It was over a year ago that I talked about the standards that will be effective for 2009 financial statements. The list of standards has not changed since then, but as management of many companies are starting to think about preparing their 2009 interim reports, now is a good time to refresh our memories.
There is plenty to think about, and there is a theme amongst a lot of what is new. Many of the new or amended standards and interpretations will have an impact either on company results or on the way in which those results are presented. For example: the revision to IAS 1 might lead some companies to present their income statement and statement of recognised income and expense into a single statement of comprehensive income; the introduction of IFRS 8 may result in changes to both the volume and type of information provided about segments; the amendment to IAS 23 will require some companies to capitalise interest, thus reducing finance expense but increasing depreciation costs in the future; and I have talked previously about the impact of the new business combinations standard on earnings. Combine this with the effects of an uncertain economy, and explaining the current year results may prove something of a challenge.
So what actually is new? The only entirely new standard due for implementation in 2009 is IFRS 8, ‘Operating Segments’, which will require management to consider their approach to disclosure of their operating segments. The other key requirements for 2009 are amendments to the following standards:
• IAS 1, ‘Presentation of financial statements’
• IAS 23, ‘Borrowing costs’
• IAS 32, ‘Financial instruments: Presentation’
• IAS 39, ‘Financial instruments: Recognition and measurement’
• IFRS 2, ‘Share-based payment’.
The much talked about revisions to IFRS 3, ‘Business combinations’, and IAS 27, ‘Consolidated and separate financial statements’, will not apply to most companies until their 2010 year ends (it actually applies to accounting periods beginning on or after 1 July 2009).
On top of all of this are the first batch of IFRS improvements and a handful of IFRIC interpretations to consider.
If you want to know more about the implications of the new requirements, we have both high-level and detailed guidance on the subject: 48 pages of questions and answers in ‘A practical guide to new IFRSs for 2009’; and a more detailed discussion of three of the standards in ‘Understanding new IFRSs for 2009 – a guide to IAS 1 (revised), IAS 27 (revised), IFRS 3 (revised) and IFRS 8’.
This, of course, is only the start. We have seen a raft of discussion papers and exposure drafts over the past year and there are others to come, including a new financial instruments standard. Continuing my theme from above, some of these projects have the potential to really change the way in which you report your results and, possibly, the way investors value your business.
As always, I would be very interested in your views, either by email or by commenting here.
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Posted by: Michelle Boudreau | 12 October 2009 at 20:46