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November

IFRIC will meet on 2 December 2004

30 Nov 2004

The International Financial Reporting Interpretations Committee will meet at the IASB's offices in London on Thursday, 2 December 2004. The agenda for the meeting is as follows: IFRIC Interpretation 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Funds Accounting for Service Concessions – The IFRIC will consider three draft Interpretations with a view to agreeing them for publication: D11 Service Concession Arrangements - Determining the Accounting Model D12 Service Concession Arrangements - The Financial Asset Model D13 Service Concession Arrangements - The Intangible Asset Model IFRS 2 - Changes in Employee Contributions to ESPPs Scope of IFRS 2 IFRS 2 - Treasury Share Transactions and Group Transactions IAS 39 Financial Instruments: Recognition and Measurement - Reassessment of Embedded Derivatives .

The International Financial Reporting Interpretations Committee will meet at the IASB's offices in London on Thursday, 2 December 2004. The agenda for the meeting is as follows:

  • IFRIC Interpretation 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Funds
  • Accounting for Service Concessions – The IFRIC will consider three draft Interpretations with a view to agreeing them for publication:
    • D11 Service Concession Arrangements - Determining the Accounting Model
    • D12 Service Concession Arrangements - The Financial Asset Model
    • D13 Service Concession Arrangements - The Intangible Asset Model
  • IFRS 2 - Changes in Employee Contributions to ESPPs
  • Scope of IFRS 2
  • IFRS 2 - Treasury Share Transactions and Group Transactions
  • IAS 39 Financial Instruments: Recognition and Measurement - Reassessment of Embedded Derivatives

FEE guidance on pan-European prospectuses

29 Nov 2004

The European Federation of Accountants (FEE) has published a discussion paper on Auditors' Involvement with the New EU Prospectus Directive.

The Directive, which comes into force on 1 July 2005, is aimed at simplifying capital raising in Europe and is a key step in creating a single European market for financial services. The Directive requires involvement of the auditor to give assurance on historical and prospective financial information. FEE's paper provides national auditing standard setters with a framework within which standards might be developed to implement the requirements of the Directive. More information is on the FEE Website.

IFRIC Interpretation 2 on shares in co-ops

26 Nov 2004

The International Financial Reporting Interpretations Committee (IFRIC) has issued Interpretation IFRIC 2 'Members' Shares in Co-operative Entities and Similar Instruments' (co-ops).

Members-shares in co-ops have some characteristics of equity.   They also give the holder the right to request redemption for cash, although that right may be subject to certain limitations.

IFRIC 2 gives guidance on how those redemption terms should be evaluated in determining whether the shares should be classified as financial liabilities or as equity. Under IFRIC 2, shares for which the member has the right to request redemption are normally liabilities. However, they are equity if:

  • the entity has an unconditional right to refuse redemption, or
  • local law, regulation, or the entity's governing charter imposes prohibitions on redemption. But the mere existence of law, regulation, or charter provisions that would prohibit redemption only if conditions (such as liquidity constraints) are met, or are not met, does not result in members' shares being equity.

Click for Press Release (PDF 23k).

 

IFRIC draft interpretation on waste equipment

26 Nov 2004

The International Financial Reporting Interpretations Committee (IFRIC) has invited comments on draft interpretation IFRIC D10 'Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment'.

D10 clarifies when original producers of electrical goods will need to recognise a liability for the cost of waste management relating to final disposal of waste electrical and electronic equipment by private households.

The IFRIC concluded that the event giving rise to the liability for costs of such waste is participation in the market in the period in which the original seller's market share is determined for the purposes of allocating ultimate waste management costs. It's not the original production or sale of the equipment that triggers liability recognition.

Comments are due by 11 February 2005.  Click for Press Release (PDF 24k).

 

New Accounting Roundup posted

25 Nov 2004

We've posted the (PDF 196k) published by Deloitte (USA).

Topics covered in this issue include a proposed FSP on income taxes, recent FASB and AcSEC meetings, EITF developments, SEC postponement of accelerated of filing dates, PCAOB's amendments to its interim auditing standards, and international developments including amendment to the scope of SIC-12. You will find past issues of Accounting Roundup Here.

FASB moves inventory standard toward IAS 2

25 Nov 2004

The US Financial Accounting Standards Board has amended the US accounting standard on inventories to clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognised as current-period charges and to require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities.

US GAAP still permits LIFO, which is no longer allowed under IAS 2. Click for FASB Press Release (PDF 24k). You can download FASB Statement 151 from the FASB Website.

Irish Institute welcomes endorsement of IAS 39

25 Nov 2004

The Institute of Chartered Accountants in Ireland (ICAI) has welcomed the decision taken by European Commission to endorse an amended IAS 39 "as providing some clarity on the operation of the standard for now while recognising that this 'carved out' option should only have a short shelf life".

Click for ICAI Media Release.

BOE governor urges fresh look at IAS 39

24 Nov 2004

In remarks delivered at the 13th Central Banking Conference in London on 22 November 2004, Sir Andrew Large, Deputy Governor of the Bank of England, said that "the recent furore over IAS 39 - the international accounting standard for financial instruments - has resulted in a situation which all agree is unsatisfactory".

He called for a "re-examination of the basics aimed at securing agreement on fundamental principles" of financial instrument accounting. He raised questions about:
  • "The ability to obtain robust fair values for instruments which are not priced, even indirectly, in reasonably deep and liquid markets."
  • "The economic relevance of unrealised gains and losses - particularly if they are not immediately realisable."
  • "Further concerns about wider use of fair value accounting relate to the possible implications for volatility in financial markets and in the economy more widely. In my view, there is an important distinction to be drawn between accounting rules which capture accurately the volatility inevitably present in the real world, and 'spurious' volatility introduced by the accounting rules themselves."
He suggested that "despite intensive work to improve accounting standards for financial instruments in recent years, fundamental issues with financial stability implications remain to be resolved." Click to download the (PDF 121k) and a (PDF 89k).

PCAOB staff Q&As on internal controls

24 Nov 2004

The US Public Company Accounting Oversight Board has published a third set of staff questions and answers related to PCAOB Auditing Standard No.

2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements. AS 2 applies to audits of foreign, as well as domestic, SEC registrants. The new Q&As; (nos. 30-36) address, among other things, audits of multinational companies that involve more than one auditor; audits of federally insured financial institutions; the timing of auditors' communications about weaknesses or deficiencies in internal control; audits of IT; and use of internal auditors.

New working group on performance reporting (financial statement presentation)

23 Nov 2004

The IASB and FASB have jointly appointed a new working group on performance reporting to assist the boards in their joint project to establish standards for presenting, in the financial statements, information that is useful in assessing the financial performance of a business enterprise.

Working group members include Stephen Taylor, a partner in Deloitte Touche Tohmatsu, Hong Kong:

 

Members of the Joint International Group on Performance Reporting

Name Title Organisation Country
Peter R Bible Chief Accounting Officer General Motors Corporation United States
Kathryn Cearns Consultant Accountant Herbert Smith United Kingdom
Malcolm Cheetham Chief Accounting Officer Novartis Switzerland
Stephen Cooper Managing Director, Valuation & Accounting Research UBS Investment Bank United Kingdom
W Peter Day Executive General Manager - Finance Amcor Limited Australia
Jacques De Greling Equity Analyst IXIS Securities (Caisse d'Epargne Group) France
Bo Eriksson Senior Vice President/Corporate Controller Stora Enso Oyj Finland
Bridget Gandy Managing Director, International Accounting and Research Fitch Ratings Ltd United Kingdom
Gregory Jonas Managing Director Moody's Investors Service United States
Ken Kelly Vice President & Controller McCormick & Co United States
Sara York Kenny Principal Accounting Policy Advisor International Finance Corporation (World Bank Group) United States/Global
Guido Kerkhoff Senior Executive Vice President-Group Accounting and Reporting Deutsche Telekom AG Germany
Michael P Krzus Director Grant Thornton LLP United States
Chris Legge Managing Director, Industrial Ratings Standard & Poor's United Kingdom
Patricia McConnell Senior Managing Director Bear Stearns United States
Stuart MacDonald Head of Group Financial Reporting Scottish Power plc United Kingdom
Elizabeth Mooney Analyst Capital Strategy Research United States
Hans-Joachim Pilz Managing Director SBFA Investment Research Germany
Wolfgang H Reichenberger Executive Vice President & Chief Financial Officer Nestle SA Switzerland
Walter Schuster Professor Stockholm School of Economics Sweden
Stephen Taylor Partner Deloitte Touche Tohmatsu Hong Kong
Takashi Yaekura Professor Hosei University, Faculty of Business Administration Japan
Hiroshi Yamada Councillor-Corporate Accounting Group Matsushita Electric Industrial Co., Ltd. Japan
Gilles Zancannaro Corporate Director - Information Systems and Finance Bouygues France

 

Click for Press Release (PDF 42k).

 

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