'A Securities Regulator Looks at Convergence'

22 Apr 2005

The US Securities and Exchange Commission has released for public distribution an article titled A Securities Regulator Looks at Convergence, by SEC Chief Accountant Donald T.

Nicolaisen. Mr. Nicolaisen introduces his article as follows:

In the pages that follow I explain why I believe the movement towards use of a single set of globally accepted accounting standards is good for the global capital markets, and for investors and creditors (collectively, investors). I also discuss what I believe this movement means for the US capital markets and, in response to a question I am frequently asked, I attempt to set out a possible roadmap to elimination of the SEC's requirement that foreign private issuers reconcile financial statements prepared under IFRSs to US GAAP. Further, I describe factors that I believe can contribute to successful implementation and to increasingly widespread acceptance and use of IFRSs, or which, if not addressed, could impede progress. Lastly, I express my view that to maximize the benefits from a common set of accounting standards – IFRSs – the many involved parties need to work together on interpretive matters that arise in applying it.

Click to (PDF 228k).

EC comments on SEC 'roadmnap'

22 Apr 2005

The European Commission highlighted the progress made between the EC and the SEC (see news story below) in a (PDF 77k) titled Accounting Standards: EU Commissioner McCreevy Sees Agreement with SEC as Progress Toward Equivalence.

The reference to 'equivalence' relates to a study currently underway within the European Commission to assess whether US GAAP, Canadian GAAP, and/or Japanese GAAP are 'equivalent' to IFRSs and, therefore, should be allowed for non-European companies in European capital markets. An excerpt from Commissioner McCreevy's press release:

I very much welcome the constructive approach the SEC is taking to moving these critical issues forward. We will work closely together to promote the closer alignment of IFRS and US GAAP and towards the elimination of US GAAP reconciliation requirements for foreign private issuers. These are major steps towards high-quality global accounting standards, which the European Union strongly supports. Clearly there is much to do all round, but the bandwagon has now started. International accounting standard setters, preparers, issuers, auditors and regulators must now accelerate their efforts to seize this unique opportunity. They must set clear goals and deliver the necessary convergence, consistency and enforcement required. I will be pressing all concerned in Europe to play their part.

2005 version of UK FRSSE is issued

22 Apr 2005

The United Kingdom Accounting Standards Board has issued the 2005 version of its Financial Reporting Standard for Smaller Entities (FRSSE).

It is effective for accounting periods beginning on or after 1 January 2005. The FRSSE is an accounting standard developed specifically for smaller entities, by collecting together in one document and in simplified form the requirements from other accounting standards and interpretations that are applicable to smaller entities. It may be adopted by companies qualifying as small under UK companies legislation (at present, generally those entities with an annual turnover of less than £5.6 million). Smaller entities that elect to comply with the FRSSE are exempt from applying all other accounting standards and interpretations. Smaller entities that do not adopt the FRSSE remain subject to the full range of UK accounting standards and interpretations. Click for Link to Press Release and Download the FRSSE from the ASB's website.

IASB FASB SEC Convergence Conference 24 June

21 Apr 2005

The IASB, the US Financial Accounting Standards Board, and the US Securities and Exchange Commission are jointly sponsoring a conference on -->Convergence: The Future of International Financial Reporting Worldwide --> on Friday 24 June 2005 in London.

This one-day conference is aimed at CFOs and CAOs of SEC-registrants, listed companies, and other interested parties. Representatives of the IASB and FASB will discuss their plans for convergence of financial reporting standards, and representatives of the SEC will discuss convergence implications for SEC registrants. Speakers include Sir David Tweedie, IASB Chairman, and Bob Herz, FASB Chairman. Click for More Information about the IASB SEC FASB Convergence Conference.

Structured finance arrangements

21 Apr 2005

In his Remarks before the Bond Market Association in New York yesterday, SEC Chairman William H.

Donaldson discussed, among other things, accounting issues relating to structured finance arrangements. Mr. Donaldson's comments are relevant under IFRSs as well as under US GAAP:

Structured finance

The final regulatory initiative I'd like to touch on concerns the complex structured finance activities that financial institutions engage in with their corporate clients. Last May, the Commission joined with federal banking regulators in requesting public comment on a proposed interagency statement concerning these activities. This guidance emphasized the need for financial intermediaries to be diligent in avoiding involvement with products that are designed to evade an accounting or legal requirement.

Let's be clear where the common ground is. I think we all agree that we cannot go back to the days of Nigerian barge transactions, Raptors and Jedi's, with bankers, lawyers and accountants working feverishly to design exquisitely complicated transactions that serve no legitimate business purpose, but that achieve a favorable financial statement result. There is now a widespread understanding that financial services professionals are accountable, reputationally and sometimes legally, for the transactions they help their corporate clients design and execute.

Structured finance transactions pose no problem for the markets or market participants when they are properly disclosed and serve legitimate business ends - such as effecting a real transfer of risk, a real hedge of a liability, or a real influx of third-party capital. Corporations often need complicated structures to achieve these goals in the most efficient manner possible, and there is nothing wrong with bringing together the brightest financial, legal and accounting minds to create the optimal strategy for a corporate client. These same professionals simply must realize that they cannot ignore the corporation's real reason for wanting to do the transaction. We need to be clear that engineering a particular accounting result is not by itself a legitimate business objective.

Notes from the first day of the April Board meeting

20 Apr 2005

The IASB held its monthly Board meeting on Tuesday 19 April 2005. Click to go to our preliminary and unofficial Notes from the IASB Meeting on 19 April 2005. .

The IASB held its monthly Board meeting on Tuesday 19 April 2005. Click to go to our preliminary and unofficial Notes from the IASB Meeting on 19 April 2005.

EFRAG proposes to endorse IAS 39 amendment

20 Apr 2005

The European Financial Reporting Advisory Group has posted to its Website its proposed letter recommending that the European Commission approve, for use in Europe, the IASB's recent Amendments to IAS 39 Financial Instruments: Recognition and Measurement–Cash Flow Hedge Accounting of Forecast Intragroup Transactions.

EFRAG seeks comments by 16 May 2005.

EFRAG comments to IASB on fair value option

20 Apr 2005

The European Financial Reporting Advisory Group has submitted a letter of comment to the IASB on Amendments to IAS 39: The Fair Value Option–Effective Date and Transitional Provisions.

Click to Download the Letter (PDF 25k).

IAS Plus Newsletters for Q1 2005 are posted

19 Apr 2005

We have posted the latest Global and Asia-Pacific Editions of our IAS Plus newsletter.

The newsletter, which is published quarterly, reports on the recent activities of the IASB and the IFRIC and also on worldwide issues and events relating to international financial reporting. The Asia-Pacific edition has the same news content as the Global Edition plus accounting standards updates for Asia-Pacific countries. You will find all Past Issues Here.

Asia-Pacific pages updated

19 Apr 2005

We have updated the following Asia-Pacific jurisdiction pages to reflect standard-setting activity during the first quarter of 2005: Australia, Hong Kong, India, Japan, Malaysia, New Zealand, Singapore, and Taiwan. .

We have updated the following Asia-Pacific jurisdiction pages to reflect standard-setting activity during the first quarter of 2005: Australia, Hong Kong, India, Japan, Malaysia, New Zealand, Singapore, and Taiwan.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.