IASC Foundation
Annual Report 2008 IASC Foundation
Goal The objective of the IASC Foundation is to develop a single set of high quality, understandable and enforceable accounting standards to help participants in the world’s capital markets and other users make economic decisions.
Global adoption Over 100 countries now require or permit the use of IFRSs.
Highlights
2001 2002 2003 2004
Formal incorporation of European Union passes IASB issues first new IASB improvements and the IASC Foundation. regulation to adopt IFRSs for standard — IFRS 1 First-time stable platform of IFRSs IASB begins work listed businesses beginning Adoption of International completed in first quarter 1 January 2005 Financial Reporting Standards IASB seeks broader stakeholder IASB and FASB announce Australia, Hong Kong, engagement through enhanced initiative to achieve New Zealand and South Africa due process convergence of financial commit themselves to reporting standards and adoption of IFRSs to co-ordinate future work programmes Contents
Page
1 Report of the Chairman of the IASC Foundation Trustees 2–9
2 Meeting the public accountability challenge: report on the Trustees’ oversight activities in 2008 10–13
3 Securing a stable and independent basis of funding 14–18
4 Report of the Chairman of the IASB 19–47
5 Trustees of the IASC Foundation 48–50
6 Members of the International Accounting Standards Board 51–52
7 Members of the International Financial Reporting Interpretations Committee 53
8 Members of the Standards Advisory Council at the end of 2008 54–56
9 Senior staff 57
10 Report of the independent auditors 58
11 Statement of comprehensive income 59
12 Statement of financial position 60
13 Statement of cash flows 61
14 Notes to the financial statements 62–73
15 2008 Financial supporters 74–78
16 IASB documents current at 1 January 2009 79–80
2005 2006 2007 2008
In Europe nearly 7,000 listed IASB and FASB agree Brazil, Canada, Chile, India, Japan Israel, Malaysia and Mexico businesses in 25 countries Memorandum of and Korea all establish time lines to adopt IFRSs simultaneously switch to IFRSs Understanding for to adopt or converge with IFRSs US publishes ‘roadmap’ for advancing convergence US SEC Chief Accountant US SEC removes reconciliation of IFRSs and US GAAP IFRS adoption, update of publishes ‘roadmap’ requirement for non-US IASB-FASB MoU released describing steps towards the China adopts accounting companies reporting under IFRSs, removal of the reconciliation standards substantially in line and consults on IFRSs for IASB pursues comprehensive requirement by 2009 with IFRSs — ultimate goal of domestic companies response to the financial crisis full convergence Over 100 countries now require or permit the use of IFRSs
Annual Report 2008 1 1
Report of the Chairman of the IASC Foundation Trustees
The financial crisis gripping the world’s capital markets is the most significant challenge facing economic policymakers and regulatory bodies since the 1930s.
One lesson is clear — the financial crisis is a global problem demanding a global response.
The leaders of the world’s major Enhancing public developed and emerging economies accountability and global recognised this reality when they acceptance of IFRSs highlighted the need to co-ordinate regulatory initiatives when the Group At our meeting in New Delhi in of 20 (G20) met in Washington, DC, USA, January 2009, the Trustees completed on 15 November 2008 and in London, UK, the first part of their five-yearly review on 2 April 2009. of the IASC Foundation constitution — this review was one of the Trustees’ The Trustees of the International priorities in 2008. The first part of our Gerrit Zalm Accounting Standards Committee Constitution Review addressed the issue Chairman of the IASC (IASC) Foundation and the members of of public accountability by creating a FOUNDATION TRUSTEES the International Accounting Standards link to an independently established Board (IASB) recognise the role a single Monitoring Board of capital market set of accounting standards used authorities. At the same time, the worldwide could play in establishing a international basis of the IASB was more effective regulatory infrastructure strengthened by increasing its size from for the world’s integrated capital 14 to 16 members by July 2012 and markets. International Financial providing geographical guidelines. Reporting Standards (IFRSs), set by the IASB, are now used in more than 100 A strategy review by the Trustees in 2007 countries. Significant advances were highlighted the need to enhance the made toward further adoption of IFRSs in public accountability of the IASC major economies in 2008. By the end of Foundation if the IASB were to become 2008, most of the world’s developed and the world’s accounting standard-setter. emerging economies — including nearly Therefore, the Trustees gave the issue of all of the G20 members — had made public accountability fast-track priority commitments to IFRSs. for the Constitution Review in 2008. The relevance of this priority was confirmed
2 when a group of regulators (the European This basic approach to the architecture Commission, the US Securities and of governance is similar to that in ‘The first part of the Exchange Commission, the Japan place in many national jurisdictions Constitution Review Financial Services Agency and the for accounting standard-setters. Our International Organization of Securities consultation process revealed strong and focused on the creation Commissions) issued in November 2007 consistent support among investors and of a direct link to a press release regarding the IASC others on the need to maintain, within public authorities.’ Foundation’s public accountability. agreed due process, the independence In reaching our conclusions, we of the IASB’s decision-making. At the conducted a consultation process that same time, they understood the need sits as an observer at Monitoring Board included round-table discussions in to establish a formal linkage to public meetings. The Trustees met with the London and a public comment period, authorities, where none was previously Monitoring Board for the first time on where we received responses from more defined, and strongly encouraged our 1 April 2009. than 70 individuals and organisations. efforts to enhance the organisation’s public accountability. The Monitoring Board’s main Our constitutional changes are a responsibilities are to ensure that the significant enhancement of existing Therefore the first part of the Trustees discharge their duties as defined governance arrangements. Underpinning Constitution Review focused on by the IASC Foundation’s Constitution, the organisation’s structure is the the creation of a direct link to an as well as approving the appointment or internationally accepted principle that independent body of public authorities reappointment of Trustees. It is envisaged global accounting standards should be — one that would seek to replicate, on an that the Monitoring Board will meet the developed by an independent IASB. international basis, the link between Trustees at least once a year, or more The IASB reaches conclusions following accounting standard-setters and those often if appropriate. The relationship a transparent and open due process public authorities that have generally and responsibilities of the participating that seeks the views of all stakeholders. overseen accounting standard-setters. organisations are described in the An independent and geographically The initial membership will comprise Memorandum of Understanding (MoU) diverse body of Trustees oversees the the relevant leaders from the European developed by the members of the IASB. Under the constitutional changes, Commission, the US SEC, the Japan FSA Monitoring Board in consultation with the Trustees themselves are now publicly and the IOSCO Emerging Markets and the Trustees. accountable to a Monitoring Board of Technical Committees. The Basel public authorities. Committee on Banking Supervision
Annual Report 2008 3 1 REPORT OF THE CHAIRMAN OF THE IASC FOUNDATION TRUSTEES
The Monitoring Board arrangements are • one member from South America; and A responsible and not a substitute for existing consultation • two members appointed from any active approach to the requirements. Indeed, the Trustees are area, subject to maintaining overall financial crisis stepping up their efforts for greater geographical balance. dialogue with interested parties through My Trustee colleagues and the IASB have the Standards Advisory Council (SAC), The Trustees have already strengthened responded and will continue to respond which was reconstituted in 2008 and the contingent from Asia-Oceania with in an urgent and responsible manner met for the first time in its new form the recent appointment of Prabhakar to help restore confidence in financial in February 2009. The Trustees and the Kalavacherla of India (formerly a partner markets. The Trustees have supported IASB are also working to build stronger with KPMG). The focus in 2009 is to the IASB’s efforts, under Sir David relationships with representatives of identify qualified candidates who Tweedie’s leadership, to respond users, preparers, auditors, academics, will provide practical experience promptly to the recommendations of the and regulatory organisations. from the perspectives of users, preparers, Financial Stability Forum (FSF) and the and regulators. G20, particularly on off balance sheet Furthermore, consistently with the items and the development of In December 2008 the Trustees launched November 2008 recommendation of the educational guidance for the application the second part of the Constitution G20 to examine the membership of of fair value in illiquid markets. The Review by publishing a discussion standard-setting bodies, the Trustees also Trustees have monitored closely the document. The purpose of the discussion approved, in New Delhi on 15 January, IASB’s response to the recommendations document is to seek comments on the a constitutional change that will expand made at the G20 meeting in November full range of constitutional issues that the IASB to 16 members and provides 2008 for action by 31 March 2009, to the were not addressed in the first part of the guidelines regarding geographical proposals coming out of the FSF, and to review. During the first part of the diversity. In order to ensure a broad other suggestions that have been made. review, commentators raised the need to international basis, there will be: The Trustees believe that the IASB has examine the possibility of introducing • four members from the dealt effectively and promptly with all emergency due process procedures, Asia/Oceania region; of these issues. the IASB’s agenda-setting process, the • four members from Europe; effectiveness of the SAC, and the ongoing • four members from North America; financing efforts. These will certainly be priority issues for the Trustees in 2009. • one member from Africa;
4 The Trustees encouraged the initiative of re-examine the prohibition contained in Composition of the IASB IASB and the US Financial Accounting IAS 39 Financial Instruments: Recognition at 1 July 2009 * Standards Board (FASB) to assemble the and Measurement against reclassifying Financial Crisis Advisory Group (FCAG), some financial assets out of the held-to- chaired by Harvey Goldschmid, a former maturity category. The change was 1 US SEC Commissioner, and Hans necessary, they argued, in order to bring 1 Hoogervorst, Vice Chairman of IOSCO’s IFRSs more into line with US generally 4 Technical Committee. The FCAG, accepted accounting principles (GAAP), comprising senior leaders from business which allowed such transfers in and government, will make an important limited circumstances. 4 contribution to the IASB’s consideration of issues arising from the financial crisis. At our meeting in October in Beijing, the Trustees faced a difficult decision, One of the clear lessons of the financial as might be anticipated when there are 5 crisis is that we must press on with and multiple standard-setters and sets even accelerate convergence efforts, of standards. Had the Trustees and where possible, and seek commitments subsequently the IASB not acted, the Asia/Oceana region towards the achievement of a single set likely outcome would have been a of accounting standards, administered change, resulting in no guidance in the Europe by a single standard-setter and used rules as to when such transfers are North America throughout the world. Indeed, the permitted, no guidance of required Africa continuing existence of different disclosure, and the possibility for greater South America accounting standards and multiple inconsistency in application between standard-setting bodies provides the IFRSs and US GAAP. * Expanding to 16 members by July 2012. opportunity for regulatory arbitrage. This was very much the case when, in the midst of a sudden downturn in the markets, EU leaders asked the IASB to
Annual Report 2008 5 1 REPORT OF THE CHAIRMAN OF THE IASC FOUNDATION TRUSTEES
In these circumstances, the IASB crafted In 2008 we have had three primary an amendment to IAS 39 which sought to ‘The Trustees have financial objectives in the financial area: create a level playing field between IFRSs also made it a priority • Prudently expanding staff resources to and US GAAP. Additionally, the IASB respond to a growing workload. required full disclosure of such transfers. to ensure that an • Projecting the resource requirements The Trustees allowed the IASB to waive its adequate financing over five years following the 2007 due process to effect this amendment. regime is in place strategy review. The Trustees strongly believe, in light of the context, with the transparency of the to ensure that the • Continuing to advance the long-term disclosures, and because of the way the IASC Foundation financing initiative, begun in 2006 rule was crafted, that this exceptional fulfils its public and, to a great extent, in place for the waiver of the due process in these interest objectives.’ 2008 financial year. unprecedented times was warranted. 2008 financial results However, we are also united in our For the first time in three years, in 2008 commitment to appropriate due process. The existence of the Monitoring Board the IASC Foundation ran a profit before As part of the second part of the should also provide a forum to raise fair value changes and exchange gains Constitution Review, the Trustees are issues of great urgency with bodies fully were taken into account, totalling seeking input on how emergency due committed to the need for an £528,311 in 2008, compared with a loss process procedures might be introduced. independent standard-setter. of £210,530 in 2007. Highlights from the 2008 financial year include: The Monitoring Board and the Trustees Building a well-resourced • Expanded capacity and enhanced are committed to protecting the independent standard-setter consultation: The IASC Foundation independence of the IASB’s decision- One of the major responsibilities for the was able to achieve this result despite making process. The establishment of Trustees remains securing the necessary significantly increasing the resources the Monitoring Board should help to resources to operate the organisation. devoted to staff and consultations, strengthen the IASB’s independence by The adoption of IFRSs throughout the both a necessary by-product of the providing more legitimacy through world, combined with the pressures of IASB’s response to the financial crisis public accountability. The capital market the ongoing financial crisis, has placed and commitment to pursuing the authorities serving on the Monitoring increasing demands on the organisation. targets set out in its MoU with the Board have often been an effective shield The Trustees have also made it a priority US FASB. against parochial interests in a national to ensure that an adequate financing or international setting. regime is in place to ensure that the IASC Foundation fulfils its public interest objectives.
6 — Salaries, wages, and benefits rose to £12.5 million (£11 million from ‘The strong financial results in 2008, before fair non-publications related activities) value changes and exchange gains are taken into from £11 million (£9.7 million from non-publications related activities), account, means that the IASC Foundation has as the number of employees rose improved its cash and investment position.’ from 91 to 101.
— With the reach of IFRSs growing, The strong financial results in 2008, While the IASC Foundation is reporting the organisation has placed before fair value changes and exchange an operating surplus for 2008, the increased emphasis on the need gains are taken into account, mean that financial statements show a loss from for consultation internationally. the IASC Foundation has improved its total comprehensive income of Costs related to meetings of cash and investment position. By the £1.7 million (compared with a loss of the Trustees, IASB, and other end of 2008, the IASC Foundation £212,172 in 2007). This loss is primarily committees increased from had £6.6 million in cash on deposit the result of a fair value adjustment from £2.1 million in 2007 to £2.4 million (£4.8 million in 2007) and bonds worth forward exchange contracts, used to in 2008. £7.7 million (£7.2 million in 2007) — remove exchange rate risk associated • Significant growth of revenues: a total of £13.5 million in liquid funds. with contributions. The great majority The IASC Foundation benefited from The funds in bonds represent funds of IASC Foundation financing is set the introduction of new funding not immediately required for operations. in either US dollars or euro, while mechanisms throughout the world They are invested in sterling- the organisation’s expenditures are in 2008 and continued strong interest denominated, fixed rate notes of the in sterling. in IASC Foundation publications UK government and international and educational conferences. organisations with an AAA rating. Funds Revenues grew from £16.9 million are divided into relatively equal sums in 2007 to £19.8 million in 2008 — with maturities in each of the next four a 17 per cent increase. years to provide steady cash flow if the financing system falters.
Annual Report 2008 7 1 REPORT OF THE CHAIRMAN OF THE IASC FOUNDATION TRUSTEES
‘The Trustees have made significant progress on efforts to build a sustainable basis of funding for the IASC Foundation.’
To provide certainty regarding future At the end of 2008, the Trustees had development, which is necessary to revenue, the Trustees have purchased begun developing a five-year financial ensure the long-term independence of forward currency contracts on a two-year plan. This plan will be presented in the standard-setting process. A summary outward-looking basis. The great majority draft form to the Trustees and the of the current funding position appears of the forwards for 2009 and 2010 were Monitoring Board at their meeting later in the Annual Report. bought in early 2008, before the rapid in London in April 2009. depreciation of sterling. At year-end, the The most immediate priority for funding fair value loss of these forward contracts Strengthening the basis of funding will be moving those countries on a totalled £3.4 million. However, these As stated above, the Trustees have made voluntary regime, such as the United losses will unwind in future years and significant progress on efforts to build a States, or those areas yet to participate on will be netted against the increased value sustainable basis of funding for the IASC an equitable basis. Second, the Trustees of US dollar and euro contributions, Foundation. The Trustees themselves will need to consider ways to enable which are not recognised as income until have no authority to impose funding national funding regimes to adjust received. Indeed, the projection of more regimes on countries, but have worked for approved increases in the IASC than £17 million in contributions in 2009 closely with regulatory and other public Foundation budget. Third, the Trustees (up from £12.8 million in 2008) is largely authorities and key stakeholder groups to will seek to raise funds to support the a reflection of the relative strength of the create national regimes. In 2008 funding development of its IFRS XBRL taxonomy. US dollar and euro versus sterling. systems to support standard-setting The Trustees have committed the activities were implemented for the first organisation to a leadership role in Looking at the next five years time. Now, throughout the world, levy taxonomy development as way to ensure In 2007 the Trustees launched a strategy systems and national contributions increased comparability and usability of review to develop action steps required through regulatory and standard-setting financial information provided by IFRS to make IFRSs the pre-eminent set of authorities or stock exchanges are reports. The Trustees will be raising these accounting standards used worldwide. becoming the norm. This is a positive issues with the Monitoring Board. As a result of that study, the Trustees concluded that they required a firmer understanding of the resource ‘The Trustees have committed the organisation requirements over the next five years to a leadership role in taxonomy development to guide the ongoing funding efforts. as way to ensure increased comparability and usability of financial information provided by IFRS reports.’
8 Achieving a single set of countries remains an important element standards used worldwide of our strategy to make IFRSs the global ‘Our organisation is standard. In this light, the continued committed to acting The organisation is committed to convergence work of the IASB with the playing a constructive role in restoring Accounting Standards Board of Japan in an urgent and confidence to the world’s markets. and the US FASB remains highly relevant. responsible manner The crisis has demonstrated how to help restore interconnected the world’s capital My fellow Trustees and I understand the markets are. Continued differences unprecedented circumstances facing confidence in in accounting standards offer the policymakers today. Our organisation is financial markets.’ opportunity for regulatory arbitrage, committed to acting in an urgent and impose unnecessary costs on companies responsible manner to help restore required to comply with different confidence in financial markets. accounting requirements, and reduce Broad international adoption of IFRSs, comparability for investors. The Trustees combined with the actions that we have are pleased that momentum towards a taken in 2008 and to which we are single set of standards continued to committed in 2009, means that the gather pace in 2008 and our objective IASC Foundation is taking steps to play was endorsed by the G20 heads of state its part in the response on financial in October. reporting issues.
The publication of roadmaps setting out a pathway toward IFRS adoption in both Japan and the United States, the world’s two largest economies that have yet to commit themselves fully to IFRSs, is also an important development. The agreement of both the Japan FSA and the US SEC is another positive signal Gerrit Zalm, Chairman of the of their commitment to IFRSs. Indeed, Trustees, IASC Foundation ultimate adoption of IFRSs by those two
Annual Report 2008 9 2 Meeting the public accountability challenge: report on the Trustees’ oversight activities in 2008
At the conclusion of the organisation’s first five-yearly Constitution Review completed in 2005, the Trustees recognised then, as they continue to recognise, the need to demonstrate the organisation’s public accountability. The Trustees placed particular emphasis on their oversight of and engagement with the IASB. Accordingly, they created the Due Process Oversight Committee as a standing committee of the Trustees.
The Due Process Oversight Committee is In considering how the Trustees ‘The IASC Foundation the Trustees’ committee responsible for demonstrate the organisation’s and the IASB are both overseeing the IASB’s adherence to accountability, the Committee pays due process and working with the IASB particular attention to how the committed to to enhance that due process and its Trustees provide evidence of responding in an consultation activities and reporting these activities. urgent manner back on an ongoing basis. To fulfil its responsibilities, the Committee Responding to the to the ongoing develops proposals and measurement financial crisis financial crisis.’ targets regarding oversight responsibilities for consideration by The IASC Foundation and the IASB are Trustees. The Committee monitors the committed to responding in an urgent achievements of these targets and manner to the ongoing financial crisis. suggests amendments to these targets Throughout 2008, policymakers and when appropriate. The Committee other interested parties highlighted the also listens to and consults external part that enhancements in accounting stakeholders and takes that input into standards could play to ensure an account in its work. effective response to the crisis. The IASC Foundation and the IASB acted on a The Committee leads the Trustees’ number of fronts in response to this annual review of their assessment of crisis — including in areas under the effectiveness in oversight and priorities purview of the Due Process Oversight in the forthcoming year. This report Committee and the Trustees at large. represents that annual review. In assessing the achievement of these Throughout the crisis, the Trustees have targets, the Committee uses a framework supported the IASB’s efforts to respond in for evaluating the Trustees’ effectiveness an urgent manner to the unprecedented in carrying out their constitutional economic situation. Consistently with responsibilities. This framework the recommendations of the Financial document was approved in November Stability Forum, the IASB decided to 2006 and has been used to monitor forgo discussion papers for its projects targets since then. The Trustees report on consolidation and derecognition to annually on their oversight activities as address off balance sheet items. The IASB part of this framework and their report also established an Expert Advisory Panel is augmented by detailed information to address valuation techniques in on the IASC Foundation website. illiquid markets. The Trustees have
10 supported these steps and will continue to monitor the IASB’s actions in response ‘Whilst unprecedented situations require to the financial crisis. unprecedented actions, the Trustees remain The Trustees also welcome the committed to due process.’ commitment of the IASB to work jointly with the US Financial Accounting Standards Board (FASB) to achieve, by the IASB, could have led to others The Trustees recognise that the IASB has through convergence, a single globally introducing changes to the standards. some ambitious targets under the MoU accepted set of standards. We have seen The IASB’s approach, unlike other work plan. Therefore, greater technical that the continuing existence of proposals, provided clear disclosures resources have been committed to differences — no matter how small for investors and avoided derailing support the IASB’s work in 2009 onwards. or arcane — offers the possibility for momentum towards a single set regulatory arbitrage. This was highlighted of standards. Enhancing the role and by the issue of the reclassification of composition of the Standards Whilst unprecedented situations require certain financial assets in IAS 39, referred Advisory Council unprecedented actions, the Trustees to below. This case also highlights the remain committed to due process. Since the mandate of the Standards need to reach a single set of high-quality Advisory Council (SAC) was due to accounting standards. Reviewing the IASB’s agenda conclude at the end of 2008, the IASC Foundation considered the SAC At their meeting in Beijing in October Throughout the year, the Trustees composition in the first part of the year. 2008, the Trustees took an unprecedented reviewed and updated the IASB’s The aim of the review was to consider step by allowing the IASB to waive its due commitment in terms of the ways in which the effectiveness of the process. This came about because the Memorandum of Understanding (MoU) SAC could be improved. financial crisis drew attention to the with the FASB. The MoU sets out the differences between IFRSs and US GAAP work programme that will be required The Trustees concluded that the mandate in a particular area which meant the in order to achieve IFRS adoption in of the SAC is still sound. The Trustees, playing field was perceived not to be many jurisdictions in 2011 and later. however, proposed changes to the sufficiently level. Subsequently, the IASB membership of the SAC, to ensure it was introduced an amendment permitting For example, Canada, India, Japan, composed primarily of representatives reclassification of some financial assets Korea, and Mexico are all expected of organisations. This change is designed to move to a level playing field for IFRSs to change to IFRSs in 2011-2012. to provide a broader basis for the input and US GAAP. The IASB recognised Consequently, the IASB is anxious to the SAC deliberations than could that differences between IFRSs and US to minimise the changes to IFRSs come from a Council composed purely GAAP existed, which, unless rectified as much as possible.
Annual Report 2008 11 2 REPORT OF THE TRUSTEES OVERSIGHT FOR 2008
‘The SAC has an important part to play in the effectiveness of the whole organisation.’
of individuals. At the same time, held in September 2007. It was decided The great majority of the working there still remains scope for individual that such joint meetings would be held group members responded, which was appointments. The Chairmanship is to twice a year. helpful and insightful. While the concept be rotated every three years to provide of using working groups remains well regional diversity and to keep the The purpose of these meetings is to supported, the findings identified a leadership invigorated. Given the enhance the oversight review process by few areas for possible improvement complexity of seeking global input and direct contact with the IASB. This enables of the process. the need for regional feedback, two due process issues and improvements to Vice-Chairmen have also been appointed be discussed, and for matters of mutual The results of the review will be from different regional backgrounds, concern and interest in the standard- jointly considered with the IASB so thereby creating a combined leadership setting due process to be aired. as to develop improvements, which representing diverse regional interests The Trustees believe that these meetings will serve to enhance the IASB’s and backgrounds. additionally provide a useful opportunity due process. for the Trustees and the IASB to It is also recommended that the SAC co-ordinate their outreach efforts and The Trustees greatly appreciate the Chairman should consider arranging exchange information to ensure that the efforts that the working group members meetings in addition to the plenary Trustees and the IASB are aware of each make in assisting the IASB in developing sessions held in London. These meetings other’s activities. The Committee reports new standards. The Trustees recognise could extend beyond the SAC regularly on its work to the Trustees at that the working group members are members and provide opportunity public meetings. volunteers with busy schedules and as for multiple contributions. a consequence they want to make the Review of the IASB most effective use of their time. The Trustees believe that this adaptation working groups of the SAC will enable the IASB to receive Enhanced performance views reflecting a wider range of The Due Process Oversight Committee review of the IASB interested parties and would give greater initiated a review of the working authority to views received and will groups in the third quarter of 2008. In 2008 the Trustees put into place an ultimately enhance due process. The SAC In undertaking the review of working enhanced performance review procedure has an important part to play in the group arrangements, the Trustees and for the IASB. This was seen as an effectiveness of the whole organisation. the IASB recognised their importance. important step in the Trustees’ oversight function. The IASB members have always Liaison with the IASB The review was undertaken in two parts been subject to individual and peer during 2008 — a questionnaire survey of all working appraisal. The results of the appraisal are group members and detailed interviews discussed with each IASB member with a The first joint meeting of the IASB and with the working group chairmen and view to improve performance. However, Due Process Oversight Committee was technical support staff. in 2008/2009, a further element to
12 performance evaluation has been Following the success of the introduction • liaison with the Monitoring Board, added. External third parties have been of feedback statements and effect as appropriate, on issues of due interviewed in order to give greater analyses, the IASB amended the Due process oversight; insight into the perceived effectiveness Process Handbook to make provision • developing an emergency due process and performance of the IASB as a body. for this additional due process step. procedure framework, as may be The purpose of the feedback statement recommended following the second The Trustees have been using an external is to explain better to stakeholders and part of the constitution review; agency with appropriate expertise, regulators how the IASB developed Spencer Stuart, to help conduct part of during due process its thinking, and why • finalising the review of IASB working the appraisal process for the IASB. it took the decisions it did, including groups following IASB feedback; and explaining the reasoning on the • reviewing the effectiveness of the XBRL The Trustees will continue to monitor acceptance or rejection of representations team and quality of its due process. the effectiveness of the IASB appraisal made to it. and review process so as to ensure that Conclusion it remains relevant and beneficial to The purpose of effect analyses is to both the IASB members and the ensure that all stakeholders can see The year 2008 has brought increased IASC Foundation. transparently the effect of proposals scrutiny of accounting standard-setters for standards. Stakeholders and and the standards themselves. The An assessment of the role commentators had called for both Trustees have responded to input from of feedback statements and these additions to due process. stakeholders by making constitutional effect analyses changes and enhancing their oversight Looking ahead: priorities activities. The objective is to produce Feedback statements were used for the for 2009 global high quality international first time by the IASB in January 2008, accounting standards through enhanced with the publication of the revised The Trustees have resolved that the transparency, greater dialogue with version of IFRS 3 Business Combinations following will be priorities for the stakeholders and enhanced public and the amended version of Due Process Oversight Committee accountability for the benefit of investors IAS 27: Consolidated and Separate during 2009: and other market participants. Financial Statements. • maintaining the organisation’s focus in achieving the G20 conclusions; A separate document entitled Project summary, feedback and effect analysis was • reviewing the IASB’s progress relative prepared to support and aid regulators to the time frame set out in the MoU; around the world, following requests for further clarification.
Annual Report 2008 13 3
Securing a stable and independent basis of funding
The financial crisis has highlighted the need for a well-resourced and stably financed international accounting standard-setter. The IASC Foundation and its standard-setting body, the IASB, require resources to engage interested parties in an effective manner throughout the world, while maintaining capacity to address urgent issues.
At the same time, the financing should • Compelling: A system must carry ‘Financing should be be accomplished in such a way that with it enough pressure to make free accomplished in such ensures the independence of the riding very difficult. This could be standard-setting process and the effective accomplished through a variety of a way that ensures functioning of the IASC Foundation. means, including official support the independence from the relevant regulatory The process of establishing a broad-based, of the standard- authorities and formal approval automatic, and sustainable funding by the collecting organisations. setting process and regime has been an evolutionary one. • Open-ended: The financial The IASC Foundation itself has no the effective commitments should be open-ended authority to impose a funding system functioning of the and not contingent on any particular on a national or international basis. action that would infringe on the IASC Foundation.’ However, the Trustees have worked independence of the IASC Foundation steadily to build national funding and the IASB. This should include mechanisms based upon four principles: sustained support from official • Broad-based: A sustainable long-term international organisations, central financing system must expand the banks and the major accounting firms. base of support to include major participants in the world’s capital • Country-specific: The funding burden markets, including official should be shared by the major institutions, in order to ensure economies of the world on a diversification of sources. proportionate basis, using GDP as the key determining factor of measurement. Each country should meet its designated target in a manner consistent with the principles above. Trustees should be assigned to specific countries to assist in the development of the funding scheme.
14 During the past two years, the IASC In 2009, the Trustees expect new funding Foundation has benefited from a number regimes to begin in a number of ‘In 2009, the Trustees of new fundraising schemes coming countries, including Canada, France, expect new funding into effect, which have reduced Norway, and South Africa, among others. significantly its dependency on At the same time, sterling has depreciated regimes to begin in a individual company contributions significantly against the euro and the US number of countries, organised on an ad hoc basis by dollar, which are the base currencies for including Canada, Trustees and staff. Total contributions many of the funding regimes. On this increased from £11.3 million in 2007 to basis, the IASC Foundation is estimating France, Norway, £12.7 million in 2008. A complete and that its financing efforts will exceed and South Africa, detailed breakdown of contributions by £17 million in 2009. among others.’ country appears later in the Annual Report (see pages 74 to 78). Levies and widely based national schemes that eliminate the need to approach individual companies form an increasing percentage of our income.
Annual Report 2008 15 3 SECuring a stable and independent basis of funding
Expected financing contribution for 2009
Country/type System in place Anticipated amount Anticipated sterling of contributor in local currency* amount at 31 December 2008 exchange rate EUROPE
Germany Voluntary system of more than 100 major €1,320,000 £1,256,794 private companies organised by the standard-setting authority with maximum contribution of €36,000 United Kingdom Levy on all listed UK companies through £750,000 £750,000 the UK Financial Reporting Council
France Levy-like system supported by the A target of €1,000,000 £952,147 Ministry of Finance
Italy Levy on registered companies €750,000 £714,087
Spain Levy being established with support of the €500,000 £476,059 stock exchange and securities regulator
The Netherlands Contribution through the Ministry €380,000 £361,805 of Finance, akin to a levy
Sweden Funding through Föreningen för god sed €200,000 £190,423 på värdepappersmarknaden
Switzerland Funding primarily collected through €250,000 £238,029 Swiss business associations (Swiss Banking Association and Swiss Holdings)
Norway Funding through Norsk Regnskapsstiftelse €45,000 £42,845
Luxembourg Funding through the Bourse €50,000 £47,605 of Luxembourg
The European Commission has proposed a €4 million per year contribution for 2011 – 2013. Funding efforts are proceeding in EU Member States. Details of commitments will be posted when confirmed.
* Subject to change due to ongoing efforts and based upon best estimates.
16 Country/type System in place Anticipated amount Anticipated sterling of contributor in local currency* amount at 31 December 2008 exchange rate Africa
South Africa Levy system established by US$150,000 £102,613 South African government
AMERICAS
United States Voluntary system of 33 companies US$3,500,000 £2,394,000 with range of contribution from US$3,750-US$200,000
Canada Funding through the Canadian Institute C$800,000 £447,087 of Chartered Accountants
Mexico Voluntary system of contributions US$50,000 £34,202
Brazil Voluntary system of contributions US$15,000 £10,261
Asia-Oceania
Japan Voluntary system co-ordinated centrally, US$2,800,000 £1,915,315 involving a range of Japanese market participants. Levy-like system to be in place in 2010
China, excluding Voluntary contributions of Chinese listed US$900,000 £615,637 Hong Kong SAR companies through the China Accounting Standards Committee
Australia Annual payment on behalf of private and A$1,000,000 £477,660 public sector stakeholders in the Australia accounting standard-setters’ process
Korea Voluntary contributions of Korean listed A target of US$500,000 £205,212 companies through the Korea Accounting with US$300,000 Standards Board committed in 2008
India Contribution through major two exchanges, US$400,000 £273,616 supported by securities regulator
* Subject to change due to ongoing efforts and based upon best estimates. Annual Report 2008 17 3 SECuring a stable and independent basis of funding
Country/type System in place Anticipated amount Anticipated sterling of contributor in local currency* amount at 31 December 2008 exchange rate Hong Kong SAR, Contribution through regulatory US$195,000 £133,388 China authorities and stock exchange
New Zealand Annual payment through the NZ$200,000 £79,554 Accounting Standards Review Board
Funding efforts are proceeding in other countries in the Asia-Oceania region.
Central Banks and International Organisations
Central banks and Voluntary payments US$530,000 £362,542 international organisations (efforts ongoing)
International Accounting Firms
Deloitte, Ernst & Young, KPMG Voluntary payments US$2,000,000 each £5,472,328 and PricewaterhouseCoopers
BDO and Grant Thornton Voluntary payments US$150,000 each £205,212
Mazars Voluntary payment US$100,000 £68,404
Other sources of income
The IASC Foundation also receives additional funding to finance its standard-setting and XBRL activities through its publications, educational and related activities.
* Subject to change due to ongoing efforts and based upon best estimates.
18 4
Report of the Chairman of the IASB
The financial crisis made 2008 a challenging year for all of those concerned with the effective functioning of capital markets. The IASB recognises the important role that it could play in helping restore confidence in capital markets.
Our goal is to develop a single set of high The global financial crisis quality global standards. Those standards must ensure that investors and other We began the year concerned about the users of financial information have global credit crisis, which at that time transparent information about the mainly involved the banking sector. entities in which they have, or are That crisis has grown to become a considering having, an economic interest. global financial crisis with much With transparency comes the confidence wider implications. that they know what risks they are taking One of the most important bodies shaping as investors. And with that confidence the global response to the crisis has been SIR DAVID TWEEDIE will come increased stability. Chairman OF THE IASB the Financial Stability Forum (FSF), Our work in 2008 was largely focused on in which the IASB is an active member. our response to the global financial crisis In April 2008 the FSF produced a report and our efforts to make improvements that included three recommendations that also address differences between affecting the IASB: our standards and national standards, • ‘The IASB should improve the principally US generally accepted accounting and disclosure standards accounting principles (GAAP) in order to for off balance sheet vehicles on an facilitate global adoption. The financial accelerated basis and work with other crisis demonstrates the need to eliminate standard-setters toward international differences to avoid possibilities of convergence.’ (Recommendation III.4) regulatory arbitrage. • ‘The IASB will strengthen its standards to achieve better disclosures about valuations, methodologies and the uncertainty associated with valuations.’ (Recommendation III.5)
• ‘The IASB will enhance its guidance on valuing financial instruments when markets are no longer active. To this end, it will set up an expert advisory panel in 2008.’ (Recommendation III.6).
Annual Report 2008 19 4 REPORT OF THE CHAIRMAN OF THE IASB
On 15 November the G20 leaders held a summit in Washington DC to discuss the ‘We have been working with the FSF, standard- crisis. In their conclusions they endorsed setters and other regulatory authorities to address the need for globally accepted financial reporting standards and identified six those suggested financial reporting enhancements. topics that the IASC Foundation (and the We are continuing that work and are taking IASB as its standard-setting body) should additional steps to respond to the conclusions consider in the light of the crisis. Four of these relate to the standards that we reached by the G20.’ produce, and (as stated in the Declaration of the Summit on Financial Markets and • ‘Regulators and accounting We have been working with the FSF, the World Economy on 15 November) in standard setters should enhance standard-setters and other regulatory many respects mirrored the earlier the required disclosure of complex authorities to address those suggested recommendations of the FSF: financial instruments by firms financial reporting enhancements. • ‘The key global accounting standards to market participants.’ We are continuing that work and are bodies should work to enhance taking additional steps to respond to • ‘The key global accounting standard- guidance for valuation for securities, the conclusions reached by the G20. setting bodies should work intensively also taking into account the valuation The technical developments that we toward the objective of creating a of complex, illiquid products, especially have undertaken are described in the single high quality global standard.’ during times of stress.’ standard-setting section of my report. • ‘Accounting standard-setters should significantly advance their work to address weaknesses in accounting and disclosure standards for off balance sheet vehicles.’
20 ‘During 2008 we acted urgently to provide necessary guidance and improved existing standards.’
Financial Crisis Advisory Group • Whether priorities for the IASB and • The independence of accounting the FASB should be reconsidered in standard-setters and governmental We, with the US Financial Accounting the light of the credit crisis. actions to the global financial crisis. Standards Board (FASB), set up a high • Potential areas that require future The group met on five occasions during level advisory group to consider financial attention of the IASB and the 2009 and expects to publish a report of reporting issues arising from the global FASB in order to avoid future its conclusions in July 2009. financial crisis. The Financial Crisis market disruption. Advisory Group (FCAG) is chaired The advice of the FCAG will feed into by Harvey Goldschmid, a former • The implications of the credit crisis the work of related projects and assist Commissioner of the US Securities and for the interaction between general us in determining whether additional Exchange Commission (SEC), and Hans purpose financial reporting measures are necessary. Hoogervorst, Chairman of the requirements for capital markets and Netherlands Authority for the Financial regulatory reporting, particularly for Standard-setting response Markets and Vice-Chairman of the IOSCO financial institutions. to the global financial crisis Technical Committee. The FCAG has been • The relationship between fair value invited to discuss, among other issues, and off balance sheet accounting and During 2008 we acted urgently to provide the following: the current crisis, both during and necessary guidance and improved • Areas where financial reporting helped leading up to the crisis. existing standards. We published one identify issues of concern during the discussion paper, two reports, four • The findings and relevance of credit crisis. exposure drafts and two amendments to conclusions of various studies under our standards on matters related to the • Areas where financial reporting way, including the SEC’s study under financial crisis. Those publications are standards could have provided the Emergency Economic Stabilization listed in the table on the following page more transparency to help either Act of 2008. and discussed in the sections that follow. anticipate the crisis or to respond • The need for due process for to the crisis more quickly. accounting standard-setters and its implications for resolving emergency issues on a timely and inclusive basis.
Annual Report 2008 21 4 REPORT OF THE CHAIRMAN OF THE IASB
Month (2008) Publication Measuring fair value when markets become inactive March DP Reducing Complexity in Reporting Financial Instruments As part of our convergence work with October An IASB Staff Summary — Using judgement to measure the the FASB, we instigated a fair value fair value of financial instruments when markets are no measurement project to establish a single longer active source of guidance for all fair value Report of the IASB Expert Advisory Panel — Measuring and measurements required or permitted by disclosing the fair value of financial instruments in existing IFRSs. The project will neither markets that are no longer active introduce nor require any new fair value ED Improving Disclosures about Financial Instruments measurements. The project is also identifying ways to enhance disclosures IFRS Reclassification of Financial Assets about fair value to inform users of November IFRS Reclassification of Financial Assets — Effective Date financial statements about the use of fair and Transition values and the inputs used to derive December ED Consolidated Financial Statements those fair values. We expect to publish an exposure draft (ED) in April 2009. ED Embedded Derivatives Public round-table discussions are ED Investments in Debt Instruments planned for after the comment period.
22 IASB Expert Advisory Panel The report of the panel identifies Exposure draft Improving Disclosures practices that experts use for measuring about Financial Instruments — As the credit crisis worsened, many the fair value of financial instruments October 2008 parties expressed concerns about when markets become inactive and The ED proposed amendments to measuring the fair value of financial useful practices for fair value disclosures disclosure requirements that are based instruments when markets become in such situations. The report provides on a three-level fair value hierarchy illiquid — concerns that the FSF asked helpful information and educational (similar to that used in the US standard us to address. guidance about the processes used and SFAS 157 Fair Value Measurements). The judgements made when measuring and proposed amendments would require In May we assembled a panel of experts disclosing fair value. disclosures about the level of the fair to review best practices in the area of value hierarchy into which fair value valuation techniques and formulate any In February 2009 we asked the members measurements are categorised in their necessary additional guidance on of the panel whether any new issues had entirety, the fair value measurements valuation methods for financial arisen that could usefully be discussed by resulting from the use of significant instruments and related disclosures the panel, or whether any of the issues unobservable inputs to valuation when markets are no longer active. previously discussed by the panel should techniques and the movements between The panel comprised experts from be revisited in the light of subsequent different levels of the fair value hierarchy. preparers and users of financial developments. Our staff are evaluating statements, as well as regulators the small number of suggestions made The ED also proposed amendments and auditors. by panel members. that would clarify the definition of liquidity risk, improve the quantitative The panel met seven times, culminating The work of the panel was incorporated disclosures about liquidity risk, and in the publication on 31 October of the in the ED proposing improvements to strengthen the relationship between final report of the panel and a summary IFRS 7 Financial Instruments: Disclosures qualitative and quantitative disclosures document prepared by IASB staff. published on 15 October and will be used about liquidity risk. in the development of the forthcoming The summary document set out the standard on fair value measurement. The Board discussed the comments context of the panel’s report and received at its meeting in January and highlighted important issues associated decided to proceed with most of the with measuring the fair value of financial proposals, which were issued as instruments when markets become amendments to IFRS 7 in March 2009. inactive. It took into consideration and is consistent with documents issued by the FASB and the SEC at around the same time.
Annual Report 2008 23 4 REPORT OF THE CHAIRMAN OF THE IASB
Off balance sheet activities structures and the risks to which these ‘In December we special structures expose the entity. Consolidation and improved accounting published proposals The proposals would apply not only for off balance sheet items to the financial sector but to any to strengthen In December we published proposals entity that uses legal entities to manage and improve the to strengthen and improve the its activities. requirements for identifying which requirements entities a company controls. We held public round-table meetings in for identifying London in September to discuss early which entities a The proposals form part of our drafts of our proposals. We are planning comprehensive review of off balance company controls.’ to hold additional round tables in 2009 sheet activities and address an area cited to discuss the proposals, in conjunction by the FSF and G20 leaders. with the derecognition project.
The use of special structures by reporting Derecognition entities, particularly banks, to manage Our staff and Board have been developing securitisations and other more complex proposals to amend IAS 39 Financial financial arrangements was highlighted Instruments: Recognition and Measurement in by the FSF and the G20 as a matter of relation to the derecognition (including concern. Some commentators have securitisation) of financial assets and questioned whether financial statements liabilities. We have been considering two convey the extent to which reporting models. Both models are based on control entities are exposed to risks from those but one approach, which the Board types of structures. decided was its preferred approach, has a greater emphasis on continuing The proposals address those concerns involvement. However, although the by presenting a new, principle-based, main proposals in the forthcoming ED definition of control of an entity that would will reflect our preferred approach we apply to a wide range of situations and be will also present, in an appendix, the more difficult to evade by structuring. other model. This will ensure that The proposals also include enhanced potential respondents are provided with disclosure requirements that would fully developed alternatives. We expect to enable an investor to assess the extent to publish the proposals at the end of the which a reporting entity has been first quarter of 2009, consistently with involved in setting up special the G20 target date of 31 March 2009.
24 ‘The boards have agreed to fast track this urgent project, which could involve significant changes to IAS 39 and the relevant US standards.’
As I mentioned above, we expect Amendment to IAS 39 on reclassification restrictions imposed by the EU regulation to hold round tables during the of financial assets that permit only full endorsement or derecognition ED comment As a result of the crisis and following ‘carve outs’, the alternative would have period in conjunction with the comments by European Union (EU) allowed EU financial institutions to consolidation project. leaders and others that entities using reclassify financial assets without any IFRSs were at a disadvantage in constraints on how the assets were Simplifying the accounting comparison with their US counterparts, measured at the time were reclassified, for financial instruments the Board issued an amendment to no constraints on how far back they IAS 39 to permit reclassification of could go in choosing when to reclassify The Board inherited IAS 39, our existing some financial assets in particular and no accompanying disclosure requirements for financial instruments, circumstances. Although the amendment requirements. The Board’s amendment from our predecessor board. IAS 39 brought US GAAP and IFRSs more into to IAS 39 required transfers at fair value has been frequently criticised for its line, different scope, transition and and disclosures enabling users of the complexity. In March 2008, as a first impairment requirements mean that financial statements to recreate the step towards replacing the standard, differences in treatment still exist. financial position and profit or loss as the Board published a discussion paper The incident revealed sharply the if no reclassification had been made. (DP) Reducing Complexity in Reporting problems for investors if two different Financial Instruments. sets of accounting rules for identical The demand for rapid standard-setting situations exist. responses is not unique to the IASB. The boards have agreed to fast track this The experience of standard-setters urgent project, which could involve To make this urgent change, following a nationally and internationally significant changes to IAS 39 and the decision by the Trustees, the Board issued demonstrates the need to have common relevant US standards. Given the urgency the amendment without its normal due standard-setting responses, even if on of the matter, the boards’ intention is to process in order to provide a more level an accelerated basis. This may require work to finish this project in a matter of playing field during a period of crisis. us to establish emergency due process months rather than years. Although the Board strongly believes procedures — an issue now under that investors are best served when it examination by the Trustees. conducts an open and thorough due process, the alternative proposed would have been worse. Because of the
Annual Report 2008 25 4 REPORT OF THE CHAIRMAN OF THE IASB
Other issues arising from the crisis We published the report of the IASB ‘As the financial crisis In the days following the reclassification Expert Advisory Panel Measuring and evolved it became amendment, the EU organised a meeting disclosing the fair value of financial of European stakeholders to identify instruments in markets that are no longer necessary for us to any other issues in IAS 39 and IFRS 7 active and the accompanying staff make changes to our that they considered should be addressed summary within days of receiving the standards, as a matter by the IASB. The major concerns raised letter from the Commission. We also set in that meeting, and conveyed to us up with the FASB a series of joint public of urgency.’ in a letter from the European round tables to provide a wide range of Commission, were: stakeholders with the opportunity to • the need for further guidance in the give the boards views on these and application of the fair value model in other matters. illiquid markets Joint round tables on the financial crisis • allowing reclassification of financial Three IASB/FASB public round-table assets currently classified under the meetings were held in London, Norwalk fair value option and Tokyo to identify any accounting • clarification of whether synthetic issues that might require the urgent collateralised debt obligations (CDOs) and immediate attention of the boards. include embedded derivatives The meetings took place in November and December. • adjustments to impairment rules applicable to available-for-sale A clear message we received was that financial assets. we must work with the FASB on any proposals and that we must do so with full due process.
26 Participants at the joint round tables Short-term changes to IFRSs Both the IASB and the FASB, whose in December saw an urgent need for a As the financial crisis evolved it became respective standards have different broader examination by the IASB and necessary for us to make changes to our impairment requirements, have asked the FASB of the role of fair value standards, as a matter of urgency. their staff to consider together how measurement for financial instruments, existing requirements relating to including the issues of improving the Impairment reversals of impairment losses might be impairment requirements, classification As a result of comments made at the changed. The boards will also address the issues, the fair value option, and joint round tables, the IASB and the FASB whole question of impairment as part of transfers between the categories. proposed similar new disclosure an urgent broader project in 2009, and requirements relating to impairments. this will also be a topic for consideration Round-table participants supported The proposals would require companies by the FCAG. reconsideration of the fair value option to disclose the profit or loss that would alongside a broader reconsideration of have been recorded if all financial assets Ensuring consistent treatment the classification categories. At the same (other than those categorised at fair of accounting for particular credit- time, almost all the users of financial value through profit or loss) had been linked investments under US GAAP statements at the round tables said that measured using amortised cost (ie using and IFRSs permitting reclassification out of the fair an incurred cost model) or all had been Some stakeholders have called for the value option now, without proper measured using fair value. The boards need to clarify any possible difference consideration of all the issues, would not published their EDs in late December and between IFRSs and US GAAP in the improve financial reporting or enhance asked for comments by mid-January 2009. accounting treatment of credit-linked investors’ confidence in financial Both boards discussed the matter in investments. The FASB is planning to markets — reclassifications out of the January and in the light of comments issue mandatory implementation fair value option would permit losses to received decided not to proceed with the guidance on this matter to clarify the be hidden. Both boards found the views proposed amendments at this time. requirements of US GAAP. The of those user participants compelling and Respondents gave a consistent message accounting required by IFRSs is clear, believe that any change in the fair value that an assessment of impairment should and there is no diversity in practice. option should be made only as part of a be part of a wider examination of IAS 39. While some differences might exist broader examination of accounting for because of the markedly different financial instruments. approaches of IFRSs and US GAAP, the accounting application resulting from the intended FASB guidance should be closer than before.
Annual Report 2008 27 4 REPORT OF THE CHAIRMAN OF THE IASB
Ensuring embedded derivatives are assessed and separated if financial ‘The development of a single set of high quality, assets are reclassified understandable and enforceable global accounting In December we published an ED with a 30-day comment period that standards for use in the world’s capital markets proposed clarifying that all embedded has been the primary goal of the IASB since its derivatives should be assessed and, inception in 2001. That aim has driven our work.’ if necessary, separately accounted for in financial statements.
SEC Roadmap Participants in the round tables asked Advancing a single set of The most widely adopted accounting the IASB to act in order to prevent any standards used worldwide reporting requirements around the world diversity in practice developing as a The development of a single set of high are IFRSs and US GAAP. result of the amendments made to quality, understandable and enforceable IAS 39 in October 2008 to permit the global accounting standards for use in On 14 November the SEC published for reclassification of some financial the world’s capital markets has been public comment a proposal, entitled assets in particular situations. the primary goal of the IASB since its Roadmap for the Potential Use of Financial inception in 2001. That aim has driven Statements Prepared in accordance with Respondents expressed strong support our work. The global financial crisis has International Financial Reporting Standards for the proposals and we issued Embedded served only to emphasise that having by U.S. Issuers. The publication of the Derivatives (Amendments to IFRIC 9 and similar requirements around the world roadmap followed a unanimous vote IAS 39) in March 2009. is simply not good enough. The taken by the five SEC Commissioners in requirements must be the same; August. The proposed roadmap sets out otherwise entities, or jurisdictions, milestones that, if achieved, would will seek regulatory arbitrage by trading enable the SEC by 2011 to decide whether off the differences. the United States should adopt IFRSs beginning in 2014. The roadmap also proposes to permit the early adoption of IFRSs from 2010 for some US entities. The comment period ends on 20 April 2009.
28 IASB-FASB MoU In September we published an update of Underpinning our efforts to develop the MoU, outlining a plan and projected a single set of global standards is the timetable for completing the remaining Memorandum of Understanding (MoU) projects included in the MoU. Our we have with the FASB. objective is to have the major projects completed by 30 June 2011. The MoU has 54 The MoU identifies the projects that each implications worldwide. The target is of us is committed to complete, either on important because many jurisdictions, The number of standard-setters our own or together, in the short term. including Canada, India, Japan and participating in the IASB’s annual The purpose is to eliminate differences Korea, have announced plans to adopt or meeting of world standard-setters between our requirements. converge with IFRSs in 2011. Mexico has in 2008. announced plans to adopt IFRSs for all Although we often characterise this as listed entities from 2012. Setting a a convergence programme, a more deadline of 30 June 2011 ensures that appropriate description of the MoU is the major changes to IFRSs will be in that it is an agreement that guides a place in time for those jurisdictions and collaborative effort by the IASB and the will avoid the need for them to make FASB to deliver the greatest possible major changes shortly after they have improvements to financial reporting. adopted IFRSs. We think that by combining our resources and having the boards The successful completion of each MoU challenge each other we will not only project eliminates differences between end up with common standards but IFRSs and US GAAP. Of course, the more will also create more robust and similar IFRSs and US GAAP become the sustainable solutions. easier it will be for US entities to move to IFRSs if the SEC decides that such a step is appropriate. As I have already emphasised, having similar requirements is not good enough. A single set of global standards remains our primary goal.
Annual Report 2008 29 4 REPORT OF THE CHAIRMAN OF THE IASB
MoU projects Month Publication The projects on consolidation, May DP Preliminary Views on an improved Conceptual Framework derecognition, fair value measurement for Financial Reporting: The Reporting Entity and replacing the existing financial ED An improved Conceptual Framework for Financial instruments standards are all part of the Reporting: Chapter 1: The Objective of Financial Reporting MoU. I have already described our current Chapter 2: Qualitative Characteristics and Constraints of activities on those projects in my Decision-useful Financial Reporting Information discussion of our response to the global financial crisis. We expect to finish the phase dealing We have not yet decided on a timetable In the next sections, I provide an with the objective and qualitative for the inactive phases on presentation overview of the MoU projects under characteristics and to publish an ED and disclosure, the purpose and status three headings — conceptual on the reporting entity in the second of the framework, and applicability of framework, short-term projects and half of 2009. the framework for not-for-profit entities major projects. and government business entities. The other active phases deal with the Conceptual framework definition and recognition of elements Short-term projects of financial statements and measurement Our objective is to create a sound, of items in the financial statements. The 2006 MoU with the FASB identified comprehensive and internally consistent We expect to publish a DP on a few focused areas that the boards foundation for future standards. The measurement near the end of 2009 thought could be eliminated through project has several phases, of which four and a DP defining the accounting one or more short-term projects. are active. elements (assets, liabilities, revenue and The MoU set a target of 2008 for the boards to decide whether those During the year, we published with expenses) in 2010. differences should be addressed and, the FASB an ED on the objective if so, for completing or substantially and qualitative characteristics of completing work in those areas. financial reporting, and a DP on the reporting entity.
30 By the beginning of 2008 the FASB and Joint ventures ‘By the beginning the IASB had already issued standards on The objective of the project is to improve of 2008 the FASB and several of the short-term convergence the accounting for, and the quality of the projects. The FASB brought US GAAP information being reported about, joint the IASB had already into line with IFRSs by issuing new or arrangements — which include joint issued standards amended standards that introduced a ventures, joint assets and joint on several of fair value option (SFAS 159) and adopted operations. We published an ED in the IFRS approach to accounting for September 2007 and expect to issue the short-term research and development assets a standard in the second quarter convergence projects.’ acquired in a business combination of 2009. (SFAS 141(R)). The IASB issued new standards on segment reporting Income tax (IFRS 8 Operating Segments) in 2006 and We have been working with the FASB on borrowing costs (IAS 23 Borrowing Costs a joint project on income tax for several (revised)) in 2007. years. The aim of the project is to improve the accounting for income tax by The boards began a broad examination eliminating exceptions from the basic of impairment in 2006, but decided model common to both IAS 12 Income that the differences could not be Taxes and SFAS 109 Accounting for Income addressed in a short-term project. Tax. We expect to publish an ED of a Both boards are now considering replacement for IAS 12 in March 2009. impairment of financial assets as part The FASB has indicated that, as part of of the financial instruments project, its review of its strategy for short-term as a matter of urgency. convergence projects in the light of the possibility that some or all US public We deferred work on the government companies might be permitted or grants project pending progress on the required to adopt IFRSs at some future revenue recognition, related parties and date, it will seek input from US emissions trading schemes projects. constituents by issuing an Invitation The two remaining short-term projects to Comment containing our ED. After to which we are committed are joint that review, it will decide whether to ventures and income tax. undertake projects that would eliminate differences in the accounting for taxes.
Annual Report 2008 31 4 REPORT OF THE CHAIRMAN OF THE IASB
Major projects ‘In January 2008 we issued a revised Month Publication IFRS that addressed January IFRS Business Combinations (revised) the accounting IFRS Consolidated and Separate Financial Statements (amended) for business February DP Financial Instruments with Characteristics of Equity combinations, March DP Preliminary Views on Amendments to IAS 19 along with an Employee Benefits amended standard September ED Discontinued Operations on consolidated October DP Preliminary Views on Financial Statement Presentation and separate December ED Preliminary Views on Revenue Recognition on Contracts financial statements.’ with Customers
Business combinations This is also the first project for which we In January 2008 we issued a revised have published a Feedback Statement and IFRS that addressed the accounting for Effect Analysis. The Feedback Statement business combinations, along with an provides a summary of the project amended standard on consolidated and objectives, how respondents reacted to separate financial statements. the proposals and, in turn, the Board’s response to the comments it received. This was the first major MoU project The Effect Analysis explains the likely completed in conjunction with the effect of the new requirements on how FASB. The objective of the project was to business combination activities will be develop a single high quality standard reported, the likely effect on costs to of accounting for business combinations preparers and the likely effect on the that would ensure that the accounting costs and benefits of investors and other for mergers and acquisitions activity is users. We also committed to conducting the same whether an entity is applying a post-implementation review of the IFRSs or US GAAP. project two years after the effective date. For business combinations that review will take place in 2013.
32 ‘We will publish a Feedback Statement and Effect Analysis and undertake a post-implementation review for each major project.’
We will publish a Feedback Statement Revenue recognition Leases and Effect Analysis and undertake a In December we published with the FASB The objective of the project is to post-implementation review for each a joint DP containing proposals on when develop by mid-2011 a new, improved major project. and how entities should recognise accounting model for lessees. In March revenue arising from contracts with 2009 we published a DP with the FASB, Financial statement presentation customers to provide goods and services. presenting preliminary views on the main In mid-October we published with the The proposals are intended to improve components of a lessee accounting model. FASB a joint DP containing proposals practice by clarifying the principles for intended to provide a clearer revenue recognition and by ensuring that Responses to the DP will assist the boards presentation in financial statements and entities in different industries recognise in developing the model into a standard so make it easier for users of financial revenue more consistently. The proposals that can provide users of financial statements to follow the flow of should also significantly simplify the statements with useful and transparent information through the statements. requirements in US GAAP. information about leasing contracts, During the 180-day comment period the showing the liabilities arising from the project team will be field testing the Financial instruments with contracts and the rights to use of the proposals, which involves organisations characteristics of equity (liabilities leased assets. that have volunteered to recast their and equity) financial statements into the new In February we published a DP inviting Post-employment benefits formats. The results of this exercise will comments on the FASB’s preliminary (including pensions) help the two boards assess the feasibility views document Financial Instruments We are in the early stages of re-deliberating of the proposals. with Characteristics of Equity. The comment the proposals we set out in our DP period ended on 5 September and we Preliminary Views on Amendments As part of this project, we had been discussed an analysis of the comments to IAS 19 Employee Benefits. That paper considering the definition of in October. At our subsequent joint proposed the elimination of deferred discontinued operations and the meeting with the FASB in October we recognition (the corridor method), related disclosure requirements. Rather discussed which principles for discussed different ways to present than wait until the project is completed identifying equity instruments should changes in plan assets and defined in 2011 the boards decided to accelerate be used as a starting point for future benefit obligations, and explored new this part of the work. We published an deliberations. We shall continue those accounting for contribution-based ED in September and expect to finalise discussions throughout 2009. promises. We intend to publish an ED the amendments in the second quarter in 2009. of 2009.
Annual Report 2008 33 4 REPORT OF THE CHAIRMAN OF THE IASB
Other improvements Month Publication Although the global financial crisis and January IFRS Vesting Conditions and Cancellations the MoU have shaped a large part of our agenda, we have other projects on our February IFRS Puttable Financial Instruments and Obligations agenda that are important to members of Arising on Liquidation the IFRS community. The Board attaches May IFRS Cost of an Investment in a Subsidiary, Jointly Controlled great importance to these projects and Entity or Associate intends to devote sufficient resources to IFRS Improvements to IFRSs finish them in a timely fashion. July IFRS Eligible Hedged Items The following table lists the publications August ED Simplifying Earnings per Share we produced during 2008 in relation to the other projects that will improve ED Improvements to IFRSs financial reporting. September ED Additional Exemptions for First-time Adopters
November IFRS First-time Adoption of International Financial Reporting Standards (revised)
December ED Relationships with the State
34 ‘We have a process to deal with non-urgent but necessary amendments to IFRSs. The Board discusses and decides on proposed improvements to IFRSs as they arise throughout the year.’
Completed projects Cost of an investment in a subsidiary, We finalised another of those proposals jointly controlled entity or associate in November by issuing a restructured Vesting conditions and cancellations In May we amended IFRS 1 First-time version of IFRS 1. We revised IFRS 1 to In January we amended IFRS 2 Share-based Adoption of International Financial Reporting simplify the structure of the standard, Payment by clarifying the definition of Standards and IAS 27 Consolidated and which had become more complex vesting conditions and providing Separate Financial Statements. The and less clear as it was amended to guidance on the accounting treatment of amendments provided an exception on accommodate first-time reporting cancellations by parties other than the transition to IFRSs that removed an requirements for new and entity. We also clarified the treatment of impediment preventing entities from amended standards. all non-vesting conditions. The standard adopting IFRSs for the separate financial was previously silent on those matters, statements of parent entities. We also The restructured IFRS 1 does not, which had allowed practice to vary. clarified the accounting requirements however, include further changes we when a group reorganises its structure had published as an ED in September Puttable financial instruments and by establishing a new parent entity. to address potential challenges for obligations arising on liquidation jurisdictions adopting IFRSs in the near In February we amended IAS 32 Financial Annual improvements future. The proposals are for relief for Instruments: Presentation and IAS 1 We have a process to deal with entities previously accounting for oil and Presentation of Financial Statements to non-urgent but necessary amendments gas assets using full cost accounting, and improve the accounting for puttable to IFRSs. The Board discusses and decides for some aspects of operations subject to financial instruments and instruments on proposed improvements to IFRSs as rate regulation. We expect to complete that impose on the entity an obligation they arise throughout the year. We then those amendments in the second half to deliver a pro rata share of the net publish a single ED. This streamlines the of 2009. assets of the entity only on liquidation. standard-setting process, with benefits In the past many of these instruments, for both interested parties and the Board. In August we published an ED which have characteristics similar to Improvements to IFRSs for the 2007-2009 ordinary shares, were classified as For the 2006-2008 project cycle, we issued project cycle. We expect to issue the financial liabilities. The amendments a standard, Improvements to IFRSs, in May. amendments in April 2009. ensure that, provided they have This finalised 34 of the 41 amendments particular features and meet specific proposed in the ED that was published The Board discussed the first new conditions, such instruments will be in October 2007. proposal for the 2008-2010 project cycle classified as equity. in September and will continue to consider additional issues until July 2009. We expect to publish an ED of the approved proposals in August 2009.
Annual Report 2008 35 4 REPORT OF THE CHAIRMAN OF THE IASB
‘In December 2007 we activated work on the accounting for emissions trading schemes.’
Eligible hedged items Related party disclosures (relationships Emissions trading schemes We amended IAS 39 to specify the risks with the state) In December 2007 we activated work on that qualify for designation as a hedged In 2007 we proposed amendments to IAS 24 the accounting for emissions trading risk when IAS 39 is applied. The Related Party Disclosures to simplify the schemes. We expect to address the amendment clarifies the requirements definition of a related party and clarify accounting for all tradable emissions for the designation of a one-sided risk what related party disclosures are rights and obligations arising in in a hedged item and the designation appropriate when the state has a emissions trading schemes. We also of inflation in particular situations. controlling or significant investment in expect to address the accounting for The amendment is expected to reduce the reporting entity. After considering activities that an entity undertakes in diversity in practice that exists, or is the comments we received we decided contemplation of receiving tradable likely to occur, in those two situations. to publish a second ED Relationships with rights in future periods, such as certified the State. The ED, published in December, emissions reductions. The aim is to issue Ongoing projects proposed a revised exemption for entities an IFRS in 2010. controlled, jointly controlled or Insurance contracts significantly influenced by a state as Liabilities (revision to IAS 37) In May 2007 we published a DP well as one further amendment to the This is a project to revise IAS 37 Provisions, Preliminary Views on Insurance Contracts, definition of a related party. The Contingent Liabilities and Contingent Assets, which drew over 160 responses. We began amendments would reduce the our general standard on uncertain to review the responses in February. In disclosure requirements for some entities liabilities (sometimes known as October the FASB decided to join us on that are controlled or significantly provisions). We published an ED of this project. We are working to publish influenced by a state in relation to proposed amendments in 2005. Our staff an ED in the second half of 2009. transactions with other entities are refining the proposed amendments in controlled or significantly influenced the light of comments received on the I am very grateful to the members of by that state — unless influence exists ED. The main difficulties in this project the Insurance Working Group, which in such relationships. We expect to relate to developing principles for met in April and November. They have complete this project in the second half identifying whether an entity has a been extremely helpful in developing of 2009. liability when it is a party, or potential the proposals. party, to a lawsuit and other similar non-contractual events and activities. We expect to issue a revised standard in the second half of 2009.
36 Management commentary Share-based payment: group We are developing guidance based on the cash-settled transactions ‘National standard- DP Management Commentary, which we In December we published an ED of setters make a published in October 2005. The guidance proposed amendments to both IFRS 2 will set out a framework for the Share-based Payment and IFRIC 11 valuable contribution preparation of management commentary IFRS 2 — Group and Treasury Share when they undertake and establish principles for its structure, Transactions. We expect to finalise research for us.’ content and presentation. the amendment in the second quarter of 2009. Although it will not be mandatory, we think such guidance will benefit Extractive industries Other projects those jurisdictions that do not have We have a project on extractive industries We added a project on common control any requirements or guidance for the with the objective of developing an IFRS to our agenda in December 2007. We will preparation of management commentary to supersede IFRS 6 Exploration for and begin work on it when staff now working (or MD&A as it is called in some Evaluation of Mineral Resources. A project on projects related to the financial crisis jurisdictions). We expect to publish team with representatives from the become available. an ED in the second quarter of 2009. national standard-setters of Australia, Canada, Norway and South Africa has In December 2007 we decided not to add Earnings per share been developing a DP for publication in a project on intangible assets to our In August we published an ED Simplifying early 2009. The DP will be the initial due agenda. The Australian Accounting Earnings per Share, proposing amendments process document for our deliberations, Standards Board (AASB) had performed to IAS 33 Earnings per Share. The FASB if we decide to add this project to our the exploratory work for us. The AASB also published an ED on this topic. The active agenda. continued work on this project and in proposals would simplify the calculation October published for public comment of earnings per share and eliminate some National standard-setters make a valuable a DP Initial Accounting for Internally differences between IFRSs and US GAAP. contribution when they undertake Generated Intangible Assets. We welcome In April 2009 we shall be considering research for us. Not only does this such initiatives because we benefit from the comments received. research activity help us access the the thinking and research on projects in wealth of experience of the boards and the formative stages. staff of national standard-setters but it can save the time that the IASB needs to spend on a project by up to two years.
Annual Report 2008 37 4 REPORT OF THE CHAIRMAN OF THE IASB
New agenda items In every country in the world, including ‘The project to develop developed ones, over 98 per cent of In December we added a project on an IFRS expressly private entities have fewer than 50 rate-regulated activities. The issue is employees. The project to develop an IFRS designed to meet the whether rate-regulated entities could or expressly designed to meet the financial financial reporting should recognise a liability (or an asset) reporting needs of such entities is an as a result of rate regulation by needs of such entities important step towards meeting the regulatory bodies or governments. needs of a very important part of the is an important step For several countries adopting IFRSs in global economy. towards meeting the the next few years, this is a particular needs of a very problem. The project has a limited We published an ED with our proposals scope designed to preserve good in February 2007. In March 2008, important part of practice and eliminate unacceptable we began redeliberating those proposals. the global economy.’ accounting rather than developing We received 162 comment letters and 116 new requirements. field test reports. The Working Group for the project met in April and submitted IFRS for SMEs to the Board two comprehensive sets of recommendations for further In developing a single set of high quality, simplifications of the original proposals understandable and enforceable global (one on accounting recognition and accounting standards our Constitution measurement principles and the other requires us to take account of the special on disclosures). By December we had needs of small and medium-sized entities redeliberated almost all of the issues. and emerging economies. A few final issues were considered in January. We are on course to issue a standard in the middle of 2009.
38 Meetings and outreach It is a demand that is wholly The Board meets in London for a week understandable, but one that has each month, except August. Each stretched us at times. In 2008 we meeting typically involves about 30 hours arranged conferences in Amsterdam, of public discussion. Last year I reported Beijing and Toronto. We supported on the independent assessment by the co-branded conferences in Almaty, 42 One World Trust of our transparency and Berlin, London and Moscow and held stakeholder engagement. Transparency sessions for IFRS teachers, trainers The number of languages into which and accountability have been cornerstones and researchers in Amsterdam, Paris IFRS material has been translated. of the standard-setting process since we and Toronto. started in 2001. We also ensure that Board members The Board Although the public Board meetings and staff spend time in countries that are the main focus of our decision- are adopting international standards. We currently have an establishment making activities they are by no means Countries that have already adopted of 14 Board members. With changes our only activity. international standards are not forgotten to our Constitution that number will and Board members visit not only their increase to up to 16. We operated through Spreading the word country of origin but also neighbouring all of 2008 with only 13 Board members. It is part of the our mission to promote ones, thereby ensuring that a large However, we completed 2008 with the the use of the standards we develop, and number of countries in six continents comforting knowledge that Stephen it is a measure of success that so many are visited during the course of a year. Cooper would be changing from a countries are interested in adopting our part-time to a full-time member of the standards or, having made that decision, We also meet many representative Board and that the vacancy had been are now implementing them. As that groups. Although the meetings are filled. Prabhakar Kalavacherla, or ‘PK’ number has risen so too have the normally held in London these as he prefers to be called, joined the demands for direct contact with the have members from a broad range Board on 1 January 2009. An Indian Board and its staff. of countries. citizen, trained accountant and a former KPMG partner, PK has worked in India, Europe, and the United States, most recently in the San Francisco office, where he specialised in technology and biotechnology.
Annual Report 2008 39 4 REPORT OF THE CHAIRMAN OF THE IASB
In responding to the increased demand for Board and staff time, Wayne Upton ‘We currently have an establishment of 14 Board was appointed to the new role of Director members. With changes to our Constitution that of International Activities. Wayne was Director of Research until he took on this number will increase to up to 16.’ important responsibility.
We have also begun to use technology Working with national standard-setters The national standard-setters meet as to spread the word. We have conducted The national standard-setters are our a body at least twice each year and we several webcasts in which Board members partners in seeking to remove differences participate in those meetings. Each year and staff present project summaries via in accounting, worldwide. we host, in London, an annual meeting the web. of world standard-setters. This provides In 2008 we held two joint meetings with the Board with the opportunity to hear Participants are then able to ask the the FASB, each lasting two days. We met about the issues that are of the greatest presenters questions by sending an email in London in April and at the FASB offices interest, or concern, to standard-setters. and the presenters share the questions in Norwalk in October. At the October In addition, throughout the year Board with all the participants and answer meeting we agreed to meet three times members attend regular meetings of them. We have held webcasts for in 2009. standard-setters. the pensions, revenue recognition, financial statement presentation and We have two-day meetings scheduled for A note of thanks consolidations projects, attracting more London in April and July and Norwalk The workload of the Board has increased than 1,200 online participants to some in October. over the year. Shouldering this sessions. Recently, a staff member responsibility is possible only with the In August 2007 we announced an conducted a plenary session for a New willing co-operation of my colleagues on agreement we had reached with the Zealand conference via video link from the Board. I am grateful for the cheerful Accounting Standards Board of Japan London. We will continue to examine comradeship of the Board members. (ASBJ), designed to eliminate differences other ways to maximise our participation between Japanese GAAP and IFRSs, in activities and communicate with the by 30 June 2011. We also have two joint IFRS community. meetings with the ASBJ each year.
40 International Financial In March the Trustees appointed Peggy Reporting Interpretations Smyth (US) and Scott Taub (US) to the ‘The role of the IFRIC Committee (IFRIC) IFRIC. Peggy is Vice President, Controller, is to consider requests at United Technologies Corporation and The role of the IFRIC is to consider Scott is Managing Director of Financial received by the IASB requests received by the IASB for an Reporting Advisors, LLC. In June the for an interpretation interpretation of an IFRS. Trustees appointed Luca Cencioni (Italy), of an IFRS.’ Jean Paré (Canada) and Joanna Perry (New The IFRIC is chaired by Bob Garnett, Zealand) to the IFRIC. Luca Cencioni is who is a Board member. Bob does not Senior Accounting Manager at Eni The staff supporting the IFRIC are have a right to vote, but ensures that S.p.A, Jean is Vice President, Financial led by Tricia O’Malley as Director of there is consistency and cohesion Reporting at Bombardier and Joanna Implementation Activities. Tricia is a between the activities of the Board and is a Company Director and the Chair former Board member and she has done those of the IFRIC. I am grateful to Bob of the New Zealand Financial Reporting a tremendous job in ensuring that IFRIC for the superb job he does in chairing the Standards Board. members are presented with robust meetings and working with the staff who analysis of the matters that they are being support the IFRIC. Several regulators and Board members asked to consider. Sadly for us Tricia is also attend the meetings as non-voting leaving the organisation in July 2009 to The IFRIC has 12 voting members. Three observers. They do, however, have the re-assume the role of Chair of the IFRIC members completed their terms in right to speak. 2008. Phil Ameen (US), Claudio de Conto Canadian Accounting Standards Board, (Italy) and Mike Bradbury (New Zealand) but in both of her roles within the retired from the IFRIC on 30 June. We are organisation she has played an grateful to them for their commitment to enormously important part a very important part of the development in establishing IFRSs on the pathway of IFRSs. to becoming the global standard.
Annual Report 2008 41 4 REPORT OF THE CHAIRMAN OF THE IASB
‘During 2008 the IFRIC finalised four interpretations... the IFRIC also considered 15 issues that it decided should not be added to its agenda.’
Interpretations The Board considered IFRIC 18 in January 2009 and approved it for issue. Month Publication Matters not added to the agenda January Draft interpretation Distributions of Non-cash Assets The IFRIC also considered 15 issues to Owners that it decided should not be added Draft interpretation Customer Contributions to its agenda. July IFRIC Agreements for the Construction of Real Estate Standards Advisory Council IFRIC Hedges of a Net Investment in a Foreign Operation The Standards Advisory Council (SAC) is November IFRIC Distributions of Non-cash Assets to Owners one of the Board’s primary consultative forums. The SAC’s foremost role is to During 2008 the IFRIC finalised four IFRIC 17 Distributions of Non-cash Assets provide broad strategic advice on the interpretations (although one was not to Owners clarifies that an entity should Board’s agenda priorities and insight issued until after it was approved by the measure distributions of assets other into the possible benefits and costs of Board in January 2009). than cash when it pays dividends to its particular proposals. The composition of owners at their fair value. Until the the SAC reflects this mandate, comprising IFRIC 15 Agreements for the Construction of interpretation was issued the dividend leading practitioners from 23 countries Real Estate provides guidance on how to payable was sometimes recognised at and seven international organisations, determine whether an agreement for the the carrying amount of the assets to including senior financial officers of construction of real estate is within the be distributed and sometimes at their corporations, investment analysts with scope of IAS 11 Construction Contracts or fair value. knowledge of accounting issues, partners IAS 18 Revenue and when revenue from of audit firms with experience in the construction should be recognised. IFRIC 18 Transfers of Assets from Customers auditing companies that apply IFRSs, addresses an issue that arose in the executives of international financial IFRIC 16 Hedges of a Net Investment in utilities industry. It is common for an and development organisations, and a Foreign Operation will eliminate the entity to receive transfers of items of other senior representatives of public possibility of an entity applying hedge property, plant and equipment from its interest bodies. accounting for a hedge of the foreign customers that must be used to connect exchange differences between the customers to a network and provide The SAC met three times in 2008, under functional currency of a foreign customers with ongoing access to a the able leadership of Nelson Carvalho. operation and the presentation supply of commodities such as electricity, Nelson’s term concluded at the end of currency of the parent’s consolidated gas or water. The Interpretation clarifies 2008. I am grateful to this inspiring financial statements. when such transfers should be recognised leader for his unswerving dedication by the entity as an asset and how to and unstinting support in his role as account for the corresponding credit. Chairman of the SAC.
42 ‘We have continued to attract excellent staff from all around the world and from diverse backgrounds.’
The Trustees have appointed Paul Cherry It is a team that demands strong to chair the new SAC. In March 2009 Paul leadership. We were therefore saddened retired as the chairman of the Canadian that Liz Hickey, our Director of Technical Accounting Standards Board. In that role Activities, decided to return to New he spearheaded Canadian work on IFRS Zealand in July for family reasons. convergence and adoption, which will Liz had done an excellent job in the 44 culminate in the use of IFRSs by public five years she was with us, initially as companies in Canada in 2011. I am Education Director and then as Director The number of organisations looking forward to working with Paul, of Technical Activities. Her legacy is the represented on the reconstituted a long-time friend of international strong technical team that we currently Standards Advisory Council. standard-setting, having been a member have in place. of the former IASC. As part of its constitutional review, With Liz’s departure we reorganised and the Trustees decided to strengthen The Trustees have also appointed two strengthened the senior technical team. the SAC even further by appointing Vice-Chairmen. Charles Macek is a As noted previously, in recognition of the representatives of organisations rather non-executive Director of Telstra and importance of helping new countries than individuals. This ensures that SAC Wesfarmers and former Chairman of adopt international standards Wayne members can convey the collective views the Australian Financial Reporting Upton moved from his role as Director of the organisations they represent, Council. Patrice Marteau is the of Research to become Director of broadening the consultative base. As a Chairman of ACTEO and the Chairman International Activities. Three of our result of this change many of the SAC of the Accounting Committee of Senior Project Managers stepped up into members completed their terms at Business Europe. Director roles. Alan Teixeira took on the the end of 2008. SAC members are responsibility of Director of Technical required to meet their own travel and Staff Activities, Peter Clark became the accommodation costs. They also invest Director of Research and Gavin Francis two full days attending each SAC Technical took on the new role of Director of meeting, plus preparation time. Some Our technical staff are the people Capital Markets. In recognition of the SAC members travel long distances to get responsible for researching, developing increasing importance of implementation, to London, so their contribution of time and writing the discussion papers, Tricia O’Malley became Director of is even greater. I value the contribution exposure drafts, standards and Implementation Activities. Paul Pacter the retiring SAC members have made to interpretations that the Board approves. continues as Director of Standards international standards and hope that for SMEs. they continue to be involved in helping We have a large and growing team of us achieve a global solution. nearly 50 professional staff members.
Annual Report 2008 43 4 REPORT OF THE CHAIRMAN OF THE IASB
‘In December we were in the final stages of a recruitment round, and by the end of January 2009 we had appointed six new technical staff (from Australia, Italy, New Zealand and the US).’
We are also fortunate to have four new Board), Ian Hague and Rebecca Villmann Practice Fellows (from accounting firms) (both of the Canadian Accounting and a new Industry Fellow — Fabienne Standards Board) and Simon Peerless Colignon (France) from Mazars, Michael (UK Accounting Standards Board) all Kraehnke (US) from KPMG, Michael completed their secondments. Kimberley, Mueller (Germany) from Deloitte, Ian and Rebecca made particular 25 Shelley So (Hong Kong) from sacrifices, travelling long distances to PricewaterhouseCoopers and Nikolaus present to both the IASB and the FASB in Number of different nationalities of Starbatty (Germany) from Siemens. their roles on the conceptual framework full-time staff. We also benefited from two short-term project. I am grateful to all of our secondments. Clare de Arostegui, from secondees and their host organisations In July we promoted Liz Figgie and Rachel PricewaterhouseCoopers, assisted with for the contributions they have made. Knubley to Senior Project Manager. the development of material for the Two Practice Fellows completed their New staff consolidation round tables and David two-year secondments, with Candy Fong We have continued to attract excellent Quest, also from that firm, assisted with returning to Deloitte in Hong Kong and staff from all around the world and from the illiquid markets expert panel. Colin Edwards returning to KPMG in the diverse backgrounds. We welcomed six Departures UK. Ewa Kwiatkowska, from Poland, new Project Managers — Jon Baldurs It is also inevitable that many of our completed her two-year assignment as a (Iceland), Mark Bunting (South Africa), technical staff will seek opportunities Technical Associate and accepted a role Martin Friedhoff (Germany), Ryan outside the IASB. Two staff left us to in Brussels. Richards (US), Aida Vatrenjak (Bosnia and embark on PhD studies. Amanda Herzegovina) and Luci Wright (South Quiring returned to the US to study at Looking ahead Africa). We also welcomed three new Duke University while Jenny Lee will In December we were in the final stages Technical Associates — staff who are undertake her studies in the UK. Michael of a recruitment round, and by the end relatively early in their careers who Thomas, from South Africa, took up a of January 2009 we had appointed six provide support to the Project Managers position in Singapore. new technical staff (from Australia, Italy, — Manuel Kapsis (Australia), Sunhee Kim New Zealand and the US). We were also (Korea) and Barbara Ruane (US). Victoria Yung-Wook Kim, Leng Bing and Eiko in the final stages of securing an Blackburn (UK) joined us as a Technical Osawa completed their secondments additional six secondees from national Administrator — Victoria moved into the from national standard-setters. Yung- standard-setters (four from the communications team at the end of Wook returned to Korea, Bing to China Accounting Standards Board of Japan, December. We also secured the services and Eiko to Japan. Kimberley Crook (New one from the Korea Accounting of Jeff Wilks (US) as an Adviser on the Zealand Financial Reporting Standards Standards Board and one from the revenue recognition project. Chinese Ministry of Finance).
44 It is our able staff who have had to bear much of the burden of the increased ‘The rapid growth in the adoption of international workload stemming from our response to standards has been matched by growth in the size the global financial crisis. They have done so professionally and without hesitation. and complexity of the IASB.’
Operations Tom Seidenstein (our Chief Operating Editorial Education Officer) leads the operational side of the Our editorial team, ably led by the The Education team is led by Mike Wells organisation. Tom has been with us since Editorial Director Michael Butcher, is (Director — IFRS Education Initiative). the establishment of the IASB and we responsible for preparing the technical They produce several publications, continue to benefit from his astute and documents for publication. Michael leads included the well received guides to efficient guidance. a small team that has had to cope with IFRSs. During the year the team has been an increasing range of outputs over the developing educational material for During 2008 we have paid particular last year. SMEs. Mike hosts many student visits to attention to ensuring that we build a the IASB, which have grown in number strong, robust and stable organisation. Publications over the last two years. He also organises The rapid growth in the adoption of Ken Creighton (Director — IFRS Content the IFRS conferences we host. international standards has been Services) leads the publications team. matched by growth in the size and Ken and his team manage the delivery During the year we welcomed Germán complexity of the IASB. Recognising this, of eIFRS and the distribution of all of López Espinosa (Spain), who is on we are fortunate to have secured the our publications, and they do a superb sabbatical leave from Universidad de services of Miranda Corti (UK) as Director job for us. We sometimes license our Navarra. Gargi Ray (India) spent a short — Finance and Human Resources. publications, including translation. It is time with us on secondment from Miranda has extensive experience in the publications team that looks after all Infosys. We said farewell to Luciana senior management positions, of this. During the year David Bray and Abrantes (Brazil), who left to resume particularly in the finance sector. Trevor Sturge (both UK) left to take up her studies. other opportunities. The operations side includes several discrete teams — editorial, publications, education, translation, XBRL and communications — for which I have made additional comments.
Annual Report 2008 45 4 REPORT OF THE CHAIRMAN OF THE IASB
Translations Since 2001, the IASC Foundation has As XBRL has matured, we have also Our translations team is responsible for provided a licence-free IFRS Taxonomy, changed our resource focus. We have overseeing the translation of IFRSs into which is a dictionary of data tags wound down our very successful intern a multitude of languages. We do not explaining what each tagged element is programme and focused on undertake translation ourselves; our role and how it should be treated under IFRSs. strengthening the permanent team. is to co-ordinate the translation process. In July 2007 the Trustees made the Six XBRL Interns completed their Ioanna Tzivani, who has been the team decision to focus the activities of the assignments with us — Elizabetta Barone leader for several years, took a break XBRL team of the IASC Foundation, with (Italy), Ioannis Deniozos (Greece), from this role for personal reasons. the result that in March 2008 the IFRS Alessandro d’Eri (Italy), Andrea Felkai Leilani Macdonald picked up this Taxonomy 2008 was released at the same (Hungary), Valeria Moruzzi (Italy) and additional responsibility. time as the Bound Volume of IFRSs. The Timo Philipp (Germany). XBRL team of the IASC Foundation is During the year the team welcomed two also involved in XBRL adoption and Communications new project managers, Clare McGuinness implementation initiatives around the The communications team is led by our (UK) and Lorida Tieri (Italy). world to promote understanding of XBRL Communications Director, Mark Byatt. and its potential to improve access for It is a small team with a big job, and one XBRL users to financial information, to they have performed admirably through XBRL (eXtensible Business Reporting increase the range of users (via what has been an extremely volatile Language) is an XML-based language translations) of financial information, political environment. developed specifically for the automation and to ease IFRS conversion, of business information requirements, It can be challenging to identify how best understanding and implementation such as the preparation, sharing and to communicate what can be complex analysis of financial reports, statements The XBRL team is led by Olivier Servais technical messages to a wide range of and audit schedules. XBRL is widely (Director — XBRL Activities). Olivier and people. The communications team adopted and implemented across the his team have been busy developing introduced the project webcasts world by capital market participants pursuing the Trustee vision for the mentioned earlier. They have also for banking supervision, securities IFRS Taxonomy. introduced project snapshots (project regulation, the filing and registration of summaries aimed at busy executives) and company financial statements, statistical To help us be assured that our XBRL developed new presentation templates reporting and tax filing. efforts meet the highest standards we are for the many public talks given by Board fortunate to have the assistance of the members and staff. They have also members of the XBRL Advisory Council developed new styles for our main and the XBRL Quality Review Team. publications, which were put into effect at the beginning of January 2009.
46 Some final thanks ‘I and my fellow Board members greatly appreciate As this report shows, this is an organisation that depends on the the help and advice we receive from the many contributions and efforts of many volunteers and well-wishers who give so people and many other organisations. generously of their time and expertise in the I have made special mention of several people in the report. Many others Board’s working groups.’ undoubtedly deserve thanks and I hope that they know how much I value Closer to home, there is a small group of To conclude, I want to record my special their contributions. people that I interact with on an almost thanks to Gerrit Zalm, as Chairman of I and my fellow Board members greatly daily basis. Janet Smy (my PA) and Ailie the Trustees, and to the other Trustees appreciate the help and advice we Burlinson, Fiona Dunne, Kathryn for their support, encouragement and receive from the many volunteers and McArdle, Katherine Maybin, Jill Robinson, advice. I am particularly thankful for well-wishers who give so generously of and Jennifer Wilson form the secretariat their resolute determination to protect their time and expertise in the Board’s that provides me, the other Board the integrity and independence of this working groups. members and the technical staff with the organisation — a resolve that was tested unflinching support that we need to be in October 2008 when we suspended our able to meet our goals. I am sure I test due process, with the support of the their patience. Trustees, to protect the integrity of financial reporting by the banking sector in the EU. The establishment of the Monitoring Board, which is discussed in Gerrit Zalm’s report, is an important step towards preventing a similar set of circumstances that we faced in October from developing again.
Annual Report 2008 47 5
Trustees of the IASC Foundation
Current Trustees
A Gerrit Zalm, Chairman D Bertrand Collomb G tsuguoki (Aki) Fujinuma Former Deputy Prime Minister and Honorary Chairman, Lafarge Immediate Past Chairman Finance Minister, The Netherlands; France and President, Japanese Institute Managing Board ABN AMRO Term expires: December 2009 of Certified Public Accountants The Netherlands Japan Term expires: December 2010 E Samuel A DiPiazza, Jr Term expires: December 2010 Chief Executive Officer, B Philip A Laskawy, PricewaterhouseCoopers H Robert Glauber Vice Chairman United States Retired Chairman and Chief Chairman, Fannie Mae Term expires: December 2011 Executive Officer, NASD (the private United States sector regulator of the US securities Term expires: December 2009 F Oscar Fanjul market); former Under Secretary Vice Chairman, Omega Capital; of the Treasury for Finance C Marvin KT Cheung former Chairman and CEO, United States Retired Chairman, KPMG Repsol, SA Term expires: December 2011 Hong Kong SAR Spain People’s Republic of China Term expires: December 2010 I Alicja Kornasiewicz Term expires: December 2011 Member of the Board, CA IB Corporate Finance Gmbh, Vienna; CEO and Chairman, CA IB Group, Poland Poland Term expires: December 2010
A D G
B E H
C F I
48 J Zhongli Liu M Sir Bryan Nicholson GBE O David Sidwell President, Chinese Institute of Former Chairman, Financial Director, UBS Certified Public Accountants; Reporting Council Board Member, Federal National former Minister, Ministry of Finance United Kingdom Mortgage Association People’s Republic of China Term expires: December 2011 United States Term expires: December 2011 Term expires: December 2009 N t V Mohandas Pai K Jeffrey Lucy, AM Director and Member of the Board, P Luigi Spaventa Chairman, Financial Reporting Infosys Technologies Limited; Former Chairman, Commissione Council; former Chairman of Chairman, Infosys BPO Limited nazionale per le società e la the Australian Securities and India borsa (Consob); Professor Emeritus, Investments Commission Term expires: December 2011 University of Rome Australia Italy Term expires: December 2010 Term expires: December 2009
L Pedro Malan Former Chairman of the Board of Unibanco; former Minister of Finance of Brazil; former President of the Brazilian Central Bank Brazil Term expires: December 2010
J M O
K N P
L Continued overleaf
Annual Report 2008 49 5 Trustees of the IASC Foundation
q Paul Tellier Trustees retiring at December 2008 Former President and CEO,
Bombardier and CN; former Clerk t Max Dietrich Kley u Junichi Ujiie of the Privy Council and Secretary Member of the Supervisory Chairman, Nomura Holdings Inc of the Cabinet; Director Rio Tinto Board, BASF SE Japan plc and Rio Tinto Ltd.; Director Germany McCain Foods and Chairman, Global Container Terminals (GCT) David L Shedlarz Canada Former Vice Chairman, Pfizer Inc Term expires: December 2009 United States
r Jeff van Rooyen Chief Executive, Uranus Investment Holdings; former Vice Chairman, Executive Committee, International Organization of Securities Commissions (IOSCO); former CEO, South African Financial Services Board South Africa Term expires: December 2009
s Antonio Vegezzi President of Capital Italia Fund, former President & Director Capital International; former Director of the Capital Group Companies Switzerland Term expires: December 2010
Q S u
R t
50 6
Members of the International Accounting Standards Board
A Sir David Tweedie D Stephen Cooper G Robert P Garnett Appointed: January 2001 Appointed: July 2007 Appointed: April 2001 Term expires: 30 June 2011 Term expires: 30 June 2012 Term expires: 30 June 2010
b thomas E Jones E Philippe Danjou H Gilbert Gélard Appointed: January 2001 Appointed: July 2006 Appointed: January 2001 Term expires: 30 June 2009 Term expires: 30 June 2011 Term expires: 30 June 2010
C Professor Mary E Barth F Jan Engström I Prabhakar Kalavacherla (‘PK’) Appointed: January 2001 Appointed: May 2004 Appointed: January 2009 Term expires: 30 June 2009 Term expires: 30 June 2014 Term expires: 30 June 2013
A D G
b E H
C F I
Annual Report 2008 51 6 MEMBERS OF THE INTERNATIONAL ACCOUNTING STANDARDS BOARD
J James J Leisenring L John T Smith N Wei-Guo Zhang Appointed: January 2001 Appointed: September 2002 Appointed: July 2007 Term expires: 30 June 2010 Term expires: 30 June 2012 Term expires: 30 June 2012
K Warren J McGregor M tatsumi Yamada Appointed: January 2001 Appointed: January 2001 Term expires: 30 June 2011 Term expires: 30 June 2011
J L N
K M
52 7
Members of the International Financial Reporting Interpretations Committee
At 31 December 2008 Name and affiliation Term expires Name and affiliation Term expires Luca Cencioni 30 June 2011 Margaret M (Peggy) Smyth 30 June 2011 Senior Accounting Manager Vice President, Controller, Eni S.p.A United Technologies Corp Italy United States Guido Fladt 30 June 2010 Scott Taub 30 June 2011 Partner Managing Director, Financial Reporting PricewaterhouseCoopers Advisors, LLC, United States, and former Germany Acting Chief Accountant and Deputy Bernd Hacker 30 June 2010 Chief Accountant, US Securities and Head of Standard Setter Liaison and Exchange Commission Financial Instruments Accounting Policies United States Siemens Andrew Vials 30 June 2010 Germany Partner Sara York Kenny 30 June 2012 KPMG LLP Principal Accounting Advisor UK International Finance Corporation Ken Wild 30 June 2009 United States Partner Jean-Louis Lebrun 30 June 2008 Deloitte & Touche Partner UK Mazars & Guerard France Non-voting Chairman Takatsugu Ochi 30 June 2012 General Manager, Planning and Robert P Garnett Administration Department Member, International Accounting Standards Board Sumitomo Corporation Japan Official Observers Jean Paré 30 June 2011 Vice President, Financial Reporting European Commission Bombardier The International Organization of Securities Commissions Canada Joanna Perry 30 June 2011 Company Director and Current Chair Financial Reporting Standards Board New Zealand Ruth Picker 30 June 2012 Partner — Technical Consulting Group, Global IFRS Ernst & Young Australia Darrel Scott 30 June 2010 Head of Group Finance FirstRand Banking Group South Africa
Annual Report 2008 53 8
Members of the Standards Advisory Council at the end of 2008
At 31 December 2008. The SAC was reconstituted in January 2009. For a list of current SAC members please see the IASB website. Country Name and affiliation Country Name and affiliation
Chairman Korea Suk Jun Lee Vice President, Corporates Overseas Brazil Nelson Carvalho Management Team, Samsung Electronics Professor, University of São Paulo, Brazil; Co., Limited Financial consultant and litigation expert; Japan Dr Eiko Tsujiyama Member of various boards and heads of Professor of Accounting, various Audit Committees Waseda University, Faculty of Commerce AFRICA & Business Cameroon Benoît Antoine Atangana Onana China Wang Jun Former President, Institute of Chartered Vice Minister, Ministry of Finance, Accountants of Cameroon; Senior Partner People’s Republic of China; Secretary- and General Manager, African Consulting General, China Accounting Standards Enterprise; Member of National Education Committee, People’s Republic of China Private Sector Japan Yoshiki Yagi South Africa Christine Ramon Senior Advisor Emeritus, Hitachi Limited Executive Director and Chief Financial EUROPE Officer, Sasol Limited Spain José Antonio Alvarez ASIA-OCEANIA Chief Financial Officer, Grupo Santander, Australia Judith Downes Ciudad Grupo Santander Chief Financial Officer, Alumina Limited United Kingdom Sarah Deans India Shailesh V Haribhakti Executive Director/Head of Accounting Managing Partner and CEO, and Valuation Research, JP Morgan Haribhakti & Co. Italy Alberto Giussani Hong Kong P M Kam Member of the Italian National Group Financial Controller, Setter; Professor of Accountancy, Jardine Matheson Ltd University of Milan Malaysia Professor Rifaat Ahmed Abdel Karim Italy Mauro Grande Secretary-General, Islamic Financial European Union Institution Services Board Director, Financial Stability and Singapore Yeoh Oon Jin Supervision, European Central Bank Partner, Head of Assurance, Norway Ingebret Hisdal PricewaterhouseCoopers Managing Partner, Deloitte Singapore Anna Di Michele Executive Director, P&S Consulting, UBS AG
54 Country Name and affiliation Country Name and affiliation
United Kingdom David Lindsell LATIN AMERICA Retired partner, Ernst & Young, Argentina Hector Estruga United Kingdom; Member of Supervisory Retired Partner and former Professional Board of European Financial Reporting Practice Director for South America, Advisory Group (EFRAG) and Deputy Ernst & Young; Consultant to E&Y; Chair of UK Financial Reporting Member, CENCYA (Special Audit and Review Panel Accounting Standards Committee); France Patrice Marteau Argentine Federation of Professional Chairman, ACTEO; Senior Adviser, Council in Economic Sciences ABN AMRO Bank Mexico Hector J Vela Dib Germany Heinz-Joachim Neubürger Corporate Financing and Banking Chairman of the Executive Board, Relations Director for Spain, France, Accounting Standards Committee Middle East, Asia & Africa, CEMEX of Germany (GASC) MIDDLE EAST Germany Jochen Pape Retired Partner, PricewaterhouseCoopers, Israel Adir Inbar Germany; since 1 July 2007, Vice-President, Professional Leader and Senior Audit German Accounting Standards Board Partner, Deloitte Touche Tohmatsu Russia Vladimir Preobrazhenskiy NORTH AMERICA Chief Financial Officer, Siberian Coal United States Michael Paul Cangemi Energy Company President and CEO, Financial European Union Richard Thorpe Executives International Institution Member, Financial Reporting Committee, United States Trevor Harris Committee of European Securities Senior Adviser, Morgan Stanley Professor, Regulators (CESR-fin); Head of Capital Columbia Business School Adequacy Policy and Accounting and United States Dane Mott Auditing Sector Leader, UK Financial Executive Director/Head of US Accounting Services Authority and Valuation Research, JP Morgan Switzerland Will Widdowson Head Group Accounting Policy and Group SOX Officer, UBS AG
Annual Report 2008 55 Name and affiliation Name and affiliation
INTERNATIONAL ORGANISATIONS United Nations Conference for Trade and Development
Basel Committee of Banking Supervisors Yoseph Asmelash Head, Accounting Unit, Division on Investment Sylvie Matherat and Enterprise Development Director, Financial Stability Directorate, Bank of France; Chair of the Accounting Task Force, Basel Committee World Bank
International Association of Insurance Supervisors Charles A McDonough Deputy Controller & Chief Accountant Henning Göbel Chief Accountant, Bundesanstalt für OBSERVERS Finanzdienstleistungsaufsicht (Federal Financial European Commission Supervisory Authority), Germany Financial Services Agency of Japan International Federation of Accountants US Securities and Exchange Commission Ian Ball Chief Executive Officer
International Monetary Fund
Kenneth Sullivan Senior Financial Sector Expert
International Organization of Securities Commissions
John Carchrae Chief Accountant, Ontario Securities Commission Now at the World Bank, Vienna Christoph Ernst Head of the Accounting and Auditing Law Division of the Federal Ministry of Justice, Germany
56 9
Senior staff
IASC Foundation IASB
Tom Seidenstein Peter Clark Chief Operating Officer Director of Research
Michael Butcher Gavin Francis Editorial Director Director of Capital Markets Mark Byatt Tricia O’Malley Director of Corporate Communications Director of Implementation Activities Miranda Corti Paul Pacter Director of Finance & Resources Director of Standards for SMEs Ken Creighton Alan Teixeira Director of IFRS Content Services Director of Technical Activities Olivier Servais Wayne Upton Director of XBRL Activities Director of International Activities Mike Wells Director of IFRS Education Initiative
Annual Report 2008 57 10
Report of the independent auditors
We have audited the financial statements of the International Accounting Standards Committee Foundation (IASC Foundation) for the year ended 31 December 2008 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows and the related notes. These financial statements have been prepared under the accounting policies set out therein.
Respective responsibilities of accept responsibility for this report to opinion we also evaluated the overall Trustees and auditors any other person or for any other purpose adequacy of the presentation of and we hereby expressly disclaim any and information in the financial statements. The Trustees are responsible for the all such liability. preparation of the financial statements Opinion in accordance with applicable law, Basis of audit opinion In our opinion the financial statements: the IASC Foundation’s Constitution We conducted our audit in accordance and International Financial • give a true and fair view of the state with International Standards on Reporting Standards. of the IASC Foundation’s affairs as Auditing (UK and Ireland) issued by the at 31 December 2008 and of its Our responsibility is to audit the Auditing Practices Board. An audit comprehensive income for the financial statements in accordance includes examination, on a test basis, year then ended; and with relevant legal and regulatory of evidence relevant to the amounts • have been properly prepared in requirements and International and disclosures in the financial accordance with International Standards on Auditing (UK and Ireland). statements. It also includes an Financial Reporting Standards. assessment of the significant estimates We report to you our opinion as to and judgments made by the directors whether the financial statements give in the preparation of the financial a true and fair view and have been statements, and of whether the properly prepared in accordance accounting policies are appropriate BDO Stoy Hayward LLP with International Financial to the IASC Foundation’s Chartered Accountants, London Reporting Standards. circumstances, consistently applied April 2009 and adequately disclosed. Our report has been prepared pursuant to the requirements of our engagement We planned and performed our audit letter to you dated 3 October 2008 and so as to obtain all the information and for no other purpose. No person is explanations which we considered entitled to rely on this report unless necessary in order to provide us with such a person is a person entitled to rely sufficient evidence to give reasonable upon this report by virtue of and for the assurance that the financial statements purpose of our engagement letter to are free from material misstatement, you dated 3 October 2008 or has been whether caused by fraud or other expressly authorised to do so by our prior irregularity or error. In forming our written consent. Save as above, we do not
58 11
Statement of comprehensive income
2008 2007 Year ended 31 December 2008 Notes £’000 £’000
INCOME Standard-setting and related activities Contributions 3 12,747 11,277 Interest income 553 595 Other income 41 61 13,341 11,933
Publications and related activities Revenue 4(a) 6,481 4,992 19,822 16,925
EXPENSES
Standard-setting and related activities 5 (10,983) (9,738) Salaries, wages and benefits 6 (469) (496) Trustees’ fees 7 (2,424) (2,117) Cost of meetings, associated travel and accommodation 8(a) (1,302) (1,320) Accommodation (36) (175) Fundraising expenses 9 (944) (667) Other costs (16,158) (14,513)
Publications and related activities 4(b) (3,136) (2,623) Direct cost of publications and related activities (19,294) (17,136)
Profit (loss) before fair value changes and exchange gains 528 (211)
Changes in fair value of financial instruments 10(d) (2,977) (436) Exchange gains 762 436
(1,687) (211) Profit (loss) before tax
11 (60) (1) Taxation 12 (1,747) (212) Comprehensive income for the year net of tax
The notes on pages 62 to 73 form part of these financial statements.
Annual Report 2008 59 12
Statement of financial position
2008 2007 At 31 December 2008 Notes £’000 £’000 ASSETS Current assets Cash and cash equivalents 10(a) 6,647 4,752 Accrued interest receivable on bonds 139 91 Contributions receivable 3 334 1,053 Trade and other receivables 10(c) 640 539 Prepaid expenses 459 442 Inventories 13 77 78 Bonds 10(b) 1,375 3,148 9,671 10,103
Non-current assets Bonds 10(b) 6,279 4,055 Leasehold improvements, furniture and equipment 8(b) 484 428 6,763 4,483
TOTAL ASSETS 16,434 14,586
LESS: LIABILITIES Current liabilities Trade and other payables 659 668 Accrued expenses and sundry payables 1,259 1,099 Contributions received in advance 3 176 264 Rent incentive 43 50 Publications revenue received in advance 876 989 Forward currency contracts at fair value 10 (d) 2,287 139 5,300 3,209
Non-current liabilities Contributions received in advance 3 49 122 Forward currency contracts at fair value 10 (d) 1,208 78 Reinstatement provision 8(c) 413 202 Rent incentive 380 144 2,050 546
7,350 3,755 TOTAL LIABILITIES 9,084 10,831 NET ASSETS
The financial statements on pages 59 to 73 were approved by the Trustees of the IASC Foundation on 1 April 2009 and authorised for issue on 1 April 2009. Gerrit Zalm Chairman of the Trustees
60 13
Statement of cash flows
2008 2007 Year ended 31 December 2008 Notes £’000 £’000 £’000 £’000 OPERATING ACTIVITIES Cash received Contributions 13,305 10,550 Interest 527 622 Foreign exchange settlements (375) 529 Publications and related activities 6,339 5,074 Other receipts 72 30
Cash paid Salaries, wages and benefits (10,832) (9,921) Other expense (4,468) (4,055) Publications direct costs (3,091) (2,610) Trustees’ fees (476) (461) NET CASH FROM OPERATING ACTIVITIES 1,001 (242)
INVESTING ACTIVITIES Purchase of bonds (3,321) (1,185) Matured bonds receipts 3,148 1,145 Interest received (67) (141) Purchase of furniture and equipment (3) (103) NET CASH INCREASES FROM (243) (284) INVESTING ACTIVITIES
Effects of exchange rate changes on cash 1,137 (93) and cash equivalents
NET INCREASE (DECREASE) IN CASH AND 1,895 (619) CASH EQUIVALENTS
Cash and cash equivalents at beginning 4,752 5,371 of period
CASH AND CASH EQUIVALENTS AT THE 10(a) 6,647 4,752 END OF THE PERIOD
The notes on pages 62 to 73 form part of these financial statements.
Annual Report 2008 61 14
Notes to the financial statements
1. Legal form, objectives Financial Reporting Interpretations 2. Accounting policies and restructuring Committee (IFRIC) and the Standards Advisory Council. In addition to their (a) Basis of preparation Incorporated in the State of Delaware, general oversight functions, the Trustees These financial statements have been USA, on 6 February 2001, the appoint the members of the IASB and prepared in accordance with International International Accounting Standards related bodies, and are responsible for Financial Reporting Standards. Committee Foundation (IASC the financial and legal arrangements of For the purposes of organising the Foundation) is a not-for-profit charitable the organisation. The IASB, however, has financial information the IASC Foundation organisation with its primary operations the responsibility for setting accounting has categorised income and expenses into based in London. standards in accordance with its two categories; standard-setting and mandate and the due process set out in related activities and publications and The objectives of the IASC the IASC Foundation’s Constitution and related activities. Standard-setting and Foundation are: the IASB’s Due Process Handbook. related activities includes all activities (a) to develop, in the public interest, associated with standard-setting and a single set of high quality, In 2008 the Trustees advanced the first support functions required to achieve the understandable and enforceable part of the IASC Foundation’s five-yearly organisation’s objectives. Publications and global accounting standards that Constitution Review. The first part related activities includes information require high quality, transparent and addressed the issue of public related to the sales of print and electronic comparable information in financial accountability of the Trustees, as well as IFRS materials, educational activities, statements and other financial the composition, geographical diversity and XBRL. reporting to help participants in the and size of the IASB. In relation to the world’s capital markets and other organisation’s governance, the Trustees (b) Contributions users make economic decisions; considered the creation of a direct link to Contributions are recognised as revenue public authorities – one that would seek (b) to promote the use and rigorous in the year designated by the contributor. to replicate, on an international basis, application of those standards; the link between accounting standard- (c) Publications and related revenue (c) in fulfilling the objectives associated setters and those public authorities that Subscriptions to the IASC Foundation’s with (a) and (b) to take account of, have generally overseen accounting comprehensive package and eIFRS as appropriate, the special needs of standard-setters. In reaching conclusions products are recognised as revenue on small and medium-sized entities and about the proposals for the first part, the a time-apportioned basis over the emerging economies; and IASC Foundation worked closely with a period covered by the subscriptions. group of public authorities – the (d) to bring about convergence of Royalties are recognised as revenue on International Organization of Securities national accounting standards and an accruals basis. International Accounting Standards Commissions (IOSCO), the European and International Financial Reporting Commission, the Japan Financial Services Publications direct cost of sales comprises Standards to high quality solutions. Agency (FSA), and the US Securities and printing costs and other direct costs Exchange Commission (SEC). Those including publications department The governance of the IASC Foundation organisations issued in November 2007 a salaries and promotion and computer rests primarily with the Trustees, who press release regarding the IASCF’s public costs. The direct costs do not include provide oversight of the International accountability, which was consistent other costs of preparing standards, Accounting Standards Board (IASB) and with the conclusions on public including costs of meetings of the its related bodies, the International accountability emerging from the Trustees or the IASB, associated costs of Trustees’ strategic review during 2007.
62 the IASC Foundation’s management team (g) Operating leases — IASC Foundation does not hold or issue related to the publications programme, office accommodation derivative financial instruments for the costs of the editorial function Lease payments for office trading purposes; the forward foreign involved in preparing published accommodation are recognised as an currency hedges are entered into to materials, various overheads including expense on a straight-line basis over the provide certainty regarding funding to administration, computer and financial non-cancellable term of the lease. Leases protect against currency fluctuation on costs, cost of capital, or the costs relating in which a significant portion of the risks future cash flows that are designated in to publications of the work of the IFRIC, and rewards of ownership are retained US dollars and euro. Derivative financial the IASB members and technical staff. by the lessor are classified as operating instruments are recognised at fair value. These costs are included within standard- leases. The aggregate benefit of lease The corresponding gains or losses are setting and related activities. incentives is recognised as a reduction included in the Statement of of the rental expense over the lease term Comprehensive Income. (d) Inventories on a straight-line basis. Inventories of current publications are (j) Provisions and contingencies valued at the lower of net realisable value (h) Financial assets Provisions are recognised when the and the cost of printing the publications. Investments in bonds are classified at following three conditions are met – the Inventories that have been superseded fair value through profit or loss, and IASC Foundation has a present obligation by new editions are written off. the corresponding gains or losses are (legal or constructive) as a result of a past included in the Statement of event, it is probable that an outflow of (e) Depreciation Comprehensive Income. resources embodying economic benefits Leasehold improvements and furniture will be required to settle the obligation, and equipment are initially measured at Regular purchases and sales of financial and a reliable estimate can be made of cost, and depreciated on a straight-line assets are recognised on the trade date, the amount of the obligation. basis (in the case of leasehold the date on which the IASC Foundation is improvements over the period of the committed to purchase or sell the asset. The amount of the provision represents lease). For all other assets the annual rate Investments are recognised initially at the best estimate of the expenditure applied is 20 per cent of cost, except fair value plus transaction costs for all required to settle the obligation at the computer equipment, which is financial assets not carried at fair value end of the reporting period. Provisions depreciated at 33 1/3 per cent of cost. through profit or loss. Financial assets are measured at the present value of the are derecognised when the rights to expenditures expected to be required to (f) Foreign currency transactions receive cash flows from the investments settle the obligation using a pre-tax rate The IASC Foundation’s presentational have expired or have been transferred that reflects current market assessments and functional currency is sterling. and the IASC Foundation has transferred of the time value of money and the risks Transactions denominated in currencies substantially all risks and rewards specific to the obligation. The increase in other than sterling are recorded at the of ownership. the provision due to the passage of time exchange rate at the date of the is recognised as interest expense. transaction. Differences in exchange (i) Derivative financial assets rates are recognised in the Statement of and liabilities (k) Critical accounting estimates Comprehensive Income. Monetary assets The IASC Foundation uses contributions, and judgements and liabilities are translated into sterling primarily in US dollars and euro, to fund The IASC Foundation makes estimates at the exchange rate at the end of the a portion of sterling obligations arising and assumptions regarding the future. In reporting period. from activities. In accordance with its the future, actual experience may differ financial risk management policy, the from those estimates and assumptions.
Annual Report 2008 63 14 Notes to the FINANCIAL STATEMENTS
The Trustees consider there are none that In 2008 IAS 1 (revised 2007) was adopted • IAS 23 Borrowing Costs (as revised are material to the preparation of the early. The revised standard prohibits the in 2007) (1 January 2009) financial statements. presentation of items of income and • Vesting Conditions and Cancellations expenses (ie ‘non-owner changes in (Amendment to IFRS 2) (l) new standards and equity’) in the statement of changes in (1 January 2009) interpretations issued equity, requiring them to be presented The financial statements have been separately from owner changes in equity. • Puttable Financial Instruments and drawn up on the basis of accounting All non-owner changes in equity are Obligations Arising on Liquidation standards, interpretations and required to be shown in a performance (Amendments to IAS 32 and IAS 1) amendments effective at the statement, but entities can choose (1 January 2009) beginning of the accounting period whether to present one performance • Cost of an Investment in a Subsidiary, on 1 January 2008, except for that statement (the statement of Jointly Controlled Entity or Associate explained in (b) below. comprehensive income) or two (Amendments to IFRS 1 and IAS 27) statements (the income statement and (1 January 2009) (a) Interpretations effective in 2008 statement of comprehensive income). but not relevant • IAS 27 Consolidated and Separate Where entities restate or reclassify Financial Statements (as amended The following Interpretations of comparative information, they are in 2008) (1 July 2009) standards are mandatory for accounting required to present a restated statement periods beginning on or after 1 January of financial position as at the beginning • IFRS 3 Business Combinations 2008 but are not relevant to the of the comparative period in addition to (as revised in 2008) (1 July 2009). operations of the IASC Foundation: statements of financial position at the The amendments to the following end of the current period and • IFRIC 11 IFRS 2 — Group and Treasury standards as part of the IASB’s annual comparative period. Share Transactions improvements project issued in May 2008 (1 January 2009): • IFRIC 12 Service Concession Arrangements The presentation of the IASC Foundation’s financial statements has been changed • IFRS 5 Non-current Assets Held for Sale • IFRIC 14 IAS 19 — The Limit on a Defined as a result of the adoption of the and Discontinued Operations (and Benefit Asset, Minimum Funding revised standard. consequential amendment to IFRS 1 Requirements and their Interaction. First-time Adoption of International (c) New standards, Interpretations and The adoption of the above Interpretations Financial Reporting Standards) amendments to existing standards that does not have any impact on the financial (1 July 2009) are not yet effective and not relevant for statements of the IASC Foundation. • IFRS 7 Financial the operations of the IASC Foundation. Instruments: Disclosures (b) Standard adopted early • IFRS 8 Operating Segments • IAS 1 Presentation of • IAS 1 Presentation of Financial Statements (1 January 2009) Financial Statements (as revised in 2007) (effective from • IFRIC 13 Customer Loyalty Programmes • IAS 8 Accounting Policies, Changes in 1 January 2009). (1 July 2008) Accounting Estimates and Errors • IFRIC 15 Agreements for the Construction • IAS 10 Events after the of Real Estate (1 January 2009) Reporting Period • IFRIC 16 Hedges of a Net Investment in a • IAS 19 Employee Benefits Foreign Operation (1 October 2008)
64 • IAS 18 Revenue A large number of national levies, To assist in their work on the longer-term payments and broad-based regimes were financing regime, in 2006 the Trustees • IAS 23 Borrowing Costs in place for the first time in 2008 and engaged a fundraising consulting firm • IAS 28 Investments in Associates (and these led to an overall increase in to assist in the establishment of the new consequential amendments to IAS 32 contributions. In 2008 the IASC fundraising system in the United States. Financial Instruments: Presentation and Foundation received funds of £12,747,000 The total cost for the fundraising IFRS 7 Financial Instruments: Disclosures) in contributions (2007: £11,277,000). consultancy was £36,000 (2007: £175,000). • IAS 34 Interim Financial Reporting The engagement ended in November 2008. Contributions received before • IAS 36 Impairment of Assets 31 December 2008, amounting to • IAS 38 Intangible Assets £225,000 (2007: £386,000), which were specifically designated by the • IAS 39 Financial Instruments: Recognition contributors for use by the IASC and Measurement. Foundation in subsequent years, were recognised as current and non-current 3. Contributions liabilities, depending upon the The Trustees arrange the majority of the designation of the contributor. organisation’s operations to be funded Contributions received or confirmed through a number of national financing after 31 December 2008, amounting to regimes. These are established on the a total of £334,000 (2007: £1,053,000) following basis: specifically designated by the contributors for use by the IASC • Broad-based: The funding system will Foundation in 2008 were recognised as expand the base of support to include revenues at the end of 2008 and included major participants in the world’s as contributions receivable. capital markets in order to ensure diversification of resources. As at March 2009, the IASC Foundation • Compelling: The system will carry has £17.1 million in multi-year sufficient pressure to make free commitments from country-specific riding difficult. regimes towards a target of £18 million. Many of these contributions are the • Open-ended: The financing will not be continuation of existing contributions, contingent on any particular action mostly either in US dollars or euro. that would infringe on the Some of the increase can therefore be independence of the organisation. explained by the appreciation of the • Country-specific: The funding burden US dollar and euro against sterling. should be shared by the major Additionally, more countries are economies of the world on a launching funding regimes in 2009. proportionate basis, using Gross Using the IASC Foundation’s website, Domestic Product as the determining the Trustees are informing interested factor of measurement. Each country parties of their progress on establishing should meet its designated target in broad-based funding regimes throughout a manner consistent with the the world. principles above.
Annual Report 2008 65 14 Notes to the FINANCIAL STATEMENTS
4. Publications and related activities
(a) Publications and related revenue (b) Publications and related costs 2008 2007 2008 2007 £’000 £’000 £’000 £’000 Sales of subscriptions 4,411 3,808 Staff/employee related costs 1,486 1,263 and publications Costs of goods sold 433 377 Royalties and permission fees 1,120 1,013 Depreciation 37 40 Other related activities 950 171 Other costs 1,180 943
TOTAL 6,481 4,992 TOTAL 3,136 2,623
5. Salaries, wages and benefits
The IASC Foundation had an average of 101 employees (including IASB members and interns) during 2008 (2007: 91). 2008 2007 £’000 £’000 £’000 £’000 Staff costs, including IASB members’ salaries and other costs 10,252 9,126 Contributions to defined contribution pension plans 533 456 Recruitment and relocation costs 198 156 10,983 9,738 Staff costs included in publications direct expenses (see note 4) Salaries and other costs 1,366 1,171 Contributions to defined contribution pension plans 92 73 Recruitment and relocation costs 28 19 1,486 1,263 TOTAL 12,469 11,001
In order to account for the fact that a number of the IASB members, amounted to £4,771,000 (2007: £4,735,000). In March members work outside the United Kingdom, the Trustees agree 2008, effective for April 2008, the Trustees approved the following upon an annual remuneration budget for each of the IASB remuneration budgets: £476,900 per year for the IASB members inclusive of all employer contributions for tax and Chairman (2007: £461,142), £389,680 per year for full-time benefits. In 2008, the total cost for the 13 IASB members’ salaries, members (2007: £374,690) and £194,840 per year for part-time including all applicable employment taxes and benefits, members (2007: £187,345). recruitment expenses, and relocation costs of new IASB
66 6. Trustees’ fees 8. Accommodation and other assets
The Trustees are remunerated by annual and meeting fees (a) Accommodation expenses and are reimbursed for the expenses of their travel on IASC 2008 2007 Foundation business. In 2008 the annual fee for the Chairman £’000 £’000 of the Trustees was £75,000 (2007: £25,000). The annual fee for Rent 610 629 the other Trustees was £12,500 (2007: £12,500). Trustees received Service charges 164 179 an attendance fee of £1,000 (2007: £1,000) for each formal Rates, insurance and energy 342 324 meeting of the Trustees and their committees. Depreciation 164 167 Other 22 21
TOTAL 1,302 1,320 7. Cost of meetings and associated travel and accommodation
2008 2007 MEETING TYPE £’000 £’000 IASB 828 732 Trustees 294 250 International Financial 351 274 Reporting Interpretations Committee and Standards Advisory Council Other advisory meetings 445 495 Travel for other 506 366 consultation and liaison TOTAL 2,424 2,117
Annual Report 2008 67 14 Notes to the FINANCIAL STATEMENTS
(b) Leasehold improvements, furniture and equipment
2008 Leasehold Leasehold Furniture, 2008 property improvements equipment TOTAL £’000 £’000 £’000 £’000 COST At 1 January 2008 - 838 771 1,609 Additions - 190 67 257 Disposals/Retirements - - (23) (23) At 31 December 2008 - 1,028 815 1,843
DEPRECIATION At 1 January 2008 - 598 583 1,181 Charge for the year - 110 91 201 Disposals/Retirements - - (23) (23) At 31 December 2008 - 708 651 1,359
NET CARRYING AMOUNT AT 31 DECEMBER 2008 - 320 164 484
2007 Leasehold Leasehold Furniture, 2007 property improvements equipment TOTAL £’000 £’000 £’000 £’000 COST At 1 January 2007 65 662 654 1,381 Additions - 176 141 317 Disposals (65) - (24) (89) At 31 December 2007 - 838 771 1,609
DEPRECIATION At 1 January 2007 65 484 514 1,063 Charge for the year 114 93 207 Disposals (65) - (24) (89) At 31 December 2007 - 598 583 1,181
NET CARRYING AMOUNT AT 31 DECEMBER 2007 - 240 188 428
68 Capital commitments 9. Other costs At the reporting date the IASC Foundation had no capital commitments (2007: £nil). 2008 2007 £’000 £’000 (c) Reinstatement provision Communication 376 231 The IASC Foundation has made the following provision for Audit, legal and taxation fees 118 95 reinstatement; this provision covers the cost of reinstating External relations 229 182 the building when the lease expires in September 2018. Others 221 159 TOTAL 944 667 The corresponding property asset is amortised over the period of the lease. 2008 2007 10. Financial instruments £’000 £’000 Owing to its funding model, which is largely based on Balance at 1 January 2008 202 - Reclassification of provision - 106 contributions in a number of currencies, the IASC Foundation previously reported in is exposed to a number of financial risks. The IASC Foundation current liabilities also faces risks associated with its use of financial instruments. Provision made in year 211 96 This note describes the organisation’s objectives, policies and Balance at 413 202 processes for managing those risks and the methods used to 31 December 2008 measure them.
(d) Lease commitments There have been no substantive changes in the organisation’s Payments on the leases, excluding service charges and property exposure to financial instrument risks, its objectives, policies rates are as follows: and processes for managing those risks or the methods used to 2008 2007 measure them from previous periods unless otherwise stated in £’000 £’000 this note. Within one year 400 498
In two to five years 3,113 2,734 Principal financial instruments More than five years 3,694 4,472 The principal financial instruments used by the IASC TOTAL 7,207 7,704 Foundation, from which financial instrument risk arises, are as follows: Since 2001 the IASC Foundation has rented office space at 610 Fifth Avenue, New York, NY, USA. The only obligation • Bonds incurred in this regard relates to payment of ongoing rent • Derivative instruments – forward currency contracts and a provision of 90 days’ notice of termination. • Trade and other receivables
• Cash and cash equivalents
• Trade and other payables.
Annual Report 2008 69 14 Notes to the FINANCIAL STATEMENTS
(a) Cash and cash equivalents deposits at floating rates of interest determined by the relevant Liquidity and credit risk associated with cash and bank’s prevailing base rate. Part of the cash at bank is held in bond holdings euro and US dollar accounts. Cash at bank to pay for general The IASC Foundation manages its working capital to ensure operations in London is held by Barclays Bank PLC, London. A sufficient cash resources are maintained to meet short-term US dollar account, used to pay most US dollar expenses, is held liabilities. The IASC Foundation has no bank borrowings. Cash by Barclays Bank PLC in New York. Other deposits and balances and cash equivalents are designated as loans and receivables. required from time to time to cover hedging obligations and for investment purposes are held in accounts with Barclays Bank Cash holdings: As a general rule, management seeks to keep an (Suisse) S.A in Geneva. All decisions regarding the Geneva amount in cash equal to or exceeding the upcoming quarter’s accounts are managed by the Trustees of the IASC Foundation. expenditure. Cash is held either on current or on short-term
Effective interest rates 2008 2007 2008 2007 £’000 £’000 % % Cash and bank deposits due after 15 days in Geneva Bank sterling deposits due after 15 days, and within 34 days 2,440 2,979 2.20 6.02 Bank dollar deposits due within 90 days 2,054 560 0.85 4.87 CASH AND BANK DEPOSITS DUE ON DEMAND Sterling in London 1,423 493 0.45 0.95 Euro in London 183 162 - - US dollar in London 1 5 - - US dollar in New York 545 550 - - Sterling and US dollar in Geneva 1 3 - - Total 6,647 4,752
70 (b) Bonds The IASC Foundation manages and receives information on Bond holdings: The Trustees are conscious of the need to its investments in bonds on a fair value basis. Information is protect against the risks associated with uncertainty relating to provided on that basis to the Trustees and key management funding contributions. The Trustees have invested surplus funds personnel. The Foundation’s accounting policy, described in of the IASC Foundation in sterling-denominated, fixed rate note 2(h), reflects this practice. notes of the UK government and international organisations with an AAA rating. Funds are divided into relatively equal Bonds are carried at fair value. The maturity of the bonds, all of sums with maturities in each of the next four years, to provide which are exposed to fair value interest rate risk, is as follows: a steady cash flow upon their maturity to replace donor commitments if they are not fulfilled.
Nominal value Nominal value Fair value Fair value 2008 2007 2008 2007 £’000 £’000 £’000 £’000 In less than one year 1,343 3,154 1,375 3,148 Total current 1,343 3,154 1,375 3,148 In more than one year and less than two years 1,503 1,354 1,582 1,354 In more than two years and less than three years 2,489 1,502 2,624 1,516 In more than three and less than four years 2,011 1,185 2,073 1,185 Total non-current 6,003 4,041 6,279 4,055 Total 7,654 7,203
Bonds provide a yield in the range of 4.25% to 5.75% per year
(c) trade and other receivables The IASC Foundation has no significant exposure to large or key Credit risk customers: its largest customer not does exceed 3 per cent of the In addition to its contributions programme, the IASC IASC Foundation’s revenues. The maximum exposure to credit Foundation supplements its funding through publications and risk is the trade receivable balance at the year-end. related activities. For publications and subscriptions sales the IASC Foundation does not offer credit. For licensing and royalty 2008 2007 arrangements some credit risk arises. However, the organisation £’000 £’000 works largely with major publishers and accounting bodies, Not yet due 541 425 Overdue but not impaired 99 114 with whom it has long-standing relationships, and therefore TOTAL 640 539 the IASC Foundation does not credit check these customers before it enters into business with them. Where overdue accounts are still unpaid six months or more after invoice date and the IASC Foundation considers the amount impaired it provides for the amount as a bad debt provision in the financial statements. At 31 December 2008 the amount provided for was £25,000 (2007: £nil).
Annual Report 2008 71 14 Notes to the FINANCIAL STATEMENTS
(d) Currency risk In anticipation of funding in foreign currency, the IASC The IASC Foundation’s expenses arise largely in sterling, Foundation forward sells approximately 90 per cent of its whereas the organisation has received funding and future net US dollar contributions and 50 per cent of its net euro commitments in US dollars and euro to cover the cost of contributions to fix a sterling equivalent. Foreign currency operating the IASB and other overhead costs. The Trustees is sold forward on a two year rolling basis. have implemented a strategy to mitigate the foreign exchange fluctuations and timing risks connected with the various Details of these forward contracts are set out in the table below. funding regimes.
Future contracts US dollar 2008 2007 Buy Sell Weighted Buy Sell Weighted £’000 £’000 average £’000 £’000 average rate rate 2008 5,850 11,791 2.016 2009 6,151 11,791 1.917 3,293 6,551 1.989 2010 3,613 6,551 1.813 - - - Total 9,764 18,342 1.878 9,143 18,342 2.006
Future contracts euro 2008 2007 Buy Sell Weighted Buy Sell Weighted £’000 £’000 average £’000 £’000 average rate rate 2008 - - - 2009 1,792 2,250 1.255 - - - 2010 1,800 2,250 1.250 - - - Total 3,592 4,500 1.253 - - -
The ranges of rates for the US dollar are 1.8060 – 1.9970 The table below follows the fair values of these contracts as (2007: 1.997 – 2.023) and the euro 1.250 – 1.255 (2007: nil). reported in the Statement of Financial Position.
The following changes to fair value are reported in the Fair value Fair value Statement of Comprehensive Income. 2008 2007 £’000 £’000 Charge in Statement of 2008 2007 Derivatives (2,287) (139) Comprehensive Income £’000 £’000 Forward contracts expiring at the end Forward foreign exchange contracts (3,277) (512) of each calendar quarter of 2009 Bonds 300 76 Forward contracts expiring at the end (1,208) (78) Changes in fair value (2,977) (436) of each calendar quarter of 2010 of financial instruments TOTAL (3,495) (217)
72 (e) Foreign currency sensitivity 11. Taxation The following table shows the sensitivity of the reported results to a potential 10 per cent fluctuation in year-end exchange rates. For US tax purposes, the IASC Foundation is classified as a not-for-profit, tax-exempt organisation. Forward £ Weakens £ Strengthens Sales 10% 10% In 2006 the IASC Foundation reached an agreement with the UK £’000 £’000 £’000 authorities regarding the status of taxation on its publications US dollar 18,342 and related revenues. In 2008 the taxation charge is calculated Profit and loss (1,397) 1,143 on this basis, and is estimated to be £60,000 (2007: £1,000). On effect (before tax) the basis of activity from previous years, at the end of 2008 the Euro 4,500 IASC Foundation is carrying forward a loss for UK tax purposes Profit and loss (533) 341 of £201,000 (2007: £768,000). Consistently with IAS 12 Income effect (before tax) Taxes, the IASC Foundation does not recognise this loss as a TOTAL (1,930) 1,484 deferred tax asset, because of the uncertainty of being able to utilise this in the future. From time to time the IASC Foundation holds US dollar funds in anticiption of US dollar liabilities. Over the year the US dollar 12. Movement in net assets exchange rate reached a high of 2.04 to sterling, whilst the low point was 1.44 to sterling. The following table shows the 2008 2007 sensitivity of the reported results to a potential 10 per cent £’000 £’000 fluctuation in year-end exchange rates. Net assets at the beginning of 10,831 11,043 the reporting period Cash £ Weakens £ Strengthens Comprehensive income in the (1,747) (212) holding 10% 10% year net of tax £’000 £’000 £’000 Net assets at the end of the 9,084 10,831 US dollar 3,801 reporting period
Profit and loss 289 (236) effect (before tax) 13. Inventories Euro 193 Inventory of books amount to £77,000 (2007: £78,000). Profit and loss 20 (26) effect (before tax) 14. Approval of financial statements TOTAL 309 (262) These financial statements were approved by the Trustees of the IASC Foundation on 1 April 2009 and authorised for issue on 1 April 2009, and at that date there were no significant events after the reporting period.
Annual Report 2008 73 15
2008 financial supporters
Chart showing country donation in £s World map showing donations by country
TOTAL £12,747,203
AUSTRALIA £472,845 BOTSWANA £5,039 27 BRAZIL £7,578 BULGARIA £4,272 5 30 CANADA £15,109 20 CHINA £533,155 12 25 16 8 CYPRUS £3,730 EU INSTITUTION 28 10 4 £25,132 31 22 26 13 9 7 15 17 6 14 GERMANY £1,011,115 19 23 11 GREECE £12,599 HUNGARY £7,293 18 INDIA £218,352 INTERNATIONAL £50,264 29 24 IRELAND £5,026 ITALY £632,218 3 2 1
21 JAPAN £1,591,582
KOREA £197,135 LUXEMBOURG £39,219 MALAYSIA £6,840 MACEDONIA £2,520 NETHERLANDS £313,160 MEXICO £25,132 Key: PORTUGAL £12,566 NEW ZEALAND £71,999 1 Australia 12 Ireland 23 Saudi Arabia SINGAPORE £7,540 SAUDI ARABIA £5,026 SLOVAKIA £5,040 SPAIN £170,744 2 Botswana 13 Italy 24 Singapore SWEDEN £190,422 SWITZERLAND £210,841 3 Brazil 14 Japan 25 Slovakia UGANDA £5,037 4 Bulgaria 15 Republic of Korea 26 Spain UK £730,000 5 Canada 16 Luxembourg 27 Sweden
6 China 17 Macedonia 28 Switzerland
US £1,891,474 7 Cyprus 18 Malaysia 29 Uganda
8 Germany 19 Mexico 30 UK
9 Greece 20 The Netherlands 31 US
10 Hungary 21 New Zealand
11 India 22 Portugal
INTERNATIONAL ACCOUNTING FIRMS £4,229,874
TRUSTEES £37,325
74 2008 Financial Supporters (amounts translated into sterling Country Organisation on date received) Cyprus Central Bank of Cyprus £3,730
Country Organisation EU Institution European Central Bank £25,132 Cumulative amount raised by country appears below country name Germany Voluntary levy through Deutsches Rechnungslegungs Standards £1,011,115 Committee e.V, the German standard-setting organisation AUSTRALIA Financial Reporting Council and Australian Accounting £472,845 Standards Board on behalf of Australian stakeholders Less than £25,000 Aareal Bank AG Heidelberger Druckmaschinen AG Less than £25,000 Reserve Bank of Australia AIXTRON AG HOCHTIEF AG Botswana Bank of Botswana £5,039 alstria office Hornbach Holding AG Brazil Brazil Telecom Altana AG HSBC Trinkaus & Burkhardt £7,578 Amadeus Fire AG HSH Nordbank AG Bulgaria Bulgarian National Bank AMB Generali Holding AG Hugo Boss AG £4,272 Arques Industries AG K+S AG Canada Balda AG KfW Bankengruppe £15,109 Bauer AG KWS Saat AG Less than £25,000 Bank of Canada Office of the Superintendent for Financial Institutions Beiersdorf AG Landesbank Baden- Canada Württemberg China Through system created by the Ministry of Finance Bilfinger Berger AG Landesbank Hessen- £533,155 Thüringen Less than £25,000 Aluminum Corp China Shipping Biotest AG Leifheit AG of China Ltd. Development Celesio AG Lloyd Fonds AG Anhui Conch China Telecommunications CropEnergies AG MLP AG Bank of China China Vanke Curanum AG MTU Aero Engines Bank of Communications China Unicom Corp Ltd. Holding AG Beijing Capital Company Dong Feng Motor Group D.Logistics AG Nemetschek AG Beijing North Star Co Ltd. Guangzhou R&F Properties DAB Bank AG Pfeiffer Vacuum Technologies AG China Construction Huaneng Power Int. Inc. DekaBank Pongs & Zahn AG China COSCO Holdings Industrial and Commercial Bank of China Demag Cranes Progress-Werk Oberkirch AG China Int Marine Containers Jingwei Text Mach Co Deutsche Beteiligungs AG Qiagen N.V. China Life Insurance PICC Property and Dürr AG QSC AG Casualty Company EM.Sport Sal. Oppenheim China Merchants Bank Ping AN Insurance Epcos AG Salzgitter AG China Mobile Ltd. Tsing Tao Brewery Epigenomics AG SGL Carbon AG China National Offshore YanZhau Coal Mining Co. Evonik Industries AG Südzucker AG Oil Ltd. (RAG AG) China Netcom (Group) Corp ZTE Corporation Fuchs Petrolub AG TA Triumph-Adler AG China Shipping Containers GEA Group AG TAKKT AG
£25,000 + China Development Bank Petrochina Gerresheimer Talanx AG China Petroleum and Hong Kong Securities and Grammer AG VIVACON AG Chemical Corp. Futures Commission Graphit Kropfmühl AG Wacker Chemie AG £50,000 + Ministry of Finance, Hong Kong Stock Exchange Hannover WireCard AG PR China Rückversicherung AG Hong Kong HeidelbergCement AG Monetary Authority
Annual Report 2008 75 15 2008 Financial Supporters
Country Organisation Country Organisation Germany Japan continued Chugai Pharmaceutical Co., Inpex Holdings Inc. continued Ltd. £25,000 + adidas AG Henkel KGaA Citizen Holdings Co., Ltd. Investment Trusts Association, Japan (The) Allianz SE Hypo Real Estate Holding AG Cosmos Initia Co., Ltd. Isuzu Motors Limited BASF AG Infineon Technologies AG Dai-Dan Co., Ltd. Itochu Corporation Bayer AG Linde AG Daiichi Sankyo Itochu Enex Co., Ltd. BMW AG MAN AG Company, Limited Commerzbank AG Merck KGaG Daiwa House Industry Itochu Techno-Solutions Daimler AG METRO AG Co., Ltd. Corporation
Deutsche Bank AG Münchener Rück AG Dentsu Inc. Ito-Yokado Co., Ltd. Dic Corporation J.Frontretailing Co., Ltd. Deutsche Börse AG Robert Bosch GmbH Ernst & Young Shinnihon Llc Japan Airlines Corporation Deutsche Post AG RWE AG Familymart Co., Ltd. Japan Petroleum Deutsche Postbank AG SAP AG Exploration Co., Ltd. Deutsche Lufthansa AG Siemens AG Fanuc Ltd. Japan Securities Investment Deutsche Telekom AG ThyssenKrupp AG Advisers Association
E.ON AG TUI AG Fuji Electric Holdings Japan Steel Works, Ltd (The) Co., Ltd. Fresenius Medical Care Volkswagen AG Fuji Film Corporation Japan Tobacco Inc. AG & Co KGaA Fuji Television Network, Inc. Jasdaq Securities Greece Bank of Greece Exchange, Inc. £12,599 Fuji Xerox Co., Ltd. Jgc Corporation Hungary National Bank of Hungary £7,293 Fujikura Ltd. Js Group Corporation India Contributions made through Stock Exchanges Fujitsu Limited Jupiter Telecommunications £218,352 Co., Ltd. Less than £25,000 *HDFC Bank Ltd. Grant Thornton Taiyo Asg Kadokawa Group Holdings, Inc. £100,000 + Bombay Stock Exchange National Stock Exchange of India Hamamatsu Photonics K.K. Kajima Corporation International Bank for International Settlements Hanwa Co., Ltd. Kanto Auto Works, Ltd. £50,264 Hirose Electric Co., Ltd. Kao Corporation Ireland Central Bank of Ireland Hitachi Cable, Ltd. Kataoka & Co., Ltd. £5,026 Hitachi Capital Corporation Kansai Electric Power Co., Italy Contribution made through Organismo Italiano de Contabilita Inc (The) £632,218 Hitachi Chemical Co., Ltd. Kawasaki Kisen Kaisha, Ltd. Japan Private company support through Council for Better Hitachi High-Technologies Kddi Corporation £1,591,582 Corporate Citizenship Corporation £0 — £50,000 Air Water Inc. Benesse Corporation Hitachi Kokusai Electric Inc. Kikkoman Corporation All Nippon Airways Co., Ltd. Bridgestone Corporation Hitachi Metals, Ltd. Kissei Pharmaceutical Alps Electric Co., Ltd. Calbee Foods Co., Ltd. Co., Ltd. Asahi Glass Co., Ltd. Canon Electronics Inc. Hitachi Software Kobayashi Pharmaceutical Asahi Kasei Corporation Canon Finetech Inc. Engineering Co., Ltd. Co., Ltd. Astellas Pharma Inc. Canon Inc. Hitachi Transport Komatsu Ltd. System, Ltd. Bdo Sanyu & Co. Central Japan Railway Company Idemitsu Kosan Co., Ltd. Konami Corporation
Ihi Corporation Kowa Company, Ltd.
* Contribution for 2007 but received in 2008.
76 Country Organisation Country Organisation Japan continued Kyb Corporation Nippon Oil Corporation Japan continued Sekisui House, Ltd. Terumo Corporation Kyocera Corporation Nippon Paint Co., Ltd. Sg Holdings Co., Ltd. Toda Corporation
Kyoto Audit Corporation Nippon Paper Group, Inc. Sharp Corporation Tokai Carbon Co., Ltd. Lion Corporation Nippon Paper Industries Shimizu Corporation Tokai Rubber Industries, Ltd. Co., Ltd. Shinmaywa Industries, Ltd. Tokuyama Corporation Maeda Corporation Nippon Shokubai Co., Ltd. Sony Corporation Tokyo Broadcasting System Marubeni Corporation Nippon Steel Corporation Square Enix Co., Ltd. Toppan Printing Co., Ltd.
Matsushita Electric Nippon Telegraph And Sumisho Computer Toray Industries, Inc. Industrial Co., Ltd. Telephone Corporation Systems Corporation Matsushita Electric Nisshin Oillio Group, Ltd. Sumitomo Chemical Co., Ltd. Toshiba Corporation Works, Ltd. (The) Sumitomo Corporation Toyo Ink Mfg. Co., Ltd. Mazda Motor Corporation Nisshin Seifun Group Inc. Sumitomo Electric Toyota Motor Corporation Mediceo Paltac Holdings Co., Nisshinbo Industries, Inc. Industries, Ltd. Ltd. Sumitomo Forestry Co., Ltd. Toyota Tsusho Corporation Meidensha Corporation Nissin Food Products Sumitomo Metal Mining Co., Ube Industries, Ltd. Co., Ltd. Ltd. Meiji Seika Kaisha, Ltd. Nittetsu Mining Co., Ltd. Taisei Corporation Ushio Inc. Meitec Corporation Nitto Denko Corporation Taisho Pharmaceutical Wacoal Holdings Corp. Mitsubishi Chemical Nomura Research Co., Ltd. Corporation Institute, Ltd. Taiyo Nippon Yamaha Motor Co., Ltd. Mitsubishi Corporation Nsk Ltd. Sanso Corporation Mitsubishi Electric Obayashi Corporation Takeda Pharmaceutical Yazaki Corporation Corporation Company Limited Mitsubishi Heavy Oji Paper Co., Ltd. Tdk Corporation Zeon Corporation Industries, Ltd. Teijin Limited Mitsui & Co., Ltd. Omc Card, Inc. £25,000 + Bank of Japan Mitsui Chemicals, Inc. Osaka Securities £50,000 + Deloitte Touche Tohmatsu KPMG AZSA & Co. Exchange Co., Ltd. General Insurance Life Insurance Association Mitsui Fudosan Co., Ltd. Pioneer Corporation Association of Japan Of Japan (The) Mitsui O.S.K. Lines, Ltd. Renesas Technology Corp. Japan Securities Pricewaterhouse Mori Building Co., Ltd. Rengo Co., Ltd. Dealers Association Coopers Aarata Morinaga & Co., Ltd. Ricoh Company, Ltd. Japanese Bankers Tokyo Stock Exchange Association Group, Inc. Nagase & Company, Ltd. Rinnai Corporation Japanese Institute Trust Companies Nankai Electric Railway Sangetsu Co., Ltd. of Certified Public Association of Japan (The) Co., Ltd. Accountants (The) Nec Corporation Sanyo Chemical Industries, Korea Contribution organised through Korea Accounting Ltd. £197,135 Standards Board Ngk Insulators, Ltd. Sanyo Shokai Ltd. Less than £25,000 *Bank of Korea Industrial Bank of Korea Nhk Spring Co., Ltd. Secom Co., Ltd Deloitte Anjin Kookmin Bank Nichirei Corporation Security Analysts Ernst & Young Han Young Korea Electric Power Association Of Japan (The) Financial Supervisory KT Corporation Nikken Sekkei Ltd. Seiko Epson Corporation Service Nippon Corporation Seiko Holdings Corporation GS Galtex KT&G Nippon Flour Mills Co., Ltd. Shiseido Co., Ltd. Hyundai Motor Company LG Electronics Nippon Kayaku Co., Ltd. Showa Denko K.K. Nippon Metal Industry Showa Shell Sekiyu K.K. Co., Ltd.
* Contribution for 2007 but received in 2008.
Annual Report 2008 77 15 2008 Financial Supporters
Country Organisation UK Levy system organised by Financial Reporting Council £730,000 Korea continued US Less than £25,000 LG Phillips LCD SK Telecom Co., Ltd. £1,891,474 POSCO S-Oil Corporation Less than £25,000 Boeing Merck Samil Tong Yang Securities Inc. DuPont State Street PricewaterhouseCoopers Eli Lilly United Technologies Samsung Securities Woori Financial Group Financial Executives Washington Post Shinhan Financial Group Samjong Accounting Corp. International £25,000 + Samsung Electronics £25,000 + Coca Cola GM Luxembourg Bourse de Luxembourg ConcoPhillips Company Pepsico £39,219 Board of Governors of the Proctor & Gamble Macedonia National Bank of Macedonia Federal Reserve System £2,520 Fitch Standard & Poors Malaysia Bank Negara Malaysia £50,000 + AIG Microsoft £6,840 Capital Research and Moody’s Foundation Cemex Mexico Management Company £25,132 CFA Institute Oracle Netherlands £313,160 Cisco Pfizer Inc. Less than £25,000 De Nederlandsche Bank ExxonMobil State Farm £100,000 + The Ministry of Finance (national contribution) General Electric Verizon New Zealand Accounting Standards Review Board on behalf IBM £71,999 of New Zealand stakeholders £100,000 + Bank of America JP Morgan Chase Portugal Bank of Portugal Citigroup Lehman Brothers £12,566 Goldman Sachs Morgan Stanley Saudi Arabia Saudi Arabian Monetary Agency £5,026 International Accounting Firms Singapore Monetary Authority of Singapore £7,540 £4,229,874 Slovakia National Bank of Slovakia £50,000 + BDO ($150,000) Mazars ($100,000) £5,040 Grant Thornton Spain International ($150,000) £170,744 £100,000 + Deloitte and Touche KPMG Less than £25,000 Banco de Espana (US$2 million each) Ernst & Young PricewaterhouseCoopers £50,000 + Grupo Santander Telefonica S/A SwEDEN Sjalvregleringen i Sverige Sergice AB £190,422 Trustees Switzerland £37,325 Two Trustees waived their fees, which have been accounted £210,841 as contributions. Less than £25,000 AGEN (organised by SWX Swiss National Bank Swiss Exchange) PSP Property (organised by SWX Swiss Exchange) £25,000 + Swiss Reinsurance Company £50,000 + Swiss Bankers Association Swiss Holdings Uganda Bank of Uganda £5,037
78 16
IASB documents current at 1 January 2009
Preface to International Financial Reporting Standards International Financial Reporting Standards Standards Framework for the Preparation and Presentation IAS 29 Financial Reporting in of Financial Statements Hyperinflationary Economies IAS 31 Interests in Joint Ventures International Financial Reporting Standards IAS 32 Financial Instruments: Presentation Standards IAS 33 Earnings per Share IFRS 1 First-time Adoption of International IAS 34 Interim Financial Reporting Financial Reporting Standards* IAS 36 Impairment of Assets IFRS 2 Share-based Payment IAS 37 Provisions, Contingent Liabilities IFRS 3 Business Combinations* and Contingent Assets IFRS 4 Insurance Contracts IAS 38 Intangible Assets IFRS 5 Non-current Assets Held for Sale IAS 39 Financial Instruments: and Discontinued Operations Recognition and Measurement IFRS 6 Exploration for and Evaluation IAS 40 Investment Property of Mineral Resources IAS 41 Agriculture IFRS 7 Financial Instruments: Disclosures Interpretations of standards IFRS 8 Operating Segments IFRIC 1 Changes in Existing Decommissioning, IAS 1 Presentation of Financial Statements Restoration and Similar Liabilities IAS 2 Inventories IFRIC 2 Members’ Shares in Co-operative IAS 7 Statement of Cash Flows Entities and Similar Instruments IAS 8 Accounting Policies, Changes in IFRIC 4 Determining whether an Arrangement Accounting Estimates and Errors contains a Lease IAS 10 Events after the Reporting Period IFRIC 5 Rights to Interests arising from IAS 11 Construction Contracts Decommissioning, Restoration and IAS 12 Income Taxes Environmental Rehabilitation Funds IAS 16 Property, Plant and Equipment IFRIC 6 Liabilities arising from Participating in IAS 17 Leases a Specific Market — Waste Electrical IAS 18 Revenue and Electronic Equipment IAS 19 Employee Benefits IFRIC 7 Applying the Restatement Approach IAS 20 Accounting for Government Grants and under IAS 29 Financial Reporting in Disclosure of Government Assistance Hyperinflationary Economies IAS 21 The Effects of Changes in Foreign IFRIC 8 Scope of IFRS 2 Exchange Rates IFRIC 9 Reassessment of Embedded Derivatives IAS 23 Borrowing Costs IFRIC 10 Interim Financial Reporting IAS 24 Related Party Disclosures and Impairment IAS 26 Accounting and Reporting by IFRIC 11 IFRS 2 — Group and Treasury Retirement Benefit Plans Share Transactions IAS 27 Consolidated and Separate IFRIC 12 Service Concession Arrangements Financial Statements† IFRIC 13 Customer Loyalty Programmes IAS 28 Investments in Associates
Annual Report 2008 79 16 IASB documents current at 1 January 2009
International Financial Reporting Standards Interpretations of standards IFRIC 14 IAS 19 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction IFRIC 15 Agreements for the Construction of Real Estate IFRIC 16 Hedges of a Net Investment in a Foreign Operation IFRIC 17 Distributions of Non-cash Assets to Owners§ SIC-7 Introduction of the Euro SIC-10 Government Assistance — No Specific Relation to Operating Activities SIC-12 Consolidation — Special Purpose Entities SIC-13 Jointly Controlled Entities — Non- Monetary Contributions by Venturers SIC-15 Operating Leases — Incentives SIC-21 Income Taxes — Recovery of Revalued Non-Depreciable Assets SIC-25 Income Taxes — Changes in the Tax Status of an Entity or its Shareholders SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease SIC-29 Service Concession Arrangements: Disclosures SIC-31 Revenue — Barter Transactions Involving Advertising Services SIC-32 Intangible Assets — Web Site Costs * being superseded by revised version issued in 2008 † being superseded by amended version issued in 2008 § effective date 1 July 2009
80
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