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31 May 2007: South Africa, Australia proposing to adopt the IFRS for SMEs

Both South Africa and Australia have taken steps that would lead to adoption of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) in those jurisdictions. The IFRS for SMEs is currently an Exposure Draft. A final standard is expected in the second half of 2008.

31 May 2007: Deloitte responds to CESR's equivalence consultation

In our News Story of 23 April 2007 we reported that the Committee of European Securities Regulators (CESR) is seeking technical advice on a mechanism for determining the equivalence of the generally accepted accounting principles of non-EU countries with IFRSs. We have submitted our response to the six questions in CESR's consultation. Click to Download the Deloitte Letter to CESR (PDF 186k).

30 May 2007: Near-final draft of amendments to IFRS 2
The IASB has posted in the On-line Subscriber Area of its website the near-final draft of a forthcoming amendment to IFRS 2 Share-based Payment. The amendment relates to Vesting Conditions and Cancellations. The amendment would be effective for annual periods beginning on or after 1 January 2008 and would be applied retrospectively.

30 May 2007: Use of IFRSs in Samoa
We have added a Country Page for Samoa. Samoa does not have an accounting law or a statutory requirement for all companies to publish financial statements. Nor are there Samoan accounting standards. The Samoa Institute of Accountants requires companies that are audited to follow either IFRSs or another internationally accepted accounting framework such as US GAAP. In most cases, companies report under IFRSs. The Institute also requires the use of International Standards on Auditing.

29 May 2007: Our views on Related Party Disclosures Exposure Draft
We have submitted to the IASB Our Comments on the Exposure Draft: Proposed Amendments to IAS 24 Related Party Disclosures (PDF 174k). The amendments relate to disclosures of relationships and transactions among state-controlled entities and to the definition of related parties. Here is an excerpt from our comment letter on the proposal:

• Deloitte Comment Letters to IASB and IASC
• Deloitte Comment Letters to IAASB

29 May 2007: CFA Institute recommendations on quarterly reporting

The CFA Institute Centre for Financial Market Integrity and the Business Roundtable Institute for Corporate Ethics have jointly published Apples to Apples: A Template for Reporting Quarterly Earnings. This report is based on concerns expressed at a series of symposia held in 2005 and 2006 addressing the issue of short-term thinking in today's financial markets. The report makes a number of recommendations for specific refinements to the content and organization of quarterly earnings releases to improve transparency. It includes an example 'template' of a third quarter earnings announcement. Click to Download the Report (PDF 198k). The report is copyright CFA Institute and has been posted here with their kind permission.

29 May 2007: FASB Chairman comments on convergence

The 2006 annual report of the US Financial Accounting Foundation (under which FASB operates) includes comments of FASB Chairman Robert H Herz on FASB-IASB convergence efforts. Mr Herz's comments are set out below. Here is the link to Download the Full FAF Annual Report from the FASB website (PDF 3,328k).

28 May 2007: We comment on three proposed auditing standards
Deloitte has recently submitted letters of comment to the International Auditing and Assurance Standards Board (IAASB) on the following three proposed International Standards on Auditing. In each case, while offering some suggestions for improvement, we concluded that "we are supportive of the development of this guidance and believe, overall, that the redrafting of the proposed standard was completed in accordance with the clarity conventions and criteria adopted by IAASB". You can find past Deloitte letters to the IAASB Here.

• ISA 540 (Revised and Redrafted) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures (49k)
• ISA 230 (Redrafted) Audit Documentation (32k)
• ISA 560 (Redrafted) Subsequent Events (39k)

28 May 2007: New publication on tax reporting challenges
Deloitte & Touche (United Kingdom) has published Mind the GAAP: Best Practice Tax Reporting in a Changing Environment (PDF 260k). This publication contains recommendations as to how companies might address the challenges of tax reporting in financial statements brought about by recent changes including IFRSs and auditor independence. The report draws on market research that investigates how large businesses in the UK are managing the challenges of tax reporting. Some of the facts uncovered may be surprising:

28 May 2007: IOSCO will hold roundtable on audit quality
The International Organization of Securities Commissions (IOSCO) will hold a Roundtable on the Quality of Public Company Audits in Paris on 1 June 2007. The roundtable will address audit quality from the perspective of securities regulators. The Roundtable Program (PDF 37k) will consist of three substantive panels followed by a concluding analysis and commentary. The panel topics are:

• Audit Quality: Evaluating External Audits in Today's Environment
• Effects of Auditor Liability on Behaviour and Quality
• Audit Firm Concentration – Potential Effects on Audit Quality

27 May 2007: SEC roundtable on recognition of foreign intermediaries
The US Securities and Exchange Commission will host a roundtable discussion on 12 June 2007 on the topic of selective mutual recognition. Selective mutual recognition would involve the SEC permitting certain types of foreign financial intermediaries to provide services to US investors under an abbreviated registration system, provided those entities are supervised in a foreign jurisdiction under a securities regulatory regime substantially comparable (but not necessarily identical) to that in the United States. The roundtable will explore whether selective mutual recognition would benefit US investors by providing greater cross-border access to foreign investment opportunities while preserving investor protection. Click for SEC Press Release (PDF 46k).

27 May 2007: IASB Employee Benefits group will meet 5 June
The IASB's Employee Benefits Working Group will hold its first meeting on Tuesday 5 June 2007, 10:00am to 16:30pm at The Brewery, Smeatons Vaults Room, Chiswell Street, London EC1Y 4SD. The agenda for the meeting is:

26 May 2007: New publication on post-employment benefits

Deloitte & Touche LLP (United States) has published A Roadmap to the Accounting and Regulatory Aspects of Postretirement Benefits (PDF 1,521k, 188 pages). This publication summarises the common types of postretirement benefits, their funding requirements, and associated statutory and accounting guidance in the United States. An appendix contains a comparison of the accounting for postretirement benefits under US GAAP and IFRSs. The book is divided as follows: Benefits and Plans. This section notes that postretirement benefits can be classified in various ways, including (1) defined benefit versus defined contribution and (2) pension benefits versus other postretirement benefits. This section discusses the various plans, distinguishing between them for tax, regulatory, and accounting purposes. Funding/Management of Plan Assets. The funding of postretirement benefits continues to garner media attention because of concerns over the Pension Benefit Guaranty Corporation's deficit and the ability of employers to make good on their pension and other postretirement obligations. This section discusses the funding and management of defined contribution plans and defined benefit plans, including Internal Revenue Service and Employee Retirement Income Security Act considerations. Statutory Considerations. A substantial body of regulation governs the funding and management of postretirement plans. Consideration should be given to these regulations in plan design as well as in any subsequent plan amendments or changes. These regulatory requirements also should be considered in determining the appropriate accounting for the benefit obligations. This section summarises the key reference points for the regulatory requirements, including the Pension Protection Act of 2006, and the regulatory processes that underlie the US system of benefit regulation. Accounting. This section outlines the existing accounting model, including recently issued standards and implementation guidance. Also highlighted are the SEC staff's views on certain aspects of postretirement benefit accounting.

25 May 2007: New Global Offerings Services newsletter

We have posted the April 2007 Edition of the Deloitte Global Offerings Services Newsletter (PDF 135k). 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. Past GOs Newsletters are Here.

24 May 2007: SEC approves new internal control reporting guidance
The US Securities and Exchange Commission has unanimously approved interpretive guidance to help public companies strengthen their internal control over financial reporting while reducing unnecessary costs, particularly at smaller companies. The new guidance will enhance compliance under Section 404 of the Sarbanes-Oxley Act of 2002 by focusing company management on the internal controls that best protect against the risk of a material financial misstatement. The guidance is based on two broad principles:

• Management should evaluate whether it has implemented controls that adequately address the risk that a material misstatement in the financial statements would not be prevented or detected in a timely manner.
• Management's evaluation of evidence about the operation of its controls should be based on its assessment of risk.

21 May 2007: Proposal to require IFRSs for all listed companies in Brazil
The Brazilian Securities and Exchange Commission has published an Exposure Draft of a proposal to require all companies listed on the BOVESPA (Sao Paulo Stock Exchange) to publish consolidated financial statements fully compliant with IFRSs starting with financial years ending 31 December 2010. Earlier adoption would be encouraged. Approximately 350 companies are listed on BOVESPA. In March 2006, the Board of Directors of the Central Bank of Brazil formally decided to require all Brazilian banks (domestic or foreign), and all financial institutions licensed by Central Bank to do business in Brazil (including leasing companies and savings and loan institutions), to fully comply with IFRSs beginning with the financial statements for the year ending 31 December 2010. More info on our Brazil Page.

20 May 2007: SEC Chairman discusses issues relating to IFRSs
In an Address to the Security Traders Association 11th Annual Washington Conference (PDF 74k), US Securities and Exchange Commission Chairman Christopher Cox spoke about the benefits of global accounting standards and some of the pitfalls in achieving those benefits. Here is an excerpt:

19 May 2007: FEI survey shows decline in Sarbanes-Oxley compliance costs
Financial Executives International (FEI) has published its sixth Sarbanes-Oxley compliance survey, which found that Section 404 (internal controls) compliance costs for large SEC registrants for 2006 were 23% less than comparable 2005 totals. FEI attributed the reduction to "companies' increased efficiencies in complying with Section 404". Click for Press Release (PDF 51k). Respondents to the survey made a number of positive comments about SOX 404:

• 60% agreed that compliance with Section 404 has resulted in more investor confidence in their financial reports.
• 46% agreed that financial reports are more accurate.
• 48% agreed that financial reports are more reliable.
• 34% agreed that compliance with Section 404 has helped prevent or detect fraud.

19 May 2007: Agenda project pages updated for May 2007 IASB meeting

We have updated the following IASB agenda project pages to reflect the deliberations and decisions at the International Accounting Standards Board's May 2007 Board meeting:

• Annual Improvements 2006-2007
• Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation
• Financial Statement Presentation
• Conceptual Framework
• IFRS 2 Vesting Conditions and Cancellations
• Leases
• Liabilities – Amendments to IAS 37
• Post-employment Benefits

18 May 2007: Notes from Day 4 of the May 2007 IASB meeting

The International Accounting Standards Board held its May 2007 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 15-18 May 2007. Click to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the Meeting.

18 May 2007: Initiative to strengthen auditing and financial reporting in US
US Secretary of the Treasury Henry M. Paulson Jr. has announced initiatives "to enhance US capital markets' competitiveness, focused on strengthened financial reporting and a more sustainable and transparent auditing profession". The initiatives are part of an ongoing effort to address the issues affecting US capital markets competitiveness. Initiatives announced by Mr Paulson are set out below and include elimination of the IFRS-US GAAP reconciliation:

• Outline of Mr Paulson's Proposals (PDF 25k) in an editorial titled The Key Test of Accurate Financial Reporting is Trust
• Press Release (PDF 23k)
• Related March 2007 Speech by Mr Paulson (PDF 31k)

18 May 2007: Notes from Day 3 of the May 2007 IASB meeting

The International Accounting Standards Board held its May 2007 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 15-18 May 2007. Click to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the Meeting.

18 May 2007: SIC 7 Introduction of the Euro will have new relevancy
The European Commission has proposed that Cyprus and Malta be approved to adopt the euro on 1 January 2008, joining the 13 current euro countries. The European Central Bank has made a similar recommendation. EU Finance Ministers will reach a final decision in July after consultation with the European Parliament and a discussion by European leaders at the June EU Summit. Interpretation SIC 7 Introduction of the Euro provides guidance on accounting for an entity's transition to the euro. It was issued in 1998 in anticipation of the initial use of the Euro as an accounting currency in 1999 and as a circulating currency in 2002.

17 May 2007: New publication on business combinations and goodwill

Deloitte & Touche LLP (United States) has published Accounting for Business Combinations, Goodwill, and Other Intangible Assets: A Roadmap to Applying Statements 141 and 142 (PDF 884k). This publication is a single source for both the requirements of FASB Statement No. 141 Business Combinations and No. 142 Goodwill and Other Intangible Assets, and available interpretive guidance. Where appropriate, Deloitte & Touche LLP interpretive views are included. In addition, it compares Statement 141 to IFRS 3 Business Combinations, and to an Exposure Draft of a proposed FASB Statement issued in June 2005 that is intended to replace Statement 141 (the IASB issued a nearly identical exposure draft at the same time).

17 May 2007: Most US companies have not assessed fair value impact of FAS 157
Only six percent of companies in the United States have assessed how FASB Statement 157 Fair Value Measurement will affect the valuation of their assets and liabilities, according to a recent online poll conducted by Deloitte Financial Advisory Services (FAS) LLP. The poll was conducted during a Deloitte web cast on SFAS 157. Most of the approximately 1,500 participants in the web cast were senior level managers within finance and accounting departments in the financial services, telecommunications, and manufacturing industries. SFAS 157 enhances guidance on how to measure assets and liabilities at fair value and consolidates fair value measurement into one accounting standard. SFAS 157 would be applied whenever another accounting standard requires or permits a fair value measurement, such as impaired assets, assets and liabilities acquired in a business combination, and some financial assets and liabilities. It also introduces new disclosures intended to highlight the reliability of fair value measurements. SFAS 157 is effective for financial years beginning after 15 November 2007. The IASB has issued a Discussion Paper inviting comments on SFAS 157. Click for Summary of Poll Findings (PDF 68k).

17 May 2007: Plan for incorporating IFRSs into Canadian GAAP
The Accounting Standards Board of Canada (AcSB) has published an update to its Implementation Plan for Incorporating International Financial Reporting Standards into Canadian GAAP. The plan envisions a changeover to the new standards of 1 January 2011. The plan includes a comparison of IFRSs and Canadian standards as of 31 March 2007, as well as the AcSB's expectations as to which IFRSs are likely to be adopted in Canada before the changeover to IFRSs for publicly accountable enterprises. The comparison is also available as a separate document. Click to download:

• Implementation Plan for Incorporating International Financial Reporting Standards into Canadian GAAP (PDF 400k).
• Comparison of IFRSs and Canadian GAAP as of 31 March 2007 (PDF 164k).

17 May 2007: PCAOB will vote on new internal control audit standard
At its meeting on 24 May 2007, the US Public Company Accounting Oversight Board (PCAOB) will vote on a final standard on auditing internal control over financial reporting, and some related amendments to the Board's auditing standards. If adopted, the new standard would supersede Auditing Standard No. 2 An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements. The revision to AS 2 was proposed by the PCAOB in December 2006 and is designed to focus the auditor on the most important matters, increasing the likelihood that material weaknesses will be found before they cause material misstatement of the financial statements. At the same time, the proposed standard would eliminate audit requirements that the PCAOB has concluded are unnecessary to achieve the intended benefits. It would also provide direction on how to scale the audit for a smaller and less complex company. The final standard adopted must be submitted to the Securities and Exchange Commission for approval. Click for:

• Press Release on the Upcoming 24 May 2007 PCAOB Meeting (PDF 17k).
• December 2006 Proposed Revised Auditing Standard 2 (PDF 385k)
• December 2006 Press Release (PDF 76k).

17 May 2007: Notes from Day 1 and Day 2 of the May 2007 IASB meeting

The International Accounting Standards Board held its May 2007 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 15-18 May 2007. Click to go to the Preliminary and Unofficial Notes Taken by Deloitte Observers at the Meeting.

16 May 2007: Our views on Fair Value Measurement Discussion Paper
We have submitted to the IASB Our Comments on the Discussion Paper: Fair Value Measurements (PDF 287k). The Discussion Paper sets out the IASB's preliminary views on how to measure fair values when fair value measurement is already prescribed under existing IFRSs. It does not propose any extensions of the use of fair values. The Discussion Paper is built around FASB's recently issued SFAS 157 Fair Value Measurements. SFAS 157 establishes a single definition of fair value together with a framework for measuring fair value for financial reports prepared in accordance with US GAAP. The IASB's Discussion Paper:

• indicates the IASB's preliminary views on the provisions of FAS 157;
• identifies differences between FAS 157 and fair value measurement guidance in existing IFRSs; and
• invites comments on the provisions of FAS 157 and on the IASB's preliminary views about those provisions.

16 May 2007: Comparison of Luxembourg GAAP, IFRSs, and US GAAP

We have posted Lux GAAP–IFRS–US GAAP: A Comprehensive Comparison (PDF 332k), published by Deloitte SA (Luxembourg). This publication sets out the key differences between Luxembourg GAAP, IFRSs, and US GAAP as of 28 February 2007. Regarding Luxembourg GAAP, the report states:

14 May 2007: Heads Up newsletter on SEC recognition of IFRSs
We have posted the 14 May 2007 Edition of the Heads Up Newsletter (PDF 65k) published by Deloitte & Touche LLP (United States). The newsletter, titled Hands Across the Ocean, discusses expected SEC actions that are likely to increase the use of IFRSs in the United States by both foreign and domestic SEC registrants. An excerpt:

11 May 2007: Exposé-sondage – NIIF pour les PMEs (SME ED in French)
The IASB has published the French translation of the Exposure Draft of a Proposed International Financial Reporting Standard for Small and Medium-sized Entities – Exposé-sondage – Norme internationale d'information financière pour les petites et moyennes entités. The French translation is now freely available to all from the 'Open to Comment' Pages of the IASB's Website (until the comment period closes on 1 October 2007). The ED, Implementation Guidance, and Basis for Conclusions have all been translated. Hard copies are available soon to purchase from the IASCF for £23 each. A Spanish translation was published two weeks ago (download from the 'Open to Comment' link), and a German translation is forthcoming.

11 May 2007: New SEC web page – Spotlight on the IFRS Roadmap

The US Securities and Exchange Commission has added a page to its website titled Spotlight On: International Financial Reporting Standards 'Roadmap'. The URL is: www.sec.gov/spotlight/ifrsroadmap.htm

On that page are links to:

• Materials and webcast archives relating to the SEC's Roundtable on IFRS Roadmap that was held on 6 March 2007
• Seven SEC Releases relating to IFRSs
• Eleven speeches and public statements by SEC Commissioners and staff relating to IFRSs.
• The Roadmap itself: A Securities Regulator Looks at Convergence, by Donald T. Nicolaisen, April 2005

10 May 2007: New data on foreign companies registered with the US SEC
We have updated our Database of Statistics that, we believe, provide clear evidence of the globalisation of the world's capital markets and of the need for global financial reporting standards. The latest updates reflect new data on the number of non-US companies registered with the US Securities and Exchange Commission: 1,145 non-US companies from 53 jurisdictions were registered at 31 December 2006 (compares with 1,236 companies from 53 jurisdictions a year earlier):

• Alphabetical Listing of Companies (PDF 390k)
• Geographic Listing of Companies (PDF 394k)
• Listing by US Trading Market (PDF 44k)
• Geographic Summary by Jurisdiciton of Incorporation (46k)

10 May 2007: Guidance on applying recent amendments to A-IFRSs
The Australian Accounting Standards Board has approved Amending Standard AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments (see our news story of 2 May 2007). AASB 2007-4, in effect, undoes most of the changes that the AASB had made to IFRSs when it initially adopted them as Australian Equivalents of IFRSs (A-IFRSs), bringing A-IFRSs much closer to their IFRS equivalents:

• List of all AASB Standards affected by AASB 2007-4.
• A detailed summary of all the non-editorial changes and their impacts on the various Standards, providing a checklist for people to utilise in their consideration and implementation of AASB 2007-4.
• Examples of disclosures if applying AASB 2007-4 results in a change in accounting policy.

9 May 2007: Four new IFRIC members are appointed

The Trustees of the International Accounting Standards Committee Foundation (IASCF) have appointed four new members of the International Financial Reporting Interpretations Committee (IFRIC) effective 1 July 2007:

• Guido Fladt, Partner, PricewaterhouseCoopers, Germany; Member, Global PwC Corporate Reporting Task Force
• Bernd Hacker, Head of Standard Setter Liaison and Financial Instruments Accounting Policies, Siemens, Germany
• Darrel Scott, Head of Group Finance, FirstRand Banking Group, South Africa
• Andrew Vials, Partner in charge of the UK firm's Department of Professional Practice, Accounting and Reporting, KPMG.

9 May 2007: Updated EFRAG endorsement status report
The European Financial Reporting Advisory Group has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. Click to download the Endorsement Status Report as of 4 May 2007 (PDF 37k). Currently, the following IASB pronouncements have not yet been endorsed for use in Europe:

• IFRS 8 Operating Segments
• IAS 23 Borrowing Costs (revised March 2007)
• IFRIC 10 Interim Financial Reporting and Impairment
• IFRIC 11 IFRS 2: Group and Treasury Share Transactions
• IFRIC 12 Service Concession Arrangements

9 May 2007: Heads Up newsletter on SEC matters
We have posted the 8 May 2007 Edition of the Heads Up Newsletter (PDF 141k) published by Deloitte & Touche LLP (United States). The newsletter summarises the 17 April 2007, meeting of the AICPA's SEC Regulations Committee and the staff of the US Securities and Exchange Commission. There is an update of the ongoing projects in the Office of the Chief Accountant, Division of Enforcement, and Division of Corporation Finance. There is also a summary of SEC staff views on range of technical issues discussed with SEC Regulations Committee.

7 May 2007: IFRIC agenda project pages updated

We have updated the following IFRIC agenda project pages to reflect discussions and decisions at IFRIC's meeting in May 2007:

• IAS 18 – Customer Loyalty Programmes (IFRIC D20)
• IAS 18 – Real Estate Sales
• IAS 18 – Guidance on Identifying Agency Relationships
• IAS 19 – The Effect of Minimum Funding Requirements on the Asset Ceiling (IFRIC D19)
• IAS 21 – Hedging a Net Investment in a Foreign Operation

7 May 2007: Summary of issues not added to IFRIC agenda is updated

We have updated our Summary of Issues Not Added to IFRIC's Agenda to reflect the IFRIC's final decisions at its May 2007 meeting not to add the following four topics to its agenda. Our summary now includes over 120 issues:

• IFRS 3 – Reassessments of acquiree's accounting as a result of a business combination
• IAS 1 and IAS 39 – Current or non-current presentation of derivatives classified as 'held for trading' under IAS 39
• IAS 16 – 'Gross' or 'net' presentation of sale of assets held for rental
• IAS 19 – Distinguishing between curtailments and negative past service costs

5 May 2007: Notes from the May 2007 IFRIC meeting day 2

The International Financial Reporting Interpretations Committee (IFRIC) met at the IASB's offices in London on Thursday and Friday 3-4 May 2007. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the second day of the meeting.

4 May 2007 Customer Contributions The IFRIC considered whether it should develop guidance as to how a utility company should account for customer contributions received. Such contributions arise when a utility enters into an arrangement with a customer as part of which the customer has to provide either an infrastructure asset or cash to fund the acquisition and/or construction of such an asset in order to obtain connection to the utility's network. The contributed infrastructure asset is necessary for the utility entity to provide an ongoing utility service to the customer. The IFRIC agreed that the issue met the IFRIC's Agenda Criteria. Members were concerned about how to limit the scope effectively, such that the IFRIC could reasonably expect to reach an answer. They requested the staff to consider the issue in a number of stages, which would assist it in reaching a consensus. These steps included identifying whether the transaction represented an exchange transaction (that is, a transaction at value); if so, does IFRIC 4 Determining whether an Arrangement contains a Lease apply to that transaction; determining whether the cost or fair value is the appropriate measurement base. The IFRIC deferred a formal decision about whether to add the issue to its agenda. The staff will make an analysis of the issues involved together with possible alternative approaches at a subsequent meeting. Review of Tentative Agenda Decisions Published in MArch 2007 IFRIC Update The IFRIC confirmed its decisions not to take the following items to the Agenda: IFRS 3 Business Combinations – Reassessments on a business combination IAS 1 Presentation of Financial Statements and IAS 39 Financial Instruments: Recognition and Measurement – Current or non-current presentation of derivatives classified as 'held for trading' under IAS 39 IAS 16 Property, Plant and Equipment – Sale of assets held for rental IAS 19 Employee Benefits – Curtailments and negative past service costs In doing so, the IFRIC had suggestions on the wording of the Agenda Decision notices. In particular, when the IFRIC was referring something to the IASB, the staff was asked, wherever possible, to indicate the action that the IFRIC was suggesting (for example, Annual Improvements Project item, incorporation into a current project, other). The Agenda Decisions will be published in the May 2007 issue of IFRIC Update. Staff Recommendations for IFRIC Agenda Decisions Gaming transactions The IFRIC discussed whether it should develop guidance as to how a gaming institution should account for bets or wagers received. The question focussed on whether such transactions give rise to revenue or whether unsettled wagers are financial instruments which should be accounted for using IAS 39. The IFRIC agreed that there was a trend among gaming institutions to treat unsettled wagers as derivative instruments and that as such, diversity was unlikely in future. The IFRIC reached a tentative decision not to add this item to its Agenda. IAS 39 Financial Instruments: Recognition and Measurement – Hedging future cash flows with purchased options The IFRIC discussed whether it should develop guidance for the situation in which a purchased option in its entirety is designated as a hedging instrument to hedge variability in future cash flows in a cash flow hedge. In particular, they discussed a staff analysis of the guidance on the topic already in IAS 39, in particular material in the Implementation Guidance, Topic F. The IFRIC agreed with the staff analysis that there was sufficient guidance in the Standard and related Implementation Guidance to answer the issue. It was also philosophically opposed to issuing an Interpretation (i.e authoritative guidance) on something contained in Implementation Guidance (i.e. non-authoritative). The IFRIC reached a tentative decision not to add this item to its Agenda. The staff was asked to adapt its analysis for inclusion in the tentative agenda decision. IAS 39 Financial Instruments: Recognition and Measurement – Hedging multiple risks with a single derivative hedging instrument The IFRIC discussed whether it should develop guidance for the situation in which a single derivative hedging instrument is used to hedge more than one different type of risk. The entire derivative is designated as a hedging instrument to hedge those exposures. The IFRIC agreed with the staff analysis that there was sufficient guidance in the Standard to answer the issue. The IFRIC reached a tentative decision not to add this item to its Agenda. The staff was asked to adapt its analysis for inclusion in the tentative agenda decision. IAS 39 Financial Instruments: Recognition and Measurement – Scope of IAS 39.11A The IFRIC discussed whether it should develop guidance about whether IAS 39 paragraph 11A could be applied to all contractual arrangements that contain one or more embedded derivatives, in particular whether IAS 39 paragraph 11A can be applied to hybrid contracts that contain financial or non-financial hosts that are outside the scope of IAS 39. An alternative view is that IAS 39 paragraph 11A can only be applied to hybrid contracts with hosts that are within the scope of IAS 39. The IFRIC agreed with the staff analysis that IAS 39 paragraphs 11 and 11A should be read in light of the scope of IAS 39 and that was sufficient guidance in the Standard to answer the issue. The IFRIC reached a tentative decision not to add this item to its Agenda. The staff was asked to adapt its analysis for inclusion in the tentative agenda decision. IAS 39 Financial Instruments: Recognition and Measurement – AG33(d)(iii) The IFRIC discussed whether it should provide guidance on the operation of IAS 39 AG33(d)(iii), which specifies whether foreign currency derivatives embedded in certain contracts (for example, contracts to buy or sell non-financial items) are closely related to the host contracts. The IFRIC reached a tentative decision not to add this item to its Agenda. IFRIC members thought that the issues relate to how to apply IAS 39 and that circumstances vary case-by-case. Judgment is necessary when determining whether the requirements in AG33(d)(iii) are satisfied based on the facts of each case. Any guidance that the IFRIC might be able to develop would be to add to the existing Application Guidance rather than an Interpretation of IAS 39. The staff was asked to adapt its analysis for inclusion in the tentative agenda decision. Plan to sell the controlling interest in a subsidiary The IFRIC discussed whether it should provide guidance on applying IFRS 5 Non-current Assets Held for Sale and Discontinued Operations when an entity is committed to a plan to sell the controlling interest in a subsidiary. The request considered situations in which the entity retained a non-controlling interest in its former subsidiary, taking the form of either an investment in an associate, an investment in a joint venture or a financial asset. The IFRIC agreed with the staff analysis that the fundamental trigger for IFRS 5 accounting was the loss of control of the subsidiary through sale. The IFRIC reached a tentative decision that this matter should be addressed by the IASB and should not to added to the IFRIC agenda. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations – Disclosures The IFRIC discussed whether it should provide guidance to clarify whether the disclosure requirements of IFRS 7 Financial Instruments: Disclosures and IAS 19 Employee Benefits apply to non-current assets (or disposal groups) classified as held for sale or discontinued operations under IFRS 5. After discussion, the IFRIC noted that more analysis was required before it would be in a position to determine whether an Interpretation was required. In particular, IFRS 5 and its FASB equivalent, FAS 144 are 'converged' standards. The staff was requested to confer with the FASB/ EITF staff to determine the US experience on the application of FAS 144. The IFRIC will discuss this issue again at a subsequent meeting. IAS 12 Income Taxes-Deferred taxes arising from unremitted foreign earnings The IFRIC discussed whether it should provide guidance about how an entity should account for potential deferred tax liabilities arising from temporary differences created by income that is earned in a foreign jurisdiction but is not taxable until it is remitted to the entity's home jurisdiction. The IFRIC noted that the issue is being considered as part of the IASB's project on Income taxes, for which an Exposure Draft is expected soon. Consequently, The IFRIC reached a tentative decision not to add this item to its Agenda. Presentations to Retiring IFRIC Members The IFRIC Chairman made formal presentations to those IFRIC members whose terms expire on 30 June: Jeannot Blanchet, Domingo Marchese, Mary Tokar and Ian Wright. Their replacements have not yet been announced, but the IFRIC Chairman hoped that they would be present at the next meeting. Scroll down for notes from Day 1 This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

5 May 2007: Accounting Roundup – April 2007

We have posted the April 2007 Edition of Accounting Roundup (PDF 254k) published by Deloitte & Touche LLP (USA). Topics covered in this issue include:

4 May 2007: Commissioner cites benefits of IFRSs in Europe
EC Commissioner for Internal Market and Services Charlie McCreevy commented on the benefits of IFRSs in a speech on Capital Markets and European Competitiveness (PDF 77k), at the European Financial Forum in Brussels on 2 May 2007. Mr McCreevy said: "For an attractive Europe, we have adopted best of breed international standards: IFRS, Basel II and soon Solvency II, which are principles-based regulations. We are determined to remove obstacles to cross-border business and clamp down on anticompetitive practices."

4 May 2007: Notes from the May 2007 IFRIC meeting day 1
The International Financial Reporting Interpretations Committee (IFRIC) is meeting at the IASB's offices in London on Thursday and Friday 3-4 May 2007. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the first day of the meeting. Most significantly:

• Final Interpretations based on IFRIC D19 (Asset Ceiling) and D20 (Customer Loyalty Programmes) were approved subject to drafting, to be effective 1 January 2008.
• Draft Interpretations on net investment hedging and real estate sales were approved, subject to drafting.

3 May 2007 IFRIC D20: IAS 18 – Customer Loyalty Programmes The IFRIC continued redeliberating the proposed Interpretation in light of comments received on Draft IFRIC Interpretation D20 Customer Loyalty Programmes. The meeting considered a revised draft of an Interpretation, in particular changes made as a result of the March 2007 meeting. Allocation of consideration to award credits In March 2007, the IFRIC had requested that the Interpretation not be prescriptive about the how the fair value of the consideration received should be allocated between the goods and services delivered and the award credits received by the customer. The staff proposed that the Interpretation should retain the requirement to use the relative fair value method, but to add application guidance (mandatory material) explaining that the fair value of the award credits might provide an acceptable substitute. The IFRIC disagreed and directed the staff to draft the Interpretation on the basis that the consideration allocated to the award credits shall be measured by reference to their fair value – the amount for which they could be sold separately. There was some discussion about how this method could best be explained in the Interpretation and related Basis. Awards supplied by third parties In March 2007, the IFRIC decided to amend the Interpretation: (a) to highlight that the entity might be collecting the consideration allocated to award credits as an agent for a third party supplying awards; and (b) to explain the consequences for measurement and recognition of revenue if this was the case. The IFRIC discussed revised wording together with a related Illustrative Example, neither of which was reproduced in the Observer Note. The IFRIC seemed to agree that, when the seller is acting as agent for the supplier, revenue should be recognised on the basis of the consideration received less the amount payable to the supplier of the award. Recognition would be at the time the entity is obliged to pass the consideration to the third party. The IFRIC agreed that the type of award should not alter the timing of revenue recognition. Thus, if a hotel awards a voucher supplied by a third party (such as a department store), revenue is recognised when the voucher is given to the customer, not when the customer uses the voucher in a transaction at the department store. Changes in accounting policy In March 2007, the IFRIC requested that a comment be added to the transition section to stress that entities that had previously accrued the costs of supplying awards would be changing an accounting policy, rather than an estimate, when they first applied the Interpretation. At this meeting, the IFRIC agreed with a staff analysis that this comment was unnecessary as it should be obvious that accruing a liability and deferring revenue are different accounting policies, even if the effect of the change is not significant. Other matters IFRIC members raised a concern that the Interpretation as drafted implied that information would have to be assessed on a transaction-by-transaction basis. The staff amended the discussion of the allocation method in the Basis for Conclusions such that this inference was avoided. The highest level of aggregation would, however, be award credits awarded in an annual period. IFRIC members also discussed the 'credit card example', agreeing that the Interpretation should clarify that award credits can be awarded by one party (the credit card company) as a result of a transaction between the customer and a third party (the retailer accepting payment by credit card). The staff observed that the Interpretation did suggest this, but agreed to clarify this issue. An IFRIC member expressed concern with the way in which the guidance on onerous customer loyalty programmes was expressed. There appeared to be an inference that an additional liability would be recognised. The staff agreed to work with the IFRIC member to rectify this inference, which was unintended. The IFRIC did not think that any additional disclosure requirements were necessary. The existing requirements of IAS 1 and IAS 18 were thought sufficient. Re-exposure The IFRIC agreed with a staff analysis that re-exposure was not necessary. Effective date The IFRIC agreed that the Interpretation should be effective for financial years beginning on or after 1 January 2008. If implementing the Interpretation required a change in accounting policy, IAS 8 would apply. Approval The IFRIC Chairman asked whether, based on the draft Interpretation and the discussions today, whether any IFRIC members would not support the Interpretation. None of the IFRIC indicated their dissent. Next Steps The staff will present a revised draft Interpretation to the IFRIC as soon as possible, with the intention that it will be presented to the June 2007 meeting of the IASB for their approval, subject to written ballot. Provided that the IASB approves the Interpretation, it should be issued in July 2007. IAS 18 Revenue – Sales of Real Estate The IFRIC considered a revised draft of a Draft Interpretation addressing the decisions and suggestions made by the IFRIC at the March 2007 meeting. Distinguishing between IAS 11 construction contracts and IAS 18 agreements of purchase and sale The IFRIC discussed the proposed indicators that would help determine whether a sale if real estate is a construction contract within the scope of IAS 11 Construction Contracts or an agreement of purchase and sale within the scope of IAS 18 Revenue. After a rather lengthy discussion, the IFRIC agreed that features that, individually or in combination, might indicate that an agreement is for the provision of construction services to the buyer's specifications, rather than the sale of goods (constructed real estate), would include: (a) the buyer being able to specify the major elements of the design of the real estate before construction begins and/or alter it while construction is in progress (whether it exercises that ability or not); (b) the buyer obtaining the risks and rewards of ownership or control over the work in progress as construction progresses. There was some discussion of possible sub-indicators of (b), such as whether, in the event of the contractor/developer defaulting on the contract, the buyer had a right to sue for specific performance (suggesting an IAS 11 contract) or a right to monetary damages (indicating an IAS 18 contract). The staff agreed to work with the suggestions made by IFRIC members. The IFRIC also agreed that the list of indicators should not suggest any form of hierarchy or create any rebuttable presumptions (that is, they are indicative only). Approval The IFRIC Chairman asked whether, based on the provisional Draft Interpretation and the discussions today, any IFRIC members would not support the Draft Interpretation. None of the IFRIC members indicated a dissent. Next Steps The staff will present a revised Draft Interpretation to the IFRIC as soon as possible, with the intention that it will be passed to the IASB for negative clearance as provided in the IFRIC's Due Process Handbook. Provided that the IASB does not object to its publication, a Draft Interpretation should be published by July 2007. Scheduling of IAS 19 Issues The IFRIC staff responsible for employee benefit accounting issues discussed a paper that laid out the possible timetable for existing IAS 19 issues in light of current specialist staffing constraints. Because of the IASB's ongoing Employee Benefits project, the employee benefits team is spending the majority of its time on that project and has only limited time to devote to IFRIC projects. The IFRIC noted this constraint, but was not particularly happy about it. Some suggestions were made about relative priorities for IFRIC IAS 19 projects, and for ways to alleviate the IASB's staffing constraint. IFRIC D19: IAS 19 – The Asset Ceiling: Availability of Economic Benefits and Minimum Funding Requirements The IFRIC discussed a variety of amendments to D19 reflecting the proposals in the comment letters received. Additional guidance and examples on what is a minimum funding requirement The staff noted that it had added requirements to the scope of the Interpretation such that: the Interpretation only applies to defined benefit plans. Therefore, any requirements to contribute to a defined contribution plan are not minimum funding requirements for the purpose of the Interpretation. minimum funding requirements are any requirements that create a legal or constructive obligation for the entity to make contributions to fund a post-employment or other long-term defined benefit plan (emphasis added). Therefore a benefit promise defined in terms of notional contributions is not a minimum funding requirement for the purpose of the Interpretation. IFRIC members generally supported these scope clarifications, but had concerns about the manner in which the clarifications had been expressed in the Interpretation. An entity's right to a refund The IFRIC agreed that an entity should recognise a potential refund as an asset only if the entity has an unconditional right to that refund. The IFRIC agreed that the entity's intentions with respect to the use of the surplus do not affect the existence of the asset. In addition, if the entity's right to a refund depends on the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the entity does not have an unconditional right to the refund (and therefore should not recognise an asset). Assumptions underlying the future service cost used to determine the reduction in future contributions The IFRIC discussed a wording that would require an entity to determine the maximum economic benefit that is available from refunds, reductions in future contributions or a combination of both. An entity should not recognise economic benefits from a combination of refunds and reductions in future contributions that are mutually exclusive. IFRIC members expressed concerns that the Interpretation should be based on facts and circumstances existing at the balance sheet date, rather than assumptions about the future. Thus, an entity should assume a stable workforce unless (at the balance sheet date) something had happened that would negate that assertion, for instance, closing a plan to new members. The IFRIC noted that closing an existing plan to new members was not a curtailment; however the act of closing the plan to new members did affect the defined benefit obligation and minimum funding requirements. Title The IFRIC agreed that the title of the Interpretation should be the title should be IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. Re-exposure The IFRIC agreed with a staff analysis that re-exposure was not necessary. Effective date The IFRIC agreed that the Interpretation should be effective for financial years beginning on or after 1 January 2008. Approval The IFRIC Chairman asked whether, based on the draft Interpretation and the discussions today, whether any IFRIC members would not support the Interpretation. None of the IFRIC members indicated a dissent. Next Steps The staff will present a revised draft Interpretation to the IFRIC as soon as possible, with the intention that it will be presented to the June 2007 meeting of the IASB for their approval, subject to written ballot. Provided that the IASB approves the Interpretation, it should be issued in July 2007. IAS 21 Foreign Exchange: Hedging a Net Investment in a Foreign Operation The IFRIC discussed some 'sweep issues' related to a proposed Draft Interpretation on the accounting for a hedge of a net investment in a foreign operation. Translation to a presentation currency After considerable debate, the IFRIC agreed that IAS 39 Implementation Guidance issue F2.14 is applicable to the hedge of a net investment, and there is no requirement to use internal hedging instruments. In other words, the translation gain or loss can be used as part of the hedging instrument. This approach would permit an entity to hold a hedging instrument anywhere within the consolidated group. However to obtain a qualifying instrument that would be effective both prospectively and retrospectively, the amounts included in the foreign currency translation reserve must be considered when testing effectiveness. If the foreign currency translation reserve is not included in the effectiveness tests the instrument may not be deemed eligible. What exposure arises from the net investment? The IFRIC agreed that an entity can hedge up to the full extent of its carrying amount in a net investment regardless of whether that net investment has investments in other foreign operations, because IAS 39 does not require a risk reduction notion when using hedge accounting. Effective date and transition The IFRIC agreed that the Draft Interpretation should propose prospective application of the [draft] Interpretation. IFRIC members noted that it was probably impracticable to require retrospective application given the documentation requirements for hedge accounting. Approval The IFRIC Chairman asked whether, based on the provisional Draft Interpretation and the discussions today, any IFRIC members would not support the Draft Interpretation. None of the IFRIC members indicated a dissent. However, some IFRIC members wanted to see the next revision of the Draft Interpretation before making a definitive determination about whether further discussion by the IFRIC is necessary. Next Steps The staff will present a revised Draft Interpretation to the IFRIC as soon as possible, with the intention that it will be passed to the IASB for negative clearance as provided in the IFRIC's Due Process Handbook. Provided that the IASB does not object to its publication, a Draft Interpretation should be published by July 2007. IAS 18 – Guidance on Identifying Agency Relationships The IFRIC discussed a request for guidance from the staff about how best to proceed with this project. Some IFRIC members were in favour of developing an Interpretation on this pervasive accounting issue. There is existing guidance in some jurisdictions (for example, the UK and US) that is not inconsistent with IAS 18. An Interpretation would reduce a perceived diversity in practice. Other IFRIC members saw the issue as one that could potentially lead to a rule-based interpretation. Identifying agency relationships is often difficult in practice and this would not change as a result of anything that IFRIC could hope to achieve. However, to the extent that there is useful guidance that might command the support of a majority of IFRIC, some guidance might be worthwhile. The IFRIC members agreed to share any existing guidance of which they are aware (including internal guidance) with the staff. If the staff determined that there is a high degree of consistency around that guidance, it might indicate that either (a) no Interpretation is necessary; or (b) an Interpretation could be developed quite quickly. If the staff concluded that there is little consistency, an Interpretation project might be necessary. The IFRIC will return to this issue at a subsequent meeting. Potential Agenda Item: In-Specie Distributions The issue is how to account for non-cash ('in-specie') distributions to owners. The IFRIC began an assessment of this potential agenda item against its agenda criteria. In doing so, it agreed that the issue is widespread and that there is known diversity in practice. Some IFRIC members suggested that even reducing the number of allowed alternative treatments might be useful. The staff noted that at least three alternative treatments are known to be in use: Distributions recorded at the carrying amounts. Distributions recorded at the fair values, with any difference between the fair values and the carrying amounts being recognised in profit or loss. Distributions recorded at the fair values, with any difference between the fair values and the carrying amounts being recognised in equity. IFRIC members noted that in-specie distributions interacted with a number of areas: non-monetary transactions with owners, company law, and securities regulation. As such, the scope of any Interpretation would need to be determined very carefully. The IFRIC seemed to agree that a useful starting point would be to limit the scope to in-specie distributions (of any asset) to owners acting in their capacity as owners. This would usually be pro-rata distributions (that is, all owners would receive a pro-rata share of the asset), but would not preclude distributions in which some shareholders received a cash alternative (for example, because of legal restrictions in a particular jurisdiction). The IFRIC was unable to conclude whether the project satisfied all of its agenda criteria and will continue its discussions at the July 2007 meeting. This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

4 May 2007: Agenda for May 2007 IASB meeting

The International Accounting Standards Board will hold its May 2007 Board meeting at its offices, 30 Cannon Street, London, on Tuesday through Friday 15-18 May 2007. Presented below is the agenda for the meeting.

15-18 May 2007, London Tuesday 15 May 2007 Leases Business Combinations II Wednesday 16 May 2007 Conceptual Framework – Reporting Entity IFRS 2 Vesting Conditions and Cancellations Update on the IFRIC meeting held on 3 and 4 May 2007 Annual Improvements 2006-2007: 1. At what point should costs associated with advertising and promotional activities be recognised as an expense in the income statement and when should an entity may recognise a prepayment? 2. Should the IAS 28 and IAS 31 disclosures be required when the investment in the associate or jointly controlled entity is accounted for at fair value, for example by a venture capital organisation? 3. Can impairments recognised against associates be reversed? 4. Clarification of whether subsidiaries held for sale in separate financial statements are within the measurement scope of IFRS 5. 5. Proposed wording revisions to IAS 20 and IAS 29 to confirm to defined or more consistently used terms. Thursday 17 May 2007 Financial Statement Presentation Liabilities – Amendments to IAS 37 Friday 18 May 2007 Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation Post-employment Benefits Annual Improvements 2006-2007 – IAS 19: difference between negative past service costs and curtailments

3 May 2007: US-EU summit meeting agrees goal of mutual GAAP recognition
The leaders of the United States (President George W Bush) and the European Union (Angela Merkel, the current President of the European Council, and Jose Manuel Barroso, President of the European Commission) held a political summit meeting in Washington on 30 April 2007. Among other things, they reached agreement on a Framework for Advancing Transatlantic Economic Integration Between the United States of America and the European Union. The framework commits the US and the EU to accelerate work on key 'priority projects' in the areas of intellectual property rights, secure trade, investment, financial markets, and innovation. As part of the financial markets project, the US and the EU agreed to "promote conditions for the US Generally Accepted Accounting Principles and International Financial Reporting Standards to be recognised in both jurisdictions without the need for reconciliation by 2009 or possibly sooner". The US and the EU also agreed to "fully support roadmap discussions between the European Commission and the Public Company Accounting Oversight Board in the area of auditor oversight". Click for:

• EU Framework Release (PDF 176k)
• US Framework Release (PDF 50k)

3 May 2007: Further guidance on new Chinese Accounting Standards
In our news story of 21 November 2006 we reported that the Ministry of Finance of China issued a 263-page book of implementation guidance on 32 of the 38 new Chinese Accounting Standards* (CASs) that were adopted by the China Accounting Standards Committee (CASC) in February 2006, effective for 2007 financial reports. The new CASs cover nearly all of the topics under the current IFRSs and, with a few exceptions, are substantially in line with IFRSs. The new CASs must be used by all Chinese listed companies and may be used by unlisted Chinese companies. The MOF has recently published additional guidance on the CASs as follows:

3 May 2007: IASB Discussion Paper on insurance contracts

The IASB has published a Discussion Paper (DP) Preliminary Views on Insurance Contracts. Comments are requested by 16 November 2007. Thereafter, IASB will develop firm proposals for an exposure draft to be published towards the end of 2008. Allowing for a further period of public consultation, the IASB expects the new standard to be in place in 2010. IASB subscribers may download the DP now (one document for main text, a second for appendices). The DP will be available on the IASB's public website from 14 May. Printed copies will be mailed to IASB comprehensive subscribers or may be Purchased from the IASB. Click for Press Release (PDF 69k). Here is the link to our Agenda Project Page.

3 May 2007: Motion in UK Parliament opposing IFRS 8

Thirteen members of the United Kingdom House of Commons (Parliament) have submitted a Parliamentary Motion urging both the UK government and the European Commission to carry out "urgent and in-depth impact assessments on IFRS 8" Operating Segments – a standard that, in their view, is "totally unacceptable". The draft resolution is below. See also our News Story of 27 April 2007 for a similar resolution under consideration by the EU Parliament.

2 May 2007: Opinion – challenges facing the IASB

We have recently published IFRSs in your Pocket 2007 – the sixth edition of our popular guide to IFRSs (see news story of 25 April 2007). In his Foreword to that publication, Ken Wild – Deloitte's Global IFRS Leader – discusses some of the challenges facing the IASB, including principle-based standards, convergence, and the conceptual framework. Ken's comments are presented below.

2 May 2007: Australia rescinds amendments made to IFRSs
The Australian Accounting Standards Board has approved an 'Amending Standard' that would, in effect, undo the changes that the AASB had made to IFRSs when it initially adopted them as Australian Equivalents of IFRSs. The changes are based on the proposals in ED 151 Australian Additions to, and Deletions from, IFRSs. The Amending Standard also incorporates a number of editorial corrections and amendments made by the IASB to IFRSs. The Amending Standard (which is not yet publicly available) is applicable from 1 July 2007 but may be adopted earlier. In all, 34 Australian Standards will be affected by the Amending Standard. Significant changes implemented by the Amending Standard include:

• permitting the 'indirect method' of presenting cash flows statements
• revisions to the definition of 'separate financial statements' and the requirement to prepare consolidated financial statements
• introduction of an option to account for jointly controlled entities using proportionate consolidation
• new options in accounting for government grants
• elimination of a large number of disclosures across many Standards.

2 May 2007: Three proposed International Standards on Auditing
The International Auditing and Assurance Standards Board (IAASB) has published exposure drafts of three proposed International Standards on Auditing (ISAs) for public comment. One (ISA 200) is a revision of the existing standard. The other two are redrafts in accordance with the IAASB's new drafting conventions designed to enhance the clarity of its pronouncements:

• ISA 200 (Revised and Redrafted) Overall Objective of the Independent Auditor, and the Conduct of an Audit in Accordance with International Standards on Auditing. Comments are due by 15 September 2007
• ISA 500 (Redrafted) Considering the Relevance and Reliability of Audit Evidence. Comments are due by 15 September 2007
• ISA 250 (Redrafted) The Auditor's Responsibilities Relating to Laws and Regulations in an Audit of Financial Statements. Comments are due by 31 July 2007.

1 May 2007: Our comments on proposed amendments to IFRS 1
We have submitted a letter in response to the IASB's January 2007 Exposure Draft of a proposed amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards: Cost of an Investment in a Subsidiary. The Exposure Draft proposes to allow a parent to use a 'deemed cost' to measure its investment in subsidiaries when it first adopts IFRSs. This deemed cost can be determined by reference to the parent's investment in the net assets of the subsidiary or the fair value of the parent's investment. In addition, the proposals would alleviate the need to restate the pre-acquisition accumulated profits of the subsidiary in accordance with IFRSs for the purposes of classifying dividends. Click to Download Our Letter (PDF 128k). An excerpt: