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30 September 2005: Deloitte comments on technical corrections proposal
Deloitte has submitted its Letter of Comment on the IASB's Proposed Technical Corrections Policy (PDF 12k). In general, we favour having a 'fast-track' process to deal with issues for which the words in a standard do not properly convey the Board's intentions. We recommend that additional guidance be provided so that issues that require considerable time and thought are not treated as 'technical corrections', and we express concern about the likely time it will take for processing the corrections and what the appropriate accounting should be in the meantime. Here is IASB's Proposed Technical Corrections Policy (PDF 39k).

30 September 2005: Special iGAAP newsletter on new UK regulations
The Deloitte (United Kingdom) IFRS Centre of Excellence has published a special edition of the iGAAP Newsletter on New UK Regulations – Accounting and Reporting Requirements Change (PDF 76k). The new regulations result from the introduction of IFRSs in the United Kingdom and relate, among other things, to summary financial statements, the operating and financial review, adjustments of corresponding amounts, and distribution provisions for investment companies. You will find all Past UK iGAAP Newsletters and Alerts in a special section of our United Kingdom page.

30 September 2005: New FASB Investor Task Force
The US Financial Accounting Standards Board has formed an Investor Task Force (ITF) (PDF 17k), an advisory group that will provide the FASB with sector-specific insight and expertise from the professional investment community on relevant accounting issues. The IASB has a similar body – its Analyst Representative Group (ARG). The ARG meets three times a year with five members of the IASB to provide the views of professional investors on financial reporting issues. The 'Chairman's Page' in the July 2005 issue of Insight, the IASB's quarterly newsletter (available to subscribers on the IASB's Website), contains a comprehensive description of the ARG and a list of its 15 members.

30 September 2005: IFRS model financial statements in Chinese

We have posted the Chinese language version of our Model IFRS Financial Statements for the year ended 31 December 2005 (PDF 632k). These model financial statements were developed to illustrate the typical financial statement presentation and disclosures that are required of a company with subsidiaries and associates, presenting its consolidated financial statements under IFRSs for 2005 (not a first-time adopter, for which special requirements apply under IFRS 1). You will find the English language version Here.

29 September 2005: EU parliament adopts ISAs

On 28 September 2005, the European Parliament approved various amendments to the Eighth Company Law Directive (the 'auditing directive'). The amendments will:

• Establish a system for public oversight of the auditing profession and for cooperation between Member States' authorities.
• Require application of International Standards on Auditing (ISAs) in European auditing. ISAs are issued by the International Auditing and Assurance Standards Board of IFAC. The EC press release announcing the Parliamentary vote said "adoption of these standards 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.
• Create an Audit Regulatory Committee to complement the revised legislation and allow the speedy adoption of necessary implementing measures.
• Require rotation, every seven years, of the key audit partner/statutory auditor. However, compulsory rotation of audit firms was rejected.
• Provide a basis for effective and balanced co-operation between regulators in the EU and with regulators in third countries, such as the US Public Company Accounting Oversight Board (PCAOB).
• Improve the independence of auditors by requiring listed companies to set up an audit committee (or a similar body) with clear functions to perform.

29 September 2005: Comparison of Australian standards and IFRSs

Deloitte (Australia) has published A-IFRS vs IFRS (PDF 244k), detailing the differences between Australian equivalents to International Financial Reporting Standards (A-IFRS) and International Financial Reporting Standards (IFRS) as of September 2005. As the Australian Accounting Standards Board (AASB) considered the issuance of IFRS in Australia, several amendments were made to the finalised A-IFRS, including the removal of certain options permitted under IFRS, the inclusion of additional implementation guidance, and other minor wording changes. As a result of these changes, the choices available and some of the implementation considerations encountered by Australian entities will differ somewhat compared to their international counterparts, despite the fact that Australian companies applying A-IFRS will generally be able to make an unreserved statement of compliance with IFRS.

29 September 2005: iGAAP quarterly newsletter on IFRSs in UK
The Deloitte (United Kingdom) IFRS Centre of Excellence has published the August 2005 iGAAP Quarterly Newsletter (PDF 138k). The newsletter covers special issues relating to application of IFRSs in the United Kingdom, as well as a more general quarterly IASB update. You will find all Past UK iGAAP Newsletters and Alerts in a special section of our United Kingdom page.

29 September 2005: Special edition of IAS Plus on IFRIC 6

Deloitte's Global IFRS Leadership Team has prepared a Special Edition of our IAS Plus Newsletter (PDF 51k) detailing the requirements of IFRIC 6 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment. IFRIC 6 considers the appropriate trigger for recognition of an obligation to contribute to the costs of disposing of waste equipment based on the entity's share of the market in a measurement period. The Interpretation is effective for annual periods beginning on or after 1 December 2005. You will find past issues of all IAS Plus Newsletters Here.

29 September 2005: September 2005 edition of EITF Roundup

We have posted the September 2005 Edition of EITF Roundup (PDF 107k), which provides an overview of the issues discussed, consensuses reached, and administrative matters discussed at the 15 September 2005 meeting of FASB's Emerging Issues Task Force. You will find past issues Here. Issues covered in the September 2005 edition include:

• Issue No. 04-13 Accounting for Purchases and Sales of Inventory With the Same Counterparty*
• Issue No. 05-1 Accounting for the Conversion of an Instrument That Becomes Convertible Only Upon the Issuer's Exercise of a Call Option
• Issue No. 05-7 Accounting for Modifications to Conversion Options Embedded in Debt Securities*
• Issue No. 05-8 Income Tax Consequences of Issuing Convertible Debt With a Beneficial Conversion Feature*
• Sale of Held-to-Maturity Securities and Other Hurricane Katrina Related Accounting Guidance
  

  * Final Consensus Reached

28 September 2005: IPSASB proposes to converge 11 standards with IFRSs
The International Public Sector Accounting Standards Board (IPSASB) has issued exposure draft 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'. ED 26 is part of the IPSASB's program to converge IPSASs, which set out the requirements for financial reporting by governments and other public sector entities, and IFRSs, where the requirements of IFRSs are appropriate for the public sector. The following 11 standards are included in ED 26:

• IPSAS 1 Presentation of Financial Statements
• IPSAS 3 Net Surplus or Deficit for the Period, Fundamental Errors and Changes in Accounting Policies
• IPSAS 4 The Effect of Changes in Foreign Exchange Rates
• IPSAS 6 Consolidated Financial Statements and Accounting for Controlled Entities
• IPSAS 7 Accounting for Investments in Associates
• IPSAS 8 Financial Reporting of Interests in Joint Ventures
• IPSAS 12 Inventories
• IPSAS 13 Leases
• IPSAS 14 Events After the Reporting Date
• IPSAS 16 Investment Property
• IPSAS 17 Property, Plant and Equipment

28 September 2005: PCAOB Chairman McDonough announces his resignation

William J. McDonough, the first Chairman of the US Public Company Accounting Oversight Board, has announced that he will step down not later than 30 November 2005. Click for Press Release (PDF 16k).

27 September 2005: New Global Offerings Services newsletter

We have posted the August-September 2005 Edition of the Deloitte Global Offerings Services Newsletter (PDF 194k). 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. Among the issues covered in the new edition are:

• Several new FASB Staff Positions
• A proposed interpretation of FAS 109 on uncertain tax positions
• Amendment of SEC delisting and deregistering rules
• Use of Forms S-8, 8-K, and 20-F by shell companies
• Securities offering reform
• Delayed SOX 404 compliance for non-accelerated filers
• A new PCAOB auditing standard on elimination of a material weakness
• New PCAOB ethics and independence rules
• Deloitte publications and webcasts of interest to foreign registrants

24 September 2005: Special edition of IAS Plus on business combinations

Deloitte's Global IFRS Leadership Team has prepared a special edition of our IAS Plus newsletter detailing the Business Combinations Phase 2 Proposals (PDF 81k) issued by the IASB on 30 June 2005 jointly with the US Financial Accounting Standards Board. The IASB proposals would not only amend IFRS 3 Business Combinations but also amend IAS 27 Consolidated and Separate Financial Statements, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and IAS 19 Employee Benefits. The principal proposals are examined in detail in this newsletter. Several involve quite radical changes. Taken together, the exposure drafts would change the way entities account for business combinations and minority interests. They would also result in recognition of certain contingent assets and liabilities that are currently only required to be disclosed. If accepted, most of the proposed changes would come into effect from 1 January 2007. The IASB has requested comments on all the exposure drafts on or before 28 October 2005. You will find past issues of all IAS Plus Newsletters Here.

24 September 2005: Deadline for commenting on 'technical corrections'

Just a gentle reminder that the deadline for commenting on the IASB's Proposed Policy on Technical Corrections is 30 September 2005. The IASB has proposed a 'fast track' process to deal with issues for which it is clear that the words in a standard do not properly convey the IASB's intention, even when considered with the basis for conclusions and any related guidance.

23 September 2005: UK FRC will form an actuarial standards board
The United Kingdom Financial Reporting Council, under which the UK Accounting Standards Board operates, is establishing a new regime to set actuarial standards and oversee the regulation of the actuarial profession. The FRC plans have the new regime in place in April 2006. Specifically, the FRC will:

• establish an FRC Board for Actuarial Standards;
• extend the remit of the FRC's Professional Oversight Board for Accountancy to cover the actuarial profession;
• extend the remit of the FRC's Accountancy Investigation and Discipline Board to cover public interest cases involving actuaries.

23 September 2005: Notes from the Sept. 2005 meeting day three
The IASB held its monthly Board meeting on 20-22 September 2005 at its offices in London. We have combined all of the preliminary and unofficial notes taken by Deloitte observers at the meeting in a Separate September 2005 Meeting Notes Page.

22 September 2005: Notes from the Sept. 2005 meeting day two
The IASB held its monthly Board meeting on 20-22 September 2005 at its offices in London. We have combined all of the preliminary and unofficial notes taken by Deloitte observers at the meeting in a Separate September 2005 Meeting Notes Page.

22 September 2005: SOX 404 delayed for non-accelerated filers
The US Securities and Exchange Commission has decided to postpone, until financial years ending on or after 15 July 2007, the initial compliance date for filing internal control reports under Section 404 of the Sarbanes-Oxley Act of 2002 by companies not designated as accelerated filers, including foreign private issuers that are not accelerated filers. A foreign private issuer that is an accelerated filer and that files its annual reports on Form 20-F or Form 40-F must begin its Section 404 reporting in the annual report for its first financial year ending on or after 15 July 2006. Accelerated filers are SEC registrants that have at least $75 million in worldwide public float. The SEC also has proposed to create the class of 'large accelerated filers' – registrants with $700 million or more in worldwide public float. Large accelerated filers would be subject to a 60-day Form 10-K annual report deadline and a 40-day Form 10-Q quarterly report deadline starting in 2006. Other accelerated filers would continue to have a 75-day Form 10-K annual report deadline and 40-day Form 10-Q quarterly report deadline. Click for SEC Announcement (PDF 77k).

21 September 2005: Notes from the Sept. 2005 meeting day one
The IASB held its monthly Board meeting on 20-22 September 2005 at its offices in London. We have combined all of the preliminary and unofficial notes taken by Deloitte observers at the meeting in a Separate September 2005 Meeting Notes Page.

20 September 2005: Insurance Working Group Meeting
The IASB's Insurance Working Group will meet on Wednesday and Thursday, 28-29 September 2005, at the Crowne Plaza London City Hotel, London. The meeting is open to public observation. The agenda is available on the IASB's website. Here is a summary:

20 September 2005: SEC may give another extension for SOX 404
The Agenda (PDF 65k) for the meeting of the US Securities and Exchange Commission for Wednesday, 21 September 3005, includes a proposal to give smaller public companies an additional one-year deferral for compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires that companies and their auditors file reports on the strength of their internal controls over financial reporting. The new compliance date would be a company's first financial year ending on or after 15 July 2007. In March of this year, the SEC gave foreign private issuers and non-accelerated filers a deferral until 15 July 2006 (see our News Story of 3 March 2005). At that time, the SEC noted that one reason for the deferral is that "many foreign companies are facing regulatory and reporting challenges in addition to internal control reporting as companies incorporated in a European Union member country are required to prepare their financial statements for 2005 in accordance with new International Financial Reporting Standards."

20 September 2005: Trustees extend deadline for trustee applications
In July, the IASC Foundation, under which the IASB operates, solicited applications and nominations of candidates for nine IASCF Trustee positions for three-year terms 2006-2008. The deadline for applications and nominations has been extended to 10 October 2005 to provide additional time for submissions and consultation. Click for Original Press Release (PDF 29k).

19 September 2005: September 2005 edition of EITF Flash
We have posted the September 2005 Edition of EITF Flash (PDF 76k). This inaugural issue of EITF Flash reports on the 15 September 2005, meeting of FASB's Emerging Issues Task Force within a day of the meeting, to enable readers to spot relevant topics and to understand quickly the meeting's outcome. Deloitte & Touche LLP's EITF Roundup, published within a week of the EITF meeting, will provide more in-depth information on each of the issues. You will find past issues of EITF Roundup and EITF Flash Here.

19 September 2005: BIS study on accounting and prudential regulation
The Bank for International Settlements has published a working paper on Accounting, Prudential Regulation and Financial Stability: Elements of a Synthesis (PDF 263k). The fundamental issue addressed is "What information about the financial condition of firms is conducive to efficient and stable operation of the financial system and of the economy more broadly?" With regard to company-specific information, the paper identifies significant differences in perspective between accounting standard setters and prudential supervisors:

15 September 2005: Unlisted Belgian banks must use IFRSs
Under a Royal Decree dated 5 December 2004, unlisted banks and other credit institutions in Belgium will be required to use IFRSs in their consolidated financial statements starting in 2006. Listed Belgian companies, including credit institutions, must prepare their consolidated financial statements using IFRSs starting in 2005 under the EU Accounting Regulation. If an unlisted credit institution is a wholly-owned subsidiary of a foreign parent, preparation IFRS consolidated statements may not be required if certain conditions are met, including the filing of consolidated financial statements of the foreign group in French or Dutch in Belgium. Belgium does not permit IFRSs to be used in separate financial statements.

15 September 2005: Statistics database updated
We have updated our Database of Statistics that, we believe, provide clear evidence of the globalisation of the world's capital markets and of the need for global financial reporting standards.

14 September 2005: EFRAG seeks views on financial guarantees
The European Financial Reporting Advisory Group (EFRAG) has invited comments on its Draft 'Endorsement Advice' Letter (PDF 20k) to the European Commission on the IASB's August 2005 amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 4 Insurance Contracts relating to Financial Guarantee Contracts. EFRAG supports the amendments and proposes to recommend their adoption for use in Europe. Comments are due by 14 October 2005.

13 September 2005: Steps toward convergence: China, Japan, Korea

	On 6 and 7 September 2005, representatives of accounting standard setters in China, Japan, and the Republic of Korea met in Xi'an, China, the fifth such meeting. Over 40 delegates attended, including observers from HK SAR, Macau SAR, and the IASB. The delegates discussed recent developments in the three countries' accounting standards and convergence issues, including obstacles and specific measures to address some of them. The three countries' accounting standard setters reached the following consensus set out in a published Memorandum of Understanding (PDF 21k) posted on the websites of the three standard-setters: China Accounting Standards Committee Accounting Standards Board of Japan Korea Accounting Standards Board
	First, the three parties recognise that the international convergence of accounting standards is the irreversible trend under the economic globalisation, and the three countries support the efforts by the IASB to develop a single set of high-quality and globally-acceptable accounting standards. In the meantime, the parties believe that convergence is not equal to being identical. The international convergence of accounting standards shall be a market-driven gradual process and this process shall be two-way interactions between national accounting standard setters and the IASB, giving considerations to special local environments. Secondly, the three parties have confirmed that they shall work for the resolution of practical issues encountered in their respective accounting standard setting and international convergence efforts that should be continuously tested in their respective capital markets. That shall, on the one hand, be helpful to set the national accounting standards and on the other hand, to identify major obstacles and issues the countries encounter in the international convergence process and to communicate with the IASB to contribute to the improvements of the International Financial Reporting Standards (IFRSs). Thirdly, the three parties have decided to set up a joint working group composed of their technical staff. The primary task of the working group is to carry out joint research on main technical issues confronted by the three countries in their standard setting and international convergence. The joint working group may meet on a non-regular basis and produce research results for the discussion at the Three Countries' Accounting Standard Setters' Meeting and as inputs to the IASB.

12 September 2005: EFRAG seeks views on endorsement of IFRIC 6
The European Financial Reporting Advisory Group (EFRAG) has invited comments on its Draft 'Endorsement Advice' Letter (PDF 23k) to the European Commission on IFRIC 6 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment. EFRAG supports the interpretation and proposes to recommend its adoption for use in Europe. EFRAG requests comments by 30 September 2005.

10 September 2005: SEC views on valuing employee stock options
US FASB Statement 123R, like IFRS 2, requires that share-based payments to employees be measured by estimating the grant-date fair value of the equity instruments (such as options) that an entity is obligated to issue when employees have earned the right to benefit from the instruments (that is, when the right to the option has vested). The standards also say that the best evidence of fair value for employee stock options is observable market prices of identical or similar instruments in active markets. Some US companies have proposed to design and issue in the market financial instruments that replicate the terms and conditions of employee stock options, for the purpose of obtaining a market-based value of the employee options. At the request of the Office of the Chief Accountant of the US SEC, the SEC's Office of Economic Analysis (OEA) has prepared a report on the potential use of such instruments for valuing employee stock options as an alternative to modelling. The OEA report concludes:

• Statement of SEC Chairman Cox (PDF 37k)
• Statement of SEC Chief Accountant (PDF 44k)
• Memorandum of SEC Office of Economic Analysis (PDF 70k)

9 September 2005: IFRSs and Bank Tier 1 capital in Australia
The Australian Prudential Regulation Authority has released the second of two discussion papers setting out its proposed regulatory response to the adoption of IFRSs 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 paper deals with the treatment of eligible Tier 1 capital instruments and securitisation for authorised deposit-taking institutions and general insurers. APRA is proposing to de-couple the definition of capital instruments eligible for Tier 1 capital from Australian accounting standards. At the same time, it is proposing to harmonise its approach to innovative capital instruments with the decisions of the Basel Committee on Banking Supervision and regulatory practice in major jurisdictions. APRA is also proposing to de-couple the assessment of securitised assets for capital adequacy purposes from the accounting treatment of these assets. Comments are due 28 October 2005. Click to download the APRA's new discussion paper, Adoption of IFRSs Prudential Approach 2: Tier 1 Capital and Securitisation (PDF 134k). Please see our 27 February 2005 News Story for details about the first APRA discussion paper and an earlier overview paper.

9 September 2005: EFRAG seeks views on two recommendations to EC
The European Financial Reporting Advisory Group (EFRAG) has invited comment on the following two draft 'endorsement advice' letters to the European Commission. In both cases EFRAG supports the IASB standards and recommends their adoption for use in Europe. EFRAG requests comments by 30 September 2005.

• Amendment to IAS 1 Presentation of Financial Statements - Capital Disclosures (PDF 22k).
• IFRS 7 Financial Instruments: Disclosures (PDF 22k). With respect to IFRS 7, EFRAG's request for comment states: "EFRAG has noted that there appears to be considerable interest around Europe in having IFRS 7 endorsed in time to be available for use in 2005 financial statements, provided that application in 2005 would not be mandatory." IFRS 7 is effective 1 January 2007, with earlier application encouraged.

8 September 2005: IFAC will develop an ISA guide for SMEs
The International Federation of Accountants (IFAC) is seeking proposals for the development of an explanatory guide on implementing International Standards on Auditing (ISAs) for audits of small- and medium-sized entities (SMEs). The purpose of the guide would be to help auditors around the world understand, comply with, and apply ISAs when conducting SME audits. Click for IFAC Announcement (PDF 76k), which includes a link to download the IFAC request for proposals. Proposals are due 18 November 2005.

8 September 2005: US SEC Chief Accountant will step down

The US Securities and Exchange Commission has announced that Chief Accountant Donald T. Nicolaisen will leave the Commission in October 2005 to return to the private sector. Mr. Nicolaisen joined the Commission as Chief Accountant in September 2003 and has led numerous initiatives to improve financial disclosure, strengthen the audit process, and rebuild investor confidence. Click for SEC Announcement (PDF 34k).

7 September 2005: IASB will meet in London 20-22 September 2005
The IASB will meet at its offices in London on Tuesday to Thursday, 20-22 September 2005. The announced agenda for the meeting is below. The Board will also host a meeting of national standard setters on 26-27 September 2005, also in London. We announced the agenda for that meeting in our news story of 24 August 2005.

20-22 September 2005, London Tuesday, 20 September 2005 Financial Instruments Puttable at Fair Value – Proposal to amend IAS 32 relating to the classification of 'financial instruments puttable at fair value' and particular financial instruments issued by limited life entities Revenue Recognition Classification of Instruments Denominated in a Foreign Currency – Classification of the conversion option within a convertible bond denominated in a foreign currency. Consolidations including SPEs Wednesday, 21 September 2005 Education Session: Introduction to International Valuation Standards – Presentation by IVSC representatives Agenda Proposal: Emission Rights – Whether to add a project to the Board's agenda to address accounting for emissions trading schemes and if so, the scope and nature of the project. Short-term Convergence: Income Taxes Short-term Convergence: Segment Reporting – Sweep issues from pre-ballot draft Earnings per Share – Options, warrants and their equivalents Thursday, 22 September 2005 Agenda Proposal: Fair Value Guidance Technical Plan Financial Instruments Issues Project: Disaggregation of Changes in Fair Value Conceptual Framework: Qualitative characteristics of financial information Concept of the reporting entity Providing prospective information as part of the objectives of financial reporting Performance Reporting – Definition of financing

7 September 2005: New Accounting Roundup is available
We have posted August 2005 Accounting Roundup (PDF 180k). 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 three proposed amendments to Statement 140 (derecognition); a final FSP on freestanding financial instruments originally issued as employee compensation; a proposed FSP on accounting for guaranteed investment contracts, and summaries of recent FASB meetings.
• GASB developments, including an Implementation Guide on Post-employment Benefits Other Than Pensions.
• SEC developments, including recommendations of the SEC Advisory Committee on Smaller Public Companies; the SEC's XBRL programme; and swearing in of Christopher Cox as SEC Chairman.
• International developments, including IFRS 7 Financial Instruments: Disclosures; amendment of IAS 1 for capital disclosures; financial guarantee contracts; and IASB's proposed technical corrections policy.
• Adoption dates and deadlines – an eight-page chart of significant adoption dates and deadlines for the FASB, EITF, GASB, AICPA/AcSEC, SEC, PCAOB, and IASB/IFRIC.

6 September 2005: SEC must address off-balance-sheet assets and liabilities
Jeffrey Diermeier, President of the CFA Institute, has urged incoming US SEC Chairman Christopher Cox to make building investor trust and confidence his top priority. In a Public Statement (PDF 23k), Mr. Diermeier suggests four critical priorities for the SEC, including one on improvements to financial reporting:

4 September 2005: EU ambassador to USA says convergence is 'urgent'
In Remarks to the Irish Financial Services Association (PDF 42k), John Bruton, Ambassador of the European Union to the United States of America, described as 'urgent' the need to remove accounting standards differences and other inefficiencies and frictions caused by differing regulation in different jurisdictions. An excerpt:

4 September 2005: Day 2 of the September 2005 IFRIC meeting
The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Thursday, and Friday 1-2 September 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the second and final day of the meeting.

2 September 2005, London IAS 19 - Minimum Funding Requirements and the Asset Ceiling The IFRIC continued its deliberations on two issues: When refunds and reductions in contributions are 'available'. How a statutory minimum funding requirement affects that 'availability'? At the previous meeting the IFRIC consensus was that a refund of surplus should be treated as 'available' to the extent that either of the following is true: the IAS 19 surplus exceeds the MFR surplus or is expected to exceed the MFR surplus in future because the assumptions underlying the MFR measurement are based on historical values that have changed; or in the jurisdiction of the plan in question, the surplus existing on the wind up of the plan, after taking into account all costs associated with the wind-up, will revert to the entity. To the extent that an asset is recognised on this assumption, that fact shall be disclosed in the financial statements. At this meeting, the IFRIC discussed the remaining questions as well as some related issues identified at the previous meeting including: 1. The definition of availability; The IFRIC discussed a proposed definition of the term 'available' in the context of IAS 19. The staff proposed the following definition: A refund of plan assets or reduction in future contributions is available to the extent that there is no restriction on the entity, by virtue of any legal or constructive obligation, to use the surplus assets in this way. The IFRIC indicated that the definition does not seem to encompass situations where a potential future merger of funds will result in the utilisation of the surplus in one of those funds, as a method of utilising the surplus. 2. The treatment of the refund that may be available assuming the gradual run-down of the plan; The point was made that in the case where a surplus exists in a fund, and is not distributable to the sponsor at the discretion of the fund itself, an asset exists. This is despite any MFR requirements which would only be taken into account in assessing the extent to which that asset is recognised (that is, the ceiling). A concern was raised about allowing recognition issues to affect measurement considerations when discussing the MFR issues. 3. The methodology and assumptions to be used for determining the reduction in employer contributions that may be possible; The IFRIC discussed at some length, the differences that would arise in the methodology and assumptions when determining the reduction in employer contributions depending on whether the fund is a closed or an open fund and compared this to the situation where a fund is being run-down and one that is fully functional. The point was made that the MFR issues under discussion, highlight the difficulties in applying IAS 19 in its present state. IFRIC members expressed concerns about allowing for future changes in the size and demographics of the workforce consistent with the management's forecasts. Instead, there was general support for the view that only the circumstances at the balance sheet date should be taken into account without a futuristic forecast of changes. The counter argument to this view is based on the fact that although the asset is measured based on conditions existing at the balance sheet date, It will be available to employees or former employees in the future. 4. The treatment of any additional obligation on the entity that arises as a result of the MFR If the MFR contribution requirement exceeds the entity's future contribution requirement in any given year, the staff recommended that an additional liability be recognised in respect of the difference in that year. In other words, the difference between the MFR contribution requirement and the entity's future contribution requirement is not limited to zero in any given year. The IFRIC considered whether any additional obligation arising from the MFR requirement would be accounted for in terms of IAS 19 or IAS 37 but no decision was made. The staff was asked to prepare a summary of the points raised during the discussion for purposes of including them in the IFRIC Update publication so as to indicate to constituents the current thinking of IFRIC. After considering other issues to be tabled at a subsequent meeting, the IFRIC will be asked to consider whether to proceed with the drafting of an interpretation. Scroll down for notes from the first day of the IFRIC meeting. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

3 September 2005: UK ASB comments on conceptual framework project
The United Kingdom Accounting Standards Board has submitted comments to the joint project team from the IASB and the FASB that is working to update the two boards' conceptual frameworks. Click to Download the ASB Comments (PDF 48k).

3 September 2005: Day 1 of the September 2005 IFRIC meeting
The International Financial Reporting Interpretations Committee (IFRIC) is meeting at the IASB's offices in London on Thursday, 1 September (afternoon only) and Friday 2 September (morning only) 2005. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the first day of the meeting.

1 September 2005, London Service Concession Arrangements Scope IFRIC spent most of their time considering Agenda paper 2A, which dealt with the scope of draft interpretation D12. Many respondents expressed either opposition to the scope of the interpretation, or confusion over it. Staff had analysed the comments received and determined ten key areas where change may be necessary. Proposal 1: grantor's accounting should be outside the scope D12 does not deal with how grantors should account, as IFRIC was asked to provide guidance for operators. Many respondents commented that the scope exclusion limited the usefulness of the draft interpretation. Staff recommended that IFRIC not address the accounting by grantors in this interpretation, mostly due to time constraints, and the urgency of this project. IFRIC broadly agreed with the staff recommendation, but noted that one of the reasons for confusion here was that whilst D12 purports not to deal with the accounting by grantors, it does consider a grantor's involvement in the arrangement. D12 should only deal with the operator's accounting, but some of the wording should be re-drafted to clarify that generally, when an asset is not an operator's, it will be a grantor's, but this may not always be the case. Proposal 2: existing assets of the operator should be outside the scope of the interpretation An operator may have owned the infrastructure before the concession arrangement. It will have recognised this infrastructure as property, plant and equipment. The service concession arrangement may convey a right of use of the infrastructure to the grantor, in which case the operator would apply the requirements of IAS 16, IAS 17, and IFRIC 4 to determine whether it should derecognise the existing infrastructure. The basis for conclusions to D12 justifies this decision on the grounds that it would be: difficult to add to the requirements of IAS; and unusual for such assets to be significant in the context of a service concession arrangement as a whole. Many respondents did not understand that such infrastructure was excluded as IFRIC regarded existing requirements as clear. They further challenged the assertion that it would be unusual for these assets to be significant in the context of a service concession arrangement as a whole. IFRIC concluded that clarification and increased explanation was necessary. They noted that the current words were unclear in situations such as privatisations, whereby a formal contract may not have been signed at the outset of the concession arrangement (for instance, it may only have been signed at the date of privatisation.) Additionally, D12 should clarify that deals with recognition; it does not deal with derecognition. An operator may face derecognition issues, but these should be addressed by looking at IAS 16, IAS 17, and IFRIC 4. Proposal 3: Amendments to the 'significant residual interest' criterion The scope of D12 includes public-to-private service concession arrangements where the grantor controls or regulates the service provided by the operator and controls the significant residual interest in the infrastructure at the end of the concession. Many respondents questioned the exclusion of arrangements where no significant residual interest exists. They pointed out that significant residual interest is a good indicator of control, but questioned the validity of the assumption that infrastructure without a significant residual interest necessarily precludes control by the grantor. This issue prompted much debate by IFRIC members. An example was given of government land on which an operator builds and runs a school, whereby the concession and useful economic life of the school are both 30 years. It was noted that the residual value of the school after 30 years may not be zero, and would be a function of the money spent maintaining it during the concession period. This prompted discussion of whether assets that were constructed or bought for the concession, and whose useful economic life (determined at the outset of the arrangement) was no greater than the concession period were within the scope of D12. It was decided that staff would present a new paper, which would cover which assets are within the scope of D12, distinguishing between those assets with rights of use or access attached to them, and all other assets (which are presumed to be assets of the operator). The paper would also cover whether assets that must be returned at the end of the concession are within the scope of D12. Proposal 4: Clarifying the requirements for control of usage Respondents questioned how the criteria for control in D12 reconciled to those in IFRIC 4. They were also unclear on how to apply paragraph 5(a) of D12, which states that D12 applies to infrastructure if 'the grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them, and at what price?'. For example, a grantor could set a fixed price that the operator must charge, or it could set a maximum price. Staff agreed that the extent of control over pricing and usage may vary, and that D12's scope should extend beyond contracts where the grantor controls almost every aspect. In principal, many IFRIC members agreed with the staff, but did not consider the proposed amendments to be any clearer than the original text. Staff were asked to consider this issue as part of the paper they were going to present at a later meeting (see above). Proposal 5: Reconcile the scope of D12 to IFRIC 4 and SIC 29 Some respondents expressed concerns that the scope creates inconsistencies with IFRIC 4, as it does not require specific assets to be used in the concession arrangements to be identified. Additionally, SIC 29 identifies concession arrangements more widely. The staff view was that IFRIC did not need to re-articulate the all the requirements of IFRIC 4; it is implicit in service concession arrangements that the asset is specified. Further, SIC 29 is an interpretation requiring disclosures for a broad range of arrangements, whereas IFRIC does not need to address all such arrangements in this project. IFRIC concurred with the staff view. Proposal 6: Clarify application of the requirements to partly regulated assets At its December 2004 meeting, IFRIC considered draft guidance explaining how to account for infrastructure that is used partly for regulated and partly for non-regulated purposes. IFRIC concluded this guidance should not be included, as it was not possible for the interpretation to deal with every possible fact pattern. Several respondents requested clarification on dealing with infrastructure that is used for both regulated and unregulated purposes. Staff believed that the extent of the confusion was such that guidance should be given, and should be based on the guidance proposed in the December 2004 meeting. IFRIC members agreed that the accounting for such infrastructure was unclear. They also agreed, however, that the proposed guidance was not sufficient and that further analysis was needed. Proposal 7: Clarify the requirement for a public service obligation IFRIC agreed with the staff that paragraph 2 should be amended to clarify what is meant by public service obligation. The requirement is that the infrastructure be available for public use. It is irrelevant whether the public chooses to use the infrastructure. Where the infrastructure is not available for the public to use, a public service obligation does not exist. It was acknowledged that public service obligations may vary from country to country. Proposal 8: Clarify application where operator provides the infrastructure but not the services Some commentators remarked it was unclear whether D12 applied in situations where the operator provides the assets, and the services related to those assets, but the grantor provides the public service. For example, an operator builds and operates a hospital, and the government provides the medical services. Staff proposed that such arrangements should be within the scope of the interpretation. IFRIC felt this issue was similar to that in proposal 7 above, and that it depended on whether there was a public service obligation. A contract to build and maintain a building would not be within the scope, however if other services were provided (that is, all services other than the provision of medical services, such as timetabling operations), this would be within the scope. Clearer drafting was needed on this point. Proposal 9: Scope should exclude private-to-private service concession arrangements Many respondents commented the scope of D12 was too limited, as it excludes private-to-private service concession arrangements. Staff believed that private-to-private service concession arrangements should have to apply D12, rather they should determine whether existing literature provided guidance, and if not, whether the principles of D12 should be applied by analogy in accordance with the hierarchy in IAS 8. IFRIC agreed that there should be no change to broaden the scope. Proposal 10: Editorial text to clarify the term infrastructure Several respondents requested clarification on the meaning of 'infrastructure'. Staff proposed to amend paragraph 1 to clarify that infrastructure comprises all assets from which the public service derives. IFRIC asked that this issue also be considered in the paper the staff would present to it (see proposals 3 and 4 above). Other Issues Raised by Commentators Paper 2A contained an appendix of other issues raised by commentators. These were issues that staff did not believe IFRIC needed to dedicate significant resources to. IFRIC asked that renewal options be considered further by staff as part of its paper revisiting 'significant residual interest'. Revenue Recognition IFRIC briefly considered agenda paper 2C, which dealt with the issue of double recognition of revenue in the intangible asset model proposed in draft interpretation D14. Paper 2C notes that the double recognition of revenue only occurs in the intangible asset model. It does not occur in the financial asset model. The paper considers the guidance in IAS 18 on exchanges of goods or services, and IAS 16 on whether an exchange lacks commercial substance. The paper argues that the future cash flows that underpin the constructed infrastructure are the same as those that underpin the intangible asset (the right to operate the infrastructure to generate revenues). Therefore there has been an exchange of similar assets, and the transaction lacks commercial substance. As a result, the staff recommendation was that the intangible asset model should be revised to require that no revenue be recognised on the exchange of constructed infrastructure for an intangible asset giving the right to operate that infrastructure to generate future cash flows. The staff acknowledged that the resulting accounting would be the same as under the 'acquired intangible asset' alternative dismissed in D14. IFRIC members were not generally supportive of the staff view. They did not see why who the cash is received from (that is, from the grantor, or from a right to charge the public) should determine whether revenue is recognised during the construction phase of the arrangement. Further, arguing that the exchange lacked substance appears inconsistent with the logic that the asset is the grantor's, and not the operator's. If the operator has merely constructed an asset, on what basis does it transfer to the books of the grantor? An additional problem was that different accounting results would arise from a situation in which the same party constructs and operates the infrastructure to the situation where different parties construct and operate the infrastructure. Staff were asked to present a new paper that deals separately with the two main issues: double recognition of revenue and recognition of profit during the construction phase. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

1 September 2005: IFRIC 6 on waste management costs
The International Financial Reporting Interpretations Committee (IFRIC) has issued IFRIC Interpretation 6 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment. The issue that IFRIC 6 addresses is if an entity has an obligation to contribute to the costs of disposing of waste equipment based on its share of the market in a measurement period, what is the event that gives rise to a liability:

• the manufacture or sale of the equipment?
• participation in the market during the measurement period?
• the incurrence of costs in the performance of waste management activities?

• Press Release (PDF 64k)
• Summary of IFRIC 6