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News

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New Hong Kong financial statement guide

08 Mar 2006

Deloitte (China) has published (PDF 3,118k).

The objective of this guide is to provide assistance with the process of drafting 2005 financial statements prepared in conformity with Hong Kong Financial Reporting Standards (HKFRSs). As of 1 January 2005, HKFRSs became fully harmonised with International Financial Reporting Standards (IFRSs), except for a few minor differences. This process resulted in the revision of numerous Standards and Interpretations and the issuance of several brand new Standards and Interpretations. The cumulative effect of these revisions and new Standards is that entities are being required to rewrite substantially their financial statements in 2005. The new guide includes 2005 HKFRS model financial statements, a presentation and disclosure checklist for 2005, and a section summarising the key changes made to the listing rules that affect the disclosure and presentation of information in the 2005 annual report.
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IASB-FASB study fair value for financial instruments

07 Mar 2006

The IASB and the US FASB are jointly requesting input from users of financial statements about the kinds of information about fair values of financial instruments, and changes in those fair values, that is useful to those making investment or credit decisions or advising others on investment or credit decisions.

For this purpose, financial instruments include not only debt securities, equity securities, and derivatives, but also loans and accounts payable or receivable, and almost any other amount payable or receivable. The Boards have issued a questionnaire and related background paper aimed at seeking users' views about whether current standards provide the information that investors and creditors need to analyse companies that report some or all financial instruments at fair value. The Boards cite the following as examples of possible additional information that users may need:
  • Quantitative information about the reasons why the fair values of financial instruments changed.
  • Disclosure of exposures to future changes in the fair values of financial instruments.
The questionnaire has five questions with various sub-questions:
  • Question 1 asks users about how they currently use fair value information about financial instruments and what information they wish they had but do not currently receive
  • Question 2 asks about the kinds of information users of financial statements would like to help them understand the reasons why fair values changed during a period
  • Question 3 asks about reporting interest income and expense for financial instruments measured at fair value and whether such interest should reflect current market cost/return and credit quality
  • Question 4 asks how users assess exposure to future changes in fair values of financial instrument
  • Question 5 asks about the relative importance of different types of information that should be required

Responses are requested by 14 April 2006. Click for:

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IASB posts updated editorial corrections lists

06 Mar 2006

The IASB has posted on its website an Updated List of Editorial Corrections to its published standards, including: Corrections to the text of the Bound Volume 2006 (which will be released shortly) Corrections to the text of the Bound Volume 2005 (list includes the corrections previously published in August 2005) Corrections to IFRSs issued since 1 January 2005 .

The IASB has posted on its website an Updated List of Editorial Corrections to its published standards, including:

  • Corrections to the text of the Bound Volume 2006 (which will be released shortly)
  • Corrections to the text of the Bound Volume 2005 (list includes the corrections previously published in August 2005)
  • Corrections to IFRSs issued since 1 January 2005
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An SEC Commissioner comments on the reconciliation

06 Mar 2006

In remarks before the Tenth Annual Conference on (PDF 37k), US SEC Commissioner Cynthia Glassman spoke about, among other things, convergence of US GAAP and IFRSs and eliminating the SEC's required reconciliation.

An excerpt:

The other significant issue on the international accounting front is reconciliation. As you well know, in their SEC filings, companies that use IFRS or other accounting standards have to reconcile their financial statements to U.S. GAAP. I fully support what has become known as the 'roadmap' to achieving the acceptance of IFRS in the U.S. without reconciliation. Basically, our staff is looking to see the nature and scope of the reconciliations and the consistency of IFRS implementation across countries. While our staff has already begun planning the initial phase of the roadmap, we really cannot get started evaluating the 2005 results of the IFRS/U.S. GAAP reconciliations until mid-year, because IFRS has only been recently implemented in many countries for the first time.

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Possible FASB convergence project on major maintenance

06 Mar 2006

At its meeting on Wednesday, 8 March 2006, the US Financial Accounting Standards Board will discuss whether to add to its agenda a project to address planned major maintenance activities.

Currently, under IAS 16, major inspection or overhaul costs are generally accounted for as part of the cost of an asset, while under US GAAP these costs are generally expensed.
IFRIC (International Financial Reporting Interpretations Committee) (blue) Image

'Issues not added to IFRIC agenda' updated

05 Mar 2006

We have updated our table of nearly 100 Issues Not Added to IFRIC's Agenda to reflect the final decisions made at IFRIC's March 2006 meeting not to put the following items to its agenda: IFRS 3 Business Combinations - Whether a new entity that pays cash can be identified as the acquirer IFRS 3 Business Combinations - 'Transitory' common control IAS 17 Leases - Leases of land that do not transfer title to the lessee IAS 12 Income Taxes - Scope IAS 18 Revenue - Subscriber acquisition costs in the telecommunications industry IAS 27 Consolidated and Separate Financial Statements - Separate financial statements issued before consolidated financial statements .

We have updated our table of nearly 100 Issues Not Added to IFRIC's Agenda to reflect the final decisions made at IFRIC's March 2006 meeting not to put the following items to its agenda:

  • IFRS 3 Business Combinations - Whether a new entity that pays cash can be identified as the acquirer
  • IFRS 3 Business Combinations - 'Transitory' common control
  • IAS 17 Leases - Leases of land that do not transfer title to the lessee
  • IAS 12 Income Taxes - Scope
  • IAS 18 Revenue - Subscriber acquisition costs in the telecommunications industry
  • IAS 27 Consolidated and Separate Financial Statements - Separate financial statements issued before consolidated financial statements
IFRIC (International Financial Reporting Interpretations Committee) (blue) Image

IFRIC agenda project pages updated

05 Mar 2006

We have updated the following IFRIC Issues project pages to reflect the deliberations at IFRIC's March 2006 meeting: Service Concession Arrangements IAS 18 Revenue - Customer Loyalty Programmes IAS 18 Revenue - Sales of Real Estate IAS 19 Employee Benefits - The Effect of a Minimum Funding Requirement on the Asset Ceiling IAS 32 - Classification of a Financial Instrument as Liability or Equity .

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IASB and Japan continue convergence discussions

04 Mar 2006

Representatives of the Accounting Standards Board of Japan (ASBJ) and the International Accounting Standards Board (IASB) held their third joint convergence meeting on 1 and 2 March 2006 in Tokyo.

The aim of these ongoing discussions is to achieve convergence of Japanese GAAP and International Financial Reporting Standards (IFRSs). The IASB was represented by four Board members, including Chairman Sir David Tweedie, and staff. The ASBJ was represented by four Board members, including Chairman Professor Shizuki Saito, and staff. Click for:

 

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SEC, EC support IASB-FASB convergence plan

04 Mar 2006

Both the US SEC and the European Commission have issued press releases expressing strong support for the updated Memorandum of Understanding (MOU) (PDF 68k) published jointly by the US FASB and the IASB earlier this week.

The MOU sets out a roadmap agreed to by both FASB and the IASB for steps toward convergence between IFRSs and US GAAP over the 2006-2008 period. Here are the: The SEC's release said:

In recent weeks, SEC Chairman Christopher Cox has publicly stressed the agency's commitment to a 'roadmap' for elimination of the requirement that foreign private issuers reconcile financial statements prepared using international financial reporting standards to the U.S. system of Generally Accepted Accounting Principles (GAAP). "The SEC is working diligently toward the goal of eliminating the existing IFRS to U.S. GAAP reconciliation requirement", he said today. "Achieving that goal depends on the contributions of many parties, including U.S. and international standard setters. This important step by IASB and FASB will help ensure that investor protection remains paramount in these efforts."

You can find more information about the MOU in our News Story of 27 February 2006.
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Comments on IFRSs by IOSCO leader

04 Mar 2006

Michel Prada, Chairman of the Technical Committee of IOSCO, delivered the (PDF 56k) at a recent roundtable on global accounting convergence sponsored by the Financial Stability Forum in Paris on 16 February 2006. Mr.

Prada addressed a range of issues, including trends in worldwide accounting and auditing standards, the processes for setting standards, the recent changes to the IASCF Constitution, structural changes within IFAC, "adoption, equivalence, harmonisation, and convergence in relation to IFRSs", the importance of a set of IFRSs for small and medium-sized entities, and the need for a 'standard setting pause' ("some stability over the next 3 years may well be needed for the transition to be really completed and digested by the stakeholders"). Here is an excerpt:

We should thus be satisfied to see that today IFRS are accepted in about 75 jurisdictions, the word 'accepted' meaning either a required or permitted use. But this absolute number does not mean much in terms of financial markets. It is more meaningful to observe that:

  • Out of a worldwide market capitalization totalling over 36 trillions US Dollars at the end of 2005, 11 trillions $ correspond to markets where IFRS are either required or permitted and 17 trillions US $ to markets where US GAAP is the rule; out of the balance, 4 trillions US $ correspond to Japan GAAP;
  • In terms of the largest companies included in the Fortune 500 list, 176 prepare their accounts under US GAAP and 200 under IFRS, 81 under Japanese GAAP.
These data illustrate both the good progress already achieved worldwide by the IFRS, and the strategic importance of achieving a satisfactory arrangement for acceptance of IFRS in the USA and for convergence between Japan GAAP and IFRS.

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