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Discussion paper on accounting for business combinations


Deloitte (Australia) has published the second in their new series of Discussion Papers on Australian equivalents to International Financial Reporting Standards ('A-IFRSs'): (PDF 1,088k, 52 pages).

The objective of this Discussion Paper is to provide an Australian perspective on the significant convergence areas of business combinations, intangibles, and impairment. The new and modified concepts and procedures for Australian entities are highlighted and crossed referenced to the Deloitte global publications (PDF 1,894) and (PDF 2,506k).

September 2004 Accounting Roundup newsletter


We have posted the of Accounting Roundup (PDF 265k), a newsletter published by Deloitte & Touche (USA).

Accounting Roundup summarises recent accounting and financial reporting developments and provides Internet links to related content. This issue has information about developments at FASB (including FSP 142 on oil and gas companies, AICPA guide on real estate time sharing, and summaries of recent FASB meetings), SEC (including postponement of accelerated filing dates and approval of several PCAOB documents). You will find all Past Issues Here.

Deloitte comments on IASB SME preliminary views


The Deloitte letter of comment on the IASB's Discussion Paper Preliminary Views on Accounting Standards for Small and Medium-sized Entities (SMEs) recommends creation of a separate committee to develop international accounting standards for SMEs.

Its standards would be subject to approval by the IASB. Click to (PDF 111k). Deloitte's overall view:

We believe that this consultation is timely as it will allow the IASB to consider the comments and to amend, as appropriate, its preliminary views before proceeding to an exposure draft stage. We have serious reservations about certain aspects of this project, which we detail in the appendix to this letter. In our view, if the IASB were to continue the project based on its preliminary views, then the resulting standards for small and medium-sized entities (SMEs) would be of limited practical use, would not address the needs of SMEs and would not reduce significantly the number of separate accounting regimes for SMEs around the world. We believe that this SME project is very important politically for the IASB's standing around the world. The Board's consultations with national standard-setters and its own Standards Advisory Council have demonstrated the need for this project and the priority attached to it.

We acknowledge the current time and work pressures on the Board. We suggest that the IASB or the International Accounting Standards Committee Foundation (IASCF) considers establishing a committee focused on SME accounting. Responsibility for developing the Standards for SMEs would be deputed to this committee, with final approval by the IASB, in the same way as responsibility for developing Interpretations rests with IFRIC subject to final Board approval. This project needs adequate attention to ensure the correct foundations are in place.

You will find all past Deloitte comment letters to IASB/IASC Here.

Hong Kong GAAP now virtually aligned with IFRSs


Hong Kong Financial Reporting Standards are developed by the Financial Accounting Standards Committee of the Hong Kong Institute of CPAs.

They take effect following approval of the Institute's Council. The Council has mandated that the FASC develop standards to achieve 100% convergence with IFRSs. Except for effective date and transition, the standards are now word-for-word identical.

ARC concurs with IAS 39 "carve out" for Europe


Several newspapers have reported that the European Commission's Accounting Regulatory Committee (ARC) has agreed in principle to support the Commission's proposal that IAS 39 be adopted for use in Europe minus two sections – the prohibition on hedge accounting for core deposits and the fair value option (see our news report of 9 September 2004).

The ARC is expected to take a final vote around 1 October. Information can be found on the EC Accounting Website. In July, Deloitte urged that IAS 39 be adopted in its entirety, citing a number of "far reaching and damaging" consequences for the transition to IFRSs in Europe in 2005 if there is not a "fully endorsed and wholly supported standard on the recognition and measurement of financial instruments".

IASB chairman testifies before US Senate committee


In testimony yesterday in Washington before the US Senate Committee on Banking, Housing and Urban Affairs, IASB Chairman Sir David Tweedie provided the committee with an update on the work of the IASB and on efforts toward convergence of IFRSs with FASB standards since his last testimony before the committee in February 2002. An excerpt: The effective functioning of capital markets is essential to our economic well-being.

In my view, a sound financial reporting infrastructure must be built on four pillars: (1) accounting standards that are consistent, comprehensive, and based on clear principles to enable financial reports to reflect underlying economic reality; (2) effective corporate governance practices, including a requirement for strong internal controls, that implement the accounting standards; (3) auditing practices that give confidence to the outside world that an entity is faithfully reflecting its economic performance and financial position; and (4) an enforcement or oversight mechanism that ensures that the principles as laid out by the accounting and auditing standards are followed. The Sarbanes-Oxley Act refocused attention on these pillars and provided many useful approaches to improve the financial reporting environment. Click to Download the Text of Sir David's testimony (PDF 38k).

Listed companies in Sri Lanka may use IFRSs


As a result of a policy decision recently adopted by the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAAMB), listed companies in Sri Lanka may choose to prepare their financial statements in accordance with International Financial Reporting Standards, rather than Sri Lankan GAAP.

We have modified our Table of Use of IFRSs by Country accordingly.


HKSA name change to HKICPA


The Hong Kong Society of Accountants has officially changed its name to the Hong Kong Institute of Certified Public Accountants (HKICPA).

Its members will carry the new title of certified public accountant rather than chartered accountant. New web address:


Are IFRSs in Canada's future?


The Accounting Standards Board of Canada is in the midst of developing a five-year plan for the period 2005-2010. The possibility of adopting IFRSs in Canada is one possible outcome.

The Invitation to Comment states:

Four key issues, which need to be addressed sequentially, are whether Canada should:

  • maintain its own standard-setting capability;
  • maintain its own GAAP or adopt either U.S. GAAP or International Financial Reporting Standards (IFRS), the standards of the International Accounting Standards Board (IASB);
  • maintain the current strategy of working to support the international convergence of accounting standards while harmonizing with U.S. GAAP; and
  • consider modifying current GAAP requirements to provide better information to the users of financial statements of various different types of entities through, for example, a wider application of differential reporting.

Currently, domestic Canadian companies are not permitted to use IFRSs in place of Canadian GAAP. Foreign securities issuers in Canada were permitted, starting in 2004, to use IFRSs without reconciliation to Canadian GAAP, though this amounts to only a handful of companies.

EC proposes to adopt IAS 39 minus two sections


The European Commission has posted to its Website a "working document" setting out its proposals regarding adoption of IAS 39 for use in Europe.

The proposals would carve out of IAS 39 two sections – the prohibition on hedge accounting for core deposits and the fair value option. The remainder of IAS 39 would be adopted. The Commission explains the carve-outs as follows:

  • "IAS 39 does not sufficiently take into account the way in which many European banks operate their asset/liability management particularly in a fixed interest rate environment. The limitation of hedges to either cash flow hedges or fair value hedges and the strict requirements concerning the effectiveness of those hedges make it impossible for those banks to hedge their core deposits on a portfolio basis and would force them to carry out important and costly changes both to their asset/liability management and to their accounting system.... Those provisions of IAS 39, which prevent portfolio hedging of core deposits on a fair value measurement basis, and which can be clearly identified, should not be adopted because they do not meet the conditions set out in Article 3(2) of Regulation (EC) No 1606/2002 and in particular the criteria of understandability, relevance, reliability and comparability required of the financial information needed for making economic decisions."
  • "IAS 39 introduces an option to fair value all financial assets and liabilities. However, the IASB has recently published an Exposure Draft (a consultation paper) which proposes an amendment to IAS 39 in order to restrict the fair value option contained in the standard. The proposed amendment is a direct response to concerns expressed by the European Central Bank, by prudential supervisors as well as by securities regulators which fear that the fair value option might be used inappropriately. This proposed amendment is currently debated in public and a final version will most likely not be available before the end of 2004. The provisions in IAS 39 relating to that fair value option, which are also distinct and separable from other parts of the standard, should not be considered applicable, because of the uncertainty surrounding the final version of those provisions. As soon as the IASB has completed its work on this issue, and normally no later than by the end of 2005, the Commission will examine the resulting amendments to IAS 39 with a view to their endorsement, in the light of the conditions set out in Article 3(2).
Click to download:

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