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January

Recommendations for valuing real estate under IFRS

31 Jan 2004

The European Public Real Estate Association (EPRA) has published its (PDF 565k) regarding the valuation of real estate under International Financial Reporting Standards.

The EPRA recommendations are supported by the (PDF 138k). EPRA's recommendations state:

1. General items: EPRA is neither an accounting body nor a valuation body. As from 2005, EPRA members will have to report in accordance with International Financial Reporting Standards (IFRS). The Best Practices Recommendations provide a framework for:

  • Specific additional guidance for real estate companies within the IFRS framework;
  • Uniform performance reporting and presentation between real estate companies;
  • Additional disclosure guidance.
2. Accounting and valuation principles: for all areas where IFRS is not specific enough for real estate companies, the Best Practices Recommendations provide tailored guidance, aiming for uniform accounting and valuation principles amongst our members. 3. Presentation of accounts: as IFRS, to some extent, is "format free" regarding the presentation of the balance sheet, profit & loss accounts and cash flow statements, the Best Practices Recommendations propose standard formats for the presentation of these accounts. 4. Notes and additional disclosure: making the performance of real estate companies insightful requires additional notes and disclosure items, based upon uniform recommended standards. 5. Draft recommendations: at current, several areas for which EPRA wishes to issue recommendations, need further research and consulting of EPRA members as well as of the IASB before final recommendations can be issued.

Investment group urges European support for IFRS and IASB

29 Jan 2004

In a letter published in the Financial Times on 23 January 2004, the United Kingdom Society of Investment Professionals has decried the political controversy that has arisen regarding adoption in Europe of IAS 32 and IAS 39 (financial instruments).

The group also condemned what it sees as attacks on the IASB's standard setting process. We have posted the (PDF 6k) with the kind permission of its authors.

EFRAG proposes to endorse improved IASs

28 Jan 2004

The European Financial Reporting Advisory Group is seeking comments on its Proposed Letter to the European Commission supporting adoption in Europe of the 13 "improved" IASs that were issued by the IASB in December.

Comments are due by 24 February 2004.

Japanese government agency comments to British FSA

27 Jan 2004

Following up on our news story of yesterday: Today the Financial Services Agency of the Government of Japan (the Japanese securities regulator) has written to the UK Financial Services Authority requesting the UK government -->"to continue to allow Japanese issuers with a primary listing or a secondary listing on the LSE to use Japan GAAP as equivalent to IAS (or US GAAP)" -->.

The Japan FSA went on to say: "If Japanese issuers were required to prepare their financial statements in accordance with IAS, and not allowed to use Japan GAAP, this could discourage their financial activities within the City and other EU markets, encourage their delisting from the LSE and other EU securities exchanges, and shift the focus of Japanese financing efforts outside Japan to non-EU markets." Click for Full Text of Japanese Government Letter to UK (PDF 25k).

New IAASB framework for assurance engagements

27 Jan 2004

IFAC's International Auditing and Assurance Standards Board has issued a revised Assurance Framework and International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

The Framework defines and describes the elements and objectives of an assurance engagement, and identifies engagements to which International Standards on Auditing (ISAs) and ISAEs apply. It provides a frame of reference for practitioners and others involved with assurance engagements, such as those engaging a practitioner and the intended users of an assurance report. Click for Press Release (PDF 41k).

Japan will urge London to continue to allow Japanese GAAP

26 Jan 2004

Today's issue of the Yomiuri Shimbun, Japan's main business newspaper, has Reported that representatives of Japanese business organisations will go to London to try to convince the UK Financial Services Authority (FSA) not to go ahead with its proposal to require foreign companies listed on the London Stock Exchange to prepare financial statements using only US GAAP or IFRS.

Currently, non-UK listed companies may report using their national GAAP. The EU accounting regulation requiring EU listed companies to adopt IFRS in 2005 does not apply to non-EU companies listed on EU exchanges, but individual EU countries can extend the requirement to such companies. The FSA has issued a Consultation Paper (PDF 318k) in which FSA said:

"With the introduction of IAS..., there will be consistency amongst all EU listed issuers that produce consolidated accounts. We believe that it is in the interests of investors for there to be consistency between all equity issuers with primary listings. So, we propose that overseas non-EU issuers should be required to report in either IAS or US GAAP."

Survey finds that IFRS will improve understanding

26 Jan 2004

A survey of 425 companies (249 listed and 176 non-listed) in 6 European countries by the French-based international auditing and advisory firm Mazars has found that: --> The great majority of listed companies are confident that adopting IFRS will bring about "beneficial impacts" on the transparency (73% of listed companies) and reliability (79% of listed companies) of their financial statements. Listed companies believe that the largest impact of the change to IFRS will be on their internal organisation, with 57% of listed companies foreseeing "a real opportunity to improve their internal organisation". The majority (55%) of non-listed companies wish to apply IFRS, and 64% of those think that improved comparability and transparency will result from the change. Many companies are late in setting up IFRS implementation programmes, measuring the impact of IFRS, training of employees, and developing external communications strategies for financial analysts, shareholders, and investors. --> Click for link to Download the Study. .

A survey of 425 companies (249 listed and 176 non-listed) in 6 European countries by the French-based international auditing and advisory firm Mazars has found that:

  • The great majority of listed companies are confident that adopting IFRS will bring about "beneficial impacts" on the transparency (73% of listed companies) and reliability (79% of listed companies) of their financial statements.
  • Listed companies believe that the largest impact of the change to IFRS will be on their internal organisation, with 57% of listed companies foreseeing "a real opportunity to improve their internal organisation".
  • The majority (55%) of non-listed companies wish to apply IFRS, and 64% of those think that improved comparability and transparency will result from the change.
  • Many companies are late in setting up IFRS implementation programmes, measuring the impact of IFRS, training of employees, and developing external communications strategies for financial analysts, shareholders, and investors.
Click for link to Download the Study.

Notes from the final day of the IASB's January meeting

24 Jan 2004

To allow our home page to load more quickly, we have moved our unofficial notes from the January 2004 IASB meeting to a Separate Page. .

To allow our home page to load more quickly, we have moved our unofficial notes from the January 2004 IASB meeting to a Separate Page.

Update on Indian GAAP

23 Jan 2004

The Institute of Chartered Accountants of India (ICAI) has issued Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Assets.

The objective of AS 29 is to ensure that appropriate recognition criteria and measurement bases are applied to provisions and contingent liabilities and that sufficient information is disclosed in the notes to the financial statements to enable the users to understand their nature, timing and amount. Further, the Standard seeks to lay down appropriate accounting principles for contingent assets.

Under AS 29, a provision should be recognised when:

  • an enterprise has a present obligation 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.

If those conditions are not met, a provision should not be recognised. Further, an enterprise should not recognise a contingent liability or a contingent assets.

AS 29 is effective for accounting periods commencing on or after 1 April 2004 for specified categories of enterprises.

 

Applicability of Accounting Standards

The Council of the Institute of Chartered Accountants of India has decided the following scheme for applicability of Accounting Standards to Small and Medium Sized Enterprises (SMEs). This scheme comes into effect in respect of accounting periods commencing on or after 1 April 2004:

 

  • For the purpose of applicability of Accounting Standards, enterprises are classified into three categories, viz., Level I, Level II and Level III. Level II and Level III enterprises are considered as SMEs.
  • Level I enterprises are required to comply fully with all the accounting standards.
  • Level II and Level III enterprises will have to follow the recognition and measurement principles stated in the individual Accounting Standards. Relaxations are provided only with regard to disclosure requirements to SMEs. Accordingly, Level II and Level III enterprises are fully exempted from certain accounting standards which are primarily disclosure Standards. The exemptions/relaxations are provided by modifying the applicability portion of the relevant existing Accounting Standards.
  • Level I Enterprises are those which fall in any one or more of the following categories, at any time during the accounting period:
    • Enterprises whose equity or debt securities are listed whether in India or outside India.
    • Enterprises that are in the process of listing their equity or debt securities as evidenced by the board of directors' resolution.
    • Banks including c-operative banks.
    • Financial institutions.
    • Enterprises carrying on insurance business.
    • All commercial, industrial, and business reporting enterprises whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 500 million.
    • All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of Rs. 100 million at any time during the accounting period.
    • Holding and subsidiary enterprises of any one of the above at any time during the accounting period.
  • Level II Enterprises are not Level I enterprises but those who fall in any one or more of the following categories:
    • All commercial, industrial, and business reporting enterprises, whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 4 million but does not exceed Rs. 500 million.
    • All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of Rs. 10 million but not in excess of Rs. 100 million at any time during the accounting period.
    • Holding and subsidiary enterprises of any one of the above at any time during the accounting period.
  • Level III Enterprises are those that are neither Level I nor Level II.

     

Deloitte partner is the new chair of EFRAG

23 Jan 2004

Deloitte & Touche partner Stig Enevoldsen has been selected as the new full-time Chairman of the Technical Expert Group (TEG) of the European Financial Reporting Advisory Group (EFRAG) effective 1 April 2004 for a three-year term.

Stig currently heads Deloitte's Copenhagen, Denmark, IFRS Centre of Excellence and is a member of the firm's Global IFRS Leadership Team. Previously, he chaired the firm's IAS Policy Committee. From 1987 to 1996 Stig Enevoldsen was a member of the Danish Accounting Standards Committee, serving as its chairman from 1991-1996.

Stig was a member of the Board of the International Accounting Standards Committee from 1991 to 2000, and was the IASC chairman from 1998 to 2000. Currently he is a member of both the TEG and the IASB's Standards Advisory Council.

Also, Deloitte partner Catherine Guttman, from France, a specialist in insurance and financial instruments issues, was appointed a new part-time member of the TEG. In addition, The chairs of the UK, French, and German standard setters will be permanent observers at the TEG.

EFRAG was established in June 2001 by a broad group of organisations representing the European accounting profession, preparers, users, and national standard-setters to provide technical expertise to the European Commission concerning the use of IFRS within the Europe and to participate in IASB's standard setting process. EFRAG is currently in the middle of a process to Enhance its Role and streamline its operating processes with the goal of strengthening European input to the IASB.

Click for EFRAG Press Release (PDF 31k).

 

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.