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IFRS/PFRS Amendments:
Consolidation, Joint
Arrangements, Fair Value,
Employee Benefits and
Disclosures, IFRS for SMEs
February 8, 2013
Oliver C. Bucao
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I FRS /PF RS A mendm en ts – PI CPA 1
Consolidation Suite of Standards
Consists of
– IFRS 10 Consolidated Financial Statement s
– IFRS 11 Joint Arrangements
– IFRS 12 Disclosures of Involvement with Other Entities
– IAS 27 Separate Financial Statements (2011)
– IAS 28 Investments in Associates and Joint Ventures (2011)
■ Published on May 2011
■ Each of the five new standards has an application date for accounting
periods beginning on or after 1 January 2013, (i.e. December 2013 year-ends) with early adoption is permitted.
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I FRS /PF RS A mendm en ts – PI CPA 4
The model in one slide
To have power, it is necessary for investor to have existing rights that give it
current ability to direct activities that significantly affect investee’s returns
(i.e. the relevant activities).
Link between
power and
returns
ConsolidationPower
Exposure to
variability
in returns
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I FRS /PF RS A mendm en ts – PI CPA 5
Power over relevant activities: Gating question
Voting rights are relevantRights other than voting
rights are relevantMajority of voting rights Less than a majority
Consider… Consider… Consider…
■ Rights held by others ■ Agreements with other
vote holders
■ Other contractual
agreements
■ Potential voting rights
■ De facto power
■ Purpose and design
■ Evidence of practical
ability to direct
■ Special relationships
■ Exposure to variabilityof returns
Consider only substantive rights
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I FRS /PF RS A mendm en ts – PI CPA 6
Assessing potential voting rights
Whether potential voting rights are currently
exercisable is not necessarily determinative and in
some cases may not be a necessary condition.
Whether potential voting rights are currently
exercisable is not necessarily determinative and in
some cases may not be a necessary condition.
Whether those rights are substantive is key:Whether those rights are substantive is key:
■ Barriers that prevent holder from exercising.
■ Whether several parties need to agree.■ How holder would benefit from exercise.
■ Purpose and design of potential voting rights.
■ Barriers that prevent holder from exercising.
■ Whether several parties need to agree.■ How holder would benefit from exercise.
■ Purpose and design of potential voting rights.
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I FRS /PF RS A mendm en ts – PI CPA 7
When de facto control may exist
STEP 1STEP 1
Investor considers all facts and circumstancesInvestor considers all facts and circumstances
Potential voting
rights
Potential voting
rights
Consider additional facts and circumstancesConsider additional facts and circumstances
Size of voting
rights compared
to others
Size of voting
rights compared
to others
Other contractual
arrangements
Other contractual
arrangements
Number of
active voters
at previousmeetings
Number of
active voters
at previousmeetings
Level of
exposure to
variablereturns
Level of
exposure to
variablereturns
Evidence of
power
Evidence of
power
Special
relationships
Special
relationships
Not
conclusive
Not clear
STEP 2STEP 2
The investor does not consolidateThe investor does not consolidate
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I FRS /PF RS A mendm en ts – PI CPA 8
When supplier relationships are considered
Power to direct the relevant activities.Power to direct the relevant activities.
Other contractual agreements.Other contractual agreements.
Exposure to variable returns.Exposure to variable returns.
Of itself, economic dependence of a supplier on a customer ≠ consolidation.But ...
Of itself, economic dependence of a supplier on a customer ≠ consolidation.But ...
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I FRS /PF RS A mendm en ts – PI CPA 9
From SIC-12 ... to IFRS 10
SIC-12 testsSIC-12 tests IFRS 10 factorsIFRS 10 factors
■ Purpose and design.
■ Evidence of practical ability to
direct.
■ Special relationships.
■ Exposure to variability in returns.
■ Purpose and design.
■ Evidence of practical ability to
direct.
■ Special relationships.
■ Exposure to variability in returns.
■ Activities on behalf of the entity
according to business needs.
■ Entity has decision-making powers
to obtain the majority of the
benefits.
■ Has rights to benefits and is
exposed to risks.
■ Retains majority of residual or
ownership risks.
■ Activities on behalf of the entity
according to business needs.
■ Entity has decision-making powers
to obtain the majority of the
benefits.
■ Has rights to benefits and is
exposed to risks.
■ Retains majority of residual or
ownership risks.
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IFR S/PFRS Amen dm en ts – P ICPA 1 0
When rights other than voting rights are relevant
Purpose and design■ Involvement and decisions made at
inception.
■ Contractual arrangements.
■ Investor’s commitment to continued
operation of investee.
Evidence of practical ability to direct■ Appointing key management
personnel (KMP).
■ Directing investee to enter into
significant transactions for investor’s
benefit.
Special relationships
■ Investee’s KMP are current or
previous employees.
■ Investee’s operations depend on
investor (funding, technology etc).
■ Disproportionate exposure to returns
compared to voting rights.
Exposure to variability of returns
■ Relative exposure to variability of
returns due to investor’s involvement
in investee.
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IFR S/PFRS Amen dm en ts – P ICPA 1 1
IFRS 12 might be challenging
Interests in subsidiaries.
Interests in unconsolidated
structured entities.
Interests in joint arrangements
and associates.
Disclosures are much
broader.
Consider increased disclosures and whether
systems are designed to provide such
information.
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IFR S/PFRS Amen dm en ts – P ICPA 1 2
PFRS 11 Joint Arrangements
May 12, 2011
Standard published
January 1, 2012
Retrospective application
December 31, 2013
First annual financial
statements in which
standard would apply
■ PFRS 11 divides joint arrangements into two types:
– Joint ventures – parties have right to the net assets
of the arrangement. Equity accounting required
– Joint operations – parties have rights to the assets
and obligations for the liabilities relating to the
arrangement. Recognises own assets and liabilities
Overview
■ Determine whether joint control exists
■ Determine the type of joint arrangement by considering:
– The structure
– The legal form
– The contractual arrangement
– Other facts and circumstances (in-substance test)
How to apply the standardHow to apply the standard
January 1, 2013
Date of initial application
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IFR S/PFRS Amen dm en ts – P ICPA 1 3
Separate vehicle
Old vs new requirements
IAS 31
Line-by-line
accounting
Choice: equity
accounting or
proportionate
consolidation
No separate vehicleJCO/
JCA
JCE
Line-by-line
accounting of
the underlying
assets and
liabilities
Equity
accounting
IFRS 11
A separate vehicle, but
separation overcome
by form, contract or
other facts and
circumstances
A separate vehicle with
separation maintained
JO
JV
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IFR S/PFRS Amen dm en ts – P ICPA 1 4
Joint venture vs joint operation
StructureStructure
Legal formLegal form
Contractual
arrangement
Contractual
arrangement
Other facts
and
circumstances
Other facts
and
circumstances
Is the arrangement structured through a vehiclethat is separate from the parties?
Is the arrangement structured through a vehiclethat is separate from the parties?
Does the legal form of the vehicle give the parties rights to the
assets and obligations for the liabilities of the arrangement?
Does the legal form of the vehicle give the parties rights to the
assets and obligations for the liabilities of the arrangement?
Do the contractual arrangements give the parties rights to the
assets and obligations for the liabilities of the arrangement?
Do the contractual arrangements give the parties rights to the
assets and obligations for the liabilities of the arrangement?
Do the parties have rights to substantially all the economic
benefits of the assets of arrangement?
Does the arrangement depend on the parties on a continuous
basis for settling its liabilities?
Do the parties have rights to substantially all the economic
benefits of the assets of arrangement?
Does the arrangement depend on the parties on a continuous
basis for settling its liabilities?
Joint VentureJoint Venture
J o i n t O p e r a t i o n
J o i n t O p e r a t i o n
Y
N
N
N
N
Y
Y
Y
1
2
3
4
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IFR S/PFRS Amen dm en ts – P ICPA 1 5
IFRS 11: Separate vehicle
StructureIs the arrangement structured through a vehicle
that is separate from the parties?
More questions…More questions… J o i n t O p e r a t i o n
J o i n t O p e r a t i o n
Y
N
“A joint arrangement that is not structured through
a separate vehicle is a joint operation.”
1
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IFR S/PFRS Amen dm en ts – P ICPA 1 6
Mini-case 1: Separate vehicle
Entities by statuteEntities by statute
Operating segmentOperating segmentCircumscribed
area of business
Circumscribed
area of business
Bank accountBank account
AccountingAccounting
recordsrecords
Q1: Which of these examples is a separate vehicle?
1
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IFR S/PFRS Amen dm en ts – P ICPA 1 7
Solution: Separate vehicle
Entities by statuteEntities by statute
Operating segmentOperating segmentCircumscribed
area of business
Circumscribed
area of business
Bank accountBank account
AccountingAccounting
recordsrecords
Learning points:
■ A ‘separately identifiable financial structure, including entities recognised
by statute, regardless of having legal personality’.
■ Needs at least some sort of legal form.
1
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IFR S/PFRS Amen dm en ts – P ICPA 1 8
IFRS 11: Legal form
Legal formLegal formDoes the legal form of the vehicle give the parties rights to the
assets and obligations for the liabilities of the arrangement?
Does the legal form of the vehicle give the parties rights to the
assets and obligations for the liabilities of the arrangement?
More questions…More questions… J o i n t O p e r a t i o n
J o i n t O p e r a t i o n
N
Y
“A joint operation is a joint arrangement whereby the partiesthat have joint control have rights to the assets,
and obligations for the liabilities, relating to the arrangement.”
2
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IFR S/PFRS Amen dm en ts – P ICPA 1 9
Mini-case 2: Legal form
■ A and B set up Unlimited Co.
■ A and B have unlimited liability
for the liabilities of Unlimited
Co.
Q2: Does the legal form of the arrangement give the parties rights to the
assets and obligations for the liabilities of the arrangement?
Partner A Partner B
Unlimited Co:
separate legal personality
2
50% equity
interest
50% equity
interest
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IFR S/PFRS Amen dm en ts – P ICPA 2 0
Solution: Legal form
Learning points:
■ The separate vehicle has a separate legal personality and therefore a
primary obligation for its liabilities.
■ The unlimited nature of the parties is essentially a guarantee and this
does not cause the arrangement to be a joint operation.
■ Rights to the assets are also required for joint operation classification.
Answer: No.
2
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IFR S/PFRS Amen dm en ts – P ICPA 2 1
IFRS 11: Contractual arrangements
Contractual
arrangement
Do contractual arrangements give the parties rights to the
assets and obligations for the liabilities of the arrangement?
More questions…More questions… J o i n t O p e r a t i o n
J o i n t O p e r a t i o n
N
Y
“…the parties use the contractual arrangement to reverse or modify the
rights and obligations conferred by the legal form of the separate vehicle.”
3
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IFR S/PFRS Amen dm en ts – P ICPA 2 2
Mini-case 3: Contractual arrangements
■ A and B each sell theirdefence contracting
businesses to a new,
jointly controlled, legally
separate vehicle,
Defence Co, for fair
value.
■ Defence Co funds the
payment with bank debt
guaranteed by A and B.
Q3: Do the contractual arrangements give A and B rights to the assets
and obligations for the liabilities of the arrangement?
Partner A Partner B
Defence Co
Bank
Loan
Guarantee
3
50%
equity
interest
50%
equity
interest
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IFR S/PFRS Amen dm en ts – P ICPA 2 3
Solution: Contractual arrangement
Learning points:
■ A guarantee does not, in itself, determine that the parties have
obligations for the liabilities of a separate vehicle.
■ In this example, the recourse of the bank to the parties is only in the
event of a default of the loan by Defence Co.
■ Only a primary, not a secondary obligation, would meet the ‘obligation
for the liabilities’ criterion.
■ Rights to the assets are also required for joint operation classification.
Answer: No.
3
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IFR S/PFRS Amen dm en ts – P ICPA 2 4
IFRS 11: Other facts and circumstances
Other facts
and
circumstances
Other facts
and
circumstances
Do the parties have rights to substantially all the economic
benefits of the assets of arrangement?
Does the arrangement depend on the parties on a continuous
basis for settling its liabilities?
Do the parties have rights to substantially all the economic
benefits of the assets of arrangement?
Does the arrangement depend on the parties on a continuous
basis for settling its liabilities?
Joint VentureJoint Venture
N
Y4
J o i n t O p e r a t i o n
J o i n t O p e r a t i o n
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IFR S/PFRS Amen dm en ts – P ICPA 2 5
IFRS 11: Other facts and circumstances
JA must give parties
rights to substantially all
economic benefits relating
to arrangement
(asset side).
JA must cause
arrangement to depend
on parties on a
continuous basis for
settling its liabilities
(liability side).
+ = Joint
OperationAsset side Liability side
4
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IFR S/PFRS Amen dm en ts – P ICPA 2 8
IFRS 11: Asset side requirement
■ When activities of arrangement are designed to provide output to theparties:
– This indicates that parties have rights to substantially all economic
benefits of the assets of the arrangement. [IFRS 11.B31]
– Parties to such arrangements often ensure their access to outputs by
preventing arrangement from selling output to third parties.
[IFRS 11.B31]
■ Application guidance included in IFRS 11:
– B32 Example 5.
– Illustrative Example 3.
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IFR S/PFRS Amen dm en ts – P ICPA 2 9
IFRS 11: Liability side requirement
■ If purpose and design of JA is to provide output to the parties, then
effect is that liabilities incurred by JA are, in substance, satisfied by
cash flows received from parties through their purchases of output.
[IFRS 11.B32]
■ When the parties are substantially the only source of cash flows
contributing to continuity of operations of JA, this indicates that the
parties have an obligation for the liabilities relating to the arrangement.
[IFRS 11.B32]
■ Application guidance included in IFRS 11:
– B32 Example 5.
– Illustrative Example 3.
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IFR S/PFRS Amen dm en ts – P ICPA 3 0
IFRS 12 might be challenging
Significant judgements / assumptions■ In determining joint control over
another entity.
■ In determining classification of joint
arrangements in separate vehicles.
Summarised financial information■ Several new line items required.
■ Amounts in investee’s financial
statements adjusted to reflect group
measures.
■ Reconciliation to investor’s financial
statements.
Specific requirements
■ Name / place of business.
■ Relationship with investor.
■ Proportion owned.
■ Accounting model.
Aggregation
■ Possible aggregation of similar
entities, but JVs and associates can’t
be aggregated.
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IFR S/PFRS Amen dm en ts – P ICPA 3 1
PFRS 12 Disclosure of Interests in Other Entities
May 12, 2011
Standard published
December 31, 2013
First annual financial
statements in which
standard would apply
■ PFRS 12 combines in a single standard the disclosure
requirements for subsidiaries, associates and joint
arrangements, as well as unconsolidated structured
entities.
Overview
■ Present a more detailed disclosure objectives and
requirements for the specific disclosure areas addressed
in PFRS 12.
■ Assess the structured entities and apply the new
disclosures.
How to apply the standardHow to apply the standardJanuary 1, 2013
Date of initial application
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IFR S/PFRS Amen dm en ts – P ICPA 3 2
PFRS 12 Disclosures of Interests in Other Entities
■ First year of application is less than
12 months away
■ Financial statements may have additional
disclosures as required
Bottom lineKey impacts
■ Expanded disclosures about subsidiaries,
joint arrangement and associates.
■ New disclosures about unconsolidated
structured entities.
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IFR S/PFRS Amen dm en ts – P ICPA 3 3
The amendments simplify the process of adopting PFRSs 10 and 11 and provide relief from
the disclosures in respect of unconsolidated structured entities.
- Depending on the extent of comparative information provided in the financial
statements, the amendments simplify the transition and provide additional relief from
the disclosures that could have been onerous.
- The amendments limit the restatement of comparatives to the immediately preceding
period; this applies to the full suite of standards. Entities that provide comparatives for
more than one period have the option of leaving additional comparative periods
unchanged.
- In addition, the date of initial application is now defined in PFRS 10 as the beginning ofthe annual reporting period in which the standard is applied for the first time. At this
date, an entity tests whether there is a change in the consolidation conclusion for its
investees. These amendments are effective for annual periods beginning on or after
January 1, 2013 with early adoption permitted.
Impact of AmendmentsImpact of Amendments
Consolidated Financial Statements, Joint Arrangements and Disclosure of
Interest in Other Entities: Transition Guidance (Amendments to PFRS 10, 11 &
12)
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IFR S/PFRS Amen dm en ts – P ICPA 3 4
PFRS 13 Fair Value Measurement
May 12, 2011
Standard published
December 31, 2013
Earliest annual financial
statements in which
standard would apply
■ PFRS 13 replaces existing guidance in individual IFRSs
■ PFRS 13 establishes:
– a single definition of fair value (FV)
– a framework for measuring FV
– disclosure requirements for FV measurements
■ PFRS 13 does not require additional FV measurements
in addition to those already existing
Overview
■ Understand guidance and principles of FV measurement
■ Analyse differences between current application and
new FV measurement and disclosure requirements
■ Categorise inputs and fair value measurements in the FV
hierarchy
■ Apply FV measurement and disclosure requirements
How to apply the standard
January 1, 2013
Date of adoption
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IFR S/PFRS Amen dm en ts – P ICPA 3 5
PFRS 13 Fair Value Measurement
■ FV measurement based on exit price and
market participant view
■ Valuation specialists may be needed
■ Extensive disclosures required
■ New systems may be required to comply
with disclosure requirements
■ Training required for finance, treasury
and asset management teams
■ FV measurement based on exit price and
market participant view
■ Valuation specialists may be needed
■ Extensive disclosures required
■ New systems may be required to comply
with disclosure requirements
■ Training required for finance, treasury
and asset management teams
■ No significant impact on the entity’s
financial ratios expected
■ Significantly more disclosure in financial
statements
■ May involve significant judgement and
estimation uncertainty
■ No significant impact on the entity’s
financial ratios expected
■ Significantly more disclosure in financial
statements
■ May involve significant judgement and
estimation uncertainty
Bottom lineBottom lineKey impactsKey impacts
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IFR S/PFRS Amen dm en ts – P ICPA 3 6
Background
What
Why
When
Defines FV.
Sets out single framework for FV
measurement.
Requires specific FV
measurement disclosures.
Consolidate FV measurement
guidance into single standard.
Increase convergence with
US GAAP.
Annual periods beginning on or
after 1 January 2013.
Early application permitted.
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IFR S/PFRS Amen dm en ts – P ICPA 3 7
Which of these is in the scope of IFRS 13?
Item
Interest rate
swap
Y: Initial and subsequent
measurement
Loan measured
at amortised
cost
Y: Initial measurement and
FV disclosure
Property plant
and equipment
Y: Subsequent measurement
based on revaluation model
N: Subsequent measurement
based on cost model
Revenue Y: Measurement of revenue
In scope of FV
measurement requirements
Investment
property
(cost model)
Y: FV disclosure
In scope of FV
disclosure requirements
Y: Subsequent FV
measurement
Y: FV disclosure
Y: Subsequent measurement
based on revaluation model
N: Subsequent measurement
based on cost model
N: Item not recognised in the
statement of financial position
Y: FV disclosure
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IFR S/PFRS Amen dm en ts – P ICPA 3 8
General IFRS 13 requirements on scope
Apply IFRS 13
FV measurement
requirements
if not explicitly
scoped out
O t h e r I F R S p e r m i t s / r e q u i r e s ? Initial measurement
(based on) FV
Subsequent
measurement
(based on) FV
Disclosure about
measurement (based
on) FV
Apply IFRS 13
disclosure
requirements
if not explicitly
scoped out
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IFR S/PFRS Amen dm en ts – P ICPA 3 9
Implications of IFRS 13’s FV definition
The amount for which an asset could be exchanged, or a
liability settled , between knowledgeable, willing parties
in an arm’s length transaction.
Pre
IFRS 13
Exit price notion
Liabilities: transfer vs settlement
Market participant vs entity specific measurement
Measurement date
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. IFRS 13
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IFR S/PFRS Amen dm en ts – P ICPA 5 1
Employee Benefits (Amendments to PAS 19)
June 16, 2011
Amendment Published
January 1, 2012
Date of initial application
January 1, 2013
Date of adoption
December 31, 2013First annual financial
statements with amended
PAS 19 applied
■ No changes to fundamental measurement method under
which benefits are attributed to periods of service
■ No changes to the requirement to recognise expense on
a straight-line basis when employee service in later
years will lead to a materially higher level of benefit than
in earlier years
OverviewOverview
■ All actuarial gains and losses are recognized
immediately in other comprehensive income
■ Revise the calculation for finance costs (net interest cost
on the net defined benefit liability (asset) calculated
based on the discount rate used to discount the
obligation)
■ Evaluate the classification of short-term and other long-
term employee benefits based upon the amended
definitions
How to apply the amendmentsHow to apply the amendments
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IFR S/PFRS Amen dm en ts – P ICPA 5 2
Highlights
Less deferred past service cost
Less fair value of plan assets
Plus/less deferred actuarial
gains and losses
Defined benefit liability (asset)
Defined benefit obligation
Less fair value of plan assets
Net defined benefit liability
(asset)
Defined benefit obligation
Current IAS 19 Amended IAS 19
Less deferred past service cost
Plus/less deferred actuarial
gains and losses
Effect of asset ceiling Effect of asset ceiling
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IFR S/PFRS Amen dm en ts – P ICPA 5 3
Highlights
Service costs
Interest income
and expected
return on plan
assets
Actuarial gains
and losses
P&L
OCI
Or
Service costs
Net interest
Remeasuremen
ts
P&L
OCI
Current IAS 19 Amended IAS 19
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IFR S/PFRS Amen dm en ts – P ICPA 5 4
Post-employment benefits – recognition
The net defined benefit liability is recognised in the statement of financial position.
This is:
The present value of the defined benefit obligation
Less the fair value of plan assets
Adjusted for the asset ceiling
Elimination of the corridor method for recognising actuarial gains and losses
Unvested past service cost is recognised immediately
surplus/deficit
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IFR S/PFRS Amen dm en ts – P ICPA 5 5
Post-employment benefits – recognition
CurtailmentsPlan amendments
♦ Introduction of a plan
♦ Withdrawal of a plan
♦ Changes to a plan
♦ Significant reduction in the number
of employees covered by the plan
Recognised at the earlier of the following:
If plan amendment/curtailment arises as part of restructuring, when the
restructuring costs are recognised
If plan amendment/curtailment is linked to termination benefits, when the related
termination benefits are recognised
When plan amendment/curtailment occurs
Past service costs
55IFRS/PFRS Amendments – PICPA
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IFR S/PFRS Amen dm en ts – P ICPA 5 6
Post-employment benefits – recognition
Recognition of plan amendments:
• Can no longer be deferred
• Could be earlier than when the plan amendment occurs
Recognition of curtailments:
• Demonstrable commitment is no longer relevant
• Could be recognised before related restructuring costs if occurs earlier
• Could be recognised earlier than when curtailment occurs if related to
termination benefits recognised
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IFR S/PFRS Amen dm en ts – P ICPA 5 8
Post-employment benefits – measurement
Current IAS 19 Amended IAS 19
Plan administration costs either reduce
the return on plan assets, or are
included in the actuarial assumptions
used to measure the defined benefit
obligation.
• Only costs of managing plan assets
reduce the return on plan assets.
• Other plan administration costs are
recognised when the administration
services are provided but are not
deducted from the return on plan
assets.
The current standard does not state
specifically how to deal with optionality
permitted by a plan.
Actuarial assumptions include an
assumption about the proportion of
plan members who will select eachform of settlement option available
under the plan terms.
58IFRS/PFRS Amendments – PICPA
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IFR S/PFRS Amen dm en ts – P ICPA 5 9
Post-employment benefits – measurement
Current IAS 19 Amended IAS 19
The current standard does not state
specifically how to deal with employee and
third party contributions.
• The amended standard specifically
requires an entity to consider whether third
party contributions reduce the cost of
benefits to the entity or are instead a
reimbursement right.
• Discretionary contributions by employees
or third parties reduce service cost upon
payment of the contributions to the plan.
• Contributions that are set out in the formal
terms of the plan either:
• Reduce service cost, if they are linked
to service, by being attributed to
periods of service as a negativebenefit, or
• Reduce remeasurements of the net
defined liability (asset), if the
contributions are required to reduce a
deficit arising from losses on plan
assets or actuarial losses.
59IFRS/PFRS Amendments – PICPA
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IFR S/PFRS Amen dm en ts – P ICPA 6 0
Post-employment benefits – measurement
Current IAS 19 Amended IAS 19
The current standard does not state
specifically how to deal with risk-
sharing features.
Actuarial assumptions include the best
estimate of the effect of performance
targets or other criteria.
For example, the terms of a plan may
state that it will pay reduced benefits or
require additional contributions from
employees if the plan assets are
insufficient. These kinds of criteria are
reflected in the measurement of the
defined benefit obligation.
60IFRS/PFRS Amendments – PICPA
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IFR S/PFRS Amen dm en ts – P ICPA 6 1
Post-employment benefits – presentation
Interest costs under current
IAS 19
Interest cost on defined benefit
obligation
Expected return on plan assets
Interest costs under Amended
IAS 19
Net interest cost on the net defined
benefit liability (asset)
calculated based on discount rate
used to discount the obligation:
Interest cost on defined benefit
obligation
Interest income on plan assets
Interest on the effect of the asset
ceiling
61IFRS/PFRS Amendments – PICPA
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IFR S/PFRS Amen dm en ts – P ICPA 6 2
Post-employment benefits – presentation
Actuarial gains and lossesunder IAS 19, recognised in
P&L or OCI
AGL on the defined benefit
obligation
The difference between the
return on plan assets and the
expected return on plan assets
Remeasurements under AmendedIAS 19 recognised in OCI
AGL on the defined benefit
obligation
The difference between the
return on plan assets and the
amounts included in net
interest
Any change to the effect of the
asset ceiling, excluding
amounts included in net
interest
Any change to the effect of the
asset ceiling is recognised inP&L or OCI
62IFRS/PFRS Amendments – PICPA
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IFR S/PFRS Amen dm en ts – P ICPA 6 3
Post-employment benefits – disclosure
Characteristics of and risks associated with defined benefit plans
• For example, narrative description about the characteristics of the entity’s defined benefit
plans and of the risks to which the plan exposes the entity
Amounts in the financial statements arising from the defined benefit plans
• For example, a detailed numerical reconciliation from the opening balance to the closing
balance
How the defined benefit plans may affect the amount, timing and
uncertainty of the entity’s future cash flows
• For example, sensitivity analysis, narrative description of any asset-liability matching
strategies used by the plan or the entity, and a narrative description of any funding
arrangements and funding policy that affect future contributions
An entity shall assess whether all or some disclosures should be
disaggregated to distinguish plans or groups of plans with materially
different risks
Additional disclosure for both multi-employer plans and group plans
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IFR S/PFRS Amen dm en ts – P ICPA 6 6
Effective date and transition
The effective date for the application of the amended standard is annualperiods beginning on or after January 1, 2013. Earlier application is
permitted, subject to making disclosure of this fact.
The amendments are generally to be applied retrospectively, with two
exceptions:
• An entity need not adjust the carrying amount of assets outside the scope of IAS 19
(such as inventories and property, plant and equipment) for changes in employee benefit
costs that were included in their carrying amount before the date of initial application.
• In financial statements for periods beginning before 1 January 2014, an entity need not
present comparative information for the disclosures required about the sensitivity of the
defined benefit obligation.
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IFR S/PFRS Amen dm en ts – P ICPA 6 7
IFRS for SMEs
• Stable platform
- No amendments since the time of adoption
• Review after 2 years of implementation
- initial comprehensive review of the Standard to
enable the IASB to assess the first two years’
experience commenced in 2012
• Guidance for micro-sized entities
- The guidance for micros will be a ‘sub-set’ of the
IFRS for SMEs. It will not be a separate standard.
No fixed timetable for completion of the guidance.
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