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Australian Accounting Alert on fair value option

13 Jul 2005

Deloitte (Australia) has published (PDF 43k) covering AASB 2005-4 Amendments to Australian Accounting Standards issued by the Australian Accounting Standards Board (AASB).

AASB 2005-4 amends AASB 139 Financial Instruments Recognition and Measurement to reflect the restrictions on using the fair value option recently adopted by the IASB. This Accounting Alert provides an overview of that change. Links to all past Alerts are Here.
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EC 'FAQ' publication on IAS 39 fair value option

13 Jul 2005

The European Commission has published (PDF 94k), providing the Commission's views on the following questions: Why did the Commission carve out the full fair value option in the original IAS 39 standard? Do prudential supervisors support the IAS 39 FVO as published by the IASB? When will the Commission to adopt the amended standard for the IAS 39 FVO? Will companies be able to apply the amended standard for their 2005 financial statements? Does the amended standard for IAS 39 FVO meet the EU endorsement criteria? What about the relationship between the fair valuation of own liabilities under the amended IAS 39 FVO standard and under Article 42(a) of the Fourth Company Law Directive? Will the Commission now propose amending Article 42(a) of the Fourth Company Directive? What about the remaining IAS 39 carve-out relating to certain hedge accounting provisions? .

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Reminder about upcoming comment deadlines

13 Jul 2005

We remind IAS Plus visitors that the deadlines for submitting comments on the following IFRIC Draft Interpretations are 18 July 2005: IFRIC D16 Scope of IFRS 2 (issued 19 May 2005) IFRIC D17 IFRS 2 – Group and Treasury Share Transactions (issued 19 May 2005) .

We remind IAS Plus visitors that the deadlines for submitting comments on the following IFRIC Draft Interpretations are 18 July 2005:

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IASB statement on withdrawal of IFRIC 3

12 Jul 2005

The IASB has issued a Public Statement on Withdrawal of IFRIC 3' Emission Rights'.

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IAASB standard on reviews of interim information

12 Jul 2005

The International Auditing and Assurance Standards Board (IAASB) has released a new International Standard on Review Engagements (ISRE) to assist auditors engaged to review the interim financial information of an audit client.

ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity outlines the general principles of a review of interim financial information, provides guidance on the procedures to be performed, and prescribes the content of the review report. In addition, an appendix to the standard includes examples of an engagement letter, management representation letter, analytical procedures the auditor may consider when performing the review, and illustrative review reports. ISRE 2410 is effective for engagements to review the interim financial information of an audit client for periods beginning on or after 15 December 2006. Click for Press Release (PDF 77k).
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New Accounting Roundup newsletter posted

11 Jul 2005

We have posted the (PDF 201k) from Deloitte & Touche (United States).

This issue includes:
  • FASB developments - including SFAS 154 on accounting changes; FASB-IASB joint EDs on business combinations and noncontrolling interests; final FSPs on warrants, electronic waste, and employee compensation; and proposed FSPs on minimum revenue guarantees and life settlement contracts.
  • EITF developments - EITF meeting 15-16 June 2005
  • AICPA developments - including an exposure draft of eight proposed auditing standards
  • SEC developments - including the SEC's report on off-balance-sheet arrangements and final Regulation NMS on requirements for US equity exchanges
  • PCAOB developments - including guidance on XBRL attestation
  • International developments - including IASB's amendments to IFRS 1 and IFRS 6 and fair value option amendments to IAS 39; proposed amendments to IAS 37; and summaries of the IASB's 22-23 June 2005 meeting and IFRIC's 2-3 June 2005 meeting.
All past issues of Accounting Roundup are Here.
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ARC endorses revised IAS 39 fair value option

11 Jul 2005

At its meeting on 8 July 2005, the Accounting Regulatory Committee, which advises the European Commission on adoption of individual International Financial Reporting Standards for use in the European Union, agreed unanimously to recommend endorsement of an amended version of IAS 39 that includes revised provisions relating to the fair value option (FVO).

When the Commission adopted IAS 39 last year, the FVO provisions were carved out. The Commission has already consulted the European Parliament on the revised FVO and, provided Parliament raises no objections, the Commission intends to adopt the amended standard by the end of September 2005. Adoption will be retroactive to 1 January 2005, so that companies can apply the amended standard for their 2005 final statements. Click for:
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CESR advice on national GAAP equivalence to IFRSs

11 Jul 2005

The Committee of European Securities Regulators (CESR) has published its final technical advice to the European Commission on the equivalence between Canadian, Japanese, and US general accepted accounting principles (GAAP) and IFRSs.

CESR's principal conclusion is that "the three countries' GAAPs, each taken as a whole, are equivalent to IFRSs". Therefore, CESR recommends that non-European companies trading in European securities markets be allowed to submit financial statements in Canadian, Japanese, and US GAAP without a full reconciliation of their accounts to IFRSs. However, they must provide information about certain specific differences between those national GAAPs and IFRSs. CESR's advice includes a non-exhaustive standard-by-standard list of differences as of 1 January 2005 for which disclosure of the nature and effect of the differences is required. CESR intends to update the list as of 1 January 2007. In addition, CESR proposes the following:
  • Companies that have subsidiaries such as Qualifying Special Purpose Entities (QSPEs) that are not consolidated for third country GAAP purposes, but are required to be consolidated for the purposes of IFRS, must report a pro-forma balance sheet and profit and loss account on their local GAAP basis, but including the unconsolidated subsidiaries.
  • Companies reporting under Japanese GAAP that have either accounted for mergers by the pooling of interest method and/or have consolidated subsidiaries on the basis of GAAPs that are not consistent with either IFRS or any of the third country GAAPs should report a pro-forma balance sheet and profit and loss account on the basis of IFRS covering business combinations and consistent accounting policies, respectively.
  • Japanese and US issuers must adopt accounting policies for the expensing of stock options on a basis equivalent (but not necessarily identical) to IFRSs, for implementation on or before 1 January 2007. (The US has already adopted such a standard, and Japan is considering doing so.)
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CESR recommends amending the prospectus regulation

11 Jul 2005

The Committee of European Securities Regulators (CESR) has published a consultation paper that sets out recommendations for a possible amendment of the Commission's Prospectus Regulation regarding historical financial information that must be included in a prospectus.

The Prospectus Regulation, which came into effect on 1 July 2005, requires (among other things) three years' audited historical information for the issuer as a whole. Sometimes, however, the issuer has not prepared its historical financial information as a single business during the whole of the three-year period, for example, because:
  • the issuer is a newly incorporated holding company inserted over an established business;
  • the issuer consists of companies that were under common control or ownership but that never formed a legal group;
  • the issuer has made a significant acquisition (representing more than 25% of the group) during the three-year historical period;
  • the issuer has disposed of a significant part of its business since the last audited accounts;
  • the issuer has changed the end of its financial year during the three year period.
CESR's recommendations relate to what additional information should be included in prospectuses in circumstances such as the foregoing. CESR requests replies by 15 September 2005 and will hold a hearing on 6 September 2005. Click to download:
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IASB chairman meets with the ARC

10 Jul 2005

IASB chairman Sir David Tweedie met with the European Commission's Accounting Regulatory Committee (ARC) in Brussels to discuss the development of International Financial Reporting Standards and, in particular, the convergence of international and national accounting standards.

Sir David was accompanied by IASC Foundation Trustee Max Dietrich Kley. The ARC is composed of representatives of EU Member States and was set up to advise the Commission on proposals to endorse individual IFRSs for use in Europe. Click to download (PDF 42k). An excerpt:

The European Commission, the European Parliament and EU Member States deserve much credit for providing the impetus to our efforts. Your choice of an international approach to accounting standards over a national and regional approach for Europe is a model for others. At the same time, if we are to achieve truly global standards and all the benefits that they will bring, accounting convergence must necessarily involve the United States, which accounts for nearly half of the world's total market capitalisation.

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