The International Accounting Standards Committee Board met in Copenhagen, Denmark, on 19-23 June 2000, when it:
- appointed a Steering Committee for the project to revise IAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions;
- agreed to proceed with projects to develop guidance on business reporting on the Internet and to conduct a survey on the extent of barter and similar transactions in order to determine the need (if any) for an IASC Standard in this area; and
- received a report on the work with others in a world.-wide effort to develop a «taxonomy» (financial statement presentation and classification system) for business reporting on the Internet.
Financial Instruments – Recognition and Measurement (E66)
The IASC Board approved Exposure Draft, E66, on five limited revisions to IAS 39, Financial Instruments: Recognition and Measurement, and related Standards. None of the proposed revisions represents a change to a fundamental principle in IAS 39. Instead, the purpose of the proposed changes is primarily to address technical application issues that have been identified following the approval of IAS 39 in December 1998. The Board’s assessment is that the proposed changes will assist enterprises preparing to implement IAS 39 for the first time in 2001 and help ensure a consistent application of the Standard. No further changes to IAS 39 arc contemplated. E66 proposes:
- consistent accounting for purchases and sales of financial assets using either trade date accounting or settlement date accounting. IAS 39 currently requires settlement date accounting for sales of financial assets, but permits both trade date and settlement date accounting for purchases;
- elimination of a requirement for a lender to recognise collateral received from a borrower in its balance sheet. IAS 39 currently requires a lender to recognise certain collateral in its balance sheet;
- improvement of the wording on impairment recognition;
- consistent accounting for temporary investments in equity securities between IAS 39 and other International Accounting Standards; and
- elimination of redundant disclosure requirements for hedges in IAS 32, Financial Instruments: Disclosure and Presentation.
- It is the IASC Board’s intention to have the proposed changes to IAS 39 in place when IAS 39 becomes effective, that is, for financial years beginning on or after 1 January 2001.
Comments on E66 are invited by the IASC from all interested parties by 10 September 2000 .
Income Tax Consequences of Dividends (E68)
The IASC Board approved Exposure Draft, E68, Income Tax Consequences of Dividends, which proposes limited changes to IAS 12, Income Taxes. The deadline for comments on E68 is 10 September 2000 .
In some jurisdictions, income taxes are payable at a higher or lower rate if part or all of the net profit or retained earnings is paid out as a dividend. In some other jurisdictions, income taxes may be refundable if part or all of the net profit or retained earnings is paid out as a dividend. E68 proposes that current and deferred tax assets and liabilities would be measured using the tax rate applicable to undistributed profits.
Pension Plan Assets (E67)
The Board approved Exposure Draft, E67, Pension Plan Assets, which proposes limited changes to IAS 19, Employee Benefits. The deadline for comments on E67 is 10 September 2000 .
E67 proposes to change the definition of plan assets in IAS 19. E67 defines plan assets as assets (other than non-transferable financial instruments issued by the reporting enterprise) that:
- are held by an entity (a fund) that is legally separate from the reporting enterprise and was established solely to pay or fund employee benefits; and
- are available to be used only to pay or fund employee benefits, are not available to the enterprise’s own creditors (even in bankruptcy), and cannot be returned to the reporting enterprise, unless either:
- the remaining assets of the fund are sufficient to meet all the related employee benefit obligations of the plan or the reporting enterprise; or
- the assets are returned to the reporting enterprise to reimburse it for paying employee benefits.
E67 also proposes recognition and measurement requirements for certain reimbursements of employee benefits – for example, reimbursements under insurance policies that an enterprise holds directly (rather than through a fund) in order to fund employee benefits. E67 proposes that an enterprise should recognise its rights under the policies as a separate asset, rather than as a deduction from the related obligations. In all other respects (for example, the use of the «corridor»), E67 proposes that an enterprise should treat such reimbursements in the same way as plan assets.
Agriculture
The IASC Board considered a draft of a final Standard on Agriculture. The draft Standard is based on Exposure Draft, E65, modified to reflect steering committee recommendations arising from comments received on E65 and the results of a field test of the reliability of fair value measurement of biological assets and agricultural produce.
The Board asked the staff to revise the draft Standard to include an exception from fair value measurement for those biological assets where fair value cannot be estimated reliably.
The Board agreed that the 1 January 2001 effective date proposed in E65 should be extended by at least one year. The Board will consider a revised draft Standard at its October 2000 meeting, with a view to finalising the Standard by year-end.
Reporting Financial Performance
The IASC Board had a short discussion on the preliminary views of the Reporting Financial Performance Steering Committee on its efforts to develop a new approach to reporting financial performance. The Board expressed broad support for developing a single statement that would report all movements in net assets other than those arising from transactions with owners. The Steering Committee intends to develop a Draft Statement of Principles by the end of 2000.
The IASC can be contacted at 166 Fleet Street , London EC4A 2DY , United Kingdom , phone 44 ( 020 ) 7353 0565 ; fax 44 ( 020 ) 7353 0562 ; e – mail : publications@iasc.org.uk ; Internet :http://www.iasc.org.uk.