A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd.

VOL 16, Issue 1 January 2014

Accounting Update: Standards/Interpretations Issued Not Yet Effective As At 31 December 2012

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors requires that when an entity has not applied a new Standard or Interpretation that has been issued but is not yet effective, the entity shall disclose:

  • this fact; and
  • known or reasonably estimable information relevant to assessing the possible impact that application of the new Standard or Interpretation will have on the entity’s financial statements in the period of initial application.

The standard requires you to consider the following in your disclosure:

  • the title of the new Standard or Interpretation;
  • the nature of the impending change or changes in accounting policy;
  • the date by which application of the Standard or Interpretation is required;
  • the date as at which it plans to apply the Standard or Interpretation initially; and
  • either:
    • a discussion of the impact that initial application of the Standard or Interpretation is expected to have on the entity’s financial statements; or
    • if that impact is not known or reasonably estimable, a statement to that effect.

Below is a list of the current standards and interpretations that have been issued, but may not be effective. Please ensure your disclosure is updated.

Standards Details of amendment Effective date
IFRS 1, First-time Adoption of Int’l Financial Reporting Standards
  • Amendments add an exception to the retrospective application of IFRSs to require that first-time adopters apply the requirements in IFRS 9 Financial Instruments and IAS 20Accounting for Government Grants and Disclosure of Government Assistance prospectively to Government loans existing at the date of transition to IFRSs.
  • Annual Improvements 2009-2011 Cycle amendments clarify the options available to users when repeated application of IFRS 1 is required and to add relevant disclosure requirements.
  • Annual Improvements 2009-2011 Cycle amendments to borrowing costs.
1 January 2013

IFRS 7 Financial instruments: Disclosures
  • Amendments require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the related net credit exposure. This information will help investors understand the extent to which an entity has set off in its balance sheet and the effects of rights of set-off on the entity’s rights and obligations.
  • Amendments to the transition guidance of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, thus limiting the requirements to provide adjusted comparative information.
  • New disclosures required for Investment Entities (as defined in IFRS 10).
1 January 2013

IFRS 13, Fair Value Measurement New guidance on fair value measurement and disclosure requirements. 1 January 2013

IAS 1, Presentation of Financial Statements
  • New requirements to group together items within OCI that may be reclassified to the profit or loss section of the income statement in order to facilitate the assessment of their impact on the overall performance of an entity.
1 July 2012

IAS 1, Presentation of Financial Statements
  • Annual Improvements 2009-2011 Cycle: Amendments clarifying the requirements for comparative information including minimum and additional comparative information required.
1 January 2013

IAS 16, Property, Plant and Equipment
  • Annual Improvements 2009-2011 Cycle: Amendments to the recognition and classification of servicing equipment.
1 January 2013

IAS 19, Employee Benefits
  • Amendments to the accounting for current and future obligations resulting from the provision of defined benefit plans.
1 January 2013

IFRS 9, Financial
Instruments
  • New standard that forms the first part of a three-part project to replace IAS 39 Financial Instruments: Recognition & Measurement.
1 January 2015

IFRS 10, Consolidated
Financial Statements
  • New standard that replaces the consolidation requirements in SIC-12 Consolidation—Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements. Standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company and provides additional guidance to assist in the determination of control where this is difficult to assess.
  • Amendments to the transition guidance of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, thus limiting the requirements to provide adjusted comparative information.
  • IFRS 10 exception to the principle that all subsidiaries must be consolidated. Entities meeting the definition of ‘Investment Entities’ must be accounted for at fair value under IFRS 9, Financial Instruments or IAS 39 Financial Instruments: Recognition and Measurement.
1 January 2013

1 January 2013

1 January 2014


IFRS 11, Joint
Arrangements
  • New standard that deals with the accounting for joint arrangements and focuses on the rights and obligations of the arrangement, rather than its legal form. Standard requires a single method for accounting for interests in jointly controlled entities.
  • Amendments to the transition guidance of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, thus limiting the requirements to provide adjusted comparative information.
1 January 2013

IFRS 12, Disclosure of
Interests in Other
Entities
  • New and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.
1 January 2013

IAS 27, Consolidated
and Separate Financial
Statements
  • Consequential amendments resulting from the issue of IFRS 10, 11 and 12.
  • Requirement to account for interests in Investment Entities’ at fair value under IFRS 9 Financial Instruments, or IAS 39 Financial Instruments: Recognition and Measurement, in the separate financial statements of a parent.
1 January 2013
1 January 2014

IAS 28, Investments in
Associates
  • Consequential amendments resulting from the issue of IFRS 10,11 and 12.
1 January 2013

IAS 32, Financial
Instruments:
Presentation
  • Amendments require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the related net credit exposure. This information will help investors understand the extent to which an entity has set off in its balance sheet and the effects of rights of set-off on the entity’s rights and obligations.
  • Annual Improvements 2009-2011 Cycle: Amendments to clarify the tax effect of distribution to holders of equity instruments.
1 January 2013

IAS 34, Interim Financial
Reporting
  • Annual Improvements 2009-2011 Cycle: Amendments to improve the disclosures for interim financial reporting and segment information for total assets and liabilities
1 January 2013

 

What else should be disclosed?

In order to comply with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors entities need to disclose effects of the initial application of IFRSs and amendments that are mandatory for the first time.

An entity shall disclose the following when applying IFRSs and related amendments:

  • The title of the IFRS;
  • When applicable, that the change in accounting policy is made in accordance with its transitional provisions;
  • The nature of the change in accounting policy;
  • When applicable, a description of the transitional provisions;
  • When applicable, the transitional provisions that might have an effect on future periods;
  • For the current period and each prior period presented, to the extent practicable, the amount of the adjustment:
    • For each financial statement line item affected
    • If IAS 33 Earnings per Share applies to the entity, for basic and diluted earnings per share
  • The amount of the adjustment relating to periods before those presented, to the extent practicable;
  • If retrospective application required is impracticable for a particular prior period, or for periods before those presented, the circumstances that led to the existence of that condition and a description of how and from when the change in accounting policy has been applied.

 

ACCOUNTING PUBLICATION:
These periodic Accounting Updates are prepared by PKF International Ltd (PKFI) as a resource to help PKF member firms understand key accounting developments and how they may affect their clients.

IMPORTANT DISCLAIMER:
This publication has been distributed on the express terms and understanding that the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication.

The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms.