Accounting standards and interpretations issued by the IASB/IFRIC and endorsed by the European Commission
Regulation (EU) No. 1205/2011 issued by the European Commission on 22 November 2011 harmonised the amendments to IFRS 7 “Financial instruments: Disclosures –Transfers of Financial Assets”, which provide for the additional disclosure of financial instruments, with reference to transfers of financial assets, in order to describe the risks to which the company remains exposed through the transferred assets. The new provisions require, among other things, additional disclosure in the event that a company makes significant transfers of financial assets near the end of the financial year. The new provisions are effective as of financial years beginning on or after 1 July 2011 (2012 financial statements for Snam).
Accounting standards and interpretations issued by the IASB/IFRIC and not yet endorsed by the European Commission
On 12 November 2009, the IASB issued IFRS 9 “Financial Instruments” (subsequently “IFRS 9”) which amends the criteria for recognising and measuring financial assets and their respective classification on financial statements. In particular, the new provisions stipulate, among other things, a model for classifying and measuring financial assets based exclusively on the following categories: (i) assets measured at amortised cost; (ii) assets measured at fair value. The new provisions also provide that equity investments other than those in subsidiaries, jointly controlled entities or associates must be measured at fair value and posted to the income statement. In the event that such equity investments are not held for trading purposes, changes in fair value may be recognised on the statement of comprehensive income, maintaining on the income statement solely the effects associated with dividend distributions; the amounts recognised on the statement of comprehensive income are not posted to the income statement upon disposal of the equity investment. On 28 October 2010, the IASB supplemented the provisions of IFRS 9 by including criteria for recognising and measuring financial liabilities. In particular, the new provisions require, among other things, that if a financial liability is measured at fair value and posted to the income statement, the changes in fair value associated with changes in the issuer’s credit risk (i.e. own credit risk) are to be recognised in the statement of comprehensive income; this component is to be posted on the income statement to ensure symmetrical representation with other financial statement items associated with the liability, avoiding an accounting mismatch . The document “Mandatory effective date and transition disclosures”, issued by the IASB on 16 December 2011 postponed the entry into force of the provisions of IFRS 9 to the periods that began on, or after, 1 January 2015 (the prior provisions referred to 1 January 2013).
On 12 May 2011, the IASB published IFRS10, “Consolidated Financial Statements” (subsequently “IFRS 10”), together with the updated version of IAS 27, “Separate Financial Statements” (subsequently “IAS 27”), which set out, respectively, the principles to be adopted for the presentation and preparation of consolidated financial statements and individual financial statements. IFRS 10 provides, inter alia, a new definition of control to be applied uniformly to all companies (including holding companies). According to this definition, a company controls an associate when the company is exposed, or has rights, to variable returns from its involvement with the associate and has the ability to affect those returns through its power over the associate. The standard lists the factors to be considered when assessing whether control exists, which include, inter alia, potential rights, protective rights, whether the investor acts as an agent or franchising arrangements. Furthermore, the new provisions also recognise the possibility of exercising control over an associate even without holding the majority of voting rights due to a dispersed shareholder base or the passive attitude of other investors. The provisions of IFRS 10 and the new version of IAS 27 will take effect from financial years starting on or after 1 January 2013.
On 12 May 2011, the IASB published IFRS 11, “Joint Arrangements” (subsequently “IFRS 11”), and the updated version of IAS 28, “Investments in Associates and Joint Ventures” (subsequently “IAS 28”). IFRS 11 identifies two types of arrangement based on the rights and obligations for participants: the joint operations and the joint ventures, and also sets out the accounting treatment to be adopted for their recognition on financial statements. For the recognition of joint ventures, the new provisions indicate the equity method as the only permitted treatment, removing the possibility of using proportional consolidation. The updated version of IAS 28 defines, inter alia, the accounting treatment to be adopted in the event of the total or partial divestment of a holding in an associate or joint venture. The provisions of IFRS 11 and the new version of IAS 28 will take effect from financial years starting on or after 1 January 2013.
On 12 May 2011, the IASB issued IFRS 12, “Disclosure of Interests in Other Entities” (subsequently “IFRS 12”), which indicates the disclosures required in the consolidated financial statements concerning subsidiaries, joint ventures and associates, in addition to structured entities not included within the scope of consolidation. The provisions of IFRS 12 will be in effect starting from the periods beginning on or after 1 January 2013.
On 12 May 2011, the IASB published IFRS 13, “Fair Value Measurement” (subsequently “IFRS 13”), relating to the definition of a single framework for fair value measurement, required or granted by other IFRSs, and financial disclosures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants. The provisions of IFRS 13 will be in effect starting from the periods beginning on or after 1 January 2013.
On 16 June 2011, the IASB issued Amendments to IAS 1, “Presentation of Items of Other Comprehensive Income”, which introduce, inter alia, the obligation of consolidating components of comprehensive income based on the possibility of their reclassification in the income statement according to the reference IFRSs (reclassification adjustments). The provisions will take effect from financial years starting on or after 1 July 2012 (2013 for Snam).
On 16 June 2011, the IASB issued the new version of IAS 19 “Employee Benefits” which introduce, inter alia: (i) the obligation to recognise actuarial gains and losses in the statement of comprehensive income, removing the possibility of adopting the corridor method. Actuarial gains and losses recognised in the statement of comprehensive income are not subsequently posted to the income statement; and (ii) the removal of the separate disclosure of cost components relating to defined-benefit liabilities, represented by the anticipated asset yield servicing the plan and the interest cost, and the replacement with the aggregate, “net interest”. This aggregate is calculated by applying the discount rate defined for liabilities to the liabilities, net of the assets servicing the plan. The new provisions also require additional disclosures to be provided, particularly with reference to defined-benefit plans. The provisions will take effect from financial years starting on or after 1 January 2013.
On 16 December 2011, the IASB issued Amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities” (subsequently the “Amendments to IAS 32”) and Amendments to IFRS 7 “Disclosures – Offsetting Financial Assets and Financial Liabilities” (subsequently “Amendments to IFRS 7”), which provide criteria to be adopted for offsetting financial assets and liabilities and the relative reporting obligations, respectively. More specifically, the Amendments to IAS 32 set out that: (i) for the purposes of offsetting, the right to offset must be legal in each circumstance or be within normal conduct of operations or in the event of insolvency, default or bankruptcy of one of the contracting parties; and (ii) on determining certain conditions, the simultaneous settlement of financial assets and liabilities on a gross basis with the consequent removal or significant reduction of credit and liquidity risk, can be considered equivalent to settlement on a net basis. The provisions of the Amendments to IAS 32 are in effect starting from periods beginning on or after 1 January 2014. The Amendments to IFRS 7 relating to financial reporting are in effect from period beginning on or after 1 January 2013.
At present, Snam is analysing the standards mentioned and is assessing whether their adoption will have a significant impact on the financial statements.