Transcript Title 1 – Times New Roman

The latest changes in accounting standards
Evaldas Grenda,
Audit Director
9 February 2012
Presentation will focus on:
I part:
• Financial accounting framework in Lithuania
• Changes in Business Accounting Standards
• BAS that will be effective in the future
II part:
•
•
•
•
2
Changes in International Financial Reporting Standards
IFRS in issue, however, not effective yet
Exposure drafts
IFRS for SMI
The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
Financial Reporting Framework in Lithuania
• Business Accounting Standards of Lithuania
• International Financial Reporting Standards
• International Financial Reporting Standards, adopted by EU
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
Changes in Business
Accounting Standards
Changes in Business Accounting Standards
The table below summarizes new or amendments to Standards
Name
BAS 1 Financial statements (new version, minor changes in definitions,
defined scope of some condensed financial statements (cash flow statement
might be included), set additional requirements for brokerage and other
specific purpose companies )
1 January 2011
BAS 5 Statement of Cash flows (new version, minor changes in CF
preparation, CF attribution to different categories, extraordinary income and
expenses captions deleted, included clarifications regarding realised /
unrealised FX change)
1 January 2011
BAS 6 Explanatory notes (new version, changes in requirements for
condensed explanatory notes (only info on goodwill needs to be disclosed if
its amortisation rate >5y, less info requirements on relations with
management
5
Effective Date
(annual period beginning)
The latest changes in accounting standards, 9 February 2012
1 January 2011
© 2012 Deloitte Lithuania
Changes in Business Accounting Standards
The table below summarizes new or amendments to Standards
Name
Effective Date
(annual period beginning)
BAS 27 Concession rights (new version, defined scope of standard,
1 January 2010
additionally explained when concessor has to record fixed assets in its books,
revised accounting rules for payments made to concessor)
BAS 29 Interim financial statements (new version, revised definitions to be 1 January 2011
compliant with other standards, changed some definitions)
BAS 33 Financial statements of brokerage companies and management
companies (minor changes in typical forms of consolidated cash flow
1 January 2007
statements and changes in equity)
BAS 39 Accounting and financial statements of collective investments
subjects and pension funds (new standard)
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The latest changes in accounting standards, 9 February 2012
1 January 2011
© 2012 Deloitte Lithuania
Changes in Business Accounting Standards
The table below summarizes issued Standards (not effective yet)
Name
Effective Date
(annual period beginning)
BAS 7 Changes in accounting policy, estimates and correction of errors 1 January 2012
(new version)
7
BAS 21 Donations and subsidies (new version)
1 January 2012
BAS 23 Impairment of assets (new version, changes related to impairment
of goodwill)
1 January 2012
BAS 37 Investments into joint operations (partnerships) (new version)
1 January 2013
The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
Changes in IFRS
Amendments to existing guidance on
Financial Instruments and related issues
The table below summarizes new or amendments to Standards/Interpretations relating to Financial
Instruments applicable for 31 December 2011
Name
IFRS 1
Limited Exemptions from Comparative IFRS 7 Disclosures for First Time
Adopters
1 January 2011
Improvements to IFRSs (2009-2010):
IFRS 7 – Clarification of Disclosures
IAS 32
Classification of Rights Issues
1 January 2011
IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
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Effective Date
(annual period beginning)
The latest changes in accounting standards, 9 February 2012
1 February 2010
1 July 2010
© 2012 Deloitte Lithuania
Amendments to other Standards / Interpretations
The table below summarizes new or amendments to Standards/Interpretations relating to Financial
Instruments applicable for 31 December 2011
Name
Effective Date
(annual period
beginning)
IAS 24
Related Party Disclosures
1 January 2011
IFRIC 14
Prepayments of a Minimum Funding Requirement
1 January 2011
Improvements to IFRSs (2009-2010)
1 July 2010
1 January 2011
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
IFRS in issue
(not effective yet)
Amendments to existing guidance on
Financial Instruments and related issues
The table below summarizes new or amendments to Standards / Interpretations relating to Financial
Instruments which are available for early adoption
NOT YET ENDORSED FOR USE IN EU
Name
Effective Date
(annual period beginning)
Amendments to IFRS 7
Financial Instruments: Disclosures - Transfers of Financial Assets
1 July 2011
IFRS 9
Financial Instruments
Financial Assets
Financial Liabilities*
1 January 2013
* IFRS 9 was reissued in October 2010 to incorporate the requirements regarding financial liabilities
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
Amendments to other Standards / Interpretations
The table below summarizes amendments to Standards/Interpretations
which are available for early adoption – NOT YET ENDORSED FOR USE IN EU
Name
Effective Date
(annual period
beginning)
IFRS 1
Severe Hyperinflation and Removal of Fixed Dates
1 July 2011
IAS 12
Deferred Tax: Recovery of Underlying Assets
1 January 2012
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
Addendum (May 2011)
New IFRSs and Consequential Amendments
The table below summarizes amendments to Standards / Interpretations
which are available for early adoption – NOT YET ENDORSED FOR USE IN EU
Name
Effective Date
(annual period
beginning)
IFRS 10 Consolidated Financial Statements
1 January 2013
IFRS 11 Joint Arrangements
1 January 2013
IFRS 12 Disclosure of Interests in Other Entities
1 January 2013
IFRS 13 Fair Value Measurement
1 January 2013
IAS 27 Separate Financial Statements (consequential amendment in 2011)
1 January 2013
IAS 28 Investments in Associates and Joint Ventures (consequential
amendment in 2011)
1 January 2013
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
Addendum (June 2011)
Amended standards
The table below summarizes amendments to Standards
which are available for early adoption.
NOT YET ENDORSED FOR USE IN EU.
Name
Effective Date
(annual period
beginning)
IAS 1 Presentation of Financial Statements
Separate OCI for items to be recycled through income statement
1 July 2012
IAS 19 Employee Benefits
Corridor approach option removed
1 January 2013
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
IASB current projects
(what may change)
Leases
Objective
• To provide investors with better information and transparency
on leasing activity undertaken by an entity
Lessees
• Under the proposals, all leasing activity would be reflected on the
statement of financial position through recognition of a right-of-use
asset and a liability for lease rentals
Project
Insights
• The right-of-use asset would be presented as part of property, plant and
equipment and amortised over the life of the lease
• Scope exemption for very short-term leases for lessors only
Lessors
• Proposals significantly less well-developed than lessee accounting
Next Steps
17
• Final IFRS was expected in 2011 (Q4). Effective date – TBD.
The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
Revenue
Objective
• To develop a revenue model to apply to all industries and all types of
revenue-generating transactions.
• Would replace both IAS 11 Construction Contracts and IAS 18 Revenue
Scope
Next Steps
18
• Included: all contracts with customers – including services unbundled
from lease and insurance contracts
• Excluded: lease contracts, insurance contracts, contractual rights or
obligations in the scope of IFRS 9/IAS 39
• Final IFRS was expected in 2011 (Q4). Effective date TBD.
The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
IFRS for SMI
Drivers for the IFRS for SMEs
National GAAP
Full IFRFS
• Not tailored to specific
needs of users of SME
financial statements
• Not comparable across
national boundaries
• Contains a large amount of
detail which is not relevant
to SMEs
• Does not take into account
the limited ability of SMEs
to bear costs of compliance
and of the required
expertise
SME
• May not be perceived as of
high quality
• Not necessarily based on a
similar framework to full
IFRSs
• May be limited training
material and similar
resources available
IFRS for SMEs
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
IFRS for SMEs in practice
Challenges
Benefits
Compared to national
GAAP
• Internationally
recognised and known
to be high quality
• Understandable by
overseas parties
• Internationally
comparable
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Compared to full
IFRSs
• Tailored to SMEs
• Removal of complex
options and nonrelevant topics
• Simplified based on
cost/benefit analysis
The latest changes in accounting standards, 9 February 2012
• Understanding how to
apply the IFRS for
SMEs
• Make users of financial
statements familiar with
new framework
© 2012 Deloitte Lithuania
Scope of the Standard
An SME (Small or Medium-sized Entity)
Public accountability
•
•
• Does not have public accountability; and
• Publishes general purpose financial
statements for external users
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The latest changes in accounting standards, 9 February 2012
Instruments traded in public
market, or
Holds assets in a fiduciary
capacity for a broad group of
outsiders as a primary
business
© 2012 Deloitte Lithuania
Comparison with full IFRSs
Omitted topics
• Earnings per share
• Interim financial reporting
• Segment reporting
• Insurance
• Special accounting for assets held
for sale
Accounting policy options
disallowed because a simplified
treatment is available
• Revaluation model for PPE and
intangible assets
• Proportionate consolidation for
jointly-controlled entities
• Accounting policy choice for
investment property
• Range of methods to account for
government grants
• Deferral of actuarial gains and
losses of defined pension plans
• NCI measured at fair value
• Certain options for financial
instruments
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
Application of IFRS for SMEs
Nearly 50 jurisdictions have taken action to adopt
the IFRS for SMEs or indicated publicly an
intention to do so
Translations are available or will be available in Czech, Spanish,
Italian, Turkish, Romanian, Chinese, Portuguese, Arabic, French,
Japanese, Serbian, Armenian, Polish, Russian, Albanian,
Ukrainian
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The latest changes in accounting standards, 9 February 2012
© 2012 Deloitte Lithuania
THANK YOU FOR YOUR ATTENTION!
ANY QUESTIONS?
Contacts:
Evaldas Grenda
Director at Audit Department
Deloitte
Tel. +370 5 255 3014
[email protected]
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company limited by guarantee and its network of member firms, each of which is
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© 2012 Deloitte Lithuania