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31 October 2005: Analysts' group favours full fair value reporting
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The CFA Centre for Financial Market Integrity – a part of the CFA Institute – has published a new financial reporting model that, they believe, would greatly enhance the ability of financial analysts and investors to evaluate companies in making investment decisions. The Comprehensive Business Reporting Model proposes 12 principles to ensure that financial statements are relevant, clear, accurate, understandable, and comprehensive (see below). Click to Download the Comprehensive Business Reporting Model from the CFA Institute website. Click here for Press Release (PDF 26k).
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CFA Institute Centre for Financial Market Integrity
Comprehensive Business Reporting Model – Principles
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- 1. The company must be viewed from the perspective of a current investor in the company's common equity.
- 2. Fair value information is the only information relevant for financial decision making.
- 3. Recognition and disclosure must be determined by the relevance of the information to investment decision making and not based upon measurement reliability alone.
- 4. All economic transactions and events should be completely and accurately recognized as they occur in the financial statements.
- 5. Investors' wealth assessments must determine the materiality threshold.
- 6. Financial reporting must be neutral.
- 7. All changes in net assets must be recorded in a single financial statement, the Statement of Changes in Net Assets Available to Common Shareowners.
- 8. The Statement of Changes in Net Assets Available to Common Shareowners should include timely recognition of all changes in fair values of assets and liabilities.
- 9. The Cash Flow Statement provides information essential to the analysis of a company and should be prepared using the direct method only.
- 10. Changes affecting each of the financial statements must be reported and explained on a disaggregated basis.
- 11. Individual line items should be reported based upon the nature of the items rather than the function for which they are used.
- 12. Disclosures must provide all the additional information investors require to understand the items recognized in the financial statements, their measurement properties, and risk exposures.
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29 October 2005: Deloitte comments on IAS 19 proposals
On 30 June 2005, the IASB proposed certain amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets and complementary limited amendments to IAS 19 Employee Benefits. We have posted the Deloitte Letter of Comment on Proposed Amendments to IAS 19 (PDF 33k). Yesterday, we posted our comments on the IAS 37 amendments (see story of 28 October 2005). The main points of our IAS 19 comments:
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We question the need for piecemeal changes to IAS 19 Employee Benefits, a Standard that the IASB acknowledges requires significant revision. We acknowledge the existence of the IASB's Short-term Convergence project, however we believe constituents would be better served in this particular instance by having to deal with these amendments as part of a broader proposal addressing IAS 19 as a whole.
We question the relevance of the distinction between voluntary and involuntary termination benefits and disagree with the proposed change in the point of liability recognition. If, at the time that an entity offers benefits, the entity has committed itself (either legally or constructively) and raised a valid expectation on the part of the employee that it will fulfil its responsibility should the employee accept the offer, a liability has been created. The key issue is whether an employee is required to provide future services in return for the termination benefits (whether voluntary or involuntary), in which case those benefits should be recognised as the services are provided. We agree with the immediate recognition of termination benefits where these are not offered to employees in exchange for the employees' future service.
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29 October 2005: EU adopts amendments to IAS 39, IFRS 1, and SIC 12
The European Union has approved Commission Regulation (EC) No 1725/2005 (PDF 55k) amending the accounting regulation to formally adopt, for use in Europe starting 1 January 2005, recent IASB Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Transition and Initial Recognition of Financial Assets and Financial Liabilities, and Amendments to SIC 12 Consolidation - Special purpose entities.
29 October 2005: Agenda project pages updated
We have updated the following agenda project pages to reflect discussions at the joint IASB-FASB meeting on 24-25 October 2005 in Norwalk, CT, USA:
28 October 2005: Comment deadline on DTC 1
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We remind you that the deadline is 31 October 2005 for commenting on Draft Technical Correction (DTC) 1 Proposed Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation.
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28 October 2005: SEC Commissioner comments on reconciliation
In Remarks before the European Parliamentary Financial Services Forum (PDF 76k) on 26 October 2005, US SEC Commissioner Paul S. Atkins addressed the prospects for eliminating the SEC's requirement that IFRS filers provide reconciliations to US GAAP amounts and the prospects for a 'reverse reconciliation requirement' arising from CESR's recommendations for additional disclosures by companies using US GAAP to list in Europe. An excerpt:
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I understand that European companies are concerned about continuing to bear the costs of reconciliation to U.S. GAAP on top of switching to IFRS. But, I am optimistic that Europeans and Americans can work together to eliminate this long-standing requirement in accordance with the 'roadmap' laid out earlier this year, contemplating a 2007-2009 timeframe of mutual recognition. I am confident that the need for reconciliation will disappear as all of us gain experience with IFRS in practice.
We in the U.S. are keenly aware that unnecessary reconciliation only imposes costs on investors on both sides of the Atlantic. For this reason, I am baffled at the suggestion by some that Europeans should begin to require U.S. companies to reconcile their U.S. GAAP financial statements to IFRS. This runs against the direction that we are taking in the United States and undermines our efforts towards mutual recognition. Some may assert that this is a useful bargaining chip to ensure that we Americans will recognize IFRS. But, I believe that it is counter-productive, ignores historical precedent and market practice, and diverts attention and energy from solving the real challenges before us. IFRS will stand or fall on its own merits. Our efforts should be focused on making sure that it succeeds.
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28 October 2005: Deloitte comments on IAS 37 proposals
We have posted the Deloitte Letter of Comment on Proposed Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets (PDF 47k). On 30 June 2005, the IASB proposed to amend IAS 37 (and to retitle it Non-financial Liabilities) and complementary limited amendments to IAS 19 Employee Benefits. The amendments to IAS 37 would change the conceptual approach to recognising non-financial liabilities by requiring recognition of all obligations that meet the definition of a liability in the IASB's Framework, unless they cannot be measured reliably. Uncertainty about the amount or timing of settlement would be reflected in measuring the liability instead of (as is currently required) affecting whether it is recognised. Our response states:
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With the exception of the proposals for restructuring provisions, we do not support the ED, which we see as largely unnecessary. In our view, the majority of the Board's proposals are premature and pre-judge matters that should be discussed in the context of the review of the IASB Framework rather than as an amendment of IAS 37. We think that IAS 37 is operating satisfactorily within the current operating model and environment. In addition, we do not think that the Board's choice of a single measurement attribute is appropriate. As such, we find the majority of the changes proposed in the ED fail to achieve an improvement in financial reporting.
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28 October 2005: Deloitte comments on IFRS 3 proposals
We have posted the Deloitte Letter of Comment on Proposed Amendments to IFRS 3 Business Combinations (PDF 103k). On 30 June 2005, the IASB and the US Financial Accounting Standards Board (FASB) jointly published exposure drafts that would amend their business combinations standards (IFRS 3 and SFAS 141) while retaining the fundamental requirement to account for all business combinations using the purchase method of accounting, by which one party is always identified as acquiring the other. Among our comments are the following:
- We agree that recording 100% of the fair value of all assets acquired and liabilities assumed, including goodwill attributable to the noncontrolling (minority) interest, produces more meaningful and relevant information. However, we do not believe that the costs and operational difficulties associated with recording the fair value of the acquiree as a whole are justified by the benefits of providing the information at this time.
- Additionally, significant portions of the exposure drafts are predicated on projects that have not yet been completed (eg the Conceptual Framework project, the Financial Performance Reporting project, the Fair Value Measurements project, the Liabilities and Equity project, and new basis issues). We do not believe the Exposure Drafts should be finalised until such time as the projects forming the foundation for this standard are completed.
- We believe the IASB should retain IFRS 3 Business Combinations, with limited modifications, and that the FASB should converge with this model. Our letter cites a range of benefits of this approach.
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28 October 2005: Deloitte comments on IAS 27 proposals
We have posted the Deloitte Letter of Comment on Proposed Amendments to IAS 27 Consolidated and Separate Financial Statements (PDF 53k). In conjunction with their 30 June 2005 proposals to amend IFRS 3 and SFAS 141 (see story above), the IASB and the FASB also published exposure drafts proposing that non-controlling interests should be classified as equity within the consolidated financial statements and that the acquisition of non-controlling interests should be accounted for as an equity transaction. The IASB's proposals are presented as amendments to IAS 27. Our response states:
- Our comment letter on the IASB's June 2005 proposed amendments to IFRS 3 does not support the adoption of the proposed amendments. Consequently, we do not support the majority of this Exposure Draft's proposed changes to the accounting and reporting of non-controlling interests.
- The Board's conclusion that transactions between controlling and non-controlling shareholders should be accounted for as equity transactions is premature and should be deferred until completion of the IASB's and FASB's joint Conceptual Framework project. We are not yet convinced that the single economic entity view of consolidated financial statements provides the most relevant information to financial statement users.
- Neither IAS 27 as currently adopted nor as proposed to be amended provides guidance on accounting for changes in a parent's ownership that do not result in loss of control. As a result, preparers of financial statements apply differing accounting treatments as accounting policy elections, reducing comparability. Indeed, in practice, we have seen the application of at least five different methods of accounting for increases in ownership interest after control has been obtained.
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28 October 2005: Notes from second day of IASB-FASB meeting
The IASB and the US Financial Accounting Standards Board held their 7th semi-annual joint meeting in Norwalk, Connecticut, USA on 24-25 October 2005. Three IASB members were unable to be present (Hans-Georg Bruns, Gilbert Gelard, and Tatsumi Yamada). For that reason the IASB avoided taking votes on particular matters, as the absence of three members was considered, in a number of cases, to be likely to have a substantial effect on outcomes. We have combined the preliminary and unofficial notes taken by Deloitte observers at the meeting onto a Separate Page.
27 October 2005: IASB discussion paper on 'management commentary'
 The IASB has published a discussion paper on Management Commentary that assesses the role the IASB could play in improving the quality of the management commentary that accompanies financial statements. (Management commentary is sometimes called 'management discussion and analysis' or 'operating and financial review'.) The discussion paper was prepared for the IASB by staff of its partner standard-setters from Canada, Germany, New Zealand, and the United Kingdom. The paper reviews existing national requirements or principles on management commentary and offers recommendations on how the IASB might promote the wider adoption of best practice in the interests of investors and others who use financial reports. While the IASB has discussed the paper, it has not yet developed tentative views on the authors' recommendations. The IASB invites comments on the discussion paper by 28 April 2006. IASB subscribers can access the discussion paper now on the IASB's Website. It will be available to all without charge starting 7 November. Click for IASB Press Release (PDF 61k).
27 October 2005: Asia-Oceania Regional Forum on IFRSs
On 24 October 2005, Australia and New Zealand co-hosted an Asia-Oceania Regional Forum on IFRSs in Sydney, Australia. Participating jurisdictions were China, Hong Kong SAR, Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Singapore, Thailand, and the two host countries. The delegates included senior representatives of accounting standard setting and oversight bodies, professional accounting bodies, central banks, and government officials. The goal of the forum is to enhance regional cooperation and coordination in implementing IFRSs. Among the issues discussed:
- the benefits of further dialogue in the Asia-Oceania region;
- the differences between adoption, convergence, and harmonisation with IFRSs and the benefits and disadvantages of each;
- the importance, and implications, of the IASB's Small and Medium-sized Entities project for the region. In this context it was noted that in some jurisdictions a very large number of small and medium entities are required to comply with IFRSs;
- the delays in implementing the standards arising from translation of the international standards into local languages and/or the incorporation of the international standards into domestic legal frameworks; this raised some issues regarding when the domestic systems and related financial reports can be regarded as 'IFRS compliant'.
- interaction between IFRS and prudential and tax frameworks.
Click to download the Communiqué (PDF 13k) released after the forum. A similar forum is planned for 2006.
27 October 2005: New Malta page added
We have added a new country web page for Malta. The Maltese Companies Act and tax regulations require that all limited liability companies prepare financial statements that comply fully with standards issued by the International Accounting Standards Board and that those statements be audited in accordance with International Standards on Auditing.
27 October 2005: Notes from first day of IASB-FASB meeting
The IASB and the US Financial Accounting Standards Board held their 7th semi-annual joint meeting in Norwalk, Connecticut, USA on 24-25 October 2005. Three IASB members were unable to be present (Hans-Georg Bruns, Gilbert Gelard, and Tatsumi Yamada). For that reason the IASB avoided taking votes on particular matters, as the absence of three members was considered, in a number of cases, to be likely to have a substantial effect on outcomes. We have combined the preliminary and unofficial notes taken by Deloitte observers at the meeting onto a Separate Page.
26 October 2005: FEE will sponsor a seminar on IFRS convergence
The European Federation of Accountants (FEE) will sponsor a Seminar on IFRS Convergence and Consistency in Brussels on Thursday, 1 December 2005. Principal speakers will be:
- European Commissioner Charlie McCreevy,
- FASB Board Member Michael Crooch, and
- IASB Chairman Sir David Tweedie.
There will also be representatives of the SEC, CESR, and others. The seminar will focus on progress on the roadmap towards equivalence between International Financial Reporting Standards and US GAAP. Consistent application of IFRS in Europe will also be discussed. Click for FEE's Press Release (PDF 31k).
25 October 2005: Comment deadline on business combinations EDs
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We remind you that the deadline for commenting on the following exposure drafts is 28 October 2005.
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25 October 2005: Round-tables on 'Business Combinations Phase 2'
The IASB will hold a public round-table meeting with constituents on the Board's Business Combinations Phase II Proposals on 9 November 2005 at Etc Venues, First Floor, 51-53 Hatton Garden, London. The round-tables will be divided into three sessions (08:45-11:00, 11:30-13:45, and 14:15-16:30). The IASB and the US FASB issued identical exposure drafts, and the FASB is holding a similar round-table meeting with respondents to its exposure drafts on Thursday, 27 October 2005, 09:00am to 16:00pm. Comment deadline on the IASB and FASB exposure drafts is 28 October 2005. Deloitte has published a Special Global Edition of our IAS Plus Newsletter on the business combinations proposals (PDF 81k).
25 October 2005: EFRAG endorsement recommendation on guarantees
In August, the IASB amended the provisions relating to financial guarantee contracts that are in IAS 39 Financial Instruments: Recognition and Measurement and IFRS 4 Insurance Contracts. The European Financial Reporting Advisory Group (EFRAG) has reviewed those amendments and, in a letter to the European Commission, has recommended that the Commission endorse the guarantee contract amendments for use in Europe. Click to download EFRAG Endorsement Letter (PDF 17k).
24 October 2005: Agenda for the IFRIC meeting 3-4 November
The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on
Thursday 3 November and Friday 4 November 2005. The agenda for the meeting is below:
Thursday 3 November and Friday 4 November 2005
Thursday 3 November 2005
Friday 4 November 2005
- Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
- IAS 34 interaction with IAS 36 and IAS 39 - analysis of the options
- Leases of land that do not confer title on the lessee
- Review of tentative agenda decisions noted in August IFRIC Update:
- IFRS 4 Insurance Contracts - Discretionary participation features in insurance contracts or financial liabilities
- IAS 12 Income Taxes - Single asset entities
- IAS 32 Financial Instruments: Disclosure and Presentation - Employee long service leave
- IFRS 2 Share-based Payment - Employee share loan plans
- Review of tentative agenda decisions noted in September IFRIC Update:
- IAS 17 Leases - Time pattern of user's benefit from an operating lease
- IAS 39 Financial Instruments: Recognition and Measurement - Retention of servicing rights
- IAS 39 Financial Instruments: Recognition and Measurement - Revolving structures
- Recommendations by Agenda Committee regarding requests for IFRIC agenda items:
- IFRS 6 Exploration for and Evaluation of Mineral Resources - Application of 'full cost' method
- IAS 39 Financial Instruments: Recognition and Measurement - Eligibility of inflation risk for fair value hedging
- IAS 39 Financial Instruments: Recognition and Measurement - Contracts
indexed to own EBITDA, revenue etc.
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24 October 2005: Leaders of CESR are re-elected
The chairs of all the EU securities regulators represented in the Committee of European Securities Regulators (CESR) have re-elected Arthur Docters van Leeuwen as CESR Chairman and Kaarlo Jannari as CESR Vice-Chairman, both for two-year terms. John Tiner, Chief Executive of the UK Financial Services Authority, has been re-elected as Chairman of CESR-Fin. CESR-Fin is a permanent operational group with the role of co-ordinating the work of CESR members in the area of endorsement and enforcement of International Financial Reporting Standards (IFRSs) in Europe. Click for CESR Press Release (PDF 75k).
24 October 2005: New Australian Accounting Alert
Deloitte (Australia) has published Australian Accounting Alert 2005/12 AASB Proposes Transferring AASB 1046 Requirements into AASB 124 'Related Party Disclosures' (PDF 95k). The AASB proposal is set out in ED 143 Director and Executive Disclosures by Disclosing Entities: Removal of AASB 1046 and Addition to AASB 124. This Accounting Alert provides an outline of some of the key disclosure proposals and their impacts. Links to all past Alerts are Here.
22 October 2005: Agenda project pages updated
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We have updated the following agenda project pages to reflect discussions and decisions at the October 2005 IASB meeting: |
21 October 2005: Notes from third day of October Board meeting
The IASB held its monthly Board meeting on Tuesday-Thursday, 18-20 October 2005, at the Board's offices in London. We have combined all of the preliminary and unofficial notes taken by Deloitte observers at the IASB's October 2005 meeting onto a Separate Page.
21 October 2005: Challenges to transition to IFRSs in Europe
Charlie McCreevy, EU Commissioner for Internal Markets and Services, spoke about proposed revisions to the Eighth Directive – commonly known as the Auditing Directive – in remarks delivered at the Global Public Policy Symposium on 20 October 2005 in London. Mr. McCreevy also spoke about global issues, including convergence of IFRSs and US GAAP. Click to Download Commissioner McCreevy's Speech (PDF 88k). Here is an excerpt of his comments on convergence:
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We have an agreement with the SEC with the objective of removing the burdensome US GAAP reconciliation requirement for EU issuers in the US, as early as 2007, but no later than 2009. The convergence this will entail must be a two way street and it must not destabilise the IFRS platform in Europe. I would like to stress that convergence is not an invitation to standard-setters to try and advance the theoretical frontiers of accounting. I will not take on board any revolutionary new standards. This should be a practical exercise, firmly anchored in business reality, to be undertaken in the interests of users and investors. The main objective is to try and narrow the differences between the existing standards, not to make accounts even more indigestible with a whole set of new standards!
We will not be adding new carriages to the IFRS train, just as it has left the station. We need, first and foremost, to be sure that existing IFRS beds down and that we reap the benefits at home.
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21 October 2005: Notes from second day of October Board meeting
The IASB held its monthly Board meeting on Tuesday-Thursday, 18-20 October 2005, at the Board's offices in London. We have combined all of the preliminary and unofficial notes taken by Deloitte observers at the IASB's October 2005 meeting onto a Separate Page.
20 October 2005: Global forum of audit regulators is planned
On 18 October 2005, the United Kingdom Financial Reporting Council hosted a roundtable of 13 independent audit regulators from around the world at which they discussed issues of common concern and arrangements for future mutual cooperation. The countries represented at the roundtable were Australia, Brazil, Canada, France, Germany, Ireland, Japan, Netherlands, Singapore, Spain, Switzerland, United Kingdom, and USA. Also represented at the meeting were international organisations already engaged in discussion of auditing issues including the Financial Stability Forum, the World Bank, the International Organisation of Securities Commissions (IOSCO), the Basel Committee, the Public Interest Oversight Board, and the European Commission. Issues discussed included:
- Progress in establishing audit regulators independent of the accountancy profession,
- Arrangements for cross-border exchange of information,
- Concentration in the audit market,
- Issues related to the independence of auditors, and
- Issues raised by the multi-jurisdictional structure both of audit firms and the entities they audit.
There was broad support for the concept of an appropriate international forum of independent audit regulators to facilitate cooperation amongst the national audit regulators. Proposals for an appropriate forum will be prepared for consideration at the next meeting of the regulators to be hosted in Australia in March 2006 by the Australian Securities and Investments Commission.
19 October 2005: 'IFRS – No Pain, No Gain?'
The European Union's internal markets Commissioner, Charlie McCreevy, enumerated the benefits of introducing IFRSs for listed companies in Europe in remarks made at the official opening of the new offices of FEE (the Federation of European Accountants) in Brussels. His speech was titled IFRS – No Pain, No Gain?. Here is an excerpt:
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A common accounting standard increases investor transparency and comparability. As users become more familiar and confident with IFRS, the cost of capital for companies using IFRS should fall. It should lead to more efficient capital allocation and greater cross-border investment, thereby promoting growth and employment in Europe.
Furthermore, we are all aware of the challenges that globalisation and a rapidly-industrialising China are bringing. Now more than ever, we need to press on with the Lisbon agenda and increase the efficiency of the European economy. A common accounting standard based on IFRS, rather than a thicket of different national standards, is therefore not a luxury, but rather an absolute necessity.
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Commissioner McCreevy cited other benefits, including:
- Benefits of IFRSs to companies internally, including reduced capital costs, better management reporting, and improved internal control systems.
- Benefits to European companies listed in the United States, including eliminating the cost of preparing a reconciliation to US GAAP, and convergence of US GAAP and IFRSs.
- Benefits to European companies globally expected to result from convergence activities in other jurisdictions, including China, Japan, Canada, and India.
Click to Download Commissioner McCreevy's Remarks (PDF 73k).
19 October 2005: IFRS Ghid de Buzunar – IFRS guide in Romanian
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Deloitte in Romania (one of our 16 national practices in Central Europe) have published IFRS Ghid de Buzunar, the Romanian language version of our popular booklet, IFRS In Your Pocket 2005. This 68-page booklet contains background information about the IASB and IFRSs, summaries of all of the standards and interpretations, and details of IASB agenda projects. Click here to Download a Copy (PDF 1,261k). You will find a range of Deloitte publications about IFRSs Here. |
19 October 2005: EFRAG seeks nominees for Technical Expert Group
The Supervisory Board of the European Financial Reporting Advisory Group (EFRAG) is seeking nominations for members of EFRAG's Technical Expert Group (TEG). The terms of six of the 11 current TEG members expire on 31 March 2006, and up to four new appointments will be made. Nominations are requested by 20 December 2005. Click for Nominations Announcement (PDF 137k).
19 October 2005: Notes from first day of October Board meeting
The IASB held its monthly Board meeting on Tuesday-Thursday, 18-20 October 2005, at the Board's offices in London. We have combined all of the preliminary and unofficial notes taken by Deloitte observers at the IASB's October 2005 meeting onto a Separate Page.
19 October 2005: New Global Offerings Services newsletter
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We have posted the October 2005 Edition of the Deloitte Global Offerings Services Newsletter (PDF 178k). 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. |
19 October 2005: Accounting Roundup third quarter review
We have posted Accounting Roundup: Third Quarter in Review - 2005 (PDF 506k), a newsletter published by Deloitte & Touche LLP (United States). During 3Q 2005, accounting standard setters and accounting regulators issued a number of final and proposed FASB Statements, FSPs, EITF Consensuses, SEC rules, PCAOB rules, IFRSs, etc. This newsletter presents brief descriptions of those pronouncements as well as certain other regulatory and professional developments in accounting and financial reporting, drawn primarily from the monthly issues of Accounting Roundup, updated when appropriate. You will find links to all past issues of Accounting Roundup Here.
18 October 2005: IASB holds round-table discussions on SMEs
On 13-14 October 2005, the Board conducted public round-table meetings with respondents to its April 2005 questionnaire on possible recognition and measurement simplifications for small and medium-sized entities (SMEs) to probe the views expressed in the responses. Forty-three organisations participated in the round-tables. While a broad range of possible recognition and measurement simplifications was discussed, the areas identified below tended to receive the most attention:
IASB Round-Table Discussions of
Possible Recognition and Measurement Simplifications for SMEs
13-14 October 2005, London
- IAS 12: Deferred income taxes
- IAS 16: Some aspects of property, plant, and equipment including the revaluation model, components, and residual value
- IAS 17: Lease classification and measurement
- IAS 19: Employee benefits – defined benefit programmes including statutory long-service obligations
- IAS 27: Consolidation
- IAS 32: Debt vs equity classification
- IAS 36 and IFRS 3: Goodwill impairment and intangibles recognition
- IAS 36: Indicators of impairment of property, plant and equipment; value in use calculation; and cash generating units
- IAS 39: Fair value measurement in general, hedging, and derecognition
- IAS 41: Fair value model for biological assets and agricultural produce
- IFRS 2: Measurement of share-based payment
- What an SME should do if the IASB SME standards do not address a particular accounting question
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18 October 2005: EFRAG meeting dates for 2006
The European Financial Reporting Advisory Group (EFRAG) has announced its meeting dates for 2006:
- 11-13 January 2006, Wednesday-Friday, TEG
- 15-17 February 2006, Wednesday-Friday, TEG
- 8-10 March 2006, Wednesday-Friday, ESS/TEG
- 4-6 April 2006, Tuesday-Thursday, TEG
- 17-19 May 2006, Wednesday-Friday, TEG
- 13-15 June 2006, Tuesday-Thursday, ESS/TEG
- 10-12 July 2006, Monday-Wednesday, TEG
- 30-31 August and 1 September 2006, Wednesday-Friday, ESS/TEG
- 11-13 October 2006, Wednesday-Friday, TEG
- 7-9 November 2006, Tuesday-Thursday, TEG
- 5-7 December 2006, Tuesday-Thursday, ESS/TEG
TEG=Technical Expert Group. ESS=European National Standard Setters
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18 October 2005: French and Spanish translations of IPSASs
The International Public Sector Accounting Standards Board (IPSASB) has published French and Spanish language translations of its 2005 Handbook of International Public Sector Accounting Pronouncements. The Handbooks include all International Public Sector Accounting Standards (IPSASs). The complete handbooks and individual standards may be downloaded without charge from the 'bookstore' section of IFAC's Website. Printed versions may be purchased.
18 October 2005: 'IFRS & Convergence' conference
Deloitte is the sponsor of the 3rd Annual British Bankers' Association Accounting Conference - IFRS & Convergence to be held in London on Wednesday 23 November 2005. Among the speakers are Thomas E. Jones, Vice-Chairman of the IASB, and Ken Wild, Deloitte's Global IFRS Leader. You will find more information on the BBA Website.
17 October 2005: Standards Advisory Council is restructured
The Trustees of the IASC Foundation have announced the membership of the restructured Standards Advisory Council (SAC).
The 40 appointments represent the third step taken by the trustees to make the SAC a more effective source of advice both to the Trustees and to the IASB. Previous steps were the appointment of Nelson Carvalho of Brazil as the SAC's independent chairman and the adoption of terms of reference for the restructured SAC. SAC members and observers are listed below. Two Deloitte partners are included: Ingebret Hisdal, Managing Partner, Deloitte Norway, and Adir Inbar, Senior Audit Partner, Deloitte Israel. Click for Press Release (PDF 61k).
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Membership of the Standards Advisory Council
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15 October 2005: IASB posts technical corrections comment letters
The IASB has posted on its website the 37 letters of comment the Board received on its proposed policy on technical corrections. Here is the Link to the Download Page for the comment letters. Click here for Proposed Policy (PDF 39k). You will find Deloitte's letter of comment on the proposed policy Here.
14 October 2005: SME round-tables continue today
The IASB is holding round-table discussions with respondents to its questionnaire on possible recognition and measurement simplifications for small and medium-sized entities (SMEs) in London on 13-14 October 2005. The two days are each divided into four 90-minute segments. In each segment, representatives of five to seven responding organisations discuss their views with an equal number of members of the IASB. Click for More Information about the SME Project.
14 October 2005: ASIC clarifies impact of IFRSs on dividends
The Australian Securities & Investments Commission (ASIC) has issued guidance on how the adoption of Australian International Financial Reporting Standards (A-IFRSs) affect an entity's ability to use past retained profits to pay dividends. Under s254T of the Corporations Act 2001, a company can only pay dividends out of profits. The retained profits shown in the last financial report of a company are relevant for this purpose. Upon the adoption of A-IFRSs, the retained profits of some companies will change, sometimes materially. ASIC believes that retained profits previously reported on a pre-A-IFRS basis cease to have relevance for paying dividends after the first half-year financial report of a 'disclosing entity', or full year financial report of a 'non-disclosing entity' prepared under the Act using A-IFRSs, is completed. Only retained profits and current year profits recorded under A-IFRS will be relevant from that time going forward. Click for More Information (PDF 23k).
14 October 2005: Webcast on Canadian - US GAAP differences
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Deloitte & Touche LLP - Canada will conduct a webcast on 15 November 2005 2:00-3:30pm Toronto time on
differences between Canadian accounting standards and US GAAP. Topics to be discussed: |
- Guarantees
- Classification of liabilities and equities
- Defined benefit pension plans
- Temporary impairments
- Hedging
- Accounting for joint ventures
- Start-up costs
- Research and development
Click for Link to Deloitte Canada Webcast Archines.
13 October 2005: Four new public sector exposure drafts
The International Public Sector Accounting Standards Board (IPSASB) has issued four exposure drafts. Two relate to convergence with IFRSs and two are aimed at increasing the transparency of government financial statements:
- ED 25 Equal Authority of Paragraphs in IPSASs, proposes amendments to the Preface to International Public Sector Accounting Standards (IPSASs) to clarify that all paragraphs in the IPSASs have equal authority.
- ED 26 Improvements to International Public Sector Accounting Standards. ED 26 proposes updates to 11 IPSASs to converge with the equivalent IFRSs issued by the IASB in December 2003 as part of the IASB's 'improvements project'. We had previously reported on ED 26 in our news story of 28 September 2005.
- ED 27 Presentation of Budget Information in Financial Statements.
- ED 28 Disclosure of Financial Information about the General Government Sector.
IPSASs are based on IFRSs to the extent appropriate, and business activities of governments must follow IFRSs directly. The EDs may be downloaded from the IPSASB Web Page on IFAC's Website. Comments on EDs 25 and 26 are requested by 31 January 2006. Comments on EDs 27 and 28 are requested by 10 February 2006. Click for:
12 October 2005: IFRS Ydinkohdat – IFRS In Your Pocket 2005 in Finnish
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Deloitte & Touche (Finland) have published IFRS Ydinkohdat, the Finnish version of our popular booklet, IFRS In Your Pocket 2005. This 72-page booklet contains background information about the IASB and IFRSs, and summaries of all of the standards and interpretations. Click here to Download a Copy (PDF 361k). You will find a range of Deloitte publications about IFRSs Here. |
11 October 2005: FEE urges clarity of basis of reporting
The Federation of European Accountants (FEE) has published an analysis of responses to its April 2005 discussion paper on the reporting issues and implications for the audit report of the process of 'endorsing' IFRSs for use in Europe. FEE represents 44 professional institutes of accountants from 32 countries. Based on its analysis, FEE makes the following recommendations:
- FEE calls on the European Commission to issue authoritative guidance on how European companies should refer to their financial reporting framework. "There is a clear need for a standard wording."
- FEE recommends a change to the EC's previously suggested reference to the financial reporting framework: "Precision would be added if it were amended to: in accordance with IFRSs as adopted for use in the EU." Specifically the reference to the plural of IFRSs is considered significant to highlight that standards are endorsed one by one.
- Companies are strongly encouraged to explain, in the notes to the accounts, how their accounting policies, applying IFRSs as endorsed for use in the EU, depart from full IFRS. "This will enable investors to understand the impact and to compare the results of companies within and outside the EU."
- The reference in the audit report should be the same as in the accounting policies.
- Where companies are in compliance with full IFRS, they should be encouraged to say so in their accounting policies. However, the legal financial reporting framework in the EU needs to be referred to in all cases.
This is not just a European issue because national adoptions of IFRSs elsewhere around the world have included additions, deletions, and changes to the IASB standards as well as time lags between IASB adoption and local adoption. Click for:
11 October 2005: EFRAG makes three endorsement recommendations
The European Financial Reporting Advisory Group has recommended that the European Commission adopt three pronouncements for use in Europe. Click to download EFRAG's letters on:
10 October 2005: SEC Chairman speaks on international issues
US SEC Chairman Christopher Cox spoke recently at a Video/Tele Conference on International Securities Regulatory and Accounting Issues organised by the American Bar Association. Chairman Cox discussed a range of issues including integrity of capital markets around the world, the need for global accounting standards and enforcement, and interactive financial data. He emphasised that while the SEC is involved increasingly in international activities, the SEC does not seek to impose its views but rather encourages global convergence and collaboration. Chairman Cox's remarks are available in the form of an MP3 audio file. Download the Audio File* (MP3, 3.185mb).
*On Windows computers, left-clicking on this link usually will open the file in the default media player. Right-click on the link to save the MP3 file on your hard disk.
9 October 2005: Updated news story on amendment of EU 8th Directive
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In a news story of 29 September 2005, we reported that a revision to the EU 8th Company Law Directive (the "auditing directive") approved by the European Parliament would adopt International Standards on Auditing (ISAs) for use in Europe. We also reported that the Parliament rejected the Commission proposal that all publicly listed companies must have a separate audit committee to supervise financial reporting procedures on grounds of excessive financial and administrative burden. Our report was based on an Parliamentary Announcement titled No to Compulsory Audit Committees (PDF 95k). Subsequently, the EC issued a Press Release (PDF 22k) clarifying that:
- "Adoption of [ISAs] will be subject to strict conditions such as their quality and whether they are conducive to the European public good" – conditions similar to those required for IFRSs under the EU Accounting Regulation.
- An Audit Regulatory Committee will be created to complement the revised legislation and allow the speedy adoption of necessary implementing measures – a body similar to the Accounting Regulatory Committee that must endorse each IFRS for use in Europe.
- Listed companies are required to set up an audit committee (or a similar body) with clear functions to perform.
We have updated our story of 29 September 2005 to reflect the above.
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8 October 2005: SEC planning for interactive financial data
With the objective of making financial disclosure more useful and accessible to investors, the US Securities and Exchange Commission has issued a Request for Information (RFI) concerning interactive financial data. The SEC said that "interactive data holds the promise of transforming the static, text-only documents companies file with the SEC into dynamic financial reports that can be quickly and easily accessed and analysed." The RFI seeks information from the software industry to assist the Commission's staff in identifying ways to receive, store, view, and analyse interactive financial data. Click for:
8 October 2005: Special edition of IAS Plus on IFRS 7
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Deloitte's Global IFRS Leadership Team has prepared a special edition of our IAS Plus Newsletter providing an overview of IFRS 7 Financial Instruments: Disclosures. IFRS 7:
- adds new disclosures about financial instruments to those currently required by IAS 32 Financial Instruments: Disclosure and Presentation;
- replaces the disclosure requirements currently imposed on financial institutions by IAS 30
Disclosures in the Financial Statements of Banks and Similar Financial Institutions; and
- puts all of those financial instruments disclosures together in a new combined Standard.
We have also prepared a disclosure checklist for IFRS 7 that supplements our general IFRS presentation and disclosure checklist for 2005. Click to:
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7 October 2005: We comment on consistent application of IFRSs in EU
Deloitte Touche Tohmatsu has submitted our Letter of Comment on EFRAG's Discussion Paper Achieving Consistent Application of IFRSs in the EU (PDF 441k). While we have some reservations about certain detailed aspects of the discussion paper, we support the EFRAG in taking a pro-active role in addressing the issues arising in Europe as a result of the introduction of IFRSs. We do not support the establishment of a European interpretations group or European urgent issues group. However, we do support the establishment of a European IFRIC support mechanism along the lines proposed in EFRAG's discussion paper. We agree with EFRAG that such a mechanism could be of substantial assistance to IFRIC.
7 October 2005: IASB will meet in London 18-20 October 2005
The IASB will meet at its offices in London on Tuesday to Thursday, 18-20 October 2005. The announced agenda for the meeting is below. The Board will also meet in Norwalk, CT, USA with the US Financial Accounting Standards Board on 24 and 25 October 2005.
18-20 October 2005, London
Tuesday, 18 October 2005
- Insurance contracts: continuation, cancellation and renewal options (Education Session)
- IFRIC update on concessions (Education Session)
- IFRIC update
Wednesday, 19 October 2005
- Potential technical correction: IFRS 1 and IAS 12 – deferred tax relating to goodwill in a business combination
- Business combinations II
- Short-term convergence: borrowing costs
- Conceptual Framework – Objectives and qualitative characteristics
- Revenue recognition
- The definition of revenue (specifically the meaning of 'customer')
- Examples illustrating the application of the proposed approach to different types of revenue transactions.
- Financial instruments – Discussion of:
- Objectives and the nature and status of the current and possible future work program for financial instruments.
- Issues related to the disaggregation of changes in fair value.
Thursday, 20 October 2005
- Performance reporting
- Consolidation
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7 October 2005: New Accounting Roundup is available
We have posted Accounting Roundup September 2005 (PDF 231k). This newsletter, published by Deloitte & Touche LLP (United States), summarises recent accounting and financial reporting developments and provides Internet links to related content. This edition includes:
- FASB developments, including convergence ED on earnings per share; invitation to comment on assets and liabilities with uncertainties; three proposed FASB Staff Positions; and summaries of recent FASB meetings.
- AICPA developments, including a proposed auditing standard on communication of internal control matters; and Technical Practice Aids on employee benefit disclosures and losses from natural disasters.
- SEC developments, including amendments to filing deadlines and Sarbanes-Oxley compliance; a statement on valuing employee stock options; and regulatory relief for Hurricane Katrina victims.
- International developments, including IFRIC 6; Draft Technical Corrections 1; and summaries of recent IASB and IFRIC meetings.
You will find links to all past issues Here.
6 October 2005: Regulators to share information on IFRSs
The International Organization of Securities Commissions (IOSCO) is establishing a system for participating IOSCO members and other independent enforcement organizations to share information and consult in order to maximize co-ordination and convergence of the transition to and implementation of IFRSs. While each national regulator will retain the right to deal with an issue on its own, the system will facilitate consistency by cataloguing, in a database, decisions made by regulators concerning application of IFRSs. This will provide a reference source for input to future regulatory decisions. Participating regulators will also contact each other to discuss particular decisions. IOSCO's announcement said:
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On an ongoing basis, IOSCO will monitor issues related to the implementation of IFRS for indicators of
issues that should be referred to the International Accounting Standards Board or the International
Financial Reporting Interpretations Committee for consideration. IOSCO anticipates that the database will be operational by the second half of 2006. At this stage it is not intended for the catalogue of decisions to be publicly accessible. |
Click for IOSCO Press Release (PDF 123k).
6 October 2005: IOSCO consultation on disclosure principles
The International Organization of Securities Commissions (IOSCO) has published a Consultation Report on the International Disclosure Principles for Cross-Border Offerings and Listings of Debt Securities by Foreign Issuers. Comments are due by 22 December 2005. The Consultation Report sets forth substantive disclosure principles for documents used in public offerings and listings of 'plain vanilla' corporate debt securities. The principles are intended as guidance to securities regulators who are developing or reviewing their regulatory disclosure regimes for cross-border offerings and listings of debt securities. Click for IOSCO Press Release (PDF 163k).
6 October 2005: EFRAG comments on corrections policy
The European Financial Reporting Advisory Group has submitted to the IASB EFRAG's Views on IASB Technical Corrections Policy (PDF 25k). While agreeing with some aspects of the proposed policy, EFRAG suggests that the IASB may be "focusing its Policy on Technical Corrections on the wrong category of issues".
5 October 2005: IASB seeks comments on Draft Technical Correction
The IASB has invited comments on Draft Technical Correction (DTC) 1 Proposed Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates–Net Investment in a Foreign Operation. Comments are due 31 October 2005. If confirmed, these amendments would be the first to be issued under the Board's proposed new IASB Proposed Policy on Technical Corrections. DTC 1 provides that if a monetary item that forms part of a reporting entity's net investment in a foreign operation is denominated in the functional currency of the foreign operation, an exchange difference arises in the reporting entity's separate financial statements and in the foreign operation's individual financial statements. That exchange difference is reclassified to the separate component of equity in the financial statements in which the foreign operation is consolidated, proportionately consolidated, or accounted for using the equity method. DTC 1 can be downloaded from the IASB's Website.
5 October 2005: Commissioner McCreevy will speak on IFRSs
European Internal Market Commissioner Charlie McCreevy will deliver the keynote speech on the subject of IFRS: No Pain, No Gain? at the official opening of the new offices of the European Federation of Accountants (FEE) on 18 October 2005. Click for FEE Announcement and Invitation (PDF 23k).
4 October 2005: New Deloitte IFRS-US GAAP comparison
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We have posted the new Deloitte Comparison of International Financial Reporting Standards and United States GAAP (PDF 265k) as of 1 September 2005. While this 32-page comparison is comprehensive, it does not attempt to capture all of the differences that exist or that may be material to a particular entity's financial statements. Our focus is on differences that are commonly found in practice. The significance of these differences – and others not included in this list – will vary with respect to individual entities depending on such factors as the nature of the entity's operations, the industry in which it operates, and the accounting policy choices it has made. You will find other comparisons of IFRSs and local GAAPs Here. |
2 October 2005: New IAASB standard on audit documentation
The International Auditing and Assurance Standards Board (IAASB) has approved a revised International Standard on Auditing (ISA) 230 Audit Documentation. ISA 230 establishes clear responsibilities for the auditor to assemble the final audit file on a timely basis (generally within 60 days after the date of the auditor's report) and sets out specific rules regarding deletions, modifications, or additions to audit documentation after the date of the auditor's report. There are new documentation requirements for those very rare occasions when an auditor finds it necessary to depart from the requirement of a standard in order to achieve the objective of the audit. There is also a new requirement that the auditor not delete or discard audit documentation after the final audit file has been assembled until after the retention period – ordinarily not less than five years from the date of the auditor's report or, if later, the date of the group auditor's report. ISA 230 is effective for audits of financial periods beginning on or after 15 June 2006. The standard may be downloaded without charge from IFAC's Website. Click for Press Release (PDF 83k).
1 October 2005: EFRAG seeks to extend business combinations deadline
The European Financial Reporting Advisory Group (EFRAG) has written to the IASB asking that the IASB extend "probably by two months" the comment period for the Exposure Drafts of proposed amendments to IFRS 3 Business Combinations and related amendments to IAS 19, IAS 27 and IAS 37.
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The exposure drafts contain a number of proposals that will have a fundamental effect on the financial statements and/or have potentially widespread implications for other aspects of accounting. For that reason it is vitally important that the IASB's constituents study the proposals carefully before responding to them....
The nature of the drafts themselves compounds this problem because it is often not clear from the text why a particular proposal had been made. For example, faced with radical proposals for change it is reasonable to start by asking what is wrong with what we have now and how will the changes proposed benefit users of the financial statements. However, in the main the Basis for Conclusions as drafted does not help in answering those questions. This makes it more difficult to evaluate the proposals.
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Click to download EFRAG's Letter to the IASB (PDF 24k).
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