European Parliament overwhelmingly adopts IAS resolution

13 Mar 2002

By a vote of 492 for, 5 against, and 29 abstentions, on 12 March 2002 the European Parliament endorsed the Commission's proposal that all EU listed companies must follow standards issued by the International Accounting Standards Board in their consolidated financial statements starting no later than 2005. Companies preparing for listing would not be required to follow IAS.

Member States are permitted to decide whether non-listed companies must also follow IAS. Member States also have the option to exempt certain companies temporarily from the IAS requirement – but only until 2007 – in two cases: (1) companies that are listed both in the EU and on a non-EU exchange and that follow another set of internationally accepted standards as the primary basis of their consolidated financial statements and (2) companies that have only publicly traded debt securities. The first exemption would apply mainly to European companies listed in the US that currently use US GAAP for their primary financial statements. Click for (PDF 189k).

BIS chief executive urges global adoption of IAS

12 Mar 2002

Andrew Crockett, General Manager of the Bank for International Settlements and Chairman of the Global Stability Forum.

has called global financial reporting standards "a critical pillar in the international financial architecture":

The prospects of acceptance of international standards look better than ever before, a testimony to the efforts made so far. In particular, the European Commission has supported strongly the concept of international standards. It has proposed that quoted companies in the Union produce consolidated accounts according to international standards by 2005. And it has set up a two-tier mechanism (political and technical) for endorsement. At the same time, uncertainties remain. General support by the US authorities has been tempered by what they see as the potential risk of weakening national standards. It is important that the current momentum be maintained and, if possible, increased.

Mr. Crockett proposed a three-pronged approach toward implementing global standards:

  • Securing acceptance of international standards by national standard setters and securities regulators.
  • Reconciling the different perspectives of accounting and prudential authorities.
  • Ensuring the monitoring and enforcement of the standards.
Click for Full Text of Mr. Crockett's Remarks (PDF 101k).

We express serious concern about 30-day comment period

10 Mar 2002

In a [PDF 11k] to IASB Chairman Sir David Tweedie and the IASC Foundation Trustees, Deloitte Touche Tohmatsu has expressed 'serious concern' about the shortness of the comment period on IASB's first exposure draft (ED) on an accounting issue, Amendment to IAS 19, Employee Benefits: The Asset Ceiling.

We said:

In an international environment, translation and solicitation of input at the national level by national accountancy bodies are required in developing replies to EDs. On top of that, the issue raised in the ED is a complex one, and one that has existed since IAS 19 took effect over three years ago. In this particular case, the proposal in the ED has broad implications for some of the fundamental concepts of IAS 19 - implications that respondents to the ED must consider carefully. We certainly do not see this as an issue that in any way justifies a 30-day comment period.

We believe that, as a matter of policy, IASB Exposure Drafts should have at least a 90-day comment period other than in an exceptional situation. Further, we believe that IASB should develop and articulate, as part of the Preface, criteria to identify such an exceptional situation.

Setback for IASs in China

07 Mar 2002

The China Securities Regulatory Commission has reversed its decision [see Feb.

2002 News] that, for all initial and secondary public offerings of 'A Shares' (shares that can be purchased by Chinese investors), supplementary IAS financial statements must be published, and they must be audited by an international accounting firm. Under revised rules announced 1 March, supplementary audits will only be required if a company is issuing 300 million or more shares (a rarity). Further, in such cases the supplementary audits would be conducted by licensed Chinese accounting firms, not international firms, and only a reconciliation of net income to IAS would be required, not supplementary IAS financial statements. The Asian Wall Street Journal reported that "CSRC has succumbed to 'great pressure' from both domestic-listed companies and local accounting firms".

Running order of IASB March meeting

07 Mar 2002

The daily agenda for IASB's March 2002 Meeting has been announced. .

The daily agenda for IASB's March 2002 Meeting has been announced.

Trustees will vote today on constitutional changes

05 Mar 2002

The Trustees of the IASC Foundation will consider proposed Changes to the IASC Constitution at their meeting in London today.

The constitutional changes include:
  • Changing the committee's name to International Financial Reporting Interpretations Committee (IFRIC).
  • Broadening the committee's mandate so it can address issues not specifically covered in an existing IFRS.
  • Creating the position of a non-voting chair of IFRIC, that position to be filled by one of the members of the IASB, the Director of Technical Activities, or a member of the IASB's senior technical staff. (IASB has indicated that it will appoint Kevin Stevenson, Director of Technical Activities, as chair of IFRIC.)

SIC revises its proposed Interpretation on website costs

04 Mar 2002

At its meeting on 26-27 February 2002, the SIC approved a proposed final Interpretation, SIC-32, Intangible Assets - Website Costs.

The principal revision from the draft that was discussed but remanded by the IASB in December 2001 is that initial graphic design costs would be included in the capitalisable costs of developing a website. The revised draft will be resubmitted to the Board for approval. SIC also agreed to consider at its next meeting the following possible agenda projects:
  • Classification of Financial Instruments with Distributions at the Discretion of the Issuer
  • Employee Benefits - Limit on Recognition of an Asset Under IAS 19.58(b)(ii)
  • Employee Benefits - Changes in Employment Benefits and Actuarial Assumptions
  • Non-Cash Dividends (measure at fair value or carrying amount)
  • Revenue Presentation - Gross vs. Net
  • Revenue Recognition - Specified Trade-In Rights and Loyalty Programmes

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