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News

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Implications of adopting IFRSs on practice

10 Aug 2005

Andreas Barckow, Deloitte's national IFRS leader for Germany, spoke on the Implications of EU Adoption of IFRSs on Practice at the International Accounting Section luncheon at the annual meeting of the American Accounting Association on 8 August 2005. Click to Download Andreas's Presentation (PDF 258k). .

Andreas Barckow, Deloitte's national IFRS leader for Germany, spoke on the Implications of EU Adoption of IFRSs on Practice at the International Accounting Section luncheon at the annual meeting of the American Accounting Association on 8 August 2005. Click to Download Andreas's Presentation (PDF 258k).

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UK debate: fair presentation vs true and fair

09 Aug 2005

The United Kingdom Financial Reporting Council (FRC) has analysed the implications of new accounting and auditing standards for the 'true and fair view' and auditors' responsibilities.

The introduction of IFRSs for listed companies and new UK auditing standards based on IAASB Standards have replaced 'true and fair view' with 'fair presentation' as the over-arching test that financial statements should satisfy. Based on its analysis, the FRC has concluded that while the new standards will result in changes to the format and content of both company accounts and audit reports:
  • the concept of the 'true and fair view' remains a cornerstone of financial reporting and auditing in the UK;
  • there has been no substantive change in the objectives of an audit and the nature of auditors' responsibilities; and
  • the need for professional judgement remains central to the work of preparers of accounts and auditors in the UK.
The FRC is inviting comments on both its analysis of the current UK accounting and auditing frameworks and how they should evolve in the future. Click to download (PDF 99k). Response deadline is 1 November 2005.
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Time for a rethink on IFRSs?

09 Aug 2005

In an article in the July 2005 issue of Company Director magazine, Chris Biermann, senior audit partner, and Frank Betkowski, client director, with Deloitte (Australia) ask whether it's Time for a Rethink on IFRSs? in Australia.

Australia has been adopting national 'equivalents' of IFRSs, with some accounting options removed, disclosures added, and guidance for applying the standards in the public sector. These standards apply to all but the smallest entities in Australia.

"The current situation is an 'almost there' outcome for Australia. We strive for the holy grail of 'IFRS convergence', but have done so in a way that causes difficulties for truly global organisations and forces standards applicable to the top end of town across the board."

Click to (PDF 433k).
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New Global Offerings Services newsletter

09 Aug 2005

We have posted the (PDF 382k).

Global Offerings Services is a global team of Deloitte practitioners assisting non-US companies and non-US practice office engagement teams in applying US and International accounting standards (that is, US GAAP and IFRSs) and in complying with the SEC's financial reporting rules. Past GOs Newsletters are Here.

On 12 April 2005, the US Securities and Exchange Commission adopted its final rule First-time Application of International Financial Reporting Standards (IFRS). Subsequently, several implementation questions have arisen. To promote consistency in applying the SEC rule and reducing uncertainties foreign private issuers may face during the transition year, the AICPA International Practices Task Force developed a series of frequently asked questions based on discussions with the SEC staff. The SEC staff has indicated that it does not object to the views expressed herein. An appendix to the July 2005 GOS Newsletter contains the full text of the Q&As.;

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Implementing Hong Kong equivalents of IFRSs

09 Aug 2005

Deloitte (China) has published (PDF 2,022k).

Starting in 2005, Hong Kong Financial Reporting Standards are identical to International Financial Reporting Standards. While Hong Kong had adopted many of the earlier IASs as Hong Kong standards, some had not been adopted, including IAS 32 and IAS 39. And all of the December 2003 improvements and new and revised IFRSs issued in 2004 and 2005 will take effect in Hong Kong beginning in 2005. For each standard, this new 180-page book sets out:
  • a summary of its content,
  • the key changes it makes to accounting in Hong Kong,
  • the most significant implications of its adoption, and
  • related anticipated future developments. There is one Hong Kong standard and several Hong Kong interpretations that do not have counterparts in IFRSs. Also there are several wording differences between HKFRSs and IFRSs due to Hong Kong law. These are all described in this new book. You will find a link to this and many other Deloitte publications on our IFRS Publications Page.
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Tax consolidation under Australian IFRSs

08 Aug 2005

Deloitte (Australia) has published a discussion paper on (PDF 598k).

Australia's Urgent Issues Group issued Interpretation 1052 Tax Consolidation Accounting to address the accounting implications of the move by the Australian federal government to allow Australian groups to tax consolidate. Interpretation 1052 deals only with the separate financial statements of entities within a tax-consolidated group and many of the other issues surrounding the accounting for income tax in the tax consolidation environment remain unresolved. From a commercial perspective, there are three clear messages for Australian entities arising from Interpretation 1052:
  • 1. Tax funding arrangements need to be reviewed and if necessary rewritten to avoid superfluous accounting implications.
  • 2. The costs and benefits of any systems changes need to be considered.
  • 3. Care needs to be taken to ensure that the accounting methodology adopted does not result in unfavourable tax consequences.
The discussion paper explores these issues in addition to providing an in-depth analysis of the accounting mechanics of Interpretation 1052.
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EFRAG 'major concerns' re IFRS 3 proposals

06 Aug 2005

The European Financial Reporting Advisory Group (EFRAG) has invited comments on its draft letter to the IASB on the exposure draft of Business Combinations Phase II, which involves proposed amendments to IFRS 3, IAS 27, IAS 37, and IAS 19. .

The European Financial Reporting Advisory Group (EFRAG) has invited comments on its draft letter to the IASB on the exposure draft of Business Combinations Phase II, which involves proposed amendments to IFRS 3, IAS 27, IAS 37, and IAS 19.

We would at the outset like to make clear our support for the objective of this project to achieve convergence if it is convergence to the better accounting solution and can be achieved with reasonable efforts. We have nevertheless some major concerns...

EFRAG's concerns relate to:

  • Structure and Process of the Project, including non-issuance of a discussion paper, shortness of the comment period (especially for Europe), failure to achieve IFRS-US GAAP convergence, increased use of fair values before a debate on measurement has taken place, and changes to concepts in the Framework:

    We have a major concern with the fact that the Board proposes changes to concepts that are contained in the Framework without either first discussing those potential changes in the context of the Framework itself or actually proposing to change the Framework.

  • Technical issues, including whether a single method of accounting is appropriate for all business combinations (particularly for combinations involving mutual entities and by contract alone), subjective fair value measurements by unlisted companies or in illiquid markets, and definition of a business.
  • Proposed changes to IAS 27. EFRAG is "not convinced that the entity view is superior to the current 'parent-only' approach".
  • Proposed changes to IAS 37. EFRAG has concerns (a) about building probability into the measurement of non-financial liabilities rather than (as IAS 37 currently does) into the recognition criteria and (b) about measuring non-financial liabilities at the amount that an entity would rationally pay to settle the present obligation or to transfer it to a third party.
Click to Download EFRAG's Letter (DOC 232k). Comment deadline is 21 October 2005. The United Kingdom Accounting Standards Board has Invited Comment on the IASB's Proposals while expressing concerns similar to EFRAG's:

The ASB is issuing the proposed standards in accordance with its policy of aligning UK accounting standards with IFRS. It notes, however, that the proposals raise a number of issues, and, arguably, some of these would not represent an improvement in UK financial reporting. Amongst the more controversial issues are:

  • the proposal that goodwill is to be recognised in full; that is, 100% of goodwill is recognised even if less than 100% is acquired;
  • the requirement in IFRS 3 that, after initial recognition, goodwill should be measured at cost less impairment losses, and amortisation is not be permitted;
  • unlike present requirements, liabilities will be recognised even where it is probable that no outflow will be required to settle the obligation. The probability of an outflow is reflected in the measurement of the liability.
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IFRIC meeting dates for 2006

06 Aug 2005

The meeting schedule of the International Financial Reporting Interpretations Committee for 2006 is as follows, all in London: Thursday 12 January and Friday 13 January 2006 Thursday 2 March and Friday 3 March 2006 Thursday 11 May and Friday 12 May 2006 Thursday 6 July and Friday 7 July 2006 Thursday 7 September and Friday 8 September 2006 Thursday 2 November and Friday 3 November 2006 You can always find meeting dates for IASB, SAC, IFRIC, and IASCF by clicking the Future Meeting Dates link on our home page. .

The meeting schedule of the International Financial Reporting Interpretations Committee for 2006 is as follows, all in London:

  • Thursday 12 January and Friday 13 January 2006
  • Thursday 2 March and Friday 3 March 2006
  • Thursday 11 May and Friday 12 May 2006
  • Thursday 6 July and Friday 7 July 2006
  • Thursday 7 September and Friday 8 September 2006
  • Thursday 2 November and Friday 3 November 2006
You can always find meeting dates for IASB, SAC, IFRIC, and IASCF by clicking the Future Meeting Dates link on our home page.
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SEC Chairman urges full adoption of IFRSs

05 Aug 2005

The Chairman of the Securities and Exchange Commission of Pakistan (SEC), Dr. Tariq Hassan, has urged "across-the-board adoption of the International Financial Reporting Standards (IFRSs) in order to bring transparency in the corporate sector in Pakistan".

Here is an excerpt from his remarks at a seminar on IFRSs organised by the Institute of Cost and Management Accountants of Pakistan:

What we seek in transparency is the ability of an investor to 'see through' a company's financial statements the true results of its operations. Transparency requires that companies follow Generally Accepted Accounting Principles (GAAP) in a manner that assures consistency and comparability. The best way of achieving this is to observe and adopt IFRSs in its true spirit.

Click for Press Release (PDF 6k).

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Transition from Danish GAAP to IFRSs

05 Aug 2005

Deloitte in Denmark has developed a (PDF 685k).

It describes in English the areas of IFRSs that differ from Danish GAAP. This checklist is likely to be a useful tool for non-Danish speakers needing to know about the impact of IFRSs for entities listed on the Copenhagen Stock Exchange. We have added this publication to our page that has Comparisons of National GAAPs and IFRSs. You will also find a link on our IFRS Publications Page.

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