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IASB posts latest draft of SME exposure draft

10 Nov 2006

The International Accounting Standards Board has posted the latest staff draft of an exposure draft of an International Financial Reporting Standard for Small and Medium-sized Entities (SMEs).

The draft is posted as two files:
  • The draft IFRS and a draft Invitation to Comment
  • Draft implementation guidance in the form of Illustrative Financial Statements and a Disclosure Checklist
The Board has not completed its consideration of the text, and further changes will be made to this draft before the Board publishes the exposure draft for public comment later this year. The draft is being made publicly available to keep interested parties up to date with progress on the project. The IASB does not request comments on this draft, and the staff will not be in a position to consider or respond to any comments. Here is the Link to the SME Page on IASB's Website where you can download the latest SME drafts.

IFAC proposes guidance for companies' codes of conduct

10 Nov 2006

The International Federation of Accountants' (IFAC) Professional Accountants in Business (PAIB) Committee has published an exposure draft of guidance that would assist companies and their professional accountants in developing and implementing a code of conduct.

The proposed new good practice guidance, Defining and Developing an Effective Code of Conduct (PDF 139k), highlights the varied roles of professional accountants in business in driving and supporting organizational ethics and conducting ethics programs. It also provides practical guidance on the design and development of such codes. Comment deadline is 16 February 2007. Click for IFAC Press Release (PDF 82k).

ASBJ and FASB hold convergence discussions

10 Nov 2006

The Accounting Standards Board of Japan and the US Financial Accounting Standards Board held the second meeting on global convergence of standards.

"Both Boards believe that these discussions are useful in promoting mutual understanding that will contribute to subsequent deliberations at their respective Boards and to their respective convergence projects with the IASB." A list of issues discussed is in the ASBJ Press Release (PDF 56k).

Big-6 CEOs' vision for strengthening financial reporting

09 Nov 2006

The CEOs of the six major global networks of accounting and auditing firms, including Deloitte, have jointly published a 'vision statement' titled Global Capital Markets and the Global Economy "as the beginning of what we hope will be a robust dialogue about how global financial reporting and public company auditing procedures must adapt to better serve capital markets around the world".

The vision statement suggests development of "a new business reporting model to deliver relevant and reliable information in a timely way". Specific suggestions relating to financial reporting and auditing include the following:

Strengthening Financial Reporting and the Audit Function

Near-Term Measures:In the near term, the following 'convergence' processes must be completed to benefit the global financial markets and their stakeholders:

  • Complete the effort by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to harmonize differences between international and U.S. reporting standards, as currently envisioned. Complex rules must be resisted and withdrawn. Today's rules can produce financial statements that virtually no one understands. Standards need to be principles-based.
  • Launch and complete a similar process for the convergence of national audit standards, which should make use of the International Standards on Auditing (ISA) that already have been developed with the oversight of the Public Interest Oversight Board (PIOB) of the International Federation of Accountants (IFAC).
  • Similarly, minimize national differences in the oversight of auditors and enforcement of relevant audit standards, including rules relating to the way auditors conduct their activities. The recently established Independent Forum of International Audit Regulators (IFIAR) may be the appropriate body to pursue this objective. We are encouraged by recent statements from the U.S. audit regulator, the Public Company Accounting Oversight Board (PCAOB), that it intends to join and actively participate in IFIAR.

Consistency in business reporting standards, audit standards and enforcement of audit standards is necessary to support a global economy with the lowest cost of capital. Alignment of the accounting profession and the regulators around common objectives and application of principles-based standards will enable companies to produce consistent global information. A sensible global regulatory framework also will reduce barriers to growth and entry by other audit firms or networks in our profession, thus providing increased choice for auditing services.

Longer-Run Measures: Over the longer run, experts agree that the current systems of reporting and auditing company information will need to change — toward the public release of more non-financial information (some or much of which may be industry-specific) customized to the user, and accessed far more frequently than is currently done. It is time, therefore, for all global capital markets stakeholders involved to launch a process that will lead to the development of a new business reporting model, with a clear identification of the role of the independent audit and requirements dictated by that model.

Our firms pledge to work with issuers, investors, regulators and other market participants to develop this new model including ways of disseminating a broad array of company information to users in a manner more suited to the Internet age than the traditional quarterly and annual reports.

Click for Full Publication (PDF 1,961k).

Agenda for November 2006 IASB meeting

08 Nov 2006

The International Accounting Standards Board will hold its November 2006 Board meeting at its offices, 30 Cannon Street, London, on Thursday 16 November 2006 and Friday 17 November 2006. Presented below is the preliminary agenda for the meeting.

The IASB will also meet with the Standards Advisory Council on 9 and 10 November 2006. We previously posted the Agenda for the SAC Meeting.

Board Meeting Agenda

16-17 November 2006, London

Thursday 16 November 2006

  • IFRIC X Service Concession Arrangements – Vote to approve an Interpretation
  • Annual improvements process - the following annual improvements projects will be recommended to and discussed by the Board:
    • Should IAS 1 Presentation of Financial Statements be amended to provide guidance on situations where the financial statements of an entity are based on, but not in full compliance with, IFRSs
    • How should the conflict between the requirements of IAS 1 Presentation of Financial Statements and IFRS 7 Financial Instruments: Disclosures regarding the presentation of finance costs be resolved?
    • Should the liability component of a convertible instrument with an obligation to deliver cash or other assets more than 12 months from the balance sheet date be classified as current or non-current?
  • Financial Instruments: Recognition and Measurement - Comprehensive Project
  • Conceptual Framework – Elements and Recognition
  • Fair Value Measurements – Discussion Paper

Friday 17 November 2006

UNCTAD guidance on corporate governance disclosures

08 Nov 2006

The United Nations Conference on Trade and Development (UNCTAD) has published Guidance on Good Practices in Corporate Governance Disclosure.

This 52-page publication is an updated version of UNCTAD's 2002 report Transparency and Disclosure Requirements for Corporate Governance. UNCTAD's goal in developing this disclosure guidance is "achieving better corporate transparency and accountability in order to facilitate investment flows and mobilise financial resources for economic development" in UN member states. It is aimed particularly at regulators and companies in developing countries and transition economies. The suggested disclosures are divided between financial and non-financial. For financial disclosures the guidance states: "The International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board provide a widely recognised benchmark in this respect." The guide recommends a range of non-financial disclosures in the following areas:

Non-financial corporate governance disclosures:

  • Company Objectives
  • Ownership and Shareholder Rights
  • Changes in Control and Transactions Involving Significant Assets
  • Governance Structures and Policies
  • Members of the Board and Key Executives
  • Material Issues Regarding Stakeholders, and Environmental and Social Stewardship
  • Material Foreseeable Risk Factors
  • Independence of External Auditors
  • Internal Audit Function
We are grateful to UNCTAD for permission to post this guide.

Trustees make two Board member appointments

07 Nov 2006

The Trustees of the IASC Foundation, under which the IASB operates, have appointed Dr Zhang Wei Guo, Chief Accountant and Director General of the Department of International Affairs of the China Securities Regulatory Commission, to membership on the IASB for a five-year renewable term beginning 1 July 2007. The Trustees also reappointed John Smith, currently a part-time IASB member, to a full-time Board position for a second five-year term also beginning 1 July 2007.

The Trustees continue their search to fill one remaining position on the IASB that will become vacant on 1 July 2007. Click for Press Release (PDF 61k), which includes brief biographical notes about Dr Zhang and Mr Smith. The press release also discusses enhanced measures on Trustee oversight and long-term funding of the IASB.

Our views on IFRIC D20 Customer Loyalty Programmes

07 Nov 2006

Deloitte has submitted to the IASB comments on IFRIC's Draft Interpretation D20 Customer Loyalty Programmes.

Overall, we believe that the draft Interpretation addresses an issue for which we believe there is need for an interpretation. An excerpt from our comments:

We support the consensus in the Draft Interpretation, in so far that it applies to customer loyalty programmes that represent multiple sales, as we think the logic set out for identification and measurement of separately identifiable components in a transaction is irrefutable. We believe the IFRIC has interpreted the distinction between paragraph 13 and paragraph 19 in IAS 18 Revenue appropriately. Paragraph 13 of IAS 18 applies when a single contract requires two or more separate goods or services to be delivered at different times. In contrast, paragraph 19 of IAS 18 applies when an entity has to incur further costs related to items already delivered. An entity would not normally incur costs related to award credits at the time of the initial transaction because the entity has not provided the goods or the services to the customer at that time but rather when the customer redeems the award credits. Award credits that are provided as part of a transaction should therefore follow the accounting requirements in paragraph 13 and revenue accounted for when the entity deliver the goods or services, as a result of the award credits, to the customer.

However, we want to highlight that we have concerns regarding the scope of the Draft Interpretation. We believe that the IFRIC should clarify further the distinction between customer loyalty programmes and marketing expenses, as we believe guidance in the Draft Interpretation is not sufficient.

Click for:

Model half-year report under Australian IFRSs

06 Nov 2006

Deloitte Touche Tohmatsu (Australia) has published 2006 Consolidated Model Half-Year Report to illustrate an interim report for periods ending on or after 31 December 2006 in accordance with Australian equivalents to International Financial Reporting Standards (A-IFRSs).

Click for Full Report (PDF 630k).
There is a permanent link to these and other A-IFRS model financial statements on our Australia Page.

IFRIC 11 interprets IFRS 2

05 Nov 2006

The International Financial Reporting Interpretations Committee (IFRIC) has published IFRIC 11 'IFRS 2 – Group and Treasury Share Transactions'.

The Interpretation addresses how to apply IFRS 2 Share-based Payment to share-based payment arrangements involving an entity's own equity instruments or equity instruments of another entity in the same group (eg equity instruments of its parent).

IFRIC 11 provides:


Overview of IFRIC 11
  • Share-based payment involving an entity's own equity instruments in which the entity chooses or is required to buy its own equity instruments (treasury shares) to settle the share-based payment obligation: These should always be accounted for as equity-settled share-based payment transactions under IFRS 2.
  • A parent grants rights to its equity instruments to employees of its subsidiary: Assuming the transaction is accounted for as equity-settled in the consolidated financial statements, the subsidiary must measure the services received using the requirements for equity-settled transactions in IFRS 2, and must recognise a corresponding increase in equity as a contribution from the parent.
  • A subsidiary grants rights to equity instruments of its parent to its employees: The subsidiary accounts for the transaction as a cash-settled share-based payment transaction.

IFRIC 11 is effective for annual periods beginning on or after 1 March 2007. Earlier application is permitted. Click for:


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