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30 June 2002: Agenda is set for IASB's July meeting
The Board will Meet 17-19 July at its offices in London, when it will discuss insurance contracts; consolidation and special purpose entities; convergence topics; deposit-taking, lending, and securities activities; and performance reporting.
29 June 2002: Canada proposes to allow certain foreign issuers to use IAS
 The Canadian Securities Administrators have Proposed (PDF 8k) that certain eligible foreign issuers would be allowed to submit financial statements prepared using International Accounting Standards or using GAAP in Australia, France, Germany, Hong Kong, Italy, Japan, Mexico, the Netherlands, New Zealand, Singapore, South Africa, Spain, Sweden, Switzerland, and the UK. The CSA is also proposing that Canadian companies registered with the US SEC could use US GAAP, with a reconciliation to Canadian GAAP for the first two years in which US GAAP is used. Comments on the proposal are due 19 September 2002.
29 June 2002: Speech by IASC Foundation Chairman Paul Volcker
We have posted the Remarks of Paul Volcker (PDF 123k), Chairman of the IASB's Board of Trustees, at a Conference on Credible Financial Disclosures, Northwestern University.
28 June 2002: Financial Times urges US move to 'principles-based' standards
In an editorial titled 'The World After WorldCom', the Financial Times 27 June 2002 said:
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It is time for US accounting standards to move away from prescriptive rule-making towards the alternative used in many other countries, which focuses on 'substance over form'. US regulators have been suspicious of principles-based standards drafted by the International Accounting Standards Board, arguing that the US approach is superior. As the list of US accounting scandals mounts, it is hard to maintain such a position.
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26 June 2002: EFRAG recommends EC endorsement of all existing IAS 'en bloc'
 In response to a request from the European Commission, EFRAG (the European private sector's accounting technical committee) has reviewed IAS 1-41 and all extant SICs and has concluded that (a) they are not contrary to the 4th and 7th Directives and (b) they meet the required criteria of understandability, relevance, reliability, and comparability. Therefore, EFRAG believes that "it is in the European interest that the process of adoption of the current standards should now be set in motion. Accordingly, we recommend endorsement of the current standards 'en bloc'." Click for EFRAG Letter to EC (PDF 28k).
26 June 2002: Background on financial reporting in United Kingdom
In our section on accounting standards in individual countries, we have added a separate background page on Financial Reporting in the UK.
26 June 2002: Comparison of Dutch GAAP, US GAAP, and IAS
Deloitte & Touche in the Netherlands has published, together with the Confederation of Netherlands Industry and Employers (VNO-NCW), the third edition of Accounting Standards Compared: Differences between IAS, NL-GAAP and US-GAAP. This 221-page report analyses the differences in financial reporting between Netherlands legislation and regulations, IASB Standards, and US GAAP. Click here to Download the Summary (PDF 180k, 25 pages), which highlights the main GAAP differences.
26 June 2002: Trustees seek replacement for Robert Herz
The Trustees of the IASC Foundation have begun their search for a replacement for Robert Herz as a part-time member of the IASB. Mr. Herz left the IASB on 30 June to become chairman of the US Financial Accounting Standards Board.
24 June 2002: New Accounting Roundup newsletter posted
We have posted the 24 June 2002 edition of the Accounting Roundup newsletter from Deloitte & Touche USA.
24 June 2002: Project pages updated for June Board meeting discussions
We have created a new project page for IASB's potential project on Convergence Topics. This project, though not yet formally added to the Board's agenda, is focusing on issues for which IASB and one or more partner standard setters have standards that are broadly similar but differ in a limited number of areas. Also, we have updated our project pages on
23 June 2002: New Deloitte publication on Quality of Earnings
Deloitte & Touche (US) has published Quality of Earnings, the second in a series of booklets intended to help members of management, audit committees, boards of directors, and others better understand and assess key accounting, business, and other issues that companies currently face. You can download this booklet and the earlier Integrity and Quality booklet from our Deloitte Touche Tohmatsu Publications Page.
22 June 2002: IASB proposes amendments to IAS 32 and IAS 39
The IASB has issued an Exposure Draft proposing significant amendments to the two International Accounting Standards dealing with accounting for financial instruments, IAS 32 and IAS 39. Comments are due by 14 October 2002. The principal changes would:
- Allow an entity to designate any financial instrument (including its own outstanding debt) irrevocably at initial recognition as an instrument that is measured at fair value with changes in fair value recognised in profit or loss.
- Require that all fair value changes for available-for-sale financial instruments be recognised as a separate component of equity, with 'recycling' through net profit or loss when the financial asset is sold or liability discharged (the option to recognise such fair value changes immediately in net profit or loss would be eliminated).
- Add guidance for recognising impairment losses in groups of loans or other financial assets.
- Prohibit reversal of impairment losses previously recognised for available-for-sale financial assets.
- Treat hedges of firm commitments as fair value hedges rather than as cash flow hedges.
- Prohibit 'basis adjustment' for hedges of forecasted transactions, though continue to require basis adjustment for fair value hedges.
- Establish the principle of 'no continuing involvement' for deciding whether a financial asset should be derecognised. An entity would not be permitted to derecognise assets to the extent that it could, or could be required to, reacquire control of the transferred asset, or could receive or be required to pay compensation based on the performance of the asset.
Click for IASB Press Release (PDF 35k).
20 June 2002: Notes from IASB meeting 19 June 2002
19 June 2002: US Senate committee agrees on accounting oversight board
The banking committee of the US Senate has approved a bill, similar to one already approved by the House of Representatives, that would create a five-member oversight board for the accounting profession. The board would have the power not only to discipline auditors but also to set auditing, independence, and ethics standards. The SEC is expected to consider a similar proposal tomorrow (see our 18 June News Item).
19 June 2002: Notes from IASB meeting 18 June 2002
18 June 2002: SEC to propose a Public Accountability Board
At its open meeting on Thursday 20 June, the US Securities and Exchange Commission will consider a proposal to create a Public Accountability Board with power to oversee and discipline auditing firms and individual auditors. In a recent Speech ){PDF 41k), SEC Chairman Harvey L. Pitt said: "We believe this approach will upgrade the performance of auditors, and give investors assurances they can take to the bank that there are plenty of watchdogs making certain numbers they are told are numbers their companies actually achieve." While details have not yet been announced, the Wall Street Journal is reporting that the Board would have 9 members (6 independent plus 3 from the public accounting profession who would not vote on disciplinary matters). The Board might have some standard-setting powers as well. The US Congress will likely consider the SEC proposal in deciding whether to pursue its own current draft legislation that would create a similar oversight body. [Click here for a link to the SEC's 20 June Press Release (PDF 41k) on its proposal.]
18 June 2002: Notes from IASB meeting 17 June 2002
17 June 2002: EFRAG website launched
The European Financial Reporting Advisory Council (EFRAG) has launched its website www.efrag.org. EFRAG was created by a broad range of private sector accounting organisations in Europe to present coordinated views to the European Commission's new Accounting Regulatory Committee and to the Commission itself. Currently, in response to a request from the Commission, EFRAG is reviewing all existing IASC standards and interpretations with a view to advising the Commission, by 30 June 2002, on whether these should be endorsed as a bloc. Click for Information on IAS in Europe.
17 June 2002: SEC Statement Regarding Andersen Case
The US SEC has released a Statement 32k) to provide guidance to registrants in light of Andersen's announcement that it will cease practicing before the Commission (that is, stop auditing public companies) by 31 August 2002. In March, the SEC had adopted special Reporting Requirements (PDF 17k) for companies audited by Andersen LLP.
16 June 2002: Mark-to-market for insurance contracts comes under fire
In a joint letter, the life insurance trade associations in Germany, Japan, and the United States have expressed strong reservations about the approach being taken in IASB's Insurance Project. The American Council of Life Insurers (ACLI), the German Insurance Association (GDV), and the Life Insurance Association of Japan (LIAJ) said IASB's Draft Statement of Principles on Insurance Contracts poses numerous problems, particularly 'mark-to-market' accounting – "immediate recognition of the fair value of the estimated future profitability associated with insurance contracts, especially long-term contracts, sold during the reporting period.... Application of such an approach where there are no verifiable market prices leads to situations where entities are free to develop and use valuation models based on their own assumptions and methods.... There is no question about whether a theoretical model could be developed and required for insurance contracts. The real question is whether doing so would make matters better or worse.... We believe that the deferral/matching approach is appropriate and preferable for life insurance contracts." Click for ACLI-GDV-LIAJ Letter to IASB (PDF 186k).
15 June 2002: Study finds 'crisis of confidence' on Wall Street
An analysis of buy, sell, and hold ratings published for 19 listed companies that went bankrupt in the first four months of 2002 by 50 investment banking and brokerage firms found that "94% of the 50 firms continued to recommend that investors should buy or hold shares in failing companies right up to the day these companies filed for bankruptcy". The study concluded: "Investors lack the single most important element they need to help cut through much of the distortions and dislocations discussed in this paper: Clear, full, disclosure of accurate, unbiased, comparable information." Click for Full Study (PDF 250k).
14 June 2002: IASB will meet next week
The IASB will meet in Berlin for three days starting Monday 17 June. On the agenda are:
The Board will meet with its Advisory Council on 20-21 June and will hold a public Seminar on share-based payment on 18 June.
13 June 2002: SEC proposes rules 'to enhance investor confidence'
The US SEC is proposing to require, for domestic companies, that:
- The principal executive and financial officers certify the contents of the company's quarterly and annual reports.
- Certain new events be reported on Form 8-K, including unusual agreements, terminations of business relationships, contingent obligations, restructurings, write-offs, impairments, rating changes, withdrawals of auditors' reports, and changes in directors and management.
- Form 8-K reports be filed within two business days instead of the current 5 to 15 days.
Click for SEC Press Release.
13 June 2002: Some facts about the last 150,000 visitors to IASPlus.com
| Which browser? | Which operating system? |
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| Internet Explorer 5 | 74.5% | Windows 98 | 42.2% |
| Internet Explorer 6 | 12.5% | Windows 2000 | 25.4% |
| Internet Explorer 4 | 4.5% | Windows NT | 19.0% |
| Internet Explorer 2 | 0.8% | Windows 95 | 9.2% |
| Total Internet Explorer | 92.3% | Windows XP | 2.4% |
| Netscape 4 | 5.7% | Total Windows | 98.2% |
| Netscape 3 | 1.2% | Macintosh | 0.4% |
| Netscape 6 | 0.6% | Others | 1.5% |
| Total Netscape | 7.8% | Total Non-Windows | 1.9% |
12 June 2002: EFRAG begins its review of existing IAS
The new European Accounting Regulation requires that the European Commission "decide on the applicability within the Community" of both existing and future International Accounting Standards. The regulation establishes an Accounting Regulatory Committee to advise the Commission in this regard and sets a deadline of 31 December 2002 for decisions regarding existing IAS. Under the regulation, IAS can only be adopted if they
- (a) are not contrary to EU Directives,
- (b) are conducive to the European public good, and
- (c) meet the criteria of understandability, relevance, reliability, and comparability.
The regulation requires that the Commission consider the views of national accounting standard setters; securities, banking and insurance regulators; central banks including the ECB; the accounting profession; and users and preparers of accounts. The private sector accounting profession in Europe has created an organisation called the European Financial Reporting Advisory Council (EFRAG) to present coordinated views to the Accounting Regulatory Committee and the Commission. EFRAG has begun its task of reviewing the existing IAS with regard to their applicability in Europe. Click for EFRAG Press Release (PDF 21k).
11 June 2002: New Accounting Roundup newsletter posted
We have posted the 10 June 2002 edition of the Accounting Roundup newsletter from Deloitte & Touche USA.
11 June 2002: IASC Foundation trustees will meet tomorrow
The board of trustees of the IASC Foundation will hold an open meeting at the IASB office in London on 12 June 2002. The public session is 08:30-10:30. Agenda topics:
- Report of the IASB Chairman
- Proposed Revision of the Constitution
- Future of IASC Foundation funding
9 June 2002: NASDAQ proposes corporate governance changes
The 4,000 companies listed on the NASDAQ Stock Market in the USA would be subject to corporate governance reforms similar to those proposed by the New York Stock Exchange (see 7 June 2002 news item).
8 June 2002: Europe adopts regulation requiring IAS by 2005
The Council of the European Union has adopted an IAS Regulation requiring listed companies, including banks and insurance companies, to prepare their consolidated accounts in accordance with International Accounting Standards (IAS) from 2005 onwards. Member States may defer application until 2007 for those companies that are listed both in the EU and elsewhere and that currently use US GAAP (or other GAAP) as their primary basis of accounting, as well as for companies that have only publicly traded debt securities. The goal of the Regulation is to eliminate barriers to cross-border trading in securities by ensuring that company accounts throughout the EU are reliable, transparent, and comparable. The Regulation has the force of law without requiring transposition into national legislation. However, "to ensure appropriate political oversight", the Regulation establishes a new EU mechanism to "assess IAS to give them legal endorsement" before they can be used in Europe. Member States have the option of extending the requirements of the Regulation to unlisted companies and to the production of individual accounts.
7 June 2002: NY Stock Exchange proposes sweeping corporate governance reforms
The Corporate Accountability and Listing Standards Committee of the NYSE Board of Directors has recommended new standards and changes in corporate governance and practices of NYSE-listed companies. The report asks that the SEC to "exercise more active oversight of the FASB to improve the quality of GAAP and the speed of FASB actions". The committee also makes recommendations to Congress and the SEC on various policy and regulatory matters. The proposals seek to strengthen issuer accountability, integrity, and transparency. Click for:
6 June 2002: Goldman Sachs CEO calls for global standards, fair value accounting
In a presentation to the National Press Club in Washington, Henry M. Paulson, Jr., CEO of Goldman Sachs, called for major changes in how public companies are run, audited, and regulated, and for convergence of global accounting systems:
- Reform of the U.S. Rules-Based Accounting System: This is where the most change is needed, Mr. Paulson said. Today, US GAAP accounts for the vast majority of the world's economic activity, and is generally viewed as the best accounting system in the world. The 'European system', which is less rule oriented and more judgment based, is clearly different and successful in its own right. The goal should be convergence of accounting systems, incorporating the best from both models. To do this, we need a new approach to standard setting.
- A Long Hard Look: Mr. Paulson encouraged the SEC to "take a long, hard look at how accounting standards are set in the US," including governance of FASB, selection of FASB members, the FASB standards-setting process "with all of its time delays", and its resources.
- Fair Value Accounting: Mr. Paulson urged the FASB to review historical cost accounting which, he said, is "hopelessly antiquated for companies primarily engaged in financial services or for companies heavily involved with financial instruments, such as Enron. Instead of requiring such companies to record the current, fair market value of all financial assets and liabilities, the historic cost model allows them to record certain financial assets and liabilities at their historic cost. And while the value of financial instruments can vary greatly with the fluctuations of the market, institutions that use historic cost methodology -- primarily banks -- are not required to account for those movements in their financial statements. The result is that investors, regulators and the media have no way of quantifying the real economic impact" of these instruments.
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6 June 2002: Business Combinations: Application of the purchase method
At its April 2002 meeting, the Board voted to add to its agenda the 'application of the purchase method' portion of Phase 2 of the Business Combinations project. We have created a separate Project Page for Phase 2 of the business combinations project. Information about Phase 1 remains on the old page.
6 June 2002: Board meeting agenda for 17-19 June is announced
The IASB will discuss the following projects at its Meeting on 17-19 June 2002 in Berlin:
- Business Combinations (Phase 2)
- Convergence Issues
- Insurance Contracts - Renewal Premiums
- Reporting Performance
- Share-Based Payment - Measurement
6 June 2002: IASB will meet with Advisory Council June 20-21
Topics on the agenda for the IASB Meeting with the Standards Advisory Council on 20-21 June are:
- Business Combinations (Phase 2)
- Convergence
- IASB Agenda Proposals
- IASC Foundation Training Proposal
- IFRIC Activities
- Insurance Contracts
- Reporting Performance
- Review of the Financial Reporting Environment
- Share-Based Payment
5 June 2002: IOSCO cautions on non-GAAP earnings measures
The IOSCO Technical Committee has issued a "Cautionary Statement" urging issuers, investors, and other users of financial information to use care when presenting and interpreting non-GAAP measures of results. These measures are often identified by such terms as operating earnings, cash earnings, earnings before one-time charges, EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted earnings, and pro forma net income. The IOSCO statement "reminds issuers of the responsibility in all instances to ensure that the information they provide to the public is not misleading. Selective editing of financial information may be misleading if it results in the omission of material information. Issuers are cautioned that regulatory actions may be taken if information is disclosed in a manner considered misleading." Click for Full Text of IOSCO Statement (PDF 44k).
5 June 2002: IASB will hold a seminar on share-based payment
IASB will conduct a Seminar on Share-Based Payment (including accounting for stock options) in conjunction with its meeting in Berlin later this month. The seminar will be held on Tuesday, 18 June 2002 at 15:00 at the Forum der Konrad-Adenauer-Stiftung, Tiergartenstrasse 35, Berlin. Speakers will be IASB Chairman Sir David Tweedie; Timothy Plaut, Head of the Frankfurt Office of Goldman Sachs; and Professor Dr. Eberhard Scheffler, Member of the German Accounting Standards Board. Their presentations will be followed by a panel discussion. Click for:
4 June 2002: EC proposes revised accounting directives
The European Commission has proposed to amend the existing European Union Accounting Directives as part of its plan to create an integrated financial services market in Europe. The proposal complements the IAS Regulation, due for final adoption by the Council in the next few days, that will require all EU companies listed on a regulated market to use IAS from 2005 onwards and will allow Member States to extend the IAS requirement to all companies. The proposed changes will remove all inconsistencies between the Directives and IAS in existence at 1 May 2002. Click for:
4 June 2002: EC adopts auditor independence recommendations
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The European Commission has adopted non-binding recommendations regarding auditor independence.
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3 June 2002: FEE position paper on accounting and auditing in Europe
The European Federation of Accountants (FEE) has published a Position Paper on the Role of Accounting and Auditing in Europe. The report identifies a series of action items in light of recent high profile international business failures and concerns about the current state of corporate governance and financial reporting in Europe. Click for More Information.
3 June 2002: SEC likely to propose rules on completeness of disclosures
In a Speech (PDF 54k) before the Rocky Mountain Securities Conference, Alan L. Beller, the new head of the US SEC's Division of Corporation Finance, revealed a proposal for increased accountability of individual corporate leaders:
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We will be recommending to the Commission in the near future that it propose rules that will require [individual corporate] leaders to certify that everything they know that they believe is important to investors has been disclosed in a company's periodic reports. This is a simple but powerful approach. We believe that it will increase involvement of corporate leaders in disclosure, make them focus on what they themselves consider important and improve the overall quality of a company's reports. |
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