May

SIC 7 Introduction of the Euro will have new relevancy

18 May 2007

The European Commission has proposed that Cyprus and Malta be approved to adopt the euro on 1 January 2008, joining the 13 current euro countries.

The European Central Bank has made a similar recommendation. EU Finance Ministers will reach a final decision in July after consultation with the European Parliament and a discussion by European leaders at the June EU Summit. Interpretation SIC 7 Introduction of the Euro provides guidance on accounting for an entity's transition to the euro. It was issued in 1998 in anticipation of the initial use of the Euro as an accounting currency in 1999 and as a circulating currency in 2002.

Notes from Day 3 of the May 2007 IASB meeting

18 May 2007

The International Accounting Standards Board held its May 2007 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 15-18 May 2007.

Most US companies have not assessed fair value impact of FAS 157

17 May 2007

Only six percent of companies in the United States have assessed how FASB Statement 157 Fair Value Measurement will affect the valuation of their assets and liabilities, according to a recent online poll conducted by Deloitte Financial Advisory Services (FAS) LLP.

The poll was conducted during a Deloitte web cast on SFAS 157. Most of the approximately 1,500 participants in the web cast were senior level managers within finance and accounting departments in the financial services, telecommunications, and manufacturing industries. SFAS 157 enhances guidance on how to measure assets and liabilities at fair value and consolidates fair value measurement into one accounting standard. SFAS 157 would be applied whenever another accounting standard requires or permits a fair value measurement, such as impaired assets, assets and liabilities acquired in a business combination, and some financial assets and liabilities. It also introduces new disclosures intended to highlight the reliability of fair value measurements. SFAS 157 is effective for financial years beginning after 15 November 2007. The IASB has issued a Discussion Paper inviting comments on SFAS 157. Click for Summary of Poll Findings (PDF 68k).

Notes from Day 1 and Day 2 of the May 2007 IASB meeting

17 May 2007

The International Accounting Standards Board held its May 2007 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 15-18 May 2007.

PCAOB will vote on new internal control audit standard

17 May 2007

At its meeting on 24 May 2007, the US Public Company Accounting Oversight Board (PCAOB) will vote on a final standard on auditing internal control over financial reporting, and some related amendments to the Board's auditing standards.

If adopted, the new standard would supersede Auditing Standard No. 2 An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements. The revision to AS 2 was proposed by the PCAOB in December 2006 and is designed to focus the auditor on the most important matters, increasing the likelihood that material weaknesses will be found before they cause material misstatement of the financial statements. At the same time, the proposed standard would eliminate audit requirements that the PCAOB has concluded are unnecessary to achieve the intended benefits. It would also provide direction on how to scale the audit for a smaller and less complex company. The final standard adopted must be submitted to the Securities and Exchange Commission for approval. Click for:

Plan for incorporating IFRSs into Canadian GAAP

17 May 2007

The Accounting Standards Board of Canada (AcSB) has published an update to its Implementation Plan for Incorporating International Financial Reporting Standards into Canadian GAAP.

The plan envisions a changeover to the new standards of 1 January 2011. The plan includes a comparison of IFRSs and Canadian standards as of 31 March 2007, as well as the AcSB's expectations as to which IFRSs are likely to be adopted in Canada before the changeover to IFRSs for publicly accountable enterprises. The comparison is also available as a separate document. Click to download:

 

Our views on Fair Value Measurement Discussion Paper

16 May 2007

We have submitted to the IASB Our Comments on the Discussion Paper: Fair Value Measurements.

The Discussion Paper sets out the IASB's preliminary views on how to measure fair values when fair value measurement is already prescribed under existing IFRSs. It does not propose any extensions of the use of fair values. The Discussion Paper is built around FASB's recently issued SFAS 157 Fair Value Measurements. SFAS 157 establishes a single definition of fair value together with a framework for measuring fair value for financial reports prepared in accordance with US GAAP. The IASB's Discussion Paper:
  • indicates the IASB's preliminary views on the provisions of FAS 157;
  • identifies differences between FAS 157 and fair value measurement guidance in existing IFRSs; and
  • invites comments on the provisions of FAS 157 and on the IASB's preliminary views about those provisions.
Here is an excerpt from our comment letter on the Discussion Paper:

Constituents are better served with a consistent definition of fair value across different accounting standards when fair value is intended to have the same meaning across those accounting standards. As the Board recognises in its invitation to comment there are differences in the meaning of fair value in current standards. Before an exposure draft can be issued, a thorough analysis of all standards is needed to establish where the term fair value is currently used, what it is intended to mean. Without this analysis we do not believe an overarching measurement standard, defining current value1 measurements, can be developed. In addition, fair value measurement, as defined in the DP, is only one measurement attribute. We are not convinced that this represents the most relevant attribute for all items.

The DP concludes fair value is an exit price based on a transfer (as opposed to a settlement). Current IFRSs use the term fair value as meaning sometimes an entry price, sometimes an exit price, sometimes based on a transfer and sometimes based on a settlement. We believe that rather than removing these different terms by having a standardised definition of fair value which we believe in some instances would lead to an inappropriate treatment, recognition should be given to these different terms as we believe that all of them have a place in accounting literature. As such, the term 'fair value' should be dropped as it means different things to different people.

1 The term 'current value', as opposed to fair value, is purposely used in this letter to mean the measurement attribute of reflecting what an item is currently worth. When describing this measurement attribute the term fair value is not always used as this results in confusion as there are many different definitions of fair value.

Links to All Deloitte Comment Letters to IASB and IASC since 1995.

Comparison of Luxembourg GAAP, IFRSs, and US GAAP

16 May 2007

We have posted Lux GAAP–IFRS–US GAAP: A Comprehensive Comparison, published by Deloitte SA (Luxembourg).

This publication  sets out the key differences between Luxembourg GAAP, IFRSs, and US GAAP as of 28 February 2007. Regarding Luxembourg GAAP, the report states:

IFRS will be introduced into the local Luxembourg commercial law as an alternative to the current Luxembourg accounting principles. The international standards have already been included as an accounting option for credit institutions. The Luxembourg authorities are working on a draft commercial law, this will give the option to use IFRS for statutory accounts, to any limited companies registered in Luxembourg.

Heads Up newsletter on SEC recognition of IFRSs

14 May 2007

We have posted the 14 May 2007 Edition of the Heads Up Newsletter published by Deloitte & Touche LLP (United States).

The newsletter, titled Hands Across the Ocean, discusses expected SEC actions that are likely to increase the use of IFRSs in the United States by both foreign and domestic SEC registrants. An excerpt:

A recent flurry of activity by the SEC has made it almost certain that the reconciliation requirement will be eliminated – a wake-up call for many involved in financial reporting, including foreign and domestic companies, analysts, standard setters and accountants. Of greater relevance to US companies, the SEC is considering letting US issuers use either IFRSs or US GAAP....

The United States would be following the example of the many other countries that have already accepted IFRSs.

Exposé-sondage – NIIF pour les PMEs (SME ED in French)

11 May 2007

The IASB has published the French translation of the Exposure Draft of a Proposed International Financial Reporting Standard for Small and Medium-sized Entities – Exposé-sondage – Norme internationale d'information financière pour les petites et moyennes entités.

The French translation is now freely available to all from the 'Open to Comment' Pages of the IASB's Website (until the comment period closes on 1 October 2007). The ED, Implementation Guidance, and Basis for Conclusions have all been translated. Hard copies are available soon to purchase from the IASCF for £23 each. A Spanish translation was published two weeks ago (download from the 'Open to Comment' link), and a German translation is forthcoming.

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