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China requires internal control reports by listed companies

08 Dec 2005

The China Securities Regulatory Commission – China's securities regulator – is requiring that a company listed on a Chinese stock exchange must (a) perform a self-assessment of its internal controls and (b) engage an external auditor to evaluate its internal controls and comment on its self-assessment report.

This requirement, which is effective for 2005 calendar year-end audits, is similar to that in Section 404 of the US Sarbanes-Oxley Act. Here is the new (PDF 169k, Chinese only).
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FASB Chairman Herz speaks on complexity

08 Dec 2005

We have posted the (PDF 46k) on complexity in the financial reporting system, presented at the AICPA 2005 National Conference on Current SEC and PCAOB Developments in Washington on 6 December 2005. In our news story of 6 December 2005, we had posted the remarks of eleven US SEC representatives, including Chairman Christopher Cox.

An excerpt from Mr. Herz's comments:

Long touted by some as a strength of our reporting system, the detail and volume of accounting, auditing, and reporting guidance now pose a major challenge to maintaining and enhancing the quality and transparency of financial reporting to investors and the capital markets. Many, including some members of the FASB, believe that the current system has engendered a check-the-box, form-over-substance approach to accounting, auditing, and reporting by preparers, auditors, and regulators, sapping professionalism and increasingly necessitating the involvement of technical experts to ensure compliance. It has also provided fertile ground for those attempting to structure form-over-substance arrangements to obtain desired accounting outcomes. This complexity has also added to the costs and effort involved in financial reporting, which often fall disproportionately on small and private companies and their auditors. It has also created a black box view of financial reporting by many who are not familiar with the intricacies of the underlying accounting, auditing, and reporting requirements. For professional investors and analysts, it results in a lack of transparency and significant analytical complexity in using reported financial information. And it is viewed as a contributory factor to the unacceptably high and increasing number of restatements of financial reports by public companies.

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US-EU agreement on international cooperation

07 Dec 2005

In March 2002, the United States (represented by the SEC, the Federal Reserve Board, and the Treasury Department) and the European Union (represented by the European Commission) launched a Financial Markets Regulatory Dialogue with the goal of ongoing mutual cooperation and regulatory convergence in the areas of corporate governance and further integration of the Transatlantic securities markets.

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November 2005 Accounting Roundup posted

07 Dec 2005

We have posted the (PDF 244k) published by Deloitte & Touche LLP (USA).

Topics covered in this issue include:
  • FASB developments, including final FSPs on calculating the APIC pool under FAS 123R, minimum revenue guarantees, a QSPE's ability to hold derivatives, and investment impairment; and a new FASB project on pensions and other postretirement benefits.
  • GASB developments, including Q&A; on post-employment benefits.
  • AICPA developments, including a series of Technical Practice Aids on lease accounting and a request for comment on independence in compilation engagements.
  • SEC developments, including amendments to requirements for asset-backed securities and Q&A; on securities offering reform.
  • PCAOB developments, including ethics and independence rules regarding tax services and a report on implementation of AS2.
  • International developments, including IFRIC 7; discussion paper on measurement bases; User's Guide to Financial Instruments Standards; and summaries of recent IASB and IFRIC meetings.
You will find past issues of Accounting Roundup Here.
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Issues not added to IFRIC agenda - new web page

07 Dec 2005

The IFRIC Agenda Committee considers potential projects for the IFRIC agenda and makes recommendations to the IFRIC.

IFRIC's normal procedure is:
  • Agenda Committee makes recommendation that an item not be added to the IFRIC's agenda, and recommends the wording for IFRIC's public explanation.
  • IFRIC discusses the Agenda Committee recommendation and, if it agrees, it publishes the proposed explanation in the IFRIC Update newsletter. The newsletter indicates that if constituents disagree, they should email the IFRIC.
  • At a subsequent meeting, the IFRIC decides not to add the item to its agenda and agrees on the final wording for its explanation. IFRIC's final decision and explanation are published in IFRIC Update.
We have created a new IASPlus web page with a comprehensive Summary of Issues Not Added to IFRIC Agenda - Sequenced by IFRS. That page lists each item not added to IFRIC's agenda (back to 2002), the date the decision not to add was made, and IFRIC's public explanation of the reasons for not adding the item to its agenda. We believe that those who are responsible for preparing IFRS financial statements will find the information on our new web page useful. We will keep the page up to date after each IFRIC meeting.
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Speeches at AICPA SEC conference

06 Dec 2005

The American Institute of CPAs is holding its 2005 National Conference on Current SEC and PCAOB Developments in Washington on 5-7 December 2005, simulcast in three other cities.

Eleven US SEC representatives, including Chairman Christopher Cox, spoke at the first day of the conference, which is quite popular among SEC registrants and their auditors because the SEC representatives provide insights on important issues for calendar year-end reporting. Here is a list of the broad areas addressed by various SEC speakers, with links to their presentations:

Other speakers at the conference include PCAOB board member Charles D. Niemeier and its Chief Auditor Douglas R. Carmichael; representatives from the FASB including Chairman Robert H. Herz and board member G. Michael Crooch; and James J. Leisenring, IASB board member.
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Call for more EU involvement in IFRS process

06 Dec 2005

Pervenche Beres, Chairwoman of the committee on economics and monetary affairs in the European Parliament, spoke about The Need for Better Involvement of the European Union in the IFRS Process at the FEE Seminar on IFRS Convergence and Consistency held in Brussels on 1 December 2005. An excerpt: Debates on the constitutional review of the IASB and on the (future) role of European Financial Reporting Advisory Group (EFRAG) represent an outstanding opportunity to strengthen the voice and the role of Europe, to improve the IASB corporate governance, and to make the decision making process at IASB level more balanced.

We should fully take advantage of this momentum!

One of the European Parliament's very important concerns relates to the manner in which the EU is present and represented in the IASB, namely on the trustees and on the Board side. A greater transparency towards the European Parliament, especially when it comes to Commission's intended steps in this area, would be a clear asset in ensuring that the EU is represented in the IASB structures in an appropriate way.

Click to Download (PDF 21k). We have previously posted speeches made at the same seminar by , the European Commissioner for Internal Market and Services (PDF 74k - see news story of 2 December 2005) and by , Director, Office of International Affairs of the US Securities and Exchange Commission (PDF 71k - see news story of 3 December 2005).
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New UK actuarial standards board under FRC

06 Dec 2005

The Financial Reporting Council, under which the United Kingdom Accounting Standards Board operates, has established a new regime to set actuarial standards and oversee the regulation of the actuarial profession.

The UK government is supporting this effort. The FRC has created a Board for Actuarial Standards (BAS) whose mission is to set high quality actuarial standards independently of the actuarial profession or other interests. The FRC is also extending the remit of the Professional Oversight Board for Accountancy to oversee the regulation of the actuarial profession; and is extending the remit of the Accountancy Investigation and Discipline Board to cover public interest cases involving actuaries. The FRC has appointed Paul Seymour as Chair of the BAS. Click for . The FRC has added to its website a New Section on Regulation of the Actuarial Profession.
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Three IASB working groups will meet in January

05 Dec 2005

The following meetings of IASB working groups are scheduled for January 2006: 9-10 January 2006 – Working Group on Financial Instruments, London 12-13 January 2006 – Working Group on Insurance, London 30-31 January 2006 – Working Group on Small and Medium-sized Entities, London Meetings of IASB working groups are open to public observation.

For agendas, locations, and observer registration details, please see IASB's Website Meeting Diary.
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Deloitte's Global Economic Outlook 2006

05 Dec 2005

Global Economic Outlook 2006 is a new study from Deloitte Research that examines the various risks to the global economy and offers a point of view as to their future direction.

It suggests possible scenarios about the future direction of interest rates, exchange rates, and commodity prices, all with the aim of offering some useful planning premises for global companies that are exposed to global risks. This report also looks at each of the world's major economies and the issues they face. Of special interest are today's most discussed economies – China and India and the question as to the staying power of their extraordinary growth. Click to download:

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