30 June 2004: EFRAG submits comments on IASCF constitution review

The Supervisory Board and the Technical Expert Group of the European Financial Reporting Advisory Group (EFRAG) have jointly submitted a Letter of Comments about the IASB and IFRIC (PDF 48k) to the IASC Foundation constitution review committee. Among other things, EFRAG requests formal liaison standard setter status with the IASB, observer membership of the IFRIC, and formal status as a member of the Standards Advisory Council.

30 June 2004: EC begins study of equivalence of national GAAPs to IFRSs

The Accounting Regulation adopted by the European Union requires that European companies listed in a regulated European securities market must prepare their financial statements in conformity with International Financial Reporting Standards starting in 2005. Subsequent legislation provides that non-European companies whose securities are listed in a regulated European securities market must also follow IFRSs starting in 2007 unless the Commission has agreed, prior to 1 January 2007, to recognise financial statements prepared in accordance with "third country GAAP" (a non-European national GAAP) as being equivalent to those prepared in accordance with IFRSs. The European Commission has asked the Committee of European Securities Regulators (CESR) to assess the IFRS-equivalence of the following GAAPs by June 2005: US-GAAP, Japanese GAAP, and Canadian GAAP. Click to download the full EC Formal Mandate to CESR regarding CESR's assessment (PDF 32k). The mandate states that: In giving its advice, CESR should take full account of the following key objectives: When assessing as to whether financial statements prepared under third country GAAP provide a true and fair view of the issuer's financial position and performance, the priority should lie on assuring the protection of investors; A global and holistic assessment of the quality of the financial information provided by the accounting system in question should be carried out from a technical point of view and independently from any international convergence project aiming at a single set of accounting standards, such as the project currently conducted by the International Accounting Standard Board and the US Financial Accounting Standard Board. The global and holistic assessment should be based on the entirety of the third country GAAP in force as of 1 January 2005. The assessment should focus only on the significant differences between IAS/IFRS as endorsed at EU level and the third country GAAP in question. The assessment should not relate as to whether the third country GAAP in question might be conducive to the European public good. This is a criterion for endorsing IAS/IFRS at European level pursuant to Article 3(2) of the IAS Regulation, but not for assessing equivalence. The assessment should also be carried out independently of whether the third country concerned already recognises IAS/IFRS as equivalent to their domestic GAAP.

30 June 2004: EU and US agree to promote international accounting convergence
Following discussions on 25-26 June 2004, the participants in the US-EU Financial Markets Regulatory Dialogue have agreed to "promote international convergence of accounting standards, including their consistent application, implementation, and enforcement". Dialogue participants are the European Commission and the United States Treasury, Securities Exchange Commission, and Federal Reserve Board. Click for Report (PDF 19k).

29 June 2004: New Accounting Roundup newsletter posted

Deloitte (United States) has published the 28 June 2004 edition of Accounting Roundup (PDF 188k). This newsletter briefly describes key regulatory and professional developments that have recently occurred and provides links to Internet locations where additional information can be found on each topic. This issue includes updates on activities of FASB, GASB, AICPA, SEC, PCAOB, and IASB. You will find links to all past issues Here.

28 June 2004: IASCF constitution review hearing tomorrow in London

The constitution committee of the IASC Foundation will hold its second public hearing in connection with its current Review of the Foundation's Constitution tomorrow in London. Details about the hearing may be found on the IASB Website.

28 June 2004: CESR seeks comments on financial information in prospectuses

The Committee of European Securities Regulators (CESR) has invited comments on its draft recommendations on the content of prospectuses, including both financial and non-financial information. CESR's proposed recommendations on historical financial information cover selected financial information, operating and financial review, capital resources, profit forecasts or estimates, restatements of historical financial information, pro forma financial information, financial data not extracted from issuer's audited financial statements, interim financial information, working capital statements, and capitalisation and indebtedness. CESR notes that "the purpose of the recommendations is not to provide interpretations of IAS/IFRS or Member States' local GAAP but to clarify certain disclosure requirements included in [EU Prospectus Regulation No. 809/2004] where necessary." Comments are due 18 October 2004. Click for: Proposed Recommendations (PDF 730k) Press Release (PDF 86k)

26 June 2004: New Australian Accounting Alert

We have posted Deloitte Australian Accounting Alert 2004/12 (PDF 57k), Applicability of AASB 1046 'Director and Executive Disclosures by Disclosing Entities' to Managed Investment Schemes. You can download all past Alerts Here.

26 June 2004: First independent chair of IAASB advisory group
David Damant, a member of the IASB's Advisory Council and the IASB's SME Advisory Panel, has been appointed to be the first independent chairman of the Consultative Advisory Group (CAG) to the International Auditing and Assurance Standards Board (IAASB). Click for IFAC Press Release (PDF 61k).

26 June 2004: IAS 33 e-learning module is now available

The new e-learning module for IAS 33 Earnings per Share has been added to the 20 other modules available in Deloitte's popular IFRS e-Learning programme. You can access all available modules by clicking the IFRS e-Learning 'light bulb' on the IASPlus home page or by clicking Here. Deloitte is making our IFRS e-Learning programme available in the public interest without charge.

25 June 2004: New Accounting Alert from New Zealand

We have posted Deloitte New Zealand Accounting Alert No. 23 (PDF 181k). This issue addresses recent New Zealand exposure drafts of equivalents of IAS 30 and IAS 31, several recent IASB exposure drafts, IFRIC D6, exposure drafts of a proposed preface to New Zealand accounting standards and New Zealand Framework, and the process for developing accounting standards in New Zealand. Past Alerts can be found Here.

24 June 2004: IASB publishes discussion paper on accounting standards for SMEs

The IASB has published a discussion paper on the Board's Preliminary Views on Accounting Standards for Small and Medium-sized Entities (SMEs). The discussion paper focuses on issues relating to the Board's approach to the project. It does not include proposals for specific financial reporting standards for SMEs. That will come later. Printed copies of the discussion paper will be sent to subscribers or may be purchased for £10 from the IASB. An electronic version of the discussion paper may be downloaded from www.iasb.org without charge starting 5 July. Comment deadline is 24 September 2004. Click for IASB Press Release (PDF 26k). Issues Raised in the IASB's Discussion Paper on Standards for SMEs Should the IASB develop special financial reporting standards for SMEs? What should be the objectives of a set of financial reporting standards for SMEs? For which entities would IASB Standards for SMEs be intended? If IASB Standards for SMEs do not address a particular accounting recognition or measurement issue confronting an entity, how should that entity resolve the issue? May an entity using IASB Standards for SMEs elect to follow a treatment permitted in an IFRS that differs from the treatment in the related IASB Standard for SMEs? How should the Board approach the development of IASB Standards for SMEs? To what extent should the foundation of SME standards be the concepts and principles and related mandatory guidance in IFRSs? If IASB Standards for SMEs are built on the concepts and principles and related mandatory guidance in full IFRSs, what should be the basis for modifying those concepts and principles for SMEs? In what format should IASB Standards for SMEs be published?

24 June 2004: Notes from the third day of the June IASB meeting

The IASB met on 21-23 June 2004 in Oslo, Norway. We have combined the preliminary and unofficial notes taken by the Deloitte observers at the meeting on a Separate Page.

23 June 2004: Notes from the second day of the June IASB meeting

The IASB met on 21-23 June 2004 in Oslo, Norway. We have combined the preliminary and unofficial notes taken by the Deloitte observers at the meeting on a Separate Page.

22 June 2004: Notes from day one of the June IASB meeting

The IASB met on 21-23 June 2004 in Oslo, Norway. We have combined the preliminary and unofficial notes taken by the Deloitte observers at the meeting on a Separate Page.

22 June 2004: Key differences between IFRSs and US GAAP

Convergence of International Financial Reporting Standards and US GAAP is a goal of both the International Accounting Standards Board and the US Financial Accounting Standards Board. The two boards are working to achieve that goal, both in their individual standards setting activities and in short-term and longer-term convergence projects. Deloitte has published a booklet highlighting Key Differences Between IFRSs and US GAAP as of June 2004, with a brief note on what, if anything, is being done about each difference. The differences (or non-inclusion of what, until recently, was a difference) reflect all IFRSs issued and revised through mid-June 2004, including those that do not become mandatory until 2005. The status notes reflect current IASB and FASB proposals. You can Download the Booklet Here (PDF 258k). We are pleased to grant permission for accounting educators and students to make copies for educational purposes.

21 June 2004: Webcast on IFRS 3, IAS 27, IAS 28, and IAS 31

The Deloitte London IFRS Centre of Excellence is running a monthly series of hour-long Internet-based IFRS technical updates, focusing on the most important international accounting standards and how they will affect UK companies. The latest session, addressing business combinations and issues relating to group accounts, was run on Thursday 17 June 2004. It covered IFRS 3 Business Combinations, IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures. The link to the recording can be found on our UK Page. The recording is no longer available online.

20 June 2004: IASB posts near-final versions of four EDs
The IASB has posted on its Website the near-final versions of four exposure drafts that the Board plans to publish in July. The Board noted that it is providing these drafts for information and to assist organisations and individuals in preparing to comment on the Exposure Drafts when published. The IASB is not inviting comments on these preliminary drafts.

• Exposure Draft ED 7 Financial Instruments: Disclosures
• Exposure Draft Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Cash Flow Hedge Accounting of Forecast Intragroup Transactions
• Exposure Draft Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 4 Insurance Contracts - Financial Guarantee Contracts and Credit Insurance
• Exposure Draft Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Transition and Initial Recognition of Financial Assets and Financial Liabilities

19 June 2004: IFRSs in Japan? Japanese GAAP continue in EU?

The Japanese press is reporting that the Financial Services Authority (Japan's securities regulator) will recommend that foreign companies listed in Japan be allowed to submit IFRS financial statements, rather than Japanese GAAP statements, if they already report under IFRSs in their home country. An explanation of the differences between results under IFRS and under Japanese GAAP would be required. Currently, around 30 foreign companies are listed on the Tokyo Stock Exchange, but only about 10 of those are from countries that require IFRSs. Most of the others are US and Canadian companies that do not prepare IFRS financial statements. Several news stories have also reported that the European Union may extend to 2007 the deadline for Japanese companies listed in Europe to switch to IFRSs. Around 250 Japanese companies list their shares or bonds on EU exchanges. Most prepare their financial statements under Japanese accounting rules. The Japanese government has already asked governments in Europe to allow these companies to continue to use Japanese GAAP indefinitely.

19 June 2004: FASB roundtable meetings on share-based payment

The US Financial Accounting Standards Board will hold public roundtable meetings in the FASB Exposure Draft, Share-Based Payment on 24 June 2004 at the Sheraton Hotel, Palo Alto, California, and on 29 June 2004 at the FASB offices, Norwalk, Connecticut. FASB's exposure draft is basically the same as IFRS 2. The US Congress is considering legislation that would restrict a FASB standard on expensing stock options to options granted to the top five officers of a company (see our news story of 16 June 2004). The FASB hearings will be webcast – see the FASB Website for details.

18 June 2004: Reminder – comment deadline on IASB internal review

The deadline for comments on the IASB's internal review, Strengthening the IASB's Deliberative Processes, is one week from today (25 June 2004). This review is being conducted alongside the IASC Foundation Trustees' Constitution Review now under way.

17 June 2004: UK FRC urges European adoption of IAS 32 and IAS 39

In a letter to the European Commission, the United Kingdom Financial Reporting Council (FRC) expressed "disappointment and concern that, despite the prolonged discussion as to the suitability for adoption in Europe of the International Accounting Standards Board's standards (IAS 32 and 39) on Financial Instruments, Europe's listed companies have yet to receive a clear and unequivocal message that they should prepare to apply these standards from next year. The FRC believes that the adoption of IAS 39 is particularly important to regulate accounting for off-balance sheet finance and to ensure that the impact of derivatives is recorded in financial statements." Click for Press Notice (PDF 60k) and Letter to EC (PDF 93k). The UK Association of Corporate Treasurers has written a similar Letter (PDF 34k) to the EC.

17 June 2004: International convergence on PCAOB agenda
International convergence and coordination with standard-setters is on the agenda for discussion at the first meeting of the first meeting of the Standing Advisory Group of the US Public Company Accounting Oversight Board in Washington on 21-22 June 2004. Click for Details.

17 June 2004: EFRAG seeks comments, task force members
EFRAG has invited comments by 8 July on its Draft Response (PDF 46k) to IFRIC D6 Multi-employer Plans. Also, EFRAG plans to set up a "working group on Service Concession Arrangements with the objective to discuss urgent matters for the concession industry regarding the adoption of IFRS for 2005." EFRAG seeks nominees by 23 June.

17 June 2004: Video-streaming of Danish IAS/IFRS conference
Deloitte Denmark recorded the second day of an IAS/IFRS conference on 8 June 2004 using on-demand video-streaming (with Windows Media ADSL). The video presentations are in Danish and include:

• Business combinations, goodwill, intangible assets, and impairment test.
• An update on the new rules and principles on financial instruments in IAS 39.
• Share-based payment – new rules, new considerations.

16 June 2004: Agenda for the June IASB meeting
The IASB will meet on 21-23 June 2004 at the Grand Hotel in Oslo, Norway. The agenda, set out below and in more detail Here, includes a meeting with the Nordic Regional Standard-Setters on the afternoon of 23 June. The Board will meet with the Standards Advisory Council at the same location on 24-25 June (agenda previously reported in our News Story of 7 June 2004).

16 June 2004: US House committee would restrict FASB stock option standard
By vote of 45-13, the Financial Services Committee of the US House of Representatives approved draft legislation that would restrict a FASB standard on expensing stock options to options granted to the top five officers of a company. The committee is chaired by Rep. Michael G. Oxley, principal author of the Sarbanes-Oxley Act. The bill (known as H.R. 3574, the Stock Option Accounting Reform Act) would also delay implementing any standard for a year, until completion of a study. Approval by the committee means that the bill is now sent to the full House for consideration. The Senate must also pass the same legislation before the bill becomes law. Click for Press Release (PDF 103k).

16 June 2004: EFRAG invites comments on views on IASB due process
The European Financial Reporting Advisory Group has posted its Draft Letter of Comment on the IASB's 24 March 2004 discussion paper on Strengthening the IASB's Deliberative Processes. "EFRAG welcomes each of the detailed improvements as presented in the paper and regards them as a great improvement to the transparency and democratic process within the IASB." Additionally, the EFRAG draft makes further proposals in the areas of comment periods, changes to existing standards, basis for conclusions, use of field tests or field visits, use of discussion papers, and re-exposure of proposals. EFRAG seeks comments by 8 July 2004.

15 June 2004: Bound Volume of IFRSs now available from IASB

The 2004 Bound Volume of International Financial Reporting Standards is now available for purchase from the IASB On-Line Bookshop. BV 2004 includes all of the Improved IASs published by the Board in December 2003, IFRSs 1 to 5 and related amendments to IAS 36 and IAS 38, and the macro hedging amendments to IAS 39. Interpretations and IASB-issued supporting documentation (Bases for Conclusions, Implementation Guidance, and Illustrative Examples) are also included. The price of the printed bound volume is £54. Editorial updates will be Posted periodically to the IASB's website. A CD-ROM version may be purchased for £120 per user, including updates during the year.

15 June 2004: News report about the ARC meeting on IAS 39
The Accounting Regulatory Committee (ARC) of the European Commission met on Monday 14 June 2004 to consider whether to recommend that the Commission adopt IAS 39 for use in Europe. The ARC includes one representative from each of the 25 EU member states. Although there is no report yet on the ARC Website or other announcement from the Commission, the New York Times and the Financial Times have both reported that the governments of four European countries – Belgium, France, Italy, and Spain – objected to the rule and six others, including Germany, abstained. Fifteen voted in favour. The Commission has asked the countries to put their views in writing by 30 June. After then, the Commission will make a decision.

15 June 2004: Legislation seen as threat to FASB independence
The Trustees of the Financial Accounting Foundation, which oversees the FASB, have issued a press release expressing concern that FASB's independence is being "undermined" by legislation under consideration in the US Congress that would override or delay FASB's efforts to develop accounting standards for stock options. "Once Congress starts setting accounting standards through its political process, the integrity of U.S. accounting standard setting and the credibility of U.S. financial reporting will be dangerously compromised." Link to Press Release.

14 June 2004: UK ASB unanimously favours accepting IAS 39 in Europe

In its Response to EFRAG's request for comments on whether IAS 39 should be endorsed for use in Europe, the UK Accounting Standards Board expressed the unanimous view of its members that: In the absence of a standard on the recognition and measurement of financial instruments, those dependent on a high quality of financial reporting – the investors in the international capital markets, and their investment analysts – would regard information provided by EU listed companies as potentially inconsistent and lacking in transparency. That would have very damaging consequences and would seriously undermine the integrity of financial reporting within the EU. Although we recognise that concerns about the standard remain, our view is that none is of sufficient significance to outweigh the benefits that would result from adoption of IAS 39 in time for application from 1 January 2005.

13 June 2004: Update on IAS 39

Following several days of discussions among representatives of the IASB and representatives of the European Commission, the IASB has posted on its website an Update on IAS 39 as of 11 June 2004. The announcement outlines the steps the Board has already taken to address the concerns of European bankers about IAS 39 and its current consideration of two additional issues: Presentation of cash flow hedges in the balance sheet and statement of changes in equity. A proposal put forward by the European Banking Federation for a new type of hedge accounting for hedges of interest rate margin. The announcement also indicates that the Board will ask its new international working group on financial instruments to: Examine a number of fundamental questions about financial instruments accounting,. Explore ways to improve and simplify existing requirements. Examine broader questions on the application and extent of fair value accounting.

12 June 2004: IAS 33 e-learning module due out shortly

In the next week or so, the e-learning module for IAS 33 Earnings per Share will be added to the 20 modules already available in Deloitte's popular IFRS e-Learning programme. We will, of course, announce it here. After that, probably by the end of July, we will release modules on IAS 12, IAS 19, IAS 32/39 (part 1 of 3), and IFRS 1. You can access all available modules by clicking the IFRS e-Learning 'light bulb' on the IASPlus home page or by clicking Here. Deloitte is making our IFRS e-Learning programme available in the public interest without charge.

11 June 2004: Exposure drafts expected from IASB and IFRIC
The following proposals are expected to be issued for public comment by the IASB and IFRIC by the end of this month:

• IFRIC D7 Employee Benefit Plans with a Promised Return on Contributions or Notional Contributions
• IFRIC D8 Members' Shares in Co-operative Entities
• IFRIC D9 Scope of SIC-12
• Amendments to IAS 39 and IFRS 4 Financial Guarantees and Credit Insurance
• Amendments to IAS 39 Transition and Initial Recognition
• Amendments to IAS 39 Foreign Currency Cash Flow Hedge Accounting of Forecast Intragroup Transactions

11 June 2004: EFRAG proposes to recommend endorsement of IFRIC 1

The European Financial Reporting Advisory Group (EFRAG) is seeking comments on its draft letter to the European Commission proposing to recommend adoption of IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities for use in Europe. Click to download Draft Letter on IFRIC 1 (PDF 35k). EFRAG needs comments by 10 July 2004.

10 June 2004: PCAOB adopts rules for oversight of non-US firms

The US Public Company Accounting Oversight Board (PCAOB) has adopted rules relating to oversight of non-US public accounting firms that audit companies registered with the US SEC. The rules set out a framework under which, with respect to non-US audit firms, the PCAOB could implement the provisions of the Sarbanes-Oxley Act by relying, to an appropriate degree, on a non-US oversight system. SEC approval is required before the new rules take effect. Click for: Press Release (PDF 26k) Full Text of Rules (PDF 120k) The PCAOB's new rules summarise the Board's oversight approach as follows: The Board's rules on inspections (PCAOB Rules 4011 and 4012) provide a foreign registered public accounting firm an opportunity to minimize the unnecessarily duplicative administrative burdens of dual oversight by requesting that the Board rely – to an extent deemed appropriate by the Board – on inspections of the registered firm under the home country's oversight system. Under the Board's rules, a firm would first provide the Board with a one-time statement asking the Board to rely on a non-US inspection. At an appropriate time before each inspection of a non-US firm that has submitted such a statement, the Board would determine the appropriate degree of reliance based on information about the non-U.S. system obtained primarily from the non-US regulator regarding the independence and rigor of the non-US system. The Board would also base its decision on its discussions with the appropriate entity or entities within the oversight system concerning the specific inspection work program for the non-US firm's inspection at hand. The more independent and rigorous a home country's system, the higher the Board's reliance on that system. A higher level of reliance translates into less direct involvement by the Board in the inspection of the non- US registered public accounting firm.

9 June 2004: Basel Committee release on IAS 39 and regulatory capital
The Basel Committee has posted on its website a Press Release (PDF 18k) announcing the Committee's recommendations to national bank regulators that two amounts that are reported in equity under IAS 39 not be considered part of a bank's Tier I or Tier II capital for regulatory purposes:

• The cumulative fair value gains and losses on cash flow hedges of financial instruments measured at amortised cost
• Gains and losses arising from changes in an institution's own credit risk as a result of applying the IAS 39 fair value option to its liabilities.

9 June 2004: Ian Mackintosh named Chair of the UK ASB
Ian Mackintosh, a member of the Standards Advisory Council and the IASB's SME Advisory Panel, has been appointed as Chairman of the UK Accounting Standards Board effective 1 August 2004 for a three year term. Mr. Mackintosh has chaired the IFAC Public Sector Committee and was Deputy Chair of the Australian Accounting Standards Board. Press Release (PDF 63k).

9 June 2004: FEE urges EU rule on corporate social responsibility reporting
The European Federation of Accountants (FEE) has asked the European Commission's Multi-stakeholder Forum to give Corporate Social Responsibility (CSR) reporting the same level of recognition as financial reporting. CSR reporting typically sees corporations reporting on their economic, social and environmental impacts. Click for Press Release (PDF 22k). You can download the report from the FEE Website.

8 June 2004: We have posted the latest Accounting Roundup newsletter
Deloitte (United States) has published the 7 June 2004 edition of Accounting Roundup (PDF 162k). This newsletter briefly describes key regulatory and professional developments that have recently occurred and provides links to locations where additional information can be found on each topic. This issue includes updates on activities of FASB, GASB, SEC, and IASB. You will find past issues Here.

7 June 2004: Agenda for the June Standards Advisory Council meeting

The IASB will meet with the Standards Advisory Council on Thursday and Friday, 24-25 June 2004, at the Grand Hotel in Oslo, Norway. The agenda for the meeting is set out below. The Board will meet in the same location on 21-23 June. The Board meeting agenda has not yet been announced. AGENDA – STANDARDS ADVISORY COUNCIL MEETING 24-25 JUNE 2004 Thursday 24 June 2004 IASB Chairman's report IASB agenda planning and priorities IASCF Constitution review and SAC Charter Stable platform Friday 25 June 2004 Consolidation and SPEs - project review Financial instruments - disposition of controversial issues Financial risk disclosures Interpretations of IFRSs - interface with national standard-setters Revenue recognition - critical issues

7 June 2004: Deloitte CEO speaks at UN on codes of conduct for business
In a speech at the United Nations, Deloitte Touche Tohmatsu Global CEO William G. Parrett called on multinational corporations to establish and follow codes of conduct that transcend minimum compliance. He said that principled ethical behavior bolsters the rule of law and would therefore lead to expanded economic opportunities around the world. In a speech titled Globalisation's Next Frontier: Principled Codes of Conduct that Bolster the Rule of Law, Mr. Parrett told global ethics and business leaders, representatives from non-governmental organizations (NGOs), and academic institutions that globalisation and world security itself could be jeopardised unless multinational corporations develop ethical conduct that adheres to values and principles rather than just written law. Link to Full Text of Mr. Parrett's Remarks (PDF 46k).

6 June 2004: US PCAOB to consider oversight of non-US accounting firms
At its meeting on 9 June 2004, the US Public Company Accounting Oversight Board (PCAOB) will consider adopting final rules related to the oversight of non-U.S. public accounting firms. Section 106(a) of the Sarbanes-Oxley Act provides that any non-US public accounting firm that prepares or furnishes an audit report with respect to any US public company is subject to the Act and to the rules of the PCAOB. The rules set out a framework under which the Board could implement the Act's provisions, with respect to non-US firms, by relying, to an appropriate degree, on a non-US system. The rules were proposed on 9 December 2003. At the same meeting the PCAOB will also consider adopting final rules on (a) requirements for documentation the auditor should prepare and retain in connection with audit engagements and (b) the terminology the Board will use to describe the degree of responsibility that the auditing and related professional practice standards impose on auditors. Click for PCAOB Meeting Notice and Link to Text of Proposed Rules.

6 June 2004: SEC and CESR announce details for collaboration
In our News Story of 29 May 2004, we reported on that the US Securities and Exchange Commission and the Committee of European Securities Regulators have reached agreement for enhanced cooperation and collaboration on cross-border securities regulatory matters. In a press conference held in Amsterdam on 4 June, SEC Commissioner Roel C. Campos and CESR Chairman Arthur Docters van Leeuwen presented the terms of reference establishing the structure of this enhanced dialogue, and set out four key issues that will dominate the agenda during 2004 and 2005, one of which is:

6 June 2004: IFAC revises its ethics rules on audit partner rotation
The Ethics Committee of the International Federation of Accountants has revised IFAC's ethics code to make it clear that an individual who has completed a predefined period (normally not more than seven years) in the role of lead engagement partner for an audit of a listed entity should not participate in that assurance engagement until a further period, normally two years, has elapsed.

5 June 2004: FEE warns that EU standards "second best" without IAS 39

A report published by FEE, the Federation of European Accountants, warns that Europe's accounting standards would be regarded globally as inferior if some IFRSs (particularly IAS 39) are not endorsed for use in Europe. "We emphasise the need for 'endorsed IFRS' to be the same as 'IFRS'", said FEE President David Devlin. "The endorsement process should not be used as a means to create European standards. Only global standards will meet the wider objectives of financial stability, efficiency and transparency and provide the benefits of increasing confidence in financial markets, reducing the cost of capital and facilitating global investments." The report identifies the following "serious implications" of not endorsing all IFRSs: Extra disclosures to explain differences from IFRS, for reasons of transparency. Companies would no longer be able to claim that their financial statements were prepared under IFRS, with related consequences for the audit report. Related audit implications. The risk of setting a precedent. System changes implications of any unique European standards in any area, such as IAS 39. The risk that some financial institutions, banks or insurance undertakings that apply or want to apply IAS 39 will be seriously disadvantaged. Access to capital markets could be restricted or made more expensive. Loss of opportunity to converge IFRS and US GAAP and possible impact on other elements of transatlantic dialogue. Click for FEE Report (PDF 256k) and FEE Press Release (PDF 93k).

5 June 2004: EFRAG invites comments on endorsement of IAS 32 and IAS 39

The Technical Expert Group (TEG) of the European Federation of Accountants (EFRAG) has invited comments on draft letters to the European Commission proposing that the Commission endorse IAS 32 and IAS 39 for use in Europe. Interestingly, the vote on IAS 39 was five in favour and six against, but under EFRAG's constitution a standard is recommended to be endorsed unless two-thirds of the members are against it. Ten pages of the 16-page draft letter on IAS 39 contain the views of dissenting TEG members. EFRAG was formed in 2001; this was the first meeting of TEG at which public observers were admitted. Click to download Draft Letter on IAS 32 (PDF 41k) and Draft Letter on IAS 39 (PDF 132k). EFRAG seeks comments on its draft letters by 5 July 2004. Here is an excerpt from the draft letter on IAS 39: EFRAG is united in supporting all significant aspects of IAS 39 relating to recognition and derecognition of financial instruments, fair value measurement and impairment, the implementation of which is likely to lead to improved financial reporting in Europe. In particular, all members of EFRAG, and the three European national standard setters represented on EFRAG support the fair value measurement of financial derivatives at least when not used as part of an effective hedge. However, as regards certain aspects of hedge accounting, the treatment of liabilities repayable on demand and some other measurement issues, EFRAG members are divided: The assenting members (i.e. those supporting endorsement of IAS 39), while hoping that further improvement will be possible in the medium term to meet the concerns raised below, believe that IAS 39 now meets the requirements of the IAS Regulation. Accordingly, they favour endorsement of IAS 39. The dissenting members disagree with the requirements related to these issues, for reasons set out below in detail, and believe that IAS 39 in its present form does not meet the criteria of the IAS Regulation and therefore should not be endorsed. EFRAG also completed its endorsement process on the following IASB standards and recommended that the EU endorse them, though some concerns are expressed. Click to download the EFRAG letter: Adoption of IAS 36 Impairment of Assets and IAS 38 Intangible Assets (PDF 39k) Adoption of IFRS 3 Business Combinations (PDF 43k) Adoption of IFRS 4 Insurance Contracts (PDF 39k) Adoption of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (PDF 41k)

5 June 2004: Report from the second day of the IFRIC meeting

The International Financial Reporting Interpretations Committee (IFRIC) held a two-day meeting in London on Thursday and Friday 3-4 June 2004. Presented below are the preliminary and unofficial notes taken by the Deloitte observers at the second and final day of the meeting. Notes from the IFRIC Meeting 4 June 2004 Votes on Matters Discussed on 3 June 2004 On the first day of the meeting the IFRIC had been unable to form a quorum for large parts of the day due to three of the members being in attendance at the IASCF Constitutional Public Hearings in New York. At the beginning of the second day the staff outlined the major conclusions drawn on day 1 in respect of D3 Determining Whether an Arrangement Contains a Lease, and D7 Employee Benefit Plans with Promised Returns on Contributions or Notional Contributions. The IFRIC was asked to vote on the decisions in respect of these items as described above, and the motions were carried. IFRS 2, IAS 19, and Employee Benefit Trusts The IFRIC considered two draft interpretations amending the scope of SIC-12 Consolidation – Special Purpose Entities. The first interpretation proposes to delete the scope exclusion for equity compensation plans. The second proposes to delete the scope exclusion for equity compensation plans and to extend the scope exclusions relating to post-employment benefit plans to also exclude other long-term employee benefit plans. The IFRIC were in agreement that the second alternative was preferable, but believed the urgency to be placed on the deletion of the equity compensation plan scope exclusion was sufficient that if they were unable to determine appropriate wording for the second proposal that the first proposed draft interpretation should be issued. The IFRIC debated the objective of the second proposed amendment, and agreed that it was to explicitly exclude employee benefit plans from consolidation when the accounting for those plans is already mandated by IAS 19. Following this debate the staff proposed the following scope exclusion paragraph be used: This Interpretation does not apply to post-employment defined benefit plans and other long-term employee benefit plans with plan assets that are required to be included in the measurement of a defined benefit liability or a liability for other long-term employee benefits in accordance with paragraphs 54 and 128 of IAS 19 respectively. The IFRIC agreed that, subject to editorial comments, the suggested scope exclusion paragraph was appropriate, and agreed that the draft interpretation incorporating this paragraph be sent to Board members for comment and, subsequent to that process, issued with a 75 day comment period. Service Concessions The IFRIC were presented with a number of papers on service concessions covering the following topics: Overview Service concession assets - a control perspective The intangible asset model and the alternatives Detailed accounting issues on the alternative models Examples At previous meetings, the IFRIC had identified three potential models for accounting for service concessions: The physical asset model: On completion of construction the concession operator recognises the physical asset as its own. The receivable model: On completion of construction the concession operator recognises a right to receive cash as a result of the construction of the physical asset (the control of the physical asset passes to the concession provider). The intangible asset model: On completion of construction the concession operator recognises an intangible asset – effectively the licence to operate the physical asset (the control of the physical asset passes to the concession provider), as a result of its construction activities. Service concession assets – a control perspective The IFRIC debated a paper that considered, from a control perspective, which party should recognise the infrastructure assets as its own. The paper suggested that in the context of a service concession arrangement, CP (the Concession Provider), controls a property owned by CO (the Concession Operator) if CP (including parties related to it) both: (a) controls or regulates what services CO must provide using the property, to whom it must provide them, and at what price; and (b) will control, through ownership, beneficial entitlement or otherwise, the residual interest in the property at the end of the concession. CP might also control a property owned by CO in other circumstances. The IFRIC expressed general discomfort with these principles, including a concern that the model may not be consistent with existing GAAP, particularly in cases where CO is to operate an existing asset rather than construct a new one. They debated the merits of this proposal at length, particularly the practical application of the price control criteria. They determined that the items mentioned in the paper certainly formed a list of indicators that control might rest with CP even where legal ownership rests with CO, but not all were convinced that the criteria cited above should be used in the eventual interpretations. However, the IFRIC agreed to use the criteria above as its working model, with the intention that these criteria will be revisited once they have been tested, along with the other proposals, against examples. The intangible asset model and the alternatives The IFRIC debated a paper which proposed that the intangible asset model will apply most commonly in practice. The physical asset model will seldom apply because, on the basis of the control analysis discussed earlier, the physical asset will normally be on the books of CP. The receivable model will apply in situations where CO has a right to receive cash (the right to operate the road and thus derive cash does not result in a receivable). Therefore in most circumstances the intangible asset model will apply. A majority of IFRIC members tentatively supported this model. All were keen, however, to see the model tested against a variety of examples before reaching their final conclusions. The basic illustration of the intangible asset model used is: CO constructs a road with a cost to construct of 100. The fair value of the road at the completion of construction is 110. Operating costs over the life of the concession are 70, and cash inflows will be 200. At the completion of construction CO transfers the road to CP and receives as consideration an intangible asset – the licence to operate the road. As this is a transfer of dissimilar assets (a road for an intangible), it must generate revenue measured at fair value of the asset given up in accordance with IAS 18. Therefore CO recognises revenue of 110, an intangible of 110, and therefore has a profit on construction of 10. Over the life of the concession CO receives 200 in cash, and pays 70 in operating costs, and amortises the intangible asset of 110, resulting in a profit of 20. Therefore total revenues for the contract are 310, and total profit is 20. A number of IFRIC members were very concerned about the recognition of the 110 revenue on completion of construction, as it seemed counterintuitive to them that an entity could recognise revenue and a profit on construction of an asset to be used in its own activities. However, most IFRIC members conceded that, although they were uncomfortable with this, an exchange of dissimilar goods and services does occur at the completion of construction, and accordingly revenue (and consequently profit or in other circumstances loss) on the transaction must be recognised. Two IFRIC members indicated their intention to dissent from the interpretations if the interpretations conclude that total revenues on the concession of 310 should be recognised. The staff agreed to consider for IFRIC's debate at a future meeting, whether the use of the intangible asset model absolutely necessitated the recognition of the 110 construction revenue, or whether there might be some way in which the total revenues recognised under this model were equivalent to the total cash flows (that is, in the example above, 200). The papers presented to the IFRIC also contemplated the accounting for transactions by CP. The IFRIC debated whether they should address the accounting by CP, given that CP is often a public sector entity that in many jurisdictions would not apply IFRS. The IFRIC concluded that contemplating the accounting by CP was useful in testing the appropriateness of the proposals by CO, and also noted that in some transactions and jurisdictions CP would be required to apply IFRS. The IFRIC discussed at what point under the intangible asset model, the intangible asset should be recognised. The options presented to them were: Recognition of an intangible on day 1 with a corresponding liability reflecting the outstanding construction obligation. Recognise a receivable over the period of construction which is then recognised as an intangible at the completion of construction. Recognise an intangible asset over the period of construction. The IFRIC generally favoured the recognition of a receivable over the period of construction in cases where revenue would be recognised on the construction phase, and recognition of an intangible over a period where no revenue would be recognised on the construction phase. Accordingly final conclusions on this are dependent on the final conclusions about the appropriateness and operation of the intangible asset model. The IFRIC did note that where a receivable was recognised that would be settled other than in cash this would need to be distinguished from other receivables that are financial assets in the balance sheet. The IFRIC considered the accounting for restoration obligations. The staff had suggested that obligations to construct new assets, or enhance new or existing assets to a condition better than at the start of the concession should be recognised as part of the cost of the intangible. This was differentiated from the situation of subsequent expenditure generally under IFRS, because it is actually a cost of obtaining the licence to agree to these obligations, and IFRIC generally supported this approach. Where general restoration obligations exist, it was proposed that these be recognised over the life of the concession arrangement. This would mean amounts recognised at a particular point in time may be positive or negative depending on where in the restoration cycle the entity is. The IFRIC expressed some discomfort with this view, and that they believed it amounted to income smoothing. However, they did agree that at a point in time an assessment should be made as to whether any restoration obligation exists and if one did it should be recognised with the corresponding expense being recognised in profit and loss. Examples The IFRIC then went on to discuss some examples and whether they were in agreement with the application of the models to those examples. They concurred that subject to further exploration of revenue recognition issues described above, the staff had accurately applied the models to the few examples they were able to examine before the available time for the discussion expired. Because of time constraints the IFRIC did not get an opportunity to discuss: How CP should account for its sale of the intangible asset. The treatment of finance costs. The treatment of assets contributed by CP to CO. The impact of other contractual obligations of CO. The staff will proceed with preparing draft interpretations for consideration at the July meeting, on the basis of decisions taken to date. 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 3 June 2004.

4 June 2004: IFAC research report on public sector budgetary reporting
A research report on Budget Reporting published by the Public Sector Committee (PSC) of the International Federation of Accountants examines best practices in budget formulation and reporting under differing budget models and government administrative arrangements, and considers whether the PSC should develop an International Public Sector Accounting Standard (IPSAS) on budget reporting. IPSASs are based (to the extent appropriate) on IFRSs. The report notes that "the International Accounting Standards Board has not established accounting standards for budgetary reporting by private sector entities." The report may be downloaded from IFAC's Website (no charge, but you must first register).

4 June 2004: Report from the first day of the IFRIC meeting

The International Financial Reporting Interpretations Committee (IFRIC) is holding a two-day meeting in London on Thursday and Friday 3-4 June 2004. Presented below are the preliminary and unofficial notes taken by the Deloitte observers at the first day of the meeting. Notes from the IFRIC Meeting 3 June 2004 The Chairman noted that this was Clement Kwok's last meeting and thanked him for his participation. The Chairman noted that three of the IFRIC members were attending the IASCF Constitution Public Hearings in New York and consequently there would be quorum problems when they were unavailable by phone. IFRIC D3: Determining Whether an Arrangement Contains a Lease (Rights of Use) The staff is organising discussions with preparers and will be circulating a series of proposed questions to be discussed at these meetings. The staff proposed, based on comments received in the exposure process and subsequent comments from IFRIC members, to converge with EITF 01-8. IFRIC members confirmed their support for this general direction, but a number of members expressed concern as to the rule based nature of EITF 01-8. The staff made the following recommendations relating to comments received: That a requirement to reassess whether an arrangement contains a lease be included in line with the EITF 01-8 requirement to reassess in certain circumstances. In response to a query it was noted that the change in circumstances was event driven, and consequently a lease comes into existence or ceases to exist and therefore there is no retrospective effect. IFRIC members supported that proposal. That the retrospective transition requirements be retained. Several IFRIC members expressed concern as to this requirement. The effective date would be 1 January 2006. It was noted that this could be affected by the decision on transitional arrangements. That the interpretation clarify that it does not address when a component of an asset is itself an asset for the purpose of applying IAS 17. The IFRIC members concurred. That the proposals not be re-exposed. IFRIC agreed. A vote to confirm these decisions was delayed until the second day of the meeting because a quorum was not present. IFRIC D4: Interests in Decommissioning and Environmental Rehabilitation Funds The staff asked the IFRIC to consider four models: 1. Account for all assets arising from decommissioning funds in accordance with IAS 39. 2. Account for all assets arising from decommissioning funds in accordance with IAS 37. 3. Account for rights to reimbursement in services in accordance with IAS 37 and rights to reimbursement in cash in accordance with IAS 39 as an available-for-sale financial asset. This alternative has two sub-alternatives, namely that changes in the fair value of the IAS 37 asset could be recognised either in profit or loss or in equity. 4. Account for rights to reimbursement in services in accordance with IAS 37 but recognise an additional asset for any rights to benefits in addition to reimbursement. The staff recommended the third alternative with changes in fair value of the IAS 37 asset being recognised in equity. It was noted that any asset recognised in accordance with IAS 39 would not be subject to an asset cap, whereas the asset recognised under IAS 37 would be subject to an asset cap. After discussion the IFRIC requested the staff to pursue an approach that retained the basic D4 model but accounted for the amount subject to the IAS 37 asset cap as a financial asset or an intangible asset. The IFRIC requested the staff to obtain more information as to the nature and workings of these funds prior to proceeding. This they believed would assist them in determining the nature of the asset. IAS 27 Consolidation: Control by a Fiduciary The IFRIC noted a summary of the discussion and decisions of this topic at the May Board meeting. Any further IFRIC involvement in this project would only be determined after the June Board meeting. Employee Benefit Plans with a Promised Return on Contributions or Notional Contributions (Money Purchase Plans with a Minimum Guarantee) The IFRIC considered and commented on a proposed draft interpretation. The IFRIC debated how the proposed interpretation would account for a plan that promised a return based on the S&P 500 plus 2% on a notional amount. It was agreed that the obligation would be measured based on the amount of the return at the balance sheet date. A vote to approve the draft interpretation, which would be D7, for issue was delayed until the second day of the meeting because a quorum was not present. Combining and Segmenting Construction Contracts The IFRIC considered a summary of the tentative decisions to date. The staff noted that there is an interaction between this project and the project on Service Concessions. Obligating Event in the Light of the EU Directive on Waste Electrical and Electronic Equipment The IFRIC discussed the German Accounting Interpretation Committee's (AIC) draft proposals on accounting for the impacts of the EU directive and in particular when an obligating event arises. It was noted that the AIC would proceed to develop its draft interpretation based on the outcome of the discussions. The Directive requires that the costs relating to disposing of the relevant equipment are borne by those producers who are in the market when the costs are incurred. As there was uncertainty as to the workings of the directive, the IFRIC proceeded on the basis that the costs would be allocated based on the annual market share of the relevant producers. On this assumption, the IFRIC leaned toward concluding that the creation of the market share in the period in which the costs are incurred is the final aspect of the obligating event, and no provision should be recognised in prior periods. The cash outflows should, however, be considered in an impairment test on the related production assets. It was agreed that the AIC would proceed on this basis. Activities of Other Interpretation Bodies The IFRIC noted a report on these activities. Report of the Agenda Committee The IFRIC noted the minutes of the Agenda Committee meeting. The IFRIC considered adopting the following agenda items: Discounting of current taxes. Classification of interest and penalties on income taxes. The staff recommended that neither item be adopted. The IFRIC agreed that the items would not be adopted onto the current 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.

4 June 2004: Deloitte CEO Bill Parrett comments on constitution review

The Trustees of the IASC Foundation held the first of a series of public hearings as part of their review of the IASCF constitution on 3 June 2004 in New York. Deloitte Chief Executive Officer Bill Parrett and Deloitte Global IAS Leader Ken Wild presented our firm's views. Click to download Mr. Parrett's Opening Comments (PDF 26k).

3 June 2004: Trustees meet with SAC committee on constitution review

As part of their current Review of the IASC Foundation (IASCF) Constitution, the IASCF trustees' constitution committee met, on 2 June 2004 in a public session in New York, with a constitution subcommittee of the Standards Advisory Council (SAC). The discussions focused both on the overall issues that the IASCF has identified for in-depth consideration and on the terms of reference for the SAC. The trustees will be conducting a number of meetings with interested parties, including more public hearings. Therefore, no conclusions were reached at this meeting. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting. Notes of the Meeting of the IASCF and the SAC Constitution Committees 2 June 2004, New York 1. Whether the objectives of the IASC Foundation should expressly refer to the challenges facing SMEs The members believed that the issues of SMEs should be considered by the IASB, but questioned the inclusion of such a requirement in the constitution. The overall belief of the members was that if the constitution were to include such a reference, that reference should not be in the paragraph discussing rigorous application (as proposed). That is, regardless of the standards that apply to an entity, they should all be applied with rigour. 2. Number of trustees and their geographical and professional distribution The trustees have proposed equal representation from North America, Europe, and Asia/Oceana regions. Some members suggested that the constitution not include any specific criteria, but require the selection of the best people. Others argued that the regions that apply IFRS should be represented more than North America. Members were concerned that excluding North America would send a message that convergence was not important – which was not the belief of most members. That is, involvement in the process will create interest to "join the game". Members also noted that the purpose of financial information is for users and, therefore, the regions with the most dominant capital markets should be equally represented. There was also a suggestion to add trustees with backgrounds as regulators to the requirements in the constitution. The subcommittees briefly discussed how trustees were selected. The current IASCF Chairman expressed concern that the process was already burdensome and that adding more requirements seemed unnecessary. One member suggested appointing a nominating committee (without much support). 3. The oversight role of the Trustees The trustees had recommended that the constitution be amended to include a requirement to "carefully consider the IASB's agenda". The members expressed concern with understanding exactly what is meant by that phrase and asked the wording in the constitution to be expanded. The IASCF Chairman noted that the trustees would not have veto power over agenda items, but would require the IASB to review the agenda items with the trustees on a regular basis. The intention of the trustees was to require the IASB to bring a potential agenda item to the trustees for positive approval. It was also suggested that the trustees could require the IASB to add an item onto its agenda. There was general consensus that the Trustees role in relation to the agenda should not be strengthened to the point of approval, but should be just short of that line. Some members expressed concern that the current IASB members do not consider the practical implementation issues related to its proposals. There was consensus that the trustees should monitor this issue actively with each project. Several members strongly encouraged the trustees to reconsider whether it should undertake educational activities. There were questions over due process, the costs needed to build up the infrastructure, and the ability to have appropriate review by the trustees (since supposedly the IASB staff would not be used). The trustees were surprised by the level of concern and countered that if the trustees do not undertake these activities, interpretations around the world could differ. The members noted that there is nothing the trustees can do to prevent this – including issuing training materials. The staff noted that the IASB is currently developing 2-page summaries of its standards targeted to CFOs. One CFO at the table stated that he already gets those summaries from the Big 4 Firms – why does he need another one from the trustees? 4. Funding of the IASC Foundation The IASCF Chairman asked for any bright ideas on how to raise funding. The only alternative discussed was whether it was feasible to implement a fee-based structure with the exchanges. One member also suggested a nominal fee for all purchases of securities over a certain amount. The concern was that any of these suggestions would have to be implemented by changing local laws. 5. The composition of the IASB The Trustees recommended keeping 14 Board members, but allowing between 2 and 4 part-time members. There was general agreement with this approach as some noted that the part-time member from the accounting profession added significant quality and real life experience to the Board. Some members expressed concern about the composition of the Board with 10 of 14 being "Anglos". In addition, six come from countries that don't apply IFRS. The majority of the members believe membership of the IASB should be based on competence and not nationality. 6. The appropriateness of the IASB's existing formal liaison relationships There was general support for maintaining the requirement in the constitution to have liaison relationships. There was support, however, for ensuring the constitution remains flexible to change as situations change. One European member suggested that EFRAG replace the European national standard setters in the liaison relationships. The IASCF Chairman noted this would make it much easier and was open to pursuing this suggestion. 7. Consultative arrangements of the IASB The trustees expressed concern with cluttering up the constitution with due process issues. There was a suggestion that field tests (as distinct from merely field visits) should be mandatory on all projects. While there was not general support for making field tests mandatory, there was general agreement that field tests should be used more often. Several members suggested the IASB must validate to the trustees why it did not use field tests. Concern was raised that the current activities of the IASB do not consider the difficulties raised by users of IFRS having different language requirements. For example, 3 months is too short for a comment period as exposure drafts are not translated in time. The IASCF Chairman expressed concern about the cost of translation. There was general agreement that the cost of being an international organisation includes the cost of ensuring those companies applying IFRSs can fully understand IFRSs. 8. Voting procedures of the IASB The Trustees have proposed changing the voting requirements from a majority (8 members) to requiring the vote of 9 members. There was no objection to 9; however, one member suggested raising the requirement to 10. There was little support for this suggestion. 9. Resources and effectiveness of the International Financial Reporting Interpretations Committee (IFRIC) The members recognised there is concern over IFRIC, but were not sure there was anything that related to the constitution. One member raised the question of whether IFRIC interpretations should be exposed. The general belief around the table was that recent experience suggests exposure should continue to be required. 10. The composition, role, and effectiveness of the SAC The subcommittee of the SAC presented draft recommendations to the trustees in how to improve its process. There was general concern that SAC was not operating effectively, and therefore as a result, the IASB was not receiving advice in a useable manner. The reasons for this were various and include the size of SAC, the chairmanship of SAC, etc. The SAC members suggested the SAC develop a charter that would govern its activities and submit that charter to the trustees for approval. There was general agreement with this approach. In addition, there was general agreement the chairman of SAC should not an IASB member, but should be a paid position for either a part-time or full time individual. This issue will be discussed at a future trustees meeting. This summary is based on notes taken by observers at the meeting and should not be regarded as an official or final summary.

3 June 2004: New chairman of IOSCO Technical Committee

The International Organization of Securities Commissions (IOSCO) has elected Andrew Sheng, Chairman of the Securities and Futures Commission of Hong Kong, as the new Chair of its Technical Committee. IOSCO's Technical Committee, comprising representatives of 15 government agencies that regulate large, developed, and internationalised securities markets, deals with regulatory matters including financial reporting, disclosure matters, and International Financial Reporting Standards. In our news story of 24 May 2004 we reported two projects that have just been initiated by the Technical Committee relating to interpretation and enforcement of IFRSs.

2 June 2004: EC report on implementation of IFRSs in Europe

The 10th Progress Report (PDF 148k) on the European Commission's Action Plan for Financial Services, which was presented to the 2 June 2004 meeting of the Council of Economics and Finance Ministers, provides an update on the implementation of IFRSs in Europe, including the following commentary on IAS 39: On IAS 39, discussions continue between the IASB and interested parties. On 21 April, the IASB re-exposed the fair value option in IAS 39. Further discussions relate to the presentation of cash flow hedges and the possible application of a third type of hedge. On IAS 32, the Interpretation Committee of the IASB, IFRIC, is working on a draft interpretation regarding the treatment of cooperative shares that will be exposed for further comments in the near future. It is the Commission's intention to take stock of the ongoing discussions between the IASB and the European banking industry on IAS 39 at a next meeting of the Accounting Regulatory Committee, planned on 14 June.

1 June 2004: Interpretations Committee will meet this week in London

The International Financial Reporting Interpretations Committee (IFRIC) will meet on 3 and 4 June 2004 at the offices of the IASB in London. The agenda: AGENDA OF THE IFRIC MEETING 3-4 JUNE 2004 Service Concessions Draft of D7 Employee Benefit Plans with Promised Returns on Contributions or Notional Contributions Combining and Segmenting Construction Contracts IAS 37 - Obligating Event in the Light of the EU Directive on Waste Electrical and Electronic Equipment D3 Determining Whether an Arrangement Contains a Lease D4 Decommissioning, Restoration and Environmental Rehabilitation Funds Fiduciaries and IAS 27 IFRS 2, IAS 19, and Employee Benefit Trusts – amending the scope of SIC-12 Agenda Proposal – Whether two issues related to IAS 12 Income Taxes should be added to IFRIC's agenda: (i) whether it is appropriate to discount current taxes payable under IFRSs when settlement has been deferred by the taxing agency; and (ii) how to classify interest and penalties that arise from unpaid tax obligations.

1 June 2004: IASC Foundation meetings and hearings this week

Deloitte Chief Executive Officer Bill Parrett and Deloitte Global IAS Leader Ken Wild are among the participants in a public hearing on the review of the IASC Foundation Constitution to be conducted by the Foundation's Constitution Committee at Baruch College in New York City on Thursday 3 June 2004. The Constitution Committee is chaired by IASCF Chairman Paul Volcker. The Constitution Committee will also meet in public session with the Constitution Subcommittee of the IASB's Standards Advisory Council at the Intercontinental Barclay Hotel in New York on Wednesday 2 June. On Friday 4 June, the IASCF Trustees will meet in public session at the Intercontinental Barclay Hotel in New York, including (from 8:45-11:30am) a joint meeting with the Trustees of the Financial Accounting Foundation, which oversees the FASB. Click for Details of the Trustees' meetings on the IASB website and Information about the Constitution Review.

1 June 2004: Hong Kong adopts IAS 32 and IAS 39

The Hong Kong Society of Accountants has adopted HKAS 32 Financial Instruments: Disclosure and Presentation and HKAS 39 Financial Instruments: Recognition and Measurement, effective 2005. These are the same as IAS 32 (revised 2003) and IAS 39 (revised 2004) except for certain transition provisions. HKAS 32 and 39 are available on the HKSA Website.

1 June 2004: Joint Forum report on financial disclosure
The Joint Forum has published a report, Financial Disclosure in the Banking, Insurance and Securities Sectors: Issues and Analysis examining the progress to date by regulators and other standard-setters in the area of financial disclosures and the progress made by financial firms in adopting certain enhanced disclosure recommendations published in 2001. The Joint Forum was established in 1996 by the Basel Committee on Banking Supervision, the International Organization of Securities Commissions, and the International Association of Insurance Supervisors to deal with issues common to the banking, securities, and insurance sectors. The report notes that a number of IASB projects are expected to improve disclosures by financial firms, including Financial Risk Disclosures, IFRS 4, and Insurance Contracts Phase II. Click to download:

• Joint Forum Report (PDF 251k)
• IOSCO Press Release (PDF 128k)