No

Prepare separate financial statements only

Are separate financial statements also required?

Yes
No

Prepare both consolidated and separate financial statements

Prepare consolidated financial statements only

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Factors identifying control

Control is presumed when parent acquires more than half of voting rights of the entity

Power to appoint/remov e majority of controlling board members

>50% of votes by ownership

Control

Power to govern financial and operation

Power over voting control at board meetings

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IFRS 9 Financial Instruments Main Features

will replace IAS 39 reduces the number of categories of financial assets

Fair value Amortized cost

eliminated measurement category terminology

FVTPL, L&R, HTM, AFS

only one impairment method which is only if financial assets is measured at amortized cost

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IFRS 10 Consolidated Financial Statements

replaces the control and consolidation section of IAS 27 and SIC-12 set out a revised definition of control
is exposed, or has rights , to variable returns has the ability to affect those returns through its power the rights to direct activities that significantly affect entitys returns returns have wide meaning and includes, for example, dividends, interests, valuation gains and losses, services fees, remuneration as well as synergies

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IFRS 11 Joint Arrangements

supersedes IAS 31, Interest in Joint Ventures now two categories of joint arrangements
joint operations (including jointly controlled assets) joint ventures (based on substance of the arrangements, not legal entity driven

option
-

of using proportionate consolidation is eliminated

equity accounting used in accordance with IAS 28

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IFRS 12 Disclosures of Interests in Other Entities

A reporting entity should disclose information that helps users of financial statements to understand:

a. the significant judgments and assumptions (and changes) made by the reporting entity in determining whether it controls (or does not control) another entity
b. the interest that the non-controlling interests have in the groups activities c. the effect of restrictions on the reporting entitys ability to access and use assets or settle liabilities of consolidated entities

d. the nature, and changes in , the risks associated with the reporting entitys interest in consolidated structured entities, joint arrangements, associates and unconsolidated structured entities

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IFRS 13 Fair Value Measurements

set out guidance on how not when to use fair value clear definition of fair value applies to financial and non-financial items

clarifies how to measure FV when the market becomes less active

improves transparency through disclosures about measurement uncertainty
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Suggested IFRS resources

http://iasplus.com http://www.ifrs.org

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Questions

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Thank you
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