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28 February 2005: IFRS 5 e-learning module is now available

Our IFRS e-learning module for IFRS 5 Non-current Assets Held for Sale and Discontinued Operations is now available. Click on the light bulb icon on our home page to access. This brings the total available modules to 33. Modules for IAS 32/39 Parts 2 and 3 are planned for late March 2005.

28 February 2005: Are IFRSs in Canada's future? New developments
In our News Story of 9 September 2004 titled Are IFRSs in Canada's future?, we reported on an invitation to comment that was issued by the Accounting Standards Board of Canada (AcSB) as part of the AcSB's development of a five-year standard-setting plan. Possible outcomes of that plan, set out in the invitation to comment, are to maintain separate Canadian GAAP or to adopt either US GAAP or IFRSs for use in Canada. Canadian companies publicly traded in the United States are already permitted to use US GAAP for Canadian reporting purposes. On 10 February 2005, the AcSB made a presentation to its oversight body, the Accounting Standards Oversight Council, outlining its vision of the future of accounting standards in Canada. Broadly described, AcSB's proposal – which must be considered by the AcSB's constituents and by Canadian regulators – would involve adopting IFRSs in full as Canadian GAAP while allowing those entities that want to do so to use US GAAP. The transition to IFRSs would be made over a five-year period. The AcSB proposals would be set out in a new invitation to comment that is expected to be published by 31 March 2005.

27 February 2005: SOX 404 compliance challenges for foreign private issuers

In the United States, public companies large and small have labored over the requirements of section 404 of the Sarbanes-Oxley Act. Accelerated filers with international operations are now finalising their assessment of internal control over financial reporting. Foreign Private Issuers (FPIs), beginning with year-ends on or after 15 July 2005, are required to include an internal control report from management in their annual report. Although the SEC has delayed the effective date of section 404 several times, Deloitte highly recommends that FPIs do not change the timing or scope of their section 404 work. Deloitte's new publication, Sarbanes-Oxley Section 404: Compliance Challenges for Foreign Private Issuers (PDF 287k), summarises the experiences of FPIs and highlights key challenges that your company may face as part of your section 404 readiness activities.

27 February 2005: Australia to modify IFRS figures for bank regulation
The Australian Prudential Regulation Authority has released the first of two discussion papers setting out its proposed regulatory response to the adoption of International Financial Reporting Standards by APRA-regulated institutions. APRA is the prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, and insurance companies, among others. Australia has adopted national GAAP that starting in 2005 is virtually equivalent to IFRSs. The APRA noted that its objective is to "align its prudential and reporting standards with Australian accounting standards and principles to the extent practicable.... In certain circumstances, however, APRA's prudential framework will depart from accounting standards." Among the areas of departure cited in the discussion paper are:

Fair value measurement Non-accrual loans and deferred acquisition costs Treatment of hedges Available for sale financial assets Property Excess of market value over net assets Loan loss provisioning Defined benefit pension plans

APRA also states that it will wait until after implementation of A-IFRSs to assess other areas, including leases, impairment, business combinations, share-based payment, joint ventures, and provisions. Click to download:

• Discussion Paper Adoption of IFRSs Prudential Approach: I Fair Value and Other Issues (PDF 170k)
• Earlier (November 2004) Overview Paper (PDF 71k)

26 February 2005: IASCF Chairman Volcker's remarks to ARC
IASC Foundation Chairman Paul A. Volcker spoke to the European Commission's Accounting Regulatory Committee about the Trustees' current Review of the Constitution under which the Foundation and the Board operate. Among the points that Mr. Volcker made:

26 February 2005: IFAC seeks two public members for the IAASB
The International Federation of Accountants (IFAC) is seeking two public members for the International Auditing and Assurance Standards Board (IAASB). Individuals and organisations may submit nominations for these public member positions by 15 April 2005. Click for More Information.

25 February 2005: Ya está disponible la nueva Guía Rápida de IFRS

Deloitte (Spain) has published IFRS in your Pocket 2005 in Spanish: Guía Rápida IFRS (PDF 261k, 112 pages). This is the third edition of the Spanish language equivalent of IFRS in your Pocket 2005 (English) (PDF 810k). Esta tercera edición de Guía Rápida IFRS considera los cambios y nueva normativa que se han incorporado a las NIIF durante 2004, constituye una excelente herramienta que le servirá para conocer y comprender las NIIF, facilitar su implantación y saber cómo se están aplicando estas normas de información en todo el mundo.

25 February 2005: SEC implications outside the United States
US SEC Commissioner Cynthia A. Glassman's remarks before the ninth annual conference on The Practical Implications of SEC Regulation Outside the United States (24 February 2005, London) may be of interest to IAS Plus visitors.

25 February 2005: Asia-Pacific jurisdiction pages updated

We have updated the following pages to reflect standard setting activity during the last quarter of 2004:     Australia China Hong Kong New Zealand Malaysia Philippines Singapore Taiwan Thailand

24 February 2005: EFRAG appoints a technical director
With its present Secretary General Paul Rutteman stepping down at the end of March 2005, the European Financial Reporting Advisory Group (EFRAG) has appointed Paul Ebling to the newly created position of full-time Technical Director. At the same time, EFRAG has promoted Reinhard Biebel to the role of Assistant Technical Director. Paul Ebling has been a project director with the UK Accounting Standards Board for seven years, focusing most recently on financial instruments and insurance contracts.

24 February 2005: Paul Volcker will address ARC tomorrow
The agenda for tomorrow's meeting in Brussels of the Accounting Regulatory Committee, which advises the European Commission on endorsement of IFRSs for use in Europe, has changed significantly from the one we reported in our news story of 3 February 2005. The agenda for tomorrow includes 3½ hours on the IASCF constitution review, starting with a one-hour presentation by Paul A. Volcker, Chairman of the IASC Foundation board of trustees, which oversees the IASB. His presentation will be followed by a 2½ hour discussion of ARC's draft letter of response. The previously announced agenda had provided for only 30 minutes on this topic. In addition, ARC will vote on whether to recommend IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments for use in Europe. Also, EFRAG will make a presentation on its non-endorsement of IFRIC 3 (see yesterday's news story). Click to download the Revised Agenda for ARC's 25 February 2005 Meeting (PDF 13k).

24 February 2005: We comment on proposed IASCF Constitution changes
We have posted Deloitte's Letter to the Trustees of the IASC Foundation (PDF 27k) in response to the IASCF's November 2004 Invitation to Comment titled Review of the IASC Foundation Constitution: Proposals for Change. Click here for a Summary of the Proposed Constitution Changes. Here is an excerpt from our response:

23 February 2005: IASB project timetable updated

We have updated our Timetable for Current IASB Agenda Projects to reflect recent changes announced by the IASB in its newsletter or at Board meetings.

23 February 2005: EFRAG proposes not to endorse IFRIC 3
The Technical Expert Group of the European Financial Reporting Advisory Group (EFRAG) has invited comments on its draft letter to the European Commission recommending that the Commission not adopt IFRIC 3 Emission Rights for use in Europe.

23 February 2005: US SEC invites comments on internal control reporting
The US Securities and Exchange Commission has invited written comments from registrants, auditors, investors, and others on their experiences with implementing and evaluating the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. The Commission will also conduct a roundtable discussion on 13 April 2005 at its offices in Washington. Section 404 requires SEC registrants, including foreign companies, to report on management's responsibilities to establish and maintain adequate internal control over the company's financial reporting process, as well as management's assessment of the effectiveness of those internal controls. Auditors are required to report on management's assessment, as well as on the effectiveness of the company's controls. Click for More Information from the SEC website.

22 February 2005: IASB releases draft on fair value option
The IASB has released a preliminary draft of a possible new approach to the fair value option in IAS 39 for discussion at public roundtable meetings that the Board will conduct on Wednesday 16 March 2005 at the Crowne Plaza City Hotel, 19 New Bridge Street, London, 8:30am-4:00pm. The IAS 39 fair value option permits entities to designate, at the time of acquisition or issuance, any financial asset or financial liability to be measured at fair value, with value changes recognised in profit or loss. When the European Commission adopted IAS 39 for use in Europe, they prohibited companies from applying the fair value option to liabilities on grounds that such treatment is inconsistent with the European accounting directives. You can Download the Fair Value Option Draft from the IASB's website.

21 February 2005: Stock options legislation reintroduced in US House
The political battle in Washington over accounting for stock options has been reopened. On 17 February 2005, 23 members of the US House of Representatives introduced legislation that would impose a three-year moratorium on the SEC's enforcement of FASB Statement 123. FAS 123 was revised in December 2004 to require all companies to account for all share-based payments, including stock options, at fair value – similarly to IFRS 2. During the three years, the SEC would be required to study the impact that expensing options may have on the US economy and on 'small entrepreneurial businesses'. The bill would require listed companies that offer stock options to disclose "plain-English descriptions of share value dilution, expanded and more prominent disclosure of stock option-related information, and a summary of stock options granted to the five most highly compensated officers". The bill would not prohibit voluntary expensing of stock options by SEC registrants. The Senate must also pass the same legislation before the bill becomes law. The new proposal, known as HR 913, is similar to a bill (HR 3574) that was approved by the House in July 2004 by a vote of 312 to 111, with 10 nonvoting. The US Senate did not enact an equivalent of HR 3574, so it did not become law. HR 913 has been referred to the House Committee on Financial Services.

21 February 2005: Announcing the launch of IAS Plus in German
We are pleased to announce the launch of www.iasplus.de – our German language IAS Plus website managed by Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft. While not all sections of the site are completed yet, already you will find the latest news, summaries of many of the standards and interpretations, and various Deloitte publications, all in German. And, as a reminder, there's also IASPlus in Spanish.

Auf www.iasplus.de wollen wir Ihnen Informationen und Neuigkeiten aus der Welt der internationalen Rechnungslegung zeitnah und kostenfrei in deutscher Sprache zur Verfügung stellen. Als Ausgangsbasis dienen uns die Dokumente von IAS Plus.com, die von unserem deutschen IFRS Centre of Excellence nach Mandantenrelevanz ausgewählt und ins Deutsche übersetzt werden.

21 February 2005: EFRAG supports IFRICs 4 and 5
The Technical Expert Group of the European Financial Reporting Advisory Group (EFRAG) has sent a letter to the European Commission recommending adoption, for use in Europe, of IFRIC 4 Determining whether an Arrangement Contains a Lease and IFRIC 5 Decommissioning, Restoration and Environmental Rehabilitation Funds. The letters can be downloaded from EFRAG's Website.

21 February 2005: Three new IASC Foundation trustees

The Trustees of the International Accounting Standards Committee Foundation (IASCF), under which the IASB operates, have appointed three new Trustees:

• Oscar Fanjul, Vice Chairman, Omega Capital, and former Chairman Founder and CEO, Repsol, SA, Spain;
• Tsuguoki (Aki) Fujinuma, Chairman and President, Japanese Institute of Certified Public Accountants, Japan ; and
• Antonio Vegezzi, President and Director, Capital International SA, Switzerland.

21 February 2005: SEC guidance on operating leases
Deloitte (USA) has published a special edition of our Heads Up Newsletter (PDF 106k) discussing certain recent clarifications by the SEC staff regarding lessee accounting for operating leases. These clarifications apply to all SEC registrants, domestic and foreign, regardless of industry. The clarifications relate to amortisation of leasehold improvements, rent holidays, and landlord-tenant incentives. Some new disclosures are specified.

19 February 2005: IAS Plus Newsletters 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. January 2005 Asia-Pacific Edition (PDF 212k) January 2005 Global Edition (PDF 167k) You will find all Past Issues Here.

19 February 2005: Project pages updated for February meeting
We have updated the project pages for the following agenda projects to reflect deliberations at the Board's February 2005 meeting:
 

• Accounting Standards for Non-Publicly Accountable Entities (NPAEs) (formerly called Small and Medium-sized Entities or SMEs)
• Amendments to IAS 39: Cash Flow Hedge Accounting of Forecast Intra-group Transactions
• Amendments to IAS 39: The Fair Value Option
• Amendments to IAS 39 and IFRS 4: Financial Guarantees and Credit Insurance
• Business Combinations II – Purchase Method Procedures
• Conceptual Framework
• Convergence of IFRSs and US GAAP – Income Taxes
• ED 7 Financial Instruments: Disclosures
• Insurance Contracts - Phase 2
• Management Commentary (sometimes called Management Discussion and Analysis)

19 February 2005: New convergence project pages
We have created separate project pages for each component of the IFRS-US GAAP convergence project:

• IAS 12 Income Taxes
• IAS 14 Segment Reporting
• IAS 19 Employee Benefits
• IAS 20 Government Grants
• IAS 37 Provisions
• Asset Disposals and Discontinued Operations

18 February 2005: Notes from final day of February 2005 IASB meeting
We have combined all of our notes from the IASB's meeting on 15-17 February 2005 in a single Combined February 2005 Board Meeting Page.

18 February 2005: Webcast updates on IASs 21, 29, 10, 20, 33, and 37

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 tenth webcast was run on Thursday 17 February 2005 and covered: IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 29 Financial Reporting in Hyperinflationary Economies, IAS 10 Events After the Balance Sheet Date, IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, IAS 33 Earnings per Share, and IAS 37 Provisions, Contingent Liabilities and Contingent Assets. To access the recording Click Here. The recording of each session will be available on this website for a period of at least 3 to 4 weeks from the date of the presentation. Links to past sessions may be found on our United Kingdom Page.

17 February 2005: Notes from second day of February 2005 IASB meeting
We have combined all of our notes from the IASB's meeting on 15-17 February 2005 in a single Combined February 2005 Board Meeting Page.

16 February 2005: Notes from first day of February 2005 IASB meeting
We have combined all of our notes from the IASB's meeting on 15-17 February 2005 in a single Combined February 2005 Board Meeting Page.

15 February 2005: EFRAG draft response on constitution review
The EFRAG Supervisory Board has agreed on a Draft Response (PDF 150k) to the proposals for change regarding the IASC Foundation Constitutional Review. Comments are requested by no later than 25 February 2005. An except:

15 February 2005: 2005 edition of IVSC valuation standards

The International Valuation Standards Committee (IVSC) has published International Valuation Standards 2005. In its News Release (PDF 20k) announcing the new publication, the IVSC notes:

15 February 2005: Comment deadline on constitution review

This is a reminder that the deadline for submitting comments on the IASC Foundation Trustees' Consultation Paper – Review of the Constitution: Proposals for Change is Wednesday 23 February 2005.

15 February 2005: New IFAC public sector accounting handbook
The 2005 edition of the International Federation of Accountants' Handbook of International Public Sector Accounting Pronouncements may now be downloaded in PDF format from IFAC's Website. Print copies may also be ordered. The handbook features all International Public Sector Accounting Standards (IPSASs) issued as of 31 December 2004, including two new standards issued in 2004 dealing with cash-basis reports and impairment of non-cash-generating assets. The standards were developed by IFAC's International Public Sector Accounting Standards Board (IPSASB).

15 February 2005: Enhancing the profession's global contribution
At a meeting in London convened by IFAC last week, the chief executives of 30 IFAC member bodies and regional accountancy organisations discussed a global agenda for enhancing the accountancy profession's contributions to economic growth and development. Participants agreed that the international profession should strengthen accountancy in developing nations, address professional responsibility in financial reporting, clarify the role of accountants in corporate governance, provide support and guidance for professional accountants in business, and focus on supporting small and medium enterprises and practices. Specific steps include:

• Supporting more rapid development of narrative reporting to achieve greater transparency and more integrity in corporate reporting.
• Establishing an international forum to address audit quality with investors, regulators, and others.

14 February 2005: New Deloitte guidance on IFRS interim reporting

We have posted a new Deloitte publication The Half-time Results – Reviewing and Revising Corporate Interim Reporting (PDF 345k, 48 pages). This publication consists of three parts: A survey on corporate interim reporting by listed companies to review progress compared to a 2002 Deloitte publication and to assess present UK practice against current and future reporting requirements for interim reports. Model interim financial statements to illustrate the typical content and disclosures expected of a UK listed company that chooses, in its 2005 interim report, to follow IAS 34 Interim Financial Reporting. A checklist for interim reporting covering the requirements of the UKLA Listing Rules, IAS 34, the Transparency Directive, and additional recommendations by the Statement on Interim Reporting by the Accounting Standards Board. While focussed on interim reporting by UK listed companies, this publication should be of use to all IFRS adopters that prepare half-yearly or quarterly reports.

13 February 2005: Deloitte urges improved oil/gas reserves reporting

Deloitte is urging regulators around the world to update reporting requirements for oil and gas reserves by expanding the scope of mandatory disclosures in annual reports and financial statements. The recommendations published in a report by Deloitte's global oil and gas group seek to work with the industry to improve information available to markets and restore investor confidence in reserves reporting. Click for: Full Report (PDF 190k) Press Release (PDF 28k)

12 February 2005: New Global Offerings Services newsletter

We have posted the January 2005 Global Offerings Services (GOS) Newsletter (PDF 167k), which provides US reporting information for non-US based companies. This issue covers recent FASB, SEC, Sarbanes-Oxley, and audit matters. There are also links to over 20 recent Deloitte publications. You will find past issues of the GOS Newsletter Here.

11 February 2005: IFRS compliance, presentation/disclosure checklists

Deloitte Touche Tohmatsu is pleased to make publicly available our IFRS Compliance Questionnaire and IFRS Presentation and Disclosure Checklist, both applicable for financial periods commencing 1 January 2005. These checklists complement our Model IFRS Financial Statements for 2005, which we had previously posted. You will find links to all three of these publications on our IFRS Financial Statements Page.

11 February 2005: EFRAG supports IFRS 6 and two revised IASs
The Technical Expert Group of the European Financial Reporting Advisory Group (EFRAG) has sent letters to the European Commission recommending adoption, for use in Europe, of:

• Amendments to IAS 39–Transition and Initial Recognition of Financial Assets and Financial Liabilities.
• Amendments to IAS 19 Employee Benefits–Actuarial Gains and Losses, Group Plans and Disclosures.
• IFRS 6 Exploration for and Evaluation of Mineral Resources.

11 February 2005: PCAOB to consider IAASB audit report
The Standing Advisory Group of the US Public Company Accounting Oversight Board will meet on 16 February 2005 to consider, among other things, a Report on the Auditor's Reporting Model (PDF 71k). The report raises seven fundamental questions regarding the current reporting model, including one relating to the IAASB's new standard for the form of an auditor's report.

9 February 2005: IOSCO Technical Committee statement on IFRSs
The Technical Committee of the International Organization of Securities Commissions has issued a Statement on the Development and Use of International Financial Reporting Standards in 2005 (PDF 95k). The statement expresses the Committee's strong endorsement of IFRSs for cross-border securities offerings globally and encourages those countries that permit IFRSs but require a reconciliation to national GAAP to reconsider, on an ongoing basis, whether there is a continuing need for the reconciliation. IOSCO represents over 100 of the world's securities regulators. An excerpt from the Committee's statement:

9 February 2005: Possible delay of SOX Section 404 for foreign issuers
The US Securities and Exchange Commission has announced that it will host a roundtable discussion this spring (tentatively in April) regarding registrants' and accounting firms' experiences implementing the new internal control reporting requirements under Section 404 of the Sarbanes-Oxley Act of 2002. At the same time, SEC Chairman William Donaldson indicated that the Commission is considering a delay in applying the internal control reporting requirements to foreign issuers because "many foreign private issuers are facing regulatory and reporting challenges in addition to internal control reporting. For example, European companies are moving to prepare reports using international financial reporting standards (IFRS) for the first time in 2005". He said that an appropriate delay might be desirable if, "by waiting for foreign private issuers to work through conversion to IFRS, it achieves more effective implementation of the internal control reporting requirements". Here is the Link to the SEC Announcement.

9 February 2005: Deloitte letter of comment on IFRIC D10
We have posted the Deloitte Letter of Comment on IFRIC Draft Interpretation D10 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment (PDF 22k). Our view is quite straightforward: "We agree with the consensus reached by IFRIC." Our letter does make some suggestions for clarifications and for editorial changes. You will find all of Deloitte's past letters of comment to IASC (back to 1995) and IASB Here.

8 February 2005: EC formally endorses IFRS 2 for use in Europe
The European Commission has adopted a Regulation endorsing IFRS 2 Share-based Payment for use in Europe. The Regulation takes effect retroactively to 1 January 2005. IFRS 2 requires companies to reflect the cost of all share-based payments, including employee stock options, as an expense. The text was supported almost unanimously by the Member States at the Accounting Regulatory Committee meeting on 20 December and by the European Parliament. A similar rule will go into effect in the United States beginning 15 June. EU Internal Market and Services Commissioner Charlie McCreevy said:

8 February 2005: New Zealand Accounting Alert
We have posted New Zealand Accounting Alert #26 (PDF 190k), which discusses five accounting proposals from the New Zealand Financial Reporting Standards Board (FRSB):

• Exposure draft proposing an interim framework for differential reporting under the NZ IFRS reporting regime.
• Exposure draft proposing an amendment to NZ IAS 36 to cater for non-cash generating assets held by public benefit entities
• Exposure draft of IFRIC 3 on accounting for 'cap and trade' schemes for emission rights
• IFRIC Draft Interpretation D10 on accounting for the liability that arises in relation to new legislation in Europe for waste electrical equipment
• IFRIC Draft Interpretation D11 on applying IFRS 2 to certain changes in employee share purchase plans.

8 February 2005: Agenda for 15-17 February 2005 IASB meeting
The IASB will hold its monthly Board meeting at its offices in London on Tuesday to Thursday, 15-17 February 2005. The Board will not meet on Friday 18 February. The agenda for the meeting, which is open to public observation, is shown below. See our news story of 3 February 2005 below for the SAC agenda 10-11 February.

7 February 2005: IOSCO initiative on cross-border cooperation
The International Organization of Securities Commissions (IOSCO) has launched an initiative to raise the standards of cross-border cooperation among securities regulators. IOSCO's Press Release (PDF 233k) states that the initiative will involve a four-part process:

• 1. Identifying jurisdictions that appear to be unable or unwilling to cooperate, and prioritising follow-up work with the jurisdictions presenting the greatest risks to IOSCO's objectives of investor protection, maintenance of fair and efficient markets, and financial stability.
• 2. Entering into a dialogue (initially confidential) with priority jurisdictions to develop a mutual understanding of their ability and willingness to engage in cooperation and to assist them in resolving problems.
• 3. Assessing progress in meeting IOSCO standards for cooperation.
• 4. Considering further actions that will achieve conformity with IOSCO standards.

7 February 2005: New IFRS textbook
Paul Pacter, a director in Deloitte's IFRS Global Office and webmaster of IASPlus, is co-author of a new university textbook Applying International Accounting Standards, published by John Wiley and Sons. The focus of this 1,112-page text is on the analysis, illustration, and application of International Financial Reporting Standards. The textbook has been written for intermediate and advanced financial reporting courses, at both undergraduate and postgraduate level, and aligns with the knowledge expectations of the accounting profession. Paul's co-authors are Keith Alfredson, former chairman of the Australian Accounting Standards Board (AASB); Ruth Picker, AASB deputy chairman and a technical partner of Ernst & Young; and Ken Leo and Jeannie Radford, both of Curtin University of Technology in Australia. You will find more information on the Book's Home Page. For international orders, email custservice@johnwiley.com.au (cite ISBN: 0470804947). [Note: A revised (enhanced) edition of this textbook was published in December 2006. Click for Information.]

7 February 2005: IFAC 2005 handbook is published
The International Federation of Accountants has released its 2005 Handbook of International Auditing, Assurance, and Ethics Pronouncements. The handbook includes all pronouncements issued by the International Auditing and Assurance Standards Board (IAASB) and the Ethics Committee through 31 December 2004. A print version may be purchased, and electronic versions may be downloaded, through the IFAC Website.

6 February 2005: IFRIC project pages updated

We have updated the following project pages for IFRIC projects to reflect decisions at the IFRIC meeting on 3-4 February 2005.

• IAS 11 Construction Contracts – Combining and Segmenting Contracts
• IAS 38: Possible Amendments (new project description)
• IAS 39 Reassessment of Embedded Derivatives
• IFRS 2 Treasury Share Transactions and Group Transactions
• IFRS 2: Scope
• Service Concession Arrangements
• IFRIC D5 Applying IAS 29 Financial Reporting and Hyperinflationary Economies for the First Time

5 February 2005: Next e-learning releases

Deloitte's IFRS e-Learning programme has proved extremely popular, with well over 150,000 modules downloaded to date through IASPlus. Three more modules are scheduled for release in the next several months, as follows: IFRS 5 – February 2005 IAS 32/39 Parts 2 and 3 – Late March 2005.

5 February 2005: Notes from IFRIC Meeting of February 2005
The International Financial Reporting Interpretations Committee met at the IASB's offices in London on Thursday and Friday, 3 and 4 February 2005. Presented below are the Deloitte observers' preliminary and unofficial notes from the second and final day of that meeting:

4 February 2005 D5 - Applying IAS 29 Financial Reporting in Hyperinflationary Economies for the First Time The staff recommended that IFRIC not undertake a project to amend IAS 29 as proposed at the last meeting that this draft interpretation was discussed. This recommendation was based on cost-benefit considerations that the IASB noted whilst developing IFRS 1, compounded by the fact that the changes that some IFRIC members had in mind were of a broad nature and may result in convergence issues that would best be dealt with by the Board. IFRIC agreed with the staff. It was noted that following a recent visit by the Chairman of the IASB, the Mexican standard setters had embarked on a project exploring IAS 29, Some broad issues related to hyperinflationary accounting as well as seeking to extract guidance from other literature currently in existence. A draft paper would be presented to the IASB in April or May for the Board's consideration. This would be in addition to a research project currently being conducted by the Canadian standard setters. The IFRIC agreed to proceed with D5 despite the above as well as to clarify that D5 would apply where an economy had ceased to be hyperinflationary at some point but had deteriorated into a hyperinflationary status again. As a result of this, IFRIC agreed to amend the title of the pronouncement in order that it should not be perceived to apply to first-time application of IAS 29 only, but rather, to the application of the restatement provisions of that standard in general. The IFRIC discussed whether deferred tax assets and liabilities are monetary or non-monetary assets. Some IFRIC members believed that regardless of how the amount is computed, these balances are monetary items when the definitions of deferred taxes and monetary items in IAS 12 and IAS 21 respectively are read together. Others, however, believed these balances are non-monetary. Consequently, the IFRIC decided to amend the draft interpretation to remove the statement that suggests that deferred tax balances are neither monetary nor non-monetary, as these items are mutually exclusive. The treatment of deferred tax balances in the draft interpretation was not amended as a result of this decision. The IFRIC discussed whether 'value' as used in IAS 29.16 refers to 'fair value', a point that had been clarified by a paragraph in the initial draft interpretation, which had subsequently been deleted. There was general support for the notion that value in this context would be any value that reasonably represented a 'current value', not necessarily fair value. The IFRIC discussed the effective date of the draft interpretation and agreed that it should be set for 'periods beginning on or after' a particular date. It was unclear what the actual effective date set would be. IAS 11 Construction Contracts - Combining and Segmenting Contracts The IFRIC, after some discussion, decided to proceed with this project, noting that the interaction between IAS 18 and IAS 11 would be challenging given the on-going IASB project on Revenue Recognition. The IFRIC agreed to incorporate some of the US GAAP guidance in SOP 81-1. It was pointed out that, as a convergence project, the issues to be dealt with were broader than just the interaction between SOP 81-1 and IAS 11 but would also include EITF 00-21. The IFRIC agreed to report to the IASB on these issues at its March meeting before going ahead with the substantive work on this project. Reassessment of Embedded Derivatives The draft conclusion reached so far is that reassessment of host contracts for the existence of embedded derivatives (after initial recognition) is not required under IAS 39. The staff pointed out that FASB staff has confirmed that this conclusion would result in a difference between IFRS and US GAAP as the latter requires reassessment throughout the contract term. The IFRIC agreed with the staff's proposal to proceed with the draft interpretation. Arising from the discussions was a similar issue of principle – whether an investor in a subsidiary is required to reassess the classification of a lease at the time of acquiring the subsidiary as opposed to leaving the classification in the subsidiary which would have been determined at the time of entering into the lease arrangement by that subsidiary. The IFRIC agreed that this issue, although similar in principle to the embedded derivative issue, should be dealt with separately as an interpretation of IFRS 3. The staff was requested to proceed with the work on this project. Agenda Issue The IFRIC was asked to consider, at the recommendation of the Agenda Committee, whether they believed that a project would be worthwhile at this time, to deal with the piece-meal sale of shares by a parent entity in a subsidiary but still retaining control, as this issue is not dealt with under IFRS (the converse of step share purchases in an entity that is already controlled). Some of the points considered by IFRIC include the following: Diverse accounting treatments in various jurisdictions at present. This issue will be dealt with in the Business Combinations Phase II project. An expected significant time lag until finalisation of the Business Combinations Phase II project, which would result in divergent accounting that would most probably be 'grandfathered' under that project and hence resulting in a lack of comparability. Relatively short life of the interpretation given the fact that Business Combinations Phase II would supersede that IFRIC pronouncement. The IFRICs work would be pre-emptive of the Business Combinations Phase II conclusions. The IFRIC agreed to wait and assess the progress made on the Business Combinations Phase II project as regards meeting the timeframes set out in the Board agenda. Reassessment of that progress may lead IFRIC to consider issuing an interpretation. This summary is based on notes taken by observers at the IASB meeting and should not be regarded as an official or final summary. Scroll down for Notes from 3 February 2005.

4 February 2005: Comment deadline on IFRIC D10 is approaching

The deadline for comments on IFRIC Draft Interpretation D10 Liabilities Arising from Participating in a Specific Market–Waste Electrical and Electronic Equipment is next Friday 11 February 2005.

4 February 2005: SEC programme for voluntary XBRL filings
The US Securities and Exchange Commission has established a voluntary programme for eXtensible Business Reporting Language (XBRL) filings. Beginning with the 2004 calendar year-end reporting season, registrants may voluntarily furnish XBRL data in an exhibit to specified EDGAR filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940. Click for:

• SEC Press Release (PDF 29k).
• SEC XBRL Rules (PDF 688k).

4 February 2005: Notes from IFRIC Meeting of February 2005
The International Financial Reporting Interpretations Committee is meeting at the IASB's offices in London on Thursday and Friday, 3 and 4 February 2005. Presented below are the Deloitte observers' preliminary and unofficial notes from the first day of that meeting:

3 February 2005 Administrative matters Gilbert Gelard, IASB member chaired the meeting. The Chairman welcomed Jean-Louis Lebrun, Partner and Chairman of the Supervisory Board, Mazars, France, to his first IFRIC meeting. The new process for rejecting issues from the IFRIC's agenda was brought to the attention of members. This process is that where the agenda committee decides not to take an item onto the agenda, this item will be detailed in a standing agenda item to the full body of IFRIC, who will have one month to consider whether the exclusion of the item from the IFRIC agenda is appropriate. After this time has passed, the IFRIC will make a public communication explaining the issue and the reasons for not taking the item onto the agenda. IFRS 2 Treasury Share Transactions and Group Transactions The IFRIC considered a draft interpretation based on the examples that it had considered at previous meetings. The IFRIC had an extensive discussion on the appropriate accounting treatment in scenarios where a subsidiary provides parent company shares to the employees. The IFRIC concluded that while this transaction would be an equity-settled share-based payment in the group accounts, it may be a cash-settled share-based payment in the subsidiary's entity-only accounts. The IFRIC agreed that the wording in IFRS 2 stating that IFRS 2 applies to transactions where shares are received in other group entities is designed to scope in such arrangements, rather than to dictate that they must be accounted for consistently in individual entity accounts and consolidated accounts. The IFRIC made the following decisions in respect of specific situations: Where the transaction is between the parent company and an employee (that is, the parent company agrees with the employee to give the employee shares), this is an equity-settled arrangement; and Where a subsidiary promises shares to an employee, this may be cash-settled, because the asset being promised is not own equity; however IFRIC members were not clear as to whether an agreement between parent and subsidiary as to the settlement of this arrangement would alter the accounting. The IFRIC agreed to consider a further draft interpretation at its March meeting, and that the interpretation should be worded to cover both transactions within a group, and transactions where a major shareholder grants shares – i.e. to cover both types of transactions scoped into IFRS 2 by paragraph 3 of that standard. Scope of IFRS 2 The IFRIC considered a revised draft interpretation on the scope of IFRS 2. The IFRIC agreed that this interpretation should be redrafted to focus on the basic point that you don't have to be able to identify the goods or services to be within IFRS 2, and to clarify the indicators that a share-based payment might exist. Service Concession Arrangements The IFRIC considered worked examples illustrating the effects of applying the proposed models for accounting for service concession arrangements. The IFRIC considered concerns raised by the Spanish working group on accounting for concessions that the example was too simplified due to the relatively short period of the arrangement (ten years) and the assumption of static toll charges. The Spanish working group had proposed that the arrangement cover 50 years, but only show amounts in five year increments – this proposal was deemed to be unworkable as discounting and other factors would make the source of numbers hard for constituents to use. The reason for the simplified example was to make it publishable in normal IASB format and to illustrate the point as simply as possible. The concern raised was that this short life example failed to show the heavy losses in early years and super profits in later years. The IFRIC agreed to proceed with the examples as currently drafted. However, the IFRIC did agree that for constituents who would want to see the affects on a more realistic fact pattern, it would be more helpful if they all commented on a single fact pattern, rather than all constituents submitting their own fact pattern and commenting on the effects thereon. The latter would make comment letter analysis time consuming as staff and IFRIC members would need to analyse the validity of each fact pattern before considering the comments made. Therefore staff agreed to consider whether an existing example from any one of a number of groups could be analysed for consistency with the interpretations, and published on the IASB website so constituents that desired to do so could comment on that more intricate and realistic fact pattern. The IFRIC agreed to pose a question in the invitation to comment as to whether the timing of recognition of an intangible asset in the intangible asset model can be mandated to be one of the available options (at inception, built up over construction, or exchanged of a receivable for an intangible at completion of construction) or whether all are supportable. The IFRIC also agreed to ask the question as to whether the difference in timing and amount of recognition of repairs and maintenance obligations between the two models is appropriate. The IFRIC agreed to pose a question in the invitation to comment as to whether constituents think it appropriate under the financial asset model that different profit margins be applied to different parts of a non-segmented contract and to note to constituents that this assumption is inherent in the interpretation but is pending further consideration. In addition, the IFRIC agreed to note, in the basis for conclusions, that classification as an intangible asset or as a financial asset is dependent on the nature of the contractual relationship because this is how IAS 39 works. The IFRIC noted that transitional provisions were insufficiently clear to tell people that existing assets on the operator's balance sheets that should not be there in accordance with the interpretation have to be derecognised from the earliest period presented. The IFRIC agreed that the comment period should be as long as possible whilst still allowing an analysis of comments to be brought to the June meeting, thus enabling the IFRIC to give clear indications in public session as to the direction of the project prior to the time when entities would begin preparing their interim reports for the period ended 30 June 2005. Emission Rights - Consideration of possible approaches for revision of IAS 38 The IFRIC noted that EFRAG are unlikely to recommend endorsement of IFRIC 3 in Europe. The IFRIC considered a proposal to amend IAS 38 to create a special category of intangible assets that are like currency units and should be recognised at fair value through profit and loss, thus eliminating the mismatch between the measurement of the liability and the measurement of the asset. The IFRIC agreed that such an amendment should not be held up by waiting for the Board to complete a project on IAS 20, which in any case, staff advised, would not be complete in the near future. The IFRIC noted that staff had recently received proposals from EFRAG detailing a method of accounting for these items as hedging instruments that might resolve the issue. Staff had not had time to analyse these proposals. The IFRIC agreed to consider a draft amendment to IAS 38 at its next meeting to determine whether this is a workable solution. Once the issue of the mismatch has been resolved, IFRIC will later consider issues around the timing of recognition of emission rights, and appropriate amortisation periods (for example what is the appropriate amortisation period if an entity receives an allowance in respect of one year but can carry over left over rights?) This summary is based on notes taken by observers at the IASB meeting and should not be regarded as an official or final summary.

3 February 2005: Agenda for next week's SAC meeting
The IASB will meet with its Standards Advisory Council at the Renaissance London Chancery Court Hotel, 252 High Holborn, London on 10 and 11 February 2005 starting at 10:30am Thursday and 9:30am Friday. The agenda for the meeting, which is open to public observation, is shown below.

10-11 February 2005, London Thursday 10 February 2005 Morning Introduction and Chairman's Update Development of Regional Interest Groups Afternoon Accounting for Small and Medium-sized Entities Conceptual Framework Service Concession Arrangements Friday 11 February 2005 Morning Segment Reporting - Consideration of Convergence Proposals Management Discussion and Analysis (MD&A) Research Group Findings Revision of IAS 37 - Overview of Proposals Afternoon Business Combinations II - Overview of Proposals Open Forum

3 February 2005: EC Commissioner McCreevy speaks about IASB
In a speech before the Economic and Monetary Affairs Committee of the European Parliament in Brussels on 1 February 2005, Charlie McCreevy, the new European Commissioner for Internal Market and Services, spoke about "democratic governance and political accountability of international standard setters". He specifically addressed the International Accounting Standards Board (IASB) and the International Auditing and Assurance Standards Board (IAASB). An excerpt:

3 February 2005: ARC will consider endorsement of IFRIC 2
The Accounting Regulatory Committee, which advises the European Commission on endorsement of IFRSs for use in Europe, will meet in Brussels in 25 February 2005 to consider, among other matters, a formal vote on whether to recommend IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments for use in Europe. Additional agenda items include discussion of IFRIC 3 Emission Rights; date of application of new standards and interpretations; the full fair value option and interest rate margin hedging under IAS 39; the IASCF constitution review; IASs/IFRSs translation arrangements for 2005; and the distribution of profits under a 'fair value regime'. Click to download:

• ARC Agenda (PDF 14k)
• Draft Regulation Adopting IFRIC 2 (PDF 19k)
• English Version of IFRIC 2 (PDF 40k)

2 February 2005: CFA Institute surveys quality of financial reporting
The quality of corporate information disclosed by listed companies in the Asia-Pacific region is improving, according to a survey of portfolio managers, investment analysts, credit analysts, and investment advisors conduct by the CFA Institute. Most respondents rated the overall quality of disclosure as either 'average' (49%) or 'good' (35%). 84% of the respondents thought that the quality of disclosed information in the region had improved either 'a lot' or 'some' during the past three years. 75% felt that regulators should mandate quarterly reporting throughout the region.

The 10 areas of disclosure ranked as most important to the responding analysts are: Off-balance sheet assets or liabilities Unusual, non-recurring charges Forward-looking projections, forecasts Risk factors, sensitivity of assumptions Capitalised vs. expensed costs Accounting principles applied, Including effects of changes Revenue recognition criteria Related party transactions or special purpose entities Contingencies, including litigation Fair values of assets, liabilities

Click to download (posted with permission of CFA Institute): Report (PDF 141k) Press Release (PDF 33k) Summary - Australia (PDF 18k) Summary - China (PDF 18k) Summary - Hong Kong (PDF 18k) Summary - Japan (PDF 17k) Summary - Korea (PDF 17k) Summary - Malaysia (PDF 17k) Summary - Singapore (PDF 18k)

2 February 2005: PCAOB staff Q&A on internal controls
The US Public Company Accounting Oversight Board has published a fourth set of staff questions and answers related to PCAOB Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements. AS 2 applies to audits of foreign, as well as domestic, SEC registrants. The new Q&A #37 addresses release of the auditor's reports on (a) management's assessment of internal control and (b) the financial statements on different dates.

• Q&A 37 (PDF 85k) published 21 January 2005
• Q&A 30-36 (PDF 85k) published 22 November 2004
• Q&A 27-29 (PDF 58k) published 6 October 2004
• Q&A 1-26 (PDF 96k) published 23 June 2004

2 February 2005: EFRAG appoints insurance working group
The European Financial Reporting Advisory Group (EFRAG) has restructured its insurance subcommittee into an insurance accounting working group (IAWG). Objectives of the group are to provide pro-active contribution to the work of the IASB in Phase II of its insurance project and to identify interpretation and implementation issues on insurance-specific matters. Members of the working group are:

• Benoit Jaspar, GENERALI (Chairman)
• Bernard Bolle-Reddat, BNP-Paribas
• Ruurd Van den Berg, AEGON
• Jacques Le Douit, AXA
• Hugh Francis, AVIVA
• Catherine Guttmann, Deloitte (EFRAG TEG)
• Joachim Kolschbach, KPMG
• Nigel Masters, PwC
• Carsten Zielke, WestLB
• Observer organisations: European Commission, CESR, CEIOPS, and CEA
• Associate member organisations: ICISA and ACME

1 February 2005: Convergence of IPSASs and statistical reporting
As part of its program to support convergence of International Public Sector Accounting Standards (IPSASs) and statistical bases of financial reporting, the International Public Sector Accounting Standards Board (IPSASB) has released a research report that identifies differences in the requirements of IPSASs and statistical reporting models. The report, International Public Sector Accounting Standards (IPSASs) and Statistical Bases of Financial Reporting: An Analysis of Differences and Recommendations for Convergence, aims to reduce confusion for users of public sector financial reports caused by the differences between accounting and statistical models of financial reporting. The report may be downloaded from IFAC's Website.

1 February 2005: Special IAS Plus newsletter explains IFRS 6

Deloitte's IFRS Global Office has published a Special Global Edition of our IAS Plus newsletter explaining IFRS 6 Exploration for and Evaluation of Mineral Resources (PDF 54k). IFRS 6: permits entities to continue to use their existing accounting policies for exploration and evaluation assets, provided that such policies result in information that is relevant and reliable; and requires entities to assess any exploration and evaluation assets for impairment when facts and circumstances suggest that the carrying amount of the assets may exceed their recoverable amount. The recognition of impairment in respect of such assets is varied from that in IAS 36 Impairment of Assets but, once an impairment has been identified, it is measured in accordance with IAS 36.

1 February 2005: January 2005 edition of Accounting Roundup
We have posted the 31 January 2005 Edition of Accounting Roundup (PDF 158k). Accounting Roundup is prepared by the National Office Accounting Standards and Communications Group of Deloitte & Touche LLP (USA) to briefly describe key regulatory and professional developments that have recently occurred in the field of accounting and to provide links to locations where additional information can be found on each topic. You will find past issues Here.