April

Report from IASB meeting 21 April 2004

22 Apr 2004

We have combined onto a Single Page our notes from (a) the IASB meeting on 21 April 2004, (b) the IASB and FASB joint meeting on 22-23 April 2004, and (c) the IASB meeting with chairs of its partner national standard setters on 26-27 April 2004. .

We have combined onto a Single Page our notes from (a) the IASB meeting on 21 April 2004, (b) the IASB and FASB joint meeting on 22-23 April 2004, and (c) the IASB meeting with chairs of its partner national standard setters on 26-27 April 2004.

Venezuela adopts International Financial Reporting Standards

21 Apr 2004

The Board of the Venezuelan Federation of Certified Public Accountants has announced that it has decided to adopt International Financial Reporting Standards (including IASs, IFRSs, and related interpretations) without any modification whatsoever.

A special commission has been created to define the implementation process. It is considering the following proposed steps for implementation:
  • 2005 – Listed companies
  • 2006 – Large companies
  • 2007 – Small and medium sized companies; state companies, and companies under specific rules or regulations (banks and insurance companies)

 

IASB proposes further amendments to IAS 39

21 Apr 2004

The IASB has issued an exposure draft proposing to limit the option in IAS 39 'Financial Instruments Recognition and Measurement' to measure individual financial assets and financial assets at fair value, with value changes through profit and loss.

The option was added to IAS 39 when it was amended in December 2003. Following dialogue with banking supervisory authorities, who expressed concern that the fair value option might be used inappropriately, the IASB's latest exposure draft, Amendments to IAS 39 Financial Instruments: Recognition and Measurement - The Fair Value Option, proposes to limit the option's availability by:

  • Limiting the types of financial assets and financial liabilities to which the option may be applied to the following five specified categories:
    • Financial assets and financial liabilities that contain embedded derivatives.
    • Financial liabilities whose cash flows are contractually linked to the performance
    • of assets that are measured at fair value.
    • Cases when the exposure to changes in the fair value of the financial asset or
    • financial liability is substantially offset by the exposure to the changes in the fair
    • value of another financial asset or financial liability, including a derivative.
    • Financial assets other than loans and receivables.
    • Items that other Standards allow or require to be designated as at fair value
    • through profit or loss.
  • Requiring that the option may be applied only to financial assets and financial liabilities whose fair value is verifiable.

Click for Press Release (PDF 29k).

 

Jan Engstrom is appointed to the IASB

21 Apr 2004

The Trustees of the IASB's parent Foundation have appointed Jan Engstrom to membership on the IASB, effective 1 May 2004. Mr Engstrom, formerly the CFO of Volvo Group and a native of Sweden, will fill the vacancy for a full-time preparer position created by the retirement of Harry Schmid.

Mr Engstrom's term will expire on 30 June 2009. Click for Press Release (PDF 16k).

Paul Volcker and Robert Herz testify at US Senate hearing

21 Apr 2004

IASC Foundation chairman Paul A.

Volcker and FASB Chairman Robert H. Herz both testified on the importance of independent, non-politicised accounting standard setting before a US Senate committee. The committee is considering possible legislation that would restrict the adoption of a proposed FASB standard that would require recognition of compensation expense for the fair value of stock options given to employees.
  • Click to Download Mr. Volcker's Testimony (PDF 10k).
  • Mr. Herz's testimony can be found on FASB's Website. An excerpt: "Like investors and creditors, Congress and other policy makers need an independent FASB to maintain and improve the integrity of accounting standards in order to obtain the financial information necessary to properly assess and implement the public policies that you favor. While current efforts by certain parties to block improvements to the accounting for equity-based compensation may seem attractive to some in the short run, in the long run biased accounting standards are harmful to investors, creditors, the capital markets, and the US economy." In making his case, Mr. Herz cited IFRS 2 and the "benefit of achieving greater international comparability in the area of accounting for equity-based compensation".

European and Japanese business groups concerned about FV trend

20 Apr 2004

A joint Public Statement (PDF 58k) issued by an unusual alliance of groups representing European small business and Japanese big business states that those groups "strongly oppose the IASB's further consideration of the 'full fair value concept' without further research on the needs of users and preparers, and the economic consequences of this fundamental change in concepts because of its inherent theoretical and practical problems." They note that the full fair value concept manifests itself in the current IASB projects on Performance Reporting (Comprehensive Income Reporting), Financial Instruments, and revisions to Accounting for Employee Benefits including Pensions.

The two groups are Nippon Keidanren (whose membership includes 1,600 companies and industry organisations in Japan) and UNICE (a federation of 36 industry groups in 29 European countries).

Ten new IAS-equivalent standards adopted in Hong Kong

19 Apr 2004

The Council of the Hong Kong Society of Accountants has adopted 10 new accounting standards and one interpretation that are identical in content to their IAS and SIC counterparts.

These were previously approved by the Financial Accounting Standards Committee (FASC). Moreover, Hong Kong standards are being renamed and renumbered to conform to IASB numbering. The new Hong Kong pronouncements are:

  • HKAS 1 Presentation of Financial Statements
  • HKAS 2 Inventories
  • HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
  • HKAS 10 Events after the Balance Sheet Date
  • HKAS 16 Property, Plant and Equipment
  • HKAS 21 The Effects of Changes in Foreign Exchange Rates
  • HKAS 27 Consolidated and Separate Financial Statements
  • HKAS 28 Investments in Associates
  • HKAS 29 Financial Reporting in Hyperinflationary Economies
  • HKAS 33 Earnings per Share
  • HKAS-Int 12 Consolidation - Special Purpose Entities

Remaining convergence issues are currently being dealt with by the FASC.

Agenda for joint IASB-FASB meeting is announced

17 Apr 2004

The IASB will meet jointly with the US Financial Accounting Standards Board on Thursday and Friday 22-23 April at the Radisson SAS Portman Hotel, 22 Portman Square, London.

The agenda for the meeting is noted below.

AGENDA – JOINT IASB-FASB MEETING 22-23 APRIL 2004

  • Short-term Convergence Topics
    • Income Taxes
    • Proposed Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
    • Research and Development Costs
  • Business Combinations Phase II
  • Reporting Comprehensive Income
  • Revenue Recognition
  • Board Priorities

Agenda for IASB meeting with partner standard setters

17 Apr 2004

The IASB will meet with the chairs of its eight liaison national standard setters on Monday and Tuesday 26-27 April at Painters Hall, 9 Little Trinity Lane, London.

The agenda for the meeting is noted below.

AGENDA – IASB MEETING WITH LIAISON STANDARD SETTERS 26-27 APRIL 2004

  • Meeting with Trustees Re Constitutional Review
  • Board Priorities
  • Research Project - Measurement
  • Research Project - Leases
  • Role of National Standard Setters After Adopting or Converging with IASB GAAP
  • Research Project - Extractive Industries
  • Research Project - Intangibles
  • Research Project - Joint Ventures
  • Management Commentary

Deloitte comments on ED 6 on mineral exploration

16 Apr 2004

We have posted the Exploration for and Evaluation of Mineral Resources (PDF 240k).

Excerpt:

While we applaud the IASB for its efforts to address accounting for the exploration for and evaluation of mineral resources, we question the approach taken in ED 6. That is, to develop an "interim standard" that exempts entities within the scope of the draft standard from complying with certain parts of the Framework and defers addressing recognition and measurement principles until a later date. We do not believe this approach should be precedent for future projects. In contrast, we would prefer that the IASB address these issues as part of a comprehensive project involving the development of proper recognition and measurement principles for the extractive industries.

We understand the IASB's desire to finalise as many of its projects prior to the implementation of International Financial Reporting Standards (IFRS) in Europe. Consequently, we accept the need to provide some interim guidance on the accounting for exploration for and evaluation of mineral resources before a final standard on recognition and measurement principles is completed. Accordingly, we support the development of ED 6 into an International Financial Reporting Standard until such time as the IASB's comprehensive project can be completed.

Deloitte comment letters back to 1995 can be found Here.

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