Starting in 2005, Hong Kong Financial Reporting Standards are identical to International Financial Reporting Standards. While Hong Kong had adopted many of the earlier IASs as Hong Kong standards, some had not been adopted, including IAS 32 and IAS 39. And all of the December 2003 improvements and new and revised IFRSs issued in 2004 and 2005 will take effect in Hong Kong beginning in 2005. For each standard, this new 180-page book sets out:

• a summary of its content,
• the key changes it makes to accounting in Hong Kong,
• the most significant implications of its adoption, and
• related anticipated future developments. There is one Hong Kong standard and several Hong Kong interpretations that do not have counterparts in IFRSs. Also there are several wording differences between HKFRSs and IFRSs due to Hong Kong law. These are all described in this new book. You will find a link to this and many other Deloitte publications on our IFRS Publications Page.

Australia's Urgent Issues Group issued Interpretation 1052 Tax Consolidation Accounting to address the accounting implications of the move by the Australian federal government to allow Australian groups to tax consolidate. Interpretation 1052 deals only with the separate financial statements of entities within a tax-consolidated group and many of the other issues surrounding the accounting for income tax in the tax consolidation environment remain unresolved. From a commercial perspective, there are three clear messages for Australian entities arising from Interpretation 1052:

• 1. Tax funding arrangements need to be reviewed and if necessary rewritten to avoid superfluous accounting implications.
• 2. The costs and benefits of any systems changes need to be considered.
• 3. Care needs to be taken to ensure that the accounting methodology adopted does not result in unfavourable tax consequences.

The discussion paper explores these issues in addition to providing an in-depth analysis of the accounting mechanics of Interpretation 1052.

The European Financial Reporting Advisory Group (EFRAG) has invited comments on its draft letter to the IASB on the exposure draft of Business Combinations Phase II, which involves proposed amendments to IFRS 3, IAS 27, IAS 37, and IAS 19.

We would at the outset like to make clear our support for the objective of this project to achieve convergence if it is convergence to the better accounting solution and can be achieved with reasonable efforts. We have nevertheless some major concerns...

EFRAG's concerns relate to:

• Structure and Process of the Project, including non-issuance of a discussion paper, shortness of the comment period (especially for Europe), failure to achieve IFRS-US GAAP convergence, increased use of fair values before a debate on measurement has taken place, and changes to concepts in the Framework:

  We have a major concern with the fact that the Board proposes changes to concepts that are contained in the Framework without either first discussing those potential changes in the context of the Framework itself or actually proposing to change the Framework.

• Technical issues, including whether a single method of accounting is appropriate for all business combinations (particularly for combinations involving mutual entities and by contract alone), subjective fair value measurements by unlisted companies or in illiquid markets, and definition of a business.
• Proposed changes to IAS 27. EFRAG is "not convinced that the entity view is superior to the current 'parent-only' approach".
• Proposed changes to IAS 37. EFRAG has concerns (a) about building probability into the measurement of non-financial liabilities rather than (as IAS 37 currently does) into the recognition criteria and (b) about measuring non-financial liabilities at the amount that an entity would rationally pay to settle the present obligation or to transfer it to a third party.

Click to Download EFRAG's Letter (DOC 232k). Comment deadline is 21 October 2005. The United Kingdom Accounting Standards Board has Invited Comment on the IASB's Proposals while expressing concerns similar to EFRAG's:

The ASB is issuing the proposed standards in accordance with its policy of aligning UK accounting standards with IFRS. It notes, however, that the proposals raise a number of issues, and, arguably, some of these would not represent an improvement in UK financial reporting. Amongst the more controversial issues are: the proposal that goodwill is to be recognised in full; that is, 100% of goodwill is recognised even if less than 100% is acquired; the requirement in IFRS 3 that, after initial recognition, goodwill should be measured at cost less impairment losses, and amortisation is not be permitted; unlike present requirements, liabilities will be recognised even where it is probable that no outflow will be required to settle the obligation. The probability of an outflow is reflected in the measurement of the liability.

The meeting schedule of the International Financial Reporting Interpretations Committee for 2006 is as follows, all in London:

• Thursday 12 January and Friday 13 January 2006
• Thursday 2 March and Friday 3 March 2006
• Thursday 11 May and Friday 12 May 2006
• Thursday 6 July and Friday 7 July 2006
• Thursday 7 September and Friday 8 September 2006
• Thursday 2 November and Friday 3 November 2006

You can always find meeting dates for IASB, SAC, IFRIC, and IASCF by clicking the Future Meeting Dates link on our home page.

Here is an excerpt from his remarks at a seminar on IFRSs organised by the Institute of Cost and Management Accountants of Pakistan:

What we seek in transparency is the ability of an investor to 'see through' a company's financial statements the true results of its operations. Transparency requires that companies follow Generally Accepted Accounting Principles (GAAP) in a manner that assures consistency and comparability. The best way of achieving this is to observe and adopt IFRSs in its true spirit.

Click for Press Release (PDF 6k).

It describes in English the areas of IFRSs that differ from Danish GAAP. This checklist is likely to be a useful tool for non-Danish speakers needing to know about the impact of IFRSs for entities listed on the Copenhagen Stock Exchange. We have added this publication to our page that has Comparisons of National GAAPs and IFRSs. You will also find a link on our IFRS Publications Page.

The newsletter reports on the 2nd quarter 2005 activities of the IASB, the IFRIC, and the IASC Foundation, and also on worldwide issues and events relating to international financial reporting. The Asia-Pacific edition has the same 32-page news content as the Global Edition plus seven pages of accounting standards updates for Asia-Pacific countries.

• (PDF 311k)
• (PDF 268k)

You will find all Past IAS Plus Issues Here.

The Advisory Committee is doing this by publishing a series of questions and asking interested parties to respond to the questions. Responses are requested by 31 August 2005. Several of the questions are similar to those recently asked by the IASB in its Staff Questionnaire on Possible Recognition and Measurement Modifications for Small and Medium-sized Entities (SMEs). For example, the SEC Advisory Committee asks:

Are the current accounting standards applied to all U.S. companies appropriate for smaller companies? If not, please explain what revisions to existing standards might be appropriate. Should accounting standards provide smaller companies with different alternatives for measuring accounting events that would reduce the amount of time that would otherwise be spent by smaller companies to comply with those accounting standards? If these alternatives were available to smaller companies, would smaller companies take advantage of them even if the results of the measurements obtained from the alternatives were less favorable to them in the short term? Why or why not?

• Click for (PDF 78k)
• To view a (PDF 75k)
• Click to go to SEC Online Response Form.

Click for (PDF 32k).

In relation to the IASB Draft Memorandum of Understanding on the Role of Accounting Standard-setters, EFRAG comments as follows:

 

"Preparing the draft Memorandum of Understanding (MoU) has been a useful exercise.

We are not sure though that there are any significant benefits to be gained by developing the draft into a final document that is then signed by all the parties."

 

Click for:

• EFRAG letter: IASB Due Process Handbook (PDF 22k) "Although the IASB is, in our opinion, one of the most transparent accounting standard-setters in the world, there is always room for improvement. In general, we support the proposals in the draft Handbook."
• EFRAG letter: IFRIC Review of Operations (PDF 21k) "A number of European commentators are very concerned about the IFRIC's ability to cope with the demands that they believe will be placed on it in the coming months with large numbers of European companies applying IFRS for the first time." "We have had a number of concerns about the IFRIC agenda process."