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DECEMBER 2007

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31 December 2007: 'Closing Out 2007' – IAS Plus newsletter in Chinese
In our News Story of 21 December 2007, we reported on a special edition of our IAS Plus Newsletter titled Closing Out 2007. That newsletter summarises all of the new and revised IASB Standards and Interpretations in effect for December 2007 year ends and beyond. We have now posted the Chinese Language Version of that newsletter (PDF 302k). Our CAS Plus Website has more information in Chinese.

31 December 2007: Notes from the ARC meeting of 20 November 2007
The European Commission has posted to its website the Summary Record (PDF 34k) of the meeting of the Accounting Regulatory Committee (ARC) on 20 November 2007. Topics discussed by the ARC at that meeting included:

  • IFRS 8 Operating Segments. Has now been fully endorsed for use in the EU.
  • IFRIC 12 Service Concession Arrangements. Commission is conducting an impact assessment, which should be finished by March 2008. An endorsement decision is expected by 'mid-2008'.
  • Directive 2006/46/EC and IAS 24 Related Party Transactions. Are they consistent?
  • Review of the operation of the IAS Regulation and the Fair Value Directive. The Commission has already published a Report on IAS Implementation Prepared by the ICAEW. A report on implementation of the fair value directive is being prepared.
  • Equivalence: IFRSs and Third-country GAAPs. "The Commission Services agreed that EU oversight over IASB needs to be improved as the EU is the main user of the IASB's products.... The Commission Services invited Member States to present ideas in this respect, as regards both the emerging debate on governance of the IASB and the need to strengthen the ability of EU to influence IASB decisions."
The next ARC meeting is scheduled for 5 February 2008.

31 December 2007: New page for United Arab Emirates
We have created a new jurisdiction Page for the United Arab Emirates setting out the IFRS requirements in the UAE. In Abu Dhabi, all companies listed on the Abu Dhabi Securities Markets (ADSM) are required to publish IFRS financial statements. In Dubai, all companies listed on the Dubai International Financial Exchange (DIFX) are required to publish IFRS financial statements. Throughout the UAE, all banks are required by the Central Bank of the UAE to publish IFRS financial statements.

31 December 2007: Framework for international accounting education standards
The International Accounting Education Standards Board is conducting a fundamental review of the Framework for International Education Statements in light of changes occurring in the accountancy profession and in accounting education programs since the Framework was originally adopted. As part of the review, the IAESB is conducting a short online survey on the audience, scope, and nature of International Education Statements. The IAESB would like the views of a broad range of parties interested in accounting education. The survey is not expected to require more than 30 minutes to complete. Click for:

31 December 2007: FASB chairman's views on a global reporting system
We have posted a speech by Robert H Herz, Chairman of the US Financial Accounting Standards Board, titled Towards a Global Reporting System: Where Are We and Where Are We Going? (PDF 70k). In his remarks, Mr Herz posed a series of questions:

  • Why the movement towards global financial reporting?
  • But what exactly is the end goal?
  • What are the key elements of such a system?
  • Where are we now?
  • So what's needed to achieve a global reporting system?
    • What's needed internationally?
    • What's needed in the US?
  • OK, so where should we head?
In response to the last question (where should we head), Mr Herz identified 'three possible endgames':
  1. 'Mutual recognition' only
  2. 'Mutual recognition' plus 'two-GAAP' system for US registrants
  3. A single set of high-quality international standards for registrants (and perhaps others)
Mr Herz stated that:
"FASB and FAF support option 3 (single set of high-quality international standards).... We advocate a well planned 'improve and adopt' approach to transitioning the US to IFRSs – improvement through continued joint projects between IASB and FASB in major areas, and directly adopt other parts of IFRS."

30 December 2007: Reminder about three upcoming comment deadlines
We remind you that the deadline is Friday, 11 January 2008, for responding to the following three IASB Exposure Drafts:

30 December 2007: IAESB guidance on experience requirement for professionals
IFAC's International Accounting Education Standards Board (IAESB) has developed guidance to assist IFAC member organisations and others in establishing effective practical experience programs for professional accountants. International Education Practice Statement (IEPS) 3 Practical Experience Requirements – Initial Professional Development for Professional Accountants provides guidance on the period of practical experience, content of practical experience requirements, and the roles and responsibilities of IFAC members as well as mentors and employers. In meeting the requirements of International Education Standard (IES) 5 Practical Experience Requirements IEPS 3 suggests that IFAC member bodies should consider adopting a combined approach – requiring a minimum three-year period of practical experience and measuring workplace output to assess competence. IEPS 3 may be downloaded from www.ifac.org/store. Here is the Press Release (PDF 53k).

29 December 2007: FEI CEO's top challenges for financial executives in 2008
FEI CEO and President Michael P. Cangemi has compiled a list of the Top Challenges for 2008 (PDF 45k) – in no particular order. They will be published in the January-February 2008 issue of Financial Executive magazine. We have posted Mr Cangemi's article with the kind permission of Financial Executives International. A summary is presented below. Note that global convergence of US GAAP and IFRSs is high on the list.

FEI CEO's Top Challenges for Financial Executives for 2008
  1. Fair value, the subprime market crisis, and derivatives. Does FAS 157 help? What else is needed friom a financial reporting perspective?
  2. Global convergence of US GAAP and IFRSs. Are the US markets ready for principles-based standards?
  3. Complexity in financial reporting. The SEC Advisory Committee on Improvements to Financial Reporting (CIFR) expects to finalise recommendations that are practical, doable, and workable that intend to: make financial information more useful, reduce restatements, clarify the process for providing guidance on accounting standards, reduce complexity and promote US GAAP and IFRS convergence.
  4. Audit profession. Treasury Department's ACAP is considering, among other things, the auditing profession's ability to cultivate, attract and retain talent; ensure audit quality for investors; audit market competition and concentration and the impact of the independence and other professional standards on the US market. But how will the findings impact preparers and audit fees?
  5. XBRL. Expect even more momentum in this direction in 2008 in advance of potential leadership changes at the SEC in an election year.
  6. Business combinations. FASB has revised FAS 141 and issued FAS 160.
  7. Internal controls. 2007 marks the first year that AS5 and related SEC management guidance will be applied by all public companies.
  8. Health care. Expanded coverage? What should the benefits be, and how should they be paid for? How such costs can be better managed.
  9. Corporate taxation. Potential for 'anti-business' tax proposals in Congress.
  10. Rating agency regulation. Do rating agencies have conflicts of interest? Is more regulation needed?
  11. IRS policy restraint and privilege. Will IRS reconsider its 'policy of restraint' towards requesting companies' tax accrual workpapers? Do the tax reserve disclosures mandated by FIN 48 harm companies?

28 December 2007: SEC issues final rule on IFRS reconciliation
The US Securities and Exchange Commission has issued its final rule on Acceptance from Foreign Private Issuers of Financial Statements Prepared in Accordance with International Financial Reporting Standards without Reconciliation to US GAAP. The rule includes amendments to Form 20-F, conforming changes to Regulation S-X, and conforming amendments to other regulations, forms, and rules under US securities laws. The rule notes that the SEC continues to require the reconciliation for a foreign private issuer that files its financial statements with the Commission using a basis of accounting other than IFRS as issued by the IASB, with one exception. The exception relates to foreign private issuers that use the version of IFRSs that includes the European Commission's 'carve-out' for IAS 39. Such issuers will be allowed to use that version in preparing their financial statements for a two-year period as long as a reconciliation to the IASB's version of IFRSs is provided. After the two-year period, those issuers will either have to use the IASB's version of IFRSs or provide a reconciliation to US GAAP. The new rule is effective 4 March 2008. Click to download SEC's Final Rule Release (PDF 690k).

28 December 2007: Instant comparisons of executive pay with XBRL
The US Securities and Exchange Commission has launched an online tool that enables investors to easily and instantly compare what 500 of the largest American companies are paying their top executives. The new database highlights the power of interactive data to transform financial disclosure. The Executive Compensation Reader is available on the SEC's Web site at www.sec.gov/xbrl. It builds on the Commission's new requirements that went into effect earlier this year to expand executive compensation disclosures. Click for Press Release (PDF 31k).

28 December 2007: Global adoption of IFRSs – implications for the profession
The Q4 2007 issue of Insight, the IASB's quarterly journal, includes an article on IFRSs Going Global: Implications for the Profession (PDF 472k). The article has a number of comments from Ken Wild, Deloitte's Global Leader for IFRSs, including the following about the benefits of IFRSs:
The benefits are self-evident. The more investors and other stakeholders think that they understand something the more likely they are to provide money or invest in it. It all depends on how much confidence they have in the company and there will always be an element of doubt if the language is different.
Insight is copyrighted by the IASC Foundation. We have posted the article with the kind permission of the Foundation. You can subscribe to Insight by going to the IASB's Website and then clicking on 'Shop'.

27 December 2007: Statistics database on cross-border securities 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. The latest updates reflect December 2007 or 30 November 2007 data on the number of non-US companies listed on member exchanges of the World Federation of Exchanges and details of cross-border listings on the New York Stock Exchange, NASDAQ, and the London Stock Exchange. There is also some data on cross-border lending and on accounting standards used by companies listed on the Deutsche Börse, as well as foreign companies registered with the US SEC.

27 December 2007: Speeches at AICPA's annual SEC and PCAOB conference
The American Institute of CPAs held its 35th Annual National Conference on Current SEC and PCAOB Developments in Washington on 10-12 December 2007. On 11 December, we posted links to some of the presentations at the conference. We indicated that we would add to this list as additional presentations are made publicly available, which we have been doing. The SEC continues to release its staff presentations, including four yesterday. We have added these to our List of Presentations.

26 December 2007: 2007 IFRS financial statements and checklist in German
Deloitte (Germany) has published the German language versions of Deloitte's 2007 IFRS Model financial Statements (IFRS-Musterkonzernabschluss 2007) and 2007 IFRS Presentation and Disclosure Checklist (IFRS-Checkliste zu Ausweis- und Angabevorschriften 2007).

25 December 2007: Five proposed IAASB Standards
The International Auditing and Assurance Standards Board (IAASB) has published for comment three proposed new standards. Two focus on enhancing the auditor's consideration of controls at service organizations, and the third addresses the communication of deficiencies in internal control to those charged with governance. The IAASB has also invited comment on two exposure drafts of International Standards on Auditing (ISA) that were revised and redrafted in accordance with the new clarity drafting conventions.

Proposed new standards:
  • Proposed ISA 402 (Revised and Redrafted), Audit Considerations Relating to an Entity Using a Third Party Service Organization. Addresses the auditor's responsibilities to obtain audit evidence when an entity uses one or more service organizations. This may include obtaining reports prepared by the auditors of those organizations. Comments due 30 April 2008.
  • Proposed International Standard on Assurance Engagements (ISAE) 3402 Assurance Reports on Controls at a Third Party Service Organization. Complements proposed ISA 402 (Revised and Redrafted) in that reports prepared in accordance with proposed ISAE 3402 will be capable of providing appropriate audit evidence under the proposed ISA. It is intended to ensure that reports issued in one country are likely to meet the requirements of the auditors of user entities in other countries. Comments due 31 May 2008.
  • Proposed ISA 265 Communicating Deficiencies in Internal Control. Deals with the auditor's responsibility to communicate to management and those charged with governance deficiencies in internal control that have been identified by the auditor. Comments due 30 April 2008.
New clarity exposure drafts:
  • ISA 501 (Redrafted) Audit Evidence Regarding Specific Financial Statement Account Balances and Disclosures. Comments due 31 March 2008.
  • ISA 520 (Redrafted) Analytical Procedures. Comments due 31 March 2008.
The exposure drafts may be downloaded without charge from www.ifac.org/EDs. Here is the Press Release (PDF 109k).

24 December 2007: Commissioner updates EU Parliament on accounting matters
In a presentation to the European Parliament's Economic and Monetary Committee in Brussels, EU Commissioner for Internal Markets and Services Charlie McCreevy updated the committee on four topics – the EU-US regulatory dialogue, financial turmoil, single market, Single European Payments Area (SEPA). The first topic included an update on accounting matters (below). Click to download Commissioner McCreevy's Presentation (PDF 92k).

Accounting

On November 15, the US Securities and Exchange Commission took the major decision to allow foreign issuers to file accounts under IFRS without reconciliation to US standards. We have always wanted this. All EU companies listed in the US will benefit. One estimate puts the savings at €2.5bn – and this just for EU companies. This is clear evidence of the benefits of international regulatory dialogues! We must continually make sure that new standards reflect the real needs of stakeholders. We need to continue to press for improvements in the IASB standard setting process. To avoid unwanted or even unexpected consequences. That means more transparency. Better consultations. Impact analysis at an early stage. Thorough field-testing of any new standards. And rigorous management. We need standards only when they are necessary.

We also need to strengthen further the public accountability of the IASB. That is why last month we issued a statement together with the US SEC, the Japanese Financial Services Authority and IOSCO on key issues where action is needed.

Next year it will be the EU's turn to take the decision to accept US GAAP – and other well developed third country GAAPs. We are working hard together with European securities regulators to determine whether those GAAPs are equivalent to IFRS. We will make a serious and balanced decision – taking into account the competitiveness and attractiveness of our capital markets. As regulators we must help financial markets to function as friction-free as possible.

22 December 2007: Heads Up on FASB's proposed definition of equity
We have posted the 21 December 2007 edition of the Heads Up Newsletter (PDF 141k) from Deloitte & Touche LLP (United States). On 30 November 2007, the FASB issued for public comment a Preliminary Views document on how to distinguish liabilities from equity. If adopted, these Preliminary Views could radically change how contracts are classified either as liabilities or assets or as equity. Under what FASB calls the basic ownership approach, only the most subordinated class of common stock will qualify as equity. Other contracts currently classified as equity (such as preferred stock and certain option and forward contracts on an entity's own equity) would instead be classified as liabilities (or, in some cases, assets). This Heads Up discusses the FASB's Preliminary Views, their application to some common contracts, and how they compare with current accounting requirements. Interested parties should provide comments to the FASB by 30 May 2008. The IASB expects to issue a Discussion Paper in the first quarter of 2008 inviting comments on FASB's Preliminary Views.

22 December 2007: US GAAP XBRL taxonomy is released for comment
XBRL US Inc. has publshed 'Beta release 1.0' of the XBRL US GAAP Taxonomies and Documentation for a four month comment period ending 4 April 2008. The XBRL US GAAP Taxonomies are collections of financial reporting concepts that companies will use to report their financial statements in XBRL. Each financial reporting concept in the Taxonomy is an element or 'tag'. Elements in the taxonomy cover all US GAAP reporting requirements for both the primary financial statements (for example, the balance sheet) and the notes to the financial statements. Additionally, the Taxonomy provides elements that cover common financial reporting practices. A preparer's guide is available online or for download. Click for More Information on the XBRL US Website.

21 December 2007: European Commission proposals on statutory audits
Charlie McCreevy, the EU Commissioner for Internal Market and Services, has released details of Planned Revisions to the Statutory Audit Requirements (PDF 80k) in the European Union. The existing Statutory Audit Directive, also known as the 8th Company Law Directive, was adopted in May 2006. It sets out a framework of principles that Member States are required to implement into their national legislation by 29 June 2008. It also envisages that the European Union will continue to focus on some specific policy areas, such as auditor liability, International Standards on Auditing, inspections of audit firms, and relations with third (non-EU) countries.

Commissioner McCreevy announced his plans regarding the 8th Directive in six areas:
  • Auditor liability. Recommendation in first quarter 2008 asking Member States to limit auditor liability. Each Member State would decide the means by which liability is limited – for instance, a liability cap, proportionate liability, or contractual arrangements between the auditor and the audited firm. Liability would not be limited in cases involving wilful misconduct by auditors.
  • Restrictions on ownership of audit firms. Public consultation will be launched in the first quarter of 2008.
  • Audit quality and inspections. Independent inspections of audit firms that audit listed companies are needed. However, before this could be required, more independent inspectors with sufficient expertise are needed. Meanwhile, the EU should give more responsibilities to the public oversight bodies and, for a transitional period, allow professional bodies and practitioners to take part in the inspection process, with a limited role under the supervision of independent inspectors.
  • Implementation of the Statutory Audit Directive. Publish a 'scoreboard' in Spring 2008 showing where Member States stand in implementing the 8th Directive, particularly as regards the establishment of independent public auditor oversight.
  • International Standards on Auditing (ISAs). Article 26 of the Statutory Audit Directive allows the Commission to make ISAs mandatory for the European Union. However, the Commissioner's intention is not to make a decision on ISAs at this stage but to look at this issue again towards the end of 2008 – following completion of the IAASB's Clarity Project and studies that the EU will undertake.
  • Co-operation with 'third countries'. Under the 8th Directive, Member States are required to register all auditors from outside the EU that audit companies listed in EU markets and to subject them to their systems for overseeing domestic audit firms. However, the Directive allows Member States to exempt auditors from non-EU countries whose oversight system is considered equivalent to the EU system. In January 2008, Commissioner McCreevy will propose transitional measures to allow audit firms from such non-EU countries to continue without registration until 1 January 2011. By then, the EU will complete equivalency assessments of these non-EU oversight systems.

21 December 2007: Integration of the world's capital markets
Earlier this week, US SEC Chairman Christopher Cox delivered the keynote address at the Columbia Law and Business Schools' Cross Border Securities Market Mergers Conference. Chairman Cox reviewed the recent evolution and integration of the world's capital markets – including demutualisation, electronic securities trading, and amalgamations such as NYSE Euronext, ISE Eurex, and Nasdaq OMX. And he examined the implications of those changes for regulators. Click to download Chairman Cox's Remarks (PDF 75k). An excerpt:

There will probably never be a global securities regulator, and we probably wouldn't want one. But strong national regulators working closely together is an exceptionally positive development. It will require relationship building, and a willingness as national regulators to take a different look at common issues and to be open to considering the approaches of others. All of us have got to recognize that there is not just one way to effectively regulate markets. So long as our commitment to protecting investors and maintaining the integrity of markets remains strong, then new regulatory partnerships will undoubtedly continue to flourish, to the everlasting benefit of investors all around the world.

21 December 2007: Three revised International Standards on Auditing
The International Auditing and Assurance Standards Board (IAASB)has issued three final International Standards on Auditing (ISAs) that reflect its new clarity drafting conventions. Click for Press Release (PDF 45k), which has summaries of the three new ISAs and also a hyperlink to the IAASB's website where you can download the ISAs without charge. The new ISAs are:

  • ISA 230 (Redrafted) Audit Documentation
  • ISA 260 (Revised and Redrafted) Communication with Those Charged with Governance
  • ISA 720 (Redrafted) The Auditor's Responsibility in Relation to Other Information in Documents Containing Audited Financial Statements
The IAASB has been redrafting all of its existing standards and developing new and revised standards following 'clarity drafting conventions'. The complete set of revised and clarified ISAs will be effective for audits of financial statements for periods beginning on or after 15 December 2009. The IAASB is releasing standards as they are approved to provide standard setters, regulators, and auditors with sufficient time to plan for the adoption and implementation of the standards.

21 December 2007: Special IAS Plus Newsletter – Closing Out 2007
Deloitte's IFRS Global Office has published a special edition of our IAS Plus Newsletter titled Closing Out 2007 (PDF 198k). The newsletter summarises all of the new and revised Standards and Interpretations in effect for December 2007 year ends and beyond. Presented below is list of those pronouncements. You will find all Past IAS Plus Newsletters Here. You can sign up for a Free Subscription by Email.

Effective for 31 December 2007 year ends
New StandardEffective for periods beginning on or afterIAS Plus newsletter
IFRS 7Financial Instruments: DisclosuresJanuary 2007October 2005
Amendments to StandardsEffective for periods beginning on or afterIAS Plus newsletter
IAS 1Capital Disclosures1 January 2007October 2005
IFRS 4Revised Guidance on Implementing IFRS 41 January 2007None
New InterpretationsEffective for periods beginning on or afterIAS Plus newsletter
IFRIC 7Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies1 March 2006December 2005
IFRIC 8Scope of IFRS 21 May 2006January 2006
IFRIC 9Reassessment of Embedded Derivatives1 June 2006March 2006
IFRIC 10Interim Financial Reporting and Impairment1 November 2006August 2006
Available for early adoption for 31 December 2007 year ends
New StandardsEffective for periods beginning on or afterIAS Plus newsletter
IFRS 8Operating Segments1 January 2009December 2006
Amendments to StandardsEffective for periods beginning on or afterIAS Plus newsletter
IAS 23Borrowing Costs1 January 2008April 2007
IAS 1Presentation of Financial Statements1 January 2009September 2007
New InterpretationsEffective for periods beginning on or afterIAS Plus newsletter
IFRIC 11IFRS 2–Group and Treasury Share Transactions1 March 2007December 2006
IFRIC 12Service Concession Arrangements1 January 2008December 2006
IFRIC 13Customer Loyalty Programmes1 July 2008June 2007
IFRIC 14IAS 19–The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction1 January 2008July 2007

20 December 2007: Revised IASCF constitution reflects changes to IFRIC
The IASC Foundation has published a revised version of its constitution reflecting various amendments relating to the International Financial Reporting Interpretations Committee (IFRIC). Amendments include enlarging IFRIC from 12 to 14 members, changing the quorum and voting requirements accordingly, and basing the selection of IFRIC members on their awareness of current issues and technical ability to resolve them. The IASC Foundation plans to begin its search for two new IFRIC members shortly. Click for:

20 December 2007: We comment on two IAASB proposals
Deloitte has recently submitted letters of comment to the International Auditing and Assurance Standards Board (IAASB) on two proposed International Standards on Auditing:

  • ISA 510 (Redrafted) Initial Audit Engagements – Opening Balances (PDF 29k). We are supportive of the proposed guidance in redrafted ISA 510 and believe that the overall drafting was completed in accordance with the clarity conventions and criteria adopted by IAASB.

  • ISA 530 (Redrafted) Audit Sampling (PDF 45k). We express serious concerns about the redrafted ISA 530 regarding (1) the exclusion of certain 'anomalies' when projecting misstatements in samples to the population as a whole and (2) the required approach to evaluating sample results. We note that while these comments go beyond clarity matters, we believe that they relate to current practice problems and that their significance warrants the IAASB's consideration at this time.
You will find our past comments to the IAASB Here.

19 December 2007: FAF proposes changes to FASB structure
The Trustees of the US Financial Accounting Foundation (FAF), under which the Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board (GASB) operate, have published for comment proposals for significant changes to the FAF-FASB-GASB structure. The proposals are designed to make FASB's decision-making more efficient and to strengthen the oversight role of the FAF. Click to download the FAF Proposed Changes to Oversight, Structure, and Operations of the FAF, FASB, and GASB (PDF 83k). Comment deadline is 10 February 2008. Among the proposed changes are the following:

Summary of Main Proposals by the FAF Trustees:
Financial Accounting Standards Board (FASB):
  • Reduce the size of the FASB to five members, from seven currently.
  • Retain the current simple majority FASB voting requirement.
  • Require that FASB have at least one member from each of four backgrounds: investing, auditing, preparing financial statements, and accounting education. The fifth member could be from any background. Currently there is no required mix.
  • Give the FASB chair the authority to add issues to FASB's agenda. Currently the full Board must decide. The FAF would have an oversight role in agenda setting.
Financial Accounting Foundation (FAF):
  • Strengthen the governance and oversight activities of the FAF trustees as to the efficiency and effectiveness of the standard-setting process. Trustees propose taking a more active oversight role in such areas as due process, agenda setting, solicitation of public comment, consideration of comments, and the post-isuance evaluation of the effectiveness and efficiency of standards adopted by FASB.
  • Give the power to choose FAF trustees to the trustees themselves, replacing the current system by which eight non-government trustees are selected by six specified organisations subject only to rejection by the trustees on grounds a nominee is 'not suitable'.
  • Change FAF trustees' maximum terms of service from two three-year terms to one five-year term.
  • Change the number of FAF trustees from 16 currently to a range between 14 and 18.
  • Require that the next chairman of the FAF devote between one-third and one-half time to the job.
Governmental Accounting Standards Board (GASB):
  • Retain the current size, term length, and composition of the GASB.
  • Secure a stable mandatory funding source for the GASB.
  • Give the GASB chair the authority to set GASB's technical agenda. Currently the full Board must decide. The FAF would have an oversight role in agenda setting.

With regard to the future role of FASB and IFRSs, the FAF proposal notes:
Recent commitments by many countries to use International Financial Reporting Standards (IFRSs) have opened a broad-ranging debate on issues related to accounting standards convergence and globalization. At its core, this debate must include a realistic assessment of how IFRS will work in actual application across the world and what contributions can be made by the FAF and FASB to the quality and consistency of those standards. The outcome of this debate will affect the future role, structure, and influence of the FAF and FASB on the global standard-setting process. However, regardless of the outcome, the FASB likely will continue to have a meaningful role in how international standards are set, and it may have continuing responsibility for setting standards for private enterprises and not-for-profit organizations in the United States.

19 December 2007: CEBS report on Basel Pillar 3 addresses IFRS 7 disclosures
The Committee of European Banking Supervisors (CEBS) has published the findings of a survey on regulatory implementation of disclosures by banks and other credit institutions under EU Directive 2006/48/CE, which transposes the Basel Pillar 3 requirements into EU legislation. The rationale underlying Pillar 3 is that adequate disclosure should allow market participants to assess an entity's capital adequacy. To this end institutions need to disclose information on the scope of application, capital, risk exposures, and risk assessment processes at the highest level of consolidation. The report notes as an 'area of concern' the interrelationship between Pillar 3 disclosures and accounting disclosures under IFRS 7.

"Dealing with the relationship with accounting is of great importance to ensure that the accounting and Pillar 3 disclosures are to the largest extent consistent or at least not such that they lead to major inconsistency problems."
The survey found that, at the moment, EU countries have refrained from taking measures (either official or informal) in this respect, though many countries indicated that disclosures made in the public financial statements as a result of IFRS 7 do not need to be repeated for the purpose of Pillar 3 compliance. Two countries said that they may issue guidance on this matter. Click for:

19 December 2007: The SEC holds two roundtables on IFRSs
We have posted the 18 December 2007 edition of the Heads Up Newsletter (PDF 114k) from Deloitte & Touche LLP (United States). On 13 and 17 December 2007, the SEC hosted two roundtable discussions on the potential use of IFRSs in the United States. Those roundtables were in response to:

The roundtable participants comprised various constituents, including financial intermediaries, investors, and issuers. The roundtables addressed the effect of giving US issuers the choice of using IFRSs or US GAAP on the capital markets and on competition. Practical issues concerning the possible use of IFRSs by US issuers and the impact on investor protection also were addressed. Issues were addressed from both the US market's perspective and the global perspective. This Heads Up newsletter has the details.

18 December 2007: New IFAC translations database
The International Federation of Accountants (IFAC) has developed a database that enables professional accountants to locate third-party translations of its pronouncements in more than 30 languages. The database features information on the languages available, publication titles, names of translating organizations and, where available, lists of translated key terms. To facilitate translation and reproduction of its pronouncements, IFAC has released the following two updated policy statements:

  • Policy for Reproducing, or Translating and Reproducing, Publications Issued by the International Federation of Accountants; and
  • Permission to State that the International Federation of Accountants has Considered a Translating Body's Process for Translating Standards and Guidance.
The translations database and the policy statements can be accessed on the IFAC website at www.ifac.org/translations. Click for Press Release (PDF 56k).

18 December 2007: New IFAC guide to audits of SMEs
The International Federation of Accountants has published a Guide to Using International Standards on Auditing (ISAs) in the Audit of Small- and Medium-sized Entities. IFAC's Small and Medium Practices (SMP) Committee commissioned this guide to assist SMPs and others in applying ISAs in SME audits. The guide provides a detailed analysis of the standards and their requirements in the context of an SME audit. The guide may be Downloaded from IFAC's website (PDF 7,071k).

18 December 2007: Agenda project pages updated
We have updated the following IASB agenda project pages to reflect the discussions and decisions at the IASB's meeting on 11-14 December 2007.

18 December 2007: CESR publishes summaries of IFRS enforcement decisions
The Committee of European Securities Regulators (CESR) has published its second batch of extracts from its confidential database of enforcement decisions taken by EU national enforcers of financial information. From time to time, CESR publishes extracts of selected decisions as a source of information to foster appropriate and consistent application of IFRSs in the EU.

Topics covered in batch #2 of CESR's extracts:
  • Amortisation of intangible assets with finite lives included in goodwill
  • Excise tax on fuel
  • Recognition of negative goodwill
  • Deferred tax asset
  • Valuation of offshore rigs at the transition date
  • Use of the fair value option
  • Segment reporting
  • Method of amortising intangible assets
  • Change in accounting for employee benefits
  • Identification of the acquirer in a business combination
  • Real estate projects
Click to download:

18 December 2007: We comment to IASB on risks eligible for hedge accounting
We have submitted to the IASB our Comments on the Exposure Draft: IAS 39 Exposures Qualifying for Hedge Accounting (139k). Overall we are supportive of the proposals.

We support the Board's intention to clarify IAS 39 Financial Instruments: Recognition and Measurement in the areas of what risks are eligible for hedge accounting and what portion can be designated as a hedged item. As the amendments' objective is to provide clarity in what is a qualifying hedge accounting relationship it is important that the finalisation of the amendments on risks and portions is very clear. We currently have concerns that some of the drafting is not clear enough and also that the amendments may have unintended consequences for other hedge accounting designations beyond the intended scope of the amendments. We draw this to your attention as well as our proposals to make the amendments clearer and other drafting comments in the answers to the questions in the Appendix to this comment letter.
You will find all past Deloitte letters of comment to the IASB and the IASC Here.

17 December 2007: Notes from fourth day of December 2007 Board meeting
The International Accounting Standards Board held its December 2007 meeting at the Board's offices, 30 Cannon Street, London, on Tuesday to Friday, 11-14 December 2007. Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

15 December 2007: New Global Offerings Services newsletter
We have posted the November 2007 Edition of the Deloitte Global Offerings Services Newsletter (PDF 147k). 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. The GOs Newsletter is an update on relevant GAAP, regulatory, and other matters, webcasts, and publications, with hyperlinks to source material. Past GOs Newsletters are Here.

14 December 2007: Notes from third day of December 2007 Board meeting
The International Accounting Standards Board held its December 2007 meeting at the Board's offices, 30 Cannon Street, London, on Tuesday to Friday, 11-14 December 2007. Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

14 December 2007: FASB webcast on IFRS convergence
The US Financial Accounting Standards Board (FASB) is launching a series of periodic webcasts focusing on topics of importance to its constituents. The first is scheduled for Tuesday, 8 January 2008, and will feature a panel of experts discussing international convergence of accounting standards. The live webcast is offered free of charge. Viewers will have the opportunity to email questions to panelists during the event. The webcast will be archived on the FASB website for access by the public. To register for the live and/or archived webcast, here is the URL: http://w.on24.com/r.htm?e=98883&s=1&k=6E1FE1267FC56B24EDA45AA5C0049702.

FASB webcast on IFRS convergence:
  • Title of Webcast: Towards a Global Reporting System: Where Are We and Where Are We Going?
  • Date and Time: 8 January 2008, 10:30 AM to 11:30 AM US EST
  • Panelists: Robert Herz, Chairman of the FASB; Peter Bridgman, Senior Vice President and Controller of PepsiCo; Greg Jonas, Managing Director of Moody's Investors Service; and Sam Ranzilla, a Partner at KPMG LLC. Moderated by Wall Street Journal reporter David Reilly.
  • Topic: The panel will cover topics that include steps necessary to ensure a successful transition to IFRS; how this transition will provide better information to investors; and progress made by the FASB and the International Accounting Standards Board (IASB) to create a common set of high-quality global accounting standards.
  • Email Notification Service: To subscribe to an email notification service for future FASB webcasts, send an email to Join-fasb-webcast@listserv.lists.fasb.org. (It is not necessary to include any additional information in the subject line or body of your email.)

14 December 2007: Guía Rápida NIC/NIIF 2007 (Spain)
Deloitte (Spain) has published Guía Rápida NIC/NIIF 2007 (PDF 692k, 116 pages) – a Spanish translation of IFRSs in your Pocket 2007. It includes forewords from Ken Wild (Deloitte Global IFRS Leader) and Manual Arranz (Deloitte Spain IFRS Leader); a description of the IASB structure; biographies of IASB members; an IASC/IASB chronology; use of IFRSs around the world; summaries of all IFRSs including Interpretations up through 30 June 2007; brief summaries of IASB agenda projects; and more.

13 December 2007: Determining fair values of financial instruments under IFRSs
The six largest accounting networks under the auspices of the Global Public Policy Committee (GPPC) have jointly issued a paper entitled Determining Fair Value of Financial Instruments under IFRSs in Current Market Conditions (PDF 54k). The objective of the paper is to enhance awareness of the requirements of IFRSs in relation to the determination of fair value of financial instruments and related disclosures. It is similar to the paper issued by the Center for Audit Quality on Measurement of Fair Value in Illiquid (or Less Liquid) Markets under US GAAP (see our news story of 4 October 2007). A draft of this paper was shared with the Financial Stability Forum, some board members and staff of the IASB, Standing Committee No. 1 of IOSCO, and the Accounting Task Force of the Basel Committee on Banking Supervision. The GPPC group believes that drawing attention to the issues is helpful in advance of the 2007 year-end reporting season, particularly because this is the first time that IFRSs – and especially the literature relating to valuation of financial assets and liabilities – has been applied extensively in difficult market conditions.

13 December 2007: SEC will propose further delay of SOX 404 for small companies
In testimony yesterday before the US House of Representatives Committee on Small Business, US SEC Chairman Christopher Cox announced that the SEC will consider delaying, for one more year, the requirement that small public companies report on their internal financial controls and have them audited. The requirement is otherwise scheduled to go into effect for calendar year 2008. The Commission plans to study the costs and benefits of the requirement. Click for Chairman Cox's Testimony (PDF 35k). Here is an excerpt:

We anticipate that the study and analysis of the results will be completed no earlier than June 2008. Under the current schedule, smaller public companies would be expected to begin complying with Sarbanes-Oxley section 404(b) for fiscal years ending after December 15, 2008, with the result that unless there is an additional deferral, companies will incur compliance costs before the SEC has the benefit of the study and analysis. As a result, I intend to propose to the Commission that we authorize a further one-year delay in implementation for small businesses in order to base our decision on final implementation of section 404(b) on the best available cost data.

13 December 2007: SEC announces roundtable discussions on IFRSs
The US Securities and Exchange Commission will host two roundtable discussions in December on issues surrounding the growing prevalence of International Financial Reporting Standards (IFRSs):

SEC Roundtables on the Growing Prevalence of IFRSs
  • The first roundtable, on 13 December 2007, will address the issues arising from the current co-existence of two accounting standards in the US markets. Under current rules, non-US companies with US listings often use IFRSs. The roundtable will consist of two panels, which will look at the effect of allowing foreign companies the choice of whether to use IFRSa or US GAAP) and denying that same choice to US issuers. The first panel will explore these issues primarily from the perspective of US investors, issuers, and markets, and the second panel primarily from the perspective of the global markets.
  • The second roundtable, on 17 December 2007, will focus on the practical issues surrounding the possible future use of IFRSs by US companies. The first panel will explore these issues primarily from the perspective of US investors, issuers, and markets. The second panel will discuss the experience of those global markets and foreign companies that have already completed the transition to IFRSs.
Click for:

13 December 2007: Revised ED on 'deemed cost' of investments
The IASB published for public comment a revised exposure draft (ED) of proposed amendments to IFRS 1 First-time Adoption of IFRSs and IAS 27 Consolidated and Separate Financial Statements. The revised ED – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate – responds to comments received on a related exposure draft published in January 2007. The proposals address concern that retrospectively determining cost in accordance with IAS 27 on first-time adoption of IFRSs cannot, in some circumstances, be achieved without undue cost or effort. Under the revised proposal:

  • Entities, in their separate financial statements, would be allowed to use a 'deemed cost' option for determining the cost of an investment.
  • That 'deemed cost' could be either fair value (determined in accordance with IAS 39 Financial Instruments: Recognition and Measurement) or the carrying amount under previous national standards.
  • The 'deemed cost' option to would apply to jointly controlled entities and associates as well as subsidiaries.
  • A new parent would be required to measure cost using the carrying amounts of the existing entity at the date when the new parent is formed.
Comment deadline on the revised ED is 26 February 2008. Click for:

13 December 2007: Group cash-settled share-based payment transactions
The IASB has published for comment an exposure draft of proposed amendments to IFRS 2 Share-based Payment and to IFRIC 11 IFRS 2 – Group and Treasury Share Transactions. The proposals would provide guidance on how a group entity that receives goods or services from its suppliers (including employees) should account for the following arrangements, known as group cash-settled share-based payment transactions:
  • Arrangement 1 – the entity's suppliers will receive cash payments that are linked to the price of the equity instruments of the entity.
  • Arrangement 2 – the entity's suppliers will receive cash payments that are linked to the price of the equity instruments of the entity's parent.
Either way, it is the entity's parent that has an obligation to make the required cash payments to the entity's suppliers, not the entity itself. The proposed amendment to IFRS 2 clarifies that IFRS 2 applies to such arrangements even if the entity that receives goods or services from its suppliers has no obligation to make the required share-based cash payments. Under the proposal, the entity should measure the goods or services in accordance with the requirements for cash-settled share-based payment transactions. Comment deadline is 17 March 2008. Click for:

13 December 2007: Three projects added to IASB's technical agenda
At its meeting yesterday, the IASB agreed to add three projects to its active technical agenda. We have created project pages for each (links below) and have updated our Project Agenda and Timetable Page. The Board decided not to take on a fourth project, on intangibles. Also, it decided not to undertake, at this time, a comprehensive reconsideration of IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.

Three projects added to the IASB's technical agenda:
  • Emission Trading Schemes. The project will address emission trading rights, including any government grants associated with such emission trading rights, but will not address government grants more generally (that is, comprehensive reconsideration of IAS 20 is not included).
  • Common Control Transactions. The project will address accounting for combinations between entities or businesses under common control in the acquirer's consolidated and separate financial statements. Specifically, the scope of the project would be:
    • Define what a common control transaction is.
    • Include demergers and spin offs.
    • Consider accounting in both the separate and consolidated financial statements.
  • Management Commentary. The objective would be to develop a model for a narrative report, that would accompany but be presented outside of the financial statements, setting out management's explanation of the enterprise's financial condition, changes in financial condition, results of operations, and causes of changes in material line items. The project would build on the Discussion Paper that the Board published for comment in October 2005. The output of the project would be a 'best practice' guidance document rather than an IFRS.

13 December 2007: Heads Up on FASB's new business combinations standard
We have posted the 12 December 2007 edition of the Heads Up Newsletter (PDF 412k) from Deloitte & Touche LLP (United States). It summarises the FASB's recent issuance of Statements No. 141(R) Business Combinations and No. 160 Noncontrolling Interests in Consolidated Financial Statements. Those statements substantially elevate the role played by fair value and dramatically change the accounting for business combinations and noncontrolling interests. Their issuance represents the completion of the second phase of a multiphase project to reconsider the accounting for business combinations and to converge with the upcoming IASB standards. The IASB plans to release its equivalent of FAS 141(R) on 10 January 2008, with an effective date of 1 July 2009. The IASB's revised IFRS 3 will permit, but not require, recognition of the full goodwill of the acquired entity. SFAS 141(R) requires the full goodwill method. SFAS 141(R) and SFAS 160 may be downloaded without charge from the FASB Website.

13 December 2007: Notes from second day of December 2007 Board meeting
The International Accounting Standards Board held its December 2007 meeting at the Board's offices, 30 Cannon Street, London, on Tuesday to Friday, 11-14 December 2007. Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

12 December 2007: Updated summary of public sector standards
We have posted an updated version of Deloitte's 2007 Summary of International Public Sector Accounting Standards (PDF 472k). The 36-page booklet includes summaries of IPSASs 1 to 24 plus two outstanding exposure drafts.

12 December 2007: Notes from first day of December 2007 Board meeting
The International Accounting Standards Board held its December 2007 meeting at the Board's offices, 30 Cannon Street, London, on Tuesday to Friday, 11-14 December 2007. Click here to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the meeting.

11 December 2007: IFAC survey – Convergence important to economic growth
The International Federation of Accountants (IFAC) has released the results of its first annual Global Leadership Survey, which highlights issues the profession will be addressing in the coming year, national and regional perspectives on economic growth, and the profession's role in contributing to that growth. Click for a Summary of Survey Findings (PDF 93k). Key findings of the survey include the following:

  • Convergence to a single set of both international accounting and international auditing standards is very important to a country's economic growth and development. Respondents ranked convergence to International Standards on Auditing (ISAs) at the same high level of importance as convergence to IFRSs. Respondents viewed convergence to a single set of IFRSs for SMEs as important but less important than convergence to IFRSs or ISAs. Approximately 50 per cent of respondents said convergence to a single set of international standards for SMEs is important to economic growth in their countries.
  • The limited supply of qualified accounting professionals is having a negative effect on the growth of some national economies.
  • Applying new accounting standards is the most important issue faced by professional accountants working in business, followed by adopting good practice in internal control and risk management.
  • Auditor liability remains a significant national issue.
  • Effectively supporting small and medium entities (SMEs) is an important issue for the global profession and will have an impact on economic development.

11 December 2007: Speeches at AICPA's annual SEC and PCAOB conference
The American Institute of CPAs is holding its 35th Annual National Conference on Current SEC and PCAOB Developments in Washington on 10-12 December 2007, simulcast in five other cities, including London. Various representatives from the SEC, PCAOB, AICPA, FASB and other groups are speaking at the conference. The conference is quite popular among SEC registrants and their auditors because the SEC and PCAOB representatives provide insights on important issues for calendar year-end reporting. Here are links to some of the presentations at the conference. We will add to this list as additional presentations are made publicly available.

Speeches at AICPA's 35th Annual SEC and PCAOB Conference:

11 December 2007: IASB will consider four possible new agenda projects
The International Accounting Standards Board will meet on Tuesday to Friday, 11-14 December 2007. At the session on Wednesday 12 December 2007, the Board will consider staff proposals for adding the following four projects to the Board's active agenda:

  • Intangible assets excluding goodwill. The project proposal notes that, ideally, the scope of the project should be the initial accounting for identifiable intangible assets other than those acquired in a business combination (with a focus on, but not limited to, internally generated intangible assets) and the subsequent accounting for all identifiable intangible assets. Because of resource constraints, the initial step would be a disclosure-only project beginning with a Discussion Paper.
  • Accounting for emissions trading schemes. The Board added this project to its agenda in September 2005 following withdrawal of IFRIC 3 Emission Rights. But the project has been deferred pending progress on the Board's project on Liabilities.
  • Common control transactions. Scope of the project would be accounting for combinations between entities or businesses under common control in the acquirer's consolidated and separate financial statements. The project would include clarifying the description of a combination between entities or businesses under common control currently in IFRS 3.
  • Management commentary. The objective would be to develop a model for a narrative report, that would accompany the financial statements, setting out management's commentary on the financial statements. The project would build on the Discussion Paper that the Board published for comment in October 2005.
The recommendation of the IASB staff directors is to add all but the intangible assets project to the agenda. The agenda proposals are available on the IASB's Website.

11 December 2007: New Global Offerings Services newsletter
We have posted the September-October 2007 Edition of the Deloitte Global Offerings Services Newsletter (PDF 140k). 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. The GOs Newsletter is an update on relevant GAAP, regulatory, and other matters, webcasts, and publications, with hyperlinks to source material. Past GOs Newsletters are Here.

11 December 2007: PCAOB staff issues audit practice alert on fair value
The US Public Company Accounting Oversight Board (PCAOB) has published a Staff Audit Practice Alert on the audit of fair value measurements in financial statements. The alert provides auditors with additional information related to auditing fair value measurements and disclosures, as well as the use of specialists in this area.

The PCAOB's release Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists highlights certain matters in four areas:
  • Auditing fair value measurements;
  • Classification of fair value measurements within the fair value hierarchy established by SFAS 157;
  • The use of specialists in fair value measurements; and
  • The use of pricing services in fair value measurements
Click for:

11 December 2007: Heads Up on US GAAP XBRL taxonomy
On 5 December 2007, the US Securities and Exchange Commission released the XBRL US GAAP taxonomy for public comment. The taxonomy is a collection of computer 'tags' that can be applied to financial data included in SEC filings to make the data interactive and more useful to investors. The public comment period concludes 4 April 2008. Some time in 2008, the SEC is likely to propose a rule that would require certain registrants to incorporate interactive data into future SEC filings. We have posted the 10 December 2007 edition of the Heads Up Newsletter (PDF 111k) from Deloitte & Touche LLP (United States), which describes the US GAAP XBRL taxonomy.

10 December 2007: Major changes in German accounting law are under discussion
On 8 November 2007, the German Ministry of Justice (MOJ) issued for public comment a staff draft of the German Accounting Law Modernisation Act (BilMoG) (PDF 651k, German language). The overall goals of the reform are to (1) modernise the German Accounting Law (Handelsgesetzbuch, or HGB) and (2) reduce regulatory burden on companies. The proposed changes are generally in the direction of closer conformity of the HGB with IFRSs. The bill would also make changes in the areas of auditing, supervisory boards, and audit committees. Important accounting changes include:

  • greater recognition of intangible assets (although the related increase in equity would not be available for distribution as dividends)
  • special purpose entities controlled by a parent would have to be consolidated
  • recognition of deferred tax assets (previously prohibited)
  • measurement of financial assets held for trading at fair values in excess of initially recognised costs
  • measurement of provisions at discounted amounts
  • inclusion of actuarial assumptions in the measurement of pension liabilities
  • exemption of small non-listed entities from the requirement to publish HGB-GAAP financial statements
The staff draft is currently out for comment by key interested parties until 8 January 2008. Thereafter, the draft law will be revised based on the comments received by MOJ and then submitted to both chambers of Parliament (the Deutsche Bundestag and Bundesrat) where it will be deliberated for at least several months. Many observers anticipate a heated debate. The original time frame indicated by the MOJ was for publication of the final law in the second half of 2008, with applicability as of 1 January 2009. However, observers suggest that due to significant election dates in 2008 and 2009, that date may not be feasible to uphold.

10 December 2007: IFAC policy paper on regulation of the accounting profession
International Federation of Accountants (IFAC) has released a Policy Position on professional regulation of the accountancy profession in which it states that professional accountancy bodies, acting in the public interest, must play an active role in the regulation of the profession to ensure that regulation is effective and efficient. The paper, Regulation of the Accountancy Profession, outlines various types of regulatory models and how they can be implemented and discusses the roles of professional accountancy bodies and governments. In discussing the need for regulation, the paper points out: 'Like other professions, the sustainability of the accountancy profession depends upon the quality of services provided by its members and the profession's capacity to respond effectively and efficiently to the demands of the economy and society.' Click for:

10 December 2007: 'An Accounting Revolution is Brewing in China'
Paul Pacter, webmaster of IAS Plus, has written an article titled 'An Accounting Revolution Is Brewing in China', published in the December 2007 issue of Financial Executive, the journal of Financial Executives International. Paul discusses the capital markets in China today, the recent history of financial reporting in China, changes caused by the new Chinese Accounting Standards (CASs) that went into effect in 2007, and remaining differences between CASs and IFRSs. Click to download An Accounting Revolution is Brewing in China (PDF 268k), which is copyright 2007 Financial Executives International and is posted here with FEI's kind permission.

10 December 2007: 'Tone at the top' can influence audit quality
A study by the Transnational Auditors Committee (TAC) of the Forum of Firms, a body within the International Federation of Accountants, examines how setting the right tone can positively influence audit quality. The Forum of Firms is an association of networks of international accounting firms that perform transnational audits. The study, titled Tone at the Top and Audit Quality, explores current practices among members of the Forum of Firms. This good practice guidance paper has been prepared based on the input of ten TAC members, who represent some of the largest international networks. TAC members granted interviews and supplied background materials that have been summarised in this paper on a non-attributed basis. Click for:

9 December 2007: Fiji exempts some smaller entities from IFRS requirement
In November 2007, the Council of the Fiji Institute of Accountants approved the introduction of a F$5 million (US$3.25 million) turnover threshold for three categories of entity that would otherwise be required to follow IFRSs, thereby allowing an option for smaller entities within those three categories to apply either IFRSs or the current Fiji Accounting Standards. The Institute had introduced a requirement starting 1 January 2007 for eight categories of entity to follow IFRSs. For details please see our Fiji Page.

8 December 2007: Status of IASB's revised IFRS 3 on business combinations
The IASB has completed the second phase of the Business Combinations Project, the main outputs of which are a revised version of IFRS 3 Business Combinations and an amended version of IAS 27 Consolidated and Separate Financial Statements. The effective date for application of the new requirements is 1 July 2009. The Board expects to publish the documents on 10 January 2008. At that time the Board will also publish a project feedback statement, which summarises the main comments received on the related exposure drafts and explains how those comments affected the Board's thinking and the final documents.

7 December 2007: HK-PRC joint declarations on accounting and auditing standards
The mainland Chinese and Hong Kong accounting and auditing standard setters have signed joint declarations regarding mutual recognition of their accounting and auditing standards.

Under the Joint Declaration on Accounting Standards (PDF 48k), the two parties agree:
  • That there are only two substantive differences between Hong Kong Financial Reporting Standards (HKFRSs, which are virtually identical to IFRSs) and the new Chinese Accounting Standards (CASs*) that went into effect in 2007. The differences involve related party disclosures and reversal of impairment losses.
  • That financial statements prepared using CASs, after adjustments for those two differences, 'should achieve substantially the same effect'.
  • To work to eliminate the two differences and to maintain ongoing convergence of their accounting standards.
  • To work to obtain mutual exemption from the relevant papers on the Hong Kong and Chinese CPA examinations.
  • To work obtain mutual acceptance of each other's accounting standards for purposes of securities listings. [Currently, mainland Chinese companies listed in Hong Kong must use either HKFRSs or IFRSs].
*CASs are also sometimes referred to as Accounting Standards for Business Enterprises or ASBEs
Under the Joint Declaration on Auditing Standards (PDF 44k), the two parties agree:
  • That a CPA applying either Chinese or Hong Kong auditing standards will be complying with the same requirements and, therefore, should reach the same conclusions for assurance or other related services engagements, including audits of financial statements.
  • To maintain ongoing convergence of their auditing standards.
  • To work to obtain mutual exemption from the accounting papers on the Hong Kong and Chinese CPA examinations.
  • To work obtain mutual acceptance of each other's auditing standards for purposes of securities listings.

7 December 2007: PCAOB proposes greater reliance on foreign auditor inspections
The US Public Company Accounting Oversight Board (PCAOB) has issued for comment a proposed policy statement that identifies the factors relevant to 'full reliance' by the Board on the inspections programs systems of its non-US counterparts that are sufficiently rigorous to meet the level of protection for investors that is required by the Sarbanes-Oxley Act of 2002. The proposed policy statement provides guidance on the Board's Rule 4012 Inspections of Foreign Registered Public Accounting Firms, which permits the Board to adjust its reliance on the inspections of auditor oversight entities located in the home countries of registered non-US audit firms, based upon the level of independence and rigor of those entities. Under the proposed policy statement the PCAOB would increase its level of reliance on non-US oversight systems where possible, including in some cases full reliance, if certain essential criteria are met. The Board is seeking public comment by 4 March 2008 on the criteria and the approach described in the policy statement.

Five proposed broad principles that would guide the PCAOB in making a reliance determination:
  • Adequacy and integrity of the oversight system: The Board would weigh whether the non-US system effectively works in the public interest to protect investors by seeking to improve audit quality.
  • Independent operation of the oversight system: The Board would weigh whether the entity and the system within which it operates are free from interference or undue influence by the audit practitioners and/or audit firms under the entity's supervision.
  • Independence of the system's source of funding: The Board would weigh whether the non-US system has the ability to obtain and deploy the financial resources necessary to carry out its mandate without interference or undue influence by the audit practitioners and/or audit firms under its supervision.
  • Transparency of the system: The Board would weigh the extent to which the entity is accountable for the discharge of its duties through a transparent framework. The Board would review whether the entity publicly discloses information on its structure, governance, policies and operations.
  • System's historical performance: The Board would weigh whether the non-US oversight entity or the system within which it operates has a record of adequate disciplinary proceedings and appropriate sanctions.
Click for:

7 December 2007: Stay Tuned Online – IFRS and UK GAAP updates
The Deloitte London IFRS Centre of Excellence is running a series of hour-long Internet-based financial reporting updates, aimed at helping finance teams keep up to speed with IFRS and other financial reporting issues. Each update lasts no more than an hour, and sessions are held three times a year, at the end of March, July and November. We intend to make a recording of each session available on IAS Plus for a period of at least four months from the date of the presentation. The first in the series was held on 29 November 2007.

Topics included in the 29 November 2007 Stay Tuned Online IFRS and UK GAAP Update included:
  • an overview of recent and expected IASB activity
  • a UK GAAP update
  • IFRS 8 Operating Segments
  • recent IFRIC Interpretations (including IFRICs 11 and 13)
To access the recording Click Here. There's a permanent link on our UK Country Page.
Between 2004 and 2006, the Deloitte London IFRS Centre of Excellence ran a series of 18 IFRS technical updates, focusing on the most important international accounting standards and how they would affect UK companies. For now, we are continuing to make the recordings available on the UK Country Page on IAS Plus.

7 December 2007: Accounting Roundup – November 2007
We have posted the November 2007 Edition of Accounting Roundup (PDF 283k) published by Deloitte & Touche LLP (USA). Topics covered in this issue include:

FASB Developments
  • FASB Revises Business Combination and Noncontrolling Interests Accounting
  • FASB, FAF, and AICPA Support Transition of U.S. Public Companies to Accounting Standards Set by One Global Standard Setter
  • FASB Proposes to Delay Effective Date of Interpretation 48, Uncertain Tax Positions, for Private Entities
  • FASB Proposes to Partially Defer Fair Value Statement 157, Considers Implementation Issues
  • FASB Proposes FSP to Exclude Leases From Scope of Fair Value Statement 157 and Revises Lease Accounting's Fair Value Definition
  • FASB Proposes FSP for Indefinite Deferral of SOP 07-1 Affecting Investment Company Accounting
  • FASB Proposes FSP Amending the Factors Considered in Determining an Intangible Asset's Useful Life
  • FASB Issues Proposal to Simplify and Improve Reporting for Financial Instruments With Characteristics of Equity
EITF Developments
  • EITF Issue No. 07-1 Accounting for Collaborative Arrangements
  • EITF Issue No. 07-4 Application of the Two-Class Method Under FASB Statement No. 128, Earnings per Share, to Master Limited Partnerships
  • EITF Issue No. 07-5 Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock
  • EITF Issue No. 07-6 Accounting for the Sale of Real Estate Subject to the Requirements of FASB Statement No. 66, Accounting for Sales of Real Estate, When the Agreement Includes a Buy-Sell Clause
  • EITF Discusses FASB's Approach for Updating Issue No. 98-5, Accounting for Convertible Securities With Beneficial Conversion Features or Contingently Adjustable Conversion Ratios
SEC Developments
  • SEC Removes Reconciliation Requirement, Approves Rules for Smaller Public Companies
  • SEC Issues SAB Providing Views About Written Loan Commitments Accounted for at Fair Value
  • SEC Proposes Mandatory Electronic Submission of Certain Investment Company Applications and Filings
  • SEC Approves Amendments to PCAOB Rules Governing Inspection Frequency
  • SEC Seeks Feedback Regarding Web-Based Tools Used to Access Public-Company Disclosures About Business Activities in or With Countries Identified as State Sponsors of Terrorism
  • SEC Appoints Wayne Carnall as Chief Accountant of the Division of Corporation Finance
GASB Developments
  • GASB Issues Statement No. 52 Land and Other Real Estate Held as Investments by Endowments
International Developments
  • IASC Announces Governance Proposals to Enhance Its Public Accountability
You will find past issues of Accounting Roundup Here.

7 December 2007: IFRS Compliance Questionnaire for 2007
We have posted Deloitte's IFRS Compliance Questionnaire for 2007. This questionnaire summarises the recognition and measurement requirements in IFRSs including Interpretations. The questionnaire may be used to assist in considering compliance with those pronouncements. It is not a substitute for your understanding of such pronouncements and the exercise of your judgment. Users are presumed to have a thorough understanding of the pronouncements and should refer to the text of the pronouncements, as necessary, in considering particular items in the questionnaire. The items in this questionnaire are referenced to the applicable sections of the IFRSs. The questionnaire addresses the measurement and recognition requirements of IFRSs issued on or before 31 August 2007. It does not address presentation and disclosure requirements (for which we have published a Separate Checklist). Note, however, that IAS 8.30 requires disclosures regarding Standards and Interpretations issued but not yet effective at the date of issue of the financial statements. Therefore, in addition to the contents of the compliance questionnaire, preparers will need to consider any Standards and Interpretations issued between 1 September 2007 and the date of issue of their 2007 financial statements. The questionnaire is 282 pages long. Click below to download it in either MS Word (Zipped) or PDF format:

There are permanent links on our Model Financial Statements Page.

6 December 2007: EITF Snapshot for November 2007
We have posted the November 2007 edition of EITF Snapshot (PDF 133k) summarising the 29 November 2007 meeting of FASB's Emerging Issues Task Force. EITF Snapshot, published by Deloitte & Touche LLP (USA), enables readers to identify relevant topics and to understand quickly the meeting's outcome. Past issues can be downloaded Here.

EITF Snapshot explains the three issues on which the EITF reached a consensus at this meeting:
  • Issue 07-1 Accounting for Collaborative Arrangements (for the development and commercialisation of resource-intensive, and generally uncertain, products) – consensus reached
  • Issue 07-4 Application of the Two-Class Method Under FASB Statement No. 128, Earnings per Share, to Master Limited Partnerships – consensus for exposure
  • Issue 07-6 Accounting for the Sale of Real Estate When the Agreement Includes a Buy-Sell Clause – consensus reached

5 December 2007: FASB issues revised business combinations standard
The US Financial Accounting Standards Board has issued a revised standard on business combinations and a new standard on noncontrolling interests ('minority intrests'). The standards are effective for financial years beginning after 15 December 2008. The IASB plans to issue its counterpart standards IFRS 3 (revised) Business Combinations and IAS 27 (as revised in 2007) Consolidated and Separate Financial Statements, early next year. The FASB standard on business combinations requires the acquiring entity to recognise all the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed (including goodwill); and requires the acquirer to disclose information that helps in evaluating and understanding the nature and financial effect of the business combination. The IASB's revised IFRS 3 will permit, but not require, recognition of the full goodwill of the acquired entity. Click for FASB's News Release (PDF 58k). The new standards (SFAS 141(R) and SFAS 160) may be downloaded without charge from the FASB Website.

5 December 2007: FASB issues preliminary views on liabilities versus equity
The US Financial Accounting Standards Board published its Preliminary Views (PV) on Financial Instruments with Characteristics of Equity. The PV describes the FASB's preferred 'basic ownership' approach, which limits the instruments that can be classified as equity to the lowest residual interests in an entity. The holders of those instruments are viewed as the owners of the entity. All other instruments represent either liabilities or assets. An instrument that reduces the net assets available to the owners of the entity is a liability; and an instrument that enhances net assets available to the owners is an asset. Under this approach, forward contracts, options, and convertible debt would be classified as liabilities or assets. Comments are requested by 30 May 2008. Click for More Information on FASB's website, including free download of the PV document. The IASB plans to publish the FASB's Preliminary Views in early 2008 for comment by its constituents.

4 December 2007: Model IFRS financial statements for 2007 in Slovak language
Deloitte (Slovak Republic) has published Medzinárodné standardy pre finanèné výkazníctvo – Vzorové finanèné výkazy 2007 Slovak Language Model IFRS Financial Statements for 2007 (PDF 1,582k, 114 pages). Each item in the financial statements is cross-referenced to the relevant source in IFRSs. You will always find all of Deloitte's model IFRS financial statements Here. And here is the link to our Slovak Republic Page.

3 December 2007: IASB tops global rankings for 'stakeholder participation'
The International Accounting Standards Board has the best developed external stakeholder engagement capabilities amongst 30 of the world's most powerful global organisations and is a high performer in both transparency and evaluation, according to a report on global accountability published today by the One World Trust. Click for IASB Press Release (PDF 46k).

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