View
32
Download
0
Category
Tags:
Preview:
DESCRIPTION
What’s new on the technical accounting scene?. Alan Bermingham Principal Consultant, CIPFA. Session Objectives. To raise awareness of key technical issues To highlight areas of potential impact To look at topics for further research and understanding. New UK GAAP. - PowerPoint PPT Presentation
Citation preview
cipfa.org
What’s new on the technical accounting scene?Alan BerminghamPrincipal Consultant, CIPFA
cipfa.org
Reporting Service Performance Revisions to Consolidations Alignment CRC Scheme(IPSAS 6 to 9)
Conceptual Framework Emissions Trading Public Sector Locally (HMT/ CIPFA LASAAC)
Social Benefits Mergers Current Exposure DraftsPublic Sector International (IPSASB) Consolidations & J V's
SCA's Fair ValueGovernment Business Enterprises Pensions
Public Sector Combinations
Social Landlords
Combinations under common control Further & Higher EducationDiscounting Impact on SORP's (PBE's)
Internationally (IASB) CharitiesLiabilities Locally
Major IFRSsDisclosure Initiative New UK GAAP Framework - FRS 100, 101 & 102
Financial Instruments (IFRS9)Leases Periods beginning on or after 1 J an 2015
Emissions Trading Rate Regulated ActivitiesInsurance ContractsRevenue Recognition
What's new in Technical Accounting
cipfa.org
Session Objectives To raise awareness of key technical issues
To highlight areas of potential impact
To look at topics for further research and understanding
cipfa.org
New UK GAAPFRS 100 – Application of Financial Reporting Requirements
FRS 101 – Reduced Disclosure Framework
FRS 102 – The Financial Reporting Standard applicable in the UK and Republic of Ireland
Effective for accounting period beginning on or after 1 January 2015
cipfa.org
New Framework
cipfa.org
What should we consider? Impacts on SORP bodies and other Public
Benefit Entities (PBE’s)
Are we involved with bodies in the scope of the new standards Does this impact their financial position or
impact financial ratios or covenants? Are we grant giving bodies and need to be aware
of changes?
Do we need to consider wider supplier issues?
cipfa.org
IASB Projects and DevelopmentsProjects (Major IFRSs) New standard for Financial Instruments (IFRS 9) New Leasing Standard (replacement for IAS 17) Rate Regulated Activities Insurance Contracts Revenue Recognition
Other Research Emissions Trading Combinations under common control Liabilities (IAS 37) and Discounting
cipfa.org
Leases - Consumption Principle
cipfa.org
Recognition - Lessees
cipfa.org
Example - Lessees
cipfa.org
Other Projects and Research Rate regulation is a restriction in the setting of
prices that can be charged to customers for services or products
Generally, it is imposed by regulatory bodies or governments when an entity has a monopoly or a dominant market position that gives it excessive market power
Revenue - the objective of this project is to clarify the principles for recognising revenue from contracts with customers
It applies to all contracts with customers except leases, financial instruments and insurance contracts
cipfa.org
International - IPSAS Development of IPSAS Conceptual Framework Projects include:
Emissions Trading (also IASB) Revisions to IPSAS 6 to 9 – Resulting from IFRS 10,11,12 Public Sector Combinations Government Business Enterprises Social Benefits!
cipfa.org
Social Benefits Project The objective of the project is to identify the
circumstances and manner in which expenses and liabilities of certain social benefits of governments should be reflected in the financial statements
Why do this? – part of the issue of assessing long-term fiscal sustainability and the extent to which obligations under current frameworks can be met into the future
No real movement on this since 2012 and linked to completion of conceptual framework
cipfa.org
Public Sector Locally Current (2013) exposure drafts
Consolidation and Joint Ventures (IFRS 10,11 and 12) Fair Value Measurement (IFRS 13)
cipfa.org
IFRS 13 Fair Value Measurement Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date – exit value
For non-financial assets the standard includes the principle of highest and best use
Fair value reflects constraints and restrictions
FReM adaptation proposed
cipfa.org
Proposed FReM Adaptation‘In use’ non-specialised property assets used to deliver services in a restricted geographic area as described by government policy should be valued at market value for existing use. This measure is a proxy for fair value.
cipfa.org
Are there any constraints or
restrictions on the disposal of the
asset?
Does the organisation have
clear evidence that it is constrained by
service needs to provide the asset in a particular location
or is the asset’s market restricted by
geographical limitations?
No - Route 1
Measure in accordance with the requirements of the standard ie at highest
and best use eg office accommodation
Do these constraints or
restrictions align with the restrictions in the standard (ie
either the asset has unique
characteristics or there are legal restrictions)?
Asset measurement at fair value limited to
current or existing use
Yes - Route 2
Yes - Route 3
Fair Value cost approach (or the income approach
as appropriate)
Measure at fair value limited to current or
existing use in accordance with the (proposed)
adaptation
Unique Characteristics
Restrictions
IFRS 13 Route-map for Property, Plant and Equipment
Yes
No
cipfa.org
IFRS 13 – Issues Need to assess which assets need to be measured
at ‘highest and best’ use
Revaluation required where current use is not highest and best
Also applies to liabilities
Disclosures – especially where no market evidence
cipfa.org
Group Accounts Suite of Standards IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosures of Interests in Other Entities IAS 27 Separate Financial Statements (2011) IAS 28 Investments in Associates and Joint Ventures
(2011)
Transitional Arrangements if there are changes in accounting policy (eg changes to consolidation decisions)
cipfa.org
Group Accounts Standards IFRS 10 Consolidated Financial Statements
Identifies control as the single basis for consolidation Returns include non-financial benefits and negative returns Consolidation process unchanged
IFRS 11 Joint Arrangements Classification of joint arrangements joint ventures and joint
operations Focus no longer on legal structure but on how rights and
obligations are shared by parties to the arrangement
IFRS 12 Disclosure of Interests in Other Entities New (consolidated disclosure standard) concerns about
disclosures for unconsolidated structured entities
cipfa.org
Any Questions?
Recommended