2007

Notes from day one of January 2007 IASB meeting

24 Jan 2007

The International Accounting Standards Board held its January 2007 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Thursday 23-25 January 2007.

We have combined the preliminary and unofficial notes taken by Deloitte observers at the meeting on our January 2007 IASB Meeting Page.

Report recommends US recognition of IFRSs

24 Jan 2007

A study commissioned by political leaders in New York City suggests that New York is in danger of losing its status as the world financial centre within ten years without a major shift in regulation and policy.

The study warns that New York financial markets are becoming stifled by stringent regulations and high litigation risks and are in danger of losing businesses and high-skilled workers to overseas competitors. The report identifies eight high-priority goals as a 'national agenda' – including recognition of International Financial Reporting Standards. Click to Download the Full Report (PDF 1,756k):

Recommendations for a National Agenda

Critically important near-term priorities

  • 1. Provide clearer guidance for implementing the Sarbanes-Oxley Act
  • 2. Implement securities litigation reform
  • 3. Develop a shared vision for financial services and a set of supporting regulatory principles

Initiatives to level the playing field

  • 4. Ease restrictions facing skilled non-US professional workers
  • 5. Recognize IFRS without reconciliation and promote the convergence of accounting and auditing standards
  • 6. Protect US global competitiveness in implementing Basel II

Important longer-term national priorities

  • 7. Form a National Commission on Financial Market Competitiveness
  • 8. Modernize financial services charters

Recommendation 5

Recognize IFRS without reconciliation and promote the convergence of accounting and auditing standards. The SEC should consider recognizing International Financial Reporting Standards (IFRS) without requiring foreign companies listing in the US to reconcile to US Generally Accepted Accounting Principles (GAAP). Similarly, the PCAOB should work with other national and international bodies towards a single set of global audit standards. Meanwhile, the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) should continue – and, if possible, accelerate – current efforts towards the convergence of global accounting standards, aiming for a 'best-of-both' approach that balances materiality with the need to inform investors and other users of publicly reported financial information.

The accelerated convergence of two high-quality accounting standards will reduce regulatory compliance costs without undermining investor protection or impairing market information. The harmonization of auditing rules, provided that better standards win out, will similarly lower auditing costs for most public companies without reducing the quality of the statements produced.

IFRS preparers and auditors sought for IFRIC

24 Jan 2007

The Trustees of the IASC Foundation have invited applications from suitable candidates to fill four vacancies on the International Financial Reporting Interpretations Committee (IFRIC).

The Trustees are seeking two individuals with senior experience with an international accounting firm and two individuals from the corporate community who are responsible for the preparation of financial accounts according to IFRSs. They would serve for a term expiring on 30 June 2010, with eligibility for reappointment. Replies are requested by 9 March 2007. Click for Press Release (PDF 19k).

Comment deadline on fair value DP extended

24 Jan 2007

The IASB has decided to extend the comment deadline on its Discussion Paper Fair Value Measurements to Friday, 4 May 2007. The deadline had been 2 April 2007. Click for More Information about the Fair Value Measurements Project.

The deadline had been 2 April 2007. Click for More Information about the Fair Value Measurements Project. You can download the Discussion Paper without charge during the comment period from the IASB website 'Open to Comment' Page.

Notes from day two of January 2007 IASB meeting

24 Jan 2007

The International Accounting Standards Board held its January 2007 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Thursday 23-25 January 2007.

We have combined the preliminary and unofficial notes taken by Deloitte observers at the meeting on our January 2007 IASB Meeting Page.

Over 1,000,000 e-learning downloads from IAS Plus

23 Jan 2007

On 22 January 2007, we achieved the milestone of one million downloads of Deloitte IFRS e-learning modules from IAS Plus.

Deloitte's IFRS e-learning was launched at the end of January 2004. Downloaders come from nearly 160 countries and include audit firms, accounting bodies, regulators, educational institutions, and many of the world's leading companies. In many cases, these organisations have chosen the Deloitte materials to be their primary source of IFRS learning. Many of the downloaded modules have multiple users because organisations are permitted to install them on their own servers for the internal use of their employees or students. In addition, millions of additional modules have been completed online and offline by Deloitte staff. You can always access IFRS e-learning without charge by clicking on the light bulb icon on the IAS Plus home page.

IASCF trustees meet in Tokyo 18-19 January 2007

23 Jan 2007

The trustees of the International Accounting Standards Committee Foundation met on Thursday and Friday, 18 and 19 January 2007, in Tokyo.

A portion of the meeting on 18 January was open to public observation:

Summary of Discussion

Public Portion of IASCF Meeting, 18 January 2007

  • Financial Statement Presentation. IASB representatives explained that improvement of financial statement presentation is being done in three phases. The exposure draft of Phase A was released in March 2006, and a final standard will be issued in the second quarter in 2007. The exposure draft of Phase A allows either a single-statement approach or two-statement approach for reporting results of operations. Representatives of IASB noted that, under the two-statement approach, determining which items of income and expense should be excluded from determination of net income is arbitrary, and sometimes net income has been manipulated by financial statement preparers. Therefore, the Board would like to move to a single statement of comprehensive income and eliminate the two-statement approach – even though the two-statement approach is widely supported by industry. Some IASCF members expressed the view that both preparers and users of the financial statements are still much concerned about net income. The IASCF members advised that IASB needs to make another field survey before they reach the final conclusion to eliminate the two-statements approach and move to a single statement of comprehensive income. Representatives of IASB agreed with them.
  • Conceptual Framework. Representatives of IASB confirmed that the Conceptual Framework is intended as a guide not only for the IASB in setting standards but also for preparers and users to assist them in practice how to follow the theory where no specific accounting pronouncement addresses a situation.
  • Insurance. This project is now in Phase II, for which a Discussion Paper is expected in first quarter 2007. The key issue is how best to measure future cash inflows and outflows for the purpose of recognising insurance income and insurance liabilities.

Accounting Roundup – 2006 Year in Review

23 Jan 2007

We have posted the 2006 Year in Review Special Edition of Accounting Roundup published by Deloitte & Touche LLP (USA).

This 53-page newsletter (PDF 434k) summarises the final accounting and auditing guidance issued by the FASB, IASB, GASB, EITF, SEC, PCAOB, and AICPA throughout the year. Links to all issues of Accounting Roundup are Here.

PCAOB report on auditors' responsibilities for fraud detection

23 Jan 2007

The US Public Company Accounting Oversight Board (PCAOB) has published a report of its Observations on Auditors' Implementation of PCAOB Standards Relating to Auditors' Responsibilities with Respect to Fraud.

Based on the findings of PCAOB inspections of audit firms, the report discusses aspects of procedures relevant to an auditor's consideration of fraud. The discussion is organised around the following topics:
  • Auditor's Overall Approach to the Detection of Financial Fraud
  • Brainstorming Sessions and Fraud-Related Inquiries
  • Auditor's Response to Fraud Risk Factors
  • Financial Statement Misstatements
  • Risk of Management Override of Controls
  • Other Areas to Improve Fraud Detection
Click for Full Report (PDF 82k).

Update on the SEC and IFRSs

22 Jan 2007

John W White, the Director of the Division of Corporation Finance of the US Securities and Exchange Commission, spoke about "the Commission's role in the ongoing efforts to improve financial reporting through International Financial Reporting Standards (or IFRS) and the promotion of accounting convergence" at a conference last week in London.

His remarks also touched on the Commission's proposed rulemaking concerning deregistration by foreign private issuers and its efforts to improve the implementation of the internal control reporting requirements of the Sarbanes-Oxley Act of 2002 including for foreign private issuers. IFRS-related topics about which Mr White commented include:
  • Financial reporting in an increasingly global market
  • The role of Corporation Finance in the review of IFRS filings
  • Financial reporting with IFRS
  • Convergence of IFRS and US GAAP
  • The importance of cross-border regulatory conversations
Presented below is an excerpt from Mr White's comments concerning convergence of IFRSs and US GAAP. Click to Download Mr White's Speech  (PDF 77k).

Convergence of IFRS and US GAAP

Let me turn for a moment to convergence (and our roadmap). Last year was the first year for many companies to use IFRS. The SEC staff is necessarily also gaining more experience with IFRS, and enhancing our own understanding of the accounting standards. Right now, foreign private issuers must reconcile their financial statements to US GAAP if those statements use IFRS (or another home country GAAP) in the first instance. Many of us would like to see an end to that reconciliation requirement for IFRS filings, and we have a project plan to consider that possibility by 2009. Expanded use of IFRS and the SEC staff's review of those filings (which I have been describing) is an important step in our roadmap for the end of reconciliation. The continuing convergence efforts of the Financial Accounting Standards Board in the US and the IASB are also an important step in that roadmap. It is not an important step, in fact not a step at all, that IFRS be exactly the same as US GAAP. Nor is it part of the SEC staff's roadmap that we become the arbiter of IFRS. As our comments to and correspondence with foreign private issuers that adopted IFRS for the first time last year become available on the SEC website, I encourage you to look directly at those comments and put them to the test. I believe you will see that they reflect this same mindset that I have been sharing with you today.

The SEC staff roadmap laid out a path for a possible end to reconciliation by 2009, and the staff continues to follow that roadmap and to undertake the steps it had contemplated. It's too early now to tell where it will end, but our commitment to doing our part remains as strong as ever. Part of that involves understanding the application of IFRS and understanding the effects of IFRS on investors and the U.S. markets. We are actively engaged in seeking and analyzing the information we need and that is a key project for us in 2007. We are also considering other avenues for gathering information, beyond the reviews I have described, and we may have more to say on that in coming months.

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