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31 December 2005: DTT Worldwide Member Firms 2005 Review

Deloitte Touche Tohmatsu (DTT) has released its 2005 worldwide member firm review, which reports aggregate member firm financial results for fiscal 2005 and also articulates a new strategic direction for DTT member firms. The new strategic direction is intended to elevate all of its member firms' businesses to be the standard of excellence, thus strengthening their market differentiation. For fiscal 2005 DTT member firms had aggregate revenues of US$18.2 billion, a 10.9% increase over the US$16.4 billion reported last year. This marks the third consecutive year of double-digit growth from continuing operations. Fiscal 2005 also marked the 12th consecutive year that Deloitte member firms have posted aggregate revenue increases. Click for: DTT Worldwide Member Firms 2005 Review (PDF 3,312k) Press Release: Key Highlights and a Summary of Fiscal 2005 (PDF 170k)

30 December 2005: Public Sector Accounting Standards Board update
We have posted the December 2005 issue of IPSASB Update. The newsletter reports the decisions made at the November-December 2005 meeting of the International Public Sector Accounting Standards Board (IPSASB). The IPSASB replaced IFAC's Public Sector Committee (PSC) in November 2004. It develops standards for accounting and financial reporting by national, regional, and local governments and related governmental agencies. Those standards are generally based on IFRSs, and profit-oriented government business enterprises are required to comply directly with IFRSs. The IPSASB's current work programme includes an ongoing project on 'Convergence with International Financial Reporting Standards (IFRSs) issued by the IASB'. One IPSASB convergence issue relates to IFRIC's project on accounting for Service Concessions (public-private partnerships). Because IFRIC's draft Interpretations do not address accounting by grantors of service concessions, the IPSASB will work with national standard setters to explore the potential for coordinating national and international guidance on accounting by public sector entities involved in service concession arrangements. Click:

• Download IPSASB Update December 2005 (PDF 146k)
• More Information about the IPSASB, including links for downloading all earlier editions of the Public Sector Update newsletter.

29 December 2005: Survey of pension plan accounting assumptions
Watson Wyatt Worldwide has published 2005 Global Survey of Accounting Assumptions for Defined Benefit Plans. The report contains 2004 pension assumption data for 356 companies in 25 countries. 82% of the survey participants report under FAS 87 Employers' Accounting for Pensions; 11% under IAS 19 Employee Benefits; 6% under FRS 17 Retirement Benefits (UK and Ireland); and the remaining 1% percent under other national standards. The US retirement plan data on FAS 87 assumptions is derived from information reported in corporate annual reports. The non-US information was collected using a survey form. The report includes tables showing by country, among other things:

• Background economic data - Bond yields and CPI+.
• Discount rates are used to calculate the present value of pension obligations and the service and interest cost portion of pension expense.
• Expected rates of return on assets.
• Salary increase assumptions.
• Spread between the average discount rate and salary increase by country.
• Estimated social security increase, in those countries where the plan formula takes into account social security.
• Estimated pension increases, in those countries where either pensions are required to increase or there is a substantive commitment to provide increases.
• Whether pension assets are measured at 'market value' or 'market-related value' (the latter reflecting a smoothing of the value of assets over a period up to five years).
• Average asset allocation.
• Funded status based on projected benefits and also accumulated benefits.

28 December 2005: Search begins for new IAASB chairperson
The International Federation of Accountants has begun a search for a new full-time chairperson of the International Auditing and Assurance Standards Board effective 1 January 2007. The current chairman, John Kellas, has decided not to seek reappointment when his term ends on 31 December 2006. Click for IFAC Announcement (PDF 82k). Nominations are sought by 15 February 2006.

26 December 2005: Upcoming IASB working group meetings
The following meetings are scheduled for January:

• 9-10 January 2006 Financial Instruments Working Group
• 12-13 January 2006 Insurance Working Group
• 30-31 January 2006 Working Group on Small and Medium-sized Entities

26 December 2005: Heads Up newsletter on SEC issues
In our news story of 14 December 2005 we posted a special edition of Deloitte's Heads Up newsletter summarising the accounting highlights of the SEC and PCAOB Conference sponsored by the American Institute of CPAs, held 5-7 December 2005 in Washington. That Issue of Heads Up (PDF 365k, 37 pages, 13 December 2005) focused on speeches dealing with financial accounting and reporting in accordance with US GAAP. Deloitte & Touche (USA) have published a second Heads Up with additional highlights of the AICPA Conference. This Follow-Up Issue of Heads Up (PDF 219k, 20 pages, 23 December 2005) focuses on the speeches and other comments at the Conference that dealt with (1) securities offering reform, (2) current and proposed SEC filing rules and regulations, (3) XBRL, (4) current and proposed PCAOB initiatives, and (5) two specific accounting matters – block discounts and warrants to nonemployees.

24 December 2005: IAS 39 amendment fully adopted in Europe
The European Commission has published the amendment of IAS 39 for Cash Flow Hedge Accounting of Forecast Intragroup Transactions in the Official Journal of the European Union, making it fully endorsed for use in Europe. Click for Excerpt from Official Journal (PDF 44k).

24 December 2005: Agenda project pages updated
We have updated the following agenda project pages to reflect the discussions and decisions at the December 2005 meeting of the International Accounting Standards Board:

• Accounting Standards for Small and Medium-sized Entities
• Conceptual Framework
• Fair Value Measurement
• Financial Instruments Puttable at Fair Value
• Insurance Contracts
• Joint Ventures
• Short-term Convergence – Income Taxes

23 December 2005: Wording for stating compliance with IFRSs in EU

The European Commission has adopted the following wording for use in the notes to the accounts and in the audit reports of companies subject to the EU Regulation 1606/2002/EC (the 'IAS regulation'):

• "in accordance with International Financial Reporting Standards as adopted by the EU" or
• "in accordance with IFRSs as adopted by the EU".

23 December 2005: China moves toward adoption of ISAs
The Chinese Auditing Standards Board (CASB) and the International Auditing and Assurance Standards Board (IAASB) have released a joint statement in which the CASB states its intention to converge Chinese auditing standards with the IAASB's International Standards on Auditing (ISAs). To date the CASB has adopted 26 Chinese auditing standards. Seventeen exposure drafts are currently outstanding, and five more will be issued soon. The CASB has made amendments to some of the ISAs and also has issued Chinese standards to deal with matters not covered in the ISAs. In the joint statement, the Ministry of Finance states its intention to "eliminate, over time, as the environment in China changes, those differences between Chinese auditing standards and the ISAs that still exist". Click to Download the Joint Statement (PDF 987k).

23 December 2005: EC to study IFRSs and profit distribution
The European Commission's Internal Market Directorate has invited public comment on future priorities for the Action Plan on the Modernisation of Company Law and Corporate Governance. Comment deadline is 31 March 2006. While the issues addressed in the consultation generally do not relate to accounting, the following point is noted regarding a study on the implications of IFRSs on profit distribution:

• Consultation Document (PDF 109k)
• Press Release (PDF 86k)

22 December 2005: Board and Trustee appointments

Sir David Tweedie

Tommaso Padoa-Schioppa

The Trustees of the IASC Foundation, under which the IASB operates, have made the following announcements with respect to appointments of members of the International Accounting Standards Board and Foundation trustees: [Click for the IASCF Press Release (PDF 83k).]

22 December 2005: New European Group of Auditors' Oversight Bodies
The European Commission has formed a European Group of Auditors' Oversight Bodies (EGAOB). The goal of EGAOB is to ensure effective coordination of new public oversight systems of statutory auditors and audit firms that each EU Member State is required to establish under the October 2005 amendments to the 8th Company Law Directive. The new Group may also provide technical input to the preparation of possible measures of the Commission implementing the Directive, such as endorsement of the International Standards on Auditing or assessment of third countries' public oversight systems. Click for:

• EC Press Release on EGAOB (PDF 81k).
• Earlier Press Release on Amended 8th Directive (PDF 22k).

22 December 2005: IFRIC staff summary of service concessions project
At the November 2005 IFRIC meeting, IFRIC members directed staff to prepare a summary of decisions made to date on the service concessions project. The project summary has now been Posted on the IASB's Website. The summary outlines the project objective and background, the IFRIC's deliberations leading to the publication of Draft Interpretations 12, 13, and 14, and the IFRIC's post-exposure deliberations on the draft Interpretations.

22 December 2005: Special IAS Plus newsletter on IFRIC 7
In November 2005, the International Financial Reporting Interpretations Committee issued Interpretation 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies. IFRIC 7 contains guidance on how an entity would restate its financial statements pursuant to IAS 29 in the first year it identifies the existence of hyperinflation in the economy of its functional currency. The Interpretation is effective for annual periods beginning on or after 1 March 2006. Earlier application is encouraged. Deloitte has published a Special Edition of Our IAS Plus Newsletter (PDF 51k) explaining IFRIC 7. You will find links to all past IAS Plus newsletters Here.

21 December 2005: Special IAS Plus newsletter on financial guarantees
In August 2005, the IASB amended the scope of IAS 39 Financial Instruments: Recognition and Measurement to include financial guarantee contracts issued by the entity. If an issuer of financial guarantee contracts has previously asserted explicitly that it regards such contracts as insurance contracts and has used accounting applicable to insurance contracts, the issuer may elect to apply either IAS 39 or IFRS 4 Insurance Contracts to such financial guarantee contracts. Deloitte has published a Special Edition of Our IAS Plus Newsletter (PDF 48k) explaining the IASB's amendments to IAS 39 and IFRS 4. You will find links to all past IAS Plus newsletters Here.

20 December 2005: Key considerations in preparing 2005 IFRS reports
Deloitte has published a new IAS Plus guide: IFRS Financial Statements 2005: Key Considerations for Preparers. The objective of this 56-page guide is to provide assistance with the process of drafting those financial statements. It is not a disclosure checklist, nor a comprehensive illustration of a set of financial statements. Those tools are already available on the IAS Plus website and from Deloitte offices globally. Rather, this publication draws on our experience of the presentation and disclosure requirements of the new and revised Standards and, in particular, of the understanding that we have gained by closely monitoring the drafting process. It deals with issues that we have faced, and overcome - in the hope that we can help readers to avoid those pitfalls.

18 December 2005: SEC and CESR chairmen meet
US Securities and Exchange Commission Chairman Christopher Cox met with Chairman Arthur Docters van Leeuwen of the Committee of European Securities Regulators (CESR) to discuss International Financial Reporting Standards and other potential agenda items for collaborative efforts in 2006. The chairmen expressed their support for continued close interaction to maintain and promote investor protection and market integrity in the transatlantic capital markets. Chairman Cox also informed Chairman Docters van Leeuwen of the SEC's Rule Proposal on Deregistration Requirements for Foreign Issuers (PDF 56k), which the Commission earlier in the day had voted to publish for public comment. The SEC Press Release on the meeting between the two chairmen states (PDF 33k):

17 December 2005: Final day of December 2005 IASB meeting
The IASB held its monthly Board meeting on Tuesday to Friday, 13-16 December 2005. We have combined the preliminary and unofficial notes taken by Deloitte observers on a Separate Page.

17 December 2005: Updated EFRAG endorsement status report
The European Financial Reporting Advisory Group has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. Click to download the Endorsement Status as of 14 December 2005 (PDF 26k).

16 December 2005: Third day of December 2005 IASB meeting
The IASB held its monthly Board meeting on Tuesday to Friday, 13-16 December 2005. We have combined the preliminary and unofficial notes taken by Deloitte observers on a Separate Page.

15 December 2005: Second day of December 2005 IASB meeting
The IASB held its monthly Board meeting on Tuesday to Friday, 13-16 December 2005. We have combined the preliminary and unofficial notes taken by Deloitte observers on a Separate Page.

15 December 2005: IASB amends standard on foreign exchange
The IASB has issued a limited amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates. The amendment responds to concerns expressed by the IASB's constituents earlier this year that IAS 21 as amended in December 2003 required different accounting depending on the currency in which a monetary item was denominated where such an item was regarded as part of an entity's investment in a foreign operation. Secondly, IAS 21 was not clear on whether any member of a consolidated group could enter into the monetary transaction with the foreign operation. In response to those concerns, the IASB reviewed IAS 21 and reached the following decisions, which are reflected in the amendment:

• As regards a monetary item that forms part of an entity's investment in a foreign operation, the IASB concluded that the accounting treatment in consolidated financial statements should not be dependent on the currency of the monetary item.
• Also, the accounting should not depend on which entity within the group conducts a transaction with the foreign operation.

14 December 2005: Google search added to IAS Plus Germany
Deloitte & Touche GmbH (Germany) maintains the German language version of the IAS Plus Website: www.iasplus.de. Google search capability has now been added to that site. Click to go directly to the Search Page on IAS Plus Germany.

14 December 2005: First day of December 2005 IASB meeting
The IASB held its monthly Board meeting on Tuesday to Friday, 13-16 December 2005. We have combined the preliminary and unofficial notes taken by Deloitte observers on a Separate Page.

14 December 2005: Issues not added to IFRIC agenda
At its meeting on 1 December 2005, the IFRIC reached tentative decisions not to place five issues on its agenda:

• Whether a new entity that pays cash can be identified as the acquirer
• 'Transitory' common control
• Leases of land that do not transfer title to the lessee
• IAS 12 Income Taxes - scope
• Subscriber acquisition costs in the telecommunications industry

14 December 2005: Checkliste zu Ausweis- und Angabevorschriften 2005
Deloitte (Germany) has published a German-language translation of the 2005 IFRS presentation and disclosure checklist. Click to download Checkliste zu Ausweis- und Angabevorschriften (Presentation and Disclosure Checklist) 2005 (PDF 1,455k, 185 pages). This publication complements the previously issued German language model IFRS financial statements for 2005, which can be found on our Model Financial Statements Page.

14 December 2005: Nearly 500,000 e-learning downloads from IASPlus
As of 12 December 2005, 486,484 Deloitte IFRS e-learning modules have 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, hundreds 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-five modules are now available.

14 December 2005: Heads Up newsletter on AICPA SEC conference
Deloitte & Touche LLP (United States) has published a special edition of its Heads Up newsletter summarising the accounting highlights of the SEC and PCAOB Conference sponsored by the American Institute of CPAs that was held 5-7 December 2005 in Washington. The conference featured speeches by, and question and answer sessions with, members of the SEC, the Public Company Accounting Oversight Board, and other standard-setters. The December 2005 Issue of Heads Up (PDF 365k, 37 pages) focuses on speeches and other remarks that deal with financial accounting and reporting in accordance with US generally accepted accounting principles.

13 December 2005: Combatting complexity in accounting
Although he touched only briefly on accounting matters, SEC Chairman Christopher Cox made the following observation in his remarks before the New York Economic Club yesterday: "At the recent AICPA convention, both FASB Chairman Bob Herz and I announced our combined efforts to combat complexity in accounting. This will be an across-the-board effort that will benefit issuers and investors alike." Click for Chairman Cox's Presentation (PDF 67k).

13 December 2005: EFRAG proposes to support IFRIC 7
The European Financial Reporting Advisory Group has invited comments on its draft letter to the European Commission proposing to recommend that IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies be adopted for use in Europe. EFRAG seeks comments on its proposal by 9 January 2006. You can download the draft letter from EFRAG's Website.

13 December 2005: IFAC guide to strengthening accountancy bodies
The Developing Nations Committee of the International Federation of Accountants (IFAC) has released a guide entitled Establishing and Developing a Professional Accountancy Body to assist governments and others seeking to build accountancy capacity in various countries, and to help strengthen IFAC's current and future member organisations. The guide is essentially a toolkit with Internet hyperlinks to access additional information. The guide addresses the following areas:

• Establishing a professional body;
• Roles and responsibilities of a professional accountancy body;
• Education and examinations; and
• Capacity development.

12 December 2005: EU intepretive body not needed
Charlie McCreevy, the European Commissioner for Internal Market and Services, spoke last week on Recent Developments in the Internal Market for Financial Services and Financial Reporting before the Association of Corporate Treasurers in Belgium. Here are two excerpts from his comments on financial reporting:

11 December 2005: SEC 'Current Accounting and Disclosure Issues'
The Division of Corporation Finance of the US Securities and Exchange Commission has published its latest list of Current Accounting and Disclosure Issues (PDF 250k) as of 1 December 2005. This first section of the list is a review of recent and proposed rules and interpretations from the Commission. The second section is staff guidance and comments on current accounting and disclosure matters based on the Division's reviews of the filings of the 15,000 SEC registrants. The list is divided into the following sections:

9 December 2005: Model IFRS financial statements for UK
Deloitte & Touche LLP (United Kingdom) have developed iGAAP 2006 Financial Statements for UK Listed Groups, which has been published by CCH. The major part of this publication comprises model financial statements, accompanied by detailed commentary, to illustrate the typical disclosures required of a listed group reporting under International Financial Reporting Standards. A 'facing page' format is used so that the model disclosures can be viewed simultaneously with the relevant Deloitte commentary on the disclosure requirements. iGAAP 2006 Financial Statements for UK Listed Groups can be purchased through CCH Online or by phone at +44 (0) 870 777 2906 or by email: customerservices@cch.co.uk.

8 December 2005: China requires internal control reports by listed companies
The China Securities Regulatory Commission – China's securities regulator – is requiring that a company listed on a Chinese stock exchange must (a) perform a self-assessment of its internal controls and (b) engage an external auditor to evaluate its internal controls and comment on its self-assessment report. This requirement, which is effective for 2005 calendar year-end audits, is similar to that in Section 404 of the US Sarbanes-Oxley Act. Here is the new Chinese Regulation (PDF 169k, Chinese only).

8 December 2005: FASB Chairman Herz speaks on complexity
We have posted the Remarks of FASB Chairman Robert H. Herz (PDF 46k) on complexity in the financial reporting system, presented at the AICPA 2005 National Conference on Current SEC and PCAOB Developments in Washington on 6 December 2005. In our news story of 6 December 2005, we had posted the remarks of eleven US SEC representatives, including Chairman Christopher Cox. An excerpt from Mr. Herz's comments:

7 December 2005: Issues not added to IFRIC agenda - new web page
The IFRIC Agenda Committee considers potential projects for the IFRIC agenda and makes recommendations to the IFRIC. IFRIC's normal procedure is:

• Agenda Committee makes recommendation that an item not be added to the IFRIC's agenda, and recommends the wording for IFRIC's public explanation.
• IFRIC discusses the Agenda Committee recommendation and, if it agrees, it publishes the proposed explanation in the IFRIC Update newsletter. The newsletter indicates that if constituents disagree, they should email the IFRIC.
• At a subsequent meeting, the IFRIC decides not to add the item to its agenda and agrees on the final wording for its explanation. IFRIC's final decision and explanation are published in IFRIC Update.

7 December 2005: US-EU agreement on international cooperation
In March 2002, the United States (represented by the SEC, the Federal Reserve Board, and the Treasury Department) and the European Union (represented by the European Commission) launched a Financial Markets Regulatory Dialogue with the goal of ongoing mutual cooperation and regulatory convergence in the areas of corporate governance and further integration of the Transatlantic securities markets. The latest in a series of regular meetings at the presidential, ministerial, and staff levels was held on 2 December 2005. The Joint Statement Issued After the December 2005 Meeting (PDF 17k) includes a number of 'immediate topics of discussion' relating to international financial reporting standards and the IASB, including these:

• Speech of Commissioner McCreevy (PDF 92k) on the integration of Europe's financial markets and international cooperation (2005).
• Report of the Participants of the 2004 US-EU Financial Markets Regulatory Dialogue (PDF 19k).
• Testimony of Alexander Schaub (PDF 115k) Director–General of the EC Internal Market Directorate, before the US House Committee on Financial Services (2004).
• Speech by Ambassador Burghardt (PDF 28k) on Creating a Transatlantic Securities Market: EU/US Regulatory Convergence (2002).

7 December 2005: November 2005 Accounting Roundup posted
We have posted the November Edition of Accounting Roundup (PDF 244k) published by Deloitte & Touche LLP (USA). Topics covered in this issue include: 

6 December 2005: Speeches at AICPA SEC conference
The American Institute of CPAs is holding its 2005 National Conference on Current SEC and PCAOB Developments in Washington on 5-7 December 2005, simulcast in three other cities. Eleven US SEC representatives, including Chairman Christopher Cox, spoke at the first day of the conference, which is quite popular among SEC registrants and their auditors because the SEC representatives provide insights on important issues for calendar year-end reporting. Here is a list of the broad areas addressed by various SEC speakers, with links to their presentations:

6 December 2005: New UK actuarial standards board under FRC
The Financial Reporting Council, under which the United Kingdom Accounting Standards Board operates, has established a new regime to set actuarial standards and oversee the regulation of the actuarial profession. The UK government is supporting this effort. The FRC has created a Board for Actuarial Standards (BAS) whose mission is to set high quality actuarial standards independently of the actuarial profession or other interests. The FRC is also extending the remit of the Professional Oversight Board for Accountancy to oversee the regulation of the actuarial profession; and is extending the remit of the Accountancy Investigation and Discipline Board to cover public interest cases involving actuaries. The FRC has appointed Paul Seymour as Chair of the BAS. Click for Press Release. The FRC has added to its website a New Section on Regulation of the Actuarial Profession.

6 December 2005: Call for more EU involvement in IFRS process
Pervenche Beres, Chairwoman of the committee on economics and monetary affairs in the European Parliament, spoke about The Need for Better Involvement of the European Union in the IFRS Process at the FEE Seminar on IFRS Convergence and Consistency held in Brussels on 1 December 2005. An excerpt:

5 December 2005: Deloitte's Global Economic Outlook 2006

Global Economic Outlook 2006 is a new study from Deloitte Research that examines the various risks to the global economy and offers a point of view as to their future direction. It suggests possible scenarios about the future direction of interest rates, exchange rates, and commodity prices, all with the aim of offering some useful planning premises for global companies that are exposed to global risks. This report also looks at each of the world's major economies and the issues they face. Of special interest are today's most discussed economies – China and India and the question as to the staying power of their extraordinary growth. Click to download: Global Economic Outlook 2006 (PDF 705k) Press Release (PDF 25k)

5 December 2005: Three IASB working groups will meet in January
The following meetings of IASB working groups are scheduled for January 2006:

• 9-10 January 2006 – Working Group on Financial Instruments, London
• 12-13 January 2006 – Working Group on Insurance, London
• 30-31 January 2006 – Working Group on Small and Medium-sized Entities, London

3 December 2005: IFAC begins part 2 of compliance programme
In July 2003, IFAC began a Member Body Compliance Programme to monitor and assess compliance with IFAC's membership obligations by IFAC's 163 member bodies. The programme is being conducted in two parts.

• Part 1 – information gathering. A questionnaire was distributed in March 2004 to identify the regulatory requirements and standard-setting processes in member body countries with respect to standards for auditing, accounting, ethics, public sector, and education. To date, responses to Part 1 from 78 member bodies have been posted on IFAC's Website.
• Part 2 – member body self assessment. The goal of this step is to provide information on compliance by member bodies with IFAC's Statements of Membership Obligations. Part 2 was launched in December 2005. Each IFAC member and associate has been sent a package of materials including an instruction guide to Part 2 and confidential access to their self-assessment questionnaire. You can view the questionnaire at IFAC's Website.

3 December 2005: The reconciliation and convergence
Ethiopis Tafara, Director, Office of International Affairs of the US Securities and Exchange Commission, discussed the SEC's 'roadmap' of milestones toward elimination of the US GAAP reconciliation requirement for IFRS filers in remarks at FEE's IFRS seminar in Brussels on 1 December 2005. An excerpt:

2 December 2005: EC financial reporting strategy
Charlie McCreevy, the European Commissioner for Internal Market and Services, spoke about the EC Strategy on Financial Reporting: Progress on Convergence and Consistency at the European Federation of Accountants' (FEE) Seminar on International Financial Reporting Standards in Brussels on 1 December 2005. Here is an excerpt:

2 December 2005: Updated EFRAG endorsement status report
The European Financial Reporting Advisory Group has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. Click to download the Endorsement Status as of 30 November 2005 (PDF 23k).

2 December 2005: Report from the December 2005 IFRIC meeting
The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Wednesday, 1 December 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting.

1 December, London D16 Scope of IFRS 2 – Proposals for final Interpretation At the previous meeting the staff presented a comment analysis of the responses to D16, and the IFRIC decided that the draft should be revised to clarify certain issues. At this meeting, the staff presented the revised draft, including revisions for the following areas: The scope of the draft Interpretation must be consistent with the scope of IFRS 2, and the types of 'non-reciprocal' arrangements that fall within/outside of the scope of the Interpretation. The draft Interpretation is a clarification of the scope of IFRS 2. The rebuttable presumption in paragraph 13 of IFRS 2 does not apply to unidentifiable goods or services received. Entities would not need to compare the fair value of the equity instrument granted with the fair value of identifiable goods or services received for all non-employee goods or services received. The measurement date for the unidentifiable goods or services received shall be the grant date of the equity instrument. The measurement date for the identifiable consideration will be in accordance with IFRS 2. IFRIC agreed to include as an example, an illustration of how share-based payment transactions involving close family relationships would be dealt with under the draft Interpretation depending on whether goods or services had been provided to the entity. The words "appears to be less than fair value" were viewed by some as problematic for practical reasons, and the IFRIC agreed to explain the use of those words in the basis for conclusions. After discussing the above and some drafting issues, none of the IFRIC members indicated an intention to dissent to issuance of the Interpretation. Interim Reporting and Impairment of Goodwill and of Investments in Equity Instruments At the previous meeting, the IFRIC tended to the view that the specific guidance with regard to reversals of previously recognised impairment losses of goodwill in IAS 36 and investments in equity instruments in IAS 39 should take precedence over the more general guidance in IAS 34 and decided to proceed with a draft Interpretation. The staff introduced a draft Interpretation stating an intention to issue it for comment before the end of the year, and to set a 60-day comment period. The Chairman confirmed that the IASB had been asked about the direction the IFRIC is taking on this project. He indicated that there had been no objections from IASB members. IFRIC debated whether the draft basis for conclusions should be expanded to discuss, comprehensively, the requirements of IAS 34. The IFRIC was split on this issue, with some favouring a brief basis for conclusions focussing only on the narrow issue dealt with by the draft Interpretation, while others believed it necessary to consider the IAS 34 requirements in more detail in arriving at a conclusion. It was not clear how the IFRIC decided to proceed on this issue. IFRIC decided to issue a draft Interpretation, with two IFRIC members dissenting. The staff were instructed to finalise the draft and present it to the Board for negative clearance. Recommendations by the Agenda Committee regarding requests for IFRIC agenda items The IFRIC decided not to take onto its agenda the following issues. It approved (subject to editorial amendments) rejection wording to be published in the IFRIC Update: Classification of leases of land that do not transfer title. Common control transactions. Scope of IAS 12 Income Taxes. Subscriber acquisition costs in the telecommunications industry. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

2 December 2005: Transition to IFRSs in the retailing sector

We have posted On Your Marks–Get Set?, a booklet prepared by Deloitte & Touche LLP (United Kingdom) that identifies issues likely to arise as entities in the retailing sector make the transition to International Financial Reporting Standards. Specific issues examined include segment reporting (IAS 14); revenue recognition (IAS 18); inventories (IAS 2); impairment of assets (IAS 36); property, plant, and equipment (IAS 16); and goodwill and intangible assets (IFRS 3 and IAS 38). The booklet also summarises the results of a 2004 Deloitte benchmarking study of retailing groups to identify just how ready the retailing sector was to make the transition to IFRSs. Click to download: On Your Marks–Get Set? 2005 (PDF 312k) Benchmarking Study 2004 English (PDF 260k) Benchmarking Study 2004 French (PDF 214k)

1 December 2005: Report from the ARC 30 November 2005 meeting

The Accounting Regulatory Committee of the European Commission met on 30 November 2005 in Brussels. Key agenda items:

1 December 2005: Near-final draft of revised IFRS 4 disclosure guidance
The IASB has posted to the subscriber area of its Website a near-final draft of Revised Guidance on Implementing IFRS 4 Insurance Contracts. The revised guidance relates to the disclosure sections of IFRS 4. Those disclosures are intended to help the users of an insurer's financial statements evaluate the nature and extent of risks arising from insurance contracts.

1 December 2005: EC begins study of limitation of auditor liability
The European Commission has formed a European Forum on Auditors' Liability to gather market players' views on limiting financial burdens for auditors. Members include Hendrik Descheemaeker, President of the Deloitte Board in Belgium. Early in 2006 the Commission will launch a study on the economic impact of alternative liability regimes, competition in the market, and availability of insurance. The forum will provide data for this study and will give feedback on proposals. The results of the study will be available in autumn 2006. The Forum is expected to complete its work by 31 December 2006. Click for:

• Press Release(PDF 58k)
• List of Forum Members (PDF 78k)

1 December 2005: PCAOB report on audits of internal controls
The US Public Company Accounting Oversight Board (PCAOB) has published a report summarising issues identified in implementing Auditing Standard No. 2 An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements (AS2). The PCAOB's monitoring revealed that some audits "were not as effective or efficient as Auditing Standard No. 2 intends and as the Board expects they can be in the future, given the benefits of experience, adequate time and resources." The report cites specific examples of inefficiency and ineffectiveness. It also explains and clarifies certain aspects of AS2 and amplifies certain guidance it has previously issued. Click for:

• PCAOB Press Release (PDF 58k)
• PCAOB Report (PDF 277k)

1 December 2005: SEC proposes proxy delivery via the internet
The US Securities and Exchange Commission has proposed for public comment rules that would allow companies to use the Internet to satisfy proxy material delivery requirements. Click for Press Release (PDF 39k).

1 December 2005: Australian bank regulator makes IFRS proposals
The Australian Prudential Regulation Authority (APRA) has issued a consultation package outlining its proposed prudential response to the adoption of IFRSs in Australia by deposit-taking institutions and general insurers. APRA's approach addresses a range of issues including fair value measurement, excess of market value over net assets (EMVONA) employer sponsored defined benefit superannuation fund surpluses and deficits, and loan loss provisioning. APRA's Chairman, Dr John Laker, said:

• Download the APRA Media Release (PDF 15k)
• Draft Prudential Standards and Guidance Notes for Deposit-taking Institutions (Link to APRA Website)
• Draft IFRS Reporting Forms for Deposit-taking Institutions (Link to APRA Website)
• Draft IFRS Reporting Forms for Registered Financial Corporations (Link to APRA Website)

1 December 2005: Study on impact of expensing stock options
Standard & Poor's has published a report of the impact of expensing stock options on the S&P 500 companies. FAS 123(R) requires expensing of stock options (mandatory for most SEC registrants in 2006). IFRS 2 is nearly identical to FAS 123(R). S&P found: