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27 February 2006: Updated IASB-FASB convergence agreement
The US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have published a Memorandum of Understanding (MOU) that reaffirms the boards' shared objective of developing high quality, common accounting
standards for use in the world's capital markets. The MOU is a further elaboration of the objectives and principles first described in an MOU published in October 2002. While the new document does not represent a change in the boards' convergence work programme, it does reflect the context of the US SEC's 'roadmap' for the removal of the reconciliation requirement for non-US companies that use IFRSs and are registered in the United States. It also reflects the work undertaken by the Committee of European Securities Regulators (CESR) to identify areas for improvement of accounting standards.
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Both the FASB and the IASB note that removing the current reconciliation requirements will
require continued progress on the boards' convergence programme. Accordingly, the MOU
sets out milestones that the FASB and the IASB believe are achievable...
The boards agreed that trying to eliminate differences between standards that are both in need
of significant improvement is not the best use of resources. Instead, new common standards
should be developed. Consistent with that principle, convergence work will continue to
proceed on the following two tracks:
- First, the boards will reach a conclusion about whether major differences in focused
areas should be eliminated through one or more short-term standard-setting projects,
and, if so, the goal is to complete or substantially complete work in those areas by
2008.
- Second, the FASB and the IASB will seek to make continued progress in other areas
identified by both boards where accounting practices under US GAAP and IFRSs are
regarded as candidates for improvement.
The goal by 2008 is to reach a conclusion about whether major differences in the following
few focused areas should be eliminated through one or more short-term standard-setting
projects and, if so, to complete or substantially complete work in those areas.
Topics for short-term convergence include:
| To be examined by the FASB | To be examined by the IASB |
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| Fair value option* | Borrowing costs |
| Impairment (jointly with the IASB) | Impairment (jointly with the FASB) |
| Income tax (jointly with the IASB) | Income tax (jointly with the FASB) |
| Investment properties** | Government grants |
| Research and development | Joint ventures |
| Subsequent events | Segment reporting |
FASB Note:
*Already on FASB's active agenda
** To be considered by the FASB as part of the fair value option project |
IASB Note:
Topics are part of the IASB's existing short-term convergence project except for impairment, which will be added to that project |
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The two boards will meet on 27 and 28 April 2006 in London, when they will discuss topics described in the MOU. Click for:
27 February 2006: Agenda project pages updated for February meeting
We have updated the following agenda project pages to reflect discussions and decisions at the International Accounting Standards Board's meeting on 21-24 February 2006:
26 February 2006: Notes from the fourth day of the IASB meeting
We have combined all of the notes taken by Deloitte observers at the International Accounting Standards Board's meeting on 21-24 February 2006 onto a Separate Agenda Page.
24 February 2006: Notes from the third day of the IASB meeting
We have combined all of the notes taken by Deloitte observers at the International Accounting Standards Board's meeting on 21-24 February 2006 onto a Separate Agenda Page.
24 February 2006: Agenda for IFRIC meeting 2-3 March 2006
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The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on
Thursday 2 March and Friday 3 March 2006. The agenda for the meeting is below: |
Thursday 2 March 2006
- Introduction - Opening remarks; administrative matters; minutes of the January 2006 IFRIC meeting
- Service Concession Arrangements:
- Determining the accounting model - The dividing line between the financial (D13) and the intangible asset (D14) models
- Interaction of D12-14 with IFRIC 4 Determining Whether an Arrangement contains a Lease
- Analysis of remaining comments received on the draft Interpretations D12-14
- IAS 18 Revenue Recognition - Sales of real estate
- IAS 19 Post-employment Benefits - The effect of a minimum funding requirement on the asset ceiling
- IAS 32 Financial Instruments: Disclosure and Presentation - Classification of a financial instrument as liability or equity
- IFRS 1 First-time Adoption of International Accounting Standards - Cost of a subsidiary in the separate financial statements of a parent
Friday 3 March 2006
- IFRIC Relationship with National Standard-Setters and National Interpretive Groups
- Customer Loyalty Programmes
- Review of Tentative agenda decisions published in December 2005 IFRIC Update
- IFRS 3 Business Combinations - Whether a new entity that pays cash can be identified as the acquirer
- IFRS 3 Business Combinations - 'Transitory' common control
- IAS 17 Leases - Leases of land that do not transfer title to the lessee
- IAS 12 Income Taxes - Scope
- IAS 18 Revenue - Subscriber acquisition costs in the telecommunications industry
- Review of Tentative agenda decisions published in January 2006 IFRIC Update
- IAS 27 Consolidated and Separate Financial Statements - Separate financial statements issued before consolidated financial statements
- Recommendations by Agenda Committee regarding requests for IFRIC agenda items
- IFRS 2 Share-based Payment - Share plans with cash alternatives at the discretion of the entity
- IFRS 2 Share-based Payment - Share plans with cash alternatives (grant date and vesting period)
- IFRS 2 Share-based Payment - Fair value measurement of postvesting transfer restrictions
- IAS 39 Financial Instruments: Recognition and Measurement - Aspects of derecognition in the context of securitisation
- IAS 39 Financial Instruments: Recognition and Measurement - Hedging inflation risk - whether inflation risk qualifies as a separable component for hedging purposes
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24 February 2006: More on convergence on embedded derivatives
As noted in our news story of 21 February 2006, FASB has issued Statement of Financial Accounting Standard No. 155 Accounting for Certain Hybrid Instruments that allows financial instruments with embedded derivatives to be accounted for as a whole at fair value through profit and loss. This option eliminates the need to separate the derivative from its host contract. A similar accounting option was added to IAS 39 as part of the Fair Value Option Amendments to IAS 39 in June 2005. Deloitte (United States) has published a special edition of the Heads Up Newsletter (PDF 113k) to explain the key concepts in Statement 155. Additional information, in question and answer format, is included in an Appendix to the newsletter.
23 February 2006: EFRAG urges comprehensive measurement debate
The Technical Expert Group of the European Financial Reporting Advisory Group (EFRAG) has written to IASB Chairman Sir David Tweedie recommending that the IASB organise a comprehensive global debate on measurement. An excerpt from the letter:
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Measurement issues are at the core of many of the longer-duration projects on which the IASB is now working (including, for example, the projects considering revisions to IFRS 3 and IAS 37, and the fair value measurement guidance project). Many of these projects will determine the direction in which accounting will develop. We think it would be inappropriate for the IASB to publish any major new proposals or standards on measurement before the comprehensive measurement debate has taken place. Although we have argued before that the IASB should resolve framework issues before bringing forward proposals for standards that make assumptions about how those framework issues will be resolved, we understand that the IASB does not agree with this point of view. However, on measurement the issues involved are so fundamental and the concerns, misunderstandings, etc so great that we suspect that it would not be possible for the IASB to win acceptance for any such proposals or standards until the underlying fundamental issues have been resolved.
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Click to Download EFRAG's Letter (PDF 94k).
23 February 2006: Donaldson, Levitt diverge on convergence
During a panel discussion on 22 February 2006, two former chairmen of the US Securities and Exchange Commission, William Donaldson and Arthur Levitt, offered differing opinions on the benefits and likelihood of international convergence of accounting standards. Two other former SEC chairmen, Harvey Pitt and Richard Breeden, also participated in the panel discussion, which was held at the Council on Foreign Relations in New York and sponsored by McKinsey & Co. Here is the Link to the www.cfo.com Report of the panel discussion.
23 February 2006: Notes from the second day of the Board meeting
We have combined all of the notes taken by Deloitte observers at the International Accounting Standards Board's meeting on 21-24 February 2006 onto a Separate Agenda Page.
22 February 2006: IFRIC will meet next week
The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday 2 March 2006 (10.00am - 17.30pm) Friday 3 March 2006 (9.00am - 15.00pm). The agenda will be announced shortly.
22 February 2006: IFAC hosts meeting of accountancy bodies' CEOs
On 20-21 February 2006, the International Federation of Accountants (IFAC) hosted a meeting with chief executives of accountancy organisations from around the world. Click for a Press Release (PDF 82k) that describes the outcome of their discussions on the profession's future strategic priorities.
22 February 2006: ARC supports IFRIC 7, IAS 21 amendments
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At its meeting on 17 February 2006, the European Commission's Accounting Regulatory Committee recommended that the Commission endorse the following pronouncements for use in Europe: |
The Commission is expected to consider these two items for endorsement in April or May 2006. The one pronouncement awaiting an ARC recommendation is IFRIC 8 Scope of IFRS 2, issued 12 January 2006. ARC is expected to vote in May 2006, with Commission action during the summer. EFRAG has updated its Endorsement Status Report accordingly.
22 February 2006: Notes from first day of the IASB's February meeting
We have combined all of the notes taken by Deloitte observers at the International Accounting Standards Board's meeting on 21-24 February 2006 onto a Separate Agenda Page.
21 February 2006: FASB convergence on embedded derivatives
The US Financial Accounting Standards Board has issued Statement of Financial Accounting Standard No. 155 Accounting for Certain Hybrid Instruments that allows financial instruments with embedded derivatives to be accounted for as a whole at fair value through profit and loss. This option eliminates the need to separate the derivative from its host contract. A similar accounting option was added to IAS 39 as part of the Fair Value Option Amendments to IAS 39 in June 2005. FASB currently has on its agenda a separate project to consider the other aspects of the IAS 39 fair value option. Click for:
21 February 2006: 2006 Bound Volume of IFRSs
The IASB's 2006 Bound Volume of International Financial Reporting Standards is at the printer, and the IASB expects it to be available in mid-March. It will include all IFRS/IASs extant at 1 January 2006. You may place an advance order by faxing or posting the IASB Publications Order Form (DOC 139k). Price is £60 each including postage (bulk discounts are available).
21 February 2006: UNCTAD report on implementation of IFRSs
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The United Nations Conference on Trade and Development has released a staff Review of Practical Implementation Issues of International Financial Reporting Standards (PDF 619k). The document provides an overview of recent trends in the IFRS convergence process and highlights major practical issues that are arising in the implementation process, such as institutional challenges, enforcement mechanisms, and technical issues. UNCTAD noted that: |
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In 2005, an unprecedented number of enterprises and countries around the world adopted IFRS as their basis for financial reporting, regarding these as a means to improve the quality of information on enterprise performance, reduce the cost of capital, increase investors' confidence and facilitate investment flows and economic development. In this context, member States are pursuing coherence between current global developments and their national strategies and policies in the area of corporate transparency in order to reap the full benefits of a transition towards harmonization of reporting requirements. However, while the advantages of a common set of global reporting standards are recognized, there are a number of serious implementation challenges at the international and national levels if the objective of an improved and harmonized reporting system is to be achieved.
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21 February 2006: Addendum to Australian model financial report
Deloitte (Australia) has published an Addendum to the Consolidated Model Financial Reports (PDF 295k) to provide an illustrative example of the disclosure of key management personnel compensation and related party disclosures that are now required as a result of recent amendments to AASB 124 Related Party Disclosure. This addendum supersedes and replaces Notes 4, 5 and 56 of the annual financial report illustrated in the Consolidated Model Financial Reports. The model annual financial report may be found on our Australia Page.
20 February 2006: Press release on China's new accounting standards
In our news story of 16 February 2006, we reported that the Ministry of Finance (MOF) of the People's Republic of China has announced that it has adopted a new basic standard and 38 new Chinese Accounting Standards that are substantially in line with IFRSs. MOF has also adopted new auditing standards that are substantially in line with International Standards on Auditing (ISAs). The MOF has issued a Press Release (PDF 17k) elaborating on the new accounting and auditing standards. In December 2005, the Chinese Auditing Standards Board (CASB) and the International Auditing and Assurance Standards Board (IAASB) had released a joint statement in which the CASB states that the fundamental principle of drafting Chinese auditing standards is to improve the Chinese auditing standards system and to accelerate its convergence with the IAASB's ISAs. Click for China-IAASB Joint Statement (PDF 988k), which we had reported in our news story of 23 December 2005.
20 February 2006: 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. Updates include latest data about cross-border listings on the World Federation of Exchange member exchanges, London, NYSE, and NASDAQ.
20 February 2006: IFAC seeks ethics, public sector board nominees
The International Federation of Accountants (IFAC) is seeking nominations for a public member for the International Ethics Standards Board for Accountants and for a public member for the International Public Sector Accounting Standards Board. Both are independent standard-setting boards within IFAC. Individuals, organisations, accountancy firms, and IFAC member and regional accountancy bodies may submit nominations by 15 April 2006.
- The International Ethics Standards Board for Accountants (IESBA) for Accountants develops ethical standards and other pronouncements for professional accountants around the world. The IFAC Code of Ethics for Professional Accountants and Interpretations apply to all professional accountants, including those in public practice, business, education, and the public sector.
- The International Public Sector Accounting Standards Board (IPSASB) develops accounting standards for use by governments and other public sector entities around the world in preparing general purpose financial statements.
19 February 2006: A global regulatory agenda
EC Internal Markets Commissioner Charlie McCreevy outlined A Framework for the 21st century - The New Global Regulatory Agenda in Financial Services (PDF 79k) in remarks before the Council on Foreign Relations in Washington. He identified what he called the four A-B-C-D issues that are of concern with regard to the transatlantic capital market: Accounting, Basel II, Collateral and Deregistration. Regarding accounting, Mr. McCreevy said: "In my view, full convergence of standards cannot be a prerequisite for the elimination of the reconciliation requirement. Instead, we should make sure that our standards are understandable to investors on both sides of the Atlantic." More broadly, he spoke of the need for the EU and the US to lead the way worldwide, including in the area of standard setting:
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Jointly, we have a window of opportunity to facilitate the smooth integration of China, India, Brazil and others on the world economic stage. The EU and the US should lead by example and show how open and competitive markets with sound standards of investor and consumer protection can deliver a thriving transatlantic financial market place. In accounting, in auditing, in our securities and other markets the EU and the US can make a special contribution to the emerging global regulatory system. If we cannot resolve our differences, what sort of example are we giving to the others? This is a question of mutual interest and leadership.
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18 February 2006: SEC, PCAOB to review internal control reporting
The US Securities and Exchange Commission and Public Company Accounting Oversight Board will conduct a joint public roundtable on 10 May 2006 in Washington to discuss second-year experiences with the reporting and auditing requirements of the Sarbanes-Oxley Act of 2002 related to companies' internal control over financial reporting (SOx Section 404). Additionally they are seeking written feedback, via email or an Internet submission form, from registrants, auditors, investors and others on their experiences with complying with the Section 404 requirements. Click for Press Release (PDF 36k).
17 February 2006: Changes to IASB February meeting agenda
The IASB has made two changes to the agenda for its meeting next week, which we had announced in our News Story of 3 February 2006, which we have revised. Fair Value Measurement has been moved to Thursday afternoon, and Government Grants has been added to the Tuesday afternoon agenda.
The government grants project had started as part of the IASB's short-term convergence project with FASB. However, it has evolved into a stand-alone (non-convergence) IASB project to reconsider IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. The stated objective of the project is to amend IAS 20 by applying the accounting model for government grants contained in IAS 41 Agriculture to all government grants. The IAS 41 model establishes the following principles for recognising grants related to assets measured at fair value through profit and loss:
- If the grant is unconditional, recognise income when the grant becomes receivable.
- If conditional, recognise income when conditions attached to the grant have been met.
Also, in June 2005, the Board withdrew IFRIC Interpretation 3 Emission Rights. At that time, it indicated that it intended to address emission rights in a separate exposure draft early in 2006. Subsequently, the Board has determined that since emission rights are a form of government grant, they should be addressed in the project to reconsider IAS 20.
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17 February 2006: FASB response to SEC on off-balance-sheet items
The US Financial Accounting Standards Board has submitted its response to the SEC Staff Report on Off-Balance Sheet Arrangements, Special Purpose Entities, and Related Issues released by the US Securities and Exchange Commission in June 2005. The SEC report was prepared pursuant to the Sarbanes-Oxley Act of 2002 and was submitted to the President and several Congressional committees. The SEC staff report includes an analysis of the filings of issuers as well as an analysis of pertinent US generally accepted accounting principles and Commission disclosure rules. The report contains several recommendations for potentially sweeping changes in current accounting and reporting requirements for pensions, leases, financial instruments, and consolidation:
- Pensions: The staff recommends the accounting guidance for defined-benefit pension plans and other post-retirement benefit plans be reconsidered. The trusts that administer these plans are currently exempt from consolidation by the issuers that sponsor them, effectively resulting in the netting of assets and liabilities in the balance sheet. In addition, issuers have the option to delay recognition of certain gains and losses related to the retirement obligations and the assets used to fund these obligations.
- Leases: The staff recommends that the accounting guidance for leases be reconsidered. The current accounting for leases takes an 'all or nothing' approach to recognizing leases on the balance sheet. This results in a clustering of lease arrangements such that their terms approach, but do not cross, the 'bright lines' in the accounting guidance that would require a liability to be recognized. As a consequence, arrangements with similar economic outcomes are accounted for very differently.
- Financial instruments: The staff recommends the continued exploration of the feasibility of reporting all financial instruments at fair value.
- Consolidation: The staff recommends that the Financial Accounting Standards Board continue its work on the accounting guidance that determines whether an issuer would consolidate other entities – including SPEs – in which the issuer has an ownership or other interest.
- Disclosures: The staff believes that, in general, certain disclosures in the filings of issuers could be better organized and integrated.
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FASB's response discusses a number of "fundamental structural, institutional, cultural, and behavioral forces" that it believes cause complexity and impede transparent financial reporting. FASB provides an update on its activities and projects intended to address and improve outdated, overly complex accounting standards. These areas include accounting for leases; accounting for pensions and other post employment benefits; consolidation policies; accounting for financial instruments; accounting for intangible assets; and conceptual and disclosure frameworks. The FASB also identifies several other initiatives aimed at improving the understandability, consistency, and overall usability of existing accounting literature, through codification, by attempting to stem the proliferation of new pronouncements emanating from multiple sources, and by developing new standards in a 'principles-based' or 'objectives-oriented' approach. Click to download:
16 February 2006: CESR studies public access to IFRS reports
The Committee of European Securities Regulators (CESR) is studying the appropriate mechanism for making the financial reports of European listed companies available electronically throughout the European Union. Such reports would include annual, semi-annual, and other interim reports (which include IFRS financial statements), as well as reports of major holdings and insider information. Adoption of such a pan-European storage and retrieval mechanism is part of the process for implementing the 'Transparency Directive'. CESR will make a recommendation to the European Commission, with a goal of having an interim system in place by January 2007. CESR has issued:
Responses to the Consultation Document are due by 31 March 2006 via CESR's Website. CESR will hold an open hearing on the issues on 2 March 2006 at CESR's office in Paris.
16 February 2006: China adopts 38 new accounting standards
The Ministry of Finance (MOF) of the People's Republic of China has announced that it has adopted a new basic standard and 38 new Chinese Accounting Standards that are substantially in line with IFRSs, though a few exceptions are acknowledged. The basic standard is akin to a conceptual framework, and the 38 standards address nearly all over the issues covered in IFRSs. The MOF has also adopted 48 new Chinese Auditing Standards that are similar to International Standards on Auditing issued by the International Auditing and Assurance Standards Board. Click for a List of the New Chinese Accounting Standards (PDF 123k English and Chinese). The new accounting and auditing standards will become effective for listed enterprises from 1 January 2007. Other enterprises are encouraged to adopt them. Deloitte Touche Tohmatsu (China) has served as consultants to the MOF in developing Chinese Accounting Standards since 1993. The MOF announced the new standards in a ceremony in the Great Hall of the People, in Beijing. IASB Chairman David Tweedie participated, saying that he expected China's speedy move toward international standards is likely to spur some other countries in the Asia-Pacific region to do the same.
15 February 2006: Review of UK interim reporting
The United Kingdom Financial Reporting Review Panel has reviewed the interim accounts of 70 UK listed companies for 2005, including 35 FTSE 350 companies. "The Panel found the level of disclosure and compliance in the first reports prepared under IFRSs to be good". The Panel's report noted that:
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In the interim reports reviewed, most issues arose on matters where there had been changes as a result of the implementation of IFRS. These largely related to the presentation of items within the primary financial statements and to narrative descriptions of new or revised accounting policies.
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Click to download:
15 February 2006: EU will require foreign audit firms to register
In a Speech on The Transatlantic Capital Market (PDF 93k) to the US Chamber of Commerce in Washington last week, EU Internal Market Commissioner Charlie McCreevy cited eliminating the SEC's accounting reconciliation requirement between IFRSs and US GAAP as one of the four most pressing Transatlantic regulatory matters. He also outlined the progress that has been made in capital market reforms in the EU. He indicated that the EU shortly will adopt regulations requiring registration of foreign audit firms that perform audits in the EU. An excerpt:
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Take auditing for example. The EU has just put the finishing touches to its new
directive on Statutory Audit (the 8th Directive). During its implementation one of the
key challenges will be the question of registration of third country audit firms in the
EU by 2008. All third country audit firms, including US ones, auditing foreign
companies listed in the EU will have to be registered with EU oversight bodies -
unless their home country oversight bodies can be considered as equivalent.
Similarly, EU firms auditing SEC registrants will face inspections from the PCAOB in
2006 and 2007. The new EU directive provides for cooperation with the PCAOB on
access to audit working papers. These are tricky issues where the EU and the US
must have close and pragmatic cooperation or willingness to 'agree to agree' as Bill
McDonough, former chairman of the PCAOB, put it. Both sides have to deliver. And
both sides must be willing to respect each other's rules and limitations. Deepening
cooperation is the name of the game.
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14 February 2006: EFRAG recommends IAS 21 amendments
EFRAG has recommended that the European Commission endorse, for use in Europe, the recent Amendments to IAS 21 The Effect Of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation. Click for EFRAG Letter (PDF 18k).
14 February 2006: EFRAG letter to IASB on SME project
The European Financial Reporting Advisory Group (EFRAG) has written to IASB Board Vice Chairman Tom Jones, who chairs the Board's SME Working Group, recommending that the Board change its approach to developing an exposure draft of an IFRS for Small and Medium-sized Entities (SMEs). Here is an excerpt from EFRAG's Letter (PDF 33k):
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EFRAG wants to express its full support for the comments you made in your introduction to the Board's deliberations at the January meeting where you indicated that:
- (a) the direction in which the project is presently heading under Board members' guidance is leading to a standard which appears far too lengthy and complex; and
- (b) more simplifications are needed than decided up to date in order to meet constituents' expectations.
We agree with this view. We think it is important that the IFRS for SMEs is easy to understand and comprehensive on a stand-alone basis.
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12 February 2006: EU regulators will study reporting requirements
The three main committees of European Union financial regulators – the Committee of European Securities Regulators (CESR), the Committee of European Banking Supervisors (CEBS), and the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) – have published a common cross-sector work programme for 2006. The main goal of this supervisory cooperation is to enhance consistency in implementing EU legislation across financial sectors. The work programme includes an examination of reporting requirements, including IFRSs:
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The Committees will request input from relevant market participants to take stock of potential inconsistencies in reporting requirements stemming from sectoral EU directives applying to European supervised entities and market participants, taking into account IFRS. The Committees aim at presenting a first result of this inventory
within the second half of 2006. Based on this inventory, future work may be proposed.
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Click for Work Programme 2006 (PDF 33k) and related
Joint Press Statement (PDF 108k). CESR, CEBS, and CEIOPS are sometimes referred to as the '3 Level 3' regulators or '3L3'.
11 February 2006: EFRAG concerns on IASB measurement paper
The European Financial Reporting Advisory Group (EFRAG) has invited comments on its draft response to the IASB Discussion Paper Measurement Bases for Financial Accounting - Measurement on Initial Recognition. In its draft response, EFRAG expresses "a number of fundamental concerns regarding the reasoning and conclusions reached in the paper", including the following:
- The paper's exclusive focus on initial measurement in isolation from subsequent measurement.
- The "basic assumption... that perfect markets (or at the very least active and liquid markets that involve low transaction costs) exist for every asset and liability". In EFRAG's view this is the exception rather than the norm.
- The necessity to decide on financial statement concepts of financial performance and financial position before addressing measurement issues.
- Lack of evidence for the superiority of market value measurement objectives over entity-specific measurement objectives. "If the arguments in the paper are the only arguments in favour that exist and have been expressed in the paper in the best way possible, we do not understand how the paper could have reached the conclusions it has."
Click to download EFRAG's Draft Letter (PDF 100k). EFRAG requests comments by 1 May 2006.
11 February 2006: IFAC paper on auditing sustainability reports
The International Federation of Accountants (IFAC) has issued a consultation paper that explores the assurance aspects of the Global Reporting Initiative's (GRI's) proposed new Sustainability Reporting Guidelines (G3). The GRI, which develops global reporting guidelines on the economic, environmental, and social performance of organisations, has released draft guidelines designed to enhance the comparability, clarity, ease of use, and assurability of sustainability reports. IFAC's consultation paper, Assurance Aspects of G3 - The Global Reporting Initiative's 2006 Draft Sustainability Reporting Guidelines, explores issues in the proposed G3 Guidelines that specifically relate to assurance reporting. The paper is aimed primarily at professional accountants with some familiarity with sustainability assurance. IFAC requests comments by 31 March 2006. Click to download:
10 February 2006: Eliminating the IFRS reconciliation in the USA
European Union Internal Markets Commissioner Charlie McCreevy and US Securities and Exchange Commission Chairman Christopher Cox met in Washington on 8 February 2006. They discussed, among other things, progress toward eliminating the need for reconciliation between International Financial Reporting Standards and US Generally Accepted Accounting Principles (GAAP) in SEC filings by non-US IFRS issuers. Both the EC and the SEC agreed that, for the reconciliation to be eliminated, regulatory procedures need to be in place in a non-US SEC registrant's home country to ensure that IFRSs are applied and interpreted faithfully and consistently. Work on those procedures in the EU is underway. Click for:
10 February 2006: Interview on a range of IFRS and SME issues
We have posted an Interview with Paul Pacter (PDF 399k), Deloitte director and IAS Plus Webmaster, published in The Accountant (Malta) Winter 2005 issue. The interview covered IASB standards for small and medium-sized entities and other IFRS-related issues including 'balance-sheet orientation', user needs, relevance vs. reliability, the 'stable platform' of IFRSs, and prospects for change over the next ten years. Paul has also written about Accounting Standards in 2015 (PDF 267k) in A Plus, the magazine of the Hong Kong Institute of CPAs.
10 February 2006: New Global Offerings Services newsletter
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We have posted the January 2006 Edition of the Deloitte Global Offerings Services Newsletter (PDF 228k). 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. |
10 February 2006: Special IAS Plus newsletter on operating segments
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On 19 January 2006, the IASB published Exposure Draft 8 Operating Segments. ED 8 would replace IAS 14 and align segment reporting with the requirements of FASB's SFAS 131 Disclosures about Segments of an Enterprise and Related Information. Deloitte has published a Special Edition of the IAS Plus Newsletter (PDF 69k) explaining ED 8. You will find links to all past IAS Plus newsletters Here. |
9 February 2006: Agenda for Standards Advisory Council meeting
The Standards Advisory Council will meet at the Renaissance Chancery Court Hotel in London on Monday and Tuesday, 27-28 February 2006. Presented below is the agenda for the SAC meeting. The February 2006 Board meeting agenda is Here.
27-28 February 2006, London
Monday, 27 February 2006
- Introductory remarks - new Chairman of Trustees
- Report from Trustees
- Discussion of operations and consultation procedures
- The agenda setting process, including setting priorities and cost/benefit analysis
- Consultation with constituents - including SAC, national standard-setters, analysts, preparers, etc
- Implementation and interpretations
- Discussion of IASB work programme and convergence
- Report from IASB Chairman
- Work programme
- Convergence with US GAAP
- Business Combinations
Tuesday, 28 February 2006 (morning only)
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7 February 2006: January 2006 Accounting Roundup posted
- FASB Developments including a proposed statement on fair value option for financial instruments; and proposed FSP on classification of employee share options.
- EITF Developments including accounting for stripping costs in the mining industry.
- GASB Developments including a proposed statement on pollution remediation obligations.
- AICPA Developments including technical practice aids on nonregistered investment partnerships; and a pSSAE on reporting on internal control.
- SEC Developments including proposed changes to the disclosure requirements for executive compensation; and SEC incentives for companies to file financial data using XBRL.
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You will find past issues of Accounting Roundup Here.
7 February 2006: New Australian Accounting Alert on operating segments
Deloitte (Australia) has published Australian Accounting Alert 2006/03 Operating Segments Exposure Draft Issued (PDF 27k). This Accounting Alert provides an Australian perspective on some of the key proposals and their impacts. Links to all past Australian Accounting Alerts are Here.
5 February 2006: Issues not added to IFRIC agenda updated
We have updated our list of Issues Not Added to IFRIC's Agenda to reflect IFRIC's decision in January 2006 not to add to its agenda an issue relating to the Scope of IFRS 6 Extractive Industries.
4 February 2006: Accounting for 'heritage assets'
The United Kingdom Accounting Standards Board (ASB) has published a Discussion Paper Heritage Assets: Can Accounting Do Better? setting out proposals to improve the consistency and transparency of the financial reporting of heritage assets. The proposals will be relevant to entities such as museums holding collections of art, antiques, and books and also to entities that own and manage landscape or buildings for their environmental or historical qualities. The report concludes that the best financial reporting requires heritage assets to be reported as assets at current value, and the paper makes proposals to facilitate that approach. However, it offers an alternative approach for those entities that face genuine difficulties in valuing their heritage assets. Illustrative disclosures are included. Click to download:
The ASB requests comments by 31 May 2006.
4 February 2006: Deficiencies in financial reports of small entities
The Canadian Securities Administrators (the consortium of securities regulators in Canada) have recently published a summary of some of the most common deficiencies they find when they review financial reporting by smaller issuers. Although the review focused on companies with assets under $5 million, the CSA believes the guidance in their report will also be useful to larger issuers. The most common deficiencies found are in the following four areas:
1. Financial Statements
- Enterprises in the Development Stage
- Revenue Recognition
- Interim Financial Statements
- Related Party Transactions
- Cash Flow Statements
- New GAAP Requirements
2. Management's Discussion & Analysis (MD&A)
- Frequently, the MD&A of smaller issuers contains superficial analyses that merely repeat the information in the accompanying financial statements, particularly on the following MD&A topics:
- Operational Analysis
- Liquidity and Capital Resources
- Projects Under Development
- Related Party Transactions
3. Mining and Oil and Gas Industries
- Deficiencies in non-technical disclosures
4. Other Disclosure Issues
- Issuer and Insider filing requirements
- Timely Disclosure: The requirement for issuers to maintain an ongoing communication with the capital markets
- Audit Committees: The mandatory role of audit committees and their involvement with corporate disclosure
- Certification: CEO and CFO certifications of their issuer's annual and interim filings
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Click to Download the Complete Report (PDF 325k).
4 February 2006: Role of accountants in fostering economic growth
Dr Y V Reddy, Governor of the Reserve Bank of India, spoke about the role of accountants in fostering economic growth at the International Conference on Role of Accountancy Profession in Anchoring Economic Growth, organised by the Institute of Chartered Accountants of India (ICAI) in Mumbai on 19 January 2006. He expressed strong support for ICAI's recent efforts to look to IFRSs in developing Indian accounting standards. Click to download Dr. Reddy's Remarks (PDF 28k). An excerpt:
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In this regard, it is heartening to observe that the accounting and auditing standards in India are being increasingly benchmarked against international standards. I am also happy to note that the ICAI is making sustained efforts to align the Indian accounting standards with the international ones. A Review of the recommendations of the Advisory Group by the Reserve Bank in December 2004 shows that the gap between International Accounting Standards and Indian Accounting Standards has been gradually narrowing, reflecting the foresight of the profession in recognising the importance of international comparability.
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4 February 2006: Standard setting activity in Asia-Pacific region
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We have updated the following pages on this website to reflect recent standard setting activity in the Asia-Pacific region: |
3 February 2006: IASB February meeting agenda
The International Accounting Standards Board will meet at its offices in London on Tuesday through Friday, 21-24 February 2006. Presented below is the preliminary agenda for the meeting. The Board will meet with the Standards Advisory Council on Monday and Tuesday 27-28 February 2006 in London. The agenda for the SAC meeting has not yet been announced.
21-24 February 2006, London
Tuesday 21 February 2006 (afternoon only)
Wednesday 22 February 2006
Thursday 23 February 2006 (afternoon only)
Friday 24 February 2006 (morning only)
- Insurance Contracts Phase II
- Continuation, cancellation and renewal options
- Participating contracts
- Acquisition costs
- Gain or loss on initial measurement/liability recognition
- Measurement attribute: non-life insurance pre-claims liability
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2 February 2006: IAS Plus Newsletters for fourth quarter 2005 are posted
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The January 2006 IAS Plus newsletter has been published. The newsletter reports on the 4th quarter 2005 activities of the IASB, the IFRIC, and the IASC Foundation, and also on worldwide issues and events relating to international financial reporting. The Asia-Pacific edition has the same 24-page news content as the Global Edition plus 11 pages of accounting standards updates for the Asia-Pacific region.
You will find all Past IAS Plus Issues Here. |
2 February 2006: IASB proposes amendments on share-based payment
The International Accounting Standards Board has issued an Exposure Draft that proposes to amend two aspects of IFRS 2 Share-based Payment – what are 'vesting conditions' and what is a 'cancellation':
- Vesting conditions are the conditions that an individual or an organisation must satisfy to receive an entity's shares under a share-based payment arrangement. IFRS 2 currently states that vesting conditions include service conditions and performance conditions. It is silent on whether other features of a share-based payment are vesting conditions. The ED proposes that vesting conditions should be restricted to service conditions and performance conditions. Under IFRS 2, features of a share-based payment that are not vesting conditions must be included in the grant date fair value of the share-based payment (the fair value also includes market-related vesting conditions).
- Under IFRS 2, a failure to meet a condition, other than a vesting condition, is a cancellation. IFRS 2 specifies the accounting treatment of cancellations by the entity but does not give guidance on the treatment of cancellations by parties other than the entity. This amendment proposes that cancellations by parties other than the entity should be accounted for in the same way as cancellations by the entity.
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The proposed amendments would apply for annual periods beginning on or after 1 January 2007, with earlier application encouraged. Click for IASB Press Release (PDF 52k). Comment deadline is 2 June 2006.
2 February 2006: Australian year-end accounting update
- Amendments to Australian Accounting Standards AASB 121, 1023, 139, and 124, and AAS 25.
- Introduction of Australian Accounting Standard AASB 7.
- IFRIC Interpretations.
- UIG Interpretations 4, 5, 6, and 1052 and UIG Guidance.
- ASIC releases and amendments since 30 June 2005.
2 February 2006: New Australian Accounting Alert on related parties
Deloitte (Australia) has published Australian Accounting Alert 2006/01 Revised AASB 124 Related Party Disclosures (PDF 49k). The revised version of AASB 124 incorporates the requirements of now superseded AASB 1046 Director and Executive Disclosures by Disclosing Entities and introduces a number of additional disclosures consistent with those required by Section 300A of the Corporations Act 2001. Links to all past Australian Accounting Alerts are Here.
2 February 2006: ASBJ statement on progress toward convergence
The Accounting Standards Board of Japan (ASBJ) has released a Statement on Japan's Progress Toward Convergence between Japanese GAAP and IFRSs. In the statement, the ASBJ describes its recent progress toward convergence on asset retirement obligations, construction contracts, and disclosure of financial instruments at fair value. The ASBJ also describes its plans to address the issues that the Committee of European Securities Regulators (CESR) identified in the technical advice on equivalence of third country GAAP in July 2005. Click for:
2 February 2006: IPSASB ED on non-exchange revenue including taxes
The International Public Sector Accounting Standards Board (IPSASB) has proposed a new accounting standard for non-exchange revenue, including taxes and transfers. The exposure draft, Revenue from Non-Exchange Transactions (Including Taxes and Transfers) deals with the basis on which different kinds of taxes should be recognised and how they should be measured. The ED also addresses accounting for other major sources of non-exchange revenue for public sector entities, including transfers from other governments and international organisations, and gifts and donations. The ED also provides guidance on how conditions and restrictions on the use of transferred resources are to be reflected in the financial statements. The IPSASB requests comments on the ED by 30 June 2006. The ED may be viewed by going to IPSASB's Website. Click for the Press Release (PDF 80k).
2 February 2006: US SEC and Japan FSA will discuss accounting
The US Securities and Exchange Commission and the Japan Financial Services Agency have announced terms for increased co-operation and collaboration. Accounting standards are one of a number of issues to be covered in a planned SEC-JFSA dialogue in 2006. Click for SEC Press Release (PDF 35k).
1 February 2006: David Shedlarz named IASCF Trustee
David L Shedlarz has been appointed as a Trustee of the IASC Foundation for a term ending 31 December 2008. Mr Shedlarz is a Vice Chairman and member of the Executive Committee of Pfizer Inc, where he oversees operations including finance, strategic planning, global sourcing, human resources, and information systems. He served on the Standards Advisory Council from 2001 to 2005. Click for:
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