October

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Deloitte comments on IFRIC tentative agenda decisions

23 Oct 2006

At each of its meetings, the International Financial Reporting Interpretations Committee considers recommendations of its Agenda Committee about potential IFRIC agenda topics.

When the IFRIC initially decides Not to Put a Topic on its Agenda, they report that tentative decision in the IFRIC Update newsletter and invite comments before making a final agenda decision. In September 2006, Deloitte adopted a policy of providing written comments to the IFRIC on all tentative agenda decisions. We will post on IAS Plus those Deloitte letters considered particularly significant, including those on which we disagree on a matter of principle. We recently submitted five letters to the IFRIC in response to their September 2006 tentative agenda decisions, and we believe that the following letter deals with a significant matter of principle: IAS 39 – Testing of hedge effectiveness on a cumulative basis (PDF 122k). An excerpt:

We support the IFRIC's decision not to take this item onto the agenda as IAS 39 is clear. We believe the rejection wording could be clearer in differentiating between assessment of hedge effectiveness (for the purposes of determining whether the hedge is 'highly effective' in accordance with IAS 39.88(e)) and measurement of effectiveness (for the purposes of determining the amount of hedge ineffectiveness to be recognised in profit or loss). Differentiating between assessment and measurement is the crux of this issue. We have proposed an amendment to the rejection wording included in the Appendix to make this clear.
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Deloitte comments on ED on puttable instruments

23 Oct 2006

Deloitte has submitted to the IASB our comments on the IASB's Exposure Draft 'Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation'.

Over overall view:

We agree that the Exposure Draft meets the objective of a limited scope exception. However, we question the technical justification for this change and why this proposed amendment is warranted when it has limited application, adds further complexity to the definition of liability/equity in IAS 32 (which already forms part of a wider modified joint project with FASB) and there are plenty of other issues with IAS 32 which are subject to that wider IASB project, on which these amendments have an impact.
Click for Links to All Deloitte Comment Letters to IASB and IASC.
Click for Exposure Draft (PDF 139k).
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Deloitte 2006 review emphasises our support for IFRSs

23 Oct 2006

Deloitte Touche Tohmatsu's Worldwide Member Firms 2006 Review reports worldwide revenues for the year ended 31 May 2006 of US$20 billion, an increase of 11.5 percent in local currencies.

The 84-page annual review addresses various issues currently being debated across capital markets that consider how best to meet investor demand for reliable and timely financial data. Deloitte reiterated our strong support for International Financial Reporting Standards, for national adoption of IFRSs as a whole without modifications, and for convergence of IFRSs and US GAAP:

Achieving global consistency In a global economy, investors would benefit significantly from consistent high-quality financial reporting across markets. This, however, can only be achieved if there is greater uniformity in the way accounting, governance, business practice standards, regulation, and oversight systems are developed and applied. Importantly, such consistency would support the improvements professional services firms have made in enhancing audit quality.

Deloitte member firms support the adoption and implementation of International Financial Reporting Standards (IFRS). As countries undertake this task, their ultimate objective should be to implement IFRS as a whole to avoid the formation of hybrid standards and therefore inconsistency. Further, preparers and issuers must be given sufficient time to adjust to the global standards, so that implementation is effective and consistent with the way the standards were intended to be applied.

Deloitte member firms also strongly support the efforts of the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board to achieve convergence or mutual recognition between IFRS and U.S. GAAP. They applaud the IASB's acknowledgement that principle-based accounting is its aspiration. If markets moved toward more principle-based accounting, accountants and auditors could more easily apply their professional judgment, which is relatively more difficult to do under highly prescriptive standards.
Click for Full Report (PDF 3,445k).
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Agenda for 1-3 November 2006 IFRIC meeting

23 Oct 2006

The International Financial Reporting Interpretations Committee will meet at the IASB's offices in London on Wednesday 1 November, Thursday 2 November, and Friday 3 November 2006. The tentative agenda for the meeting is shown below.

Note that the meeting begins on Wednesday afternoon 1 November, one day earlier than originally announced.

1-3 November 2006, London

Wednesday 1 November 2006 (afternoon only)

  • Draft Handbook on IFRIC Due Process – Review of responses

Thursday 2 November 2006

  • Opening remarks and administrative matters
  • IAS 18 Revenue
    • Real estate sales
    • Revenue recognition in respect of initial fees paid by a fund manager
  • Review of tentative agenda decisions published in July and September IFRIC Update
    • 1. IFRS 2 Share-based Payment – Fair value measurement of post-vesting transfer restrictions
    • 2. IAS 39 Financial Instruments: Recognition and Measurement – Valuation of electricity derivatives
    • 3. IAS 32 Financial Instruments: Presentation – Puts and forwards held by minority interests and
    • IFRS 3 Business Combinations: Are puts or forwards received by minority interests in a business combination contingent consideration?
    • 4. SIC-12 Consolidation of Special Purpose Entities – Relinquishment of control
    • 5. IAS 39 Financial Instruments: Recognition and Measurement – Definition of a derivative: indexation on own EBITDA or own revenue
    • 6. IAS 32 Financial Instruments: Presentation – Foreign currency instruments exchangeable into equity instruments of the parent entity of the issuer
    • 7. IAS 32 Financial Instruments: Presentation – Changes in the contractual terms of an equity instrument resulting in it being reclassified to financial liability
    • 8. IAS 1 Presentation of Financial Statements – Whether the liability component of a convertible instrument should be classified as current or non-current
    • 9. IFRS 2 Share-based Payment – Incremental fair value to employees as a result of unexpected capital
    • restructurings
    • 10. IAS 16 Property, Plant and Equipment – Revaluation of investment properties under construction
    • 11. IAS 32 Financial Instruments: Presentation – Classification of a financial instrument as liability or equity
    • 12. IFRS 2 Share-based Payment – Employee benefit trusts in the separate financial statements of the sponsor
    • 13. IFRS 7 Financial Instruments: Disclosures – Presentation of 'net finance costs' on the face of the income statement
    • 14. IAS 11 Construction Contracts – Allocation of profit in a single contract
    • 15. IAS 38 Intangible Assets – Classification and accounting for SIM cards
    • 16. IAS 38 Intangible Assets – Adoption of IAS 38 (revised 2004)
    • 17. IAS 39 Financial Instruments: Recognition and Measurement – Testing of hedge effectiveness on a cumulative basis

Friday 3 November 2006

  • Proposals for new IFRIC agenda items
    • IAS 41 Agriculture – Recognition and measurement of biological produce in accordance with IAS 41
    • IAS 21 The Effects of Changes in Foreign Exchange Rates – Hedging a net investment
    • IAS 38 Intangible – Treatment of catalogues and other advertising costs
  • Status reports
    • IAS 19 issues
    • Demergers and other in specie dividends
    • Derecognition
  • Recommendations not to take items onto the IFRIC agenda
    • IAS 39 Financial Instruments: Recognition and Measurement – Short trading
    • IAS 39 Financial Instruments: Recognition and Measurement/IAS 27 Consolidated and Separate Financial Statements – Financial instruments puttable at an amount other than fair value
    • IAS 19 Employee Benefits – 'Special wage tax'
  • Agenda Committee matters
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Restructuring the IVSC

23 Oct 2006

At the 2006 Annual General Meeting of the International Valuation Standards Committee in Beijing on 26 September 2006, IVSC members approved a plan to restructure the IVSC based on the following principles:

  • The importance of an independent and transparent standard setting process
  • The development of the International Valuation Standards to embrace the valuation of all assets and liabilities in response to market needs
  • The call for a wider advisory constituency
  • The need to protect the public interest by assisting in the development of high quality practices by the world's valuers
  • The responsibility to assist the development of the profession in developing countries
  • The requirement for adequate and sustainable funding for the IVSC.

IVSC's goal is to have the restructured IVSC operational by 1 January 2008.

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Board agenda project pages updated

21 Oct 2006

We have updated the following agenda project pages to reflect the discussions and decisions at the International Accounting Standards Board's October 2006 meeting:

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Accounting Roundup – third quarter 2006 review

21 Oct 2006

We have posted Accounting Roundup: Third Quarter in Review–2006, prepared by the National Office Accounting Standards and Communications Group of Deloitte & Touche LLP (USA).

During the third quarter of 2006, accounting standard setters and regulators issued a number of pronouncements (including final FASB Statements, FSPs, EITF consensuses, SEC rules, PCAOB rules, and IFRSs) affecting accounting, financial reporting, and corporate governance. Accounting Roundup: 3rd Quarter in Review–2006, presents brief descriptions of those pronouncements, as well as certain other regulatory and professional developments in accounting and financial reporting. The articles included derive from issues of the Accounting Roundup newsletters published in the third quarter of 2006, with updates added where appropriate.
Click for Accounting Roundup: Third Quarter in Review (PDF 398k).
You will find past issues Here.
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Notes from fourth day of October IASB meeting

20 Oct 2006

The International Accounting Standards Board held its October 2006 Board meeting at its offices, 30 Cannon Street, London, on Monday through Thursday 16-19 October 2006.

Click here for the preliminary and unofficial Notes Taken by Deloitte Observers at the meeting.

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IPSASB proposal on impairment of cash-generating assets

19 Oct 2006

The International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC) has issued an exposure draft of a proposed International Public Sector Accounting Standard (IPSAS): ED 30 Impairment of Cash-Generating Assets.

The IPSASB has already addressed assets that are held and operated primarily for the purposes of service delivery when it issued IPSAS 21 Impairment of Non-Cash-Generating Assetsin December 2004. ED 30 deals with cash-generating assets held and operated by public sector entities that are not Government Business Enterprises. Comment deadline is 28 February 2007. Click for:
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Heads Up on SEC staff views

18 Oct 2006

On 26 September 2006, the SEC Regulations Committee of the American Institute of CPAs held its third meeting of the year with the SEC staff.

The Regulations Committee is composed of representatives from various public accounting firms, industry, and academia. The Committee meets periodically with the SEC staff to discuss emerging technical accounting and reporting issues relating to SEC rules and regulations, as well as ongoing SEC staff projects and final rule releases. Deloitte & Touche LLP (United States) has published a nine-page Heads Up newsletter summarising the meeting. Click to Download the Heads Up Newsletter (PDF 111k). [Note: This link is to an updated version of this Heads Up newsletter issued 5 December 2006.]

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