2005

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Special IAS Plus newsletter explains IFRS 6

01 Feb 2005

Deloitte's IFRS Global Office has published a Special Global Edition of our IAS Plus newsletter explaining (PDF 54k).

IFRS 6:
  • permits entities to continue to use their existing accounting policies for exploration and evaluation assets, provided that such policies result in information that is relevant and reliable; and
  • requires entities to assess any exploration and evaluation assets for impairment when facts and circumstances suggest that the carrying amount of the assets may exceed their recoverable amount. The recognition of impairment in respect of such assets is varied from that in IAS 36 Impairment of Assets but, once an impairment has been identified, it is measured in accordance with IAS 36.
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January 2005 edition of Accounting Roundup

01 Feb 2005

We have posted the (PDF 158k).

Accounting Roundup is prepared by the National Office Accounting Standards and Communications Group of Deloitte & Touche LLP (USA) to briefly describe key regulatory and professional developments that have recently occurred in the field of accounting and to provide links to locations where additional information can be found on each topic. You will find past issues Here.
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UK extends IFRSs to all companies

31 Jan 2005

The United Kingdom has adopted a statutory instrument (legislation) that permits publicly traded companies and building societies to use IFRSs in their individual accounts and permits non-publicly traded companies to use IFRSs in both their individual and consolidated accounts. Statutory Instrument (PDF 338k) Related Draft DTI Guidance (PDF 124k) .

The United Kingdom has adopted a statutory instrument (legislation) that permits publicly traded companies and building societies to use IFRSs in their individual accounts and permits non-publicly traded companies to use IFRSs in both their individual and consolidated accounts.

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Two new IFRS publications from Deloitte Germany

31 Jan 2005

Deloitte (Germany) has developed two IFRS publications in German: model financial statements for 2005 and a guide to applying IFRS 1 First-time Adoption of IFRSs.

Both are translations of similar English-language publications that can be found on the Deloitte IFRS Publications Page. Click to download the German-language publications:
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EFRAG appoints financial instruments group

30 Jan 2005

The European Financial Reporting Advisory Group (EFRAG) has appointed a financial instruments working group (FIWG) with the twin goals of addressing current IAS 39 issues (such as potential solutions for the carve-out areas in IAS 39) and wider issues for longer-term revision of IAS 39. FIWG members are: Thomas Naumann, Dresdner Bank (Chairman) David Bradbery, UBS Investment Bank Isabelle Collignon, Credit Agricole SA Petri Hofste, KPMG Gordong Ireland, PWC Victor Jimenez, Banco Bilbao Vizcaya Argentaria Ingvar Linse, Swedbank Helmut Ortlof, DZ Bank AG Massimo Romano, Assicurazioni Generali Hugh Shields, Barclays Capital Agnes Tardos, PWC Click to Download FIWG Terms of Reference (PDF 18k). .

The European Financial Reporting Advisory Group (EFRAG) has appointed a financial instruments working group (FIWG) with the twin goals of addressing current IAS 39 issues (such as potential solutions for the carve-out areas in IAS 39) and wider issues for longer-term revision of IAS 39. FIWG members are:

  • Thomas Naumann, Dresdner Bank (Chairman)
  • David Bradbery, UBS Investment Bank
  • Isabelle Collignon, Credit Agricole SA
  • Petri Hofste, KPMG
  • Gordong Ireland, PWC
  • Victor Jimenez, Banco Bilbao Vizcaya Argentaria
  • Ingvar Linse, Swedbank
  • Helmut Ortlof, DZ Bank AG
  • Massimo Romano, Assicurazioni Generali
  • Hugh Shields, Barclays Capital
  • Agnes Tardos, PWC
Click to Download FIWG Terms of Reference (PDF 18k).
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Steps toward convergence on income taxes

28 Jan 2005

The US Financial Accounting Standards Board has posted its Action Alert Newsletter summarising FASB's recent decisions about convergence of FASB and IASB income tax standards with respect to which tax rate to use in measuring deferred taxes: While FAS 109 requires the 'enacted' rate and IAS 12 requires the 'substantively enacted' rate, FASB would amend FAS 109 to clarify that a rate is regarded as enacted if only perfunctory actions are required for a measure to become law. If corporate income is taxed at different rates depending on whether that income is distributed to shareholders, FASB would continue to require measurement of deferred tax assets and liabilities using the distributed rate, while IASB agreed at its January meeting to stick with the IAS 12 requirement to use the undistributed rate.

However, FASB agreed to require disclosure of the difference in the tax expense (or benefit) for the period that would result from the use of the undistributed rate.
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EU emissions trading - accounting and auditing issues

27 Jan 2005

The European Federation of Accountants (FEE) has published an Alert on financial reporting and auditing issues arising from the European Union's Greenhouse Gas Emissions Trading Scheme, which went into effect on 1 January 2005. The International Financial Reporting Interpretations Committee (IFRIC) recently issued IFRIC 3 Emission Rights, which is discussed in the FEE report.

The FEE Alert may be downloaded without charge from the FEE Website (click 'Fee Publications' then 'Sustainability').
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SEC may ease reconciliation for IFRS filers

27 Jan 2005

In a speech at the London School of Economics earlier this week, US SEC Chairman William H.

Donaldson said that the Commission is considering easing certain of its rules for non-US companies listed in the United States. He indicated that European companies using IFRSs might be allowed to reconcile only two years of financial statements to US GAAP instead of three:

The Commission recognizes the seismic change that conversion to IFRS represents for many European countries. We appreciate the European Union's efforts in this area because we value the EU's willingness to require the use of a single set of high quality accounting standards. This approach enhances investor understanding. We also understand that conversion to IFRS, while undoubtedly beneficial in the long run, could be difficult and expensive for some to implement in the immediate term. Consequently, the Commission has proposed amendments to our reporting requirements that would facilitate foreign private issuers' conversion to IFRS. For those foreign issuers also listed on U.S. exchanges, the SEC has long allowed these companies to use IFRS, provided the financial figures were reconciled to U.S. Generally Accepted Accounting Principles over a three-year period. Within the next few months, I fully expect the Commission will consider adopting a proposal to allow first-time users of IFRS to reconcile their financial statements to U.S. GAAP for only two years, and I am of the firm view that this would be a step in the right direction.

Other changes under consideration include:
  • Easier rules for foreign registrants to deregister their securities if they do not wish to continue to meet the US requirements.
  • A possible delay, for non-US registrants, of the effective date of the requirements to include in their annual reports a report of management on the company's internal control over financial reporting. Currently, a foreign private issuer that files its annual report on Form 20F or Form 40F must begin to comply in its first financial year ending on or after 15 July 2005.
Click to download Mr. Donaldson's Speech (PDF 65k).
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Canada adopts financial instruments standards

26 Jan 2005

The Canadian Accounting Standards Board (AcSB) has adopted a new standard on financial instruments that is a hybrid of IAS 39 and US GAAP.

The new standard – Financial Instruments: Recognition and Measurement, Hedges, and Comprehensive Income:
  • does not adopt either of the 'carve outs' from IAS 39 that were adopted by the European Commission (thus Canadian companies can use the full fair value option and cannot apply hedge accounting to bank core deposits),
  • does not include the macro hedging provisions of IAS 39,
  • takes the US position (SFAS 115) for available-for-sale financial assets that non-quoted equities are at cost, rather than the IAS 39 position that only those for which fair value cannot be determined are at cost,
  • does not address derecognition because the AcSB has previously adopted a derecognition standard that is in line with the US model (SFAS 140),
  • is effective for annual and interim periods beginning on or after 1 October 2006 (for most companies this means initial application in calendar years beginning on 1 January 2007), with early adoption permitted.
Click for AcSB Press Release (PDF 62k).
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US restatements continue to rise

24 Jan 2005

A new study by Huron Consulting Group has found that, after a slight drop in 2003, the number of restatements due to errors in the annual and interim financial statements of public companies filed with the US Securities and Exchange Commission rose to a record 414 in 2004, up from 323 in 2002 and 330 in 2002. The most common errors in 2004 related to: Revenue recognition (16% of 2004 errors). Equity, including EPS and stock options (16%). Provisions (accruals for liabilities of uncertain amount or timing) and contingencies (14%). Improper capitalisation of assets (8%). Inventories (4%). Click for Press Release (PDF 20k). .

A new study by Huron Consulting Group has found that, after a slight drop in 2003, the number of restatements due to errors in the annual and interim financial statements of public companies filed with the US Securities and Exchange Commission rose to a record 414 in 2004, up from 323 in 2002 and 330 in 2002.

The most common errors in 2004 related to:

  • Revenue recognition (16% of 2004 errors).
  • Equity, including EPS and stock options (16%).
  • Provisions (accruals for liabilities of uncertain amount or timing) and contingencies (14%).
  • Improper capitalisation of assets (8%).
  • Inventories (4%).

Click for Press Release (PDF 20k).

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