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29 April 2005: McCreevy discusses convergence, equivalence
In a Speech (PDF 92k) on the integration of Europe's financial markets and international cooperation in New York on 20 April 2005, EC Internal Markets Commissioner Charlie McCreevy discussed, among other things, the reconciliation from IFRS to US GAAP, accounting convergence, the internal control provisions of Section 404 of the Sarbanes Oxley Act, and deregistration. An excerpt:

29 April 2005: Proposed FASB hierarchy includes IFRSs
The US Financial Accounting Standards Board has issued an exposure draft of a proposed Statement of Financial Accounting Standards titled The Hierarchy of Generally Accepted Accounting Principles. The GAAP hierarchy ranks the relative authority of accounting pronouncements issued by the FASB and its predecessors, the AICPA, and (for public companies) the SEC. Currently, in the United States, the GAAP hierarchy is set out in AICPA Statement on Auditing Standards No. 69 The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. FASB proposes that a company using US GAAP may need to look to IFRSs if an issue is dealt with in IASB standards but not in the US accounting literature. Furthermore, FASB's exposure draft notes that "the IASB accords its conceptual guidance a higher standing in its hierarchy than that which the present GAAP hierarchy accords the guidance in the FASB Concepts Statements. Because the FASB's and the IASB's goal is to converge their concepts and standards, the [FASB] acknowledges that it will need to consider whether and how to converge the hierarchy for its accounting literature with that of the IASB as part of the conceptual framework project that the Board is conducting jointly with the IASB." Comment deadline is 27 June 2005. Click to:

• Download the Exposure Draft from the FASB website.
• Download the FASB News Release (PDF 26k).

29 April 2005: CESR publishes its draft equivalency report
The Committee of European Securities Regulators (CESR) has invited comments on its tentative conclusions that Canadian, Japanese, and US GAAP, taken as a whole, are "equivalent to IFRSs, subject to a number of additional disclosures" for the purpose of listings by non-European companies in European public securities markets. European companies trading in European securities markets are required to start using IFRSs in 2005. Non-European companies are allowed to continue to use their national GAAPs until 2007. The European Commission is studying whether to allow Canadian, Japanese, and/or US GAAP to continue to be used after 2007 and has asked CESR for its views. The European Commission had also asked CESR to include, in its report on equivalence, a description of the enforcement mechanisms that are in place in each jurisdiction. The European Commission has asked to have CESR's final advice by 30 June 2005. CESR's comment deadline is 27 May 2005. CESR will hold an open hearing at its offices in Paris on the afternoon of 18 May 2005. Click to download:

• CESR Draft Report (Consultation Paper) (PDF 1,048k)
• Press Release (PDF 69k)

29 April 2005: Twelfth UK webcast update on transition to IFRSs
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 twelfth webcast was run on Thursday 28 April 2005 and, as a follow up to the session from 22 July 2004, focused on further issues arising from IAS 39 Financial Instruments: Recognition and Measurement. 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.

27 April 2005: Comments invited on due process, IFRIC
The Trustees of the International Accounting Standards Committee Foundation (IASCF) have published for public comment two consultation documents:

• Due Process of IASB: Draft Handbook of Consultative Arrangements.
• IFRIC - Review of Operations: Consultative Document.

26 April 2005: IASB expands its SME working group
The IASB has expanded its working group on Accounting Standards for Small and Medium-sized Entities (SMEs) to include more preparers and users of SME financial statements as well as others with a particular SME expertise. SMEs are entities that (a) do not have public accountability and (b) publish general purpose financial statements for external users. Click for:

• Press Release (PDF 65k).
• List of Working Group Members.

23 April 2005: Notes from the IASB meeting with FASB
On Thursday and Friday 21-22 April 2005, the IASB held a joint meeting with the US Financial Accounting Standards Board. Click to go to our preliminary and unofficial Notes from the Joint Meeting on 21-22 April 2005.

23 April 2005: China Financial Reporting Update
We have posted Deloitte's China Financial Reporting Update 2004 Year-End Review (PDF 112k). This edition contains a comprehensive review of accounting, auditing, and corporate government standards and guidance issued during 2004 in the People's Republic of China by the Ministry of Finance, the China Securities Regulatory Commission, and the Chinese Institute of Certified Public Accountants. We will post the Chinese translation of this Update shortly. You will find past issues of this Update Here.

22 April 2005: EC comments on SEC 'roadmnap'
The European Commission highlighted the progress made between the EC and the SEC (see news story below) in a Press Release (PDF 77k) titled Accounting Standards: EU Commissioner McCreevy Sees Agreement with SEC as Progress Toward Equivalence. The reference to 'equivalence' relates to a study currently underway within the European Commission to assess whether US GAAP, Canadian GAAP, and/or Japanese GAAP are 'equivalent' to IFRSs and, therefore, should be allowed for non-European companies in European capital markets. An excerpt from Commissioner McCreevy's press release:

22 April 2005: 2005 version of UK FRSSE is issued
The United Kingdom Accounting Standards Board has issued the 2005 version of its Financial Reporting Standard for Smaller Entities (FRSSE). It is effective for accounting periods beginning on or after 1 January 2005. The FRSSE is an accounting standard developed specifically for smaller entities, by collecting together in one document and in simplified form the requirements from other accounting standards and interpretations that are applicable to smaller entities. It may be adopted by companies qualifying as small under UK companies legislation (at present, generally those entities with an annual turnover of less than £5.6 million). Smaller entities that elect to comply with the FRSSE are exempt from applying all other accounting standards and interpretations. Smaller entities that do not adopt the FRSSE remain subject to the full range of UK accounting standards and interpretations. Click for Link to Press Release and Download the FRSSE from the ASB's website.

22 April 2005: SEC 'roadmap' to eliminating IFRS reconciliation
William Donaldson, Chairman of the US SEC, and Charles McCreevy, EU Internal Market Commissioner, met yesterday in Washington to discuss a range of topics of mutual interest between the SEC and the European Union, including expanding the use of high-quality global accounting standards and eliminating the reconciliation to US GAAP for IFRS filers. An SEC Press Release (PDF 65k) about the meeting states:

22 April 2005: 'A Securities Regulator Looks at Convergence'
The US Securities and Exchange Commission has released for public distribution an article titled A Securities Regulator Looks at Convergence, by SEC Chief Accountant Donald T. Nicolaisen. Mr. Nicolaisen introduces his article as follows:

22 April 2005: Agenda for ARC meeting May 2005
The Accounting Regulatory Committee of the European Commission will meet in Brussels on 20 May 2005. The Published Agenda (PDF 17k) includes the following IFRS-related items:

• Formal vote on adoption of amendments to IAS 39 and SIC-12
• Formal vote on adoption of IFRS 6, Amendment to IAS 19, IFRIC 4, and IFRIC 5
• Information about the state of play on IFRIC 3 (EFRAG has recommended that the Commission not adopt IFRIC 3 for use in Europe)
• Acceptance of IFRSs in the US capital markets and the Constitutional review of the IASCF
• IFRSs and European Official Statistics – presentation by Eurostat
• IASB's Project to Develop Accounting Standards for SMEs – discussion of the Commission's draft reply to the IASB questionnaire

21 April 2005: IASB FASB SEC Convergence Conference 24 June
The IASB, the US Financial Accounting Standards Board, and the US Securities and Exchange Commission are jointly sponsoring a conference on Convergence: The Future of International Financial Reporting Worldwide on Friday 24 June 2005 in London. This one-day conference is aimed at CFOs and CAOs of SEC-registrants, listed companies, and other interested parties. Representatives of the IASB and FASB will discuss their plans for convergence of financial reporting standards, and representatives of the SEC will discuss convergence implications for SEC registrants. Speakers include Sir David Tweedie, IASB Chairman, and Bob Herz, FASB Chairman. Click for More Information about the IASB SEC FASB Convergence Conference.

21 April 2005: Structured finance arrangements
In his Remarks before the Bond Market Association in New York yesterday, SEC Chairman William H. Donaldson discussed, among other things, accounting issues relating to structured finance arrangements. Mr. Donaldson's comments are relevant under IFRSs as well as under US GAAP:

20 April 2005: Notes from the first day of the April Board meeting
The IASB held its monthly Board meeting on Tuesday 19 April 2005. Click to go to our preliminary and unofficial Notes from the IASB Meeting on 19 April 2005.

20 April 2005: EFRAG comments to IASB on fair value option
The European Financial Reporting Advisory Group has submitted a letter of comment to the IASB on Amendments to IAS 39: The Fair Value Option–Effective Date and Transitional Provisions. Click to Download the Letter (PDF 25k).

20 April 2005: EFRAG proposes to endorse IAS 39 amendment
The European Financial Reporting Advisory Group has posted to its Website its proposed letter recommending that the European Commission approve, for use in Europe, the IASB's recent Amendments to IAS 39 Financial Instruments: Recognition and Measurement–Cash Flow Hedge Accounting of Forecast Intragroup Transactions. EFRAG seeks comments by 16 May 2005.

19 April 2005: Asia-Pacific pages updated
We have updated the following Asia-Pacific jurisdiction pages to reflect standard-setting activity during the first quarter of 2005: Australia, Hong Kong, India, Japan, Malaysia, New Zealand, Singapore, and Taiwan.

19 April 2005: IAS Plus Newsletters for Q1 2005 are posted

We have posted the latest Global and Asia-Pacific Editions of our IAS Plus newsletter. The newsletter, which is published quarterly, reports on the recent activities of the IASB and the IFRIC and also on worldwide issues and events relating to international financial reporting. The Asia-Pacific edition has the same news content as the Global Edition plus accounting standards updates for Asia-Pacific countries. April 2005 Asia-Pacific Edition (PDF 224k) April 2005 Global Edition (PDF 177k) You will find all Past Issues Here.

19 April 2005: Public Sector Accounting Standards Board update
In November 2004 IFAC's Public Sector Committee (PSC) was reorganised into the International Public Sector Accounting Standards Board (IPSASB). The IPSASB develops standards for accounting and financial reporting by national, regional and local governments and related governmental agencies. Those standards, known as International Public Sector Accounting Standards (or IPSAS) are generally based on IFRSs, and profit-oriented government business enterprises are required to comply directly with IFRSs. We have posted the April 2005 issue of IPSASB Update, the first issue of IFAC's public sector newsletter since the reorganisation of the PSC into the IPSASB. The newsletter reports the decisions made at the IPSASB's March 2005 meeting and includes a review of the IPSASB's current work programme. Click:

• Download IPSASB Update April 2005 (PDF 168k)
• More Information about the IPSASB, including links for downloading all earlier editions of the Update newsletter published by the PSC.

18 April 2005: EC plans to evaluate the IAS Regulation in 2007
The European Commission has posted to the Internal Market section of its website an updated Evaluation Plan for 2005-2009. Under that plan, the success of a wide range of Internal Market initiatives is being evaluated. Regulation EC 1606/2002 (the 'IAS Regulation') is scheduled for review in 2007.

18 April 2005: IASB meeting with FASB is now 21 and 22 April
The IASB meeting later this week with the US Financial Accounting Standards Board will take place on Thursday and Friday, 21 and 22 April 2005. The Board's preliminary announcement (which we reported in an 8 April 2005 news story) had indicated that the joint meeting would be held only on Thursday, 21 April. Agenda details for the two-day meeting can be found Here.

16 April 2005: Accounting Roundup 2005–first quarter review
We have posted the Accounting Roundup: First Quarter in Review–2005 (PDF 632k), prepared by the National Office Accounting Standards and Communications Group of Deloitte & Touche LLP (USA). During the first quarter of 2005, accounting standard-setters and accounting regulators issued a number of final and proposed FASB Interpretations, FSPs, EITF consensuses, SEC rules, PCAOB rules, IFRSs, etc. affecting accounting, financial reporting, and corporate governance. Accounting Roundup: 1st Quarter in Review–2005, presents brief descriptions of those pronouncements, as well as certain other regulatory and professional developments in accounting and financial reporting. The articles included were primarily drawn from issues of the Accounting Roundup newsletters published in the first quarter of 2005 and have been updated when appropriate. You will find past issues Here.

15 April 2005: IFAC proposes new auditor education requirements
Proposals just released by the International Federation of Accountants call for auditing professionals to have an advanced level of knowledge in three areas: financial statement audits, financial accounting and reporting, and information technology. This advanced level of knowledge is deeper than that expected of other professional accountants. The proposals are set out in an exposure draft, Competence Requirements for Audit Professionals (PDF 128k). The ED also would require individuals to gain a period of relevant practical experience (normally a minimum of three years) before having substantial involvement in a financial audit assignment. For audits of financial statements in specific industries (such as banking and finance, extractive industries, and insurance) and specific environments (such as transnational audits), the proposed standard would require that the audit professional possess professional knowledge and experience relevant to those environments or industries. Comment deadline is 15 July 2005. Click for Press Release (PDF 67k).

15 April 2005: SEC delays stock option compliance date
The US Securities and Exchange Commission has deferred the compliance dates for FASB Statement 123 (revised 2004), Share-Based Payment. Under FAS 123R, registrants would have been required to implement the standard as of the beginning of the first interim or annual period that begins after 15 June 2005 (after 15 December 2005 for small businesses). For a calendar year-end company, this would have meant initial adoption of FAS 123R in their third quarter 2005 reports. The Commission's new rule allows companies to implement FAS 123R at the beginning of their next financial year that begins after 15 June 2005 (15 December 2005 for small businesses). An SEC registrant other than a small business with a 30 June 2005 year-end, however, must comply with FAS 123R starting with its interim financial statements for the quarter beginning 1 July 2005. The Commission's new rule does not change the accounting required by FAS 123R – only the dates for compliance with the standard. FAS 123R, like IFRS 2, requires companies to recognise the fair value of stock options given to employees as compensation expense. IFRS 2 went into effect on 1 January 2005. Click for SEC Press Release (PDF 29k).

14 April 2005: Nominees sought for public sector standards board
The International Federation of Accountants is seeking public members for the International Public Sector Accounting Standards Board (IPSASB). The IPSASB (formerly known as the Public Sector Committee) develops accounting standards for financial reporting by governments and other public sector entities. Nominations are requested by 31 May 2005. Click for More Information.

14 April 2005: McCreevy: The limits of accounting standards

EU Commissioner for Internal Market and Services Charlie McCreevy spoke last week in Dublin about The Limits of Accounting Standards:

14 April 2005: Amendment to IAS 39 on intragroup hedges
The IASB has issued an amendment to IAS 39 Financial Instruments: Recognition and Measurement to permit the foreign currency risk of a highly probable intragroup forecast transaction to qualify as the hedged item in a cash flow hedge in consolidated financial statements – provided that the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and the foreign currency risk will affect consolidated financial statements. The amendment also specifies that if the hedge of a forecast intragroup transaction qualifies for cash flow hedge accounting, any gain or loss that is recognised directly in equity in accordance with the hedge accounting rules in IAS 39 must be reclassified into profit or loss in the same period or periods during which the foreign currency risk of the hedged transaction affects consolidated profit or loss. The amendment is effective 1 January 2006, although earlier application is encouraged. This amendment removes a difference with US GAAP that was created when IAS 39 was amended in December 2003, because that amendment did not permit hedge accounting for forecast intragroup transactions. Click for Press Release (PDF 55k).

14 April 2005: Future role of UK Accounting Standards Board
The UK Accounting Standards Board (ASB) has published an exposure draft of its Policy Statement, Accounting Standard-setting in a Changing Environment: The Role of the Accounting Standards Board. The ED sets out, for consultation, the ASB's views on its future role, including its roles in:

14 April 2005: SEC amends Form 20-F for IFRS adopters
The US Securities and Exchange Commission has adopted amendments to Form 20-F to provide an accommodation to foreign private issuers that change their basis of accounting to IFRSs prior to or for the 2007 financial year. The amendments also require certain disclosures from all foreign private issuers that adopt IFRSs for the first time during any financial year. The Commission did not, however, change its current requirement for a reconciliation of financial statement items to US generally accepted accounting principles. Click here for SEC Final Rules (PDF 212k). The SEC Press Release (PDF 29k) says that "the Commission is adopting these amendments to promote and encourage the use of IFRSs as a high quality set of accounting standards." The key changes are as follows:

14 April 2005: We have redesigned our home page a bit
The links on our home page haven't changed – just the look.

13 April 2005: Commissioner McCreevy again speaks about IFRS issues
For the third time this month, Charlie McCreevy, the EU Commissioner for Internal Market and Services, spoke publicly about issues relating to the IASB and IFRSs. On 7 April 2005, at a European Policy Centre Breakfast Briefing on the future of Internal Market regulation, Mr. McCreevy discussed convergence of IFRSs and US GAAP and governance of international standard setters such as the IASB. On the latter issue, the Commissioner said:

13 April 2005: Nominees sought for Standards Advisory Council
The trustees of the IASC Foundation are seeking nominations of individuals to serve on the IASB's Standards Advisory Council (SAC). Qualified candidates will include senior financial officers of corporations, investment analysts with knowledge of accounting issues, partners of audit firms with experience in auditing companies applying IFRSs, executives of international financial and development organisations, and other senior representatives of public interest bodies. SAC members will be expected to attend three to four two-day meetings annually, generally held in London. Terms are for three years. The IASC Foundation does not reimburse travel expenses or provide any fees or honoraria for membership. Click for:

• IASCF Press Release (PDF 27k)
• More Information about SAC.

13 April 2005: Elizabeth Hickey is new IASB technical director

The IASB has named Elizabeth Hickey as Director of Technical Activities, effective 1 May 2005. She succeeds Kevin Stevenson, who is returning to his native Australia as a partner in the Global Capital Markets Group at PricewaterhouseCoopers. Since August 2003 Ms Hickey has been the Director of Education of the IASC Foundation. Formerly she was a partner with Ernst & Young in New Zealand and chaired the New Zealand Financial Reporting Standards Board. Click for Press Release (PDF 117k).

12 April 2005: Outcome of IASB-ASBJ convergence meeting
The Accounting Standards Board of Japan has released a Summary of the March 2005 Convergence Meeting (PDF 57k) between the ASBJ and the IASB in Tokyo. The summary indicates that the two boards agreed to pursue convergence issues in the following five standards in the first phase of the project:

• Measurement of inventories (IAS 2)
• Segment reporting (IAS 14)
• Related party disclosures (IAS 24)
• Unification of accounting policies applied to foreign subsidiaries (IAS 27)
• Investment property (IAS 40)

12 April 2005: FEE study on audit report implications of IFRSs
The European Federation of Accountants (FEE) has released a discussion paper on Reporting Issues in Relation to Endorsed IFRS and Possible Implications for the Audit Report. The European Union IAS Regulation requires European listed companies to prepare consolidated financial statements from 2005 on the basis of those IFRS that have been endorsed by the European Commission. Because endorsed IFRSs may not necessarily be the same as full IFRSs because of time lags or 'carve-outs' such as was done with IAS 39, the appropriate wording to describe the accounting framework in the auditor's report and in the accounting policies note must be carefully considered. The FEE discussion paper examines the following questions:

• How should the financial reporting framework be referred to in the accounting policies in the notes to the financial statements?
• When the company also complies with full IFRSs, should it refer to that fact?
• How should the framework be described in the audit report? Can there be a difference in description compared to the reference to the financial reporting framework in the accounting policies?
• Would the reference to the European financial reporting framework have a clear meaning outside the EU?

11 April 2005: Final communique from 30th annual IOSCO conference
The International Organization of Securities Commissions (IOSCO) held its 30th annual conference in Colombo, Sri Lanka, from 4 to 7 April 2005. IOSCO is the global association of the world's securities and futures regulators. The Final Communique (PDF 293k) from the meeting reiterated IOSCO's long-standing support for IFRSs and reported on a study on regulation of the auditing profession:

11 April 2005: Questionnaire on SME recognition and measurement
The IASB has published a staff questionnaire on possible modifications of the recognition and measurement principles in IFRSs for use in IASB standards for small and medium-sized entities (SMEs). The IASB plans to hold public round-table meetings with preparers and users of the financial statements of SMEs, most likely in September 2005, to discuss possible recognition and measurement modifications. The questionnaire has been prepared by the staff of the IASB as a tool to identify issues that should be discussed at those round-table meetings. Response deadline is 31 May 2005. The questionnaire contains two questions:

• Questionnaire (Word Doc 103k)
• Press Release (PDF 69k)
• Background on the SME Project

11 April 2005: Information about 2006 World Congress of Accountants
The 17th World Congress of Accountants will be held 13-17 November 2006 in Istanbul, Turkey. Workshop and plenary sessions will be organised around the theme Generating Economic Growth and Stability Worldwide. Session topics will include generating economic growth and stability through the accounting profession in the developing nations, capital markets stability worldwide and the accounting profession, and the role of professional accountants in business in contributing to value creation worldwide. For more information, go to the WCOA-2006 Website at www.wcoa2006istanbul.org.tr.

11 April 2005: Deloitte Heads Up newsletter on share-based payment
In our news story of 30 March 2005, we reported on SEC Staff Accounting Bulletin No. 107 Share-Based Payment, dealing with valuations and other accounting issues for share-based payment arrangements by public companies under FASB Statement 123R Share-Based Payment. For public companies, valuations under Statement 123R are similar to those under IFRS 2 Share-based Payment. Deloitte & Touche (United States) has published a special edition of the Heads Up newsletter discussing SAB 107. Click to download the Heads Up Newsletter on SAB 107 (PDF 144k).

11 April 2005: We comment on the staff paper on IAS 39 FV option
Deloitte Touche Tohmatsu has submitted comments on the IASB staff paper of 23 March 2005 on the Proposed Amendment to IAS 39: The Fair Value Option–Effective Date and Transition Provisions. The staff paper sets out an overview of certain alternatives on the basis of the Board's tentative decisions. Our comments are based on this brief paper without full consideration of a detailed analysis of the alternatives. Click to Download our Letter (PDF 51k). Our overall view:

11 April 2005: More details on the April Board meeting agenda
Our news story of 8 April 2005 reported the agenda for the IASB's April Board meeting on Tuesday 19 April 2005 and the agenda for its joint meeting with the US FASB on Thursday 21 April 2005. On Wednesday 20 April 2005, the Board will meet with its liaison national standard-setters. Here is the agenda for that meeting.

19-21 April 2005, London Tuesday 19 April 2005 IASB Board Meeting Location: IASB Offices, 30 Cannon Street, London Agenda: See news story of 8 April 2005 Wednesday 20 April 2005 Meeting of the IASB and the Liaison National Standard Setters Location: The Council Room, One Great George Street, Westminster, London SW1P 3AA Matters Arising from Liaison Standard-Setters Meeting Role of National Standard Setters Proposed MoU Technical Matters Other Matters Interpretations IFRIC Review of Operations and Implications for National Standard Setters Interpretation and Guidance Future Work Programme and Priorities of IASB Planning for the Conceptual Framework Project Participation by National Standard Setters in Project Teams and Processes Thursday 21 April 2005 Meeting of the IASB and the US FASB Location: The Council Room, One Great George Street, Westminster, London SW1P 3AA Agenda: See news story of 8 April 2005 The combined agenda is Here.

11 April 2005: IVSC 2005 standards now available on line

The International Valuation Standards Committee (IVSC) has posted to its website the various sections of International Valuation Standards 2005, including International Valuation Standards (IVSs), International Valuation Applications (IVAs), and International Valuation Guidance Notes. A printed volume and subscription service are also available.

8 April 2005: April Board meeting agenda is announced
The IASB will hold its monthly Board meeting on Tuesday 19 April 2005. On Wednesday 20 April, the Board will meet with its liaison national standard-setters. On Thursday 21 April 2005, the Board will hold a joint meeting with the US Financial Accounting Standards Board. All are in London, though venues differ. Presented below are the preliminary agendas announced so far.

19-21 April 2005, London Tuesday 19 April 2005 IASB Board Meeting Location: IASB Offices, 30 Cannon Street, London Extractive Industries [Education Session] Insurance Contracts [Education Session] Amendments to IAS 39: The Fair Value Option Financial Guarantee Contracts and Credit Insurance Short-term Convergence – Income Taxes IFRS 6 – Clean-up Issue IFRIC Update Wednesday 20 April 2005 Meeting of the IASB and the Liaison National Standard Setters Location: The Council Room, One Great George Street, Westminster, London SW1P 3AA Provisional agenda not yet announced Thursday 21 April 2005 Meeting of the IASB and the US FASB Location: The Council Room, One Great George Street, Westminster, London SW1P 3AA Financial Instruments – Way Forward The Boards will discuss alternative approaches towards future projects on financial instruments accounting. Performance Reporting 1. What topics will be addressed in Segment A and Segment B, including agreement on the required financial statements, whether to require a single statement of comprehensive income with a total for comprehensive income while retaining a subtotal similar to the concept of 'income from continuing operations' or 'profit or loss', and agreement on the number of years required to be presented in comparative financial statements. 2. Whether the issue on requiring the presentation of the direct method for the statement of cash flows should be addressed in either Segment A or Segment B 3. What is the timing and the type of document(s) for public comment that should be used for Segment A and Segment B 4. Whether the document(s) for public comment should be drafted jointly by the IASB and FASB staff using the same wording (similar to a new standard such as Business Combinations II) or if the staff should amend each Board's existing guidance/literature using the same wording (whenever possible) Short-term Convergence: Income Taxes Concepts – Objectives

8 April 2005: Disclosing the effects of IFRS changeover
The importance of explaining the effect of first-time adoption of IFRSs was highlighted in a speech by Terence O'Rourke, President of the Institute of Chartered Accountants in Ireland earlier this week in Dublin. Mr. O'Rourke cited an example of the price of shares in an Irish bank tumbling after it announced lower IFRS earnings, though its circumstances had not changed. He suggested that market misunderstanding, including the failure of financial analysts to study and take account of the effects of the IFRS changeover, was a major cause of the price decline. "What it has done, however, is illustrate the importance of providing a context to accounting information provided to the capital markets," Mr. O'Rourke said. Click to download Mr. O'Rourke's Remarks (PDF 31k).

8 April 2005: Four Deloitte leaders are SEC SOX roundtable panelists
The US Securities and Exchange Commission will hold a Roundtable on Implementation of Internal Control Reporting Provisions of the Sarbanes-Oxley Act of 2002 on 13 April 2005 from 9:00am to 5:30pm at the Commission's headquarters in Washington. Real time and archived audio and video webcasts will be accessible on www.sec.gov. Selected materials related to the Roundtable – including the day's agenda, a Briefing Paper, and materials submitted to the staff in connection with the discussions – are accessible at www.sec.gov/spotlight/soxcomp.htm. The Roundtable will cover a number of topics, including: (1) first year efforts; (2) reporting to the public; (3) planning and design; (4) documentation and testing of internal control over financial reporting; (5) the use of judgment in communications and conclusions; and (6) next steps. The Roundtable will feature a broad range of stakeholders involved with internal control reporting – including investor advocates, representatives of public companies, members of audit committees, auditors, attorneys, and US regulators. The members of the PCAOB will participate. Panelists include two former Deloitte Chairmen, J. Michael Cook and James E. Copeland, Jr., and current Deloitte partners Larry J. Koch and Robert J. Kueppers. Click for SEC Press Release (PDF 43k).

8 April 2005: EFRAG's final comments on IFRIC D11
The European Financial Reporting Advisory Group (EFRAG) has released its letter of comment on IFRIC Draft Interpretation D11 Changes in Contributions to Employee Share Purchase Plans (ESPPs). The letter expresses agreement with one aspect of the proposed consensus but disagrees with another. EFRAG agrees that if an existing ESPP is replaced by a new ESPP, the entity should account for this replacement as a modification of the original plan in accordance with IFRS 2. However, EFRAG disagrees with the proposed consensus on how to account if an employee stops contributing to an ESPP while remaining in the entity's employment. D11 proposes that the entity account for this event as a cancellation and, therefore, should recognise immediately as expense the amount that otherwise would have been recognised for services received over the remainder of the vesting period. EFRAG's letter raises questions about the basis for IFRIC's proposed consensus. Click to download EFRAG's Letter on D11 (PDF 17k).

8 April 2005: Over 200,000 e-learning downloads from IASPlus
As of 1 April 2005, 200,000 Deloitte IFRS e-learning modules had been downloaded from IASPlus by people in over 150 countries. Deloitte's e-learning was launched at the end of January 2004. Many of the downloaded modules have multiple users because organisations are permitted to install them on their own servers for the internal use of their employees or students. In addition, tens of thousands of additional modules have been completed online and offline by Deloitte staff. You can always access IFRS e-learning without charge by clicking on the light bulb icon on the IASPlus home page. Thirty-three modules are now available.

7 April 2005: Garnett, Gelard, Leisenring reappointed to IASB

Mr. Garnett

Mr. Gelard

Mr. Leisenring

Following a recommendation of their nominating committee, the Trustees of the International Accounting Standards Committee Foundation, under which the IASB operates, voted unanimously to reappoint three members of the International Accounting Standards Board to five-year terms beginning 1 July 2005 and ending 30 June 2010. The three Board members are Robert Garnett, Gilbert Gelard, and James Leisenring. Click for Press Release (PDF 124k).

7 April 2005: Russia may delay move toward adopting IFRSs
On 1 November 2004, we reported that the Russian Duma (parliament) had given preliminary approval to a bill requiring corporations with more than one subsidiary to publish financial statements that conform to IFRSs starting either in 2004 or 2005. We noted that two additional votes of the Duma were required before the bill would become law. It now appears that the legislation is stalled in the Duma. A news story in Vedomosti (Russia's top business newspaper, a joint venture of the Financial Times and Wall Street Journal) on 2 February 2005 was titled 'IFRS to be Adjourned' and stated that "the effort has come to a standstill". A few weeks later (22 February 2005), an editorial in Vedomosti said that neither the business community nor government is ready for transition to IFRS because "there are no incentives for transparency and there are technical difficulties for implementation that may cause chaos in the reporting rather than increase investment attraction". The editorial also questioned the quality of current IFRS implementation by Russian banks, which have been required to use IFRSs since third quarter 2004.

6 April 2005: Commissioner McCreevy speaks about IFRS issues
In a speech to the Institute of Chartered Accountants in England and Wales in Brussels yesterday, Charlie McCreevy, the EU Commissioner for Internal Market and Services, discussed a range of issues relating to IFRSs, including:

• Convergence of US GAAP and IFRSs
• Convergence of Japanese GAAP and IFRSs
• EC consideration of the equivalence of US, Canadian, and Japanese GAAPs to IFRSs
• The EC 'carve-out' of two sections of IAS 39
• Independence of the IASB
• The need for interpretations
• Enforcement of IFRSs
• Auditor oversight
• The need for international regulatory cooperation in a globalised world

6 April 2005: Spotlighting Deloitte's IFRS experts on IAS Plus
At Deloitte our success is due to the expertise of our people. Recognising this, we have added a section at the bottom of the left-hand column of this home page to Spotlight a Deloitte IFRS Expert. We plan to focus on a different person every few weeks. Our first expert is Ken Wild, Deloitte's Global Leader for IFRSs. We also have placed a permanent link under 'Resources' near the top of the left-hand column.

6 April 2005: Enforcement of accounting standards in UK
The United Kingdom Financial Reporting Review Panel (FRRP) has reached agreements with both the UK Financial Services Authority and Inland Revenue, and also has adopted new operating procedures, all aimed at enhancing the enforcement of financial reporting standards in the UK. Those steps coincide with changes to the Companies Act to give the FRRP statutory power to require companies, directors, and auditors to provide documents, information, and explanations relevant to a question about whether accounts comply with reporting requirements. Link to the FRRP Press Release.

5 April 2005: EU Commissioner urges US recognition of IFRSs
In a speech in Madrid on Competitiveness and Growth in the EU on 1 April 2005, Charlie McCreevy, the European Commissioner for Internal Market and Services, urged US recognition of IFRS financial statements submitted to the SEC without the need for reconciliation to US GAAP. He noted that with respect to auditing standards "the US authorities have broadly accepted the equivalence of the approach of EU Member States' audit requirements." He said he would raise the issue of mutual recognition of accounting standards with the SEC during a trip to Washington later this time, including insistence on agreement on a framework and a timetable. Click to Download Commissioner McCreevy's Speech (PDF 76k). Here is an excerpt:

5 April 2005: New Global Offerings Services newsletter

We have posted the February-March Edition of the Deloitte Global Offerings Services Newsletter (PDF 249k). Global Offerings Services is a global team of Deloitte 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. Past GOs Newsletters are Here.

4 April 2005: IASCF loses right to Russian translations of IFRSs
The IASC Foundation has lost a legal battle over who owned the copyright to the 1997, 1998, and 1999 Russian translations of IASs – the IASC Foundation or a company that had paid the IASCF a £25,000 fee for the right to prepare and publish the translation. The High Court of Justice in London has ruled that the copyright belongs with the translation company ZAO Askeri-ACCA. The IASCF has also been ordered to pay the translation company's legal costs. Click to Download the High Court Judgement (PDF 63k). Subsequent to the judgement, the IASCF was denied the right to appeal, and the Russian company has sued the IASCF for damages.

4 April 2005: Update on extended use of IFRSs in Italy
On 25 February 2005, the Italian Council of Ministers approved a Legislative Decree regarding the options provided by Article 5 of Regulation 1606/2002 of the European Parliament (the EU Accounting Regulation) to permit or require the adoption of the International Financial Reporting Standards (which includes IASs and Interpretations) in respect of annual accounts and of non-publicly-traded companies. As a result, IFRSs will be applied in Italy as follows:

4 April 2005: Summary of ARC meeting 25 February 2005 is available
The European Commission has released the summary record (notes) from the meeting of the Accounting Regulatory Committee on 25 February 2005. At that meeting, among other things, the ARC endorsed IFRIC 2 for use in Europe; received a report from IASC Foundation Chairman Paul Volcker on the IASCF's current constitution review and discussed the Commission's draft comment letter; discussed the date of application of new and revised IFRSs and interpretations in Europe; and heard reports about IFRIC 3, the fair value option, and interest rate margin hedging. Click to Download the ARC Summary 25 Feb 2005 (PDF 53k).

4 April 2005: Australian Accounting Alert on tax consolidation
Deloitte (Australia) has published an Australian Accounting Alert covering a new Australian interpretation, Alert 2005/03 - Accounting for Tax Consolidation Under A-IFRS (PDF 49k). The effect of the interpretation is as follows:

• each entity in the tax-consolidated group recognises its own deferred tax balances and income tax expense;
• the head entity recognises the group's aggregate current tax liability and the benefit of any tax losses arising in the tax-consolidated group; and
• where amounts payable under any tax-funding agreement that is in place do not mirror these requirements, the net difference is treated as an equity transaction.

4 April 2005: Bear, Stearns study on impact of expensing stock options
If US public companies had been required to expense employee stock options in 2004, as will be required under FASB Statement 123R Share-Based Payment starting in third-quarter 2005:

• the reported 2004 post-tax net income from continuing operations of the S&P 500 companies would have been reduced by 5%, and
• 2004 NASDAQ 100 companies' post-tax net income from continuing operations would have been reduced by 22%.

2 April 2005: Report from the IFRIC meeting 1 April 2005
The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Thursday 31 March and Friday 1 April 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the second day of the meeting.

1 April 2005, London IAS 39: Impairment of an Equity Instrument One of the impairment triggers in paragraph 61 of IAS 39 is 'a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost'. The submission before the IFRIC is for guidance regarding whether 'significant' in paragraph 61 should be measured against the original cost or the original cost less any prior impairment losses, and whether 'prolonged' in paragraph 61 should be evaluated against the entire period for which the investment has been held, or against the time period since the last recognised impairment loss. In addition, guidance is being sought as to whether IAS 39 allows an entity to, in some way, segregate different loss events impacting an investment in a single equity instrument and evaluate the significance and duration of each event separately. The IFRIC debated this issue at length, with some noting that by its nature, the requirements of paragraph 61 as regards the words 'significant' and 'prolonged' would result in different application in practice. There was general agreement that a loss event leading to an impairment loss on an available-for-sale financial asset should not have the effect of setting a new 'cost', instead any further losses should also be recognised as impairment losses ('keep the meter running'). This results in the need to maintain a record of impairment losses recognised throughout the period for which such instrument is held. It was noted that practise in the USA would result in a new cost being set up after the first loss event. Members indicated that this issue does not require the development of an Interpretation and that any suggestion to the IASB to amend IAS 39 would significantly change the accounting for available-for-sale instruments (that is, potentially requiring all gains and losses to be recognised in the income statement). A rejection note will be drafted and presented at the next meeting setting out why the IFRIC believe the issue is clear together with an expanded note clarifying that the word 'prolonged' refers to the period that the instrument has a value below cost. IFRIC D12, D13, D14 Service Concessions Arrangements The staff indicated to IFRIC members that there was general concern that the 61-day comment period ending 3 May 2005 was too brief. IFRIC agreed to extend the comment period to 31 May 2005 but would encourage those respondents able to meet the original deadline to submit their comments on that earlier date in order to allow IFRIC to start processing responses. It was also noted that those constituents that had advocated for this issue to be dealt with swiftly, should be notified of the possible delay on the overall timetable resulting from this extension. Convertible Instruments Denominated in a Foreign Currency (Cross-Currency Bonds) The issue before the IFRIC concerns the classification of a convertible bond denominated in a foreign currency (ie a currency other than the functional currency of the entity issuing the bond). Such a bond allows the holder to convert the bond into a fixed number of the entity's equity instruments in exchange for a fixed amount of foreign currency. For example an entity whose functional currency is the Euro issues a US dollar-denominated convertible bond that can be converted into a fixed number of the entity's equity instruments (ie it contains an option to exchange a fixed number of the entity's shares for a fixed amount of US dollars). IAS 32 states that a contract that will be settled by the entity by delivering a fixed number of its own equity instruments in exchange for a fixed amount of cash or another financial asset is an equity instrument. Consequently, the question determining classification of the written option in the convertible bond is whether a fixed amount of a foreign currency represents a fixed amount of cash or other financial asset. Ie, in the example above, is a fixed amount of US dollars 'a fixed amount of cash or another financial asset' for an entity whose functional currency is Euro? If a fixed amount of a foreign currency represents a fixed amount of cash or another financial asset the convertible is separated into a liability and an equity component in the usual way. If however a fixed amount of a foreign currency represents a variable amount of cash then some have asserted that the written option component in the convertible is a liability; is equity; or is a hybrid instrument with equity and foreign exchange components that require separate accounting under IAS 39 Financial Instruments: Recognition and Measurement. After some debate, there was general consensus within IFRIC that contracts that will be settled by an entity by delivering a fixed number of its own equity instruments in exchange for a fixed amount of foreign currency should be classified as liabilities. IFRIC agreed to undertake a research project on possible amendments to the literature that could be passed on to the IASB for consideration. This course of action was taken as the IASB is currently considering a project dealing with liability / equity issues. IFRS 2: Treasury Share Transactions and Group Transactions The IFRIC continued its discussions of various issues relating to accounting for share-based payment arrangements in which: An entity grants options to its employees and chooses to or is required to purchase its own shares upon exercise of the options by its employees A subsidiary's employees are granted rights to shares of the parent. The staff presented a revised draft Interpretation setting out the changes suggested at the previous meeting and there was general agreement with the revised document. Subject to minor editorial amendments, no objections were noted to the issuance of the draft Interpretation. Scope of IFRS 2 The staff indicated that they had prepared the latest draft Interpretation to deal mainly with the issue of whether there is a requirement to demonstrate that goods or services would be received in order to IFRS 2 to apply. There was general support for the document. Subject to minor editorial amendments, no objections were noted to the issuance of the draft Interpretation. IFRIC D11 Changes in Contributions to Employee Share Purchase Plans (ESPPs) To date, 34 comment letters on D11 have been received. The staff presented a summary of comments on: the proposed treatment of a cessation of contributions the proposed treatment of a change from one ESPP to another other issues. Cessation of contributions Most respondents focused on this issue. Many disagreed with the proposed treatment in D11. Of those who disagreed, many argued that a requirement to contribute to the plan is a vesting condition; therefore, a cessation of contributions should be accounted for as a forfeiture (ie reversal of the expense recognised to date and no further charges). Of the remainder of respondents who disagreed with the proposal in D11, some supported the alternative treatment outlined in paragraph BC10 of the Basis for Conclusions to D11, ie the cessation of contributions has no accounting effect; instead, the entity should continue to recognise an expense for services received from that employee over the remainder of the vesting period. In addition to the above, a few respondents who disagreed with the proposal in D11 argued that instead of treating the cessation of contributions as a cancellation, the entity should cease recognising an expense for that employee, with no reversal of the previous expense. One respondent suggested that IFRS 2 be amended to permit this treatment. Changes from one ESPP to another Some respondents did not comment on the proposed treatment of a change from one ESPP to another. Of those respondents who did express a view, most agreed with the proposal in D11. IFRIC discussed the comments and some members made the point that it was not clear whether US GAAP is consistent with IFRS on the issue of cancellation. The point was made that US GAAP deals explicitly with 'reductions' in contributions but not cancellations. Other Issues IFRIC discussed other conceptual issues including when a 'shared understanding' of the arrangement is reached, for example, where a letter of employment states that employees are free to join the ESPP scheme as part of their employment contract. Does the signing of the contract by all employees represent grant date? Or is grant date when the employees that decide to join the scheme, indicate their willingness to join (possibly by making the contributions)? Following this thinking, some IFRIC members questioned the reason (at a conceptual level) why no charge for share-based payments had been proposed for employees that remained in employ but did not join the scheme. This thinking would have wide ramifications on various types of employee benefit schemes in existence. After much debate, IFRIC seemed to agree that 'forfeiture' is not a possible solution, and neither is accounting for the SAYE schemes as those presenting the employees with a choice of settlement in cash or equity. Some suggested that D11 as currently drafted is the only correct interpretation of IFRS 2 as drafted, but 5 IFRIC members indicated that they would vote against D11 as currently drafted. Others indicated they would prefer to reach a consensus that would allow entities to cease expensing or even continue with the expensing they had been doing, but would not accept accelerated expensing (as per D11) as it is counter intuitive. The opportunities to abuse such provisions were noted with indications that the Board would probably not sanction such amendments. IFRIC concluded that the issue should be elevated to the Board with a proposal that the cancellation provisions in IFRS 2 be revisited. IFRIC D10 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment The most striking fact with regard to descriptive statistics is that no individual preparer and only one preparer representative body has commented on IFRIC D10. 7 responses came from accountancy bodies and standard setters and 5 from accounting firms. Finally, EFRAG and FEE have sent a comment letter to IFRIC. 21 respondents (95%) fully agreed with the draft Consensus. While 8 respondents (36%) had no or just a few formal comments, 13 (59%) raised some concerns about the scope of IFRIC D10 and a certain lack of clarity in several paragraphs of the body of the draft Interpretation and the Basis for Conclusions. Some scope issues were discussed, mainly that the interpretation should be drafted in a broader context and only making reference to the WE&EE directive. IFRIC indicated that they had already debated this issue and had arrived at the draft as currently drafted but would include a reference to the hierarchy in IAS 8 to deal with some of the scope issues. Some respondents had requested that the requirements of the draft Interpretation be expanded by addressing disclosure requirements. IFRIC agreed to encourage this disclosure through the Basis for Conclusions but believe they could not require such disclosure without re-exposure and consulting the Board. IFRIC decided to clarify that the recognition of the liability arising from applying D10 would take place 'during' the measurement period in order to avoid full recognition on the first day of participating in the market. 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 31 March 2005.

1 April 2005: Deadline on IFRIC D12-13-14 extended to 31 May
The IFRIC has agreed to extend the deadline for comments on its three Draft Interpretations D12, D13, and D14 Service Concession Agreements to 31 May 2005. Those proposals were issued on 3 March 2005 with an original comment deadline of 3 May 2005.

1 April 2005: PCAOB proposal on elimination of a material weakness
The US Public Company Accounting Oversight Board has proposed for public comment a standard that would apply when auditors report on the elimination of a material weakness in a company's internal control over financial reporting. The proposed standard would establish a voluntary, stand-alone engagement that would be performed at the election of the company. Comments are due 16 May 2005. If the PCAOB does adopt a final standard, it will be submitted to the Securities and Exchange Commission for approval. The proposed rule may be Downloaded from the PCAOB's Website (Docket No. 018).

1 April 2005: Proposal to replace Canadian GAAP with IFRSs
The Canadian Institute of Chartered Accountants' Accounting Standards Board (AcSB) has issued an Invitation to Comment on its draft strategic plan, Accounting Standards in Canada: Future Directions. The draft plan includes the AcSB's proposal to follow separate strategies for public companies, private businesses, and not-for-profit organisations. Highlights:

1 April 2005: March 2005 edition of Accounting Roundup
We have posted the 31 March 2005 Edition of Accounting Roundup (PDF 176k), prepared by the National Office Accounting Standards and Communications Group of Deloitte & Touche LLP (USA). This edition has information about FASB developments (several final and proposed FSPs and summaries of recent FASB meetings); AICPA developments (exploring changes to GAAP for private companies); SEC developments (including SAB 107, an SEC Staff Alert on annual report reminders, and FAQs on the SEC's voluntary XBRL filing program); and international developments (including the IASB Staff Paper on the fair value option, IFRIC's proposed guidance on service concession arrangements, and a summary of the March 2005 IASB meeting). You will find past issues Here.

1 April 2005: Report from the IFRIC meeting 31 March 2005
The International Financial Reporting Interpretations Committee (IFRIC) is meeting at the IASB's offices in London on Thursday 31 March and Friday 1 April 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the first day of the meeting.

31 March 2005, London Administrative Matters Gilbert Gelard, IASB member chaired the meeting. The Chairman welcomed Shunichi Toyoda (Japan), who has replaced Junichi Akiyama on the IFRIC. Mr Toyoda is employed by the NEC Corporation. He is currently on secondment to the Accounting Standards Board of Japan, where he is a technical manager. The IFRIC expressed its thanks and good wishes for the future to outgoing member Junichi Akiyama. Mr Gelard also noted that this meeting would be the last for Robert Comerford (IOSCO-SEC) and for Kevin Stevenson (IASB). Mr Comerford will be leaving the SEC at the end of May. Mr Stevenson is returning to his native Australia at the end of April. An IFRIC member expressed concern that the short comment letter period on the concessions exposure drafts (Draft Interpretations D12, D13 and D14) would lead to a 'lack of depth' in the comments. One of the international accounting firms had identified at least twelve points of principle in the exposure drafts and is concerned that there were several 'embedded interpretations' – especially of IAS 11 Construction Contracts – that might catch people unawares. The staff noted the concern and stated that the staff would investigate whether an extension of the comment period was possible given the desired completion date for the final interpretations. IFRIC 3 Emission Rights Intangible assets The IFRIC considered a staff proposal to amend IAS 38 Intangible Assets to facilitate 'currency-like' intangible assets (eg emission allowances that can be used to settle emission obligations) to be measured at fair value through profit or loss. That amendment would be a further accounting policy choice in IAS 38. The IFRIC had received strong representations from the European Financial Reporting Advisory Group (EFRAG) about IFRIC 3, especially with respect to a perceived accounting mismatch caused by the interaction of IAS 20 Government Grants, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and IAS 38. The staff proposal would create a special category of intangible asset, which could be used if: a. the intangible asset's value derives from the fact that it can be used to settle obligations; and b. the intangible asset has a fair value that can be determined by reference to an active market. The IFRIC discussed the issue at length and explored the staff recommendations as well as other possible alternatives. There was enough support among IFRIC to direct the staff to develop its general proposal further. There was mixed support for a proposal that the accounting model should mandate a 'fair value through profit and loss' approach. One vote taken had enough support for a consensus view however, after further discussion, there was enough opposition to the mandatory requirement to block a consensus. Notwithstanding this vote, the IFRIC agreed that the staff should redraft the proposals assuming a mandatory requirement for fair value through profit or loss. The staff was asked to refine the accounting model such that the class of intangible asset such that criterion (a) above would be something like 'the intangible asset ultimately derives its value from the fact that it can only be used to settle obligations'. Hedge accounting The IFRIC had also received a suggestion from the EFRAG that entities should be allowed to apply, by analogy, the hedge accounting provisions in IAS 39 Financial Instruments: Recognition and Measurement for a cash flow hedge of a foreign currency exposure. IFRIC members stated that they wished to develop their views on the accounting for intangible assets before giving detailed consideration to this proposal. To that end, they directed the staff to ask EFRAG to prepare a more detailed proposal on hedge accounting and to submit this in good time before the next IFRIC meeting (2-3 June 2005). IFRIC D9 Employee Benefit Plans with a Promised Return on Contributions or Notional Contributions The IFIRC discussed a preliminary analysis of comments received on exposure, in particular the measurement of the defined benefit obligation in respect of a D9-type plan. The discussion was wide-ranging, and no conclusions were reached. Several concerns were expressed, especially that, if the tentative staff conclusions were pursued, the IFRIC would be undertaking a far more fundamental amendment of IAS 19 Employee Benefits. Such a move would necessitate re-exposure. The IFRIC will resume its redeliberations in June. IFRIC D6 Multi-employer Plans IFRIC redeliberated IFRIC D6 Multi-employer Plans with respect to State Plans. IFRIC D6 contained a proposed amendment to IAS 19 that stated that entities should account for state plans as defined contribution plans. The results from exposure were inconclusive, and some commentators disagreed with the automatic exemption from defined benefit accounting for any type of plan. After a brief discussion, the IFRIC agreed with a staff recommendation that the IFRIC should not proceed with the proposed amendments to IAS 19 in relation to state plans. IFRIC D5 Applying IAS 29 Financial Reporting in Hyperinflationary Economies for the First Time Disposition of comments received on the 'near-final draft' of proposed IFRIC 6 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies. The IFRIC did not provide Observer Notes for this session. The IFRIC agreed a number of editorial amendments to the near-final draft of IFRIC 6 suggested by the staff. In addition, they agreed that the section on Transition (paragraph 7) was redundant and should be deleted. The IFRIC agreed to redraft BC16, which contained a discussion of US generally accepted accounting principles and the reporting requirements of the US Securities and Exchange Commission, such that it is factual rather than discursive. An IFRIC member raised a concern with the material in IE6, which addresses deferred tax accounting. The member was concerned that, while the example reflected appropriately the IFRIC's conclusions, the accounting result could be seen as being not meaningful. The concern was that the operation of the restatement approach magnifies the deferred tax effect by a greater amount than might be expected. The staff is to review the example. If it could be amended without major work and causing no changes in principle, the consensus would be issued under existing authorities granted by the IFRIC and IASB. However, if there were changes in principle as a result of the staff's review of the example, IFRIC 6 would have to be referred to the IFRIC (and the IASB) in June. IAS 11 Combining and Segmenting Contracts The IFRIC discussed a report to the IASB prepared by the staff, which summarised the IFRIC's work and conclusions on this topic. The staff's primary conclusions were (i) that there was no significant difference between IFRS and US GAAP with respect to combining and segmenting construction contracts and (ii) that the Board should assume responsibility for two revenue recognition issues identified during the course of IFRIC's discussions. IFRIC members expressed concern that, while there might be no difference in net income between IFRS and US GAAP with respect to contract accounting, differences in the timing of revenue and expense recognition under the two regimes could lead to differences. These differences could lead to material differences in the measure of total revenue and total expense, even if net income was not affected. The IFRIC also discussed two flowcharts comparing IFRS and US GAAP for the separation, allocation and recognition of multiple element arrangements. Some IFRIC members expressed some reservations about the staff analysis with respect to the accounting for multiple element arrangements under IFRS, but the discussion was not conclusive. The IFRIC was asked to pass any comments to the staff off-line. In addition, they were asked to indicate which, if any, issues related to the topic they might want to pursue. Any such topics might be treated as supplemental topics for the service concessions team. IFRIC D12, D13, D14 Service Concession Arrangements The staff provided an oral report on the status of the comprehensive example designed to accompany D12, D13, and D14 on service concession arrangements. The example extends the example in the exposure draft to a 50-year arrangement and contains detailed computations, etc. The staff had reviewed the example and had a number of comments and some major concerns, in particular with respect to potential conflicts with current requirements of IAS 38. The parties preparing the example (who are independent of the IASB) have yet to respond to the staff. However, from experience they have been very accommodating to staff concerns. The comprehensive example will be available on the IASB Website as soon as the staff is satisfied with its contents. The IFRIC will not review it. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.