We have combined our notes from the three-day Board meeting on 17-19 September 2003 into a Single Page.

Regarding market foundations and corporate governance, the FSF said:

"Accounting standards. Members noted that good progress has been made in the IASB and FASB short-term convergence project and in strengthening accounting standards internationally. However, some complex and difficult issues remain unresolved. Reaching an international consensus on these issues will require consultation on all sides, and the larger objectives that motivate the need for convergent accounting standards – including financial efficiency, stability and transparency – should be kept in mind."

Click for News Release (PDF 157k).

 

Topics covered include IFRIC Draft Interpretation D2, Changes in Decommissioning, Restoration and Similar Liabilities. Click to download this or any of the prior issues of Accounting Roundup or our new EITF Roundup newsletter.

A meeting of World Accounting Standard Setters will take place on 22 September 2003, and the Board will meet with representatives of its partner standard-setters on 23 September 2003. The latter two meetings are at the Renaissance Chancery Court Hotel, London. All meetings are open to public observation.

AGENDA OF THE IASB MEETING 17-19 SEPTEMBER 2003 Business Combinations Phase I Business Combinations Phase II Consolidation and Special Purpose Entities Convergence Extractive Industries Amendments to IAS 32 and IAS 39 IFRIC Update Improvements to IFRS Revenue Recognition Share-based Payment Small and Medium-Sized Entities

The report, Rebuilding Investor Confidence, Protecting U.S. Capital Markets (PDF 891k) explores the impact of the Sarbanes-Oxley Act of 2002 one year after its enactment.

A section of the report reviews how the Act has begun to create "a level playing field for international companies and auditing firms", including a review of steps taken by the European Commission.

The report also includes a summary of the findings of a study by Huron Consulting Group of restatements of financial statement filed with the Securities and Exchange Commission. For the 12 months ended 30 June 2003, 354 public companies restated earnings because of accounting errors. Of those, 158 restatements were filed during the first six months of 2003. Problems applying accounting rules, human and system errors, and fraudulent behaviour were the three primary causes for accounting restatements.

 

The IASB's ED 2, Share-Based Payment, would not prescribe any particular model. The IASB's current timetable calls for issuing a final IFRS in the first quarter of 2004.

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on 30 September and 1 October 2003. Topics on the agenda are:

• Decommissioning and environmental rehabilitation funds
• First-time adoption of IAS 29, Financial Reporting in Hyperinflationary Economies
• IAS 11, Construction Contracts: Combining and segmenting contracts
• IAS 19, Employee Benefits: Multi-employer plans
• IAS 19 and IAS 27 - Employee benefit trusts
• IAS 37, Provisions, Contingent Liabilities and Contingent Assets: Onerous contracts
• IAS 41, Agriculture: Use of net present value techniques
• IFRIC D1, Emission Rights: Comment letter analysis
• Rights of use
• Service concession arrangements

But the AASB has indicated that it might make some modifications to IFRS for use in Australia. The AASB invited comments on that approach. In a story titled "Keep Global Rules Intact, Say Big Four", the Melbourne Age newspaper (PDF 97k) that responses to the AASB from Deloitte Touche Tohmatsu, PricewaterhouseCoopers, KPMG and Ernst & Young and from senior finance executives of listed companies have said that "the AASB should adopt the international literature without local modifications". Also, the AASB has Announced (PDF 157k) that it will not adopt the Australian "equlivalents" of IFRS in phases, as previously announced, but instead will adopt all of them in a single batch, most likely in April 2004.

S&P concludes that while initially insurers and reinsurers will find the introduction of IFRS to be traumatic, "ultimately, the capital markets, consumers, and the more sophisticated financial statement users will reward insurers for their improved transparency rather than penalizing them for volatility." Benefits of adopting ED 5 that were cited by S&P, in addition to enhanced consistency and transparency, include better understanding of the risks to which insurers are exposed, and their potential rewards; more informed company managements and boards; better alignment of product pricing and financial reporting; and regulatory benefits, possibly even reduced regulatory filings and requirements. We are grateful to Standard & Poor's for allowing us to make their report available on IASPlus. Click to download:

• The Standard & Poor's Report (PDF 110k).
• (PDF 46k).

The articles include:

• Waking Up to International Accounting Standards: Accountancy Age's campaign to raise awareness of IFRS in Britain [update: Link on Accountancy Age website is no longer working]
• Who's Who in IAS (PDF 45k): The top personalities to watch closely ahead of the January 2005 cut-off, and the wider circle of power
• IAS: The View from the Top (PDF 22k): Comments of IASB Chairman Sir David Tweedie
• The IASB: Bringing about a New Dawn (PDF 20k): An overview of the IASB's 30-year history
• Countdown to IFRS Begins (PDF 52k)
• Big or Small - Don't Ignore IAS (PDF 20k): IFRS may well be extended to small and medium-sized entities