This comment letter was sent by BDO Global Coordination B.V. to the International Accounting Standards Board on 29 December 2009, on behalf of BDO International.
Dear Sir
IASB Exposure Draft ED 2009/13: Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters – Proposed amendment to IFRS1
We are pleased to comment on the above exposure draft (the ED) issued by the International Accounting Standards Board (IASB), on behalf of BDO International.
Our responses to the specific questions raised in the ED are set out below.
Question 1 – Consistent disclosure transition provisions
The Board proposes to amend Appendix E of IFRS 1 to include transition provisions for first-time adopters consistent with the transition provisions in paragraph 44G of IFRS 7 Financial Instruments: Disclosures.
Do you agree with the proposal? If not, why?
We agree with the proposal.
Question 2 – Effective date
The proposed amendment to IFRS 1 would be effective for annual periods beginning on or after 1 July 2010 with early application permitted.
Do you agree that this amendment should apply for annual periods beginning on or after 1 July 2010 with early adoption permitted? If not, why?
We agree with the outcome of the proposal, as it will permit a first-time adopter of IFRS to take advantage of the same relief that is available to an ongoing reporter.
We note that the effective date of the proposed amendment is annual periods commencing on or after 1 July 2010, with earlier application permitted. While we understand that the IASB might wish to have an effective date after the date of issue of a final amendment, this would normally be on the basis that the amendment would require a change of approach with some entities already having reported their results at the date of issue of the amendment. However, the proposed amendment introduces an optional relief from disclosure and not a required change.
We also note that the amendment would be available only for accounting periods commencing before 1 January 2010, and in that context it appears inconsistent for the effective date of the amendment to be after that point.
Consequently, the IASB might consider changing the effective date from the proposed 1 July 2010 to be immediate on issue of the amendment, with retrospective application, in order that it is in place for all financial statements issued on or after that date; this would also be consistent with the Basis for Conclusions to the ED. As the amendment would simply reduce the extent of required disclosure, an entity could still issue financial statements with fuller (prior year) disclosures, if the timing of issue of its first IFRS financial statements was on or around the date of issue of the amendment, and remain fully in compliance with IFRS.
We hope that our comments and suggestions are helpful. If you would like to discuss any of them, please contact Andrew Buchanan at +44 (0)20 7893 3300.
Yours faithfully
BDO Global Coordination B.V.