September

Australia should not modify IFRS for domestic use

10 Sep 2003

The Australian Accounting Standards Board has recently begun a programme to adopt International Financial Reporting Standards as Australian GAAP.

But the AASB has indicated that it might make some modifications to IFRS for use in Australia. The AASB invited comments on that approach. In a story titled "Keep Global Rules Intact, Say Big Four", the Melbourne Age newspaper (PDF 97k) that responses to the AASB from Deloitte Touche Tohmatsu, PricewaterhouseCoopers, KPMG and Ernst & Young and from senior finance executives of listed companies have said that "the AASB should adopt the international literature without local modifications". Also, the AASB has Announced (PDF 157k) that it will not adopt the Australian "equlivalents" of IFRS in phases, as previously announced, but instead will adopt all of them in a single batch, most likely in April 2004.

Analysis of the impact of ED 5 on the insurance industry

10 Sep 2003

Standard & Poor's, the securities analysis and ratings agency, has published a report, International Accounting Standards: Threat or Opportunity?, analysing the potential impact of the IASB's Exposure Draft 5, Insurance Contracts on the insurance industry.

S&P concludes that while initially insurers and reinsurers will find the introduction of IFRS to be traumatic, "ultimately, the capital markets, consumers, and the more sophisticated financial statement users will reward insurers for their improved transparency rather than penalizing them for volatility." Benefits of adopting ED 5 that were cited by S&P, in addition to enhanced consistency and transparency, include better understanding of the risks to which insurers are exposed, and their potential rewards; more informed company managements and boards; better alignment of product pricing and financial reporting; and regulatory benefits, possibly even reduced regulatory filings and requirements. We are grateful to Standard & Poor's for allowing us to make their report available on IASPlus. Click to download:

Accountancy Age focus on IFRS

09 Sep 2003

The 4 September 2003 issue of Accountancy Age magazine includes a number of articles focusing on the imminent switch to International Financial Reporting Standards in the United Kingdom in particular and in Europe more generally.

The articles include:

Irish Institute urges IFRS for all domestic companies

09 Sep 2003

The Institute of Chartered Accountants in Ireland has recommended to the Irish government that IFRS be required for "all companies in the Republic with a three-year transitional period to be applied to facilitate the changeover".

Click for Press Release (PDF 36k).

Updated statistics on cross-border capital markets

07 Sep 2003

Cross-border capital markets are an important reason why global accounting standards are needed.

On our Statistics Page you can view and download various statistics that demonstrate the globalisation of the world's capital markets. We have updated the following statistics in the past several days:

  • Number of Companies Listed on 50 Major World Stock Exchanges, with Domestic and Foreign Split (31 July 2003)
  • Non-US Companies Listed on New York Stock Exchange (469 companies from 51 countries at 20 August 2003)
  • Non-US Companies Listed on NASDAQ Market (342 companies from 37 countries at June 2003)
  • Non-US Companies Registered with the SEC (1,319 companies from 59 countries at 31 December 2002)
  • Non-UK Companies Listed on London Stock Exchange Main Board and AIM (447 companies from 63 countries at 31 July 2003)
  • Comprehensive Global Capital Market Statistics - World Federation of Exchanges Annual Statistical Report 2002
  • Link to Fortune 2003 Global 500
  • United Nations Conference on Trade and Development World Investment Report 2003

Obstacles to good financial reporting

06 Sep 2003

In a recent speech before the American Enterprise Institute, US SEC Commissioner Cynthia A.

Glassman made some observations about Obstacles to Good Financial Reporting that, we believe, are equally relevant in an international financial reporting context as in a domestic one. Click to View Commissioner Glassman's Presentation.

Valuation issues arising from IFRS

05 Sep 2003

The International Valuation Standards Committee (IVSC) has published the September 2003 issue of its Global Valuation Issues Newsletter (PDF 257k).

This edition includes a seven-page update on the valuation implications of International Financial Reporting Standards, a discussion of investment performance standards, as well as general global valuation news. Click for More Info about IVSC including a link for downloading the 2003 International Valuation Standards without charge.

British securities regulator warns companies on IFRS

05 Sep 2003

In a letter to all companies listed on the London Stock Exchange, the Director of Listing of the Financial Services Authority of the United Kingdom issued a stern warning to be prepared to make the change to IFRS.

He wrote:

For a company with a reporting date of 31 December 2005, the date of its transition to IFRS will be 1 January 2004. This means such a company will be required to prepare comparative IFRS accounts for 2004.... I am very concerned to learn that many issuers are poorly prepared for these changes.... I appreciate that the timetable is made more difficult, given the fact that not all the relevant standards have been agreed and some have not yet been published. Nevertheless a consequence of not being in a position to adopt IFRS will be that issuers are unable to meet the reporting requirements and deadlines of the listing rules. Failure by issuers to submit preliminary or interim results within the required timescale is likely to result in the suspension of the issuer's securities.

Click for FSA Press Release (PDF 34k)

IFRIC issues draft interpretation D2

04 Sep 2003

The International Financial Reporting Interpretations Committee has issued Draft Interpretation D2 'Changes in Decommissioning, Restoration and Similar Liabilities'.

Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, a provision must be recognised when an asset is acquired if the acquirer is obligated to incur costs for decommissioning, restoration, and similar future activities. The costs are included as part of the cost of the asset.

The proposed Interpretation deals with accounting for subsequent changes in the estimated cash flows relating to the provision. The proposed Interpretation concludes, among other things, that decommissioning, restoration, and similar liabilities should be remeasured at each balance sheet date using a current market-assessed discount rate.

Comments are due by 3 November 2003. Click for:

 

Proposal to extend the scope of IFRS in Denmark

04 Sep 2003

Denmark is a member of the European Union, and its listed companies will be required to adopt IFRS in their consolidated financial statements starting in 2005. The Danish Parliament has invited public comment on proposed legislation that would: Require the use of IFRS in individual company financial statements if an entity uses IFRS in its consolidated statements. Permit non-listed companies to choose to follow IFRS, instead of Danish GAAP, in both their consolidated and individual company statements. The draft legislation does not include a proposed starting date for use of IFRS in place of Danish GAAP but leaves this for the Minister of Economic and Business Affairs to determine (through an executive order) at a later stage.

Danish listed companies are already permitted to use IFRS provided that they also comply with the provisions of the Danish Financial Statements Act.

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