ACCOUNTING

Accountancy SA, Jun 2008 by Kubuya, Patrick

FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF EQUITY

A discussion paper on the distinction between equity financial instruments and other financial instruments (non-equity instruments) has been published for public comment by the International Accounting Standards Board (IASB). This has been issued in South Africa as ED236 - Financial Instruments with Characteristics of Equity ana can be downloaded from the SAICA website.

This is the first stage of the IASB's project to improve and simplify the requirements in IAS 32(AC 125) - Financial Instruments: Presentation. Stakeholders around the world have raised the following broad classes of criticisms of the current requirements:

* The principles in IAS 32 are difficult to apply.

* The application of those principles can result in an inappropriate distinction between equity instruments and nonequity instruments.

The deadline for comment to SAICA is 5 August 2008.

SAICA SUBMISSIONS

SAICA with the input from the Accounting Practices Committee has made the following submissions to the lASB/lnternational Financial Reporting Interpretations Committee (IFRIC):

* ED 228 - Amendments to IAS 39 Financial Instruments: Recognition and Measurement- Exposures Qualifying for Hedge Accounting.

* ED 229 - Joint Arrangements.

* ED 230 - Proposed Improvements to International Reporting Standards - First Annual Improvements Project.

* ED 231 - Proposed Amendments to IFRS 1 - First-time Adoption of International Financial Reporting Standards and IAS 27 - Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly Con trolled Entity or Associate.

* ED 232 - Proposed Amendments to IFRS 2 - Share-based Payment and IFRIC 11 IFRS 2 - Group and Treasury Share Transactions: Group Cash-settled Share-based Payment Transactions.

SAICA also made a submission pertaining to IAS 8 - Accounting policies, changes in accounting estimates and errors, requesting clarification on whether its applicability includes revised, improved and amended Standards where there is a significant change to the requirements.

Visit the SAICA website to view these submissions.

RE-ISSUED PRONOUNCEMENT FOR EDITORIAL CHANGES

IAS 14(AC 115) - Segment Reporting

An updated version of IAS 14 - Segment Reporting (includes amendments resulting from new and amended IFRSs issued up to 17 January 2008) was issued by the IASB, which includes a front page history matter.

IAS 14 is being superseded by IFRS 8 - Operating Segments. IFRS 8 is required to be applied from 1 January 2009, but earlier adoption is permitted.

DISCUSSION PAPERS PUBLISHED BY THE IASB FOR COMMENT

Reducing complexity in reporting financial instruments

Discussion paper on Reducing complexity in reporting financial instruments, has been issued in South Africa as ED 237 and can be downloaded from the SAICA website.

The existing requirements for reporting financial instruments are widely regarded as difficult to understand, interpret and apply, and constituents have urged the IASB to develop standards that are principle-based and less complex. The document is the first stage in a project that aims to replace IAS 39(AC 133) - Financial Instruments: Recognition and Measurement The discussion paper analyses the main causes of complexity in reporting financial instruments, and proposes possible intermediate approaches to address some of them, as well as a possible long-term approach.

The deadline for comment to SAICA is 22 August 2008.

Proposals to increase transparency in the accounting for post-employment benefits

Discussion paper on IAS 19(AC 116) - Employee Benefits, had been issued in South Africa as ED 238. This paper sets out the lASB's preliminary views on how the accounting for some post-employment benefits, including pensions, could be improved.

The discussion paper, developed in consultation with the lASB's Employee Benefits Working Group, addresses the main concerns expressed by a wide range of interested parties that the accounting model set out in IAS 19 is inadequate and should be reviewed.

The deadline for comment to SAICA is 29 August 2008, and can be downloaded from the SAICA Website.