Malaysia delays adoption of standard based on IAS 39

29 Jun 2003

The Malaysian Accounting Standards Board has decided to delay, until at least third quarter 2004, the adoption of a standard on financial instruments that is based on IAS 39 because of the imminent changes to IAS 39. MASB also delayed a proposed standard on unit trusts for the same reason.

Click for the MASB's News Release (PDF 15k).


Proposed FASB staff position differs from IAS 37

28 Jun 2003

The FASB staff has invited comment on a Draft FASB Staff Position (FSP) on accrual of a provision for a legislative requirement to remove asbestos that seems to reach a different conclusion from that in IAS 37 Example 6, "Legal Requirement to Fit Smoke Filters".

The draft FSP concludes that a legal requirement to remove asbestos creates a liability even if the owner of the building with asbestos could sell it subject to the obligation. IAS 37 Example 6 concludes that a legal requirement to fit a smoke filter does not create a liability -- the liability is created only when the filter is actually installed but not yet paid for.

New DTT guidance on accounting for income taxes

27 Jun 2003

Deloitte Touche Tohmatsu has published a 120-page book of guidance on applying SSAP 12, Hong Kong's new standard on (PDF 1,090k).

Because SSAP 12 is substantially equivalent to IAS 12, we believe that this book will be of interest to all who apply IFRS. Chapters cover calculation of tax balances; current tax; deferred tax; tax bases; temporary differences; balance sheet recognition; measurement; recognition of the movement between the opening and closing balance sheets; and presentation and disclosure. There is also a chapter on applying the standard to Hong Kong circumstances including business combinations; investments; revaluations of properties; foreign currency translation; and compound financial instruments. Appendices include example tax worksheets; a presentation and disclosure checklist; illustrative disclosures; and an international comparison.

There are two main differences between SSAP 12 and IAS 12. The first is that the Hong Kong standard includes significant additional implementation guidance within the body of SSAP 12 that is not in IAS 12. Secondly, with respect to revalued investment property (including freehold land, land use rights, and buildings) the Hong Kong standard has arrived at a "Hong Kong solution for a Hong Kong problem". Under SSAP 12, deferred tax on all revalued investment property should be measured based on the tax consequences that would follow from recovery of the carrying amount of the asset through sale. Since the Hong Kong tax law provides for no capital gains tax on sale of investment property, minimal deferred tax would be recognised. This is, in effect, an extension of the scope of SIC 21, which applies only to freehold land. The Hong Kong Society of Accountants expects to reconsider this difference after completion of the IASB's Improvements and Convergence projects.

Canadian Senate committee urges global accounting standards

25 Jun 2003

After a year-long study triggered by Enron and other recent financial reporting scandals, a committee of the Senate of Canada has published a report that makes extensive recommendations on financial reporting, including: accounting and auditing standards, oversight of the profession, audit committees, certification of annual financial statements, MD&A, corporate governance, and management compensation.

Two items relating to the work of the IASB are:
  • The Committee's recommendation that "The federal government should take a leadership role and work with Canadian stakeholders in undertaking discussions with the US Financial Accounting Standards Board, the International Accounting Standards Board, and others that will result in all relevant parties working expeditiously toward the development of global uniform accounting standards."
  • The Committee's view that "stock options are an element of compensation, and must be treated as an expense like any other compensation item." Click for Entire Report (PDF 333k).

We have posted a new Accounting Roundup newsletter

24 Jun 2003

You can download the 10-page 23 June 2003 Edition of Accounting Roundup from Deloitte & Touche (USA).

Topics covered include the FASB ED on SPEs that qualify for off-balance-sheet treatment, summaries of decisions reached at recent FASB meetings, summaries of EITF consensuses (including one on software revenue recognition), new Derivatives Implementation Group FAS 133 guidance, recent SEC pronouncements, and a list of topics discussed at the IASB's May 2003 meeting. You can also download all 36 past editions of Accounting Roundup at the above link.

"Convergence" on key share-based payment decisions

24 Jun 2003

Both the IASB and the US FASB have projects on share-based payments.

A Decision Summary (PDF 82k) prepared by the FASB for today's meeting of its Advisory Council summarises the two boards' decisions to date and concludes that "the IASB and the FASB are converged with respect to accounting for equity-settled employee stock-based compensation transactions.... The two Boards are converged in the sense that if the IASB's proposed guidance and the FASB's tentative decisions do not change, the final standards would be converged." The decision summary notes the following key decisions made to date:

  • Recognition. Goods or services received in exchange for stock-based compensation result in a cost that should be recognised in the income statement as an expense when the goods or services are consumed by the enterprise.
  • Measurement Attribute. The measurement attribute for an exchange involving stock-based compensation is fair value.
  • Measurement Objective. The measurement objective for equity-settled awards is to determine the fair value of the goods or services received in the exchange, which should be based on (a) the fair value of the goods or services received or (b) the grant-date fair value of the equity instruments issued (that is, modified grant date measurement), whichever is more reliably measurable.
  • Attribution. Compensation cost should be recognised over the service period using the attribution method in FASB Statement 123, Accounting for Stock-Based Compensation, rather than by the units-of-service attribution method proposed in IASB ED 2, Share-based Payment. In May 2003 the IASB decided to move to the SFAS 123 model.

IASB has changed the dates of its July 2003 meeting

24 Jun 2003

The new meeting dates are 22-24 July 2003 at the IASB's offices in London.

The previously announced dates were 23-25 July. The agenda and running order have not yet been announced.

EFRAG supports adoption of IFRS 1 in Europe

23 Jun 2003

The European Financial Reporting Advisory Group has posted on its Website a draft of its proposed letter to the European Commission recommending that "it is in the European interest" for the Commission to adopt IFRS 1. .

The European Financial Reporting Advisory Group has posted on its Website a draft of its proposed letter to the European Commission recommending that "it is in the European interest" for the Commission to adopt IFRS 1.

Impediments to adopting IFRS in Australia

23 Jun 2003

In its Media Release (PDF 58k) welcoming the adoption of IFRS 1, the Australian Accounting Standards Board has cited two significant impediments to adopting IFRS 1 and other IFRS in Australia.

One is the fact that IFRS are copyrighted by IASB whereas Australian accounting standards must be freely available by law. Secondly, IFRS 1 makes cross-references to IFRS and amended IAS that have not yet been adopted by the AASB. Australian law prohibits cross-referring to regulations that have not yet been enacted. Rather than using IFRS in place of national GAAP, Australia is taking the approach of adopting an Australian equivalent of each individual IAS/IFRS.

IFRIC July agenda is announced

22 Jun 2003

The International Financial Reporting Interpretations Committee will meet on 1 and 2 July at the IASB's offices in London.

The agenda includes the following topics:
  • IAS 11 – The criteria for combining and segmenting construction contracts
  • IAS 12 – Hyperinflation and deferred tax
  • IAS 17 – Rights of use of assets
  • IAS 19 – Multi-employer plan exemption
  • IAS 19 – Money purchase plan with minimum guarantee
  • IAS 19 – EITF issues update
  • IAS 37 – Provisions: decommissioning and environmental rehabilitation funds
  • IAS 37 – Changes in decommissioning and similar liabilities
  • Update on activities of national interpretive bodies

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