PCAOB's plans for overseeing non-US auditing firms

31 Oct 2003

The US Public Company Accounting Oversight Board has published a briefing paper that describes the PCAOB's approach to oversight of non-US accounting firms.

The approach envisions cooperation with appropriate non-US auditor oversight authorities. The plans described in the briefing paper include:

  • A framework to permit varying degrees of reliance on a firm's home country system of inspections, based on a sliding scale: the more independent and robust a home country system, the higher the reliance on that system. This framework also would involve the PCAOB in inspecting, on behalf of a non-US regulatory agency, US firms that audit or play a substantial role in the audit of public companies in the non-US jurisdiction.
  • A modification to the PCAOB's registration form to permit, where applicable, the inclusion of certain information about a non-US firm's home country oversight system, to facilitate coordination between the PCAOB and non-US oversight systems.
  • A 90-day extension of the Board's deadline for non-U.S. firm registration, which will give non-US firms a reasonable amount of time to understand and prepare for registration.
Click to Download the Briefing Paper (PDF 49k).

Thoughts of FASB chairman on international convergence

30 Oct 2003

FASB Board members also responded to the 2003 annual FASAC survey (see news story below).

Following are the comments of FASB Chairman Rohert H. Herz on international convergence:

International Convergence. This needs to be a continuing and constant priority, both in terms of eliminating specific 'narrow' differences between U.S. GAAP and IFRS through 'short-term' convergence projects and by aligning our future agendas on major projects as best we can. I believe that we can do this in a way that is consistent with the recommendation in the SEC report on principles based standards that over time we redo some of the more 'rulesbased' standards in current U.S. GAAP. In that regard, the SEC report cites stock compensation, leasing, derivatives, and derecognition of financial assets as examples of such rules-based standards. With regard to stock compensation, both we and the IASB are, of course, currently working on that subject. Leasing (or perhaps the broader subject of executory contracts) is a topic I would favor us taking on as a joint project in the next year or so. I would also favor us revisiting Statements 133 and 140 and all the related pronouncements. However, a more principles-based or objectives-oriented approach in these areas would, in my view, imply moving to a full fair value model for financial instruments. While I personally favor such a move, its timing requires that we address and satisfactorily resolve important measurement and display issues and reliability concerns. Because this is a pervasive and controversial area, I think it would be important that we address it jointly with the IASB. But right now I do not believe that the IASB would be prepared to put this on its current agenda because of all the other things it needs to get done in the near term to achieve a 'stable platform' for 2005, including getting its existing financial instruments standards (IAS 32/39) improved and adopted by the European Commission.

International convergence high on FASAC's "to-do list"

30 Oct 2003

Most members of FASB's Financial Accounting Standards Advisory Council (FASAC) feel that international convergence should be high among FASB's priorities.

That is one of the findings of the 2003 annual survey of FASAC members. Typical of the FASAC members' comments is this one:

As multinational companies operate in many markets, the accounting standards need to be consistent. The United States is one of the few major exchanges in the world that does not already accept International Financial Reporting Standards. Convergence should not only be the goal for pronouncements already issued, but should continue to be a factor for consideration in the current development of new GAAP.

Click to (PDF 358k). Then search for "international" to see individual FASAC members' comments.

Asia-Pacific pages updated

30 Oct 2003

We have updated the following national pages to reflect recent accounting standards setting activity in each jurisdiction: Australia, Japan, New Zealand, Philippines, Singapore, and Thailand. .

We have updated the following national pages to reflect recent accounting standards setting activity in each jurisdiction:

FASB agrees to propose expensing stock options

30 Oct 2003

At its meeting yesterday, the US Financial Accounting Standards Board agreed to expose, for public comment, a standard that would require companies to expense the fair value of stock options granted to employees.

The proposal would likely be issued in February 2004 and, if adopted, would take effect in 2005. The IASB published a similar proposal last year (Exposure Draft ED 2) and is expected to issue a final standard during the first quarter of 2004, also effective in 2005. Currently, companies in the United States are permitted, but not required, to recognise stock options as part of employee compensation cost. Several hundred listed companies (out of about 15,000) recognise the expense. Even if they elect not to charge the cost to expense, companies must disclose the fair values of options granted. Current IFRS require neither expensing nor disclosure of the fair values of share-based compensation. Both the FASB and IASB proposals would apply to all companies, not just publicly traded ones.

Deloitte and IASB will hold an IFRS conference in December

29 Oct 2003

Deloitte and the IASB will jointly sponsor a conference titled Europe and IFRS Beyond 2005 in Paris on 3 and 4 December 2003. The conference will focus not only on IFRSs that will be applicable in 2005 but also on the challenges beyond 2005. Speakers will include Sir David Tweedie, Chairman of the IASB; Rene Ricol, Chairman of the International Federation of Accountants (IFAC); James Leisenring and Gilbert Gelard, IASB Board members; Bertrand Collomb, Chairman of Lafarge and Chairman of the Association Francaise des Enterprises Privees; Michel Pebereau, Chairman of BNP; and many senior executives from industry, banking, insurance, the European Commission, and national standard-setters and regulators.

Click for:

Comment deadlines approaching

28 Oct 2003

We are reminding you that the comment deadline dates on the following IASB and IFRIC proposals are fast approaching: IASB Exposure Draft: ED 5, Insurance Contracts – 31 October 2003 IFRIC Draft Interpretation D2, Changes in Decommissioning, Restoration and Similar Liabilities – 3 November 2003 IASB Exposure Draft: Fair Value Hedge Accounting for a Portfolio Hedge of Interest Rate Risk – 14 November 2003 .

We are reminding you that the comment deadline dates on the following IASB and IFRIC proposals are fast approaching:

Six new International Education Standards from IFAC

28 Oct 2003

The International Federation of Accountants (IFAC) has released six International Education Standards (IESs) that establish the global benchmarks for education and development for professional accountants.

Developed by IFAC's Education Committee, the standards prescribe the essential elements of education to become a professional accountant and the ongoing education requirements necessary to remain competent. All IFAC member bodies are expected to comply with the standards effective 1 January 2005. The six standards may be downloaded from IFAC's Website. Their titles are:
  • IES 1, Entry Requirements to a Program of Professional Accounting Education
  • IES 2, Content of Professional Accounting Education Programs
  • IES 3, Professional Skills
  • IES 4, Professional Values, Ethics and Attitudes
  • IES 5, Practical Experience Requirements
  • IES 6, Assessment of Professional Capabilities and Competence

Notes from the IASB meeting on 24 October 2003

27 Oct 2003

The IASB held the final day of its October 2003 meeting on Friday, 24 October 2003 in Toronto.

We have combined all of our notes from the IASB's October 2003 meeting onto a Separate Page.

Adoption of IFRS-based standards in Australia

25 Oct 2003

The Australian Securities and Investments Commission (ASIC) and the Australian Financial Reporting Council (FRC) have urged company boards and management to prepare early for the adoption of IFRS-based accounting standards in Australia.

Companies with financial reporting periods beginning on or after 1 January 2005 will be required to follow Australian accounting standards that will be "equivalent to International Financial Reporting Standards". Click for ASIC Press Release.


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