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30 September 2004: Now available – IAS 32 and IAS 39 modules

We are pleased to make available without charge the first of three Deloitte e-learning modules on IAS 32 Financial Instruments: Presentation and Disclosure and IAS 39 Financial Instruments: Recognition and Measurement. In this module, you will learn about the content of IASs 32 and 39 and how to apply those standards in practice. Several case studies are included. This module reflects both the December 2003 revisions to IAS 32 and IAS 39 and the March 2004 macro hedging revisions to IAS 39. Subsequent to those revisions, the IASB has issued four exposure drafts of further changes to IAS 39 as well as a new financial instruments disclosure exposure draft that would replace and expand the disclosures now in IAS 32. The e-learning module does not address these proposed changes.

30 September 2004: iGAAP 2005 Financial Instruments: IASs 32/39

Deloitte has published iGAAP 2005 Financial Instruments: IAS 32 and 39 Explained, an authoritative guide to applying those two standards. The publication is relevant to current IAS reporters that are adopting both of the revised standards, as well for first time adopters of IFRSs. The publication includes: Classification of financial assets and liabilities, derivatives and embedded derivatives, measurement, derecognition, extensive guidance on hedge accounting, as well as specific guidance on how to apply both of these complex standards if you are a first time reporter using IFRS. Detailed application guidance, illustrative examples, and interpretations of the standards. iGAAP 2005 Financial Instruments: IAS 32 and 39 Explained can be purchased through CCH Online or by phone at +44 (0) 870 777 2906. iGAAP 2005 Financial Statements for UK Listed Groups is also available, and the complete iGAAP 2005 Manual will be available from November 2004.

30 September 2004: Latest Global Offerings Services newsletter

We have posted the September 2004 edition of Deloitte's US Reporting Newsletter for Non-US Based Companies (PDF 138k). This newsletter is published by Deloitte's Global Offerings Services group, which is a global team of practitioners assisting non-US companies and non-US practice office engagement teams in applying US and international accounting standards (that is, US GAAP and IFRSs) and in complying with the SEC's financial reporting rules. You can find past issues Here.

30 September 2004: Latest New Zealand Accounting Alert posted
The September 2004 New Zealand Accounting Alert (PDF 152k) summarises recent exposure drafts issued by the Financial Reporting Standards Board as part of the convergence process with IFRSs. Also included is an overview of a discussion paper Preliminary Views on Accounting Standards for Small and Medium-sized Entities and a list of the latest New Zealand Pending Accounting Standards. Click for Past Issues.

29 September 2004: EC's revised IAS 39 "carve-out" proposal
The European Commission has posted to its Internal Markets Website its revised proposal to adopt IAS 39 for use in Europe with two significant modifications that would (1) remove the IAS 39 fair value option as it applies to liabilities, and (2) facilitate the use of fair value hedge accounting for the interest rate hedges for core deposits on a portfolio basis. The proposal will be considered by the EC's Accounting Regulatory Committee at a meeting on 1 October 2004. Click to download:

• Revised IAS 39 Proposal (PDF 26k)
• Revised IAS 39 Proposal Annotations (PDF 129k)
• Explanatory Memo (PDF 58k)
• Minutes of the ARC Meeting 8 Sept 2004 (PDF 25k)

29 September 2004: IPSASs for governments in Europe?
International Public Sector Accounting Standards (IPSASs) are essential to the development and strengthening of financial reporting by governments – that was the conclusion of a high-level conference organised jointly by the European Commission and the European Federation of Accountants (FEE). IPSASs are developed by the Public Sector Committee of IFAC and are based, to the extent appropriate on IFRSs. Click for FEE Press Release (PDF 121k).

28 September 2004: SEC proposes voluntary XBRL filings
As part of its initiative to assess the benefits of tagged data and its potential for improving the timeliness, accuracy, and analysis of financial disclosures by public companies, the US Securities and Exchange Commission has proposed to establish a voluntary program allowing registrants to file supplemental financial information using eXtensible Business Reporting Language (XBRL). The program would begin with the 2004 calendar year-end reporting season. In addition to domestic issuers, the voluntary program is available to foreign private issuers that otherwise file financial information prepared in accordance with US GAAP. The Commission also issued a concept release on the benefits and implications of tagging data for filers, investors, the Commission, and other market participants, and on the suitability of the XBRL format. Click for:

• SEC Release.
• Download the Proposed Rule from the SEC website (PDF 626k)
• Download the Concept Release from the SEC website (PDF 191k)

28 September 2004: Web-based technical update on IASs 24 and 38
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 fifth Webcast was run on 23 September 2004 and covered IAS 24 Related Party Disclosures and IAS 38 Intangible Assets. To access the recording Click Here. The recording of each session will be available on this website for a period of at least 3 to 4 weeks from the date of the presentation. Links to past sessions may be found on our United Kingdom Page.

28 September 2004: Later this week – IAS 32 and IAS 39 modules

The first of the three e-learning modules on IAS 32 Financial Instruments: Presentation and Disclosure and IAS 39 Financial Instruments: Recognition and Measurement will be released later this week. Watch for the announcement on IASPlus.

28 September 2004: EFRAG letter to EC on IAS 39 "carve-outs"
The European Financial Reporting Advisory Group (EFRAG) has responded to the request of the European Commission for technical input on the "carve-outs" proposed by the EC in relation to IAS 39 Financial Instruments: Recognition and Measurement. The "carve-outs" would:

• remove the IAS 39 fair value option as it applies to liabilities, and
• facilitate the use of fair value hedge accounting for the interest rate hedges for core deposits on a portfolio basis.

27 September 2004: Two new IAASB auditing exposure drafts
The International Auditing and Assurance Standards Board (IAASB) has approved two new exposure drafts. The IAASB Press Release (PDF 85k) has links for downloading the EDs:

• Proposed Policy Statement on Clarifying Professional Requirements in International Standards. The ED defines two categories of professional requirements – "requirements" and "presumptive requirements". A requirement, to be fulfilled in all cases, would be identified by the word "shall" and a presumptive requirement by the word "should". The IAASB also issued a consultation paper, Improving the Clarity and Structure of IAASB Standards and Related Considerations for Practice Statements, which seeks feedback on whether there is a need to change the way IAASB standards are drafted. Comments on the exposure draft and related consultation paper are requested by 31 December 2004.
• Revision to International Standard on Auditing (ISA) 230, Audit Documentation. The proposed revisions include clarification on the form, content, and extent of audit documentation, guidance on changes to audit documentation after the date of the auditor's report, and matters to be considered in connection with confidentiality, safe custody, and retention of audit documentation. An appendix to the exposure draft identifies additional specific audit documentation requirements set out in other ISAs. Comments on this exposure draft are requested by 31 January 2005.

27 September 2004: Financial Stability Forum reviews IASB progress
At their meeting in Washington earlier this month, the members of the Financial Stability Forum (FSF) reviewed the latest developments in the area of international accounting standards, including future plans of the International Accounting Standards Board (IASB) and discussions on convergence between IASB and the US Financial Accounting Standards Board. An FSF roundtable in October 2004 will consider challenges associated with the implementation of international accounting and auditing standards. Click for Press Release (PDF 36k). The FSF was convened in April 1999 to promote international financial stability through information exchange and international co-operation in financial supervision and surveillance.

27 September 2004: IASB Project Summaries Updated
We have updated our summaries of the following agenda projects to reflect decisions at the September 2004 IASB meeting:

• Business Combinations Phase II
• Concepts
• Convergence: Exposure Draft of Proposed Amendments to IAS 19
• Convergence: Employee Benefits (IAS 19)
• Convergence: Income Taxes (IAS 12)
• Convergence: IAS 37 Provisions, Contingent Liabilities and Contingent Assets
• ED 6 Exploration for and Evaluation of Mineral Resources
• Financial Instruments: the Fair Value Option
• Financial Reporting by Small and Medium-sized Entities
• IAS 12 Income Taxes - Backwards Tracing
• IFRIC - Concessions
• IFRS 3: Business Combinations – Combinations Involving Mutual Entities
• Insurance Contracts Phase II
• Strengthening IASB Due Process

27 September 2004: EFRAG letter of comment on IFRIC D9
The European Financial Reporting Advisory Group has submitted to IFRIC its Letter of Comment (PDF 34k) on IFRIC D9 Employee Benefit Plans with a Promised Return on Contributions or Notional Contributions.

25 September 2004: Richard G Humphry of Australia is new IASCF trustee
Richard G Humphry of Australia has been named a Trustee of the IASC Foundation (parent body of the IASB) representing the Asia-Pacific region. Mr Humphry will fill the vacancy left by the death of Kenneth Spencer and will begin his three-year term on 1 January 2005. Mr Humphry is Managing Director and Chief Executive Officer of the Australian Stock Exchange (ASX) Limited. His nomination carries the support of the International Federation of Accountants and the Financial Reporting Council of Australia. Click for Press Release (PDF 18k).

25 September 2004: Notes from the final day of the IASB meeting
The IASB met in London on 21-24 September 2004. You will find our Combined Notes from the Four-Day Meeting Here. The Board also met with its partner national standard-setters 27 and 29 September 2004 and with representatives of standard setting bodies from over 30 countries on 27 and 28 September.

25 September 2004: IFRS is the lead story in new FEE European Update
The European Federation of Accountants (FEE) has published a new edition of its European Update newsletter. Several stories relate to IFRSs including the lead story "Call for Global Standards: IFRS". Click to Download (PDF 219k). Also, FEE is sponsoring a European Congress for SMP/SME Accountants in 7-8 October 2004 in Spain. The IASB's SME Project is on the agenda.

24 September 2004: Notes from the third day of the IASB meeting
The IASB met in London on 21-24 September 2004. You will find our Combined Notes from the Four-Day Meeting Here. The Board also met with its partner national standard-setters 27 and 29 September 2004 and with representatives of standard setting bodies from over 30 countries on 27 and 28 September.

22 September 2004: Notes from the second day of the IASB meeting
The IASB met in London on 21-24 September 2004. You will find our Combined Notes from the Four-Day Meeting Here. The Board also met with its partner national standard-setters 27 and 29 September 2004 and with representatives of standard setting bodies from over 30 countries on 27 and 28 September.

22 September 2004: Deloitte comment letter on IFRIC D9

We have submitted our letter of comment on IFRIC Draft Interpretation D9 Employee Benefit Plans with a Promised Return on Contributions or Notional Contributions: Download the Letter (PDF 59k). Summary of D9. Deloitte's overall view:

22 September 2004: Normas para el Sector Público en Español
Las Normas Contables Internacionales para el Sector Público (International Public Sector Accounting Standards - IPSASs), elaboradas por el Comité del Sector Público de la Federación Internacional de Contadores se encuentran ahora Disponibles en Español.

22 September 2004: AAA International Accounting Section website
The International Accounting Section of the American Accounting Association has launched its New Website. The URL is http://aaahq.org/international/index.html.

22 September 2004: Notes from the day one of the IASB meeting
The IASB met in London on 21-24 September 2004. You will find our Combined Notes from the Four-Day Meeting Here. The Board also met with its partner national standard-setters 27 and 29 September 2004 and with representatives of standard setting bodies from over 30 countries on 27 and 28 September.

22 September 2004: ARC will consider IAS 32 and IFRIC 1
In our news story of 20 September we noted that after the EC Accounting Regulatory Committee (ARC) meets on 1 October 2004, both IAS 32 and IFRIC 1 will remain to be considered for endorsement in Europe. The ARC is scheduled to meet again on 30 November 2004, at which time those two pronouncements will be considered.

21 September 2004: Deloitte letter to EFRAG re IAS 39 'carve out'
Deloitte has written to EFRAG urging that any 'Carve Out' of sections of IAS 39 be applicable only to banks, and then only as an option that also permits banks to use the full unmodified version of IAS 39. Our letter states that "our comments are offered in the context of seeking to help the Commission to find a way forward. Nothing in this letter should be taken as indicative of a change in our often stated and still held position as a global organisation of support for full and immediate endorsement of the IAS 39 in the form in which it has been issued by the IASB." Click to Download the Deloitte Letter (PDF 55k). Here is an excerpt:

21 September 2004: IFAC report on implementing international standards
A new study, commissioned by the Board of the International Federation of Accountants (IFAC), identifies the challenges to adopting and implementing International Financial Reporting Standards (IFRSs) and International Standards on Auditing (ISAs) and recommends actions to be taken by all those in the financial reporting supply chain to achieve convergence to international standards. Entitled Challenges and Successes in Implementing International Standards: Achieving Convergence to IFRSs and ISAs, the study also provides examples of successful adoption and implementation to serve as models for other countries. Click to download:

• Press Release (PDF 46k)
• Report (PDF 181k)

21 September 2004: Update on Malaysian adoption of IFRSs
We have updated our Malaysia Page to include an update on Malaysian adoption of International Financial Reporting Standards (IFRSs).

21 September 2004: New IASB financial instruments working group
The IASB has announced the membership of its new working group on financial instruments. The financial instruments working group will help the IASB take a fresh look at the accounting standard IAS 39 Financial Instruments: Recognition and Measurement by examining and questioning the fundamentals of the standard within the context of the IASB's Framework. "The review will therefore focus on improving, simplifying, and ultimately replacing IAS 39 and will examine broader questions of the application and extent of fair value accounting – a topic on which the IASB has not reached any conclusion. Although any major revision of IAS 39 may take several years to complete, the IASB is willing to revise the standard in the short term if any immediate solutions emerge from the working group's discussions", the Board's announcement said.

21 September 2004: New IASB insurance working group
The IASB has announced the membership of its new working group on financial reporting by insurers. Although the IASB's predecessor produced an Issues Paper and a Draft Statement of Principles, and the IASB itself has discussed the project at many Board meetings, other priorities forced the IASB to suspend work following the January 2003 meeting. Therefore, the IASB will regard the past work as a useful resource, but will not feel bound by it. "The only restrictions on a fresh look are the IASB's Framework and the general principles established in the IASB's existing standards", the Board's announcement said.

20 September 2004: Additional information about ARC 1 October meeting
Our news story of 19 September noted that the Accounting Regulatory Committee will meet on 1 October 2004 to decide on whether to recommend endorsement of IAS 39. Also on the agenda for that meeting will be the questions of whether to endorse:

• The improvements to 14 IASs that were adopted as revised standards in December 2003 (to date, the EC has endorsed only the pre-2003 versions).
• IFRS 2 Share-based Payment
• IFRS 3 Business Combinations and related amendments to IAS 36 and IAS 38
• IFRS 4 Insurance Contracts
• IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

19 September 2004: ARC will meet on 1 October to consider IAS 39
The Accounting Regulatory Committee will meet on 1 October 2004 to decide on whether to recommend that IAS 39 Financial Instruments: Recognition and Measurement should be endorsed for use in Europe it its entirety or with two sections 'carved out'. The two sections proposed for deletion are (1) the option for an entity to choose to measure any individual financial liability at fair value with value changes through profit and loss and (2) the prohibition against using fair value hedge accounting for core deposits. The opinions of both ARC and EFRAG will then be considered by the 25-member European Commission, who must make the final endorsement decision.

18 September 2004: Agenda for the September IASB meeting
The IASB has announced the agenda for its Board meeting on 21-24 September 2004. The Board will also meet with its partner national standard-setters 27 and 29 September 2004 and with representatives of standard setting bodies from over 30 countries on 27 and 28 September. The IASB Board meeting will be held at the IASB offices, 30 Cannon Street, London. The meetings with partner national standard setters and world standard setters will be held at three other locations as indicated Here.

18 September 2004: Comment letters on IFRIC D8 are posted
The 22 comment letters received on IFRIC Draft Interpretation D8 Scope of SIC-12 Consolidation – Special Purpose Entities have been Posted on IASB's Website. For a summary of D8, Click Here.

18 September 2004: PCAOB adopts amendments to its auditing standards
The US Public Company Accounting Oversight Board (PCAOB) has amended its interim auditing standards to conform them with PCAOB Auditing Standard No. 2 An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements. The PCAOB had adopted the interim standards in April 2003, based on standards that had been developed by the auditing profession before the PCAOB was established. Since then, the PCAOB has adopted several permanent standards that, in various respects, supersede the interim standards – hence these amendments. The PCAOB's auditing standards apply to audits of all companies registered with the SEC, including foreign registrants. Link to PCAOB Release.

17 September 2004: Reminder of two comment deadlines next week

The comment periods on two documents end next week: D9 Employee Benefit Plans with a Promised Return – 21 September 2004 Discussion Paper: SMEs – 24 September 2004

17 September 2004: Hong Kong company explains why it switched to IFRSs
Esprit Holdings Limited, a Hong Kong based clothing and cosmetics wholesaler and retailer, has switched from Hong Kong GAAP to IFRSs for its year ended 30 June 2004, as permitted by the Stock Exchange of Hong Kong. In its Earnings Announcement, Esprit cited the following reasons for adopting IFRSs:

• The Group operates internationally in four continents and has diverse international shareholders. The Group believes adoption of internationally recognized accounting standards will allow its financial statements to be better understood by its shareholders, the capital markets and the other users globally;
• Many of the Group's peers in Europe will be adopting IFRS from 2005 onwards under European Union rules; and
• Many of the Group's subsidiaries, particularly in Europe which accounts for approximately 80% of the Group's turnover and profits, have historically prepared their financial statements in accordance with IFRS. Consistently using IFRS throughout the Group will lead to efficiencies and is cost effective.

17 September 2004: Draft IVSC guidance note on plant and equipment
The International Valuation Standards Committee (IVSC) has invited comment on a proposed Valuation Guidance Note 3 Plant and Equipment (PDF 203k). The draft discusses various approaches to valuing plant and equipment and provides guidance for valuations that meet the requirements of accounting standards, particularly IAS 16 Property, Plant and Equipment. The draft points out that the measurement objective for financial reporting purposes is generally market value, defined as "the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion". The draft notes that "although the concept, use, and application of non-market bases of value may be appropriate under certain circumstances, the valuer is responsible to ensure that if such value is to be found and reported, it will not reasonably be construed as a representation of market value". Comments are due 31 October 2004.

16 September 2004: Malaysia may let foreign companies use IFRSs
The government of Malaysia is considering an amendment to the Financial Reporting Act that would allow foreign companies traded on Bursa Malaysia – the Malaysian stock exchange – to use IFRSs by year-end. Domestic companies would continue to use the standards set by the Malaysian Accounting Standards Board. Currently, approximately 930 companies are listed on Bursa Malaysia, of which four are foreign.

16 September 2004: Current accounting developments at the SEC
In a speech before the Foundation for Accounting Education of the New York State Society of CPAs, SEC Chief Accountant Donald T. Nicolaisen addressed a range of issues including international ones. Here is the Link to Mr. Nicolaisen's Remarks on the SEC website. An excerpt:

16 September 2004: EFRAG invites comments on their ED 7 draft letter
The European Financial Reporting Advisory Group (EFRAG) has invited comments by 20 October 2004 on their draft letter to the IASB on ED 7 Financial Instruments: Disclosures. You can download the letter from EFRAG's Website.

15 September 2004: EFRAG to consider EC's IAS 39 'carve out'
The Technical Expert Group of the European Financial Reporting Advisory Group (EFRAG) will hold an open meeting on 22 September 2004 in Brussels to evaluate the proposal of the European Commission to adopt IAS 39 for use in Europe minus two sections, as discussed in our news stories of 9 and 10 September 2004. The two sections relate to (a) the prohibition on hedge accounting for core deposits and (b) the fair value option. The purpose of EFRAG's meeting is to consider whether IAS 39 with these two sections 'carved out' would "lead to a technically robust, sound, and consistent solution. The aim is not to evaluate whether the carve-out solution in principle is the preferred option." EFRAG invites interested parties to provide comments on the carve-out proposal by 21 September 2004.

15 September 2004: Comment letters on IFRIC D8 are posted
The 49 comment letters received on IFRIC Draft Interpretation D8 Members' Shares in Co-operative Entities have been Posted on IASB's Website. For a summary of D8, Click Here.

14 September 2004: EFRAG will meet with European standard setters
The European Financial Reporting Advisory Group (EFRAG) will meet with representatives of all European national standard setters in Brussels on 6 October 2004. The main agenda items will be the IASB projects on measurement, concession arrangements, and the IASB's exposure drafts proposing amendments to IAS 39. The meeting will take place at FEE, Rue de la Loi 83, 1040 Brussels.

11 September 2004: Deloitte comments on IASB SME preliminary views

The Deloitte letter of comment on the IASB's Discussion Paper Preliminary Views on Accounting Standards for Small and Medium-sized Entities (SMEs) recommends creation of a separate committee to develop international accounting standards for SMEs. Its standards would be subject to approval by the IASB. Click to Download the Letter (PDF 111k). Deloitte's overall view:

11 September 2004: Deloitte comment letter on IFRIC D8

We have submitted our letter of comment on IFRIC Draft Amendment D8 Members' Shares in Co-operative Entities. Click to Download the Letter (PDF 53k). Deloitte's overall view:

11 September 2004: September 2004 Accounting Roundup newsletter
We have posted the 10 September 2004 Edition of Accounting Roundup (PDF 265k), a newsletter published by Deloitte & Touche (USA). Accounting Roundup summarises recent accounting and financial reporting developments and provides Internet links to related content. This issue has information about developments at FASB (including FSP 142 on oil and gas companies, AICPA guide on real estate time sharing, and summaries of recent FASB meetings), SEC (including postponement of accelerated filing dates and approval of several PCAOB documents). You will find all Past Issues Here.

11 September 2004: Discussion paper on accounting for business combinations
Deloitte (Australia) has published the second in their new series of Discussion Papers on Australian equivalents to International Financial Reporting Standards ('A-IFRSs'): Business Combinations: Insights for Australian Entities (PDF 1,088k, 52 pages). The objective of this Discussion Paper is to provide an Australian perspective on the significant convergence areas of business combinations, intangibles, and impairment. The new and modified concepts and procedures for Australian entities are highlighted and crossed referenced to the Deloitte global publications Business Combinations: A guide to IFRS 3 (PDF 1,894) and First-time Adoption – A Guide to IFRS 1 (PDF 2,506k).

10 September 2004: IASB chairman testifies before US Senate committee
In testimony yesterday in Washington before the US Senate Committee on Banking, Housing and Urban Affairs, IASB Chairman Sir David Tweedie provided the committee with an update on the work of the IASB and on efforts toward convergence of IFRSs with FASB standards since his last testimony before the committee in February 2002. An excerpt:

10 September 2004: Hong Kong GAAP now virtually aligned with IFRSs
Hong Kong Financial Reporting Standards are developed by the Financial Accounting Standards Committee of the Hong Kong Institute of CPAs. They take effect following approval of the Institute's Council. The Council has mandated that the FASC develop standards to achieve 100% convergence with IFRSs. Except for effective date and transition, the standards are now word-for-word identical.

10 September 2004: ARC concurs with IAS 39 "carve out" for Europe
Several newspapers have reported that the European Commission's Accounting Regulatory Committee (ARC) has agreed in principle to support the Commission's proposal that IAS 39 be adopted for use in Europe minus two sections – the prohibition on hedge accounting for core deposits and the fair value option (see our news report of 9 September 2004). The ARC is expected to take a final vote around 1 October. Information can be found on the EC Accounting Website. In July, Deloitte urged that IAS 39 be adopted in its entirety, citing a number of "far reaching and damaging" consequences for the transition to IFRSs in Europe in 2005 if there is not a "fully endorsed and wholly supported standard on the recognition and measurement of financial instruments".

9 September 2004: EFRAG comments on IFRIC D7
The European Financial Reporting Advisory Group (EFRAG) has submitted its Letter of Comment (PDF 25k) broadly agreeing with the proposals in IFRIC D7 Scope of SIC 12 Consolidation–Special Purpose Entities.

9 September 2004: EC proposes to adopt IAS 39 minus two sections
The European Commission has posted to its Website a "working document" setting out its proposals regarding adoption of IAS 39 for use in Europe. The proposals would carve out of IAS 39 two sections – the prohibition on hedge accounting for core deposits and the fair value option. The remainder of IAS 39 would be adopted. The Commission explains the carve-outs as follows:

• IAS 39 Proposal (PDF 26k)
• European Commission's Annotated Version of IAS 39. In each case where the Commission is proposing a carve-out, the right-hand column provides an explanation (both IAS 39 and the related Application Guidance). (PDF 130k)

9 September 2004: Are IFRSs in Canada's future?
The Accounting Standards Board of Canada is in the midst of developing a five-year plan for the period 2005-2010. The possibility of adopting IFRSs in Canada is one possible outcome. The Invitation to Comment states:

9 September 2004: Listed companies in Sri Lanka may use IFRSs
As a result of a policy decision recently adopted by the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAAMB), listed companies in Sri Lanka may choose to prepare their financial statements in accordance with International Financial Reporting Standards, rather than Sri Lankan GAAP. We have modified our Table of Use of IFRSs by Country accordingly.

9 September 2004: HKSA name change to HKICPA
The Hong Kong Society of Accountants has officially changed its name to the Hong Kong Institute of Certified Public Accountants (HKICPA) and its members will carry the new title of certified public accountant rather than chartered accountant. New web address: www.hkicpa.org.hk.

8 September 2004: IVSC ED on valuing specialised trading properties
The International Valuation Standards Committee (IVSC) has published an exposure draft of a proposed new Guidance Note on the Valuation of Specialised Trading Properties. Specialised trading properties are individual properties, such as hotels, gas or petrol stations, and restaurants, that usually change hands in the marketplace as operating entities. They comprise not only land and buildings but also fixtures and fittings and a business component made up of intangible assets and goodwill. The ED discusses the relationship of the valuation provisions and IFRSs. Comments are requested by 31 October 2004. Click to Download the Exposure Draft (PDF 170k).

7 September 2004: Audit issues arising from first-time adoption of IFRSs
To help auditors address reporting issues arising from the first-time adoption of International Financial Reporting Standards, the staff of the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) along with staff of professional accountancy bodies, national standard setters, and audit firms have prepared a series of key questions and answers. IFAC has published the Q&As in a document entitled First Time Adoption of IFRSs – Guidance for Auditors on Reporting Issues. Click to download:

• IFAC Press Release (PDF 83k)
• Q&A Booklet on IFRS Audit Issues (PDF 283k)

5 September 2004: Second day of the September 2004 IFRIC meeting
The International Financial Reporting Interpretations Committee (IFRIC) met in London for two days: 2 and 3 September 2004. Presented below are the preliminary and unofficial notes taken by the Deloitte observers at the second and final day of the meeting.

3 September 2004 Determining Whether an Arrangement Contains a Lease (Rights of Use) (D3) The chairman noted that a quorum was not present and therefore decisions made on this issue could not be officially voted. All members present agreed to issue a final interpretation consistent (nearly word for word) with EITF 01-8. The members clarified that the final interpretation would answer the question of when a lease exists – not how that lease would be classified under IAS 17. The discussion focussed on the effective date (annual periods beginning on or after 1 January 2006) and transition. The members stated that first-time adopters should adopt the interpretation at the date of transition if the reporting date was for periods beginning on or after 1 January 2006. For existing IFRS users (which will include the 2005 adopters in Europe), transactions should be assessed at the effective date and presented in accordance with the new interpretation from the earliest period presented forward. The IFRIC intends to take a final vote on this issue at the next meeting and expects to issue the interpretation shortly thereafter, for approval by the IASB. Emission Rights (D1) A quorum was present for the remainder of the meeting. The IFRIC concluded to issue D1 with minor changes as a final Interpretation. There were no dissenting votes. The staff intends to finalise drafting issues with the members prior to the next meeting and an interpretation is likely to be issued in the early part of the fourth quarter of 2004. No further discussions are planned on this topic. The IFRIC noted that guidance is needed on this issue now and that if the IFRIC were to wait for the Board to complete several related current projects, guidance was not likely for at least a further year. While there were some reservations about the effects of the conclusions in D1, all members believed the conclusions were consistent with current IFRSs. Therefore, the issuance of such guidance would be better than non-issuance. As a result, the IFRIC removed its recommendation that IAS 38 be amended to require the intangible assets with attributes of a currency to be presented at fair value with changes in profit or loss. IAS 37 Provisions: Obligating Event in the Light of the EU Directive on Waste Electrical and Electronic Equipment The IFRIC continued its discussion of the issue raised by the German standard setters on when a liability should be recognised for the decommissioning of waste electrical equipment (WEE). The IFRIC concluded that the scope should be limited to the accounting for historical waste related to household buyers. Under an EU directive, costs incurred to decommission an asset placed in service prior to 13 August 2005 to household buyers will be borne by the companies selling product in the market at the date the costs are incurred to decommission the asset based on each company's market share. Therefore, the higher the market share at a future point in time, the higher the obligation to decommission. The IFRIC concluded that the obligating event was the gaining of the market share and therefore no obligation should be recognised prior to that date. Some members expressed a view that the obligating event was the issuance of the legislation (since the equipment to be decommissioned is already in the market) and therefore the issue of market share was a measurement issue. The IFRIC rejected this view. No further discussions are planned on this topic. The staff will finalise an exposure draft for IFRIC members' review and expect to issue it in the early part of the fourth quarter of 2004. Decommissioning Funds (D4) The IFRIC decided to finalise D4 as it was issued with minor changes. There were no dissenting votes. The final interpretation will also clarify that no additional asset should be recorded for rights to excess funds unless the criteria in IAS 37 have been met (virtually certain). The IFRIC may also clarify that when a participant in a fund has the rights to the residual interest in the fund, that residual interest may meet the definition of an equity instrument which should be accounted for in accordance with IAS 39. No further discussions are planned on this topic. A final interpretation is expected in the early part of the fourth quarter of 2004. 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 2 September 2004.

3 September 2004: First day of the September 2004 IFRIC meeting
The International Financial Reporting Interpretations Committee (IFRIC) is meeting in London for two days: 2 and 3 September 2004. Presented below are the preliminary and unofficial notes taken by the Deloitte observers at the first day of the meeting.

2 September 2004 Report of the Agenda Committee Staff gave a report back of the Agenda Committee meeting and presented a list of the issues that were not taken onto the agenda. On the issue of the accounting for contingently convertible debt with certain features, particularly with regards to their effect on diluted earnings per share (commonly referred to as 'Co-Cos'), IFRIC noted that this issue should be monitored. Staff was asked to prepare an analysis of the issues with the objective of identifying differences between US GAAP and IFRS in this area. In addition, it was noted that the differing debt / equity models used by the two accounting frameworks warranted a revisit of this issue at a later stage. Service Concession Arrangements Staff advised IFRIC that education sessions on this issue had been planned to take place in September so as to prepare the IASB for the issues dealt with in this project. The Chairman indicated that the planned way forward was to have draft interpretations at the October meeting for IFRIC to formally vote on, hence the purpose of the discussion was to finalise the principles contained in the current draft interpretations as well as raise issues to be dealt with before the October meeting. It was agreed that any dissenting views at this stage would be documented and presented to the IASB during the education sessions to be held in September. A general discussion ensued in which members indicated that with hindsight, this project was essentially a standard setting type project and not one of an interpretive nature. This discussion was held in the context of the difficulties surrounding the project given the number of additional issues that had arisen during debates particularly the revenue recognition issues that appear to pre-empt the IASB's project on that issue. A proposal to have the IASB complete work done so far was generally rejected, with members noting that constituents required guidance and hence IFRIC agreed to move forward with preparing the Interpretations. It was noted that the IASB should be made aware of areas within this project that IFRIC believed certain principles had been stretched (such as the control notion and the clarity of the scope of this project given the existence of IFRIC D3), if those areas still existed at the time of presenting the drafts to the IASB. Scope There was significant discussion around the scope paragraphs with IFRIC agreeing that the draft interpretations should specify that they would apply to 'public to private' arrangements but without limiting their application (e.g. to 'private to private' arrangements). IFRIC would then ask for comment from constituents during the exposure period as to whether this was appropriate. IFRIC agreed that these draft interpretations should only deal with the accounting by the 'operator' and not the 'grantor'. It was noted that there was no intention to ask constituents for comments on this issue. The guidance contained in SIC 29 Disclosure - Service Concession Arrangements was discussed in the context of providing a definition in the draft interpretations of service concession arrangements in order to ensure that general outsourcing type arrangements would be excluded from D10. Members noted that the definition per SIC 29 would be problematic (e.g. the term 'gives public access' and reference to 'social facilities' may be difficult to apply in practice). There was general agreement that the words 'service concession arrangements' should be used in the draft interpretations as opposed to referring using other words as this would create confusion particularly with outsourcing type arrangements that exist. The distinction in the applicability of D3 and D10 was discussed with some members expressing concern in this area. IFRIC agreed to make it explicitly clear in the scope paragraphs that these interpretations would be mutually exclusive (it would not be a choice, which interpretation to apply). Issues and Consensus Members expressed concern at the number of issues that were being dealt with in this project and suggested a way forward that would deal with the broader issues only without necessarily dealing with the detailed ramifications that may arise depending on various scenarios. There was general support for this view. The distinction between the receivables and intangibles model was discussed at length. The following basic fact pattern is only meant to give context to the debate observed: An operator builds a road but gets paid based on usage of the road by the general public IFRIC first debated whether upon completion of construction, the operator should recognise a financial asset, an IAS 11 type asset which could be a receivable, an intangible asset or whether that asset was essentially a contingent asset. This debate included whether a financial asset should be recognised when the road is complete, such that the variability in cash inflow becomes a measurement issue (this was supported by members with reference to the principles surrounding certain derivatives). Some members supported the view that a financial asset should be recognised based upon usage of the road. There appeared to be general support for the view that the operator had a financial asset based on AG8 of IAS 32 particularly where the grantor has an obligation to make payment based on usage (as opposed to the operator receiving cash directly from the general public - e.g. toll road collections). Members supporting the intangible asset model, did so, where the operator was paid directly by the general public, on the basis that a third party was making the payments whereas, a contract existed between the operator and the grantor and its that contract that gives rise to an intangible asset. IFRIC also discussed the implications of the above issues where floors and / or caps were added to the contractual terms by the grantor (e.g. operator will be paid based on usage directly by the public subject to a minimum of $X etc.) but no decisions were taken. As a result, concern was raised at the possible structuring opportunities if IFRIC decided that both the financial asset and intangible asset models were acceptable depending on the means of payment. Members noted that this may indicate a need to amend IAS 38 such that the accounting result would not differ simply because of the way the arrangement is structured. IFRIC decided to go ahead and present all supportable solutions based on existing literature with a view that the IASB may then consider to make the necessary amendment to IAS 38 in order for there to be only one solution. Summaries of the draft Interpretations presented to IFRIC, as prepared by the Staff (contained in observer papers), are as follows (note that this is prior to making any changes that may arise from IFRIC's debate): Summary of proposals in draft D10A Service Concession Arrangements - Determining the Accounting Model Recognition of the infrastructure items as assets of the grantor Infrastructure items constructed or acquired by the operator for the purpose of a service concession shall be recognised as assets of the grantor, and not the operator, if they are controlled by the grantor. Otherwise, subject to the effects of any leases from the operator to the grantor, they shall be recognised as assets of the operator. It is usual that assets are controlled by their owner. However, this is not always so. In particular, the grantor of a service concession controls the infrastructure used in that concession even when it is owned by the operator, if the grantor both: a. controls or regulates what services the operator must provide using the infrastructure, 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 infrastructure at the end of the concession, and the residual interest is significant. Infrastructure items transferred to the operator by the grantor, and used in the concession, shall continue to be recognised as assets of the grantor unless the conditions in IAS 18 for recognising revenue on a sale of goods are met, in which case they shall be recognised as assets of the operator. Among other circumstances, those conditions will not be met when the grantor controls the infrastructure. Choice of accounting model The operating lease model applies if the operator has the right of use of the infrastructure. If, as is usual, the grantor controls the use to which the infrastructure is put, the operator does not have the right of use of the infrastructure but only the right of access to the infrastructure to provide the specified services on the specified terms. The accounting under the operating lease model is generally similar to that under the intangible asset model, except that the operating lease prepayment is accounted for under IAS 17. The receivable model applies if the operator does not have the right of use, and: the grantor (rather than users) has the primary responsibility to pay the operator for its services, or although the operator is entitled to be paid by users, the effect of the contractual arrangements is that substantially all of the demand risk associated with the service concession is retained by the grantor. The intangible asset model applies in all other cases where the infrastructure items are recognised as assets of the grantor. Summary of proposals in draft D10B Service Concession Arrangements - The Receivable Model Recognition and measurement Contract obligations and related rights shall be recognised and measured in accordance with IASs 11 and 18. As regards recognition: no obligation or related right is recognised to the extent that contracts are executory. an obligation is recognised when consideration is received in advance of performance. an asset, being a receivable under a contract, is recognised when an entity performs in advance of receiving consideration. As regards measurement: obligations under contracts shall be measured on the basis of the consideration receivable for their performance. consideration receivable shall be measured at fair value. The receivable in respect of construction or other services The receivable shall be accounted for in accordance with IAS 39 as either: a loan or receivable; if so designated upon initial recognition, an available-for-sale financial asset; or if so designated upon initial recognition, at fair value through profit or loss. This designation shall not be made unless the fair value is reliably measurable. In the first two cases, IAS 39 requires interest income calculated using the effective interest method to be recognised in profit or loss. The receivable shall be classified as available for sale (unless designated as at fair value through profit or loss) when the holder may not recover substantially all of its initial investment, other than because of credit deterioration. This applies if the operator's recovery may vary significantly with variations in demand. However, it does not apply solely because revenue may vary for reasons relating to the quality of subsequent services, such as variations in availability or service levels. If revenue may vary for reasons relating to the quality of subsequent services, the operator shall account for the receivable on the basis of expected cash flows. Variations because quality levels are more or less than expected shall be recognised as they occur. Borrowing costs incurred by the operator If the operator adopts the allowed alternative treatment in IAS 23, it shall capitalise borrowing costs attributable to contract activity, if the costs are reliably estimated to be recoverable. Capitalisation shall cease once revenue is recognised in relation to the relevant expenditure. Items contributed by the grantor Under the receivable model, infrastructure items contributed by the grantor for use in the service concession continue to be recognised as assets of the grantor. Therefore, the operator does not recognise them as assets. If the grantor makes no charge for these items, the operator shall recognise an expense for their use, and corresponding additional income from the grantor, only when the operator both: has the right of use of the items, and is providing services to the grantor, rather than to other users. The grantor may also contribute other items to the operator, which the operator can keep or deal with as it wishes. In accordance with the general recognition and measurement principles: such items are recognised as assets of the operator at fair value. in a reciprocal transaction, they will have been contributed in consideration for the assumption of contract obligations by the operator. The operator recognises a corresponding liability in respect of those obligations, unless they have already been performed. Handover obligations Because the infrastructure items are recognised as assets of the grantor, the operator shall not recognise any obligation in respect of its commitment to hand them over to the grantor at the end of the service concession. Summary of proposals in draft D10C Service Concession Arrangements - The Intangible Asset Model General The requirements of D10B also apply to the intangible asset model, unless a different treatment is specified by D10C. The intangible asset shall be accounted for in accordance with IAS 38. Revenue and profit or loss recognition When construction or other services are provided in exchange for the intangible asset, revenue and profit or loss shall be recognised on the exchange. Revenue and costs shall be recognised and measured in accordance with IASs 11 and 18. In particular, revenue shall be measured at the fair value of the intangible asset received or receivable, unless its fair value cannot be measured reliably, in which case revenue is measured at the fair value of the services provided, adjusted in either case by the amount of any cash or cash equivalents transferred. Timing of recognition of the intangible asset The intangible asset shall be recognised when it meets the recognition criteria of IAS 38, which is usually the earlier of (a) when the operator is entitled to earn revenue from it, and (b) when costs are incurred (either in cash or otherwise, such as by providing construction or other services). If the intangible asset is recognised in advance of payment, the operator has an obligation that is discharged upon payment. When payment is in the form of construction or other services, payment occurs when revenue is recognised on those services. Contractual obligations included in the consideration given for the intangible asset Obligations to construct new infrastructure, or to enhance either new or existing infrastructure to a condition better than at the start of the concession, are included in the consideration given for the intangible asset, and therefore in its cost. Contractual obligations excluded from the consideration given for the intangible asset All other contractual obligations of the operator - including obligations to maintain, replace or restore infrastructure, except for any enhancement element - are excluded from the consideration given for the intangible asset. They shall be recognised and measured in accordance with IAS 37, i.e. at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Borrowing costs Subject to the next paragraph, if the operator adopts the allowed alternative treatment in IAS 23, it shall capitalise borrowing costs attributable to the acquisition or production of the intangible asset. Under IAS 23, capitalisation ceases when substantially all activities necessary to prepare the asset for its intended use are complete. In most cases, this will be no later than when the intangible asset is paid for, either in cash or in the form of construction or other services. If the operator has a right to recover its borrowing costs from the grantor or another party, which is not contingent on other revenues being insufficient to cover those costs, it shall expense the borrowing costs and recognise revenue in respect of its right of recovery. If the ability to recover borrowing costs is contingent on other revenues being insufficient to cover those costs, it is not a right of recovery but an agreement designed to limit the operator's exposure to variations in demand, and shall be accounted for as described below. Revenue caps, floors and similar agreements The operator shall account for revenue caps, floors and other agreements included in the terms of the service concession, designed to limit the operator's exposure to variations in demand, as follows: if their fair value is reliably measurable, the operator may elect to account for them at fair value through profit or loss, separately from the intangible asset. On initial recognition, this requires an allocation to be made between the value of these agreements and of the intangible asset. if the agreements are not accounted for at fair value through profit or loss: any premium effectively paid or received for the agreements shall not be accounted for separately from the intangible asset. any rights under them shall be recognised only if and when they satisfy the recognition criteria in IAS 37. any obligations under them shall be accounted for in accordance with IAS 37. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

3 September 2004: Strong US support for uniform global accounting standards
Roughly three-fourths of 101 US senior financial executives surveyed support expensing stock options. By about the same percentage, the executives believe that there should be uniform global accounting standards and that greater transparency is needed in financial reporting. The survey was conducted by DePaul University for Grant Thornton LLP. Click for Press Release (PDF 94k).

3 September 2004: Deloitte guide to compliance with SOX Section 404
Deloitte & Touche LLP has released Taking Control, a comprehensive guide to compliance with Section 404 of the Sarbanes Oxley Act. That section requires the management of a company registered with the SEC to assess and report on the effectiveness of the company's internal control over financial reporting, and requires auditors to attest to and report on management's assessment. Section 404 applies to "accelerated filers" effective for financial years ending on or after 15 November 2004. The date is deferred until years ending on or after 15 July 2005 for foreign (non-US) registrants and non-accelerated filers. Taking Control targets non-accelerated filers and foreign private issuers that may be just getting their work under way, as well as companies currently involved in their section 404 projects. Click to download Taking Control (PDF 397k).

3 September 2004: Deloitte's global transfer pricing strategy matrix
Deloitte's Strategy Matrix for Global Transfer Pricing (7th edition) is a compilation of essential information regarding the transfer pricing regimes in 39 jurisdictions around the world and the OECD. The 2004 edition includes a new country: Norway. The information regarding the 38 countries included in last year's edition has been thoroughly reviewed and updated to reflect any changes implemented since that edition. The book represents the collective knowledge of the members of Deloitte's Global Transfer Pricing Service Line. Given the complexity of transfer pricing issues, this book should be the starting point rather than the finish line for all your transfer pricing inquiries. If you seek assistance, the book identifies transfer pricing specialist contact people in Deloitte member firms in each of the 39 jurisdictions. Click to download Deloitte's 2004 Strategy Matrix for Global Transfer Pricing (PDF 1,421k).

3 September 2004: Reminder – eight comment deadlines coming up
Just in case some of us put these out of our minds during our summer holidays, we thought it would be helpful to remind IASPlus visitors of the eight IASB and IFRIC comment deadlines that loom ahead in the next month and a half:

2 September 2004: New IFAC policy on translation of standards
A new Policy Statement on Translation of Standards and Guidance Issued by the International Federation of Accountants has been issued by IFAC to encourage high-quality translations. The policy applies to standards and guidance issued by IFAC's Education Committee, International Auditing and Assurance Standards Board, and Public Sector Committee. The policy addresses such issues as responsibilities of the translating body, design and implementation of a translation plan, translation of key words, and the translating body's translation process. English is the official language of IFAC standards and guidance, and in the event of any dispute as to the meaning of a translated word or phrase, IFAC will refer to the English meaning thereof. Click to Download IFAC's Translation Policy from IFAC's website (PDF 204k).

2 September 2004: Non-US companies registered with the SEC
We have posted to our Statistics Page the list of non-US companies registered with the SEC at 31 December 2003, based on lists recently posted on the SEC's Website. At 31 December 2003 there were 1,232 foreign registrants (compared to 1,319 a year earlier) from 57 countries (compared to 59 a year earlier). Click to download:

• List in Excel Spreadsheet Format (.xls 166k)
• Alphabetical List in PDF Format (PDF 70k)
• Summary of SEC Registrants by Country (PDF 13k)

1 September 2004: Deloitte comment letter on IFRIC D7
We have submitted our letter of comment on IFRIC Draft Amendment D7 to the Scope of Interpretation SIC 12 Consolidation—Special Purpose Entities. Click to Download the Letter (PDF 53k). Deloitte's overall view:

1 September 2004: PCAOB standard on audit documentation is approved
The US Securities and Exchange Commission has approved the Public Company Accounting Oversight Board's Auditing Standard No. 3 Audit Documentation effective for audits of financial statements of companies with financial years ending on or after 15 November 2004. AS 3 establishes general requirements for documentation that an auditor should prepare and retain in connection with engagements conducted pursuant to PCAOB standards. Such engagements include an audit of financial statements, an audit of internal control over financial reporting, and a review of interim financial information. In general, the retention period is seven years. AS 3 applies to both US-based and foreign auditors of SEC registrants. AS 3 notes that section 106(b) of the Sarbanes-Oxley Act of 2002 imposes certain requirements concerning production of the work papers of a foreign public accounting firm on whose opinion or services the auditor relies. Compliance with AS 3 does not substitute for compliance with Section 106(b) or any other applicable law. You can Download Details from PCAOB's Website (PDF 174k).