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IFAC ethics proposals on auditor independence


The International Ethics Standards Board for Accountants (IESBA) has issued an exposure draft proposing to update and strengthen the auditor independence requirements contained in the IFAC Code of Ethics for Professional Accountants.

Significant proposed modifications to the Code include:
  • extending the partner rotation requirements to all key audit partners on an audit of an entity of significant public interest;
  • updating requirements related to the provision of non-assurance services, including setting out additional guidance on the provision of tax services to audit clients;
  • providing guidance on key audit firm personnel accepting employment with audit clients that are entities of significant public interest; and
  • extending the independence requirements to the audits of a wider range of entities of significant public interest.
Comment deadline is 30 April 2007. Click for:


SEC amends executive compensation disclosures


The US Securities and Exchange Commission has amended its executive and director compensation disclosure rules to more closely conform the reporting of stock and option awards to FASB Statement No. 123 (revised 2004) Share-Based Payment.

FAS 123R is similar to IFRS 2 Share-based Payment. The amendment modifies rules that were adopted in July 2006. The July rule had required a company to include the entire fair value of stock option grants in the SEC's Summary Compensation Table and the Director Compensation Table in the period in which the options are granted. The revised rule spreads the fair value in those Compensation Tables over the same periods as the company recognises options expense in its financial statements under FAS 123R. Click for SEC Press Release  (PDF 66k).

Updated EFRAG endorsement status report


The European Financial Reporting Advisory Group has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments.

Click to download the Endorsement Status Report as of 20 December 2006 (PDF 35k). You can always find a link on our EFRAG Page. Currently, the following IASB pronouncements have not yet been endorsed for use in Europe:
  • IFRS 8 Operating Segments
  • IFRIC 12 Service Concession Arrangements
  • IFRIC 11 IFRS 2: Group and Treasury Share Transactions
  • IFRIC 10 Interim Financial Reporting and Impairment
The updated Endorsement Status Report reflects EFRAG's recent decision to Recommend IFRIC 10 (PDF 45k) for use in Europe.

IAS Plus availability and speed are still not normal


The Hong Kong government reports it will take at least five to seven days to repair the six undersea fibre-optic cables off the coast of Taiwan damaged by a series of earthquakes on 26 December 2006 (see our Earlier Story).

The cables account for about 90% of the total capacity and mainly affect connections to Japan, Taiwan, Korea, the US and Canada. Operators have implemented contingency plans and rerouted traffic via all other cables still in service. At present, voice call services including IDD calls and roaming calls to most of the countries/territories except for Taiwan have nearly resumed to normal. However, Internet access to overseas websites is still congested. IAS Plus has had less than one-third of the expected number of visitors for the week between Christmas and New Year's Day. Click for HK Government Press Release (PDF 27k).

Earthquakes disrupt IAS Plus availability, speed


Strong earthquakes off the coast of Taiwan have disrupted the availability and access speed of IAS Plus.

The quakes occurred starting at 12:26 GMT on Tuesday 26 December 2006. The server for IAS Plus is located in Hong Kong. The earthquakes and related aftershocks damaged undersea data cables in the Luzon Strait between Hong Kong and Taiwan, disrupting internet links between Hong Kong and much of the world yesterday and continuing today. IAS Plus normally has up time of 99.9% and connect time (time it takes for us to start sending data to you after you access the site) of under 0.8 seconds. The main headline in today's South China Morning Postsays:

Cyberspace chaos leaves region reeling. Net users struggle to cope without their lifelineas providers warn it could take weeks to fix cables damaged by quake.

Update 07:48 GMT 28 December: News reports say that six of the seven main submarine fibre-optic cables serving Hong Kong have been badly damaged and the seventh is functioning with limited capacity. At least eight boats (three from Taiwan and five from Hong Kong) have been dispatched to assess damage and undertake repairs – which reports say may take up to three weeks. Some rerouting of traffic may be possible until repairs are completed.

Six exposure drafts from IAASB


The International Auditing and Assurance Standards Board (IAASB) approved a proposed revised International Standard on Auditing (ISA) 580 (Revised and Redrafted) Written Representations, as well as five exposure drafts of revised standards written in accordance with the IAASB's new clarity drafting conventions.

Written representations are affirmations that auditors request from management, those charged with governance, and others, as part of the audit process. The affirmations relate to the financial statements, including internal control, and the completeness of information made available to the auditor, and specific assertions in the financial statements. The five 'clarity' exposure drafts are:
  • ISA 230 (Redrafted), Audit Documentation;
  • ISA 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures;
  • ISA 560 (Redrafted), Subsequent Events;
  • ISA 610 (Redrafted), The Auditor's Consideration of the Internal Audit Function; and
  • ISA 720 (Redrafted), Reading Other Information in Documents Containing Audited Financial Statements.
Proposed ISA 540 is a combination of ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures (Other Than Those Involving Fair Value Measurements and Disclosures) and ISA 545, Auditing Fair Value Measurements and Disclosures. Comments on the exposure drafts of proposed redrafted ISAs 230, 560, 610 and 720 are requested by 31 March 2007. Comments on the exposure drafts of proposed ISAs 540 (Revised and Redrafted) and 580 (Revised and Redrafted) are requested by 30 April 2007. Click for Press Release (PDF 82k).

Special Newsletter–Closing Out 2006


Deloitte's IFRS Global Office has published a special edition of our IAS Plus Newsletter titled Closing Out 2006.

The newsletter summarises all of the new and revised Standards and Interpretations in effect for December 2006 year ends and beyond. Here is list of those pronouncements:

Effective for 31 December 2006 year ends

New Standard

IAS Plus newsletter issued


Exploration for and Evaluation of Mineral Resources

January 2005

Amendments to Standards

IAS Plus newsletter issued

Amendment to IAS 19

Actuarial Gains and Losses, Group Plans and Disclosures


Amendment to IAS 21

Net Investment in a Foreign Operation


Amendment to IAS 39

Cash Flow Hedge Accounting of Forecast Intragroup Transactions


Amendment to IAS 39

The Fair Value Option

July 2005

Amendments to IAS 39 & IFRS 4

Financial Guarantee Contracts

December 2005

New Interpretations

IAS Plus newsletter issued


Determining whether an Arrangement Contains a Lease

December 2004


Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

December 2004


Liabilities arising from Participation in a Specific Market–Waste Electrical and Electronic Equipment (effective for accounting periods beginning on or after 1 December 2005)

September 2005

Available for early adoption for 31 December 2006 year ends

New Standards

Effective for accounting periods beginning on or after

IAS Plus newsletter issued


Financial Instruments: Disclosures

1 January 2007

October 2005


Operating Segments

1 January 2009

December 2006

Amendments to Standards

Effective for accounting periods beginning on or after

IAS Plus newsletter issued

Amendment to IAS 1

Capital Disclosures

1 January 2007

October 2005

Revised Guidance on Implementing IFRS 4

1 January 2007


New Interpretations

Effective for accounting periods beginning on or after

IAS Plus newsletter issued


Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies

1 March 2006

December 2005


Scope of IFRS 2

1 May 2006

January 2006


Reassessment of Embedded Derivatives

1 June 2006

March 2006


Interim Financial Reporting and Impairment 1

November 2006

August 2006


IFRS 2–Group and Treasury Share Transactions

1 March 2007

December 2006


Service Concession Arrangements

1 January 2008

December 2006

You will find all Past IAS Plus Newsletters Here

Heads Up newsletter on AICPA SEC/PCAOB conference


Annually, the American Institute of Certified Public Accountants hosts a conference featuring speeches by, and question-and-answer sessions with, representatives of the Securities and Exchange Commission, the Public Company Accounting Oversight Board, and other standard setters.

In our news story of 12 December 2006 we posted links to various speeches made at the conference. We have now posted a Special Issue of Deloitte's Heads Up Newsletter (PDF 573k, 79 pages) that extracts key insights from this three-day conference attended by more than 2,000 CPAs. Heads Up is published by the National Office Accounting Standards and Communications Group of Deloitte & Touche LLP (United States).

Special edition IAS Plus Newsletter on IFRS 8


Deloitte's IFRS Global Office has published a special edition of our IAS Plus Newsletter titled IFRS 8 Operating Segments.

On 30 November 2006, the IASB issued IFRS 8, which replaces IAS 14 Segment Reporting. This newsletter explains the requirements of IFRS 8 and how it differs from IAS 14. IFRS 8 is mandatory for annual financial statements for periods beginning on or after 1 January 2009, although earlier application is permitted. Once IFRS 8 is effective, segment reporting under IFRSs and US Generally Accepted Accounting Principles (SFAS 131) will be converged except for some minor differences. IFRS 8 will expand significantly the requirements for segment information at interim reporting dates. Click for Newsletter (PDF 113k). You will find all Past IAS Plus Newsletters Here

European Central Bank report on IFRSs


The European Central Bank (ECB) has published a report titled Assessment of Accounting Standards from a Financial Stability Perspective that was prepared by the ESCB Banking Supervision Committee.

The Committee comprises representatives of the national central banks and banking supervisory authorities of the European Union and the ECB.

Assessment criteria. First, the report puts forward ten criteria deemed important from the perspective of financial stability with which accounting standards should be consistent. The selected criteria are:

  • reliance on principles-based accounting standards;
  • use of reliable and relevant values;
  • recognition of the allocation and magnitude of risks;
  • provision of comparable financial statements;
  • provision of clear and understandable financial statements;
  • portrayal of the financial situation of banks (solvency, profitability, liquidity);
  • alignment of accounting rules and sound risk management practices;
  • promotion of a forward-looking recognition of risks;
  • avoidance of negative and promotion of positive externalities, in particular regarding the behaviour of banks; and
  • enhancement of market confidence and corporate governance.

Positive findings.The report analyses IFRSs based on these criteria. Positive features of the IFRSs from a financial stability point of view identified in the report include:

  • the overall increase in comparability and transparency, which enhances the level playing field between financial institutions and strengthens market discipline;
  • the provision of early warning signals on exposures or risks, which is relevant both for the risk management function of financial institutions and for effective market discipline; and
  • the use of a principles-based framework, which provides for an adequate degree of flexibility in implementation.

Concerns.Then the report identifies areas where concerns could arise from a financial stability perspective. These include:

  • the reliability of 'fair' values: fair values should be accurately measured and appropriately documented, so as to avoid an inappropriate upfront recognition of gains that are unrealisable and behaviour that is based on accounting figures rather than on the underlying economic factors;
  • the economic basis for hedge accounting: the accounting framework should reflect the underlying economic situation and adequately take into account strictly documented risk management practices, as this would further encourage better risk management;
  • provisioning: the provisioning regime should not be conducive to increasing pro-cyclicality, but should encourage the use of methods that are aimed at identifying credit losses already inherent in a particular credit portfolio at the present time.
Click for:

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