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31 October 2002: Deloitte Touche Tohmatsu comment letter on first-time application
We have posted the Comment Letter (PDF 63k) of Deloitte Touche Tohmatsu to IASB on IASB Exposure Draft 1, First-Time Application of IFRS. Overall, we support the opening balance sheet approach of ED1. We believe the approach addresses the practical problems of applying the previous requirements under SIC-8, First-Time Application of IASs as the Primary Basis of Accounting, and the IASB has accomplished its objective of ensuring that an entity's first
IFRS financial statements contain high quality information. Nonetheless, our review of ED1 identified a number of issues that arise from applying the different options and exemptions under the opening balance sheet approach that we believe should be addressed by the IASB. You will find all of our past comment letters Here.
30 October 2002: IASB and FASB agreement on convergence
The International Accounting Standards Board and the US Financial Accounting Standards Board have jointly issued a memorandum of understanding, marking a significant step toward formalising their commitment to the convergence of US and international accounting standards. The IASB and the FASB presented the agreement to the chairs of leading national standard setters at a two-day meeting in London on 28-29 October. Click for:
30 October 2002: EFRAG comment letter posted
We have posted the EFRAG Comment Letter to IASB on proposed amendments to IAS 32 and IAS 39
29 October 2002: New Australian Accounting Alert posted
We have posted the 28 October 2002 edition of Accounting Alert from Deloitte Touche Tohmatsu (Australia). It deals with the accounting implications of Australia's new business tax system (tax consolidation). Earlier editions are also available for downloading.
28 October 2002: New Accounting Roundup newsletter is published
We have posted the 28 October 2002 edition of Accounting Roundup , a newsletter published by Deloitte & Touche (USA). This issue covers special purpose entities, amendment to SFAS 133 (derivatives and hedging), principles-based approach to US standards, implementation of the Sarbanes-Oxley Act, appointment of PCAOB members, EDGAR filings for foreign issuers, our book on implementing IAS 32 and IAS 39, and the IASB's exposure draft on first-time application of IFRS.
27 October 2002: IFAC task force to address confidence in financial reporting
The International Federation of Accountants has appointed a Task Force to address Rebuilding Public Confidence in Financial Reporting. Task force will identify and analyse the causes of the loss of credibility, and consider alternative courses of action to restore credibility. These may include recommendations on principles of best practice in the areas of financial and business reporting, corporate governance, and auditor performance. The task force will be chaired by John Crow, former Governor of the Bank of Canada, and includes representatives from company management, boards of directors, the investment community, and the accountancy profession. They expect to issue their report in mid-2003. Click for IFAC Press Release (PDF 21k).
27 October 2002: Project pages updated to reflect October Board decisions
We have updated the following project pages in the Agenda section of this website to reflect IASB discussion and decisions at the Board's October meeting:
26 October 2002: SEC appoints members of new US oversight board
In a vote divided largely along party lines, the US Securities and Exchange Commission approved the following members of the new Public Company Accounting Oversight Board: Judge William H. Webster, PCAOB chairman, former US court judge and director of the FBI; Kayla J. Gillan, pension fund attorney; Daniel L. Goelzer, former SEC general counsel; Willis D. Gradison Jr., former Congressman; and Charles D. Niemeier, SEC Enforcement Division Chief Accountant. Want more information? Click for:
26 October 2002: Notes from the third (final) day of the October IASB meeting
We have combined all of the notes from the 23-25 October 2002 IASB meeting on a Single Page.
25 October 2002: US GAO report examines 919 restatements of financial statements
The United States General Accounting Office (GAO) has published a 262-page report on Financial Statement Restatements, Trends, Market Impacts, Regulatory Responses, and Remaining Challenges. The eight-month study identified 885 companies (including 689 publicly traded companies) who made a total of 919 restatements during the 5½ years ending in June 2002. The principal finding is that, while the number of restating companies continues to make up a small percentage of all publicly listed companies annually, the number of restatements due to accounting irregularities grew significantly during the 5½ years studied. "The proportion of listed companies on NYSE, Amex, and Nasdaq identified as restating their financial reports tripled from less than 0.89 percent in 1997 to about 2.5 percent in 2001 and may reach almost 3 percent by the end of 2002. From January 1997 through June 2002, about 10 percent of all listed companies announced at least one restatement." Share prices of restating companies dropped by an average of 10% within one day after the restatement was announced. Issues involving revenue recognition (misreported or nonreported revenue) accounted for almost 38% of the 919 announced restatements. Issues relating to improper recognition or capitalisation of costs and expenses accounted for another 16% of the restatements. Click to Download the GAO Report from IASPlus (PDF 5,270k) -- it will take 30-60 minutes if you are using a modem rather than a broadband Internet connection. If you can handle ZIP files, click here for a Faster Download (ZIP 3,008k).
25 October 2002: Notes from the second day of the October IASB meeting
We have combined all of the notes from the 23-25 October 2002 IASB meeting on a Single Page.
24 October 2002: Notes from the first day of the October IASB meeting
We have combined all of the notes from the 23-25 October 2002 IASB meeting on a Single Page.
23 October 2002: IOSCO papers on disclosure, independence, auditor oversight
The Technical Committee of the International Organization of Securities Commissions (IOSCO) has issued statements of principles to guide securities regulators in dealing with three critical areas necessary for investor confidence in securities markets. The principles describe essential features of regulatory systems requiring transparency and disclosure by listed entities; the independence of external auditors; and the need for public oversight of the audit function. You can download the three papers and the related IOSCO press release as follows:
23 October 2002: CESR paper on enforcement of accounting standards in Europe
The Committee of European Securities Regulators (CESR) has issued a consultation paper that contains a Proposed Statement of Principles (SOP) of Enforcement of Accounting Standards in Europe. The SOP will be used for developing standards of best practice on enforcement among CESR members. Principle 1 set out in the SOP states that "competent independent administrative authorities set up by member States should have the ultimate responsibility for enforcement of compliance of the financial information provided by the companies identified by Principle 7 [listed companies and those applying for listing] with the reporting framework." This seems to support the establishment of oversight boards in EU member States similar to the PCAOB set up in the United States by the Sarbanes-Oxley Act of 2002. Comments are requested by 15 January 2003. Click to download:
CESR SOP (PDF 163k).
CESR Press Release (PDF 101k).
23 October 2002: October issue of our IASPlus newsletter is available
The October 2002 edition of our  newsletter can be Downloaded Here. This is the Asia-Pacific edition, which includes all of the general IASB/IFRS update information plus country updates for the Asia-Pacific region. Our Europe-Africa and Americas editions will be published soon.
22 October 2002: Summary of the Sarbanes-Oxley Act of 2002
We have posted a One-Page Summary of the Act (PDF 19k). Also you can Download the Full Text of the Act (PDF 230k).
22 October 2002: Accounting standards updates for 10 jurisdictions posted
We have updated the following jurisdiction pages for news about recent accounting standards setting activity: Australia, China, Denmark, Hong Kong, Malaysia, Pakistan, Philippines, Singapore, Taiwan, Thailand.
21 October 2002: FASB invites comments on principles-based standards
The US Financial Accounting Standards Board has invited comment on a proposal for a principles-based approach to accounting standard setting. The proposal discusses how that approach might improve the quality and transparency of financial reporting and affect development of future standards. Comments are requested by 3 January 2003. FASB has scheduled a roundtable discussion on the topic for 16 December 2002. The proposal can be downloaded at www.fasb.org. Here's their Press Release (PDF 13k). Referring indirectly to International Accounting Standards, FASB Chairman Robert H. Herz stated:
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The FASB is committed to improving US financial accounting standards. Many believe that moving to broader, more principles-based accounting standards such as those used in other parts of the world would facilitate better reporting in the United States. Others, however, are concerned that a principles-based approach could reduce the comparability of financial information and leave too much room for judgment by
companies and auditors.
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18 October 2002: SEC proposes new corporate disclosures, internal control report
The US SEC is proposing that both domestic and foreign registrants include the following new disclosures in their Exchange Act filings:
- The number and names of the "financial experts" serving on the company's audit committee and that they are independent of management, as determined by the company's board of directors.
- Whether the company has adopted a code of ethics for its senior officers, or if not, why not; and any amendments to or waivers from the code.
- A company would be required to file, in its annual report, an internal control report of management stating:
1. management's responsibilities for establishing and maintaining adequate internal controls and procedures for financial reporting for the company,
2. management's conclusions about the effectiveness of the company's internal controls and procedures for financial reporting as of the end of the company's most recent fiscal year, and
3. that the company's registered public accountant has attested to, and reported on, management's evaluation of the company's internal controls and procedures for financial reporting.
Click for SEC Release.
18 October 2002: Foreign issuers in US must file electronically starting 4 November
New US rules requiring foreign private issuers and foreign governments to file most of their Securities Act and Exchange Act documents on EDGAR will become effective 4 November 2002. EDGAR is the SEC's Electronic Data Gathering, Analysis, and Retrieval System. Click for Link to SEC Release.
18 October 2002: IASB will meet in London next week
The IASB will hold its monthly meeting on 23-25 October at its offices in London. The agenda will include Revenue Recognition Concepts; Linkage of Assets and Liabilities (the linkage question arises when the accounting treatment for two or more transactions or contracts differs depending on whether they are accounted for separately or together); Consolidation and Special Purpose Entities; Business Combinations - Phase II; Convergence Topics; Insurance Contracts; and possibly Performance Reporting. The following week (28-29 October) the Board will meet with the chairs of its eight partner national standard-setters.
17 October 2002: Delay in ED on activities of financial institutions
The IASB has postponed the issuance of an Exposure Draft on Activities of Financial Institutions to the second quarter of 2003, with a final Standard now planned for some time in 2004.
16 October 2002: Hong Kong decides not to adopt IAS 40
The Hong Kong Society of Accountants has decided not to replace Hong Kong's existing investment property accounting standard with IAS 40. Over the past several years, under a policy adopted by the HKSA Council, the HKSA has replaced many Hong Kong standards with the related IAS standard essentially verbatim. However, a number of property companies in Hong Kong have expressed significant concerns about IAS 40. The main issue of concern is reporting changes in the fair value of an investment property as part of profit or loss. Both the HKSA Council and its Financial Accounting Standards Committee concluded that the HKSA should await completion of IASB's Performance Reporting project before taking the matter up again.
15 October 2002: Our comments on IAS 32 and 39 amendments
We have posted the Deloitte Touche Tohmatsu comment letter to IASB on the Exposure Draft of Proposed Amendments to IAS 32 and IAS 39 on financial instruments. Click to go to:
15 October 2002: New Accounting Roundup newsletter is available
We have posted the 14 October 2002 edition of Accounting Roundup , a newsletter published by Deloitte & Touche (USA). This issue covers stock options, convergence of FASB and IASB standards, special purpose entities, principles-based approach to standard setting, audits of investment companies, revenue recognition with multiple deliverables, accounting by state and local governments, and a summary of the September IASB meeting.
14 October 2002: Implications of US accounting reform for Europe
Speaking in Brussels at a conference sponsored by the Institute of Chartered Accountants of England and Wales, US SEC Chairman Harvey L. Pitt addressed the implications for Europe of the recent US accounting reform legislation [Sarbanes-Oxley Act]. Click to view the full text of Mr. Pitt's Remarks titled "A Single Capital Market in Europe: Challenges for Global Companies". Among other things, Mr. Pitt said:
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Once the [new Public Company Accounting Oversight] Board is operational, it will need to determine a plan to consider and address issues regarding foreign firms. The Act provides that we, or the Board subject to our approval, may exempt any foreign public accounting firm from any provision of the Act or the rules promulgated under the Act. Once the Board is operational, we and it will explore the basis and need for exempting foreign audit firms. Ultimately, our decision must balance the fundamental regulatory objectives of Sarbanes-Oxley with our role as one of many regulators in the community of nations. We want to work closely with you in making these determinations and we will give real credence to the auditor oversight approaches other nations take.
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10 October 2002: FASB approves an agenda project on international convergence
The United States Financial Accounting Standards Board has added to its agenda a short-term international convergence
project that will be conducted jointly with the International Accounting Standards Board. The FASB also voted to authorise its staff to expand its research project on international convergence. With respect to the short-term project, the FASB established a goal of 31 December 2003 for issuance of a final Statement that would "eliminate or reduce many, if not all, of the differences to be addressed in that project".
The new US Public Company Accounting Reform and Investor Protection Act of 2002, approved by the US Congress in July 2002, permits the SEC to look to a private-sector accounting standard-setter, such as FASB, provided that the standard-setter "considers, in adopting accounting principles, ... the extent to which international convergence on high quality accounting standards is necessary or appropriate in the public interest and for the protection of investors."
9 October 2002: Project pages updated
Because the IASB has split its Insurance Contracts project into two phases, we have similarly split our agenda project page into Insurance Contracts - Phase I and Insurance Contracts - Phase II. In addition to updating those two pages to reflect decisions at the September IASB meeting, we have also updated our project pages on
9 October 2002: IASB meeting dates for October are confirmed
The IASB will hold a deliberative Board meeting on 23-25 October (agenda not yet announced) and will meet with the chairs of major national accounting standard-setters on 28-29 October (agenda announced). Click for Meeting Details.
8 October 2002: US SEC Chairman comments on accounting by foreign registrants
In Remarks delivered at the Financial Times' Conference on Regulation and Integration of the International Capital Markets (London, 8 October 2002), US SEC Chairman Harvey L. Pitt commented on accounting and other standards to be followed by foreign companies that trade in the US capital markets:
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In implementing Sarbanes-Oxley, we will be fully faithful to its letter and spirit, and we will also be fully mindful of the impact of regulation on both U.S. and global markets. In doing so we will continue a tradition that we have been following for many decades. Our philosophy is simple - U.S. persons invest around the globe, and therefore the interests of U.S. investors and U.S. markets are best served if foreign companies trade in our markets and meet our disclosure and accounting standards. I am well aware that there are those, especially outside the United States, who believe that recent events call our disclosure and accounting rules into question. However, I am confident, first, that our standards best serve the needs of our investors, and, second, that following the improvements that we have made and are in the process of making, including those mandated by the Sarbanes-Oxley Act, our standards are and will be the equal of any, and the standard for many....
We intend to implement fully the Sarbanes-Oxley Act for all companies, foreign and domestic. That is our mandate. And, as we write our rules to implement the Act, foreign companies can expect that many of the new rules will apply to them. But we are prepared to consider how we can fulfill the mandate of the Act through our rulemaking and interpretive authority in ways that accommodate the home country requirements and regulatory approaches of the home jurisdiction of our foreign registrants and potential registrants.
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8 October 2002: Chinese GAAP: The Process of International Harmonization
We have posted a new edition of our China Financial Reporting Update Newsletter. It addresses Chinese Accounting Standards: The Process of International Harmonization.
7 October 2002: Possible US move to a principles-based approach to standards
The US Financial Accounting Standards Board has agreed to invite comment on a proposal for a principles-based approach to US accounting standard setting. The proposal addresses concerns about the increase in the level of detail and complexity in accounting standards. Principles-based standards would focus on establishing general principles derived from the conceptual framework, reflecting the recognition, measurement, and reporting requirements for the transactions covered by the standards. The standards would provide few, if any, exceptions to the general principles and would limit additional guidance for applying the general principles to typical transactions, encouraging professional judgment in applying the general principles to other transactions specific to an entity or industry. The FASB will publish the proposal with a 75-day comment period. The FASB also plans to hold a public roundtable discussion with respondents to the proposal on 16 December 2002.
3 October 2002: Comparison of IFRS and GAAP in the People's Republic of China
Deloitte Touche Tohmatsu has published GAAP Differences in your Pocket: IAS and GAAP in the People's Republic of China. This 32-page booklet identifies and explains 108 differences between International Financial Reporting Standards and Chinese GAAP. It also includes a comprehensive foreword that reviews the development of financial reporting standards in China. Click to Download the Booklet (PDF 346k). We are pleased to grant permission to accounting educators and students to make copies for educational use. In July, we published a similar comparison of IFRS and United States GAAP, which can be downloaded from our Publications Page.
3 October 2002: EFRAG web page added to IASPlus
Because IFRS will be required for listed companies throughout Europe starting in 2005, we have created a separate web page for the European Financial Reporting Advisory Group (EFRAG). EFRAG develops a consensus view of a broad range of European organisations with an interest in financial reporting and submits that view to IASB and to the European Commission. Our EFRAG Page includes background information about EFRAG and links to the EFRAG comment letters, including EFRAG's recent comment letter on IASB's Improvements Exposure Draft.
2 October 2002: Study on the effects of FAS 133 on companies' risk management
The Association for Finance Professionals has published a study of The Impact of FAS 133 on the Risk Management Practices of End Users of Derivatives. The study reports the experience of 175 companies in applying FAS 133. Because the provisions of FAS 133 are very similar to those of IAS 39, the study should be of interest to companies that apply IAS 39. Click here to Download the Study (PDF 48k). The study is an update of a similar 2001 study which can be Downloaded Here (PDF 287k).
1 October 2002: Our IAS 39 guidance book is now available for downloading
Deloitte Touche Tohmatsu is pleased to make available, without charge, our book of comprehensive implementation guidance for IAS 39, Financial Instruments: Recognition and Measurement. The book is nearly 250 pages in length and contains:
- 164 Questions and Answers,
- 151 Examples (many with journal entries),
- 52 US GAAP Comparisons,
- Comprehensive summaries of IAS 39 and its companion disclosure standard, IAS 32.
These are linked back to the IAS 32 and IAS 39 paragraphs.
When it was originally issued late last year, we restricted distribution of the book to staff and clients. In response to many requests, we are now making it available without charge to all. Click to Download the Deloitte IAS 39 Book (PDF 1,933k). Because the file is large, if you are using a modem you are likely to see a white screen for a minute or two -- be patient. Click here for More Information about the book.
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