30 October 2007: EFRAG will do cost-benefit assessments of IFRSs

The October 2007 Edition of EFRAG Update (PDF 63k), published by the European Financial Reporting Advisory Group, reports that EFRAG is likely to extend the work that it normally carries out in making IFRS endorsement recommendations to the European Commission to include 'some form of cost-benefit study' for individual IFRSs, including Interpretations. Here is an excerpt from the EFRAG Update: At the October meeting of the European Financial Reporting Advisory Group (EFRAG), the European Commission explained that it has been decided that more extensive work on the costs and benefits of Standards and Interpretations needs to be carried out in future. The IASB has apparently agreed to carry out such work when developing proposals for new Standards and Interpretations, but that commitment will not cover projects already well-advanced and material issued but not yet endorsed. The European Commission is therefore as a result discussing with EFRAG the need for some form of cost-benefit study to be carried out as part of the endorsement process. Those discussions are ongoing but it is likely that EFRAG will be encouraged to extend the work it carries out in formulating its endorsement advice. This would be the case not only for Standards and Interpretations not yet issued, but also for those Standards and Interpretations on which EFRAG has not yet issued its final endorsement advice; in other words, IFRIC 13 Customer Loyalty Programmes, IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, and IAS 1 (Revised) Presentation of Financial Statements. It was noted that some further work would also need to be carried out, probably largely by the Commission, on the material on which EFRAG has already issued its endorsement advice: IFRIC 12 Service Concession Arrangements and IAS 23 (Revised) Borrowing Costs. As a result, it was now unlikely that IFRICs 12-14, IAS 23 (Revised), and IAS 1 (Revised) will be endorsed before the end of 2007. EFRAG will continue to issue regular updates on the endorsement process on its website (www.efrag.org) in the form of Endorsement Status Reports [these are available on IAS Plus's EFRAG Page].

29 October 2007: Updated EFRAG endorsement status report

The European Financial Reporting Advisory Group (EFRAG) 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 16 October 2007 (PDF 99k). Currently, the following IASB pronouncements have not yet been endorsed for use in Europe: IFRS 8 Operating Segments IAS 1 Presentation of Financial Statements (revised September 2007) IAS 23 Borrowing Costs (revised March 2007) IFRIC 12 Service Concession Arrangements IFRIC 13 Customer Loyalty Programmes IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements, and their Interaction

27 October 2007: AICPA testifies in support of IFRSs

In our news story of 26 October, we reported on testimony by IASB Chairman Sir David Tweedie and FASB Chairman Robert Herz at a US Senate Subcommittee hearing on International Accounting Standards: Opportunities, Challenges, and Global Convergence Issues. Charles E. Landes, Vice President for Professional Standards and Services of the American Institute of Certified Public Accountants (AICPA) also addressed the subcommittee. His testimony expressed the AICPA's strong support for eliminating the SEC's IFRS-US GAAP reconciliation and for allowing US issuers to use IFRSs. Excerpts from AICPA testimony: I want to state as directly as possible that the AICPA supports the goal of a single set of high-quality, comprehensive accounting standards to be used by public companies in the preparation of transparent and comparable financial reports throughout the world. The debate or question should no longer be whether we move to convergence of high quality accounting standards, but how soon we can accomplish convergence.... The AICPA supports the elimination of the US GAAP reconciliation for foreign private issuers using International Financial Reporting Standards.... The AICPA supports giving US issuers an option to prepare financial statements in accordance with IFRSs as published by the IASB for purposes of complying with the rules and regulations of the SEC. Giving US issuers such an IFRS option will be yet another important step towards achieving the larger goal of a single set of high quality, comprehensive accounting standards to be used by public companies in the preparation of transparent and comparable financial reports throughout the world. Click for: Mr Landes's Statement (PDF 50k) AICPA News Release (PDF 19k)

27 October 2007: Swiss Exchange guidance on IFRS implementation

The Swiss Stock Exchange (SWX) has released its Annual Communique (PDF 26k) identifying the areas on which they expect to focus in their regulatory reviews of annual financial reports for 2007 and semi-annual financial reports for 2008 of Swiss Exchange (SWX) listed companies. The areas of focus will be: Disclosures of financial instruments (IFRS 7) Accounting policies (IAS 1) Income taxes (IAS 12) Related party disclosures (IAS 24) Intangible assets from business combinations (IAS 38/IFRS 3) Further, the SWX has updated its Admission Board Circular No. 6 (PDF 136k), which identifies 24 IFRS issues that have led to discussions with or actions against issuers in the past. Permanent links are on our Switzerland Page.

26 October 2007: US Senate committee hearing on IFRSs

On 24 October 2007, the US Senate Committee on Securities, Insurance, and Investment conducted a hearing on International Accounting Standards: Opportunities, Challenges, and Global Convergence Issues. Among those who testified were: Sir David Tweedie, Chairman, IASB (statement PDF 38k) Robert Herz, Chairman, FASB (statement PDF 32k) Conrad Hewitt, Chief Accountant, SEC and John White, Director, Office of Corporation Finance, SEC (joint testimony PDF 65k) An excerpt from Sir David's statement: The movement towards IFRSs is truly global and extends well beyond Europe's borders. More than 100 countries throughout the world – 108 according to the latest Deloitte IASPlus survey – require or permit the use of IFRSs. From our discussions with regulators and standardsetters, we expect this number to rise substantially within a relatively short time. As I said, the EU's adoption served as a catalyst. Australia, Hong Kong, New Zealand, and South Africa all joined Europe as early adopters. The major emerging and transition economies of the world – Brazil, China, India, and Russia – are adopting or considering the adoption of IFRSs, not US GAAP, in an effort to become integrated in the world's capital markets and attract the investment necessary to finance their development. Similarly, Canada, Chile, Israel and Korea, economies with significant ties with the United States, have all recently announced their planned abandonment of national standards for IFRSs.

25 October 2007: SEC OKs use of a surrogate to value employee share options

In a letter to Zions Bancorporation, SEC Chief Accountant Conrad Hewitt indicated that ESOARS ('employee stock option appreciation rights securities') are sufficiently designed to meet the measurement objective of FASB Statement No. 123(R) Share-Based Payment. This means that companies issuing employee share options may be able to use ESOARS (or an acceptably designed alternative) in lieu of existing valuation techniques (such as the Black-Scholes-Merton formula or a binomial model) to determine the grant-date fair value of an employee share option, a value that is used, in turn, to determine compensation cost. IFRS 2 Share-based Payment has the same measurement objective as FAS 123(R), though the Chief Accountant's letter does not address IFRS 2. ESOARS are derivative securities that are sold to investors. ESOARS are designed to (1) track the value of a referenced pool of employee share options (that is, there is no one-to-one correlation between the issuance of an employee share option and ESOARS), (2) pay investors as employee share options are exercised, (3) make payments to their investors on the basis of a pro rata share of the intrinsic value realized by employees upon exercise of their share options in the referenced pool, and (4) be priced, upon issuance, through a modified Dutch auction. Click to download Heads Up Newsletter published by Deloitte & Touche LLP (USA) (PDF 117k) explaining the Chief Accountant's Letter (PDF 151k).

24 October 2007: Agenda for upcoming Analyst Representative Group meeting

The IASB will meet with the Analyst Representative Group on Wednesday, 7 November 2007, at the IASB offices, 30 Cannon Street, London, 09:00-17:00h. The meeting is open to the public. Topics on the agenda are: Update – IASB Work Plan Consolidation Revenue recognition Financial statement presentation Emission rights Joint arrangements

24 October 2007: European study on ownership rules for auditing firms

The Internal Market Directorate of the European Commission has published an independent study on the ownership rules that apply to audit firms and the consequences of those rules on audit market concentration. The study analyses whether changes to the ownership rules of audit firms might help increase the number of international players in the audit market. At present, the European Statutory Audit Directive requires that auditors hold a majority of the voting rights in an audit firm and control the management board. Click to download the EC Press Release (PDF 88k). Click here for Links to Download tne Report and an annex of relevant legislative requirements in 18 EU member states. Key conclusions of the study: The audit market for major listed companies is dominated by the Big Four audit firms. For the smaller audit firms, important investments might be necessary over years to expand and to enter the international audit market. Analysis of an investment model developed to assess such potential expansion plans indicates that an audit firm owned by external investors, instead of auditors, might take more easily the decision to expand into the market of large audits. One of the reasons is that existing ownership structures may be estimated to increase audit firms' cost of raising capital by perhaps as much as 10%. Nevertheless, restrictions on access to capital appear to represent only one of several potential barriers to entry. There are other barriers which also play an important role: reputation, the need for international coverage, international management structures, and liability risk. The impact of liability risk on the cost of capital can be significant and may lead to capital rationing. There may also be good reasons for audit firms to stick to their current structures: for example, to retain their human capital. From the regulatory point of view, existing ownership structures have been justified by the necessity to protect independence of audit firms. However, the analysis of the decision-making processes in large audit firms indicates that alternative ownership structures are unlikely to impair auditor independence in practice. Specific conflicts of interest could be dealt with through the establishment of appropriate safeguards.

24 October 2007: Auditing internal control in small public companies

The United States Public Company Accounting Oversight Board has invited comment on proposed staff guidance on auditing internal control over financial reporting in smaller public companies. The release is titled Preliminary Staff Views - An Audit of Internal Control That Is Integrated with An Audit of Financial Statements: Guidance for Auditors of Smaller Public Companies. The guidance explains how auditors can apply the PCAOB's internal control auditing standard Auditing Standard No. 5 An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements to audits of smaller, less complex public companies. Comments are requested by 17 December 2007. Click for: Proposed Staff Guidance on Applying AS 5 by SMEs (PDF 177k) Press Release (PDF 59k) PCAOB Auditing Standard No. 5 (PDF 73k)

23 October 2007: IAS Plus Newsletter on 2007 Improvements ED

Deloitte's IFRS Global Office has published a special edition IAS Plus Newsletter on Omnibus Exposure Draft (ED) of Annual Improvements (PDF 98k). The ED proposes miscellaneous amendments to 25 IFRSs as part of the IASB's first annual improvements project. The proposals range from a restructuring of IFRS 1, mainly to remove redundant transitional provisions, to minor changes of wording to clarify the meaning and remove unintended inconsistencies between IFRSs. The IASB discussed the individual proposals during the past year. The IASB requests comments by 11 January 2008. The proposed effective date for the proposed amendments would be 1 January 2009. You will find all Past IAS Plus Newsletters Here. You can sign up for Free Subscription by Email.

23 October 2007: PCAOB report on inspection issues

The US Public Company Accounting Oversight Board has released a Report (PDF 90k) on issues identified in the 2004 through 2006 inspections of US firms that audited 100 or fewer public companies. This is a general report issued under the Board's Rule 4010 and does not identify any firm or firms. The report includes observations in 11 areas where auditing or quality-control deficiencies were observed: Revenue Related-Party Transactions Equity Transactions Business Combinations and Impairment of Assets Going-Concern Considerations Loans and Accounts Receivable (including allowance accounts) Service Organizations Use of Other Auditors Use of the Work of Specialists Independence Prohibited Non-Audit Services Indemnification Firm Independence Policies and Procedures and Independence Confirmation with Audit Committees Concurring Partner Review

22 October 2007: Update on adoption of IFRSs in Philippines

We have modified our classification of the adoption of IFRS in Philippines in our table of Use of IFRSs by Jurisdiction. In her presentation titled Conversion to IFRS: The Philippine Experience at the IASB's recent IFRS Conference in Singapore, Ms Fe Barin, Chairperson of the Philippines Securities and Exchange Commission, explained that IFRSs have been modified in a number of ways when they were adopted as Philippines Financial Reporting Standards (PFRSs). Consequently, entities complying with PFRSs will not necessarily be complying with IFRSs as adopted by the IASB. The following table is based on Ms Barin's Presentation (link to IASB Website): Where are we now? ('Transition relief'): Reduced segment reporting disclosures Exemption from applying tainting rule for a specific set of financial instruments Commodity derivative contracts of mining companies as of 1 January 2005 'grandfathered' Insurance companies allowed to use another comprehensive set of accounting principles (also described as Philippine Financial Reporting Standards) For banks, losses from sale of non-performing assets allowed to be amortised over a period of time Some additional changes to IASB's pension, foreign exchange, and leases Standards Where do we want to be five years from now? Philippines PFRSs = IFRSs Eliminate transition relief unless provided in the standard itself Philippine financial statements fully compliant with IFRSs No need for IFRS conversion [reconciliation] Financial reports 'at par with the best in the IFRS world'

22 October 2007: Agenda for Advisory Council meeting 8-9 November 2007

The International Accounting Standards Board will meet with the Standards Advisory Council at the Renaissance Chancery Court Hotel, 252 High Holborn, London on Thursday and Friday 8-9 November 2007. The meeting is open to the public. The tentative agenda is shown below. 8-9 November 2007, London Thursday 8 November 2007 Opening remarks Session with Trustees General update The role of SAC members - ambassadors for IFRS Discussion of IASB work programme and convergence Financial statement presentation Friday 9 November 2007 Agenda proposals Fair value measurement (presentation and breakout sessions) Revenue recognition Insurance

22 October 2007: Deloitte announces record financial performance worldwide

We have posted the Deloitte Touche Tohmatsu 2007 Worldwide Member Firms Review (PDF 4,778k). Aggregate member firm revenues increased by a record 15.5% in US dollars and 12.6% in local currencies, to US$23.1 billion for the financial year ended 31 May 2007. This marks Deloitte's fifth consecutive year of member firm double-digit revenue growth from continuing operations. Every service line and every geographic region delivered double-digit growth: Financial advisory services increased 25.2% to US$1.89 billion; consulting and tax services each grew 16.5% to US$5.19 billion and US$4.98 billion respectively; and audit services grew by 13.1% to US$11.08 billion, with strong results in the core assurance services as well as enterprise risk services. Deloitte member firms also reported growth in each of the primary industry sectors. The Asia Pacific region was the fastest growing in local currencies, increasing 17.2% to US$2.46 billion. The Europe-Mideast-Africa region grew 12.6% to US$9.18 billion and the Americas region grew by 11.9% to $11.49 billion. Click for Press Release (PDF 47k).

22 October 2007: IAASB exposure drafts on confirmations and use of experts

The International Auditing and Assurance Standards Board (IAASB) has published the following two exposure drafts (EDs). Comment deadline on both EDs is 15 February 2008. Click for Press Release (PDF 103k): Proposed ISA 505 (Revised and Redrafted) External Confirmations. Proposed ISA 505 addresses concerns about the use and reliability of external confirmations as audit evidence. External confirmations are written responses to the auditor from a third party. Proposed ISA 505 is directed at the effective performance of external confirmation procedures when the auditor determines that such procedures are an appropriate response to an assessed risk of material misstatement. Download the ED (PDF 183k). Proposed ISA 620 (Revised and Redrafted) Using the Work of an Auditor's Expert. Proposed ISA 620 deals with the auditor's use of the work of a person or organisation possessing expertise in a field other than accounting or auditing, employed or engaged by the auditor to assist the auditor to obtain sufficient appropriate audit evidence. It places particular emphasis on the need for the auditor to evaluate the expert's objectivity, and to establish a proper understanding with the expert of the expert's responsibilities for the purposes of the audit. Download the ED (PDF 263k).

21 October 2007: Board agenda project pages updated

We have updated the following agenda project pages to reflect the discussions and decisions at the International Accounting Standards Board's October 2007 meeting: Annual Improvements 2008 Conceptual Framework Fair Value Measurements Financial Statement Presentation - Phase B Financial Instruments – Comprehensive Project Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation Leases Liabilities – Amendments to IAS 37 Post-employment Benefits Related Party Disclosures – Amendments to IAS 24

21 October 2007: Agenda for 1-2 November 2007 IFRIC meeting

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday and Friday 1-2 November 2007. The meeting is open to the public and will be webcast. The tentative agenda is shown below. 1-2 November 2007, London Thursday 1 November 2007 Introduction IAS 27 – Accounting for Distributions of Non-cash Assets to Owners IAS 39 Financial Instruments: Recognition and Measurement – Two potential IFRIC agenda projects Scope of IAS 39 paragraph 11A Application of paragraph AG 33(d)(iii) of IAS 39 IAS 18 Revenue – Customer contributions The IFRIC will also consider a draft Interpretation prepared by the staff based on its discussions to date. Review of Tentative Agenda Decisions published in September IFRIC Update IAS 19 Employee Benefits Treatment of employee contributions IAS 19 Employee Benefits Changes to a plan caused by government IAS 19 Employee Benefits Death in service benefits The tentative agenda decisions and the comment letters received are available on the IASB Website. Friday 2 November 2007 Staff Recommendations for Tentative Agenda Decisions IAS 19 Employee Benefits Pension – Promises based on performance hurdles How to measure a defined benefit obligation that is based, in part, on the employee or company meeting a performance hurdle IAS 37 Provisions, Contingent Liabilities and Contingent Assets – Deposits on returnable containers IAS 23 Borrowing Costs – Foreign exchange differences associated with capitalisable borrowing costs a. To what extent should foreign exchange differences be regarded as an adjustment to interest costs? b. When an entity hedges its exposure to foreign exchange movements, to what extent should costs associated with the hedging instrument be considered to be part of the borrowing costs that may be capitalised? IAS 19 Employee Benefits – Definition of plan assets How should insurance and investment policies issued to a pension plan by an entity that employs the staff included in the plan (or by a subsidiary that is consolidated in the same group as that entity) be considered in determining plan assets. IAS 39 Financial Instruments: Recognition and Measurement – Scope of IAS 39 paragraph 2(g) Paragraph 2(g) exempts from the scope of IAS 39 'contracts between the acquirer and a vendor in a business combination to buy or sell an acquiree at a future date'. The project would consider several questions in applying this paragraph. Administrative Session

20 October 2007: Revised agenda for IASC Foundation trustees meeting

Two items have been added to the agenda for the 31 October 2007 public portion of the meeting of the Trustees of the International Accounting Standards Committee Foundation, which we had originally reported in our news story of 15 October 2007. The two new items are: IFRIC Constitutional Change (proposal to increase the size of IFRIC from 12 to 14 members) Report of the SAC Chairman The meeting will be held at the offices of Morgan Stanley, 1585 Broadway, New York, NY 10036. The revised public agenda is as follows: New York City, Public Portion, Afternoon of 31 October 2007 (13:15-17:00pm) Approval of July Minutes Report of the Procedures Committee Feedback from September meeting with IASB IFRIC Constitutional change Discussion of IASB consultation initiatives (feedback statements and cost benefit analyses) New Committee name Report of the IASB Chairman Review of convergence activities (United States, Japan, China, and India) 2008 goals Discussion of Proposed Agenda Items Discussion of any implications of sub-prime and liquidity crisis for IFRSs Report of the SAC Chairman Update on SAC Effectiveness Survey Plans for Upcoming SAC Meeting Update on long-term funding

20 October 2007: Our views on IFRIC D22

Deloitte has submitted a letter of comments on IFRIC's Draft Interpretation D22 Hedges of a Net Investment in a Foreign Operation (188k). We welcome guidance in the area of hedges of a net investment in a foreign operation (referred to as 'net investment hedging') as IAS 21 (and indirectly IAS 39) require clarification. We also welcome this draft interpretation as it deals with a number of net investment hedging issues as a consolidated package. An excerpt: We support the objective of the interpretation to remove the ambiguity in IAS 21 regarding whether the hedged risk is the difference between the functional currency of the foreign operation and the functional or presentation currency of the parent. We recognise the arguments both for and against that are included in the draft interpretation and on balance agree with the conclusion that the IFRIC has reached. We agree with the clarification that any parent entity within a group that has an interest in a foreign operation may apply net investment hedging. We believe the draft interpretation should be clearer as to whether designated net assets are either the net assets of individual foreign operations or net assets of a sub-consolidated foreign operation (ie a foreign operation that itself has investments in foreign operations and therefore converts its investments in foreign operations into its functional currency in determining a sub-consolidation). We believe both approaches are acceptable but we do not believe the draft interpretation is clear. Our major concern with the draft interpretation is the guidance on which entity within the group can hold the hedging instrument. Click for: Our Summary of IFRIC D22 Links to All Deloitte Comment Letters to IASB, IASC, and related bodies since 1995.

20 October 2007: Notes from IASB October 2007 meeting days 3 and 4
The International Accounting Standards Board helde its October 2007 meeting at the Board's offices, 30 Cannon Street, London, on Tuesday to Friday, 16-19 October 2007. Click here for the Preliminary and Unofficial Notes Taken by Deloitte Observers at the Meeting. The IASB and the US Financial Accounting Standards Board will hold a joint meeting at the FASB's offices in Norwalk, Connecticut, USA on Monday 22 October to Tuesday 23 October 2007.

20 October 2007: Japan plans oversight of foreign audit firms

The Japanese Financial Services Agency (FSA) has invited comments on proposed regulations (known as Proposed Cabinet Orders and Cabinet Office Ordinances) that would implement revised Certified Public Accountants Laws that were passed by the Diet (Japanese parliament) in June 2007. The laws take effect in April 2008. The revised laws include measures (a) to enhance the quality control and governance of, and disclosures by, audit firms; (b) to reinforce the independence of auditors; and (c) to strengthen oversight on auditors. The revisions also include measures to introduce FSA oversight of foreign audit firms. Because the regulations affect foreign firms, the FSA has prepared an English Translation of the Proposed Notification Requirement for Foreign Audit Firms (PDF 265k) and asks firms to comment by 29 October 2007. The entire proposed regulation is now on public consultation and available in Japanese on the FSA's Website.

20 October 2007: Update on IFRS reporting in Kazakhstan

We have updated our Kazakhstan Page and our Table of Jurisdictional Use of IFRSs to reflect the following information for Kazakhstan: Companies other than banks. Starting 2006, IFRSs have been required for all joint stock companies (which includes all listed companies plus some others) and for other companies with significant public interest (including extractive industry companies and companies with Governmental ownership). Banks. Most banks were required to use IFRSs beginning in 2003 and the others starting in 2004.

20 October 2007: US SEC Commissioner comments on IFRSs

At a conference earlier this week in Tokyo, US SEC Commissioner Paul Atkins addressed a number of issues relating to IFRSs including elimination of the required reconciliation to US GAAP for IFRS filers, consistent application of IFRSs, and possible use of IFRSs by US domestic companies. Click to download Commissioner Atkins's Remarks (PDF 82k). Here are several excerpts: Reconciliation. "Strong arguments can be made for the rapid elimination of the reconciliation requirement. Reconciliation is an additional cost for foreign private issuers registered in the United States. That cost is hard to justify. In the discussions at the SEC's IFRS roundtable earlier this year, we learned that the reconciliations are of limited use to those who look at financial statements." Consistent application. "The SEC is working with our fellow international securities regulators and accounting standard setting bodies to achieve the consistent application and interpretation of IFRS. The SEC staff, which receives IFRS filings from all over the world, is in an excellent position to spot potential issues, but it does not intend to become the arbiter of IFRS. I hope that if the rule is adopted and properly implemented, investors will benefit from the elimination of the costly reconciliation requirement, and businesses will be able to refocus their resources on more productive measures." Possible use of IFRSs by US companies. "As further evidence of the global nature of the capital markets, the SEC likely will consider whether to take the additional step of permitting U.S. companies to select between using U.S. GAAP and IFRS. You can easily see the utility of IFRS for multi-national American companies that access international capital markets and have foreign-based competitors. Last month, the SEC voted to issue a concept release on permitting U.S. issuers to file their financial statements using IFRS rather than U.S. GAAP. That would leave the choice between U.S. GAAP and IFRS to the markets. If investors prefer one set of accounting standards over another, they may well reward with premium pricing those issuers who use the preferred set."

19 October 2007: Priorities of the PCAOB for 2008

At yesterday's meeting of the Standing Advisory Group of the US Public Company Accounting Oversight Board, PCAOB Chief Auditor Thomas Ray outlined the PCAOB's Standard-setting Priorities for 2008 (PDF 43k). Those priorities include: Effective implementation of the internal control provisions of the Sarbanes-Oxley Act Finalise proposed rules on auditor independence and prohibited services Finalise proposed rules on evaluating consistency of financial statements Auditing standard on engagement quality review Auditing standard on risk assessment, including fraud risk assessment Issues relating to auditing fair value estimates Potential standards projects on auditor use of specialists, related parties, and confirmations Action plan for review of 'Interim Standards' (old AICPA standards that were initially adopted by the PCAOB)

19 October 2007: Report on first year implementation of IFRSs in EU

The Institute of Chartered Accountants in England and Wales (ICAEW) has published a report for the European Commission on the first year of implementation across the EU of International Financial Reporting Standards and the Fair Value Directive. The study includes a detailed review of the 2005 financial statements of 200 companies from 25 EU member states. Principal Components of the ICAEW Study of IFRS Implementaiton in the EU analysis of the legal implementation of the IAS Regulation and the Fair Value Directive based on questionnaires sent to interested parties in all member states and subsequent work to try to resolve conflicting responses; review of surveys and other literature on EU implementation of IFRS; roundtables, principally involving preparers and auditors of IFRS financial statements, held in Dusseldorf, London, Madrid, Paris, Rome and Warsaw and used to test and explore the preliminary findings from our other work; an on-line survey which generated usable responses from statistically valid samples of 51 investors, 162 preparers and 141 auditors across 23 member states covering understanding and use of IFRS financial statements, their preparation and audit, and the incremental costs to companies of applying IFRS; a review of regulators' statements on EU implementation of IFRS and selected published correspondence between the SEC and EU companies; an academic research paper on the relevance of IFRS information in explaining market prices and stock returns of French, Italian, Spanish and UK publicly traded companies; the application of the EU Common Methodology to assess the costs of the IAS Regulation; detailed technical analysis of the IFRS consolidated financial statements of a sample of 200 EU publicly traded companies; high level technical analysis of IFRS consolidated financial statements of 18 EU non-publicly traded companies; and high level technical analysis of IFRS legal entity financial statements of 50 companies. Sections of the ICAEW Report on Implementation of IFRSs in the EU Objectives, terms and approach Implementation of the Fair Value Directive Implementation of the IAS Regulation Views of preparers, users and auditors The role of regulators The reaction of securities markets Costs of implementing IFRS IFRS consolidated financial statements of EU publicly traded companies IFRS consolidated financial statements of EU non-publicly traded companies IFRS legal entity financial statements First-time adoption of IFRS Fair presentation and accounting policies Financial statements presentation Fair value accounting The use of other options in IFRS Consolidated financial statements Banks Insurance companies Extractive industries Service concessions Intangible assets Defined benefit pension plan disclosures Share-based payments Financial instruments Click to download: ICAEW Report (PDF 1,544k, 258 pages) Executive Summary (PDF 157k, 24 pages)

18 October 2007: Notes from IASB October 2007 Board meeting day 2

The International Accounting Standards Board helde its October 2007 meeting at the Board's offices, 30 Cannon Street, London, on Tuesday to Friday, 16-19 October 2007. Click here for the Preliminary and Unofficial Notes Taken by Deloitte Observers at the Meeting. The IASB and the US Financial Accounting Standards Board will hold a joint meeting at the FASB's offices in Norwalk, Connecticut, USA on Monday 22 October to Tuesday 23 October 2007.

18 October 2007: Gerrit Zalm named Chairman of IASCF Trustees

Gerrit Zalm, the former Deputy Prime Minister (2003-2007) and Finance Minister (1994-2002, 2003-2007) of the Netherlands, will become the next Chairman of the Trustees of the International Accounting Standards Committee Foundation, which is the oversight body of the International Accounting Standards Board. Mr Zalm's three-year term will begin on 1 January 2008. The appointment follows an international search in which candidates and nominations were sought from a wide range of interested parties. Mr Zalm's appointment carries the strong support of the Trustee Appointments Advisory Group, a group comprising leaders of major international organisations. Click for Press Release (PDF 124k).

18 October 2007: No deferral for FAS 157 and 159 fair value standards

The US Financial Accounting Standards Board decided not to do a wholesale deferral of the effective dates of FASB Statement 157 Fair Value Measurements and FASB Statement 159 The Fair Value Option for Financial Assets and Financial Liabilities. The Statements are effective for fiscal years beginning after 15 November 2007. The FASB had received requests for deferral from a number of constituents as a result of the increasing number of implementation issues identified in practice. The Board instructed the FASB staff to evaluate other deferral alternatives, which could include deferring for certain assets and liabilities or certain entities. These alternatives will be discussed at a future Board meeting. The Board also discussed plans to address implementation issues. Specifically mentioned was whether plan sponsors should be required to provide Statement 157 disclosures for their pension and other postretirement employee benefit plan assets. While the Board did not formally vote on the issue, the Board noted that it does not believe such disclosures should be required by Statement 157 and plans to address this issue (with other implementation issues) at a future Board meeting.

17 October 2007: Could SMEs in the United States use the IFRS for SMEs?

Paul Pacter, webmaster of IAS Plus who also serves as the IASB's Director of Standards for SMEs, has written an Article in Financial Executive Magazine October 2007 (PDF 129k) that considers whether U.S. private companies might use the IFRS for SMEs. The article also reviews the background, organisation, and content of the proposed IFRS for SMEs. An excerpt is below. The article is copyright by Financial Executives International and we have posted it here with their permission. Most American accountants are surprised to learn that millions of SMEs around the world have statutory reporting and audit obligations. That's because the situation in the U.S. is so different. There are roughly 5 million limited-liability corporations and roughly 15 million more partnerships, proprietorships and other forms of ownership. By law, only a relative handful of those are required by law to publish U.S. GAAP financial statements, audited or unaudited – generally the 15,000 SEC registrants plus a few other regulated entities. Sometimes, lenders or contracts impose such requirements. But for the vast majority of American private companies, there is no requirement to prepare U.S. GAAP statements. So, could private companies in the U.S. use IFRS for SMEs? There does not appear to be any reason why not – provided that the basis of presentation note clearly explains that the statements conform to IFRS for SMEs. If audited, the auditor would report on conformity with the IFRS for SMEs.

17 October 2007: Notes from IASB October 2007 Board meeting day 1

The International Accounting Standards Board helde its October 2007 meeting at the Board's offices, 30 Cannon Street, London, on Tuesday to Friday, 16-19 October 2007. Click here for the Preliminary and Unofficial Notes Taken by Deloitte Observers at the Meeting. The IASB and the US Financial Accounting Standards Board will hold a joint meeting at the FASB's offices in Norwalk, Connecticut, USA on Monday 22 October to Tuesday 23 October 2007.

17 October 2007: IAS Plus quarterly newsletter for October 2007

The October 2007 IAS Plus Quarterly Newsletter has been published. The newsletter reports on the 3rd quarter 2007 activities of the IASB, the IFRIC, and the IASC Foundation, and also on worldwide issues and events relating to international financial reporting: Download the October 2007 Global Edition (PDF 333k) Links to Past IAS Plus Issues Here. Sign up for Free Subscription by Email.

16 October 2007: Report on choice in the UK audit market

The United Kingdom Financial Reporting Council (FRC) has published the final rreport of the Market Participants Group that has advised the FRC on its Choice in the UK Audit Market project. The Group was established in October 2006 to provide advice to the FRC on possible actions that market participants (that is, companies, investors and audit firms) could take to mitigate the risks arising from the characteristics of the market for audit services to public interest entities in the United Kingdom. The Grou's recommendations are summarised below. Click for: Report of the Market Participants Group (PDF 317k) Press Release (PDF 22k) Summary of Recommendations on Choice in the UK Audit Market: The FRC should promote wider understanding of the possible effects on audit choice of changes to audit firm ownership rules, subject to there being sufficient safeguards to protect auditor independence and audit quality. Audit firms should disclose the financial results of their work on statutory audits and directly related services on a comparable basis. In developing and implementing policy on auditor liability arrangements, regulators and legislators should seek to promote audit choice, subject to the overriding need to protect audit quality. Regulatory organisations should encourage participation on standard setting bodies and committees by appropriate individuals from different sizes of audit firms. The FRC should continue its efforts to promote understanding of audit quality and the firms and the FRC should promote greater transparency of the capabilities of individual firms. The accounting profession should establish mechanisms to improve access by the incoming auditor to information relevant to the audit held by the outgoing auditor. The FRC should provide independent guidance for audit committees and other market participants on considerations relevant to the use of firms from more than one audit network. The FRC should amend the section of the Smith Guidance dealing with communications with shareholders to include a requirement for the provision of information relevant to the auditor selection decision. When explaining auditor selection decisions, Boards should disclose any contractual obligations to appoint certain types of audit firms. Investor groups, corporate representatives, auditors and the FRC should promote good practices for shareholder engagement on auditor appointments and re-appointments. Authorities with responsibility for ethical standards for auditors should consider whether any rules could have a disproportionately adverse impact on auditor choice when compared to the benefits to auditor objectivity and independence. The FRC should review the Independence section of the Smith Guidance to ensure that it is consistent with the relevant ethical standards for auditors. Regulators should develop protocols for a more consistent response to audit firm issues based on their seriousness. Every firm that audits public interest entities should comply with the provisions of a Combined Code-style best practice corporate governance guide or give a considered explanation. Major public interest entities should consider the need to include the risk of the withdrawal of their auditor from the market in their risk evaluation and planning.

15 October 2007: PCAOB will discuss audit implications of IFRS filings

The Standing Advisory Group of the US Public Company Accounting Oversight Board will meet Thursday, 18 October 2007 in Washington. At the meeting, the group will address, among other things, the potential audit implications of the Securities and Exchange Commission's recent proposed rules and concept release regarding the use of International Financial Reporting Standards (IFRSs). The SEC's proposed rules would allow foreign private issuers to file with the SEC financial statements prepared in accordance with IFRSs, as published by the International Accounting Standards Board, without a reconciliation to US generally accepted accounting principles. The SEC's concept release seeks comment on whether US issuers should also be allowed to file financial statements prepared in accordance with IFRSs, as published by the IASB. Click for: PCAOB News Release (PDF 18k) More Information on the SEC Proposal and Concept Release

15 October 2007: IASC Foundation trustees will meet

The Trustees of the International Accounting Standards Committee Foundation, under which the IASB operates, will meet on 31 October and 1 November 2007 at the offices of Morgan Stanley, 1585 Broadway, New York, NY 10036. The meeting is open to public observation. The agenda posted on the IASCF website currently covers only the afternoon of 31 October (13:15-17:00h), with topics as follows: New York City, Public Portion, Afternoon of 31 October 2007 (13:15-17:00pm) Approval of July Minutes Report of the Procedures Committee Feedback from September meeting with IASB Discussion of IASB consultation initiatives Feedback statements Cost benefit analyses New Committee name Report of the IASB Chairman Review of convergence activities (United States, Japan, China, and India) 2008 goals Discussion of Proposed Agenda Items Discussion of any implications of sub-prime and liquidity crisis for IFRSs Update on long-term funding

14 October 2007: IAS Plus Newsletter on joint ventures exposure draft

Deloitte's IFRS Global Office has published a special edition IAS Plus Newsletter on Proposed Changes to Accounting for Joint Ventures (PDF 116k). The newsletter discusses Exposure Draft ED 9 proposing to replace IAS 31 Interests In Joint Ventures with a new standard to be titled Joint Arrangements. A joint arrangement is a contractual arrangement whereby two or more parties undertake an economic activity together and share decision-making relating to that activity. Joint arrangements include joint assets, joint operations, and joint ventures. Comment deadline is 11 January 2008. You will find all Past IAS Plus Newsletters Here. You can sign up for Free Subscription by Email.

14 October 2007: CICA website on transition to IFRSs and ISAs

The Canadian Institute of Chartered Accountants has launched a New Website that Focuses on Transition to IFRSs and ISAs It can be accessed through the Transition to International Standards icon located below the menu in the left column of the CICA Home Page www.cica.ca, and from the homepages of the Canadian provincial institutes. CICA developed the new website to help its members prepare for a smooth and effective transition: from Canadian GAAS to International Standards on Auditing (ISA) for periods after December 15, 2009 from Canadian GAAP to International Financial Reporting Standards (IFRS) for publicly accountable enterprises for periods beginning on or after January 1, 2011; and, to a new strategy for Financial Reporting by Private Enterprises. Here is the link to IAS Plus's Canada Page.

14 October 2007: Reminder about upcoming comment deadline: IFRIC D22

We remind you that the deadline is Friday, 19 October 2007, for responding to IFRIC Draft Interpretation D22 – Hedges of a Net Investment in a Foreign Operation. . IFRIC D22 clarifies two issues that have arisen on two accounting standards – IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 39 Financial Instruments: Recognition and Measurement – about the accounting for hedging foreign currency risk within a company and its foreign operations. The IFRIC proposal clarifies what qualifies as a risk in the hedge of a net investment in a foreign operation and where within a group the instrument that offsets that risk may be held.

13 October 2007: SEC Chairman Cox discusses IFRS issues

In his keynote address to the 2007 US-EU Corporate Governance Conference in Washington earlier this week, US SEC Chairman Christopher Cox discussed a range of issues including accounting convergence and potential SEC recognition of IFRSs. Here is an excerpt from his remarks. Click to Download Chairman Cox's Remarks (PDF 65k). The International Accounting Standards Board and the U.S. Financial Accounting Standards Board have for years been working on a convergence project to eliminate needless regulatory friction between International Financial Reporting Standards and U.S. Generally Accepted Accounting Principles. And that has made possible the SEC's announcement that we are taking the next steps on our Roadmap to eliminate the reconciliation requirement in the United States, and that we are even considering allowing U.S. issuers to use IFRS.... IFRS promises to integrate our markets. But that promise is jeopardized if IFRS isn't applied faithfully and consistently across jurisdictions. Regulators must beware the impulse to develop nationally-tailored versions of IFRS, and we must cooperate with one another in implementing a set of standards that is faithfully and consistently applied. Since 2005, the SEC has been following a publicly announced 'Roadmap' that charts a path to when issuers would no longer be required to reconcile their IFRS financials statements to U.S. GAAP. We're well down the path charted in the 'Roadmap', and we're still very much on track to eliminating the reconciliation requirement by 2009.

13 October 2007: IASB will meet with representatives of EFRAG

Representatives of the IASB and the European Financial Reporting Advisory Group (EFRAG) will meet at the IASB's offices in London from 14:00h to 16:00h on Monday, 15 October 2007. The meeting will be open to public observation and will be webcast. Click here for the Agenda (PDF 7k).

12 October 2007: Our views on IFRIC D21 Real Estate Sales
Deloitte has submitted a letter of comments on IFRIC's Draft Interpretation D21 Real Estate Sales (137k). Overall, we do not support the consensus as proposed in the Draft Interpretation as it does not clearly articulate the underlying principles and logic to distinguish a contract for the delivery of goods from that for the delivery of construction services. An excerpt from our comments:

• Our Summary of IFRIC D21
• Links to All Deloitte Comment Letters to IASB, IASC, and related bodies since 1995.

12 October 2007: EU single market update on accounting and auditing

The Internal Market and Services Directorate of the European Commission has published a special edition of the Single Market News newsletter (PDF 1,036k) reviewing 15 years of the single market in the EU. One section in this issue is titled Accounting & Auditing Rules Redefined for the Global Marketplace and discusses the 'successful application of IFRSs' in the EU (see page 17).

12 October 2007: SEC review of executive compensation disclosures

The US Securities and Exchange Commission staff has published a report discussing the principal themes that emerged from its initial review of the disclosure of 350 public companies for compliance with the Commission's new and enhanced rules for executive compensation and related disclosure. Click for: Staff Report on Compensation Disclosures (PDF 80k). SEC Press Release (PDF 33k). SEC Compensation Disclosure Requirements as amended December 2006 (PDF 151k)

11 October 2007: IASB proposes amendments to 25 IFRSs

The IASB has published for comment an exposure draft (ED) of proposed miscellaneous amendments to 25 International Financial Reporting Standards as part of its first annual improvements project. The proposals range from a restructuring of IFRS 1, mainly to remove redundant transitional provisions, to minor changes of wording to clarify the meaning and remove unintended inconsistencies between IFRSs. The IASB discussed the individual proposals during the past year. Availability of the ED. Currently available for the IASB's eIFRS subscribers. Will be publicly available on the IASB's Website starting 22 October 2007. Comment deadline. The IASB requests comments by 11 January 2008. Effective date. The proposed effective date for the proposed amendments would be 1 January 2009. IASB press release. Click (PDF 51k) More Information about the ED. IAS Plus Agenda Project Page.

11 October 2007: IASB seeks users of insurance company financial statements
The IASB is looking for one or two users of financial statements to join its insurance working group. Candidates should have practical experience of using and interpreting financial information produced by insurers. The working group provides advice to the IASB for its Project on Insurance Contracts. The IASB requests nominations by 30 October 2007. Click for Call for Nominations (PDF 18k).

10 October 2007: Agenda for upcoming IASB-FASB joint meeting

The International Accounting Standards Board will meet with the US Financial Accounting Standards Board at the FASB's offices in Norwalk, Connecticut, USA on Monday 22 October to Tuesday 23 October 2007. The joint meeting agenda is set out below. The meeting will be webcast (click for Details). Joint Meeting of the IASB and the FASB 22-23 October 2007, Norwalk, Connecticut, USA Monday 22 October 2007 (11:00am to 5:00pm US EDT) Financial Statement Presentation – Initial discussion document Conceptual Framework – Objectives and Qualitative Characteristics Conceptual Framework – Elements and Recognition: Asset Definition Revenue Recognition Tuesday 23 October 2007 (8:30-10:30am US EDT) Accounting Principles for Derecognising Financial Assets [Education Session]

9 October 2007: Study of financial statement restatements in the US 2004-2006
Huron Consulting Group has published a study titled The Restatement Process: How Long Will it Take, What to Do, and What to Avoid. The study examined, by accounting issue, company size, and industry, approximately 1,900 restatements announced between August 2004 and December 2006 by US SEC registrants. The study analysed the timing between the initial announcement (filing of Form 8-K) of a material error in historical financial statements and the filing of restated financial statements with the SEC. The restated financials were filed within four months of the 8-K in around 80% of the cases. The five most common accounting issues for restatements were:

• Equity and debt
• Capitalisation versus expense of costs
• Reserves, accruals, and contingencies
• Revenue recognition
• Income taxes

9 October 2007: IFRS presentation and disclosure checklist for 2007

We have posted Deloitte's IFRS presentation and disclosure checklist for the year ended 31 December 2007. The checklist summarises the presentation and disclosure requirements set out in International Financial Reporting Standards issued as of 31 August 2007. It does not address the recognition and measurement requirements of IFRSs. This checklist may be used to assist in considering compliance with the presentation and disclosure requirements of those pronouncements. It is not a substitute for your understanding of such pronouncements and the exercise of your judgment. Click to download: IFRS Presentation and Disclosure Checklist (Word file zipped) (ZIP 423k). The checklist is formatted to allow the recording of a review of financial statements, with a place to indicate yes/no/not-applicable for each presentation and disclosure item. IFRS Presentation and Disclosure Checklist (PDF version) for the year ended 31 December 2007 (PDF 794k). This checklist is always available on our Model Financial Statements and Checklists Page.

9 October 2007: SEC staff comments on implementation and enforcement of IFRSs

In remarks presented at the IASB's conference with world standard setters on 24 September 2007 in London, Julie A Erhardt, Deputy Chief Accountant of the US Securities and Exchange Commission, addressed Implementation and Enforcement of IFRSs (PDF 50k). Here is an excerpt: I offer three observations related to keeping IFRS 'healthy': My first 'healthy habit' observation relates to square one of financial reporting, which is whether investors can determine the basis of accounting under which a set of financial statements is prepared by reading the basis of presentation footnote, which is typically footnote 1.... In today's environment I would suggest that the safe bet is not so safe because more and more often a company's financial statements are likely to be prepared in accordance with IFRS as published by the IASB and/or a jurisdictional adaptation of IFRS. Even in these situations an investor may not be sure what the distinction between the two means and how significant it is for a particular company. My second 'healthy habit' observation relates to whether and how those who identify rough spots in IFRS in implementing it locally can – for the good of the international order – make those rough spots knowable on a timely basis to not just the IASB but also to the other parties working with IFRS around the world? My third 'healthy habit' observation relates to how to make IFRS as a body of standards robust and adequate for investors' purposes, yet at the same time somehow nimble and not overly complex.

9 October 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 1 October 2007 (PDF 99k). Currently, the following IASB pronouncements have not yet been endorsed for use in Europe: IFRS 8 Operating Segments IAS 1 Presentation of Financial Statements (revised September 2007) IAS 23 Borrowing Costs (revised March 2007) IFRIC 12 Service Concession Arrangements IFRIC 13 Customer Loyalty Programmes IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements, and their Interaction

8 October 2007: IFRSs and IASB on EU Parliament committee agenda

The Committee on Economic and Monetary Affairs of the European Parliament will meet in Brussels on Monday 8 October 2007 and Tuesday 9 October 2007. Among the agenda items: Consideration of draft opinion – International Financial Reporting Standard 8 concerning disclosure of operating segments Establishing a mechanism for the determination of equivalence (to IFRSs) of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council Consideration of draft motion for a resolution – International Financial Reporting Standards and the governance of the IASB

8 October 2007: SEC Commissioner speaks on global accounting convergence

At a recent conference in the United States, Commissioner Kathleen L. Casey of the US Securities and Exchange Commission spoke about the SEC's role in support of international financial reporting convergence – development of a "single set of high-quality global accounting standards that promise to produce significant benefits for investors, issuers, and our markets as a whole". Click to Download Commissioner Casey's Remarks (PDF 74k). Among other things, Commissioner Casey spoke about eliminating the IFRS-US GAAP reconciliation, the need for consistent and faithful application of IFRSs, the need for converged global audit standards and auditor oversight, and the need for a long-term funding mechanism for the IASB. An excerpt: If the Commission decides to eliminate the reconciliation requirement, it will be a major change. Some commenters see the elimination of reconciliation as an accommodation that would merely reduce costs for the relatively small number of foreign issuers registered in the United States. But in my view, eliminating reconciliation would be a watershed event. It would represent a much more significant recognition on the part of the Commission of the need and desirability of continuing down the path of convergence efforts towards the ultimate goal of the development of a single set of global accounting standards.

8 October 2007: CEBS study on adjustments to IFRSs for regulatory reports

The Committee of European Banking Supervisors (CEBS) has published an analysis of adjustments European banks in 28 countries have made to reported IFRS measurements for the purpose of computing bank regulatory capital. CEBS calls these adjustments 'prudential filters'. CEBS adopted the 'prudential filters' 2004. CEBS will present and discuss the report and its conclusions at a public hearing scheduled for 16 October 2007. An excerpt: "The analysis shows that the implementation of the prudential filters has improved over time and that a very high level of compliance with the CEBS guidelines has been achieved amongst members.... As concerns the quantitative part of the analysis, the data collected shows that prudential filters moderately reduce total eligible own funds by 0.9% and result in a 5.2% decrease in original own funds, mainly owing to the AFS equity instrument filter recommended by CEBS." The CEBS 'prudential filter' adjustments include: The boundary between debt and equity. Shares in co-operative entities and certain preferred shares that are liabilities under IFRSs are converted to equity for regulatory capital purposes. The boundary between debt and equity. An embedded derivative that constitutes an equity component of a compound financial instrument under IFRSs is classified as part of the liability for regulatory capital purposes. Available-for-sale (AFS) instruments. Under IFRSs, all AFS instruments are measured at fair value, with value changes recognised in equity subject to loss recognition for impairments. AFS equities. Under IFRSs, all AFS instruments are measured at fair value, with value changes recognised in equity subject to loss recognition for impairments. Under the CEBS guidelines, unrealised losses on AFS equities are deducted, after tax, from original own funds and unrealised gains are only partially be included in additional own funds before tax. AFS loans and receivables. Under CEBS guidelines, unrealised gains and losses, apart from those related to impairment, are 'neutralised' (reversed) in own funds after tax. Other AFS assets, (for example debt securities and financial instruments subject to interest rate risk). Under CEBS guidelines, a bank may choose to classify these either (a) as equities or (b) as loans and receivables. Cash flow hedges. There should be a consistent treatment of gains and losses resulting from a transaction whereby a cash flow hedge is created for an available for sale instrument: if the gains on the hedged item are recognised in additional own funds, so should the results of the corresponding cash flow hedging derivative. Loan losses. As a general principle, no regulatory adjustments should be made to impairment losses. Impairment related to credit risks should always be taken into account via the profit and loss account and therefore deducted from original own funds. Click for: CEBS Analytical Report on 'Prudential Filters' (PDF 290k) CEBS 'Prudential Filters' Adopted in 2004 (PDF 165k)

7 October 2007: IAESB issues two Education Practice Statements

The International Accounting Education Standards Board (IAESB) has released two new International Education Practice Statements (IEPSs). The new practice statements assist IFAC members, associates and other educators in developing ethics education programs and in implementing the information technology (IT) knowledge component of a professional accounting education program. The two statements are: IEPS 1 Approaches to Developing and Maintaining Professional Values, Ethics, and Attitudes provides guidance to IFAC members and associates on how to achieve good practice in developing and maintaining professional values, ethics, and attitudes in accordance with the requirements in International Education Standard 4 Professional Values, Ethics and Attitudes. The practice statement identifies a number of methods for the delivery of ethics education, stressing the importance of workplace learning and assessment. It also identifies continuing professional development as the means for member bodies to ensure that professional accountants continue to develop professional values, ethics, and attitudes throughout their careers. IEPS 2 Information Technology for Professional Accountants outlines the knowledge and skills necessary to prepare professional accountants to perform competently in the IT environment. The two practice statements can be downloaded without charge from the IFAC online bookstore at www.ifac.org/store. Click for Press Release (PDF 55k).

6 October 2007: Belarus requires banks to report using IFRSs

The National Bank of the Republic of Belarus has ordered Belarusian banks to publish IFRS financial statements along with financial reports prepared using national standards starting in 2008. We have updated our Table of Use of IFRSs by Jurisdiction.

5 October 2007: IASB October 2007 Board meeting agenda

The International Accounting Standards Board will hold its October 2007 meeting at the Board's offices, 30 Cannon Street, London, on Tuesday to Friday, 16-19 October 2007. The agenda for the meeting is set out below. The IASB and the US Financial Accounting Standards Board will hold a joint meeting at the FASB's offices in Norwalk, Connecticut, USA on Monday 22 October to Tuesday 23 October 2007. The joint meeting agenda is not yet available. 16-19 October 2007, London Tuesday 16 October 2007 (afternoon only) Post-employment Benefits – Discussion paper issues relating to defined benefit promises Conceptual Framework – Phase A: Objectives and Qualitative Characteristics Conceptual Framework – Phase B: Elements and Recognition Annual Improvements 2008 Should IFRS 5 be amended to clarify the disclosures required for non-current assets (or disposal groups) classified as held for sale or discontinued operations? Should the Appendix to IAS 18 be amended to add guidance on determining whether an entity is acting as a principal or as an agent? Wednesday 17 October 2007 Fair Value Measurements – comment letter analysis IFRIC proposal: Draft amendment to IFRIC 11 and IFRS 2 – Group cash-settled share-based payment transactions Financial Statement Presentation - Phase B – Presenting information on the face of the financial statements Basket transactions (a single transaction that involves multiple assets (or a combination of assets and liabilities) that would be classified in more than one category under the proposed presentation format) and foreign currency translation adjustments The classification and presentation of dividends payable Follow-up issues: offsetting in the statement of cash flows and capital management disclosures. Financial Instruments – Comprehensive Project Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation – Arrangements for Roundtables Thursday 18 October 2007 Fair Value Measurements – Measurement methodologies employed by valuation professionals (Education session) Liabilities – Amendments to IAS 37 Leases Friday 19 October 2007 (morning only) XBRL (eXtensible Business Reporting Language) (Education session) Related Party Disclosures – Amendments to IAS 24 – redeliberation based on responses to the exposure draft

5 October 2007: Accounting Roundup – third quarter 2007 review

We have posted Accounting Roundup: Third Quarter in Review–2007 (PDF 406k), prepared by the National Office Accounting Standards and Communications Group of Deloitte & Touche LLP (USA). This newsletter provides brief descriptions of pronouncements affecting accounting, financial reporting, and corporate governance issued during 3Q-2007 by standard setters and regulators including FASB, EITF, AICPA, SEC, FASAB, PCAOB, GASB, IASB, and IFRIC. It also outlines other third-quarter regulatory and professional developments. This quarterly review consists of articles, adapted as necessary, from issues of Accounting Roundup published in July and August 2007, as well as new articles for the month of September. You will find past issues Here. International developments covered in this edition of Accounting Roundup are: IASB Issues Exposure Draft on Accounting for Joint Arrangements IASB Proposes Additional Guidance on Hedge Accounting IASB Issues Revised Standard on Presentation of Financial Statements IFRIC Issues Interpretation of IAS 19 IFRIC Issues Proposed Guidance on Real Estate Sales IFRIC Issues Proposed Guidance on Hedges of a Net Investment in a Foreign Operation Meeting to Promote Global Convergence in Emerging and Transition Economies Japan and India Agree With IASB on Achieving Convergence by 2011

5 October 2007: IAS Plus Newsletter on hedging exposure draft

Deloitte's IFRS Global Office has published a special edition IAS Plus Newsletter on Exposures Qualifying for Hedge Accounting (PDF 207k). The newsletter discusses an Exposure Draft (ED) of proposed amendments to IAS 39 Financial Instruments: Recognition and Measurement that the IASB published for comment on 6 September 2007. The ED addresses: What can be designated as a hedged item in a hedge accounting relationship – that is, which risks qualify for designation as hedged risks when an entity hedges its exposure to a financial instrument. Circumstances in which an entity may designate a portion of the cash flows of a financial instrument as a hedged item. Comment deadline is 11 January 2008. You will find all Past IAS Plus Newsletters Here. You can sign up for Free Subscription by Email.

5 October 2007: New ISA on audits of group financial statements

The International Auditing and Assurance Standards Board (IAASB) has issued International Standard on Auditing (ISA) 600 (Revised and Redrafted) Special Considerations – The Audit of Group Financial Statement (Including the Work of Component Auditors). ISA 600 is intended to assist the group engagement partner in taking responsibility for the direction, supervision, and performance of the group audit and the issue of an auditor's report that is appropriate in the circumstances. The ISA specifies the types of work that the group engagement team, or component auditors on its behalf, should perform on the financial information of significant components. Click for Press Release (PDF 35k). ISA 600 is effective for audits of financial periods commencing on or after 15 December 2009. This date is consistent with the effective date for all the standards being redrafted under the IAASB's Clarity project (see our News Story of 2 October 2007).

4 October 2007: South Africa adopts IASB's SME proposal as GAAP for SMEs

The Accounting Practices Board (APB) of the South African Institute of Chartered Accountants (SAICA) has adopted the IASB's proposed International Financial Reporting Standard for SMEs as a final Statement of Generally Accepted Accounting Practice (GAAP) for Small and Medium-sized Entities (SMEs). The APB's reason for doing so is that full South African GAAP is converged with full IFRSs, and many South African SMEs have found these requirements burdensome and too complex for their needs. A recent change in South African company law has made provision for differential reporting for 'limited interest companies' (SMEs) from full South African GAAP if they want it. Entities eligible to use the new Statement of GAAP for SMEs: Companies: The Statement of GAAP for SMEs may be applied by 'limited interest companies', as defined in the Corporate Laws Amendment Act of 2006 (that is, they are not 'widely held'), if they do not have public accountability (that is, not listed and not a financial institution). Alternatively, the company may choose to apply full South African Statements of GAAP or full IFRSs. Entities other than companies: If the law or a regulation requires an entity to comply with a specific financial reporting framework other than South African Statements of GAAP, the entity is not eligible to use the Statement of GAAP for SMEs. In all other cases, if the entity does not have public accountability, it should assess whether it is appropriate to apply the Statement of GAAP for SMEs. How to describe the basis of presentation: Companies and other entities using the Statement of GAAP for SMEs must say so in the notes to financial statements. The audit report should do likewise. Reference should not be made to an IFRS for SMEs. Effective date: Companies: The Statement may be applied to annual financial statements for financial years ending on or after 31 December 2005 that are issued on or after 1 October 2007. Entities other than companies: The Statement may be applied to annual financial statements that are issued on or after 1 October 2007. Click for more information: SAICA Circular with Background Information (PDF 68k). The Circular covers such matters as entities eligible to use the Statement, reasons for adopting the Statement, due process steps, 'some areas to be aware of in applying the Statement', and audit reporting considerations. SAICA Frequently Asked Questions Document (PDF 179k). Note that this document will be updated from time to time. Check the SAICA Website for updates. Cover Letter Sent to all SAICA Members (PDF 100k) SAICA Press Release (PDF 47k) Link to SAICA Website

4 October 2007: Accounting issues arising from illiquid market conditions

The Center for Audit Quality (CAQ) issued three white papers addressing key accounting issues arising from the current illiquid market conditions from the perspective of existing United States GAAP. While the papers are written in a US GAAP context, the issues are likely to be of interest in an IFRS context as well. The CAQ was created by the American Institute of CPAs "to foster confidence in the audit process and to aid investors and the capital markets by advancing constructive suggestions for change rooted in the profession's core values of integrity, objectivity, honesty and trust". Download the three CAQ white papers: Fair Value Measurements in Illiquid (or Less Liquid) Markets (PDF 32k). The paper discusses measurement of fair value under existing US GAAP (most of which is contained in SFAS 157 Fair Value Measurements) in the context of illiquid (or less liquid) market conditions that currently exist in many segments of the credit markets. Although much of the discussion is in the context of assets backed by subprime mortgage loans, the GAAP principles discussed regarding the measurement of fair value are also applicable to the measurement of the fair value of other assets (such as unsecuritized assets), not just those backed by subprime mortgage loans. Consolidation of Commercial Paper Conduits (PDF 31k). The objective of this paper is to discuss the application of FASB Interpretation No. 46 (revised December 2003) Consolidation of Variable Interest Entities by sponsors of commercial paper conduits, particularly as impacted by market conditions that currently exist in many segments of the credit markets, including illiquid (or less liquid) conditions in the commercial paper markets. Accounting for Underwriting and Loan Commitments (PDF 39k). This paper discusses existing US GAAP associated with commitments to lend money or underwrite securities in the context of illiquid (or less liquid) market conditions that currently exist in many segments of the credit markets.

4 October 2007: US Treasury committee will examine the auditing profession

The United States Department of the Treasury has named a 19-member Treasury Advisory Committee on the Auditing Profession. The committee will examine auditing industry concentration, financial soundness, audit quality, employee recruitment and retention, and related topics. The committee is co-chaired by former Securities and Exchange Commission Chairman Arthur Levitt and former SEC Chief Accountant Donald Nicolaisen. Paul Volcker, former chairman of the Trustees of the International Accounting Standards Committee Foundation, is a member. IASB Chairman Sir David Tweedie is an observer, as is FASB Chairman Robert H Herz. Treasury expects the committee to produce findings and recommendations by early summer 2008. Appointment of the committee is part of a four-pronged initiative to strengthen auditing and financial reporting in the United States, announced in May 2007 (see our News Report of 18 May 2007). Click for: Announcement of Appointment of the Committee (PDF 55k) Treasury Secretary Paulson's Statement Announcing the Committee (PDF 49k)

4 October 2007: Reminder about upcoming comment deadline

We remind you that the deadline is Friday, 5 October 2007, for responding to IFRIC Draft Interpretation D21 – Real Estate Sales. IFRIC D21 addresses accounting by real estate developers for sales of units, such as apartments or houses, 'off plan', that is, before construction is complete. At present, some real estate developers record revenue only when they have handed over the completed unit to the buyer, while others record revenue earlier, as construction progresses, by reference to the stage of completion of the development. IFRIC D21 proposes that revenue should be recorded as construction progresses only if the developer is providing construction services, rather than selling goods (completed real estate units). It proposes features that indicate that the seller is providing construction services. In many countries, these features tend currently not to be present in typical off plan sale agreements.

3 October 2007: There are currently visitors connected to www.iasplus.com
We are now able to track how many visitors are connected to our website at a point in time. If you're curious, this number will always be available at the Bottom of Our Home Page, along with the cumulative number of visitors and maps of the locations of the last 500 and last 100 visitors.

3 October 2007: Report from last week's meeting of IASB and ASBJ

The IASB met with representatives of the Accounting Standards Board of Japan (ASBJ) in London on 27 and 28 September 2007 to discuss progress on convergence of Japanese GAAP and IFRSs. The discussions included a review of short-term convergence projects, where the goal is to eliminate major differences by the end of 2008, as well as other major projects including segment reporting, intangible assets, special purpose entities and business combinations where the goal is to eliminate major differences by June 2011. In addition, the representatives of the boards exchanged views on the current status of their work on consolidation, liabilities and equity, and revenue recognition. Click for IASB News Release (PDF 48k).

2 October 2007: Our table of use of IFRSs by jurisdiction is expanded

We have expanded our Table that Shows the Use of IFRSs by Jurisdiction for domestic listed companies and for domestic unlisted companies. The expansion includes a column that indicates whether the audit report and basis of presentation note refer to IFRSs without qualification or whether they refer to IFRSs as adopted by the local jurisdiction or to local GAAP. We have also added grand totals of the various columns: Grand Totals for Listed Companies Information, to the best of our knowledge, for 140 jurisdictions: IFRSs not permitted — 32 jurisdictions IFRSs permitted — 26 jurisdictions IFRSs required for some companies — 3 jurisdictions IFRSs required for all companies — 79 jurisdictions Of the 108 jurisdictions (26 + 3 + 79) that permit or require IFRSs: In 73 jurisdictions the audit report refers to conformity with IFRSs In 32 jurisdictions the audit report refers to local GAAP or to IFRSs as adopted in the jurisdiction In 1 jurisdiction the audit report for some companies refers to local GAAP and for other companies it refers to IFRSs For 2 jurisdictions we do not have this information Grand Totals for Unlsted Companies IFRSs not permitted — 41 jurisdictions IFRSs permitted — 40 jurisdictions IFRSs required for some companies — 17 jurisdictions IFRSs required for all companies — 24 jurisdictions

2 October 2007: IAASB invites comments on strategy for 2009-2011

The International Auditing and Assurance Standards Board (IAASB) is seeking comments on its proposed future technical strategy. The strategy, when finalised, will form the basis for the IAASB's work program for 2009 to 2011. Comments are requested by 30 November 2007. Click to download: IAASB Strategy Consultation Paper (PDF 138k) Related Press Release (PDF 45k) The IAASB has also has determined that its complete set of clarified International Standards on Auditing (ISAs) will be effective for audits of financial statements for periods beginning on or after 15 December 2009. Announcing this date will allow standard setters, regulators, and auditors to plan for the adoption and implementation of the standards. Click to download: IAASB Announcement of Effective Dates (PDF 40k) Update on Clarity Project (PDF 115k) You will find more information on IAASB's Home Page www.iaasb.org.

2 October 2007: IAS 1 (Revised 2007) compliance checklist

We have published an IAS 1 (Revised 2007) Compliance Checklist (PDF 223k). IAS 1 (Revised 2007) Presentation of Financial Statements was issued on 6 September 2007 and is effective for annual periods beginning on or after 1 January 2009, with early application permitted. There is a permanent link to this and related Deloitte publications on our Model Financial Statements Page.

2 October 2007: IAS Plus Newsletter on revisions to IAS 1

Deloitte's IFRS Global Office has published a special edition IAS Plus Newsletter on IAS 1 (Revised) Presentation of Financial Statements (PDF 129k). The revisions to IAS 1, which the IASB published on 6 September 2007, represent the first step in the Board's comprehensive project on reporting financial information. The main changes from the previous version of IAS 1 are to require that an entity must: Present all non-owner changes in equity (that is, 'comprehensive income') either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income may not be presented in the statement of changes in equity. Present a statement of financial position (balance sheet) as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement. Disclose income tax relating to each component of other comprehensive income. Disclose reclassification adjustments relating to components of other comprehensive income. The revised Standard is effective for annual periods beginning on or after 1 January 2009, with early application permitted. You will find all Past IAS Plus Newsletters Here. You can sign up for Free Subscription by Email.

1 October 2007: Overview and impact of the IASB's insurance DP in Denmark

Deloitte in Denmark has published a booklet about the IASB's Discussion Paper (DP) on Insurance Contracts. The DP is the first step in the IASB's project to develop a comprehensive global financial reporting standard for accounting for all insurance contracts from the perspective of the insurer. The publication (which is in the Danish language) provides an overview of the DP and examines the expected impact on Danish life and non-life insurance companies, including numerical examples. Click to Download the Deloitte Denmark Publication (PDF 1,082k).