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2012

IAASB feedback statement on disclosure consultation

11 Jan 2012

The International Auditing and Assurance Standards Board (IAASB) has released a 'Feedback Statement' on the responses to its January 2011 Discussion Paper 'The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications'. The Discussion Paper solicited views and perspectives of different stakeholder groups on the challenges arising as financial reporting continues to evolve to meet the changing needs of users.

The Feedback Statement presents a summary of the range of views on some of the more significant challenges faced by participants across the entire financial reporting supply chain, including the impact of trends in financial reporting, applying materiality to disclosures, evaluating misstatements generated by disclosures, the availability of audit evidence to support disclosures, and work effort.

To address some of the issues identified respondents have called for more auditing guidance in certain identified areas. However, the majority of the respondents were of the view that some of the more important issues could not be addressed by the IAASB on its own, but would require international collaboration and cooperation, particularly with both the accounting standard setters—including the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB), and regulators.

The need for a 'Disclosure Framework' is a recurring theme in recent times. For instance, our comment letter (PDF 126k) on the IASB's Agenda Consultation noted the "development of a clear framework for disclosures in financial statements is critical and urgent".

Click for IAASB press release (link to IFAC website).

New ICAEW website on auditing

11 Jan 2012

The Institute of Chartered Accountants of England and Wales (ICAEW) has launched a new website dedicated to auditing and its possible reform.

The website contains high-level information about the nature and value of auditing, possible options for change, details of current reviews, and a question and answer section.

The website can be accessed at www.trueandfair.org.uk.

IFRS Advisory Council membership update

10 Jan 2012

The Trustees of the IFRS Foundation have announced the appointments and reappointments to the IFRS Advisory Council for memberships that ended 31 December 2011.

The new terms begun on 1 January 2012 and are between one and three years to enchance continuity.

In addition, Paul Cherry has been reappointed for another two years as Chairman of the Advisory Council. Patrice Marteau has been reappointed for one year and Charles Macek has been reappointed for three years, both as Vice-Chairmen of the Advisory Council.

Click for:

AOSSG survey on Islamic accounting

10 Jan 2012

The Islamic Finance Working Group of the Asian-Oceanian Standard Setters Group (AOSSG) has issued a survey on Islamic accounting.

The purpose of the survey is to highlight the importance of current Islamic accounting and the need to have the IASB consider Islamic financial transactions when discussing ongoing and future projects.

The survey was run between 1 July and 15 October 2011. The survey was sent to national standard-setters in Asia-Oceania and the National Standards Setters (NSS) members. Responses from 24 participating standard-setters were used in developing this report.

Several main conclusions from the survey are:

  • entities using Islamic accounting are not subject to a common set of accounting standards.
  • ’Islamic accounting standards‘does not imply there is a consistent set of standards used globally. Instead, the term implies that there are different sets of religiously-influenced standards, the different regulations can treat similar transactions with significantly different results.
  • an overwhelming majority of respondents believed there should not be a separate Islamic accounting standards because it was likely it would be incompatible with IFRS convergence.

Based off the survey results, AOSSG Islamic Finance Working Group may need to expand its work to jurisdictions without their own identifiable accounting standard-setters and continue their efforts to promote consistent reporting in jurisdictions with a significant Islamic finance presence.

Click for:

Outcomes from recent Capital Markets Advisory Committee meeting

09 Jan 2012

The IASB has released a summary of the Capital Markets Advisory Committee (CMAC) meeting which was held in London on 12 October 2011. The CMAC was previously known as the Analyst Representative Group (ARG) and is a group of professional financial analysts who regularly meet with members of the IASB to provide the views of professional investors on financial reporting issues.

The topics discussed at the meeting included:

  • XBRL. The CMAC considered the IFRS taxonomy, custom tags and the Thomson Reuters taxonomy model
  • Risk free rate of return. There was a general view among the participants that the determination of the risk free rate was not the responsibility of the IASB, discussion also included when 'synthesised' risk free rates may be appropriate (e.g. entities operating in the Eurozone or multi-nationals)
  • Impairment of financial instruments. The CMAC considered the IASB's current impairment model ('three bucket approach') and considered matters such as 'day one losses', information needs, and the use of expected values
  • Transition disclosures. The CMAC discussed disclosures made when an IFRS is issued but is not yet mandatory, a preference for IFRS 1 type disclosures when a new standard is applied for the first time, and related matters
  • Other. The CMAC discussed the usefulness of project-specific case studies for accounting proposals, and the IASB's agenda consultation.

Click for more information (link to IASB website).

Agenda for January 2012 IFRS Interpretations Committee meeting

07 Jan 2012

The IFRS Interpretations Committee will meet at the IASB's offices in London on Tuesday and Wednesday 17 and 18 January 2012.

The meeting is open to the public and will be webcast. The tentative agenda is shown on our meeting note page for the meeting.

Deloitte comment letter on investment entities

05 Jan 2012

Deloitte's IFRS Global Office has submitted a letter of comment to the International Accounting Standards Board (IASB) on its Exposure Draft ED 2011/4 – Investment Entities.

In the comment letter, we agree with the views in the exposure draft that for certain entities the measurement of investments in controlled subsidiaries at fair value provides the most relevant information, but we believe that criteria should be developed which better defines 'investment entities'. However, we disagree with the proposal that a non-investment entity parent of an investment entity should consolidate all entities it controls through its consolidated investment entity subsidiary. The following is an excerpt from the letter:

We believe that it is appropriate to establish a clear principle and criteria at the investment entity level that carries-over to the consolidated financial statements of a non-investment entity parent, rather than to prohibit the retention of investment entity accounting, or to impose barriers or restrictions that would result in differing accounting at the investment entity and consolidated levels.

Further, our comment letter expresses concern about the number of differences in the proposed accounting requirements between the IASB's exposure draft and the FASB's proposed guidance.

Click for our comment letter on Exposure Draft ED 2011/4 — Investment Entities.

Introduction message from the new chairman of the IFRS Foundation Trustees

04 Jan 2012

The IASB has posted to its website an introduction message from the new chairman of the IFRS Foundation Trustees, Michel Prada.

He speaks about his previous work and his dedication to the development of global financial reporting standards. He warns about "uncertainty and ambiguity" in markets and says that the financial crisis should not impede efforts toward global accounting standards. He is committed to "managing the delicate balance between independence, legitimacy and public accountability" in his role as chairman. Please click Mr Prada's introduction message on the IASB's website.

Michel Prada became the new chairman of the IFRS Foundation Trustees effective on 1 January 2012. Please see our earlier story for more information about his appointment.

Deadline reminder – IASB exposure drafts on investment entities and government loans

04 Jan 2012

We remind you that comments on two IASB exposure drafts are due on 5 January 2012.

The two exposure drafts are:

  • Exposure Draft ED/2011/4 Investment Entities – published on 25 August 2011 and proposing to define 'investment entities' as a separate type of entity that would be exempt from the consolidation accounting requirements in IFRS 10 Consolidated Financial Statements. Those wishing to participate in the upcoming roundtables must have submitted a comment letter on the proposals
  • Exposure Draft ED/2011/5 Government Loans (Proposed amendments to IFRS 1) – published on 20 October 2011 and designed to address how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRSs.

Yong Li and Marco Onado appointed as Trustees of the IFRS Foundation

03 Jan 2012

The Trustees of the IFRS Foundation have announced the appointment of Yong Li and Marco Onado as Trustees of the IFRS Foundation.

Yong Li is President of the Chinese Institute of Certified Public Accountants and a Vice Minister to the Ministry of Finance of the People’s Republic of China. President Li is a former Executive Director of the World Bank and a former First Secretary of the Chinese delegation to the United Nations.

Marco Onado is a Senior Professor of Financial Institutions at the Bocconi University in Milan, Italy. He is also Chairman of Pioneer Global Asset Management, a global investment manager. Professor Onado is a former Commissioner of the Commissione Nazionale per le Società e la Borsa (CONSOB), the Italian securities and markets regulator.

The appointments begin immediately and will expire in three years. The terms are renewable once. Please click for IASB press release (link to IASB website) and our overview of Trustees working currently for the IFRS Foundation.

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