August

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Innovation in emerging markets

15 Aug 2006

In recent years, global manufacturers have been enticed by the enormous business potential presented by emerging markets.

But what is required to succeed in these markets whose cultures, customer requirements, labor practices, and regulatory regimes are very different than those in developed markets? How are companies adjusting their product offerings, human resource strategies, and supply chains? A new publication from Deloitte Innovation in Emerging Markets: Strategies for Achieving Commercial Success identifies five challenges that companies must innovatively tackle to achieve success in emerging markets:
  • Build new value propositions to deliver different product offerings that meet the unique needs of emerging market customers. In many cases, this will be at dramatically lower price points than in developed markets.
  • Globalise research and development by locating R&D; facilities in emerging markets to acquire deeper customer knowledge, and to build, market and distribute tailored products.
  • Tailor talent management strategies to the unique needs of employees in emerging markets, rethinking how to effectively recruit, develop, deploy, and connect people.
  • Master the complexity of global value chains to provide autonomy at the local level, while leveraging the strengths of headquarters, including governance and management know-how.
  • Build risk management capabilities to effectively detect, correct and manage the unique profile of risks presented by emerging markets, such as the protection of intellectual property.
The research report is based on a global survey of more than 400 executives, as well as in-depth interviews with senior executives at several global manufacturers. Learn more by downloading (PDF 647k).
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Comparison of Canadian GAAP and IFRSs

14 Aug 2006

The staff of the Accounting Standards Board of Canada (AcSB) has published a high-level comparison of current Canadian standards and IFRSs.

Its purpose is to provide information about the extent of similarity between Canadian GAAP and IFRSs. The comparison reflects AcSB and IASB standards at 31 March 2006. The comparison covers significant differences only and does not include all of the differences that might arise in a particular entity's circumstances. It is not intended for use in preparing financial statements. AcSB staff is also maintaining a more detailed comparison for those interested in comparison at a technical level. It is available on the AcSB's Website. Click to (PDF 286k). There's a permanent link on our Canada Page. Deloitte is grateful to the AcSB for allowing us to post this comparison. We have Other Comparisons Here.
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Two Swedish accountancy bodies merge

13 Aug 2006

Two main Swedish professional accountancy organisations have agreed to merge effective 1 September 2006. The two groups are the Swedish Organisation of Certified Public Accountants (Foreningen for Auktoriserade Revisorer, or FAR) and the Swedish Organisation of Auditors (Svenska Revisorsamfundet or SRS).

The combined organisation has about 4,000 members comprising authorized public accountants, approved public accountants, and other highly qualified professionals in the accountancy sector in Sweden. The new body is known as FAR SAS.

 

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AICPA-AAA-IAASB research on auditor's report

12 Aug 2006

The American Institute of Certified Public Accountants (AICPA), the American Accounting Association (AAA), and the International Auditing and Assurance Standards Board (IAASB) have launched a research initiative aimed at providing a better understanding of users' perceptions of the financial statement audit and the auditor's report.

A joint request for proposals solicits academic research to identify and provide information about such perceptions. Proposals must be submitted by 2 October 2006. The AICPA and IAASB will fund between US$10,000 and $20,000 for each project. Researchers are required to submit a summary of results by 1 October 2007, with a more detailed report by 7 January 2008.

Click for:

 

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Interview on new IFRS-based Chinese standards

10 Aug 2006

We have posted an interview with Stephen Taylor, head of the Deloitte Asia-Pacific IFRS Centre of Excellence, about China's new Accounting Standards for Business Enterprises that are based on IFRSs.

The interview, titled (PDF 563k) was included in Issue 3/2006 of Australian CPA Network magazine, published by the Hong Kong branch of CPA Australia. Stephen highlights some of the differences between the new Chinese standards and IFRSs and comments on their efficacy and wider implications. Several of the interview questions relate to convergence. Here's one:

Question: Why can't you have one set of IFRS standards with exceptions for specific circumstances in each country? Stephen's response: Ideally, that's where we should be but it's mainly the lack of sovereignty that is the issue. In China the standards are laws. So you would be allowing a body of people sitting in London to dictate their laws. Hong Kong won't do it, neither will the European Union. Even in the European Union if an IFRS standard is issued by the IASB it has to be endorsed by the European Union for use in Europe because it's a legal issue. What we will probably see more of in China's case is a reconciliation requirement. In other words, it will be alright to use this Chinese standard but please reconcile and show us the potential impact of these minor differences.

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Section 404 relief for small companies, FPIs

10 Aug 2006

The US Securities and Exchange Commission has offered smaller public companies and many foreign private issuers further relief from compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Two aspects of Section 404 are at issue: Section 404(a), which requires a report by management assessing the effectiveness of the company's internal control over financial reporting Section 404(b), which requires an auditor's attestation on internal controls The SEC would offer relief in three areas: Relief from Section 404 compliance dates for smaller companies (non-accelerated filers). The Commission proposes to: extend the date by which non-accelerated filers must provide the Section 404(a) management report from fiscal years ending on or after 15 July 2007, until fiscal years ending on or after 15 December 2007; and extend the date by which non-accelerated filers must begin to provide the Section 404(b) auditor's attestation to the first annual report for a fiscal year ending on or after 15 December 2008. These extensions would benefit about 44% of the domestic companies and 38% of the foreign private issuers that file periodic reports with the SEC. Relief from Section 404(b) compliance date for certain foreign private issuers. The SEC has adopted final rules allowing foreign private issuers that are accelerated filers but not large accelerated filers, and that file their annual reports on Form 20-F or 40-F, to defer their Section 404(b) auditor's attestation until fiscal years ending on or after 15 July 2007. These companies will be required to include the Section 404(a) management report in their annual reports for their first fiscal year ending on or after 15 July 2006. This extension would apply to about 23% of the foreign private issuers (these are in addition to the 38% mentioned previously). Transition relief for newly public companies. The Commission proposes a newly public company, including a foreign private issuer that is listing on a US exchange for the first time, would not be required to provide either a Section 404(a) management assessment or 404(b) auditor attestation report until it has previously filed one annual report with the Commission. Note that no relief is offered to a foreign private issuer that is a large accelerated filer.

Such companies must still comply with both the Section 404(a) and 404(b) requirements in their annual reports for years ending on or after 15 July 2006. Click for (PDF 45k). The press release has hyperlinks to the full text of the SEC rules.
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Annual FASAC survey addresses convergence

09 Aug 2006

The US Financial Accounting Standards Advisory Council (FASAC) is in the midst of its (PDF 160k) on issues confronting the US Financial Accounting Standards Board.

The 2006 survey focuses on four areas – FASB priorities, future issues, educational efforts, and international convergence.

With respect to convergence, the survey asks three questions:

  • In February of this year, the FASB and the IASB published a memorandum of understanding that affirms the Boards' shared objective of developing high-quality, common accounting standards for use in the world's capital markets. Both the FASB and the IASB believe that a common set of high-quality accounting standards will enhance the consistency, comparability, and efficiency of financial statements, enabling global markets to operate more effectively. Do you support the notion of international convergence of accounting standards? Why or why not?
  • Assume that the FASB and the IASB achieve the goal of converging standards at some point in the future. What would be the role of the FASB in a world of converged accounting standards?
  • Consider the following: The FASB identifies an area in financial reporting that needs significant improvement. The FASB estimates that it could issue a nonconverged final standard in four years that would result in a significant improvement to US financial reporting. An internationally converged standard would take seven years to complete. How heavily should the Board weigh timely improvement to US standards versus international convergence in determining its own standard-setting priorities? Is it ever appropriate to forgo or delay convergence if a pressing need exists domestically?
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New Accounting Roundup newsletter posted

09 Aug 2006

We have posted the (PDF 458k) published by Deloitte & Touche LLP (USA).

Topics covered in this 30-page issue include:

FASB Developments

  • Final Interpretation on Accounting for Uncertainty in Income Taxes
  • Final FASB Staff Position on Accounting for a Change in Income Tax Cash Flows Generated by a Leveraged Lease Transaction
  • FASB Preliminary Views on Conceptual Framework Joint Project with IASB
  • FASB Proposed FSP for Technical Corrections to Statement 123(R)
  • Changes to the Green Book: Accounting for Derivative Instruments and Hedging Activities
  • Lease Project Added to FASB Agenda
GASB Developments
  • New Q&A; on Qualifying OPEB Plan Trusts and Fiduciary Responsibilities
AICPA Developments
  • AICPA Exposure Draft on SSAE Hierarchy for Auditors of Nonissuers
  • AICPA Omnibus 2006 Exposure Draft for Auditors of Nonissuers
  • AICPA Exposure Draft on Quality Control Standards for CPA Firms
  • Practice Aid on Auditing Alternative Investments
SEC Developments
  • SEC Adopts Changes to Executive Compensation Disclosures
  • Concept Release on Section 404 Improvements
  • Highlights of AICPA SEC Regulations Committee Joint Meeting With the SEC Staff - 20 June 2006
  • SEC Interpretive Release on Use of Client Commissions for Brokerage and Research Services
PCAOB Developments
  • PCAOB Practice Alert on Stock Option Grants
International Developments
  • IFRIC Interpretation on Interim Financial Reporting and Impairment
  • Application of New IFRSs Not Effective Until 2009
Other Developments
  • Request for Comments on Proposed Changes to Yellow Book Auditing Standards
  • COSO Guidance on Internal Control Over Financial Reporting for Small Public Companies
You will find past issues of Accounting Roundup Here.
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Call for applications for SARG membership

09 Aug 2006

> By (PDF 42k), the European Commission established the Standards Advice Review Group (SARG).

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Global trends in venture capital - Deloitte survey

09 Aug 2006

Deloitte Touche Tohmatsu has published the (PDF 1,389k). The survey was conducted in association with Venture Capital Associations in the Americas, Asia Pacific and Europe, Middle East and Africa. Over half of all the respondents come from outside the United States, which gives some indication of the growing profile of global VC communities. Over half of all respondents – 53% of those in the United States and 58% non-US – are set on global expansion in the coming year. VCs are increasingly viewing strategic alliances and international interdependence as a key method of globalisation.

75% of non-US and 71% of US respondents viewed these as key to success. The report is based on 505 responses from general partners of venture capital companies with assets under management ranging from less than US$100 million to greater than $1 billion. Of the 505 total respondents, 279 were based in the Americas, 140 in Europe, Middle East and Africa and 86 in Asia Pacific.

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