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News

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CESR 'call for evidence' on historical financial information

06 Jun 2005

The Committee of European Securities Regulators (CESR) has issued a (PDF 131k) inviting comments on what additional financial information should be included in a prospectus when the issuer has not prepared its historical financial statements as a single business entity during the whole period for which historical financial information is required under the EC's Prospectus Regulation 809/2004 of 29 April 2004. Comment deadline is 20 June 2005. Examples of such circumstances include: 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 which never formed a legal group; the issuer has made a significant acquisition (representing more than 25% of the group) during the three year historical record or subsequent to the last audited consolidated financial information on the issuer; the issuer has disposed of a significant part of its business since the last audited accounts; the issuer has changed its accounting reference date during the three year period. .

The Committee of European Securities Regulators (CESR) has issued a (PDF 131k) inviting comments on what additional financial information should be included in a prospectus when the issuer has not prepared its historical financial statements as a single business entity during the whole period for which historical financial information is required under the EC's Prospectus Regulation 809/2004 of 29 April 2004. Comment deadline is 20 June 2005. Examples of such circumstances include:

  • 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 which never formed a legal group;
  • the issuer has made a significant acquisition (representing more than 25% of the group) during the three year historical record or subsequent to the last audited consolidated financial information on the issuer;
  • the issuer has disposed of a significant part of its business since the last audited accounts;
  • the issuer has changed its accounting reference date during the three year period.
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Summary of 20 May 2005 ARC meeting

04 Jun 2005

The Accounting Regulatory Committee, which advises the European Commission on endorsement of individual IFRSs and IFRIC Interpretations for use in Europe, has released the (PDF 36k).

At that meeting the ARC recommended endorsement of IFRS 6, IFRIC Interpretations 4 and 5, IFRIC's recent amendment to SIC 12, and the IASB's recent amendment to IAS 19, and related consequential amendments. The ARC's next meeting is scheduled for 8 July 2005.
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Report from the IFRIC meeting 3 June 2005

04 Jun 2005

The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Thursday and Friday 2-3 June 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the second day of the meeting.Notes from the IFRIC Meeting3 June 2005 Convertible Instruments Denominated in a Foreign Currency At its April meeting, the IFRIC addressed the classification of the written option in a convertible bond denominated in a foreign currency.

Such bonds allow the holders to convert the bond into a fixed number of the entity's equity instruments in exchange for a fixed amount of foreign currency. The IFRIC had agreed in April that the result of applying IAS 32 to this fact pattern would be to classify the entire instrument as a liability.

At the June meeting of IFRIC, the IFRIC considered draft amendments to IAS 32 that it could recommend to the Board to enable the appropriate classification of the equity element of the instrument. Some IFRIC members believed this classification is possible under existing IAS 32. However, a clear majority believed this was not possible and that the standard should be amended to require such classification.

The IFRIC members debated the draft wording and requested some amendments. The proposed amendment will be put to the IASB at its June meeting. The IFRIC were advised that IASB members are cognisant of the need for timely resolution of this issue. The IFRIC members also agreed that it was not appropriate for wording to be published in the IFRIC Update explaining the IFRIC's reasons for not taking this onto the agenda – this topic is clearly on the agenda, albeit that the expected outcome is an amendment to a standard rather than an IFRIC interpretation.

The IFRIC noted that as a result of its publication in the April 2005 IFRIC Update of their view that IAS 32 currently requires classification as a liability, companies in certain jurisdictions applying IFRS had, for their March quarterly reporting, reclassified these instruments as liabilities in compliance with that view. The chairman reminded the public that non-authoritative publications such as the IFRIC Update and the IASB Update should not be read in the same way as final standards and interpretations. The Update publications reflect the progress of an issue through the due process and should not be read or interpreted as being the final views of either the IASB or the IFRIC.

Reasons for Rejection

IAS 39: Accounting for Securities Sold but not yet Purchased ('Short trading')

The IFRIC had previously published draft reasons for not accepting this item onto the agenda in the April 2005 IFRIC Update. The IFRIC had previously agreed that as part of the process for enabling the public to comment on reasons for not taking items onto the agenda, if letters were received as a result of the IFRIC Update these would be given due consideration. A letter from a constituent on this topic was tabled at the meeting, and the IFRIC agreed to defer consideration of this item until the next meeting to allow IFRIC members to explore fully the implications of the content of that letter.

The public were reminded that if comments do arise as a result of draft reasons for not taking an item onto the agenda published in the IFRIC Update, those comments should be received by the staff as soon as possible, to enable them to be taken into account when the wording is finalised at the following IFRIC meeting. A dedicated email address will be set up for this purpose. Constituents should not address their concerns to particular individuals within the IASCF organisation; rather they should use the dedicated email address.

Inclusion of Value Added Tax (VAT) in Cash Flow Statements

The IFRIC reconsidered revised wording on this topic, which had been prepared overnight. After a short discussion it emerged that not all IFRIC members were in agreement as to whether a separate line item for VAT-related cash flows should be permitted under the existing standard. Accordingly, while the IFRIC are in agreement that cash flows from customers and to suppliers cannot be shown net of the VAT, they are unable to finalise wording for not taking this issue onto the agenda, until the second issue has been resolved, and acknowledged in the course of the meeting that the topic may indeed be added to the agenda. This will be discussed at the next IFRIC meeting.

IAS 19 - Distinction Between Defined Benefit and Defined Contribution Plans

In the course of analysing the comments received on IFRIC D9 Employee Benefits with a Promised Return on Contribution or Notional Contributions, staff noted that some confusion existed amongst constituents as to the appropriate distinction between defined benefit and defined contribution plans. This confusion was brought to the attention of the IFRIC at its April meeting, where the IFRIC agreed that staff should consider the development of appropriate guidance on distinguishing between the two types of plan, for possible inclusion in the finalised version of D9.

Staff prepared the following proposed guidance:

The distinction between a defined contribution and defined benefit arrangement lies in whether or not the employer has an obligation in respect of future risks attached to the benefits earned as at the balance sheet date.

In order to determine whether such an obligation exists, one should make reference to the following three conditions:

  • Condition 1: the employee stays in employment;
  • Condition 2: retains plan membership
  • Condition 3: stops accruing future benefits in the plan

If the employer has no obligation in respect of future risks in respect of the earned benefit when the three conditions apply, then the plan is a defined contribution plan. Otherwise, it is defined benefit.

(Extract from paragraph 3.46 of Observer Paper, Agenda Item 10)

The IFRIC noted that the third criteria should refer to accruing service related benefits. That is, in some circumstances, an employee might reach the maximum pensionable service period (such as 25 years) but might still accrue additional benefits in the form of adjustment of the pension related to adjustments to that employee's salary. In such a case the plan would be a defined benefit scheme. The IFRIC discussed briefly various types of plans such as career average salary plans and current salary plans, and whether plans which are economically the same should be accounted for differently. Staff briefly explained the economic differences in the various types of plan.

The IFRIC discussed whether the existence of a compulsory benefit resulted in automatic classification as a defined benefit scheme. The IFRIC agreed that such classification would not be automatic. The IFRIC discussed some proposed wording on the impact of materiality. They agreed that it is inappropriate to describe a defined contribution scheme as having an immaterial defined benefit element, rather the analysis should be that there are two separate schemes, and the defined benefit scheme is not material. In addition the IFRIC considered whether an unfunded scheme should automatically be classified as defined benefit, and noted this would have possible implications for year-end accruals.

The IFRIC agreed that guidance on the difference between defined benefit and defined contribution plans should not be included in the final interpretation resulting from D9. The IFRIC agreed to address this as a separate project and to consider a project plan for this project out of session. The IFRIC agreed that the three conditions proposed by staff were a step in the right direction, and further debate is necessary. Furthermore, consideration of the following issues would be required:

  • Whether the existence of a compulsory benefit automatically results in classification as a defined benefit scheme;
  • Worked examples explaining average salary plans;
  • Appropriate discussion of the impact of materiality on classification;
  • Whether an unfunded plan is automatically considered defined benefit; and
  • The interaction of the defined benefit/defined contribution distinction with insured benefits.

IFRIC D9 Employee Benefits with a Promised Return on Contributions or Notional Contributions

At its April meeting the IFRIC had considered responses to IFRIC D9. In analysing those responses, it had been noted that the proposed measurement model in D9 was not entirely consistent with IAS 19. The fixed/variable approach contained in that document was not only inconsistent with IAS 19, but not easily applied in practice. A deconstruction approach was recommended to the April IFRIC meeting but rejected by that meeting.

At this meeting the staff noted that an ideal solution to this problem would come in the form of an amendment to IAS 19 that would enable the pension expense to be recognised appropriately for such schemes. However, a compromise proposal would be to use a deconstruction approach in accounting for the defined benefit analysis, and ensure recognition of the pension expense which would be recognised under IAS 19. The IFRIC agreed to consider this approach and the approach involving a change to the standard, in detail, at its next meeting. They agreed that as well as examining the effect of the different methods, they would need to analyse the nature of the changes to IAS 19 that would be required to operationalise the use of the methodologies.

The IFRIC noted that its original conclusion, that these items are defined benefit schemes, was still correct, albeit they have been unable to finalise an appropriate measurement model.

This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

Scroll down for Notes from 2 June 2005.

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Congressman Cox nominated as SEC chairman

03 Jun 2005

US President Bush has nominated California Congressman Christopher Cox to be the next chairman of the US Securities and Exchange Commission, replacing William H.

Donaldson, who resigned effective 30 June 2005. Senate confirmation is required. Congressman Cox was a co-sponsor of H. CON. RES. 98 in 1993 opposing the US Financial Accounting Standards Board's proposal on employee stock options. He is an original co-sponsor of H.R. 913 in the current Congress that would block the implementation of FASB Statement 123R Share-Based Payment. He supported the Sarbanes-Oxley Act of 2002.
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Over 240,000 e-learning downloads from IASPlus

03 Jun 2005

As of 31 May 2005, over 240,000 Deloitte IFRS e-learning modules had been downloaded from IASPlus by people in over 150 countries.

(The precise number was 241,282!) Deloitte's e-learning was launched at the end of January 2004. Many of the downloaded modules have multiple users because organisations are permitted to install them on their own servers for the internal use of their employees or students. In addition, tens of thousands of additional modules have been completed online and offline by Deloitte staff. You can always access IFRS e-learning without charge by clicking on the light bulb icon on the IASPlus home page. Thirty-three modules are now available.
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Comment deadline on IFRS 6 amendment

03 Jun 2005

Reminder that today is the deadline for comments on the IASB's proposed Limited Amendment to IFRS 6 and related amendment to IFRS 1. .

Reminder that today is the deadline for comments on the IASB's proposed Limited Amendment to IFRS 6 and related amendment to IFRS 1.

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Report from the IFRIC meeting 2 June 2005

03 Jun 2005

The International Financial Reporting Interpretations Committee (IFRIC) is meeting at the IASB's offices in London on Thursday and Friday 2-3 June 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the first day of the meeting.Notes from the IFRIC Meeting2 June 2005 Administrative matters Robert Garnett, IASB member, chaired the meeting. IAS 19 – Effect of Minimum Funding Requirements on the Asset Ceiling The IFRIC considered a staff proposal as to how the existence of a minimum funding requirement (MFR) would affect the asset ceiling as determined in accordance with IAS 19. This item was added to the agenda on the recommendation of the IFRIC agenda committee at that committee's February meeting.

The staff proposed that a draft interpretation be developed stating that an asset should be recognised for any excess of an IAS 19 surplus over an MFR surplus (or deficit) only to the extent that:

  • (a) the assumptions underlying the MFR measurement are not current best estimates and it is expected that those assumptions will change to eliminate the deficit or increase the MFR surplus; or
  • (b) it is a reasonable assumption that, in the jurisdiction of the plan in question, any surplus existing on the wind up of the plan will revert to the entity, taking into account all costs associated with a wind-up. To the extent that an asset is recognised on this assumption, that fact shall be disclosed in the financial statements; or
  • (c) it is a reasonable assumption that in the jurisdiction of the plan in question, in a gradual settlement of the plan at the end of its life, any surplus in the plan will revert to the entity. To the extent that an asset is recognised on this assumption, that fact shall be disclosed in the financial statements.

It was noted that the key questions in the mind of constituents are 'what is the interaction between the minimum funding requirements and the plan asset recognition rules' and 'what is meant by reduction in future contributions'. It was further noted that there are questions both of recognition (whether a plan asset could be recognised) and measurement (how it is measured when an MFR exists.)

Members expressed some concerns that the proposal in (a) above would result in recognition of the effect of changes in rates (for example a regulatory change in the minimum funding requirement) that are neither enacted nor substantively enacted at balance sheet date. The staff clarified that the intention of this paragraph would be too allow the recognition of changes where the MFR will change as a result of past events (for example rate changes) that have already occurred at the balance sheet date.

The IFRIC noted that where there is no scope for the entity to ever receive the excess created by the MFR back, this is an additional cost to the entity of providing the scheme. Where there is some scope to receive the excess back (for example on a gradual basis as the scheme winds down and the regulators are satisfied as to the adequacy of plan assets absent the MFR) then the MFR should not be incorporated into the IAS 19 calculations. In any case it was acknowledged that the existence of the MFR does result in an economic restriction as the entity may not be able to get the returns that they would if the assets were not tied up in the plan. It was agreed that the impact of MFRs would vary significantly from one jurisdiction to the next. The IFRIC agreed that the staff should further develop the principles they recommend, amplifying and clarifying the wording. The IFRIC also agreed that to the extent possible the language should be consistent with IAS 19, and particularly that the phrase 'reasonable assumption' is inappropriate.

The IFRIC briefly considered whether an additional liability should be recognised when an MFR liability exists over and above the IAS 19 deficit. The IFRIC agreed that the resolution of this issue would flow from the model to be developed in respect of plan assets. The IFRIC briefly considered the impact of MFRs in a business combination (because, arguably, the amount an entity would pay for another entity with a scheme subject to an MFR, is different to what the entity would pay for another identical entity without an MFR) and agreed that this would most appropriately be dealt with in the IASB's project on Business Combinations Phase 2.

At its next meeting the IFRIC will consider worked examples of the impact of MFRs on plan assets, together with a paper that further develops the principles discussed above.

IFRIC 3 Emission Rights

The IFRIC discussed two papers:

  • A proposed amendment to IAS 38 Intangible Assets that would create an additional category of intangibles measured at fair value through profit and loss, and
  • A proposal from EFRAG as to how hedge accounting could be used to resolve the mis-match issues created by IFRIC 3.

At its February meeting the IFRIC had agreed to prepare a limited amendment to IAS 38, despite the preference of some members for the revaluation model contained in that standard to be completely revisited. It was noted that the effect of the proposed amendment was to move the gains and losses into the same place (profit and loss); however the timing might still have a mismatch because of the at the beginning of the period an asset exists, for which fair value gains and losses must be recognised, however the corresponding liability builds up over the period.

EFRAG presented a paper proposing to include emission rights within a hedge accounting model, that would use the principles of cash flow hedging to deal with this issue. There was support from a number of IFRIC members; however, many expressed reluctance to take the project further until the IASB had been explicitly consulted as whether they considered this an appropriate project to pursue.

It was noted that the amendment to IAS 38 in itself is insufficient to alleviate the concerns raised by EFRAG, but is not incompatible with the EFRAG proposals. Accordingly, the amendment to IAS 38 would solve part of the problem for entities that do not pursue hedge accounting. It was noted that if the hedging proposal was used, it would be difficult to mandate hedging (as entities could fail eligibility for hedging on a number of criteria, particularly forecast usage), and therefore this might open up more options. It was agreed that in principle hedge accounting should be required where certain facts and circumstances exist, with a default treatment being required if an entity fails to meet the hedge accounting requirements. The IFRIC agreed that the staff should continue with the proposal to amend IAS 38, subject to satisfying themselves that the amendment is necessary irrespective of whether the hedging methodology is introduced, and that the result of such an amendment is not to back IFRIC into a corner such that their options for introducing the hedging rules are limited. Staff agreed to check with the financial instrument team whether it was appropriate to use cash flow hedging during the period when the entity has only the allowances, and fair value hedging after the emissions have been made.

The IFRIC noted that there are other issues, such as the appropriate initial recognition date, however did not seek to resolve these issues at this time.

IAS 12 and Finance Leases – Draft reasons for rejection

In the April IFRIC Update, the IFRIC published a proposed wording for the rejection of this issue from the IFRIC agenda, which included a comment as to the appropriate technical outcome. A number of constituents had expressed discomfort at this. The IFRIC agreed that the final wording for the reasons for rejection should merely say that whilst the IFRIC has noted there is diversity in practice, this will not be taken onto the agenda as it will be resolved by the Board's short term convergence project on income taxes. As the IFRIC themselves are not in agreement as to the appropriate technical conclusion under existing IAS 12, no mention should be made as to the appropriate answer.

Impairment of an Equity Security – Draft reasons for rejection

The IFRIC discussed a draft reason for rejection of this issue. It was noted that the matter was discussed at the April 2005 meeting and the intention to reject it from the agenda was published in the IFRIC Update, and no adverse comments from constituents had been received. The IFRIC agreed, subject to certain amendments, that the draft reasons for rejection (which was not made available to observers) should be published in the IFRIC Update.

IAS 19: Prioritisation of Outstanding Issues

The staff noted that there were 8 outstanding issues on the IFRIC agenda in relation to IAS 19 Employee Benefits, and suggested an order of priority in which they should be addressed. The staff had classified the issues as follows:

Group 1: Issues with widespread divergence for which IFRIC has begun or is about to begin its deliberations

  • D9 - plans with a promised return on contributions
  • Distinction between defined benefit and defined contribution arrangements
  • Impact of minimum funding requirement on the asset ceiling

Group 2: Items with widespread relevance, but less expected impact than Group 1

  • Pension promises based on performance hurdles
  • Issues related to the non-consolidation model and the definition of plan assets

Group 3: Issues considered to be important which have been added to the agenda, but are less widespread and significant than groups 1 and 2

  • Changes to a plan caused by government
  • Treatment of employee contributions
  • Treatment of death-in-service and other risk benefits

It was noted that the non-consolidation aspect of the issue in Group 2 does need to be worked up, but may not actually require an IAS 19 expert to staff this project. Some IFRIC members expressed surprise that the changes to a plan caused by the government was not considered a high priority, given the recent high profile examples in which local regulators had given different views in different countries.

The IFRIC noted that some of these issues were added to the agenda at a time when the IFRIC agenda committee did not have a formal process for publication of the rejection of issues. The issues in groups 2 and 3 would be brought back to the agenda committee to determine whether they still meet the criteria for addition onto the agenda, and if not, whether constituent concerns could be resolved via the new process for formalising the rejection of issues.

Rejection of Issues

No observer papers were provided for this session, and accordingly the impact of some aspects of the discussion was difficult to record. However, the IFRIC's policy of publishing their draft and final reasons for rejection of issues in the IFRIC Update will result in this information being released into the public domain shortly after the meeting. It was noted that editorial amendments might be made to wording between the publication of the draft reasons for rejection, and the finalisation of those reasons, and that such amendments need not be explicitly drawn to the attention of readers of the IFRIC Update.

Inclusion of Value Added Tax (VAT) in Cash flow statements

The IFRIC agreed that the proposed wording for rejection, as published in the April 2005 IFRIC Update, did not directly answer the question posed, and accordingly should be redrafted to more clearly state that cash flows should not be reported net of VAT.

Recognition of Operating Lease Incentives

The IFRIC discussed the draft reasons for rejection, as published in the April 2005 IFRIC Update. After a short discussion it became apparent that a majority of IFRIC members were unconvinced as to the appropriateness of rejecting this item from the agenda, and accordingly the full IFRIC will consider the papers that were presented to the agenda committee in February at its next meeting.

A process issue was noted, that in putting the draft wording on the table, and into the IFRIC Update, results in this being put into the public domain before IFRIC has had a comprehensive discussion on the matter. As the IFRIC are currently settling into this new process it was agreed to consider alternative methodologies which will enable all IFRIC members to comprehensively consider an issue (should they wish to do so) prior to the draft wording for rejection being published.

Finance Leases of Finance Sub-Leases

The wording for rejection of this issue, published in the April 2005 IFRIC Update was agreed. In summary that is, the requirements of IAS 17, together with the derecognition requirements of IAS 39 provide a clear answer to this issue and therefore it should not be added to the agenda.

IAS 12: Carry forward of Unused Tax Losses and Tax Credits

The wording for rejection of this issue, published in the April 2005 IFRIC Update was agreed. In summary that is, that this issue should not be taken onto the agenda as there is little evidence of widespread diversity in practice.

IAS 12: Non-amortisable Intangible Assets

After a short discussion of the draft wording for rejection of this issue, it became apparent that a majority of IFRIC members were unconvinced as to its appropriateness. The papers considered by the agenda committee will be considered by the full IFRIC at its next meeting.

IAS 19: Determining the Appropriate Rate to Discount Employee Benefit Obligations

The wording for rejection of this issue, published in the April 2005 IFRIC Update was agreed. In summary that is, synthetically constructed equivalents to high quality bonds are not acceptable for the purposes of determining a discount rate for use in accordance with IAS 19. However, 'in a country' might refer to a regional market to which the entity has access, provided that currency and the currency of the country were the same. This should not be taken onto the agenda because IAS 19 provides a clear resolution to this issue.

IAS 39: Hedge Effectiveness Tests - Vacillations in Effectiveness/Timing of Tests

The wording for rejection of this issue, published in the April 2005 IFRIC Update was agreed. In summary that is, that IAS 39 does not preclude redesignation, and there is insufficient evidence of diversity in practice for the IFRIC to take this item onto the agenda.

IAS 1: Comparatives for Prospectuses

The IFRIC considered draft wording for rejecting this issue, published in the April 2005 IFRIC Update, to the effect that this was a regulatory issue rather than something for IFRIC to consider. After a short discussion it emerged that IFRIC wanted this item taken off the table for this meeting so that it could be considered in more detail at a future meeting.

IAS 1: Reference to Normal Operating Cycle

The wording for rejection of this issue, published in the April 2005 IFRIC Update was agreed. The question raised was whether the normal operating cycle (if using other than twelve months) applied across all the entities in a group, or product group by product group. The IFRIC agreed not to take this on, as it is clear from the standard that the wording should be read in the singular and the plural, and the appropriate accounting should be determined with reference to the nature of the inventories in relation to the operating cycle.

IFRIC D11 Changes in Contributions to Employee Stock Purchase Plans

As a result of the IFRIC's deliberations on D11, the IASB had been asked to consider whether IFRS 2 should be amended. The IASB agreed to amend the Standard to clarify that:

  • The cancellation or settlement provisions do not apply only when the entity has cancelled the scheme (that is cancellations by the employee are also caught by these requirements); and
  • Vesting conditions are service or performance conditions.

The IFRIC agreed that, in light of these amendments, a final interpretation arising from D11 was not considered necessary at this time; however, members would consider whether there are any related issues that will not be resolved that should be brought back to the IFRIC Agenda Committee. It was noted that the Board would consider whether re-exposure was necessary for these amendments – the IFRIC strongly recommended that the amendments should be exposed, together with a comprehensive basis for conclusions.

Activities of Other Interpretive Bodies

The IFRIC considered a paper in relation to the activities of other interpretive bodies, and confirmed the decision of the agenda committee not to add any of the items to the agenda.

This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

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New Global Offerings Services newsletter

02 Jun 2005

We have posted the (PDF 140k).

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.
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FASB converges treatment of accounting changes

02 Jun 2005

The US Financial Accounting Standards Board has issued Statement No.

154 Accounting Changes and Error Corrections, which requires retrospective application to prior periods' financial statements of a voluntary change in accounting principle unless it is impracticable. The previous FASB standard had required that most voluntary changes in accounting principle be recognised by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. Excerpt from (PDF 20k):

Statement 154 is the result of a broader effort by the FASB to improve the comparability of cross-border financial reporting by working with the International Accounting Standards Board toward development of a single set of high-quality accounting standards. Michael Crooch, FASB Board member and Board collaborator on the project, said, "This is one example where the Board concluded that the IASB requirements result in better financial reporting. We were able to make a meaningful improvement in U.S. GAAP while converging with the IASB."

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Deloitte letter on day 1 profit disclosures

02 Jun 2005

Deloitte has submitted a (PDF 34k).

The proposed drafting would be included in IFRS 7 Financial Instruments: Disclosures, scheduled for release later this month.

We generally agree with the proposed drafting of the "Day 1 gain or loss" disclosures to be included in IFRS 7 Financial Instruments: Disclosures. However, we believe an entity should be required to determine categories of instruments for which the "Day 1 gains or losses" issue is relevant (for example, derivative commodity contracts and structured financial products). A requirement to describe these categories should be inserted into IFRS 7.

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.