Deloitte letter to CESR on GAAP equivalence

31 May 2005

Deloitte has submitted a letter of comment to the Committee of European Securities Regulators (CESR) on CESR's tentative conclusions that Canadian, Japanese, and US GAAP, taken as a whole, are "equivalent to IFRSs, subject to a number of additional disclosures" for the purpose of listings by non-European companies in European public securities markets.

The European Commission is studying whether to allow Canadian, Japanese, and/or US GAAP to continue to be used after 2007 and has asked CESR for its views. The EC had also asked CESR to include, in its report on equivalence, a description of the enforcement mechanisms that are in place in each country. The EC has asked to have CESR's final advice by 30 June 2005. Click to download: CESR invited comments on their tentative views. (PDF 35k) states:

We believe this equivalence project has made a valuable contribution to the shared understanding of both the common ground and the differences between the leading sets of GAAP and we are supportive of the concept of focusing on "real world outcomes of investor behavior" and efficient remedies that are targeted on what really matters to investors. However, we do have reservations about the role and capacity of the auditor in this regard, which we address in our detailed comments.

Introduktion til de internationale regnskabsstandarder

31 May 2005

Deloitte (Denmark) has published IFRS – Introduction to International Financial Reporting Standards (in Danish).

The publication summarises each IFRS/IAS together with relevant interpretations (IFRIC/SIC) as well as the main differences between IFRSs and Danish GAAP. The publication also includes a short introduction to key factors in a successful conversion to IFRSs as well as helpful checklists on key differences between IFRSs and Danish GAAP and on Danish accounting rules that must be applied even if the company is reporting under IFRSs. Click here to download (PDF 2.4mb, 244 pages).

Prince of Wales urges 'sustainability reporting'

30 May 2005

In a speech on 25 May 2005 at the Annual Dinner of the Institute of Chartered Accountants in England & Wales (ICAEW), The Prince of Wales noted that the accountancy profession has a key role to play in developing methodologies for helping decision-makers to successfully weigh up the long-term costs and benefits of sustainable procurement.

He called on the profession to work with economists, academics, and the government to identify ways in which sustainability can be brought centre stage in the decision making process and supported by the appropriate cost benefit analysis. He said: "Accounting mechanisms have not, for the moment at least, kept pace with our requirements for sustainability information. And I would suggest we need that information as a matter of real urgency if we are to avert a growing series of man-made catastrophes in our over-crowded world." In conjunction with his speech, The Prince of Wales launched the first report from the Accounting for Sustainability Group, a task force convened to examine how public sector procurement policy can contribute towards sustainability and influence the whole economy in a more sustainable direction. Click to:
  • (PDF 465k).
  • (PDF 34k).

Commissioner McCreevy comments on IFRSs

30 May 2005

In a speech on A Changing Landscape for Business in Europe at the annual conference of the Institute of Certified Public Accountants in Ireland, EU Internal Market Commissioner Charlie McCreevy commented on various issues relating to IFRSs, including the following: Accounting and auditing: the global challenge for regulators: "The interrelationship in markets is the primary reason why, five years ago, Europe opted for international accounting standards....

The move was made because it fosters international convergence of accounting standards and keeps our capital markets attractive for overseas issues of securities. But even more importantly it eases our companies' access to other markets where IAS is accepted."
  • Convergence and equivalence of global standards: "Reaching IAS/US GAAP technical equivalence would be a significant step forward. But it should not stop there. There should be a clear and permanent recognition of equivalence of accounting standards."
  • Interpretation of IFRSs: "One means we are considering to do this is a 'European Forum', which would bring together the interested parties, namely regulators, standard setters, preparers, and the profession."
  • Download (PDF 76k).

    AICPA encourages FASB to study 'SME' GAAP

    30 May 2005

    The Council of the American Institute of Certified Public Accountants (AICPA) has adopted a resolution directing AICPA management to work with the FASB to evaluate, where appropriate, potential changes in the recognition, measurement, and disclosure standards applicable to private (unlisted) entities.

    Click for (PDF 145k).

    Survey finds equity market unprepared for IFRSs

    30 May 2005

    A survey of 12 leading investment banks and 30 rated investment analysts in London by financial communications consultants Citigate Dewe Rogerson has found that the investment banks are "largely adopting a 'wait and see' approach towards the reconciliation of IFRS changes in financial modelling and forecasting....

    The risk is that market valuations and share prices may be affected by a prolonged period of volatility while analysts lack consensus and a consistent approach to the interpretation of financial data under IFRS." The survey found that:

    • Only two of the 12 investment banks have provided guidance for their analysts on how to integrate IFRSs into forecast models.
    • Three-fourths of the investment banks offered their analysts no formal training at all on the adoption of IFRS.
    • Half of the analysts surveyed have not made any changes to their forecast models for companies, while a further 23% have only made partial changes.
    • Almost a third of the analysts have received no communication whatsoever from companies on the implications of IFRS. Less than 20% of analysts surveyed stated that companies had provided sufficient data.
    • All agreed that the balance sheet and profit and loss account would be the financial statements most impacted by IFRS, thereby implying an increased focus on cash flows.
    • Half stated that they would not be changing their valuation methods as a result of the adoption of IFRS, even though many responses highlighted potential impact on EV ratios, 'sum-of-the-parts' analysis, and dividend payments.
    The report cites a range of implications of the findings including the potential for large variations in earnings forecasts, increased emphasis on cash flows, and detrimental effects on macro data offered by investment banks. Click to Download Press Release (PDF 58k), which contains an active link to download an executive summary of the study.

    PCAOB guidance on audits of XBRL data

    30 May 2005

    The US Public Company Accounting Oversight Board (PCAOB) has published staff question and answer guidance for auditors engaged to report on whether XBRL (eXtensible Business Reporting Language) data furnished under the SEC's XBRL Voluntary Financial Reporting Program accurately reflects the corresponding information in the official SEC filings.

    Click for (PDF 60k).

    IFRS financial statements and checklist for 2005

    29 May 2005

    On 21 May 2005, we posted Deloitte's for the year ended 31 December 2005 (PDF 851k), combined in a single document.

    For convenience, we are also making the two components available as separate PDF documents:

    Deloitte letter of comment on IFRIC D15

    28 May 2005

    We have posted Deloitte's (PDF 45k), We support the interpretation and offer two suggestions for clarification (excerpt below).

    You will find all past comment letters (back to 1995) Here.

    We believe the draft Interpretation is an appropriate and practical interpretation of IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) and support its issuance. However, we do have two substantive comments. Firstly, we strongly encourage the IFRIC to clarify whether the assessment of hybrid instruments is required for an acquirer at the time of a business combination. Divergent views are already in existence on this issue, and D15 presents an opportunity to clarify this matter, similar to the issue set out in paragraph 3(b) of D15. Secondly, the IFRIC should clarify that the scope of D15 is limited solely to the 'closely related' decision, and not the other requirements in paragraph 11 of IAS 39.

    Deloitte comments on proposed IFRS 6 amendments

    28 May 2005

    We have posted Deloitte's comment letter on the and related amendments to IFRS 1 (PDF 57k), We support the amendments unreservedly.

    Here is an excerpt:

    We commend the Board in acting promptly to alleviate the concerns of constituents caused by the apparent inconsistency between the wording in IFRS 1 paragraph 36B and the discussion in the basis for conclusions on IFRS 6. We support the amendments as proposed in the exposure draft and encourage the Board to complete its redeliberations and issue the amendments in final form by 30 June 2005.

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