August

Update on the US SEC and IFRSs

15 Aug 2008

In a recent address to the American Bar Association's Committee on Federal Regulation of Securities, John W White, Director of the Division of Corporation Finance of the US Securities and Exchange Commission presented an update on the activities of his Division and the Commission.

A portion of his comments focused on IFRSs. Click to Download Mr White's Remarks (PDF 143k). Here is an excerpt:

We put out a concept release on this last August, and held two roundtables in December, at which we received a great deal of very thoughtful input. Back in February, Chairman Cox asked that Corp Fin and the Office of the Chief Accountant formally propose to the Commission a 'roadmap' laying out a schedule, with appropriate milestones on which the schedule will be conditioned, for continuing the US's progress in moving to accept IFRS in this country. We have a large team actively working on this project, and even held another roundtable on the topic last Monday, August 4, at which we received yet more helpful information from members of the public. So hopefully we will be prepared to make a recommendation soon. But as always, remember my disclaimer.

In anticipating all of this, I would suggest that you keep the following in mind:

  • We are headed toward a single set of high quality, globally accepted accounting standards – there is general agreement that having a single set of high quality, globally accepted accounting standards will benefit the capital markets generally including investors, as financial statements of global issuers become more comparable on a cross-border basis.
  • The choices are US GAAP and IFRS.
  • Over 100 countries require or accept IFRS.
  • So, IFRS is where the future is (not US GAAP).

Update of our IASC-IASB chronology

15 Aug 2008

We have updated our Chronology of the IASC and the IASB to reflect recent events, exposure drafts, and final standards and interpretations.

The chronology goes back to 1966.

IFRS and the mining industry

14 Aug 2008

Publicly accountable entities in Canada are required to switch to IFRSs starting in 2011 (with an option to adopt IFRSs earlier, even in 2008, with approval of the Provincial securities regulator).

The transition from Canadian GAAP will be different for every company. However, particular industries will experience common themes and issues. Deloitte (Canada) has published IFRS and the Mining Industry: Top Ten Accounting Issues for Canadian Issuers in both English and French: This publication provides Deloitte's viewpoints on the following IFRS changeover issues in the mining industry:
  1. Impairment
  2. Mineral resources and property, plant and equipment
  3. Provisions and asset retirement obligations (including decommissioning and restoration costs)
  4. Business combinations, consolidation, and special purpose entities
  5. Joint ventures
  6. Borrowing costs
  7. Foreign currency
  8. Financial instruments
  9. Income taxes
  10. First-time adoption of IFRSs

 

Heads Up discusses IASB/FASB earnings per share proposals

14 Aug 2008

The latest issue of Heads Up titled 'A Common Denominator: FASB and IASB Issue Exposure Documents on EPS' is now available.

It discusses the exposure documents issued Last Week by the FASB and IASB reflecting efforts by the boards to converge the guidance on earnings per share in US GAAP and International Financial Reporting Standards and to clarify and simplify this guidance.
Click to view A Common Denominator: FASB and IASB Issue Exposure Documents on EPS (PDF 155k).

 

Discussing an IFRS changeover plan in the MD&A

14 Aug 2008

As part of their programme to provide guidance to clients and others on Canada's transition to IFRSs, Deloitte (Canada) has published How to Monitor a Sea Change: Discussing Your IFRS Changeover Plan in the MD&A.

This booklet discusses the contents of a changeover plan and how to explain the plan in a company's 'Management Discussion and Analysis'. A sample changeover plan is included. Click to download English and French versions: There is much more information about Canada's transition to IFRSs on our Canada Page and on Deloitte Canada's IFRS Transition Page.

Stay Tuned Online – IFRS and UK GAAP updates

13 Aug 2008

The Deloitte London IFRS Centre of Excellence is running a series of hour-long Internet-based financial reporting updates, aimed at helping finance teams keep up to speed with IFRS and other financial reporting issues.

Each update lasts no more than an hour, and sessions are held three times a year, approximately at the end of March, July and November. We intend to make a recording of each session available on IAS Plus for a period of at least four months from the date of the presentation. The third in the series was held recently.

The topics covered in the July 2008 Stay Tuned Online IFRS and UK GAAP Update were:

  • IFRIC 15 Agreements for the Construction of Real Estate and IFRIC 16 Hedges of a Net Investment in a Foreign Operation
  • Update on implementation of the Companies Act 2006
  • Latest Financial Reporting Review Panel developments
  • The impact of Improvements to IFRSs issued in May 2008
To access the recording Click Here. There's a permanent link on our UK Country Page.

 

CRMPG-III report on containing systemic risk

13 Aug 2008

The Counterparty Risk Management Policy Group III (a group of senior officials from a number of major financial institutions) has published a report titled Containing Systemic Risk: The Road to Reform.

The Report sets out an integrated framework of private initiatives that will complement official oversight to help contain systemic risk. The Policy Group focused on four key areas, which it deemed the most important and timely and were the areas in which the Policy Group believed it could make the greatest contribution. Those areas include:
  • Reconsideration of the standards for consolidation under US GAAP of entities currently off-balance sheet coming on-balance sheet.
  • Measures to better understand and manage high-risk financial instruments.
  • Significant enhancements to risk monitoring and management.
  • A series of sweeping measures to enhance the resiliency of financial markets generally and the credit markets in particular, with a special emphasis on OTC derivatives and credit default swaps.
The report also highlights important emerging issues that will require close attention in the period ahead. Accounting recommendations begin on page 18. Click to Download the Report (PDF 606k). We have added it to our Credit Crunch Page.

An excerpt from the accounting recommendations: II-1. The Policy Group endorses, in principle, the direction of the changes to the US GAAP consolidation rules provided that the changes are (1) principles-based, (2) convergent with International Financial Reporting Standards, and (3) accompanied by suitable disclosure and transition rules regarding regulatory capital which will provide flexibility in the implementation of these rules over a reasonable period of time.

II-2. The Policy Group recommends adoption of a single, principles-based global consolidation framework that is based on control and the ability to benefit from that control. The analysis of whether an entity (the investor) has a controlling interest in another entity (the investee) should be based on:

  • the investor's power over the investee, including the ability to make decisions that determine the success of the investee;
  • the degree of investor exposure to the risks and rewards of the investee, including through guarantees, commitments and all other explicit and implicit arrangements between the two entities; and
  • the design and sponsorship of the investee, including the degree to which the activities of the investee expose the investor to commercial, legal, regulatory and reputational risks.

Updated IFAC education pronouncements

12 Aug 2008

IFAC's International Accounting Education Standards Board (IAESB) has released amended versions of its International Education Standards (IESs) and related education pronouncements.

The amendments result in more consistent use of terminology throughout the standards and more clearly describe the role of the IAESB and its standard-setting process. The amended documents (all of which were initially published 2003-2006) are:
  • Framework for International Education Pronouncements,
  • Introduction to International Education Standards, and
  • International Education Standards 1-8.
IESs express the benchmarks that IFAC member bodies are expected to meet in the preparation and continual development of professional accountants. Because the changes are editorial in nature, the IAESB did not undertake public consultation. In addition to these editorial amendments, the IAESB has commenced a project to substantively revise the Framework and the Introduction. As part of that project, the IAESB will seek public comments on changes to those documents. The amended versions of IESs 1-8, the Framework and the Introduction can be downloaded without charge from the IFAC Online Bookstore. Click for Press Release (PDF 35k).

 

Deloitte letter to SEC on interactive data proposal

12 Aug 2008

On 14 May 2008, the US Securities and Exchange Commission proposed that all registrants be required to file their data with the SEC in XBRL (interactive data) format.

XBRL reporting would be required for registrants using either US GAAP or IFRSs. The transition would take three years starting in 2008. There's more information in our News Story of 16 May 2008. A few days later, the Commission proposed that more than 8,000 mutual funds trading in the US would also be required to file XBRL date (see our News Story of 26 May 2008). Deloitte & Touche LLP (United States) has submitted a comment letter on the SEC's first proposal. Overall, we support the Commission's interactive data initiative. Our letter makes a number of suggestions that, we believe, will ensure successful implementation of the proposed rule.

Among the points made in our letter:

  • Updated preparer guidance. The Commission should update the EDGAR Filer Manual to provide additional guidance on tagging information in the footnotes and financial statements, and this update should be exposed for public comment sufficiently in advance of the proposed adoption dates.
  • Maintenance, support, and updating of taxonomies. The Commission should expose for comment its plan for ensuring that the XBRL taxonomies remain current as well as its planned mechanism for communicating such updates to preparers and interactive data users.
  • Validation software considerations. The Commission plans 'to use validation software to check interactive data for compliance with many of the applicable technical requirements'. The Commission should release its validation criteria for public comment sufficiently in advance of the first phase-in dates under the rule to enable preparers and users to understand the extent of the procedures performed by the software and the expectations of the Commission.
  • Monitoring during the phase-in period. The Commission should specify (1) the criteria that it will use during the early phase-in periods to assess the success of the implementation and (2) how it will determine whether additional adjustments will be necessary for the later phase-in periods.
  • Assurance issues during the phase-in period. The PCAOB and the Commission should work with the auditing profession to revise the standard report of the independent registered public accountant to explicitly refer to the financial statements filed in Item 8 of the registrant's Form 10-K and perhaps to include a statement that assurance has not been provided on the interactive data. The Commission also should develop specific guidance on how the auditor should report if a registrant voluntarily elects to obtain assurance on its interactive data.
  • Clarifying the extent of auditor liability. Our letter offers a number of suggestions for clarifying auditor liability with respect to interactive data.
  • Early adoption of the proposal. The Commission should clarify how a registrant in one of the later phase-in groups could early-adopt the proposal.
  • Interactive data and financial statement requirements. The proposed rule currently would apply only to registration statements, annual reports on Forms 10-K or 20-F, quarterly reports on Form 10-Q, and transition reports. The Commission should clarify whether a registrant should file interactive data for Forms 8-K that update financial statements.
  • Need for assurance after the phase-in period. Throughout the phase-in period, the Commission should seek feedback from financial statement users regarding (1) whether their primary source of information for investing decisions is financial statements filed in the traditional format or as interactive data and (2) whether they believe assurance is needed for the interactive data.
  • Coordination with IFRS initiatives. The Commission has issued a concept release on allowing US issuers to prepare financial statements in accordance with International Financial Reporting Standards. The Commission should ensure that any rulemaking associated with that concept release remains aligned with its XBRL rulemaking efforts.

 

Deloitte UK study on interim management statements

12 Aug 2008

Deloitte & Touche (United Kingdom) has published First Impressions: The First Year's Interim Management Statements.

This publication considers how UK listed companies have implemented the new requirements for a twice-yearly interim management statement (IMS) in the first year of compliance with the UK Disclosure and Transparency Rules (DTR) (which is based on the European Transparency Obligations Directive). In particular, it surveys interim management statements of UK listed companies (including separate consideration of investment trusts), reviews compliance with the new rules, and contains illustrative and real life example IMSs as well as an IMS disclosure checklist. Click to download:

 

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.