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31 August 2006: Heads Up on compensation, SOx 404

Deloitte & Touche LLP (USA) has published a Heads Up Alert (PDF 408k) dealing with two issues: Show Me the Money! – SEC Finalizes Disclosure Requirements for Executive Compensation Oh, What a Relief It Is! – SEC Proposes Extension of Section 404 Compliance Deadlines for Smaller Public Companies and Finalizes Extension for Certain Foreign Private Issuers

31 August 2006: Including estimates of the future in today's financial statements

The Bank for International Settlements (BIS) has posted on its website BIS Working Paper No 208, "Including estimates of the future in today's financial statements", by IASB Board Member Mary Barth. The paper was presented last November at a BIS workshop on accounting, risk management, and prudential regulation. Below is an abstract of the paper. The full paper may be Downloaded from the BIS Website (PDF 140k).

30 August 2006: IFAC papers on sustainability management and reporting
To help professional accountants in business better understand how they can advance, measure, and report on sustainable economic development, the Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has published two new information papers on the topic:

• Why Sustainability Counts for Professional Accountants in Business provides an overview of enterprise sustainability and sets out the business case for addressing the risks and opportunities of sustainable development at the enterprise level. It also discusses the ways in which professional accountants in business, especially those working for organisations with significant environmental or social impacts, will be involved with the measurement, recording and interpretation of sustainability-related information.
• Professional Accountants in Business – At the Heart of Sustainability? provides first-hand commentary from eleven senior professionals working in various enterprises around the world on the role of PAIBs and the challenges they face in promoting and implementing sustainable development strategies.

29 August 2006: A quiet revolution at the AASB?
Deloitte (Australia) has published Accounting Alert 2006/09 A Quiet Revolution at the AASB? (available on-line, not PDF). This Alert discusses the future role of the Australian Accounting Standards Board (AASB). "The AASB's role may be very different in the future and the potential impacts for financial reporting in Australia are numerous." Among the issues discussed:

• Towards true IFRS convergence. The AASB is developing an exposure draft that would seek to bring A-IFRSs much closer to IFRSs – reinstating options, deleting many additional disclosures and eliminating Australian guidance. But there will still be areas where differences exist, at least in the short term.
• The 'missing link' in A-IFRSs. The AASB has negotiated with the IASB to make the 'IASB support materials' – the bases for conclusions, implementation guidance, illustrative examples and so on – freely available to Australian residents.
• How many GAAPs does Australia need? Does one size really fit all? Recent developments are calling into question whether one set of standards based on IFRSs is the longer-term answer. Will not-for-profit and smaller entities have their own standards?

28 August 2006: Australian Alert on IASB debt-equity proposals
Deloitte (Australia) has published Accounting Alert 2006/08 Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation – Proposed Amendments to AASB 132. Alert 2006/08 explores the IASB's proposals to amend the debt versus equity distinction in IAS 32 in relation to puttable instruments and obligations on liquidation.

• Download Alert 2006/08 (PDF 51k)
• Download a Special IAS Plus Newsletter on the IASB's Debt-Equity Proposals (PDF 67k)
• Go to Links to All Past Australian Accounting Alerts

28 August 2006: IFRS presentation and disclosure checklist 2006
On 20 August 2006, we posted Deloitte's new IFRS Presentation and Disclosure Checklist for the year ended 31 December 2006 in PDF format (PDF 1,181k). In response to requests, we are now also posting it as a Zipped Microsoft Word File (ZIP 409k). There are permanent links to Deloitte's model IFRS financial statements, IFRS presentation and disclosure checklists, and IFRS compliance questionnaires Here.

28 August 2006: FASB fair value measurement standard nears completion

At its meeting on 16 August 2006, the US Financial Accounting Standards Board authorised its staff to prepare a final draft of a Statement on Fair Value Measurements for vote by written ballot. The FASB plans to issue the Statement in September 2006. That Statement will form the basis of the next step of the IASB's project to develop fair value measurement guidance. The IASB plans to issue a discussion paper in the fourth quarter of 2006 that would:

• indicate the IASB's preliminary views of the provisions of the FASB's Statement on Fair Value Measurements and
• identify differences between the FASB Statement and fair value measurement guidance in existing IFRSs.

28 August 2006: New data on foreign companies registered with the US SEC
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. The latest updates reflect new data on the number of non-US companies registered with the US Securities and Exchange Commission: 1,236 non-US companies from 53 countries were registered at 31 December 2005:

• Alphabetical Listing of Companies (PDF 523k)
• Geographic Listing of Companies (PDF 410k)
• Listing by US Trading Market (PDF 55k)
• Geographic Summary by Jurisdiction of Incorporation (17k)

26 August 2006: Agenda topics for IFRIC meeting 7-8 September 2006

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday 7 September and Friday 8 September 2006. The meeting agenda is set out below.

7-8 September 2006, London Thursday 7 September 2006 (10:00 - 18:00) Opening remarks and administrative matters Service Concession Arrangements IAS 18 Revenue – Real Estate Sales IFRIC D17: IFRS 2 – Group and Treasury Share Transactions IFRS 2 Share-based Payment – Employee benefit trusts in the individual or separate financial statements of the sponsor Friday 8 September 2006 (09:00 - 12:30) IAS 18 Revenue – Upfront revenue recognition by a fund manager IAS 38 Intangible Assets – Update on accounting for catalogues and other marketing costs Recommendations regarding requests for IFRIC agenda items IAS 39 Financial Instruments: Recognition and Measurement – Testing of hedge effectiveness on a cumulative basis IFRS 7 Financial Instruments: Disclosures – Presentation of 'net finance costs' on the face of the income statement IAS 38 Intangible Assets – Classification of SIM cards IAS 38 Intangible Assets – Adoption of IAS 38 (rev 2004) IAS 11 Construction Contracts – Allocation of profit in unsegmented contracts Agenda Committee update

26 August 2006: Nearly 700,000 e-learning downloads from IAS Plus
As of 23 August 2006, 693,777 Deloitte IFRS e-learning modules have been downloaded from IAS Plus by people in over 150 jurisdictions. Deloitte's IFRS e-learning was launched at the end of January 2004. Many of the downloaded modules have multiple users because organisations are permitted to install them on their own servers for the internal use of their employees or students. In addition, hundreds of thousands of additional modules have been completed online and offline by Deloitte staff. You can always access IFRS e-learning without charge by clicking on the light bulb icon on the IASPlus home page. Thirty-five modules are now available covering virtually all IFRSs. Because of the complexity of accounting for financial instruments, there are three modules on IAS 32 and IAS 39 (a general introduction and special modules on hedge accounting and derecognition).

25 August 2006: IFRIC proposes guidance on pension accounting
The International Financial Reporting Interpretations Committee (IFRIC) has published draft Interpretation D19 IAS 19 – The Asset Ceiling: Availability of Economic Benefits and Minimum Funding Requirements. IFRIC D19 would clarify the interaction between statutory or contractual minimum funding requirements and the requirements of IAS 19 Employee Benefits. The proposals clarify how to determine the limit on a pension plan asset that may be recognised in an employer's balance sheet as well as how the pensions asset or liability may be affected when there is a statutory or contractual minimum funding requirement. D19 may be downloaded from IASB's Website. Comment deadline is 31 October 2006. Click for Press Release (PDF 64k).

24 August 2006: EFRAG is forming a user advisory panel
The European Financial Reporting Advisory Group (EFRAG) is seeking candidates for membership on a new User Panel that it plans to form. The panel will be asked to provide input from the financial statement user community on draft EFRAG comment letters, endorsement advice to the European Commission, and other EFRAG activities. The User Panel will meet for one day every three months in Brussels. Candidates for the User Panel should be actively working as users of financial statements, including financial analysts and investors taking investment decisions. Applications should be sent to EFRAG at info@efrag.org no later than 20 September 2006. Click for User Panel Terms of Reference (PDF 27k).

23 August 2006: New IFAC paper on internal controls
The International Federation of Accountants has published a paper on Internal Controls – A Review of Current Developments. The paper, developed by IFAC's Professional Accountants in Business (PAIB) Committee, summarises key internal control frameworks, highlights recent legislative and other initiatives, and discusses the role of internal control in enhancing corporate governance.

23 August 2006: Where do IAS Plus visitors come from?
Cumulatively, since we started tracking in May 2003, the top 10 jurisdictions from which visitors to IAS Plus come are United Kingdom, United States, Germany, Hong Kong, China, France, Australia, Malaysia, Italy, and The Netherlands. An interesting phenomenon is the gradual shift in visitors away from Europe and more toward Asia-Pacific, where IFRSs are gradually being adopted. For example:

• In July 2006 the top 10 visitor jurisdictions included Hong Kong, China, and Malaysia. None of those three was in the top 10 in July 2004.
• In July 2004, the top 10 referrers included Google France and Google Italy. By July 2006 those two countries were replaced by Google Philippines and Google Malaysia. And Google Canada has replaced MSN: Canada has announced a plan to replace current Canadian GAAP with IFRSs.

22 August 2006: Two publications from IFAC education board

IFAC's International Accounting Education Standards Board has published two documents:

• Proposed new guidance outlining the knowledge and skills necessary to prepare professional accountants to perform competently in one or more information technology roles. Those roles could include:
  • Assurance provider and evaluator, such as an internal financial or operational auditor or evaluator of information systems;
  • Manager of information systems, such as a knowledge manager or data center manager; and
  • Designer of business systems, alone or as part of team, such as a knowledge engineer, external advisor or consultant.
  The proposal is in the form of an exposure draft entitled Information Technology for Professional Accountants. Click for Press Release (PDF 84k)
• An information paper on Approaches to the Development and Maintenance of Professional Values, Ethics and Attitudes in Accounting Education Programs. The paper will serve as the basis for the development of an International Education Practice Statement on this topic. Click for Press Release (PDF 82k).

20 August 2006: IFRS presentation and disclosure checklist 2006
We have posted Deloitte's new IFRS Presentation and Disclosure Checklist for the year ended 31 December 2006 (PDF 1,181k). This checklist addresses the presentation and disclosure requirements of IFRSs in issue at 30 June 2006. It does not address the requirements of IFRSs as regards recognition and measurement. The checklist is formatted to allow the recording of a review of financial statements, with a place to indicate yes/no/not-applicable for each presentation and disclosure item. You can always find Deloitte's model IFRS financial statements, IFRS presentation and disclosure checklists, and IFRS compliance questionnaires Here.

20 August 2006: EU amends 4th and 7th directives
On 16 August 2006, the European Union published in the Official Journal of the EU a new Directive 2006/46/EC on the annual and consolidated accounts of certain types of companies, including banks, insurance undertakings, and other financial institutions. The new directive modifies the 4th and 7th company law directives ('accounting directives' 78/660/EEC and 83/349/EEC), and also the accounting directives for banks (86/635/EEC) and insurance undertakings (91/674/EEC). It establishes collective responsibility of board members for the financial statements and annual reports, enhances transparency in related parties?transactions and off-balance sheet arrangements, and, for publicly traded companies, introduces a requirement for a corporate governance statement. The size thresholds for exempting small and medium-sized entities from specified accounting and auditing rules were also raised. The new Directive comes into law 20 days after publication in the Official Journal. EU member states then have two years to enact the provisions of the new directive into their national legislation. Click for Announcement in the Official Journal of the EU (PDF 63k).

19 August 2006: IFRIC will meet 7-8 September 2006

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday 7 September and Friday 8 September 2006. The agenda will be announced shortly.

18 August 2006: Update on accounting standards in Morocco
Following consultation with the banking and finance industry, the Central Bank of Morocco (Bank Al Maghrib) is developing a regulation that is expected to require Moroccan banks and other financial institutions to prepare their 2008 consolidated financial statements using International Financial Reporting Standards. Currently, the Moroccan Stock Exchange Law requires all companies listed on the Casablanca Stock Exchange other than banks and financial institutions to choose between IFRSs and Moroccan GAAP. We have updated our Morocco Page accordingly.

15 August 2006: Update on accounting standards in Vietnam
We have updated our Vietnam Page with the latest information about Vietnamese Accounting Standards (VASs), including a list of VASs currently in force. VASs have been developed by the Ministry of Finance (MOF) based on IASs issued prior to 2003. The MOF is considering a proposal to grant rights to the Vietnam Association of Certified Public Accountants (VACPA) to formulate and update Vietnamese Accounting Standards. You will find links to all of our jurisdiciton pages Here.

15 August 2006: Innovation in emerging markets
In recent years, global manufacturers have been enticed by the enormous business potential presented by emerging markets. But what is required to succeed in these markets whose cultures, customer requirements, labor practices, and regulatory regimes are very different than those in developed markets? How are companies adjusting their product offerings, human resource strategies, and supply chains? A new publication from Deloitte Innovation in Emerging Markets: Strategies for Achieving Commercial Success identifies five challenges that companies must innovatively tackle to achieve success in emerging markets:

• Build new value propositions to deliver different product offerings that meet the unique needs of emerging market customers. In many cases, this will be at dramatically lower price points than in developed markets.
• Globalise research and development by locating R&D facilities in emerging markets to acquire deeper customer knowledge, and to build, market and distribute tailored products.
• Tailor talent management strategies to the unique needs of employees in emerging markets, rethinking how to effectively recruit, develop, deploy, and connect people.
• Master the complexity of global value chains to provide autonomy at the local level, while leveraging the strengths of headquarters, including governance and management know-how.
• Build risk management capabilities to effectively detect, correct and manage the unique profile of risks presented by emerging markets, such as the protection of intellectual property.

14 August 2006: Comparison of Canadian GAAP and IFRSs
The staff of the Accounting Standards Board of Canada (AcSB) has published a high-level comparison of current Canadian standards and IFRSs. Its purpose is to provide information about the extent of similarity between Canadian GAAP and IFRSs. The comparison reflects AcSB and IASB standards at 31 March 2006. The comparison covers significant differences only and does not include all of the differences that might arise in a particular entity's circumstances. It is not intended for use in preparing financial statements. AcSB staff is also maintaining a more detailed comparison for those interested in comparison at a technical level. It is available on the AcSB's Website. Click to Download the Comparison of IFRSs and Canadian GAAP as of 31 March 2006 (PDF 286k). There's a permanent link on our Canada Page. Deloitte is grateful to the AcSB for allowing us to post this comparison. We have Other Comparisons Here.

13 August 2006: Two Swedish accountancy bodies merge
Two main Swedish professional accountancy organisations have agreed to merge effective 1 September 2006. The two groups are the Swedish Organisation of Certified Public Accountants (Foreningen for Auktoriserade Revisorer, or FAR) and the Swedish Organisation of Auditors (Svenska Revisorsamfundet or SRS). The combined organisation will have about 4,000 members comprising auditors and a range of specialists. The name of the new body will be announced on 21 August 2006.

12 August 2006: AICPA-AAA-IAASB research on auditor's report
The American Institute of Certified Public Accountants (AICPA), the American Accounting Association (AAA), and the International Auditing and Assurance Standards Board (IAASB) have launched a research initiative aimed at providing a better understanding of users' perceptions of the financial statement audit and the auditor's report. A joint request for proposals solicits academic research to identify and provide information about such perceptions. Proposals must be submitted by 2 October 2006. The AICPA and IAASB will fund between US$10,000 and $20,000 for each project. Researchers are required to submit a summary of results by 1 October 2007, with a more detailed report by 7 January 2008. Click for:

• Request for Proposals (PDF 53k)
• IAASB Press Release (PDF 85k)

10 August 2006: Section 404 relief for small companies, FPIs

The US Securities and Exchange Commission has offered smaller public companies and many foreign private issuers further relief from compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Two aspects of Section 404 are at issue: Section 404(a), which requires a report by management assessing the effectiveness of the company's internal control over financial reporting Section 404(b), which requires an auditor's attestation on internal controls

10 August 2006: Interview on new IFRS-based Chinese standards
We have posted an interview with Stephen Taylor, head of the Deloitte Asia-Pacific IFRS Centre of Excellence, about China's new Accounting Standards for Business Enterprises that are based on IFRSs. The interview, titled Thinking Globally, Setting Standards Locally (PDF 563k) was included in Issue 3/2006 of Australian CPA Network magazine, published by the Hong Kong branch of CPA Australia. Stephen highlights some of the differences between the new Chinese standards and IFRSs and comments on their efficacy and wider implications. Several of the interview questions relate to convergence. Here's one:

9 August 2006: Call for applications for SARG membership
By Decision of 14 July 2006 (PDF 42k), the European Commission established the Standards Advice Review Group (SARG). SARG's role is to advise the Commission in the endorsement process of IFRSs including IFRIC Interpretations. The SARG will "assess whether EFRAG's opinions on endorsement of IFRSs and IFRICs are well-balanced and objective". The SARG will have a maximum of seven members appointed by the Commission. The Commission has now published a Call for Applications for SARG Membership (PDF 22k). The Commission intends to take the following criteria into account when assessing applications:

• proven competence and technical experience, including at European and/or international level, in the accounting area, in particular in financial reporting;
• independence (that is, a person not directly involved with a private entity, organisation, association or other entity using, advising on, auditing IFRS financial statements or representing the interests of users and preparers);
• the need for balanced composition in terms of geographical origin, gender, the functions and size of entities concerned.

• We have created a new SARG Page on IAS Plus.

9 August 2006: New Accounting Roundup newsletter posted

We have posted the July 2006 Edition of Accounting Roundup (PDF 458k) published by Deloitte & Touche LLP (USA). Topics covered in this 30-page issue include:

9 August 2006: Annual FASAC survey addresses convergence
The US Financial Accounting Standards Advisory Council (FASAC) is in the midst of its Annual Survey of the Views of Members of FASB and FASAC (PDF 160k) on issues confronting the US Financial Accounting Standards Board. The 2006 survey focusses on four areas – FASB priorities, future issues, educational efforts, and international convergence.

9 August 2006: Global trends in venture capital - Deloitte survey

Deloitte Touche Tohmatsu has published the 2006 Global Venture Capital Survey (PDF 1,389k). The survey was conducted in association with Venture Capital Associations in the Americas, Asia Pacific and Europe, Middle East and Africa. Over half of all the respondents come from outside the United States, which gives some indication of the growing profile of global VC communities. Over half of all respondents – 53% of those in the United States and 58% non-US – are set on global expansion in the coming year. VCs are increasingly viewing strategic alliances and international interdependence as a key method of globalisation. 75% of non-US and 71% of US respondents viewed these as key to success. The report is based on 505 responses from general partners of venture capital companies with assets under management ranging from less than US$100 million to greater than $1 billion. Of the 505 total respondents, 279 were based in the Americas, 140 in Europe, Middle East and Africa and 86 in Asia Pacific.

8 August 2006: Implementation of CESR's financial information standard
In March 2003, the Committee of European Securities Regulators (CESR) published its Standard No. 1 Financial Information (PDF 151k). CESR Standard 1 is aimed at developing and implementing a common approach to the enforcement of International Financial Reporting Standards (IFRSs) throughout the EU. It sets out 21 high level principles that define enforcement and describes the principles that EU member states should adopt in enforcing IFRSs, including structure of their enforcement authority; selection of financial information to be reviewed for enforcement purposes; actions available to enforcers (including, in particular, asking for public correction); cross-border coordination; and reporting by enforcement agencies. CESR's Review Panel has now completed and published its first Review of Implementation of CESR Standard 1 in CESR's jurisdictions (PDF 2,630k). The Panel concludes that:

• Full implementation of CESR Standard No 1 has occurred in Belgium, Denmark, France, Greece, Italy, Norway, Portugal, and United Kingdom.
• Partial but significant implementation has occurred in Cyprus, Ireland, Malta, Spain, and Finland.
• Partial implementation, but with a significant majority of principles not fully implemented, has occurred in Czech Republic, Estonia, Germany, Luxembourg, Poland, Slovenia, and Slovakia.
• Standard 1 has not been implemented in Hungary, Netherlands, Latvia, Sweden, and Austria.
• Lithuania and Iceland did not submit a response to CESR's enquiry.

7 August 2006: Changes to CESR structure; new CESR-Fin chairman

The Committee of European Securities Regulators (CESR) has amended its Charter (PDF 82k) to enable it to "shift its priorities to more operational tasks so as to deliver effective supervisory convergence across the EU". Changes include:

• a more straightforward decision making procedure, including the possibility to vote;
• a mediation mechanism between members to facilitate a rapid outcomes;
• the integration of the Review Panel into the Charter, which will permit a more thorough cross-examination of the way in which members apply the new legal framework;
• a commitment to respect data protection rules when developing databases;
• greater legal certainty of confidentiality to allow the secretariat to fully assist the members on operational issues.

7 August 2006: Updated US GAO study on financial statement restatements
The United States Government Accountability Office has updated its 2002 study of financial statement restatements in the USA. In 2002, GAO reported that the number of restatement announcements due to financial reporting fraud and/or accounting errors grew significantly between January 1997 and June 2002, negatively impacting the restating companies' market capitalisation by billions of dollars. The US Congress recently asked the GAO to update key aspects of its 2002 report. The 2006 report discusses (a) the number of, reasons for, and other trends in restatements; (b) the impact of restatement announcements on the restating companies' stock prices and what is known about investors' confidence in US capital markets; and (c) regulatory enforcement actions involving accounting and audit issues. Click for:

• GAO 2006 Restatements Study (PDF 1,838k)
• GAO 2006 Highlights Sheet (PDF 64k)
• GAO 2002 Restatements Study (PDF 5,270k)
• GAO 2002 Restatements Study (Zipped for faster download, 3,008k)

6 August 2006: IASB makes draft of SME Exposure Draft available for download
The IASB has posted on its website the latest draft of an Exposure Draft (ED) prepared by staff for the IASB's project to develop an International Financial Reporting Standard for Small and Medium-sized Entities (SMEs). That Project is ongoing, and the draft posted is a work in progress, not a finished product. Further changes, some of which could be substantial, will be made to this draft before the IASB publishes it for public comment. The IASB has discussed earlier drafts of this ED at public meetings, and this draft reflects the cumulative, tentative decisions made by the conclusion of its meeting in July 2006. Those tentative decisions have been reported in the newsletter IASB Update. The IASB has not approved this draft. The draft is being made publicly available purely for information – to give interested parties an update on the project. The IASB does not request comments on this draft, and the staff will not be in a position to consider or respond to any comments. The IASB expects to publish an ED for public comment later this year.

6 August 2006: Two special edition IAS Plus Newsletters

Deloitte's IFRS Global Office has published two special editions of our IAS Plus Newsletter: Special Edition - IFRIC 10 (PDF 49k). On 20 July 2006 the IFRIC published IFRIC 10 Interim Financial Reporting and Impairment. IFRIC 10 addresses the interaction between the requirements of IAS 34 Interim Financial Reporting and impairment recognition and reversal under IAS 36 Impairment of Assetsand IAS 39 Financial Instruments: Recognition and Measurement. This newsletter summarises the Interpretation. Special Edition - IASB's Conceptual Framework Discussion Paper (PDF 56k). On 6 July 2006, as a first step in their joint project on the Conceptual Framework of financial reporting, the FASB and the IASB each published on a discussion paper setting out their preliminary views on the objective of financial reporting and the qualitative characteristics of decision-useful financial information. This newsletter summarises the views in the Discussion Paper. You will find all Past IAS Plus Newsletters Here. You can sign up for Free Subscription by Email.

6 August 2006: ICAS urges only two tiers of standards in the UK
The Institute of Chartered Accountants of Scotland's Accounting Standards Committee recommends that the United Kingdom should move towards adopting a single set of International Accounting Standards for all companies except the smallest as quickly as possible. ICAS supports the development of a simplified international standard for small companies (a project currently under way at the IASB), but is "opposed to what would be a third set of accounting standards applicable to medium-sized and unlisted companies. These companies should follow full IFRSs, although reduced disclosure requirements for these companies, as well as for subsidiaries, may be appropriate." ICAS is keen for the ASB to encourage the International Accounting Standards Board (IASB) to address this issue on an international level. Click for ICAS Statement (PDF 35k).

5 August 2006: US House passes Financial Reporting Transparency Act

On 25 July 2006, the US House of Representatives passed HR 5024 the Promoting Transparency in Financial Reporting Act of 2006. The Act would require the US Securities and Exchange Commission (SEC), Public Company Accounting Oversight Board (PCAOB), and Financial Accounting Standards Board (FASB) to give annual testimony, beginning in 2007, updating the House Financial Services Committee on their efforts to:

• reassess complex and outdated accounting standards;
• improve the understandability, consistency, and overall usability of the existing accounting and auditing literature;
• develop principles-based accounting standards;
• encourage the use and acceptance of interactive data; and
• promote disclosures in plain English.

• Full Text of HR 5024 Referred to the Senate (PDF 38k)
• House Committee Press Release (PDF 105k)

5 Auguswt 2006: Standard setting activity in Asia-Pacific region

We have updated the following pages on this website to reflect recent standard setting activity in the Asia-Pacific region: Australia China Hong Kong SAR Japan Malaysia New Zealand Philippines Singapore

4 August 2006: EC Standards Advice Review Group established
The European Commission has established a Standards Advice Review Group (SARG) in the area of accounting "to ensure objectivity and proper balance of the European Financial Reporting Advisory Group's (EFRAG) opinions". The Group will be composed of independent experts and high-level representatives from National Standard Setters whose experience and competence in accounting are widely recognised. The Group's task will be to assess whether the endorsement advice given by the EFRAG is well balanced and objective. The group will deliver its advice normally within three weeks. The final advice will be published on the Commission's website. EC Internal Market and Services Commissioner Charlie McCreevy said:

3 August 2006: SEC and CESR launch financial reporting work plan
The US Securities and Exchange Commission and the Committee of European Securities Regulators (CESR) have released a joint work plan on financial reporting. The main focus of the plan is the application by internationally active companies of International Financial Reporting Standards and US Generally Accepted Accounting Principles in the United States and the European Union, respectively. The plan envisions cooperation by the staffs of the SEC and CESR on the modernization of financial reporting and disclosure information technology, and regulatory platforms for risk management. The stated goal of the staff cooperation is to promote:

• the development of high quality accounting standards;
• the high quality and consistent application of IFRS around the world;
• full consideration of international counterparts' positions regarding application and enforcement; and
• the avoidance of conflicting regulatory decisions on the application of IFRS and US GAAP.

• SEC Announcement and Full Text of Work Plan (PDF 65k).
• CESR Announcement (PDF 80k)

3 August 2006: Review of pension disclosures under IFRSs and UK GAAP
The United Kingdom Financial Reporting Review Panel (FRRP) has published a study of disclosures of defined benefit pension plans under IFRSs and UK GAAP. The review examined the 2005 pension disclosures of 20 listed groups that used IAS 19 Employee Benefits and of ten large private companies that used UK FRS 17 Retirement Benefits. The FRRP found a "high level of compliance with the detailed disclosure requirements of IAS 19, although there were some omissions," which the report describes. The FRRP concludes that the quality of pensions reporting under IFRSs could be improved by :

• Better disclosure of the uncertainties surrounding accounting estimates
• More consistent interpretation of what is meant by principal assumptions
• A focus on more accessible, and less technical explanations
• More information about non-standard types of assets held
• Avoiding detailed disclosure of immaterial amounts

2 August 2006: Heads Up on stock options backdating
On 29 July 2006 we posted a News Story on an Audit Practice Alert issued by the US Public Company Accounting Oversight Board addressing "Matters Relating to Timing and Accounting for Options Grants". Deloitte & Touche LLP (USA) has published a Heads Up Alert (PDF 113k) reviewing the PCAOB's new guidance. The Heads Up explains what option backdating and spring-loading are, and outlines auditing considerations.

2 August 2006: Plan for incorporating IFRSs into Canadian GAAP
In January 2006, the Accounting Standards Board of Canada (AcSB) adopted its Strategic Plan for the Direction of Accounting Standards (PDF 139k). The Plan includes the decision to move financial reporting for Canadian publicly accountable enterprises to a single set of globally accepted high-quality standards, namely, International Financial Reporting Standards (IFRSs), as issued by the International Accounting Standards Board (IASB). The AcSB has now published a more detailed Implementation Plan for Incorporating International Financial Reporting Standards into Canadian GAAP (PDF 373k). The Implementation Plan identifies key decisions that the AcSB will need to make as it implements the Strategic Plan for publicly accountable enterprises. Although the Impmentation Plan may be revised and updated as circumstances warrant, currently it envisions 2010 as the last year that publicly accountable enterprises will report under current Canadian GAAP and 2011 as the first year of reporting under a complete set of IFRS-based Canadian standards. Because some current Canadian standards are already IFRS-based, and because others will become IFRS-based before 2011, the changeover to IFRS-based Canadian standards is likely to be more gradual, rather than abrupt, for most enterprises.

2 August 2006: World accounting standard setters meeting

The International Accounting Standards Board will host a meeting of accounting standard setting bodies from around the world on Monday and Tuesday, 25 and 26 September 2006, at the Renaissance Chancery Court Hotel in London. The meeting will be open to public observation. Agenda topics for the meeting are as follows:

2 August 2006: Public Sector Accounting Standards Board update
We have posted the July 2006 issue of IPSASB Update. The newsletter reports the decisions made at the meeting of the International Public Sector Accounting Standards Board (IPSASB) 3-6 July 2006. The IPSASB develops standards for accounting and financial reporting by national, regional, and local governments and related governmental agencies. Those standards are generally based on IFRSs, and profit-oriented government business enterprises are required to comply directly with IFRSs. The IPSASB's current work programme includes an ongoing project on convergence with IFRSs and projects on several issues on which the IASB is also working, such as the conceptual framework, service concessions, and employee benefits. Click to download:

• July 2006 IPSASB Update Newsletter (PDF 137k).
• Info about the IPSASB and Links to Past Newsletters.

2 August 2006: IFRS convergence in Japan
The Business Accounting Council – an advisory panel of experts to the Financial Services Agency (FSA) of Japan – has released a statement titled Toward the International Convergence of Accounting Standards (PDF 31k). FSA is Japan's securities regulator. The statement encourages continued improvements of Japanese accounting standards so that those standards will be deemed equivalent to IFRSs by the European Commission. A favourable equivalence decision would allow Japanese companies to continue to prepare financial statements using Japanese accounting standards for the purpose of raising capital in European public capital markets.

1 August 2006: Revised definition of 'network firm' in IFAC ethics code
IFAC's International Ethics Standards Board for Accountants (IESBA) has revised the Code of Ethics for Professional Accountants by updating the definition of a network firm. Network firms are required to be independent of an audit client of another firm within the network. Under the revised definition, a network firm is a firm or entity that belongs to a network. A firm can be a sole practitioner, partnership, or corporation of professional accountants or an entity that controls or is controlled by such parties. A network is a larger structure:

• that is aimed at co-operation, and
• that is clearly aimed at profit or cost sharing or shares common ownership, control or management, common quality control policies and procedures, common business strategy, the use of a common brand-name, or a significant part of professional resources.

1 August 2006: Updated summary of issues not added to IFRIC agenda
We have updated our Summary of Issues Not Added to IFRIC's Agenda to reflect IFRIC's final decision in July 2006 not to add the following topic to its agenda:

• IAS 17 Leases – Recognition of contingent rentals

1 August 2006: Summary of ARC 7 July 2006 meeting

The European Commission has posted a Summary of the 7 July 2006 Meeting of its Accounting Regulatory Committee (PDF 39k). Matters discussed include:

• Roundtable on Consistent Application of IFRSs (click for Info on the Roundtable)
• IFRIC working procedures and due process (see our news story of 7 May 2006.
• Equivalence between IFRSs and third country GAAP, in particular US GAAP
• IASB financing
• Update on the Commission's project to consolidate the various Regulations by which IFRSs have been endorsed in the past into a single Regulation containing all endorsed IFRSs
• Creation of a 'Standards Advice Review Group'. The ARC summary states:

  "The creation of the Group was foreseen in the Commission-EFRAG Working Arrangement signed earlier this year. It had not been possible to formally adopt EFRAG as a technical committee of the Commission and this working arrangement had been the alternative, suitable compromise."

• Service concession arrangements
• Segment reporting

1 August 2006: Updated EFRAG endorsement status report
The European Financial Reporting Advisory Group has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. Click to download the Endorsement Status as of 25 July 2006 (PDF 28k). Currently, the following IASB pronouncements have not yet been endorsed for use in Europe:

• IFRIC 8 Scope of IFRS 2
• IFRIC 9 Reassessment of Embedded Derivatives
• IFRIC 10 Interim Financial Reporting and Impairment

1 August 2006: US SEC expands disclosures about executive compensation
The US Securities and Exchange Commission has adopted changes to the rules requiring disclosure of executive and director compensation, related person transactions, director independence and other corporate governance matters, and security ownership of officers and directors. The changes would affect disclosure in proxy statements, annual reports, and registration statements, as well as the current reporting of compensation arrangements. The rules would require that most of this disclosure be provided in plain English. Click for SEC Announcement (PDF 69k). In announcing the new disclosure requirements, SEC Chairman Christopher Cox said: