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July

ED on First-Time Application of IFRS is published

31 Jul 2002

The IASB has issued exposure draft ED 1 'First-time Application of International Financial Reporting Standards'.

Comments are requested by 31 October 2002.

The purpose of the Standard is to ensure that all entities adopting IFRSs for the first time present comparative information in their financial statements that is as close as possible to the information provided by existing users, but within cost/benefit constraints.

The proposals would require an entity to comply with every IFRS current in the first year when it first adopts IFRSs. At least one year of comparative information prepared using those same IFRS is required.

The draft Standard requires first-time preparers of financial statements under IFRSs to disclose how the transition to international standards affected the entity's reported financial position, financial performance, and cash flows.

Click for Project Information.

 

Full text of US accounting reform legislation posted

30 Jul 2002

Click here to Download the Full Text of the US Public Company Accounting Reform and Investor Protection Act of 2002 (PDF 226k).

A foreign public accounting firm that prepares an audit report with respect to any SEC registrant is subject to the Act and to the rules of the new Public Company Accounting Oversight Board. The new law permits the SEC to look to a private-sector accounting standard-setter, such as FASB, provided that the standard-setter:

"considers, in adopting accounting principles, ... the extent to which international convergence on high quality accounting standards is necessary or appropriate in the public interest and for the protection of investors"

SEC will study a 'principles-based' accounting system

30 Jul 2002

The accounting reform legislation in the United States requires the SEC to conduct a study on the "adoption by the United States financial reporting system of a principles-based accounting system", including: the extent to which principles-based accounting and financial reporting exists in the United States; the length of time required for change from a rules-based to a principles-based financial reporting system; the feasibility of and proposed methods by which a principles-based system may be implemented; and a thorough economic analysis of the implementation of a principles-based system. The SEC must complete the study in one year and must submit its report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives. .

The accounting reform legislation in the United States requires the SEC to conduct a study on the "adoption by the United States financial reporting system of a principles-based accounting system", including:

  • the extent to which principles-based accounting and financial reporting exists in the United States;
  • the length of time required for change from a rules-based to a principles-based financial reporting system;
  • the feasibility of and proposed methods by which a principles-based system may be implemented; and
  • a thorough economic analysis of the implementation of a principles-based system.
The SEC must complete the study in one year and must submit its report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.

New Accounting Roundup newsletter posted

30 Jul 2002

The 29 July 2002 edition of the Accounting Roundup newsletter from Deloitte & Touche USA covers the AcSEC project on valuation of private equity securities, the July IASB meeting, the US accounting reform legislation, and securitisations. .

The 29 July 2002 edition of the Accounting Roundup newsletter from Deloitte & Touche USA covers the AcSEC project on valuation of private equity securities, the July IASB meeting, the US accounting reform legislation, and securitisations.

Comparison of IFRS and US GAAP

30 Jul 2002

We have posted the latest Deloitte Touche Tohmatsu publication about IAS: GAAP Differences in your Pocket: IAS and US GAAP.

This 20-page booklet identifies and explains 81 differences between International Financial Reporting Standards and US GAAP. Twenty of these differences are being addressed in current IASB agenda projects. The booklet identifies them. Click to (PDF 453k). Deloitte Touche Tohmatsu is pleased to grant permission to accounting educators and students to print copies of the booklet for educational use. You can find other DTT publications relating to IAS Here.

Accounting reform legislation passed in United States

29 Jul 2002

By vote of 99-0 in the Senate and 423-3 in the House, the United States Congress has approved legislation creating a Public Company Accounting Oversight Board (PCAOB) to oversee the accounting profession.

By vote of 99-0 in the Senate and 423-3 in the House, the United States Congress has approved legislation creating a Public Company Accounting Oversight Board (PCAOB) to oversee the accounting profession.

Key Features of the Public Company Accounting Reform and Investor Protection Act of 2002
  • Oversight Board. The Act creates the Public Company Accounting Oversight Board (PCAOB)
  • Organisation and administration. PCAOB will be organised as a nonprofit corporation. The SEC will provide administration and oversight.
  • Timing. The initial PCAOB members must be appointed within 3 months. The board must be organised to begin its work within 9 months.
  • Mission of PCAOB. PCAOB is charged with overseeing the audits of public companies and related matters.
  • Subpoena power. PCAOB will have subpoena power.
  • Funding. PCAOB will be funded by assessing public companies.
  • Board members. PCAOB will have five full-time members (maximum of two CPAs) appointed by SEC with approvals of Treasury Secretary and Chairman of the Federal Reserve Board. They will serve five-year terms, with one renewal term allowed.
  • Authority to establish or adopt standards. PCAOB must establish or adopt auditing, quality control, ethics, and independence standards. In doing so, the PCAOB may look to standards established by recognised professional organisations.
  • Auditor registration. All auditors of public companies must register with the PCAOB, identify public audit clients, identify all accountants associated with those clients, list fees earned for audit and non-audit services, explain its audit quality control procedures, and identify all criminal, civil, administrative, and disciplinary proceedings against the firm or any of its associated persons in connection with an audit report.
  • Disciplinary power. PCAOB can discipline or suspend auditors of public companies. Disciplinary proceedings will be confidential until completed.
  • Inspection of CPA firms. PCAOB must inspect all CPA firms that audit public companies to assess compliance with the law, SEC regulations, rules established by PCAOB, and professional standards. Firms that audit more than 100 public companies will be inspected annually. Firms that audit 100 or fewer public companies must be inspected at least once every three years. If violations are found, the board must take disciplinary action.
  • Engagement of auditors. Audit firms will be appointed by, and will report directly to, the audit committee which must be comprised entirely of independent (non-executive) directors.
  • Restrictions on non-audit services to audit clients. The law restricts consulting work auditors can do for their clients. Prohibited services include bookkeeping, financial systems design, appraisal and valuation, actuarial, internal audit, management functions, human resources, broker-dealer, investment banking, and legal. PCAOB may enumerate additional prohibited services. The registrant's audit committee must pre-approve engaging the auditor for any other non-audit services, including tax work.
  • Audit partner rotation. The law requires audit partner rotation after 5 years.
  • Mandatory audit firm rotation. The Comptroller General must study and report on this within one year.
  • Disclosures in financial reports. The law requires certain disclosures in financial reports, including information about off-balance sheet transactions, and orders the SEC to develop rules regarding pro forma disclosures.
  • Loans to company executives. The Act prohibits most personal loans to company executives.
  • Financial analyst conflicts of interest. Financial analysts cannot be involved in marketing securities (detailed rules to be developed by the SEC).
  • Rules of conduct for lawyers. The SEC must develop rules of professional responsibility for attorneys who represent securities issuers.
  • Principles-based accounting. The SEC must conduct a study on the adoption of a principles-based accounting system in the United States.
  • Corporate and criminal fraud. The Act provides for criminal penalties for corporate fraud and document shredding.
  • Accounting standards. The Act permits the SEC to recognise standards established by a private-sector accounting standard-setter, such as FASB or IASB, provided that the standard-setter: — has an independent and broad-based board of trustees; — is funded through the fees collected by the PCAOB; — is deemed acceptable by the SEC in terms of improving financial reporting and protecting investors, and reports annually to the SEC; — has adopted procedures to consider accounting issues promptly and to keep its standards current; and — "considers, in adopting accounting principles, ... the extent to which international convergence on high quality accounting standards is necessary or appropriate in the public interest and for the protection of investors".

A pending issue before the SEC, set out in its February 2000 Concept Release, is the extent to which the Commission should allow registrants to use IASB standards.

The President has indicated he will sign the bill into law. Click here to Download the Legislation (PDF 226k).

Country updates posted for Europe and Africa

29 Jul 2002

We have updated our summaries of recent accounting standards activities in six Jurisdictions in Europe and Africa: France, Germany, Russia, South Africa, Sweden, and United Kingdom. .

We have updated our summaries of recent accounting standards activities in six Jurisdictions in Europe and Africa: France, Germany, Russia, South Africa, Sweden, and United Kingdom.

The July 2002 IASPlus Europe-Africa newsletter is now available

29 Jul 2002

We have posted the July 2002 Europe-Africa edition of our IASPlus Newsletter. .

We have posted the July 2002 Europe-Africa edition of our IASPlus Newsletter.

Report from IFRIC meeting 23-24 July

28 Jul 2002

The International Financial Reporting Interpretations Committee met in London on 23-24 July.

We have moved our notes from the meeting to our IFRIC Page.

International Valuation Standards 2001 published

28 Jul 2002

The International Valuation Standards Committee (IVSC) is an independent body that develops valuation standards that support standards being developed by other international bodies.

IVSC works closely with the IASB. IVSC has just published a comprehensive volume of its standards, IVS 2001, which includes revised guidance on Valuation for Financial Reporting that has been developed with the assistance of the IASB. Click for More Information.

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