The statement expresses the Committee's strong endorsement of IFRSs for cross-border securities offerings globally and encourages those countries that permit IFRSs but require a reconciliation to national GAAP to reconsider, on an ongoing basis, whether there is a continuing need for the reconciliation. IOSCO represents over 100 of the world's securities regulators. An excerpt from the Committee's statement:

As numerous countries around the world now engage in the adoption of IFRS in 2005 and beyond, the Technical Committee reaffirms its support for the development and use of IFRS as a set of high quality international standards in cross-border offerings and listings. The Technical Committee recommends that its members allow multinational issuers to use IFRS in cross-border offerings and listings, as supplemented by reconciliation, disclosure and interpretation where necessary to address outstanding substantive issues at a national or regional level. The Technical Committee further encourages members to continually evaluate such supplemental treatments as the implementation of IFRS continues and as the global financial reporting infrastructure is enhanced to encourage the consistent application and enforcement of IFRS. By this approach it is hoped that issuers would be allowed in the foreseeable future to make use of IFRS without reconciliation.

We have posted (PDF 190k), which discusses five accounting proposals from the New Zealand Financial Reporting Standards Board (FRSB):

• Exposure draft proposing an interim framework for differential reporting under the NZ IFRS reporting regime.
• Exposure draft proposing an amendment to NZ IAS 36 to cater for non-cash generating assets held by public benefit entities
• Exposure draft of IFRIC 3 on accounting for 'cap and trade' schemes for emission rights
• IFRIC Draft Interpretation D10 on accounting for the liability that arises in relation to new legislation in Europe for waste electrical equipment
• IFRIC Draft Interpretation D11 on applying IFRS 2 to certain changes in employee share purchase plans.

The Regulation takes effect retroactively to 1 January 2005. IFRS 2 requires companies to reflect the cost of all share-based payments, including employee stock options, as an expense. The text was supported almost unanimously by the Member States at the Accounting Regulatory Committee meeting on 20 December and by the European Parliament. A similar rule will go into effect in the United States beginning 15 June. EU Internal Market and Services Commissioner Charlie McCreevy said:

Endorsement of IFRS 2 is very much in the interest of European capital markets and European investors. Granting stock options can be a very effective way for companies to motivate managers and staff, but like any other form of remuneration, it has to be considered as an expense. IFRS 2 will improve the quality of financial reporting by giving financial markets a clearer and more complete picture of a company's transactions.

Click for (PDF 76k).

The agenda for the meeting, which is open to public observation, is shown below. See our news story of 3 February 2005 below for the SAC agenda 10-11 February.

IASB Meeting Agenda15-17 February 2005, London Tuesday 15 February 2005 Insurance Contracts - Phase 2 Non-life Insurance Contracts, Focusing on Discounting and Risk Margins [Education Session] Financial Reporting by Small and Medium-sized Entities Business Combinations II - Purchase Method Procedures ED 7 Financial Instruments: Disclosures Wednesday 16 February 2005 Insurance Contracts - Phase 2Non-life Insurance Contracts, Focusing on Discounting and Risk Margins [Education Session, continued] Development of Standards and Guidance for Management Commentary – Preliminary Views Amendments to IAS 39: – Cash Flow Hedge Accounting of Forecast Intra-group Transactions Amendments to IAS 39: The Fair Value Option Thursday 17 February 2005 Financial Guarantees and Credit Insurance – Amendments to IAS 39 and IFRS 4 IFRIC Update Short-term Convergence - Income Taxes Conceptual Framework

The focus of this 1,112-page text is on the analysis, illustration, and application of International Financial Reporting Standards. The textbook has been written for intermediate and advanced financial reporting courses, at both undergraduate and postgraduate level, and aligns with the knowledge expectations of the accounting profession. Paul's co-authors are Keith Alfredson, former chairman of the Australian Accounting Standards Board (AASB); Ruth Picker, AASB deputy chairman and a technical partner of Ernst & Young; and Ken Leo and Jeannie Radford, both of Curtin University of Technology in Australia. You will find more information on the Book's Home Page. For international orders, email custservice@johnwiley.com.au (cite ISBN: 0470804947). [Note: A revised (enhanced) edition of this textbook was published in December 2006. Click for Information.]

The handbook includes all pronouncements issued by the International Auditing and Assurance Standards Board (IAASB) and the Ethics Committee through 31 December 2004. A print version may be purchased, and electronic versions may be downloaded, through the IFAC Website.

IOSCO's Press Release (PDF 233k) states that the initiative will involve a four-part process:

• 1. Identifying jurisdictions that appear to be unable or unwilling to cooperate, and prioritising follow-up work with the jurisdictions presenting the greatest risks to IOSCO's objectives of investor protection, maintenance of fair and efficient markets, and financial stability.
• 2. Entering into a dialogue (initially confidential) with priority jurisdictions to develop a mutual understanding of their ability and willingness to engage in cooperation and to assist them in resolving problems.
• 3. Assessing progress in meeting IOSCO standards for cooperation.
• 4. Considering further actions that will achieve conformity with IOSCO standards.

We have updated the following project pages for IFRIC projects to reflect decisions at the IFRIC meeting on 3-4 February 2005.

• IAS 11 Construction Contracts - Combining and Segmenting Contracts
• IAS 38: Possible Amendments (new project description)
• IAS 39 Reassessment of Embedded Derivatives
• IFRS 2 Treasury Share Transactions and Group Transactions
• IFRS 2: Scope
• Service Concession Arrangements
• IFRIC D5 Applying IAS 29 Financial Reporting and Hyperinflationary Economies for the First Time

Three more modules are scheduled for release in the next several months, as follows:

• IFRS 5 – February 2005
• IAS 32/39 Parts 2 and 3 – Late March 2005.

This recommendation was based on cost-benefit considerations that the IASB noted whilst developing IFRS 1, compounded by the fact that the changes that some IFRIC members had in mind were of a broad nature and may result in convergence issues that would best be dealt with by the Board. IFRIC agreed with the staff.

It was noted that following a recent visit by the Chairman of the IASB, the Mexican standard setters had embarked on a project exploring IAS 29, Some broad issues related to hyperinflationary accounting as well as seeking to extract guidance from other literature currently in existence. A draft paper would be presented to the IASB in April or May for the Board's consideration. This would be in addition to a research project currently being conducted by the Canadian standard setters.

The IFRIC agreed to proceed with D5 despite the above as well as to clarify that D5 would apply where an economy had ceased to be hyperinflationary at some point but had deteriorated into a hyperinflationary status again. As a result of this, IFRIC agreed to amend the title of the pronouncement in order that it should not be perceived to apply to first-time application of IAS 29 only, but rather, to the application of the restatement provisions of that standard in general.

The IFRIC discussed whether deferred tax assets and liabilities are monetary or non-monetary assets. Some IFRIC members believed that regardless of how the amount is computed, these balances are monetary items when the definitions of deferred taxes and monetary items in IAS 12 and IAS 21 respectively are read together. Others, however, believed these balances are non-monetary. Consequently, the IFRIC decided to amend the draft interpretation to remove the statement that suggests that deferred tax balances are neither monetary nor non-monetary, as these items are mutually exclusive. The treatment of deferred tax balances in the draft interpretation was not amended as a result of this decision.

The IFRIC discussed whether 'value' as used in IAS 29.16 refers to 'fair value', a point that had been clarified by a paragraph in the initial draft interpretation, which had subsequently been deleted. There was general support for the notion that value in this context would be any value that reasonably represented a 'current value', not necessarily fair value.

The IFRIC discussed the effective date of the draft interpretation and agreed that it should be set for 'periods beginning on or after' a particular date. It was unclear what the actual effective date set would be.

IAS 11 Construction Contracts - Combining and Segmenting Contracts

The IFRIC, after some discussion, decided to proceed with this project, noting that the interaction between IAS 18 and IAS 11 would be challenging given the on-going IASB project on Revenue Recognition. The IFRIC agreed to incorporate some of the US GAAP guidance in SOP 81-1.

It was pointed out that, as a convergence project, the issues to be dealt with were broader than just the interaction between SOP 81-1 and IAS 11 but would also include EITF 00-21.

The IFRIC agreed to report to the IASB on these issues at its March meeting before going ahead with the substantive work on this project.

Reassessment of Embedded Derivatives

The draft conclusion reached so far is that reassessment of host contracts for the existence of embedded derivatives (after initial recognition) is not required under IAS 39. The staff pointed out that FASB staff has confirmed that this conclusion would result in a difference between IFRS and US GAAP as the latter requires reassessment throughout the contract term.

The IFRIC agreed with the staff's proposal to proceed with the draft interpretation.

Arising from the discussions was a similar issue of principle – whether an investor in a subsidiary is required to reassess the classification of a lease at the time of acquiring the subsidiary as opposed to leaving the classification in the subsidiary which would have been determined at the time of entering into the lease arrangement by that subsidiary. The IFRIC agreed that this issue, although similar in principle to the embedded derivative issue, should be dealt with separately as an interpretation of IFRS 3. The staff was requested to proceed with the work on this project.

Agenda Issue

The IFRIC was asked to consider, at the recommendation of the Agenda Committee, whether they believed that a project would be worthwhile at this time, to deal with the piece-meal sale of shares by a parent entity in a subsidiary but still retaining control, as this issue is not dealt with under IFRS (the converse of step share purchases in an entity that is already controlled).

Some of the points considered by IFRIC include the following:

• Diverse accounting treatments in various jurisdictions at present.
• This issue will be dealt with in the Business Combinations Phase II project.
• An expected significant time lag until finalisation of the Business Combinations Phase II project, which would result in divergent accounting that would most probably be 'grandfathered' under that project and hence resulting in a lack of comparability.
• Relatively short life of the interpretation given the fact that Business Combinations Phase II would supersede that IFRIC pronouncement.
• The IFRICs work would be pre-emptive of the Business Combinations Phase II conclusions.

The IFRIC agreed to wait and assess the progress made on the Business Combinations Phase II project as regards meeting the timeframes set out in the Board agenda. Reassessment of that progress may lead IFRIC to consider issuing an interpretation.

This summary is based on notes taken by observers at the IFRIC meeting and should not be regarded as an official or final summary.

Scroll down for Notes from 3 February 2005.