International Financial Reporting Standards Foundation


ANNUAL REPORT

For the year ended

31 December 2011


Report of the independent auditors


We have audited the financial statements of the International Financial Reporting Standards Foundation for the year ended 31 December 2011 which comprise the statement of comprehensive income, the statement of changes in equity, the statement of financial position, the statement of cash flows and the related notes.


The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards (IFRSs). This report is made solely to the Foundation’s Trustees, as a body, in accordance with our engagement letter to you and for no other purpose. Our audit work has been undertaken so that we might state to the Foundation’s Trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Foundation and the Foundation’s Trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Trustees and auditors

The Foundation’s Trustees are responsible for the preparation of the financial statements in accordance with the Foundation’s constitution and International Financial Reporting Standards. Our responsibility is to audit and express an opinion on the financial statements in accordance with the Foundation’s constitution and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APBs website at www.frc.org.uk/apb/scope/private.cfm .

Opinion on financial statements

In our opinion the financial statements:

BDO LLP

Chartered Accountants, London

13 April 2012


BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).


Statement of comprehensive income


2011

2010

Notes

£'000

£'000

YEAR ENDED 31 DECEMBER 2011

2(m)

Restated

INCOME

Standard-setting and related activities

Contributions

3

20,562

16,640

Other income

37

58

20,599

16,698

Publications and related activities

Revenue

4(a)

5,522

5,804

26,121

22,502

EXPENSES

Standard-setting and related activities

Salaries, wages and benefits

5

(16,253)

(15,089)

Trustees fees

6

(505)

(639)

Cost of meetings, associated travel and accommodation

7

(2,542)

(2,629)

Occupancy expenses

8(a)

(1,335)

(1,319)

Other costs

9

(1,298)

(1,221)

Provision for HMRC tax settlement

13

(460)

-

(22,393)

(20,897)

Publications and related activities

Direct cost of publications and related activities

4(b)

(3,323)

(3,246)

(25,716)

(24,143)

OPERATING INCOME (LOSS)

405

(1,641)

Finance income

10(a)

577

866

Finance costs

10(a)

(274)

(1,236)

INCOME (LOSS) BEFORE TAX

708

(2,011)

Income tax expense

11

-

(13)

COMPREHENSIVE INCOME (LOSS) FOR THE YEAR

708

(2,024)

Statement of changes in equity

YEAR END 31 DECEMBER 2011

        

Retained surplus at beginning of year

7,707

9,731

Comprehensive income (loss) for the year

708

(2,024)

RETAINED SURPLUS AT END OF YEAR

8,415

7,707


The accompanying notes form part of these financial statements.


Statement of financial position


2011

2010

AS AT 31 DECEMBER 2011

Notes

£'000

£'000

ASSETS

Current assets

Cash and cash equivalents

10(b)

6,997

2,360

Accrued interest receivable on bonds

146

162

Contributions receivable

3

1,808

1,150

Trade and other receivables

10(d)

963

934

Prepaid expenses

567

585

Inventories

12

249

293

Bonds

10(c)

3,257

1,199

Forward currency contracts at fair value

10(e)

112

-

14,099

6,683

Non-current assets

Bonds

10(c)

1,395

4,784

Forward currency contracts at fair value

10(e)

128

-

Leasehold improvements, furniture and equipment

8(b)

518

539

2,041

5,323

TOTAL ASSETS

16,140

12,006

LIABILITIES

Current liabilities

Trade and other payables

813

948

Accrued expenses

13

1,860

1,260

Contributions received in advance

3

2,991

-

Rent incentive

82

82

Publications revenue received in advance

728

651

Forward currency contracts at fair value

10(e)

169

241

6,643

3,182

Non-current liabilities

Forward currency contracts at fair value

10(e)

195

154

Reinstatement provision

8(c)

413

413

Rent incentive

474

550

1,082

1,117

TOTAL LIABILITIES

7,725

4,299

NET ASSETS

8,415

7,707


The accompanying notes form part of these financial statements.

The financial statements were approved by the Trustees of the IFRS Foundation on 13 April 2012 and authorised for issue on 13 April 2012.


Michel Prada

Chair of the Trustees

Statement of cash flows


2011

2010

YEAR ENDED 31 DECEMBER 2011

Notes

£'000

£'000

£'000

£'000

OPERATING ACTIVITIES

Cash received

Contributions

22,895

16,509

Interest

252

317

Publications and related activities

5,977

5,524

Income taxes received

-

46

Other receipts

32

53

Cash paid

Salaries, wages and benefits

(15,685)

(15,111)

Publications direct costs

(3,226)

(3,412)

Trustees fees

(523)

(494)

Foreign exchange settlements

(109)

(639)

Other expenses

(6,023)

(4,860)

NET CASH FROM OPERATING ACTIVITIES

3,590

(2,067)

INVESTING ACTIVITIES

Matured bonds receipts

1,191

1,504

Purchase of leasehold improvements, furniture and equipment

(189)

(202)

NET CASH INCREASES FROM INVESTING ACTIVITIES

1,002

1,302

Effects of exchange rate changes on cash and cash equivalents

45

2

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

4,637

(763)

Cash and cash equivalents at the beginning of the period

2,360

3,123

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

10(b)

6,997

2,360


The accompanying notes form part of these financial statements.

Notes to the financial statements


1.Legal form, objectives and restructuring

Incorporated in the State of Delaware, USA, on 6 February 2001, the International Financial Reporting Standards Foundation (IFRS Foundation) is a not-for-profit charitable organisation with its primary operations based in London.


The objectives of the IFRS Foundation are:

(a) to develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles. These standards require high quality, transparent and comparable information in financial statements and other financial reporting to help investors, other participants in the world’s capital markets and other users of financial information make economic decisions.


(b) to promote the use and rigorous application of those standards;


(c) in fulfilling the objectives associated with (a) and (b) to take account of, as appropriate, the needs of a range of sizes and types of entities in diverse economic settings;


(d) to promote and facilitate adoption of International Financial Reporting Standards (IFRSs), being the standards and interpretations issued by the International Accounting Standards Board (IASB), through the convergence of national accounting standards and IFRSs.


The governance of the IFRS Foundation rests primarily with its Trustees, who provide oversight of the IASB and its related bodies, the IFRS Interpretations Committee and the IFRS Advisory Council.


As a result of a constitutional change agreed in January 2009, a Monitoring Board comprised of public capital market authorities provides a formal link between the Trustees and public authorities.


In addition to their general oversight functions, the Trustees appoint the members of the IASB and related bodies, and are responsible for the financial and legal arrangements of the organisation. The IASB has the responsibility for setting accounting standards in accordance with its mandate and the due process set out in the IFRS Foundation's Constitution and the IASBs Due Process Handbook.

2. Accounting Policies

(a) Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards, on the historical cost basis, as modified by the revaluation of some financial assets and liabilities, including derivative financial instruments, at fair value through profit or loss. The policies have been consistently applied to all years presented, unless otherwise stated.


For the purposes of organising the financial information the IFRS Foundation has categorised income and expenses into two categories. Standardsetting and related activities includes all activities associated with standardsetting and support functions required to achieve the organisations objectives. Publications and related activities include information related to the sales of print and electronic IFRS materials, educational activities, and the development and maintenance of an IFRS Extensible Business Reporting Language (XBRL) taxonomy.


(b) Contributions

Contributions are recognised as revenue in the year designated by the contributor. Provided they can be reliably measured, donated services that would normally have otherwise been purchased are recognised in the financial statements based on their estimated fair value. Where donated services would not be purchased or cannot be measured with sufficient reliability, and are not recognised in the financial statements but disclosure of the nature and scale of the services received would help the user gain a better understanding of activities, disclosures are in the accompanying information.


(c) Publications and related revenue

Subscriptions to the IFRS Foundation's comprehensive package and eIFRS products are recognised as revenue on a time-apportioned basis over the period covered by the subscriptions. Royalties are recognised as revenue on an accrual basis. Publications direct cost of sales is comprised of printing, salaries, promotion, computer and various related overhead costs.


(d) Inventories

Inventories of current publications are valued at the lower of net realisable value and the cost of printing the publications, on a first-in-first-out basis. Inventories that have been superseded by new editions are written off.


(e) Depreciation

Leasehold improvements and furniture and equipment are initially measured at cost, and depreciated on a straight-line basis (in the case of leasehold improvements over the period of the lease). All other assets are depreciated over 5 years, except computer equipment, which is depreciated over 3 years.


(f) Foreign currency translation

The IFRS Foundation's presentational and functional currency is sterling. Transactions denominated in currencies other than sterling are recorded at the exchange rate at the date of the transaction. Differences in exchange rates are recognised in the Statement of Comprehensive Income. Monetary assets and liabilities are translated into sterling at the exchange rate at the end of the reporting period.


(g) Operating leases - office accommodation

The IFRS Foundation's lease of office space is classified and accounted for as an operating lease as a significant portion of the risks and rewards of ownership are retained by the lessor. Lease payments for office space are recognised as an expense on a straight-line basis over the non-cancellable term of the lease.


The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.


(h) Financial assets

Regular purchases and sales of financial assets are recognised on the trade date, the date on which the IFRS Foundation is committed to purchase or sell the asset. Investments are recognised initially at fair value plus transaction costs for those financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the IFRS Foundation has transferred substantially all risks and rewards of ownership.


The IFRS Foundation classifies financial assets as subsequently measured at either amortised cost or fair value based on its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. All financial assets, except for bonds and derivatives, are carried at amortised cost as the objective is to hold these assets in order to collect contractual cash flows and those cash flows are solely principal and interest. Investments in bonds are classified as measured at fair value through profit or loss, and the corresponding gains or losses are included within profit (loss) before tax. Bond holdings are discussed more fully in note 10.


(i) Derivative financial assets and liabilities

The IFRS Foundation uses contributions, primarily in US dollars and euro, to fund a portion of sterling obligations arising from its activities. In accordance with its financial risk management policy, the IFRS Foundation does not hold or issue derivative financial instruments for trading purposes; the forward foreign currency hedges are entered into to provide certainty regarding funding to protect against currency fluctuation on future cash flows that are designated in US dollars and euro. Derivative financial instruments are recognised and subsequently measured at fair value. The corresponding gains or losses are included within profit (loss) before tax.


(j) Provisions and contingencies

Provisions are recognised when the following three conditions are metthe IFRS Foundation has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.


The amount of the provision represents the best estimate of the expenditure required to settle the obligation at the end of the reporting period. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.


(k) Critical accounting estimates and judgements

The IFRS Foundation makes estimates and assumptions regarding the future. In the future, actual experience may differ from those estimates and assumptions. The Trustees consider there are none that are material to the preparation of the financial statements.


(l) New standards and interpretations issued

The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period on 1 January 2011. The IFRS Foundation has concluded that there are no relevant standards or interpretations in issue not yet adopted.


(m) Reclassification of items in the financial statements

The IFRS Foundation receives interest income on bonds and cash held at bank. Previously interest income was included within income from standard-setting and related activities and the gains and loss on the fair value of the related financial instruments were presented net. In order to give a clearer view of operating performance the presentation has been changed and interest income is now shown within finance income, with interest on bonds included within the fair value change on these financial instruments, and gains and losses on the fair value of the related financial instruments are presented gross, showing finance income and finance costs separately.


The effect of this re-presentation is a decrease of 2010 interest income previously recognised in income from standard-setting and related activities of £271,000, of which £258,000 related to bond interest income, and a corresponding increase to net finance costs. Note 10(a) shows the changes arising from the presentation of gains and losses on the fair value of the financial instruments as gross.


As the change has no effect on the statement of financial position, the earliest comparative period has not been presented here.

3. Contributions

Since 2006, the Trustees have sought to establish national financing regimes, proportionate to a countrys relative GDP, that establish a levy on companies or provide an element of publicly supported financing. Currently, the majority of the IFRS Foundation's finances is based on such regimes, and this approach has been particularly successful in Asia-Oceania and Europe. However, voluntary systems remain in place in some jurisdictions; some countries contribute less than their fair share or not at all. The Trustees are actively working to achieve further contributions.


Through the national and other financing arrangements, the IFRS Foundation received funds of £20,562,000 in contributions (2010: £16,640,000).


Contributions received before 31 December 2011, amounting to £2,991,000 (2010:£ nil), which were specifically designated by the contributors for use by the IFRS Foundation in subsequent years, were recognised as current and non-current liabilities, depending upon the designation by the contributor. Contributions received after 31 December 2011, amounting to a total of £1,808,000 (2010: £1,150,000), specifically designated by the contributors for use by the IFRS Foundation in 2011, were recognised as revenues at the end of 2011 and included as contributions receivable.


Using the IFRS Foundation's website, the Trustees are informing interested parties of their progress on establishing broad-based funding regimes throughout the world.

4. Publications and related activities

(a) Publications and related revenue

2011

2010

£'000

£'000

Sales of subscriptions
and publications

3,260

3,641

Royalties and permission fees

2,031

1,862

Other related activities

231

301

TOTAL

5,522

5,804

(b) Publications and related costs

2011

2010

£'000

$'000

Staff/employee related costs

1,666

1,569

Cost of goods sold

577

514

Depreciation

39

28

Other costs

1,041

1,135

TOTAL

3,323

3,246

5. Salaries, wages and benefits

The IFRS Foundation had an average of 125 employees (including IASB members and interns) during 2011 (2010: 119).


2011

2010

£'000

£'000

£'000

£'000

Staff costs, including IASB members salaries and other costs

15,592

14,360

Contributions to defined contribution pension plans

626

693

Other costs

35

36

16,253

15,089

Staff costs included in publications direct expenses (see note 4)

Salaries and other costs

1,538

1,463

Contributions to defined contribution pension plans

91

91

Other costs

37

15

1,666

1,569

Total

17,919

16,658


The Trustees Human Capital Committee is responsible for reviewing, bench-marking and making recommendations on salary and benefit levels. These recommendations are reviewed and approved annually by the Trustees as a whole. Effective April 2011, the Trustees approved annual remuneration levels resulting in the following gross salaries: £527,200 for the IASB Chair (2010: £490,600); £464,900 for the IASB Vice Chair (2010: £ nil), and; an average of £435,200 for other full-time members (2010: £426,600).

6. Trustees' fees

The Trustees are remunerated by annual and meeting fees and are reimbursed for the expenses of their travel on IFRS Foundation business; there were 20 Trustees in 2011 (2010: 21). In 2011 the fee for the Acting Co-Chairs and Vice Chairs of the Trustees was £100,000 (2010: £137,500 for the Chair of the Trustees). In 2010, the Chair waived fees of £37,500 and it was included as a contribution. The annual fee for the other Trustees was £12,500 (2010: £12,500). Trustees received an attendance fee of £1,000 (2010: £1,000/) for each formal meeting.

7. Cost of meetings, associated travel and accommodation

2011

2010

MEETING TYPE

£'000

£'000

IASB

308

407

Trustees

536

536

IFRS Interpretations Committee and IFRS Advisory Council

409

401

Financial Crisis Advisory Group

-

13

Other advisory meetings

636

544

Travel for other consultation and liaison

653

728

TOTAL

2,542

2,629

8. Occupancy expenses and other assets

(a) Occupancy expenses

2011

2010

£'000

000

Rent

702

696

Service charges

208

205

Rates, insurance and energy

456

439

Depreciation

210

185

Other

23

33

1,599

1,558

Less amounts included in publications costs

(264)

(239)

TOTAL

1,335

1,319


(b) Leasehold improvements, furniture and equipment

2011

Leasehold
improvements

Furniture,

equipment

Total

£'000

£'000

£'000

COST

At 1 January 2011

1,028

1,143

2,171

Additions

45

144

189

Disposals/retirements

-

(241)

(241)

At 31 December 2011

1,073

1,046

2,119

ACCUMULATED DEPRECIATION

At 1 January 2011

777

855

1,632

Charge for the year

36

174

210

Disposals/retirements

-

(241)

(241)

At 31 December 2011

813

788

1,601

NET CARRYING AMOUNT AT 31 DECEMBER 2011

260

258

518

 

NET CARRYING AMOUNT AT 31 DECEMBER 2010

251

288

539


At the reporting date the IFRS Foundation had no capital commitments (2010: £ nil).


(c) Reinstatement provision


The IFRS Foundation has made a provision for reinstatement which covers the cost of reinstating the building when the lease expires in September 2018. The estimated amount and timing of any outflow are subject to options to extend the lease. The corresponding property asset is amortised over the period of the lease.


(d) Lease commitments


Lease commitments relate to operating leases for office space with lease terms expiring in September 2018 in London and 2022 in Tokyo, and with options to extend for a further 10 years in London. All operating lease contracts contain market review clauses. Payments on the leases, excluding service charges and property rates, are as follows:


2011

2010

PAYMENTS

£'000

£'000

Within one year

798

778

In two to five years

3,437

3,113

More than five years

1,827

2,138

TOTAL

6,062

6,029


The IFRS Foundation has entered a preliminary agreement for a 10 year lease of office space in Tokyo commencing October 2012. Since 2001 the IFRS Foundation has rented office space at 610 Fifth Avenue, New York, NY, USA. The only obligation incurred in this regard relates to payment of on-going rent and a provision of 90 days notice of termination.


9. Other Costs

2011

2010

£'000

£'000

Communication and technology

528

445

Audit, legal and taxation fees

211

131

External relations

116

209

Recruitment

124

193

Other

319

243

TOTAL

1,298

1,221

10. Financial instruments

The IFRS Foundation receives contributions in a number of currencies but its expenditures are largely sterling based. This exposes the organisation to financial risks. The IFRS Foundation also faces risks associated with its use of financial instruments. This note describes the organisations objectives, policies and processes for managing those risks and the methods used to measure them.


There have been no substantive changes in the organisations exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods.


Principal financial instruments


The principal financial instruments used by the IFRS Foundation, from which financial instrument risk arises, are as follows:

  • Bonds
  • Derivative instruments - forward currency contracts
  • Trade and other receivables
  • Cash and cash equivalents
  • Trade and other payables.

(a) Finance income and finance costs

2011

2010

FINANCE INCOME

£'000

£'000

Interest income - deposits

9

13

Fair value change on forward foreign exchange contracts

481

651

Fair value change on bonds

87

202

TOTAL

577

866


2011

2010

FINANCE COSTS

£'000

£'000

Fair value change on forward foreign exchange contracts

(210)

(599)

Exchange losses

(64)

(637)

TOTAL

(274)

(1,236)


(b) Cash and cash equivalents

Liquidity risk associated with cash and bond holdings

The IFRS Foundation manages its working capital to ensure sufficient cash resources are maintained to meet short-term liabilities. The IFRS Foundation has no bank borrowings.


Cash holdings: Management seeks to keep an amount in cash equal to or exceeding the upcoming quarter's expenditure. Cash is held either on current or on short-term deposits at floating rates of interest determined by the relevant bank's prevailing base rate. Part of the cash at bank is held in euro and US dollar accounts.


(c) Bonds

Bond holdings: The Trustees have invested surplus funds of the IFRS Foundation in sterling-denominated, fixed rate notes of the UK government and international organisations with an AAA rating.


The IFRS Foundation manages and receives information on its investments in bonds on a fair value basis. Information is provided on that basis to the Trustees and key management personnel. Bonds are carried at fair value through profit or loss, based on quoted prices in active markets (described as level 1 by IFRS 7).


The maturity and fair value of the bonds are as follows:

Nominal value

Nominal value

Fair value

Fair value

2011

2010

2011

2010

£'000

£'000

£'000

£'000

less than one year

3,232

1,191

3,257

1,199

Total current

3,232

1,191

3,257

1,199

more than one year and less than two years

703

3,259

725

3,385

more than two years and less than three years

642

704

670

725

more than three and less than four years

-

658

-

674

more than four and less than five years

-

-

-

-

Total non-current

1,345

4,621

1,395

4,784

TOTAL

4,577

5,812

4,652

5,983


Bonds provide a yield in the range of 0.4% to 2.2% per year.


(d) Trade and other receivables

In addition to its financing programme, the IFRS Foundation supplements its funding through publications and related activities. For publications and subscriptions sales the IFRS Foundation does not offer credit. For licensing and royalty arrangements some credit risk arises. However the organisation works largely with major publishers and accounting bodies, with whom it has long-standing relationships, and therefore the IFRS Foundation does not credit check these customers before it enters into business with them.


The IFRS Foundation has no significant exposure to large or key customers: it has only one customer that exceeds 3 per cent of the IFRS Foundation's revenues, amounting to £323,000 or 6 per cent.


2011

2010

£'000

£'000

Not yet due

918

895

Past due but not impaired

45

39

TOTAL

963

934

Where past due accounts are still unpaid six months or more after invoice date and the IFRS Foundation considers the amount impaired it provides for the amount as a bad debt provision in the financial statements. At 31 December 2011 the amount provided for was £19,000 (2010:£13,000).


(e) Currency risk

The IFRS Foundation's expenses arise largely in sterling, whereas the organisation receives funding and future financing commitments in US dollars and euros. The Trustees have implemented a strategy to mitigate the foreign exchange fluctuations and timing risks connected with the various funding regimes. The IFRS Foundation generally forward sells approximately 90 per cent of its net US dollar contributions and 50 per cent of its net euro contributions to fix a sterling equivalent. Foreign currency is sold forward on a two year rolling basis.


Details of these forward contracts are set out in the table below.


Forward contracts US dollar

2011

2010

Buy

Sell

Weighted

Buy

Sell

Weighted

£'000

$'000

Average

Rate

£'000

$'000

Average

Rate

2011

-

-

-

7,300

11,790

1.615

2012

7,009

11,150

1.591

7,009

11,150

1.591

2013

8,502

13,500

1.588

-

-

-

TOTAL

15,511

24,650

1.589

14,309

22,940

1.603


Forward contracts euro

2011

2010

Buy

Sell

Weighted

Buy

Sell

Weighted

£'000

€'000

Average

Rate

£'000

€'000

Average

Rate

2012

2,864

3,300

1.152

-

-

-

2013

2,870

3,300

1.150

-

-

-

TOTAL

5,734

6,600

1.151

-

-

-


The ranges of rates for the US dollar are 1.5635 1.6175 (2010: 1.5819 1.6348). The ranges of rates for the euro are 1.1493 1.1530.


The fair values of these contracts, based on quoted prices in active markets (described as level 1 by IFRS 7), are reported in the Statement of Financial Position.


All non-current forward contracts expire in 2013 (2010: expire in 2012).


(f) Foreign Currency Sensitivity

The following table shows the sensitivity of the reported results to a potential 10 per cent fluctuation in year-end exchange rates.


Forward Sales

£ Weakens 10%

£ Strengthens 10%

'000

£'000

£'000

US dollar

24,650

Profit and loss effect (before tax)

(1,764)

1,443

Euro

6,600

Profit and loss effect (before tax)

(611)

499

TOTAL

(2,375)

1,942


The IFRS Foundation holds sufficient US dollar funds in anticipation of US dollar liabilities. Over the year the US dollar exchange rate reached a high of 1.65 to sterling, whilst the low point was 1.53 to sterling.


The following table shows the sensitivity of the reported results to a potential 10 per cent fluctuation in year-end exchange rates.


Cash Holding

£ Weakens 10%

£ Strengthens 10%

'000

£'000

£'000

US dollar

3,021

Profit and loss effect (before tax)

218

(178)

Euro

1,253

Profit and loss effect (before tax)

116

(95)

TOTAL

334

(273)

11. Taxation

For US tax purposes, the IFRS Foundation is classified as a not-for-profit, tax-exempt organisation.


In 2006 the IFRS Foundation reached an agreement with the UK authorities regarding the status of taxation on its publications and related revenues. For 2011 the taxation expense is calculated on this basis, and is estimated to be £nil (2010: £13,000). On the basis of activity for 2011 and from previous years, at the end of 2011 the IFRS Foundation is carrying forward a loss for UK tax purposes of £2,728,000 (2010: £1,742,000). Consistent with IAS 12 Income Taxes, the IFRS Foundation does not recognise this loss as a deferred tax asset, because of the uncertainty of being able to utilise these losses in the future.

12. Inventories

Inventory of books amount to £249,000 (2010: £293,000).


13. Provision for HMRC Tax settlement

In May 2011 the IFRS Foundation began a review by the UK tax authority (HMRC) of records for inward bound expatriate staff and general compliance with employment tax i.e. income tax and national insurance obligations. As a result, discussions are progressing and a final liability has not been assessed by the HMRC. The HMRC requested and the IFRS Foundation agreed to make a £24,000 dedicated payment on account, on a without prejudice basis, pending final resolution and settlement. An estimated total cost of £460,000 has been provided and the net liability of £436,000 is included in accrued expenses.


14. Approval of financial statements

These financial statements were approved by the Trustees of the IFRS Foundation on 13 April 2012 and authorised for issue on 13 April 2012, and at that date there were no significant events after the reporting period.



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