Accounting standards, amendments and interpretations applicable after the end of year and not adopted in advance by the Group

The following amendments and principles were endorsed during the period:

 

Amendments to IAS 1: Presentations of Items of Other Comprehensive Income

On 16 June 2011, the IASB issued the document “Presentations of Items of Other Comprehensive Income (amendments to IAS 1)”, the result of joint work carried out with the FASB, which provides a guide on the presentation and classification of items contained in the Statement of Other Comprehensive Income (“OCI”).

The standard does not modify the possibility of presenting all revenue and cost items recorded in one financial year in a single statement of comprehensive income, or in two statements: one statement which shows profit (loss) components for the year (separate income statement) and a second statement which starts with profits (losses) for the year and shows the items of the Statement of Other Comprehensive Income.

The standard requires the grouping together of items of the Statement of Other Comprehensive Income into two categories, depending on whether they can be reclassified or not, in the income statement in a future period.

The amendments to the standard were endorsed and published in Official Journal of the European Union no. 146 of 6 June 2012. They must be retrospectively applied to financial statements in years beginning 1 July 2012 or thereafter.

 

Amendments to IAS 19: “Employee Benefits”

On 16 June 2011, the IASB issued an amended version of IAS 19 “Employee Benefits”.

Said document modifies the accounting of defined benefit plans and termination benefits.

In the first place, it eliminated the possibility of using the “corridor method” for recording actuarial profits and losses. In particular, all actuarial profits and losses must be recorded in the Statement of Other Comprehensive Income (“OCI”), with no other option available, in order to show the complete net balance of the plan surplus/deficit in the statement of financial position. During the transition in line with the requirements of the amended standard, an entity that currently uses the “corridor method” may have to record a higher liability/lower asset in the statement of financial position (with a matching entry in the Statement of Other Comprehensive Income and, therefore, Equity). When fully applied, said amendment will generate higher volatility in the statement of financial position and in the Statement of Other Comprehensive Income, but the income statement will no longer be affected by the amortisation of actuarial profits/losses.

Secondly, provision is made for a new approach to the presentation and accounting of changes in the following components of defined benefit obligations and plan assets in the income statement and the Statement of Other Comprehensive Income:

  • Service costs are charged to the income statement: they include costs for services provided in the year, effects generated by past service costs and curtailments (both now recorded immediately in the year they occur) and profits/losses generated by settlement of the plan (in particular, generated by payments not in keeping with the terms of the plan, for example, early termination of the plan),
  • Net interests which are recorded in the income statement,
  • Remeasurements which are booked to the Statement of Other Comprehensive Income: these include, among other things, actuarial profits/losses on plan liabilities. Remeasurements are never reclassified to the income statement, but can be transferred to shareholders’ equity (e.g. among profit reserves).

Thirdly, the new standard requires additional disclosures, to be provided in the notes.

The amendments to the standard were endorsed and published in Official Journal of the European Union no. 146 of 6 June 2012. They must be applied to financial statements in years beginning 1 January 2013 or thereafter and early adoption is permitted. Retrospective application is required with certain exceptions and comparative sensitivity analysis for financial years starting before 1 January 2014.

 

IFRS 10 – Consolidated Financial Statements
IFRS 12 – Disclosure of interests in Other Entities

The documents were issued on 12 May 2011 as part of the IASB project aimed at incorporating two consolidation criteria present in IAS 27 (more focused on control) and SIC 12 (more focused on risks and benefits) into a single standard, and therefore providing the most complete guidelines for establishing under what conditions an SPE or an entity whose majority of voting rights (also potential) is not held should be consolidated or not.

In summary, a situation of control occurs when it can be demonstrated that the investor has the power to make decisions about the business of the company in which he has invested and when the investor is exposed to the variability of that company's returns, and therefore is able to use his power to influence its returns.

 

IFRS 11 – Joint Arrangements

The document was issued on 12 May 2011, and is intended to replace the current IAS 31. IFRS 11 is based on the following core principles:

  • Classification of arrangements in only two manners (joint operation and joint venture) instead of the three set forth in IAS 31
  • Distinction between the two types of arrangement based on their content
  • Reporting of contractual rights and obligations resulting from the arrangement on the basis of its content
  • Assessment of the investment in a joint venture based on the shareholders' equity method instead of the proportionate method, which is no longer permitted

The new standard sets forth that:

  1. if the assets and liabilities are not contained in a special vehicle, the joint arrangement is a joint operation
  2. if the arrangement's assets and liabilities are contained in any vehicle (partnership, joint stock company, consortium, etc.) the joint arrangement may be either a joint operation or a joint venture.

In a nutshell, a joint arrangement is a joint venture if:

  • the arrangement's assets and liabilities are contained in a vehicle whose legal form does not grant the parties rights to the assets and obligations for the liabilities contained in the vehicle,
  • contractual agreements do not change the vehicle's legal form and
  • the vehicle is able to operate independently from the parties.

The principles were endorsed and published in the Official Journal of the European Union no. 360 of 29 December 2012. The companies shall begin applying IFRS 10, IFRS 11, IFRS 12, the amended IAS 27 and the amended IAS 28, at the latest, on the first day of the first financial year beginning on or after 1 January 2014.

 

Amendments to IFRS 1 “First-time adoption of International Financial Reporting Standards - Severe hyperinflation and Removal of Fixed Dates for First-time Adopters” and to IAS 12 “Income taxes - Deferred tax: recovery of underlying assets”, adoption of IFRS 13 “Fair value measurement”

With Regulation (EU) 1255/2012 of the Commission of 11 December 2012, published in Official Journal L 360 of 29 December 2012, the amendments to IFRS 1 “First-time adoption of International Financial Reporting Standards - Severe hyperinflation and Removal of Fixed Dates for First-time Adopters” and to IAS 12 “Income taxes - Deferred tax: recovery of underlying assets” were adopted. IFRS 13 Fair value measurement, published by the IASB on 12 May 2011, was also adopted.

The objective of the amendments to IFRS 1 is to introduce a new exception to the scope of application of IFRS 1: entities that were subject to severe hyperinflation are authorised to use fair value to replace the cost of assets and liabilities in their first statement of financial position drawn up in compliance with IFRS.

Furthermore, those amendments also replace the references to fixed dates in IFRS 1 with references to the transition date.

As regards IAS 12, which defines the accounting of income taxes, the objective of the amendments is to introduce an exception to the measurement principle into the principle itself in the form of a rebuttable presumption based on which the carrying amount of the investment property measured based on the fair value model would be recovered through sale, and an entity would be required to apply the tax rate applicable to the sale of the underlying asset.

Companies are required to apply the aforementioned amendments at the latest from the beginning of the first annual period starting after the date the regulation comes into effect (third day subsequent to publication in the Official Journal of the European Union) or subsequently.

IFRS 13 establishes a single IFRS framework for fair value measurements and provides a complete guide on how to measure the fair value of financial and non-financial assets and liabilities. IFRS 13 applies when another IFRS requires or allows fair value measurements or requires additional information on fair value measurements.

The companies shall begin applying IFRS 13, at the latest, on the first day of the first financial year beginning on or after 1 January 2013.

 

Amendments to IFRS 7 “Financial instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities” and to IAS 32 “Financial instruments: Presentation - Offsetting Financial Assets and Financial Liabilities”

Regulation (EU) 1256/2012 of the Commission of 13 December 2012 was published in Official Journal L 360 of 29 December 2012, and adopts the Amendments to IFRS 7 “Financial instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities” and to IAS 32 “Financial instruments: Presentation - Offsetting Financial Assets and Financial Liabilities” (published by the IASB on 16 December 2011).

The amendments to IFRS 7 aim to require additional quantitative information to allow users to better compare and reconcile information generated by the application of IFRS and that generated by the application of US Generally Accepted Accounting Principles (GAAP).

Furthermore, the IASB amended IAS 32 in order to provide additional instructions to decrease inconsistencies in the practical application of the principle.

The companies shall begin applying the aforementioned amendments to IFRS 7 and IAS 32 on the first day of their first financial year which begins on or after 1 January 2013.

The additional amendments to IAS 32 shall apply, at the latest, on the first day of their first financial year which begins on or after 1 January 2014.

This Regulation also cancels paragraph 13 of IFRS 7, which should have taken place when the Amendments to IFRS 7 Financial instruments: Disclosures - Transfers of Financial Assets were adopted with Regulation (EU) no. 1205/2011 of the Commission of 22 November 2011. The provision in question must be applied beginning on 1 July 2011 in order to be effective. It must be applied retroactively to ensure legal certainty for the issuers concerned.

 

Exposure Drafts issued by the IASB
Exposure Draft 2012/2 “Improvements to IFRS: 2011-2013 Cycle”

On 20 November 2012 the IASB published Exposure Draft 2012/2 “Improvements to IFRS: 2011-2013 Cycle”. The amendments proposed in the document should be applied in financial statements for years beginning on or after 1 January 2014.

The Exposure Draft proposes amendments to the following principles:

  • IFRS 1 “First-time Adoption of International Financial Reporting Standards”.
  • IFRS 3 “Business Combinations”.
  • IFRS 13 “Fair Value Measurement”.
  • IAS 40 “Investment Properties”.

IFRS 1 “First-time Adoption of International Financial Reporting Standards”

It is clarified that, as an alternative to applying a Principle currently in force on the date of the first IAS/IFRS financial statements, the first-time adopter can opt for early application of the revised version of the same Principle (intended to replace the Principle in force).

This option is permitted when the new principle allows for early application. Furthermore, the same version of the principle must be applied for all periods presented in the first IAS/IFRS financial statements.

 

IFRS 3 “Business Combinations”

The proposed amendment has the purpose of: i) clarifying that the exclusion from the scope of application of IFRS 3 set forth in paragraph 2 a) includes joint arrangements pursuant to IFRS 11; ii) specifying that the exclusion from the scope of application refers exclusively to the financial statements of the joint operation or joint venture and not to accounting by those participating in the joint arrangement.

 

IFRS 13 “Fair Value Measurement”

In its current form, IFRS 13:52 (portfolio exception) limits the possibility of measuring fair value on the basis of net value to financial assets and financial liabilities included within the scope of application of IAS 39.

The proposed amendment clarifies that the possibility for fair value measurements to be made on a net basis also refers to contracts within the scope of IAS 39 (or IFRS 9) regardless of whether they satisfy the definition of financial assets and financial liabilities provided by IAS 32, such as commodity purchase and sale agreements that can be settled in cash for their net value.

 

IAS 40 “Investment Properties”

The proposed amendment clarifies that IFRS 3 and IAS 40 are not mutually exclusive and in order to determine if the purchase of investment property falls within the area of application of IFRS 3, reference must be made to the specific instructions provided by IFRS 3. Instead, to determine whether the purchase in question falls within the area of application of IAS 40, reference must be made to the specific instructions set forth in IAS 40. 

Comments to the Exposure Draft must be received by 18 February 2013.

 

Exposure Draft 2012/3 “Equity Method: Share of Other Net Asset Changes (Proposed amendments to IAS 28)”

On 22 November 2012, the IASB published Exposure Draft 2012/3 “Equity Method: Share of Other Net Asset Changes (Proposed amendments to IAS 28)”.

The aspects addressed in the document are described below:

Application of the equity method in the case of other changes in the shareholders' equity of the investee

The proposed amendment to IAS 28 (2011) specifies that changes in the shareholders' equity of an investee measured at equity, unlike those recognised in the income statement or in the statement of comprehensive income or generated by distributions of reserves received, must be accounted for, for the applicable portion, in the investee’s shareholders' equity.

Comments to the Exposure Draft must be received by 22 March 2013.

 

Exposure Draft 2012/4 “Clarification and Measurement: Limited Amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010))”

On 28 November 2012, the IASB published Exposure Draft 2012/4 “Clarification and

Measurement: Limited Amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010))”.

At present, the Group is analysing the standards and interpretations indicated and assessing whether their adoption will have a significant effect on the financial statements.