Click here for a Summary of the Proposed Constitution Changes. Here is an excerpt from our response:

The IASC Foundation has a vital role to play in achieving the goal of one set of high-quality global accounting standards. In protecting the independence of the International Accounting Standards Board, while ensuring its public accountability, it must balance the legitimate demands of constituents for access and responsiveness against the Board's need to develop high-quality accounting standards that serve the interests of those making economic decisions in an atmosphere that is free of political interference. However, the IASC Foundation must also work to achieve greater accountability and transparency in its own affairs, especially in the oversight of the IASB and its sub-groups (including the appointment, assessment and reappointment of Board Members) as well as the appointment and reappointment of the Trustees. We are disappointed that the proposals in the Invitation to Comment make such modest proposals for change and have not responded to many of the comments made by us in our comment letter of 11 February 2004 and our written evidence before the Trustees' Constitution Committee submitted on 20 May 2004, as well as by other respondents.

The agenda for tomorrow includes 3½ hours on the IASCF constitution review, starting with a one-hour presentation by Paul A. Volcker, Chairman of the IASC Foundation board of trustees, which oversees the IASB. His presentation will be followed by a 2½ hour discussion of ARC's draft letter of response. The previously announced agenda had provided for only 30 minutes on this topic. In addition, ARC will vote on whether to recommend IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments for use in Europe. Also, EFRAG will make a presentation on its non-endorsement of IFRIC 3 (see yesterday's news story). Click to download the (PDF 13k).

The letter states the following:

"EFRAG has concerns about the overall effect of the accounting requirements in IFRIC 3, particularly in circumstances where entities have not acquired or sold allowances.

EFRAG believes that applying IFRIC 3 will not always result in economic reality being reflected and relevant information being provided.... EFRAG has concluded that the disadvantages that would arise from endorsing an interpretation constrained by the interplay of the current IFRSs/IASs are not outweighed by the advantages that would be gained by having guidance on the accounting on the emission right schemes."

Click to Download the Draft Letter on IFRIC 3. Comments are due 22 March 2005.

 

The Commission will also conduct a roundtable discussion on 13 April 2005 at its offices in Washington. Section 404 requires SEC registrants, including foreign companies, to report on management's responsibilities to establish and maintain adequate internal control over the company's financial reporting process, as well as management's assessment of the effectiveness of those internal controls. Auditors are required to report on management's assessment, as well as on the effectiveness of the company's controls. Click for More Information from the SEC website.

We have updated our Timetable for Current IASB Agenda Projects to reflect recent changes announced by the IASB in its newsletter or at Board meetings.

The IAS 39 fair value option permits entities to designate, at the time of acquisition or issuance, any financial asset or financial liability to be measured at fair value, with value changes recognised in profit or loss. When the European Commission adopted IAS 39 for use in Europe, they prohibited companies from applying the fair value option to liabilities on grounds that such treatment is inconsistent with the European accounting directives. You can Download the Fair Value Option Draft from the IASB's website.

The letters can be downloaded from EFRAG's Website.

These clarifications apply to all SEC registrants, domestic and foreign, regardless of industry. The clarifications relate to amortisation of leasehold improvements, rent holidays, and landlord-tenant incentives. Some new disclosures are specified.

On 17 February 2005, 23 members of the US House of Representatives introduced legislation that would impose a three-year moratorium on the SEC's enforcement of FASB Statement 123. FAS 123 was revised in December 2004 to require all companies to account for all share-based payments, including stock options, at fair value – similarly to IFRS 2. During the three years, the SEC would be required to study the impact that expensing options may have on the US economy and on 'small entrepreneurial businesses'. The bill would require listed companies that offer stock options to disclose "plain-English descriptions of share value dilution, expanded and more prominent disclosure of stock option-related information, and a summary of stock options granted to the five most highly compensated officers". The bill would not prohibit voluntary expensing of stock options by SEC registrants. The Senate must also pass the same legislation before the bill becomes law. The new proposal, known as HR 913, is similar to a bill (HR 3574) that was approved by the House in July 2004 by a vote of 312 to 111, with 10 nonvoting. The US Senate did not enact an equivalent of HR 3574, so it did not become law. HR 913 has been referred to the House Committee on Financial Services.

Click here for Complete List of the 19 IASCF Trustees. Click here for Press Release (PDF 61k), which includes short bios of the three new trustees.