Thursday, 23rd October, 2014: IAASA, Ireland’s accounting enforcer, has published its annual Observations document highlighting key topics to be considered by those preparing, approving and auditing 2014 financial statements.
IAASA’s remit extends only to Irish companies trading on regulated markets. However, this Observations document should be of interest to a wider range of companies when preparing their 2014 year end financial statements.
Key topics covered by this Observations document include the following:
a) Measurement of recoverable amounts on cash generating units: Areas requiring careful examination are the determination of value in use calculations and the disclosure of recoverable amounts of cash generating units containing goodwill or intangible assets with indefinite useful lives. Close attention is needed in determining the disclosures to be provided by each significant cash generating unit rather than for all such units in aggregate.
b) Recognition, measurement and disclosures surrounding deferred tax assets: The judgements made regarding the assessment of the probability of future taxable profits being available against which unused tax losses may be recovered and the period of recovery warrant very close scrutiny.
c) Accounting for uncertain tax positions: The measurement and disclosure of uncertain tax positions require close attention in preparing 2014 financial statements.
d) Assessing control under IFRS 10 Consolidated Financial Statements: IFRS provides a single consolidation model that identifies control as the basis for consolidation. The IFRS 10 principle of control is more broadly defined than that applied under earlier financial reporting standards. Companies should carefully consider their judgements in assessing whether control exists under the IFRS 10 definition.
e) Alternative performance measures: IAASA will continue to engage with issuers in order to seek improvements in the use, presentation and disclosures surrounding alternative performance measures.
f) Messages for financial institutions: There are specific messages for financial institutions regarding the accounting aspects of the ECB/EBA Asset Quality Review, impairment provisioning and the level of disclosures in relation to forbearance measures granted to residential mortgage holders.