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Heads Up on unremitted foreign earnings

02 Nov 2004

The latest edition of the (PDF 103k) from Deloitte (USA) is of interest globally.

It is devoted to the American Jobs Creation Act of 2004, the first major broad-based restructuring of US business taxes since 1986. The Act gives multinational companies a limited, one-time tax incentive to repatriate up to 85% of their foreign earnings tax-free. Accounting implications may include:
  • A need to recognise deferred tax and tax expense in 2004 on the planned repatriation in 2005.
  • For companies that have provided deferred taxes on unremitted earnings, consideration of the 85% deduction likely will reduce the deferred tax liability.
  • The timing of recognising tax expense or benefit could be complicated by the Act's requirements to have specific plans for reinvesting the undistributed earnings.
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Russia moves toward adopting IFRSs

01 Nov 2004

IFRSs moved a step closer in Russia last week when the Duma (parliament) gave preliminary approval to a bill requiring corporations with more than one subsidiary to publish financial statements that conform to International Financial Reporting Standards within six months of the end of their financial year.

All companies will still have to report unconsolidated results to Russian standards. Two additional votes of the Duma are required before the bill would become law. The bill as passed calls for companies to report under IFRSs as of 2004. It may be changed to a 2005 effective date before final adoption. Some large Russian companies already report under IFRSs. Others currently use US GAAP. The US GAAP companies will have until 2008 to switch to IFRSs.


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UK adjustments to IFRSs for regulatory capital

31 Oct 2004

The UK Financial Services Authority has published a consultation paper proposing four adjustments to capital as measured under IFRSs for the purpose of measuring "prudential regulatory capital" in the financial services industry.

FSA Press Release (PDF 54k, contains link to consultation paper and a related newsletter):
  • In the treatment of cash-flow hedges, we propose to eliminate from the measurement of regulatory capital all fair value gains and losses arising from the fair valuation of derivatives that have been accumulated in equity;
  • In the treatment of available-for-sale assets we propose to follow the US approach and to leave equities at fair value, but write available-for-sale debt instruments back to cost or amortised cost;
  • For fair value options we propose that unrealised gains or losses arising from the fair valuation of a firm's own credit risk should be eliminated from regulatory capital; and
  • In accounting for defined benefit pension schemes we propose that the accounting measure of actuarial losses should be eliminated for regulatory purposes. It should be replaced by the company's best estimate of the level of additional funding that it will need to provide for its pension scheme over the next five years.
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UK FSA letter to CEOs on IFRSs

31 Oct 2004

The UK Financial Services Authority has written to the CEOs of all listed companies reminding them of the need for disclosure of their application of IAS 39 (particularly if they elect to follow the EC version with two 'carve-outs') and stating that FSA will allow listed companies 120 days, rather than the normal 90 days, to prepare their first half-yearly accounts under IFRSs.

Click to Download the FSA Letter (PDF 195k).
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A global 'shareholder society'

30 Oct 2004

In his recent Remarks before the International Organization of Securities Commissions, US SEC Chairman William H.

Donaldson highlighted the importance of providing credible financial information in all of the world's public capital markets:

The work we are doing on U.S. markets, and the work all of you are doing in your markets, is part and parcel of a broader issue: the movement of millions of people throughout the world into what has been called 'the shareholder society.' While share ownership has historically been limited to the wealthier nations of the world, today it can be found in all corners of the globe. More than 13 million households in India are directly invested in debt or equity shares, based on the most recent statistics. And there are believed to be approximately 36 million active equity investors in China.

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Near-final drafts of two pronouncements are posted

30 Oct 2004

The IASB has posted "near-final drafts" of the IFRIC Amendment to SIC-12 (to include equity compensation plans) and of IFRS 6 (Exploration for and Evaluation of Mineral Resources) in the subscriber area of the IASB Website.

These will be publicly available in the next several days.
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Proposed amendments to 4th and 7th Directives

29 Oct 2004

The European Commission has proposed certain corporate governance amendments to Council Directives 78/660/EEC and 83/349/EEC (the Fourth and Seventh Directives) concerning the annual accounts of certain types of companies and consolidated accounts.

Objectives of the revisions are to establish the collective responsibility of board members for a company's financial statements and annual reports; enhance transparency about related party transactions (companies' transaction with their managers, managers' family members, and others); expand disclosures about off-balance arrangements (including commitments and special purpose entities); and introduce a corporate governance statement. Click to download: Other language versions can be found on the EC Website.
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Agenda for IFRIC's November 2004 meeting

29 Oct 2004

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London for two days: 4 and 5 November 2004. Presented below is the agenda for the meeting. .

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London for two days: 4 and 5 November 2004. Presented below is the agenda for the meeting.

Agenda, IFRIC Meeting, 4-5 November 2004, London

Thursday 4 November 2004

  • Scope of IFRS 2
  • IFRS 2 - Changes in Employee Contributions to ESPPs
  • IFRS 2 Treasury Share Transactions and Group Transactions
  • Report of Agenda Committee and Activities of Other Interpretation Bodies
  • Accounting for Service Concessions – The IFRIC will re-debate two matters on which it reached tentative conclusions at previous meetings:
    • the circumstances in which the operator has a financial (as opposed to intangible) asset; and
    • the circumstances in which a financial asset cannot be classified as a loan or receivable.
  • Publication of Reasons for Rejecting IFRIC Proposals
Friday 5 November 2004 (Morning Only)
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All banks in Kazakhstan must use IFRSs

28 Oct 2004

For several years, banks in Kazakhstan that chose to participate in that country's deposit insurance fund have been required to prepare financial statements using IFRSs as well as Kazakh reporting standards.

Starting in 2004, all banks are required to participate in the deposit insurance programme. Therefore, all Kazakh banks will prepare IFRS financial statements for 2004. Click to go to our Table of Country Use of IFRSs.


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All Bulgarian companies must use IFRSs starting 2005

28 Oct 2004

As of 1 January 2003, all listed companies, banks, insurance companies, and pension funds in Bulgaria were required to use International Financial Reporting Standards.

Other companies had the option of applying IFRSs or continuing to use Bulgarian GAAP. Starting in 2005, the other companies will be required to switch to IFRSs. The Bulgarian Ministry of Finance is developing a Bulgarian translation of IFRSs.

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