The major IASB agenda includes Replacement of IAS 39 under Financial Instruments, rate-regulated activities, and revenue recognition. The timetable identified for milestones on each of the projects is discussed below. The replacement of IAS 39 underwent three phases.
The 1st phase included the classification and measurement of financial instruction. IFRS 9 was in print in 2009 around November and was responsible for financial assets (Walton, 2012). Later on, in October 2010 changes were made to address the matter of credit risk management.
In December 2011 the board revised the IFRS 9 to fit the requirement of the application for the annual periods beginning on or after 1st January 2015. The changed also applied restatement of comparison between financial statements upon application.
On November 15th, 2011, the panel agreed to modify the IFRS 9 again, and on November 28th, 2012 an Exposure Draft Classification and Measurement document were added by the IASB to the IFRS 9.
2nd phase involved impaired methodology, which was printed in January 2011 and closed on April 1st but still the deliberations are being carried out (Walton, 2012).
Phase 3 included hedge accounting. On September 7th, 2012 the IABS uploaded a draft of a list of the upcoming hedge accounting needs which were to be added to IFRS 9.
The main objective was to improve the use of the financial statement, which could be achieved by improving accounting necessities for a hedge with requests that are related to risk management.
As a result of complaints that arose due to a lack of understanding of the IAS 39 financial instruments by users, a simple based model was proposed. IASB had not yet started a curriculum of reporting the financial devices in IAS 39.
The project reports active risk management tactics for macro hedging (Walton, 2012).
The financial institutions and entities outside the financial sectors encouraged the use of dynamic risk managing strategy stating that it was important since the macro hedging introduced an extent of complexity to the bookkeeping in such hedges that were difficult to be put up in the IFRS 9 hedge bookkeeping management used for closed portfolios.
Financial statement users believed the hedge accounting must be aligned to the object’s risk management happenings.
As a result, the board has focused on understanding risk management events for macro hedging and deciding if such options should be included in an accounting approach (Godfrey, 2007).
The main proposal of macro-hedging was in agreement with the IASB discussions that an estimated approach is to be developed for accounting purposes that will help the hedged risk to be identifiable and quantifiable for changes in the hedged dangers and thus to account for losses and profits.
Another objective was to develop an accounting key that shows how a business overrides risk and at the same time aids the user to learn more about risk management. In May 2012 it was agreed that a Discussion Paper would be issued rather than the Exposure Draft (Godfrey, 2007).
The Rate Regulation timetable is as follows:
In July 2009, the IASB initiated the public comment for the Exposure Draft activities (Godfrey, 2007). After a review of the comments, the IASB was certain there was no time for changes in the complex, vital issues that were mentioned in the reviews.
In September 2010, the IASB put the project on hold. In September 2012, they originated a reviewed Rate-regulated Activities research project, leading to the formation of the Request for Information (RFI).
It was published in March 2013 and is currently open for remarks up to 30 May 2013. In the meantime, the IASB came up with an Interim Standard in December 2012, to assist new members of IFRS for a short term period before project completion.
The ED Regulatory Deferral Accounts printed in April 2013 is open for review up to September 4th, 2013 (Godfrey, 2007).
Revenue recognition is the last agenda of the IASB discussed. One of its main objects was to eliminate flaws and irregularities in the revenue recognition by proposing principles in a vigorous framework (Wiecek, 2009).
Also, it was aimed at providing a single income recognition model, which would improve companies and industries in terms of comparability and shortening financial statement research by decreasing references that are required.
The panels believe that the wished-for standard will advance financial broadcasting by providing a robust framework for solving matters as they occur, cumulative comparability between businesses and investment markets, providing boosted disclosures, and illustrative bookkeeping for contract charges.
Conceptual Framework is used by the IASB to grow IFRSs. It mainly focuses on measurement and exhibition. The Conceptual Framework project is a continuation of the work paused in 2010, which resulted in vast backing from defendants of the IASB’s agenda conference in 2011.
Subsequently, the IASB decided to implement the project in September 2012 (Wiecek, 2009). The IFRS Foundation allotted a suggestion to launch an Accounting Standards Advisory Forum project in November 2012, whose role was to advise the IASB on the Conceptual Framework project.
In the organization of the Conceptual Framework, IASB will reflect relations with IASB’s prevailing standard-setting schemes. These schemes will contribute to the Conceptual Framework and relay on growths in this scheme (Wiecek, 2009).
References
Godfrey. J. M., Chalmers. K. (2007). Globalisation of New Accounting Standards. London: Edward Elgar publishing.
Walton. P. (2012). The Routledge Companion to Fair Value and Financial Reporting. New York, NY: Perennial.
Wiecek. I. M., Young. N. M. (2009). IFRS Primer International GAAP Basics. New York, NY: John Wiley & Sons.