November

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EU Directives amended to allow IAS 39 compliance

16 Nov 2001

The Parliament and Council of the European Union have amended the EU Directives to permit European companies to comply with IAS 39 and the Directives.

Click to Download the Amended Directives (PDF 118k). Under the revised directives, originated loans, held-to-maturity investments, and non-derivative/non-trading financial liabilities must be carried at amortised cost. We maintain a comprehensive European Resource Page documenting recent IAS-related events in Europe. We have just added to that page links to the Lists of Members of the new European Securities Committee and European Securities Regulators Committee.

 

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IFAC adopts new auditor independence rules

16 Nov 2001

The IFAC Board has approved new independence rules for accountants performing assurance engagements, effective in 2004. IFAC expects to post the new guidance on its Website at the end of November.

IFAC comprises 153 professional accountancy bodies in 113 countries.
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Preliminary summary of decisions at SIC meeting

15 Nov 2001

At its meeting in London 12-13 November, SIC reached the following decisions: D27 (Lease/Leaseback): Agreed to delete paragraph 9 dealing with the classification of fees and resubmit to IASB D28 (Business Combination Measurement): Agreed to resubmit to IASB and keep "date of change of control" rather than "exchange date".

Staff will discuss individually with board members to try to convince them that IASB should reconsider its tentative decision at its October meeting to measure consideration at "exchange date".
  • D29 (Service Concessions): Agreed to some minor editorial changes.
  • D30 (Presentation Currency): Agreed to the consensus basically as drafted. There was considerable debate about using end-of-period rates vs. average rates. There was no debate about restatement in the situation of hyperinflation.
  • D31 (Barter Transactions): Agreed to the consensus basically as drafted. Agreed to keep "occurs frequently" but confirmed deletion of "expected to continue to occur".
  • D32 (Website Costs): Agreed to consensus but reverted back to the original draft instead of applying it based on an incremental, marginal approach.
  • D33 (Potential Voting Rights, or PVR): Agreed to consensus as drafted. Agreed to clarify that PVR is one of many considerations in assessing whether control exists. Agreed that unless the PVR is considered in substance a financing transaction (for instance, A sells 20% of its investment in B to C and enters into a forward to buy it back at a fixed price, in which case the amount under the forward is part of A's ownership in consolidation, not minority interest), the forward or option while it is outstanding is a derivative under IAS 39.
  • D34 (Puttable Instruments): Confirmed the consensus but agreed to delay for one year the effective date for certain enterprises
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    Timetable is emerging for IASB's agenda projects

    15 Nov 2001

    Based on comments made at the October meetings of the Board, Advisory Council, and Trustees, here is our assessment of the IASB's timetable for its nine agenda projects: TIMETABLE FOR IASB'S AGENDA PROJECTS Preface to IFRS Exposure Draft issued 8 Nov.

    2001; comments due 15 Feb. 2002; IASB aims to publish a final Preface in the second half of 2002.

    Improvements Projects

    IASB aims to issue approximately 12 Exposure Drafts in the first half of 2002 (separate Exposure Drafts for revisions to each IAS).

    First-Time Application of IFRS

    IASB aims to issue an Exposure Draft in the first half of 2002.

    Business Combinations

    IASB aims to issue an Exposure Draft of proposed revisions to IAS 22 in the first half of 2002.

    Share-Based Payment

    IASB will not discuss this project at its next two meetings, suggesting that an Exposure Draft is not likely until the second half of 2002.

    Disclosure and Presentation of Activities in Financial Institutions

    IASB may issue an Exposure Draft some time during 2002.

    IAS 39 Amendments

    IASB may issue an Exposure Draft some time during 2002.

    Performance Reporting

    IASB will discuss a Draft Statement of Principles in 2002 and may issue that document for comment as a pre-Exposure Draft discussion document.

    Insurance Contracts

    IASB will discuss a Draft Statement of Principles in 2002, but whether it will issue that document for comment or publish an Exposure Draft is undecided.

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    Decision expected on SEC Concept Release early in 2002

    14 Nov 2001

    Speaking in New York on 12 November at the Current Financial Reporting Issues Conference organised by Financial Executives International, John Morrissey, Deputy Chief Accountant of the US SEC, stated that the SEC's review of IAS for filing in the US will be a "hot topic" at the SEC during 2002.

    In February 2000, the SEC issued a Concept Release regarding the suitability of IAS for financial statements filed with the Commission.

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    Agenda project pages updated

    13 Nov 2001

    We have updated our agenda project pages for the following projects to reflect discussion at the Board's October meeting: Business Combinations Improvements Project Performance Reporting Share-Based Payments SIC D27. .

    We have updated our agenda project pages for the following projects to reflect discussion at the Board's October meeting:

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    DTT comments on SIC Draft Interpretations D33 and D34

    11 Nov 2001

    We are in general agreement with both proposals but have specific concerns on each.

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    Key provisions of Preface exposure draft

    09 Nov 2001

    We have posted a summary of the key provisions of the Proposed Preface to IFRS.

     

    Key provisions of the proposed Preface

    We have maintained these proposals here for historical interest. Please note that these proposals differ in a few respects from the IASB's conclusions in its final Preface to IFRS.

    • IASB Standards will be known as International Financial Reporting Standards (IFRS).
    • IFRS will include IAS issued by IASC from 1973-2000.
    • IFRS will apply to the general purpose financial statements and other financial reporting of all profit-oriented entities regardless of their legal form (corporate, mutual, cooperative, etc.).
    • Other financial reporting includes information provided outside financial statements that assists in the interpretation of a complete set of financial statements or improves users' ability to make efficient economic decisions.
    • IFRS will apply to individual company and consolidated financial statements.
    • A complete set of financial statements includes a balance sheet, an income statement, a statement showing either all changes in equity or changes in equity other than those arising from investments by and distributions to owners, a cash flow statement, and accounting policies and explanatory notes.
    • If an IFRS allows both a 'benchmark' and an 'allowed alternative' treatment, financial statements may be described as conforming to IFRS whichever treatment is followed.
    • IAS issued by IASC distinguished between main principles (printed in bold typeface) and explanation of the main principles (set in plain typeface). IFRS issued by IASB will not make such a distinction.
    • The provision of IAS 1 paragraph 11 that conformity with IAS requires compliance with every applicable IAS and Interpretation requires compliance with all IFRS as well.
    • Due process steps for a Standard will normally include (* means required by IASB Constitution):
      • Staff work to identify and study the issues and existing national standards and practices
      • IASB consults with SAC*
      • IASB forms an advisory group
      • IASB publishes a discussion document for comment
      • IASB considers comments received on the discussion document
      • IASB publishes an exposure draft with at least 8 affirmative votes* (ED will include dissenting opinions and basis for conclusions)
      • IASB considers comments received on the exposure draft
      • IASB considers the desirability of holding a public hearing and of conducting field tests
      • IASB approves the final Standard with at least 8 affirmative votes* (the Standard will include dissenting opinions and basis for conclusions)
    • Interpretations of IFRS will be developed by the International Financial Reporting Interpretations Committee (IFRIC) for approval by IASB
    • Due process steps for an Interpretation will normally include (* means required by IASB Constitution):
      • Staff work to identify and study the issues and existing national standards and practices
      • IFRIC studies national standards and practices
      • IFRIC publishes a draft Interpretation for comment if no more than 3 IFRIC members have voted against the proposal*
      • IFRIC considers comments received on the draft Interpretation within a reasonable period of time
      • IFRIC approves the final Interpretation if no more than 3 IFRIC members have voted against the proposal* and submits it to IASB
      • IASB approves the final Interpretation by at least 8 affirmative votes of IASB*
    • IASB and IFRIC meetings will be open to public observation
    • Each IFRS and Interpretation will set out its own effective date and transition provisions
    • English is the official language of IASB discussion documents, exposure drafts, IFRS, and Interpretations. IASB may approve translations if the process assures the quality of the translation, and IASB may license other translations.
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    IASB invites comments on revised Preface

    08 Nov 2001

    IASB is seeking comments on an exposure draft of the Preface to International Financial Reporting Standards.

    The Preface to IFRS will replace the existing Preface to IAS, which was last revised in 1982 and reflects the structure and procedures of the former IASC. IASB has posted the exposure draft on its website. Click for: Comment deadline is 15 February 2002. IASB is specifically seeking views on:
    • the proposed scope of IFRSs, which is limited to profit-oriented entities
    • its proposal to discontinue the the 'black letter' distinction for matters of principle
    • whether the due process described in the Preface is appropriate
    • whether there are additional matters that should be addressed in the Preface.
    This is IASB's first exposure draft. The Board had approved the ED at its July meeting.

     

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    Basel, IOSCO, and IAIS issue two key reports

    08 Nov 2001

    The Basel Committee on Banking Supervision, IOSCO, and the International Association of Insurance Supervisors have published two joint reports.

    One covers cross-sectoral comparisons of risk management practices and regulatory capital and the other identifies the core principles developed by the three parent committees for their respective sectors. The reports are available from the websites of IOSCO, BIS, and IAIS.

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