IFRS 15 regarding Revenue from Contracts with Customers, reasons for issuing the IFRS

In May 2014, the IASB and the US national standard-setter, the FASB, jointly issued a new revenue Standard – IFRS 15 Revenue from Contracts with Customers and Topic 606 Revenue from Contracts with Customers. IFRS 15 provides a comprehensive framework for recognising revenue from contracts with customers.

Reasons for issuing the IFRS

Revenue is an important number to users of financial statements in assessing an entity’s financial performance and position. However, previous revenue recognition requirements in IFRS differed from those in US GAAP and both sets of requirements were in need of improvement. Previous revenue recognition requirements in IFRS provided limited guidance, and, consequently, the two main revenue recognition Standards, IAS 18 Revenue and IAS 11 Construction Contracts, could be difficult to apply to complex transactions. In addition, IAS 18 provided limited guidance on many important revenue topics such as accounting for multiple-element arrangements. In contrast, US GAAP comprised broad revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions.

Accordingly, the IASB and the US national standard-setter, the FASB initiated a joint project to clarify the principles for recognising revenue and to develop a common revenue standard for IFRS and US GAAP that would :

1. remove inconsistencies and weaknesses in previous revenue requirements;
2. provide a more robust framework for addressing revenue issues;
3. improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets;
4. provide more useful information to users of financial statements through improved disclosure requirements; and
5. simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.

IFRS 15, together with Topic 606 that was introduced into the FASB Accounting Standards Codification by Accounting Standards Update 2014-09 Revenue from Contracts with Customers (Topic 606), completes the joint effort by the IASB and the FASB to meet those objectives and improve financial reporting by creating a common revenue recognition standard for IFRS and US GAAP.

IFRS 15 will be effective for annual reporting periods beginning on or after 1 January 2017. Earlier application is permitted. If an entity applies this Standard earlier, it shall disclose the fact.

IFRS 15 supersedes the following Standards :

1. IAS 11 Construction Contracts;
2. IAS 18 Revenue;
3. IFRIC 13 Customer Loyalty Programmes;
4. IFRIC 15 Agreements for the Construction of Real Estate;
5. IFRIC 18 Transfer of Assets from Customers; and
6. SIC-31 Revenue-Barter Transactions Involving Advertising Services

Latest, on 22 July 2015 the IASB issued a press release letter which confirmed a one-year deferral of effective date of IFRS 15 to 1 January 2018.

The revenue Standard was issued jointly by the IASB and the US Financial Accounting Standards Board (FASB) in May 2014 with an effective date of 1 January 2017. Both Boards have now confirmed a one-year deferral of the effective date. Companies applying IFRS continue to have the option to apply the Standard earlier if they wish to do so.

The proposed amendments to IAS 1, replacing the word ‘Discretion’ with ‘Right’

The International Accounting Standards Board (IASB) has published on 10 February 2015 the Exposure Draft of proposed amendments to IAS 1 Presentation of Financial Statements to clarify the criteria for the classification of a LIABILITY as either CURRENT or NON-CURRENT.

The proposals clarify that classification of liabilities as either current or non-current is based on the RIGHTS that are existence at the END OF THE REPORTING PERIOD. In order to make this clear, the IASB proposes :

1. replacing ‘DISCRETION’ in paragraph 73 of the Standard with ‘RIGHT’ to align it with the requirements of paragraph 69(d) of the Standard;
2. making it explicit in paragraph 69(d) and 73 of the Standard that only rights in place AT THE REPORTING DATE should affect the classification of a liability; and
3. deleting ‘UNCONDITIONAL’ from paragraph 69(d) of the Standard so that ‘an unconditional right’ is replaced by ‘a right’

The IASB also proposes making clear the link between the settlement of the liability and the outflow of resources from the entity by adding that settlement ‘refers to the transfer to the counterparty of cash, equity instruments, other assets or services’ to paragraph 69 of the Standard.

The IASB further proposes that guidance in the Standard should be reorganised so that similar examples are grouped together.

Finally, the IASB proposes that retrospective application should be required and that early application should be permitted.

Comments on the proposals in this Exposure Draft (to be received by 10 June 2015) should be submitted using one of the following methods :

• Electronically, by visiting the ‘Comment on a proposal’ page, which can be found at : go.ifrs.org/comment
• Email, by sending to : commentletters@ifrs.org
• Postal, by addressing to : IFRS Foundation, 30 Cannon Street, London EC4M 6XH, United Kingdom

Please click this link to access the Exposure Draft

IASB Issued Narrow-scope Amendments to IFRS 10 & IAS 28

Previously, on 13 December 2012, IASB published for public comment ED/2012/6 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture (Proposed Amendments to IFRS 10 and IAS 28) (click here for the document). This Exposure Draft proposed narrow-scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) to address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or contribution of a subsidiary. The main consequence of the proposed amendments is that a full gain or loss would be recognized on the loss of control of a business (whether it is housed in a subsidiary or not), including cases in which the investors retains joint control of, or significant influence over, the investee.

Within the ED, it said that the IASB proposed to amend IAS 28 (2011) so that :

1. the current requirements for the partial gain or loss recognition for transactions between an investor and its associate or joint venture only apply to the gain or loss resulting from the sale or contribution of assets that do not constitute a business, as defined in IFRS 3 Business Combinations; and
2. the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture is recognized in full.

The IASB also proposed to amend IFRS 10 so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The consequence is that a full gain or loss would be recognized on the loss of control of a subsidiary that constitutes a business, including cased in which the investor retains joint control of, or significant influence over, the investee.

Later, on 11 September 2014, IASB issued narrow-scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011).

The amendments will be effective from annual periods commencing on or after 1 January 2016.

Subscribers to eIFRS can download the document of Sale or Contribution of Assets between an investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) from eIFRS

FINAL Version of IFRS 9, Financial Instruments

The IASB published the final version of IFRS 9 Financial Instruments in July 2014. The final version of IFRS 9 brings together the Classification and Measurement, Impairment and Hedge Accounting phases of the IASB’s project to replace IAS 39 Financial Instruments : Recognition and Measurement.

IFRS 9 is built on a logical, single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. Built upon this is a forward-looking expected credit loss model that will result in more timely recognition of loan losses and is a single model that is applicable to all financial instruments subject to impairment accounting.

In addition, IFRS 9 addresses the so-called ‘own credit’ issue, whereby banks and others book gains through profit or loss as a result of the value of their own debt falling due to a decrease in credit worthiness when they have elected to measure that debt at fair value.

The Standard also includes an improved hedge accounting model to better link the economics of risk management with its accounting treatment.

As disclosed within the IFRS.org Press Release dated 24 July 2014, the package of improvements introduced by IFRS 9 includes a logical model for classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting.

The IASB has previously published versions of IFRS 9 that introduced new classification and measurement requirements (in 2009 and 2010) and a new hedge accounting model (in 2013). The July 2014 publication represents the final version of the Standard, replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments : Recognition and Measurement.

The new Standard of IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted.

Following is the link to : Project Summary of IFRS 9 Financial Instruments (July 2014)

The latest update of Financial Instruments, Insurance Contracts, Leases and Revenue Recognition discussions

Following is the report from IASB latest meeting on 12 April to 15 April, 2011 which was dropped into my inbox mail on April 20, 2011.

The IASB met in London from Tuesday 12 April to Friday 15 April. The sessions on Tuesday and Wednesday and on Thursday morning were held jointly with the US-based FASB.

The joint discussions focused on four projects: revenue recognition, leases, insurance contracts, and impairment of financial assets. The IASB-only sessions focused on hedge accounting (which the FASB joined by video) and an update of activities of the IFRS Interpretations Committee.

The boards discussed uncertain consideration in relation to revenue recognition and leases. The revenue recognition sessions also focused on allocating the transaction price, licences and rights to use, fulfilment costs, and sale and repurchase agreements. The leases sessions also focused on the definition of a lease and whether there should be one or two accounting approaches for leases.

The session on insurance focused on the use of a 'top-down approach' to determine a discount rate.

The impairment sessions included consideration of feedback from the outreach activities and comment letters on the joint supplementary document Financial Instruments: Impairment, interest income recognition and the definition of amortised cost and whether to discount a loss estimate.

In the sessions on hedge accounting the IASB began its redeliberations on the exposure draft Hedge Accounting and discussed the objective of hedge accounting and accounting for 'funding swaps', designating risk components of financial instruments that bear interest below a benchmark rate (the 'sub-LIBOR' issue), the eligibility of non-derivative financial instruments as hedging instruments (including the interaction with the fair value option) and macro hedge accounting.

During board week Sir David Tweedie, Chairman of the IASB, and Leslie Seidman, Chairman of the FASB, recorded an interview in which they review the achievements of the convergence programme so far and the time line for completing the remaining elements of the programme. To listen to the interview and read a transcript, please click here : Interview with Sir David Tweedie and Leslie Seidman regarding the timeline for completing the convergence programme

The topics discussed at the joint IASB/FASB board meeting were:

• Financial instruments: impairment
• Insurance contracts
• Leases
• Revenue recognition

The topics discussed at the IASB Board meeting were:

• Financial instruments: hedge accounting
• IFRS Interpretations Committee - update from last meeting

The publication of 2011 IFRS (Blue Book) Consolidated without early application

Dropped into my email inbox on last Saturday, November 20, 2010, below was the announcement of the publication of 2011 IFRS Blue Book.

The IFRS Foundation is pleased to announce that the 2011 IFRS (Blue Book) Consolidated without early application will be published in December 2010.

International Financial Reporting Standards (IFRSs). Official pronouncements applicable on 1 January 2011. Does not include IFRSs with an effective date after 1 January 2011.

This single volume presents the International Financial Reporting Standards (IFRSs), including International Accounting Standards (IASs), IFRIC and SIC Interpretations, and the accompanying documents - illustrative examples, implementation guidance, bases for conclusions and dissenting opinions - as issued by the IASB and with an effective date no later than 1 January 2011.

This edition does not consolidate those IFRSs or changes to IFRSs with an effective date after 1 January 2011. Readers seeking the consolidated text of IFRSs issued at 1 January 2011 (including IFRSs with an effective date after 1 January 2011) should refer to the two-part 2011 IFRS Red Book, which is being published in parallel with this edition, expected March 2011.

Copies are priced at £60 each, plus shipping. Discounts are available for:

• academics/students
• middle income and low income countries
• multiple orders.

The 2011 IFRSs (Blue Book) Consolidated without early application Bound Volume (978-1-907026-85-0) (Product code7) is priced at £60 per copy, plus shipping. Further information can be found on IFRS Foundation web shop. Please register your interest in this product if you wish to be notified of its publication.

A Guide through IFRS July 2010

The IFRS Foundation will shortly publish an updated version of "A Guide through IFRSs July 2010".

This 2010 edition is presented in two volume parts (Part A and B), sold together as a set. This new guide will include :

• All IFRSs and IASs as approved by the IASB at 1 July 2010
• The Complete and up-to-date consolidated text, with extensive cross-references and other annotations, of IFRSs, including IASs and IFRIC and SIC Interpretations.
• IASB-issued supporting documents, illustrative examples, implementation guidance.
• Bases for conclusions and dissenting opinions as approved at 1 July 2010.

This edition does not contain documents that are being replaced or superseded but remain applicable of the reporting entity chooses not to adopt the newer version early.

The main changes in this collection, since the 2009 edition, are the inclusion of :

• one new standard – IFRS 9
• one revised standard – IAS 24
• amendments to IFRSs that were issued as separate documents
• amendments to IFRSs issued in the third annual improvements project
• amendments to other IFRSs resulting from those revised or amended standards
• one new Interpretation – IFRIC 19

The arrangement of the contents in this edition differs from that in previous editions. In recognition of the growing size of the contents this edition of the Bound Volume is published in two parts. Part A presents the Framework and the unaccompanied IFRSs and their introductions and explanatory rubrics. Part B contains the accompanying documents, such as bases for conclusions, implementation guidance and illustrative examples. This partition therefore distinguishes the Framework and the requirements of IFRSs (in Part A) from the non-mandatory accompanying material (in Part B), and enables them to be read side by side.

How to purchase this publication ?

A Guide through IFRS July 2010 - (ISBN 978-1-907026-82-9 Set of two volume parts A & B), can be purchased for £90 each set (plus shipping). Discounts are available for bookshops/agents, multiple copies, students/academics and residents of middle and low income countries.
You can find further information about this publication and register your interest at the web shop.

IASB IFRS latest update – June 2010

This IASB Update is a staff summary of the tentative decisions reached by the Board at a public meeting. As a project progresses, the Board can, and sometimes does, modify its earlier tentative decisions. Tentative decisions do not change existing requirements until those decisions are incorporated in a new or amended standard.

The International Accounting Standards Board met with the US Financial Accounting Standards Board (FASB) in London on 14 - 17 June 2010. The boards discussed:

• Balance sheet - offsetting
• Insurance contracts
• Leases
• Liabilities.

Read further in here

IASB IFRS Update – 8 April 2010

The IASB has done a public meeting in London on 8 April 2010, discussed several issues of IFRS regulation on Annual Improvements, Derecognition, Fair Value Measurement and also an amendments to IAS 19 regarding Termination Benefits. Here is the summary of the meeting result :

This IASB Update is a staff summary of the tentative decisions reached by the Board at a public meeting. As a project progresses, the Board can, and sometimes does, modify its earlier tentative decisions. Tentative decisions do not change existing requirements until those decisions are incorporated in a new or amended standard.

The International Accounting Standards Board met in London on 8 April 2010 for an additional Board meeting. The US Financial Accounting Standards Board (FASB) participated via video conference. The boards discussed:

• Annual improvements
• Derecognition
• Fair value measurement
• Termination benefits - amendments to IAS 19

Annual improvements

The Board had previously tentatively decided to include in the Annual Improvements 2008-2010 cycle an amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards regarding the use of a previous GAAP carrying amount as deemed cost for property, plant and equipment and intangible assets used in operations subject to rate regulation. At this meeting the Board considered and tentatively agreed to clarifications to this proposed amendment.

The Board formally assessed the improvements proposed for inclusion in the forthcoming Improvements to IFRS against the current published criteria for Annual Improvements and concluded that the criteria were met.

Next step

The staff will circulate shortly a ballot draft of Improvements to IFRSs for publication in April 2010.

Derecognition

The staff held an education session for the FASB on the IASB's proposed derecognition model. The boards will hold further discussions on the proposed derecognition model at the next joint board meeting.

Fair value measurement

Considerations for re-exposure

The Board discussed whether there is a need to re-expose a draft of an IFRS on fair value measurement.

The Board tentatively agreed to publish a limited scope exposure draft of the measurement uncertainty analysis disclosure, including the effect of correlation. The comment period of the exposure draft will coincide with the FASB's comment period for proposed amendments to Accounting Standards Codification Topic 820 (Fair Value Measurements and Disclosures).

The Board also tentatively agreed to publish on the IASB website a Request for Views to solicit feedback on the FASB's proposed amendments to Topic 820. The IASB and FASB will consider jointly the feedback received on the IASB's limited scope exposure draft, the IASB's Request for Views and the proposed amendments to Topic 820.

Termination benefits - amendments to IAS 19

The Board tentatively decided that there is no need to re-expose the forthcoming amendments to IAS 19 Employee Benefits, relating to termination benefits.

The Board expects to publish the final amendments in the second quarter of 2010.

IAS 37 - Liabilities project - Staff paper posted

Just got today April 08, 2010 an email from IFRS alert regarding IAS 37 – Liabilities project.

The IASB staff have prepared a staff paper discussing one aspect of the working draft IFRS to replace IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

The paper explains how the recognition criteria would apply to liabilities arising from lawsuits. Its purpose is to help people understand the recognition criteria before they comment on the revised measurement proposals in the Exposure Draft Measurement of Liabilities in IAS 37.

Further information is available on the Liabilities page of the IASB website.

IASB issues a discussion paper of Extractive Activities

This is an email alerted from IASB IFRS alert on Tuesday, April 6, 2010 :

The IASB published today the results of an international research project on a possible future International Financial Reporting Standard (IFRS) for extractive activities in the form of a discussion paper - Extractive Activities. The discussion paper is open for comment until 30 July 2010.

More information:

• Read the press release
• Visit the project page. A Snapshot summary document will be available on the project page shortly.

Access the document online:

• To access the document visit the "Get involved / Comment on a proposal" section on www.iasb.org
• If you are an eIFRS/Comprehensive subscriber, you can also view the document in the 'Latest Additions' section of eIFRS (you will be required to provide your login details).

Printed copies of the document:

• Printed copies of the document can be purchased from the IASC Foundation's online shop for £12 each plus shipping. Discounts are available.
• Comprehensive subscribers will receive a print copy shortly.

2010 IFRSs Bound Volume

Below is the e-IFRS email alerted by IASB.org :

The IASCF is pleased to announce that the "2010 International Financial Reporting Standards (IFRSs)" Bound Volume will be published soon, in March 2010.

This edition includes the latest version of International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), IFRIC and SIC Interpretations and the supporting documents - illustrative examples, implementation guidance, bases for conclusions and dissenting opinions - as issued by the IASB at 1 January 2010.

For convenience, this RED book edition is presented in two parts:

• Part A (the requirements) contains the latest version of International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), and IFRIC and SIC Interpretations.
• Part B contains the accompanying documents, such as illustrative examples, implementation guidance, bases for conclusions and dissenting opinions.

Copies are priced at £60 each, plus shipping. Discounts are available for:

• academics/students
• middle income and low income countries
• multiple orders.

The 2010 IFRSs Bound Volume (978-1-907026-60-7) (Product code 10201) is priced at £60 per copy, plus shipping. Further information can be found on our Webshop. Please register your interest in this product if you wish to be notified of its publication.

If you need any further information, please contact our customer services by email or telephone: +44 (0)20 7332 2730.

Kind regards,

IASC Foundation Publications Department
publications@iasb.org
www.iasb.org

The IASB Latest Update on January 5, 2010

This IASB Update is a staff summary of the tentative decisions reached by the Board at a public meeting. As a project progresses, the Board can, and sometimes does, modify its earlier tentative decisions. Tentative decisions do not change existing requirements until those decisions are incorporated in a new or amended standard.

The International Accounting Standards Board met in London on 5 January 2010 for an additional Board meeting, when they discussed Leases and Insurance contracts. The US Financial Accounting Standards Board (FASB) participated via video conference.

• Leases
• Insurance contracts

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Leases

At their October 2009 joint meeting, the boards tentatively decided to exclude from the scope of the proposed new leases requirements contracts that represent the purchase or sale of the underlying asset. At this meeting, the boards discussed the situation when a contract is the purchase or sale of the underlying asset.

The boards tentatively decided that:

1. Contracts that transfer control of the underlying asset should be excluded from the scope of the proposed new leases requirements.

2. The proposed new leases requirements should provide indicators to help a reporting entity determine whether control has been transferred.

3. Management of the reporting entity should exercise judgement and consider all relevant facts and circumstances when determining whether control of the underlying asset has been transferred.

4. Situations in which control of the underlying asset has normally been transferred include:

    a. Contracts where the title to the underlying asset automatically transfers

    b. Contracts that include a bargain purchase option.

The boards instructed the staff to provide additional analysis on the definition of control, how control would be assessed, and other possible indicators of control in the context of a lease contract.

Go to the Leases project page

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Insurance contracts

The boards discussed:

• whether to account for insurance, investment and service components included in an insurance contract as if those components were separate contracts (unbundling).

• presentation of the performance statement.

• derivatives embedded within a host insurance contract.

Unbundling

The boards discussed whether to account for components of an insurance contract as if those components were separate contracts (ie unbundle those components). The IASB decided tentatively that, for recognition and measurement, an insurer should:

• unbundle a component of an insurance contract if it is not interdependent with other components of that contract.
• not unbundle a component that is interdependent.

The FASB tentatively decided that if unbundling is not required for recognition and measurement, it should not be a permitted option. The FASB asked staff to clarify further how unbundling for recognition and measurement relates to (a) the definition of an insurance contract and the scope of the proposed standard, (b) the presentation models for the performance statement, and (c) bifurcation of embedded derivatives.

Presentation of the statement of comprehensive income

The boards discussed five models for the presentation of the statement of comprehensive income for insurance contracts and:

• tentatively rejected a model that recognises revenue on the basis of written premiums (rather than recognising revenue as the insurer performs under the contract).
• asked the staff to clarify further the remaining models.

Embedded derivatives

The boards discussed two approaches to measuring derivatives embedded in insurance contracts:

• Measure at fair value (using existing guidance on when to bifurcate)
• Measure consistently with the measurement used for the host insurance contract

Views diverged and no clear consensus emerged. The boards will return to the topic of embedded derivatives at a future meeting.

Next steps

The boards will continue their discussion of this project at their joint meeting in January.

Go to the Insurance contracts project page

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Future Board meetings

The Board will meet in public session on the following dates in 2010. Meetings take place in London, UK, unless otherwise noted.

• 18 - 22 January
• 15 - 19 February
• 2 February (PM)
• 10 February (PM)
• 15 - 19 March
• 22 - 24 March
• 19 - 23 April
• 17 - 21 May
• 14 - 18 June
• 19 - 23 July
• 13 - 17 September
• 18 - 22 October
• 25-27 October (Norwalk)
• 15 - 19 November
• 13 - 17 December

Please note that we are likely to add some meeting dates. We will include any such additional dates in future issues of IASB Update.

Go to the meetings section of the IASB website

IASB Publishes IFRS for Small and Medium-sized Entities

On Thursday, 9 July 2009, IASB has published the IFRS for SMEs. Following is the Press Release which was posted from the IASB website :

The International Accounting Standards Board (IASB) issued today an International Financial Reporting Standard (IFRS) designed for use by small and medium-sized entities (SMEs), which are estimated to represent more than 95 per cent of all companies*. The standard is a result of a five-year development process with extensive consultation of SMEs worldwide.

The IFRS for SMEs is a self-contained standard of about 230 pages tailored for the needs and capabilities of smaller businesses. Many of the principles in full IFRSs for recognising and measuring assets, liabilities, income and expenses have been simplified, topics not relevant to SMEs have been omitted, and the number of required disclosures has been significantly reduced. To further reduce the reporting burden for SMEs revisions to the IFRS will be limited to once every three years.

Benefits

The IFRS for SMEs responds to strong international demand from both developed and emerging economies for a rigorous and common set of accounting standards for smaller and medium-sized businesses that is much simpler than full IFRSs. In particular, the IFRS for SMEs will:

(a) provide improved comparability for users of accounts

(b) enhance the overall confidence in the accounts of SMEs, and

(c) reduce the significant costs involved of maintaining standards on a national basis.

The IFRS for SMEs will also provide a platform for growing businesses that are preparing to enter public capital markets, where application of full IFRSs is required.

The IFRS for SMEs is separate from full IFRSs and is therefore available for any jurisdiction to adopt whether or not it has adopted the full IFRSs. It is also for each jurisdiction to determine which entities should use the standard. It is effective immediately on issue.

Rigorous development

In developing the IFRS for SMEs the IASB consulted extensively worldwide. A 40-member Working Group of SME experts advised the IASB on the structure and content of the IFRS at various stages in its development. The exposure draft of the IFRS, published in 2007, was translated into five languages to assist SMEs in responding to the proposals. More than 50 round-table meetings and seminars were held to receive direct feedback, and the draft IFRS was field-tested by over 100 small companies in 20 countries. As a result, further simplifications have been achieved in the final document.

Paul Pacter, Director of Standards for SMEs for the IASB, has agreed to lead a group to support international adoption of the standard. Further details of this group will be announced shortly.

Global education initiative

To support the implementation of the IFRS for SMEs the IASC Foundation is developing comprehensive training material. The Foundation is also working with international development agencies to provide instructors for regional workshops to ‘train the trainers’ in the use of the training material, particularly within developing and emerging economies. The training material will be published in a number of languages. The English language material will be downloadable free of charge from the IASB’s website in late 2009.

The complete IFRS for SMEs (together with the basis for conclusions, illustrative financial statements, and a presentation and disclosure checklist) can be downloaded free of charge from http://go.iasb.org/IFRSforSMEs from today.

Introducing the IFRS for SMEs, Sir David Tweedie, IASB Chairman, said:

The publication of IFRS for SMEs is a major breakthrough for companies throughout the world. For the first time, SMEs will have a common high quality and internationally respected set of accounting requirements. We believe the benefits will be felt in both developed and emerging economies.
I thank Paul Pacter for his tireless efforts in leading the project, as well as the hundreds of people and SMEs worldwide who have assisted in the development of the IFRS.

Commenting on the announcement, Paul Pacter, Director of Standards for SMEs, said:

The IFRS for SMEs will provide businesses with a passport to raise capital on a national or an international basis.

Journal of Accountancy on July 9, 2009 has commented the release of this IFRS for SMEs standard through its article titled “New Option for Private Companies in Streamlined IFRS.”

U.S. private companies have a new choice for accounting and financial reporting—a slimmed-down version of IFRS tailored more to their needs. IFRS for SMEs (small- and medium-size entities) is a simplification of full IFRS. The International Accounting Standards Board (IASB), which released the standard Thursday after five years of work on the project, defines SMEs as businesses that publish general-purpose financial statements for external users and do not have public accountability. Many U.S. private companies would fit that definition.

Read further in here >>. And another related article from CFO.com in here >>