Comments from ACCA to the International Accounting Standards Board, March 2012.
ACCA concurs with all of the IASB’s proposals. We agree that the clarifications proposed do reduce uncertainty. We also believe that the proposed amendment described in question 2. below is justified, in view of the costs which would otherwise be incurred by preparers of financial statements.
ACCA also agrees with the proposed definition of the date of initial application of the Standard.
Q1: The Board proposes to clarify the ‘date of initial application’ in IFRS 10. The date of initial application for IFRS 10 would be ‘the beginning of the annual reporting period in which IFRS 10 is applied for the first time’. The Board also proposes to make editorial amendments to paragraphs C4 and C5 of IFRS 10 to clarify how an investor shall adjust comparative period(s) retrospectively if the consolidation conclusion reached at the date of initial application is different under IAS 27/SIC-12 and IFRS 10. Do you agree with the amendments proposed? Why or why not? If not, what alternative do you propose?
ACCA supports both amendments. We believe that in both instances, the amendments meet the IASB’s objective of providing clarification for the users of IFRS 10. In addition, ACCA agrees that it is both logical and practical to set the date of initial application of IFRS 10 at the beginning of the annual reporting period in which the Standard is adopted.
Q2: The Board proposes to amend paragraph C3 of IFRS 10 to clarify that an entity is not required to make adjustments to the previous accounting for its involvement with entities if the consolidation conclusion reached at the date of initial application is the same under IAS 27/SIC-12 and IFRS 10. As a result, the Board confirms that relief from retrospective application of IFRS 10 would apply to an investor’s interests in investees that were disposed of during a comparative period such that consolidation would not occur under either IAS 27/SIC-12 or IFRS 10 at the date of initial application. Do you agree with the amendments proposed? Why or why not? If not, what alternative do you propose?
ACCA supports an amendment which means that the date of initial application of IFRS 10 is the point which determines the previous accounting treatment of an investee. We agree that the costs of consolidating part of a comparative period under IFRS 10 would outweigh the benefits to the users of the financial statements, given that the situation had changed by the date of the initial application of IFRS 10.