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EITF Snapshot for November 2006

18 Nov 2006

We have posted the latest edition of EITF Snapshot summarising the 16 November 2006 meeting of FASB's Emerging Issues Task Force.

EITF Snapshot, published by Deloitte & Touche LLP (USA), enables readers to identify relevant topics and to understand quickly the meeting's outcome. A related newsletter – EITF Roundup – is published immediately after the FASB's consideration of the tentative conclusions and consensuses reached, provides more in-depth information on each of the issues. Click for Snapshot (PDF 96k). Past issues of both of these publications can be downloaded Here.

Notes from the November 2006 IASB meeting

18 Nov 2006

The International Accounting Standards Board held its November 2006 Board meeting at its offices, 30 Cannon Street, London, on Thursday 16 November 2006 and Friday 17 November 2006.

Click here to go to the Preliminary and Unofficial Notes of the November 2006 IASB Meeting taken by Deloitte observers.

European discussion paper on the conceptual framework

17 Nov 2006

The European Financial Reporting Advisory Group (EFRAG) and the French accounting standard setter (Conseil National de la Comptabilite, or CNC) have jointly published the first Discussion Paper under the auspices of the Pro-active Accounting Activities in Europe (PAAinE).

The Discussion Paper is titled The Conceptual Framework: Starting from the Right Place? It elaborates on the following issues:
  • Purpose of the conceptual framework
  • Users of financial reporting
  • Entities within the scope of the Framework
  • The scope of financial reporting.
EFRAG and CNC invite comments, which are due by 18 March 2007. Click to Download the Discussion Paper PDF 873k).


Final notes from the World Congress of Accountants

17 Nov 2006

The World Congress of Accountants in Istanbul, Turkey, held its last session on 16 November 2006. Over 5,000 delegates from 120 countries attended the four-day meeting.

Presented below are notes from a number of the sessions on the fourth and final day of the Congress.

Notes from the XVII World Congress of Accountants

Istanbul, Turkey, 16 November 2006

Workshop: Emergence of the accounting profession in the CIS countries

Ndung'u Gathinji (CEO, ECSAFA, Kenya) chaired a session dedicated to examining how accountants in the Commonwealth of Independent States are coping with the transition from a managed demand economy to a market economy.

Frederic Gielen (UK Financial Reporting Council, on loan from the World Bank) noted that a comprehensive reform of the financial system in the CIS was needed when the region embraced the market economy in the early 1990s. He said that the World Bank recognised the link between sound financial reporting and poverty reduction and was an advocate for improved standards and compliance. Fundamental to this was the Bank's Report on Systems and Codes (ROSC) programme. Under the ROSC approach, the accounting profession is a key pillar in a stable financial architecture. ROSC assessments had been completed in five of the CIS countries and noted that progress was very encouraging although there were areas for improvement-not least in the compensation of accounting academics.

Igor Kozyrev (Deputy Chief Accountant, Lukoil, Russia) spoke of the changing and developing nature of the accounting profession in Russia, in particular the demand placed on it by moving from a managed to a market economy. He noted that under the Soviet system, accountants were part of a compliance network and were often involved in forensic investigations. The transition to a market economy was difficult because there was a lack of experience-both technical and psychological-in the use of judgement (rather than following state-dictated regulations). He noted that accounting reform in Russia had improved the quality of financial information but had also improved the quality of company management and the use of resources.

Prof Adolf Enthoven (University of Texas, USA) gave an overview of the history of the accounting profession in Russia, noting that prior to 1917 its history followed that of the profession in Europe. The 1917 Revolution had meant that the purposes of accounting had changed-accountants now served the State's central planning purposes, and served them well. He noted several challenges facing the profession-not least the lack of an official status for IFRS-based financial reporting and a formalist approach by regulating authorities. However, he observed that this was changing and that by 2010 significant reforms are expected to be in place.

Rick Gurley (US AID, Ukraine) gave an account of US AID's involvement in the development of a recognised accounting curriculum and qualification in the CIS. Based on knowledge of IFRS and ISA, the IFAC Code of Ethics and similar globally recognised foundations and working with CGA Canada, the Certified International Professional Accountant qualification had been developed. The CIPA exam is administered and marked by an independent body under the auspices of IFAC, US AID and the Eurasia Council of Certified Auditors and Accountants (ECCAA), a regional body recognised by IFAC. The CIPA exam has been very successful in the region and there is hope that it can be rolled out in other regions.

Plenary Session 3

The topic of this session was value creation through professional accountants in business.

Graham Ward (out-going President of IFAC, UK) opened the session by noting that IFAC had devoted significant resources in the past two years to highlighting the role of the professional accountant in business, noting that (because of their training) professional accountants bring a critical set of skills to businesses and use those skills to add value.

Lady Barbara Judge (Deputy Chair, Financial Reporting Council, UK) is not an accountant-she is a lawyer by training and a former Commissioner of the US Securities and Exchange Commission. She spoke from personal experience as a company director of the value of having a professional accountant – one who is a member of a body regulated by the IFAC codes of conduct and ethics – on the board of a publicly-accountable company.

She noted that today's world is about numbers and real-time reporting. The professional accountant can 'feel and see' what is wrong and ask the right questions to identify problems quickly. Boards of directors need this expertise, especially in the chair of the audit committee who, she said, should always be a professional accountant. The board is also responsible for governance and ethics-something that professional accountants bring with them as members of IFAC member bodies. The board is also responsible for enterprise strategy and professional accountants can help their board colleagues to focus on strategy and strategic risk assessments.

She concluded her remarks by reminding the audience that the board was also responsible for internal controls and that professional accountants can help their colleagues to understand these. Their expertise was something that helped her, as the chairman of one company and a director of others 'to sleep at night in a Sarbanes-Oxley environment'.

David Hastings (Shell Canada Limited, Canada) focused on how professional accountants in business create value for the business in which they work: identifying where, how and why value is created.

The professional accountant is central to identifying value drivers in today's economy: innovation, customer satisfaction, the war for talent, the effects of technology and brand investment. They have an holistic view of the business, putting customers first while understanding all dimensions of the business and managing risk effectively. As such, they can assimilate both the financial and non-financial information that is needed across a business. Value is created through the professional accountant's ability to identify and manage risk; to think and act globally and to recognise the difficulties and opportunities in a global economy.

Mary Keegan (HM Treasury, UK) spoke of the role of the professional accountant in creating value for citizens. In central government, there can be no second best. It was incumbent on government to improve the delivery performance to its citizens and to improve the financial management of the delivery of public services. She noted that the UK government uses a Value for Money model-concentrating on Economy, Efficiency and Effectiveness-and looks as much at the future value drivers as it does on historical data.

Central to this strategy is having the right systems delivering the appropriate data quickly; using this information to drive performance; and implementing good governance and proper management structures throughout the government supply chain. Ms Keegan noted that the UK has put in place a requirement that all government departments have an audit committee of non-executive members and that all government boards must have a professional accountant (a member of an IFAC member body) as finance director.

She noted that governments should govern by numbers not by instinct and consequently, accountants are properly placed at the centre of policy formulation and service delivery. She concluded her remarks by saying that governments had a responsibility to deliver value to their citizens and that there is a vital role for the professional accountant. Consequently, professional accountants must be at the policy table.

Notes from the XVII World Congress of Accountants

16 Nov 2006

More than 5,000 delegates from 120 countries are attending the 17th World Congress of Accountants in Istanbul, Turkey, from 13 to 16 November 2006. There are nearly 50 plenary and technical sessions.

Presented below are notes from a number of the sessions on the third day of the Congress.

Notes from the XVII World Congress of Accountants

Istanbul, Turkey, 15 November 2006

Plenary Session 2

The theme of the second plenary session was capital market stability worldwide and the accounting profession. Rene Ricol (past president of IFAC, France) introduced the session by reiterating a common theme here: that capital market stability is essential for development. To fulfil their role in the capital market supply chain, accountants must walk with integrity and join the battle against corruption and money laundering.

Taizo Nishimuro (President and CEO of the Tokyo Stock Exchange) gave an overview of the TSE's operations and how it is responding to advances both in regulation and technology. Among the steps that have been taken to ensure the integrity of financial reporting in Japanese securities markets is a requirement for a management report on internal controls and an independent audit report thereon.

Sir David Tweedie (Chairman, IASB) explained why global accounting standards, based on principles and promoting the appropriate use of professional judgement, are vital to secure an efficient global capital market. He suggesed three simple tests for a good quality accounting standard:

  • Can we explain the standard in one minute?
  • Does it make intuitive sense?
  • Is it written in plain English?

He stressed that the accounting profession had a 'once in a lifetime' opportunity to retrieve accounting standards from rule-based systems, but this will require:

  • restraint on the part of preparers and auditors from demanding interpretations and detailed implementation guidance
  • acceptance by regulators that the exercise of judgement in a principles-based environment will mean that two entities in similar circumstances might get different accounting answers.

He finished his address with an invitation to the accounting profession to rise to the challenge of implementing IFRSs.

Samuel DiPiazza (Global CEO, PricewaterhouseCoopers) emphasised that for the accounting profession to prosper it must remain relevant. We should ask each day whether we were creating trust and delivering value. He noted that stakeholders today demand financial information that reflects economic reality, and he commended the IASB for progress in that direction. He suggested three goals for a 'sustainable accounting profession':

  • Deliver quality audits: The audit opinion lends credibility financial information in the capital markets. It is the duty of the audit firms to attract and develop auditors who are skilled and critical thinkers.
  • Convergence of standards around the world: Financial information is no longer national. It is at least regional and often global. IFRS is the way to achieve reliable and consistent financial information. The standards should not be too complex and must be based on the appropriate use of professional judgement, and the legal and regulatory environment must respect those judgements.
  • Relevant reporting: The investor community is focused on economic reality and this required both financial and non-financial information; and information that is as much forward-looking as retrospective. To ensure relevance and usefulness, the profession must rethink the timeliness of information and the technology available for communication.

He concluded his remarks by saying that all parts of the financial reporting supply chain must be involved in this effort.

Finally, Professor Mustafa Aysan spoke as a late replacement for Ali Babacan, the Minister of State of Turkey, who could ot attend due to State business arising on short notice. Prof. Aysan reviewed the history of IFRSs in Turkey and spoke in favour of 'adoption' not 'adaptation' of the standards produced by the IASB.


The IASB's project to develop an IFRS for Small and Medium-sized Entities was the subject of a workshop attended by over 1,000 delegates. The workshop was chaired by Sylvie Voghel, who chairs IFAC's Small and Medium Practices (SMP) Committee.

Paul Pacter, the IASB's Director of Standards for SMEs (and webmaster of led off with an overview of the history of the project and the status of the draft Exposure Draft (ED). He noted that a near-final draft of the ED, along with the Invitation to Comment, Illustrative Financial Statements, and a Disclosure Checklist, were posted on the IASB's website last week. He said that the IASB is likely to publish the ED for comment in late December or early January. He identified:

  • material in IFRSs that is not included in the draft ED because it is not regarded as relevant for a typical SME
  • options in IFRSs that are not included in the draft ED (in general, where IFRSs allow accounting policy choices, the IFRS for SMEs will include only the simpler choice, with the alternative available to an SME via cross-reference to the IFRS)
  • recognition and measurement simplifications that the Board has made
  • proposed simplifications that were rejected

Click to downlooad Paul Pacter's Presentation (PDF 227k).

Comments on the draft ED were offered by:

  • Arnon Ratzkovsky, who chairs the Accounting Standards and Financial Reporting Committee of the Istaeli Institute of CPAs
  • Mohamed Ali Elaouany Cherif, a partner of Mazars Tunisia and a member of IFAC's SMP Committee
  • Pierre Barnes, President of the Interamerican Accounting Association (IAA)

Mr Barnes indicated that his organisation believes that, in addition to standards for listed companies and standards for SMEs, a third tier of accounting standards is needed – one designed for 'micro-sized entities' with fewer than 10 employees. He noted that IAA has embarked on a project to develop accounting standards for the micros.

Notes from the XVII World Congress of Accountants

15 Nov 2006

The World Congress of Accountants is being held in Istanbul, Turkey, from 13 to 16 November 2006. There are 5,000 delegates from over 120 countries.

There are nearly 50 plenary and technical sessions. Presented below are notes from a number of the sessions on the second day of the Congress.

Notes from the XVII World Congress of Accountants

Istanbul, Turkey, 14 November 2006

 Plenary Session 1

The theme of the first plenary session of the Congress was generating economic growth and stability through the accounting profession in developing nations. The session was chaired by the incoming chair of IFAC, Fermín del Valle (Deloitte, Argentina). In his opening remarks, he spoke of the role of accountants in promoting development, noting that accountants influence development at all levels: as controllers, management accountants, executives, Board members, internal auditors, members of audit committees and external auditors.

Continuing the high-profile political speakers at the Conference, the Deputy Prime Minister of Turkey, Abdullatif Sener, stated that the accounting profession was an integral part of being able to access secure and reliable financial data. He referred to the various measures that Turkey had put in place as it seeks to join the EU, including the commitment to adopt IFRS and Basel II by 2008. He said that global harmonisation of accounting standards is very important for developing countries. Global standards will encourage international trade, enhance the ability to obtain capital, ensure rational allocation of resources, and compel management to act rationally. Thus, IFRSs will enable developing countries to obtain the benefits of globalisation. He noted that Turkey has committed to the IMF that it will adopt IFRSs.

Mr Rahman Kahn (Deputy Chair of the Upper House of Parliament, India) stated that the lack of accountability (both in the public and private sectors) was a fundamental obstacle to economic development in several regions of the world. He said that the accounting profession had a very important role to play in countering this lack of accountability. Indeed, the role of the profession went beyond providing financial information, and should include constructive influence of public policy, especially in the areas of corporate governance, accountability, combating corruption, etc.

Mr Wang Jun (Vice Minister, Ministry of Finance, China) called the profession an 'economic bridge' in the journey from poverty to growth. He used the example of the tremendous growth of the accounting profession in China as providing a benchmark for other countries to follow. He said that China has adopted three strategies with regard to accounting:

  • talent development;
  • adoption of international accounting and auditing standards. In this regard he noted that in February 2006 China published 39 new accounting standards based on IFRSs and 48 new auditing standards based on ISAs, all of which are effective in 2007; and
  • development of larger and more competitive CPA firms. He noted that currently China has 140,000 CPAs ande 5,700 CPA firms.

 Mr Jabulani Moleketi (Deputy Minister of Finance, South Africa) reminded the Congress that development should not be economic growth for growth's sake, but rather an opportunity to offer a better life for a country's citizens. As others had done, he noted the role of accountants in fighting corruption and challenged the profession to fortitude: the resistance accountants encounter when faced with corrupt or doubtful practices should not deter us from doing our job. He concluded by saying that while a strong accounting profession was not the solution to the challenges of the developing world, a strong, vibrant and independent accounting profession was certainly part of it.

Each day at the Congress there are a number of concurrent workshops addressing a variety of issues. Deloitte participants were able to attend three of these workshops.

Workshop: Enhancing public confidence in financial reporting

Sir Bryan Nicholson, an IASC Foundation Trustee, led a panel discussion that examined the accounting profession's response to the financial reporting and auditing failures that had occurred since the last World Congress in November 2002. In his opening remarks, he noted in particular the introduction of the Sarbanes-Oxley Act in the US and the transition to IFRS in the European Union, Australia and elsewhere. Signs of regulatory fatigue were evident and had been acknowledged in the IASB's '2009 announcement'.

Robert Bunting, (Vice President, IFAC) reviewed the response of the global accounting profession. He noted that IFAC had reinforced the notion that the ethics and integrity of accountants were critical to building trust in the profession and he noted the several steps that IFAC and its member bodies had implemented to ensure that the trust was built on a solid foundation. In particular, he noted IFAC and its member bodies was committed to convergence of standards globally-not just financial reporting standards, but also standards on auditing, ethics, education and standards for accountants in business. He closed by stressing the four cornerstones of a financial reporting system:

  • a strong ethical foundation;
  • high quality international standards;
  • convergence of those standards worldwide;
  • enhancing and strengthening the role of professional accountants in business.

 Patrick de Cambourg (Mazards, France) focused on IFRS. He noted that IFRS was well known in theory but less well known in practice and (as the implementation of IFRS in the EU has demonstrated) there is room for 'local interpretation.' He noted five concerns related to IFRSs, some of which covered familiar ground:

  • the governance of the IASB, especially how agenda decisions are made
  • does convergence with FASB mean adoption of US GAAP as IFRSs
  • clarification of the status of IFRSs in the United States – will the SEC become an interpreter of IFRSs
  • stability ('people need a rest')
  • whether the revisions to the IASB framework, a statement of total recognised income and expense, and increased use of fair values are leading accounting into a 'brave new world'. He noted that although it is vital that the IASB and the FASB should be free and independent to develop their standards, a certain degree of accountability is necessary, especially as new standards shift the accounting model radically.
Finally, he noted that accounting standards were part of a larger coordinated reform of the European capital market, noting other developments such as the Transparency and Prospectus Directives as well as the reform of the Auditing Directive, which will permit the adoption of ISAs.

 Nick Fraser (Deloitte, France) addressed the role of the independent audit in the 'financial services supply chain.' He noted that public confidence in the accounting profession required all participants to perform: from management to auditor. The auditing profession has responded positively to the audit failures earlier this decade. The Forum of Firms brings together the major networks of auditing firms and is the means by which IFAC standards on auditing, ethics, internal quality control and education are implemented in the international auditing networks. He said that the Forum of Firms, whose members audit over 90% of listed companies around the world, has begun a study of consistent application of IFRSs from country to country. He noted that the profession needed to manage expectations with respect to the responsibilities and limitations of the audit better than it has done in the past. Auditors need to work with all financial reporting supply chain participants to ensure the credibility of the audit is maintained and enhanced.

Marc Pickeur (Banking, Finance and Insurance Commission, Belgium) stressed that market discipline can only be truly effective when market participants have access to high quality financial information. This required sound corporate governance and a commitment to enforce best practices within business entities and a strong external audit (which would include a report on internal controls to the audit committee). He said that regulators were reviewing and monitoring implementation of IFRS and ISA both in their own jurisdiction and globally.

Workshop: IFRS 2005: Can we see the benefits?

Gilbert Gelard (IASB Member) chaired a session that examined whether the benefits of adopting a common accounting language had begun to be seen.

Michael Birch (PricewaterhouseCoopers, Hungary) noted that the real benefits of IFRS would only be apparent when IFRS was embedded in the financial reporting systems of companies. The work to 2005 had been expensive and painful and the benefits would only be realised later. However, some benefits had already been seen: better, more transparent and more available information and an indication that the cost of capital for quality IFRS entities was improving. An underlying concern was that, because IFRS has a lower threshold for restatement of errors, the markets would react nervously to restatements under IFRS, eroding confidence rather than strengthening it.

Aziz Dieye (Cabinet Aziz Dieye, West Africa) spoke from a developing country perspective and stressed the need for the IASB to avoid any downgrading of their standards.

Bulent Ustunel (Chairman of the Turkish Accounting Standards Board) informed the session of the implementation of IFRS in Turkey. He noted that one consequence of implementing IAS 29 had been to demonstrate that the 'inflation adjustment' shares issued under Turkish tax accounting had, in fact, represented a distribution of capital and not a capitalisation of the inflation adjustment.

Lee White (Chief Accountant, Australian Securities and Investment Commission) spoke about the Australian experience of adopting Australian equivalents of IFRSs (A-IFRSs). In some areas, notably financial instruments and share-based payments, there was no equivalent Australian standard and the introduction of IFRS had real impacts on dividend policy, tax, loan covenant agreements and lending conditions. However, it seemed that already the benefits outweighed the costs: there is greater access to international capital markets and IAS 32/39 and IFRS 2 had improved financial reporting in the country. Implementation had been relatively smooth and there had been no stock exchange 'alarms'. He echoed Mike Birch in saying that implementation was not over. He also noted that the greatest challenge to ASIC as a regulator was to 'remain true to the principles-based approach' in their regulatory activity.

Workshop: Implementing international standards – the challenges and solutions

Peter Wong (Consultant, Deloitte, Hong Kong SAR) introduced this session by reviewing the findings of the Wong Report on the implementation of global standards (available on He noted that one of the principal challenges is that 'convergence' means different things, depending on who is speaking.

Gerard Tremoliere (Deloitte, France) reviewed the progress in the European Union towards adopting ISA, including the adoption of the 8th Directive on Company Accounts. He outlined the endorsement mechanism proposed to ensure that auditing standards in Europe will contribute to a high level of credibility and quality of company reports.

Sandy Chant (ALCOA, Australia and USA) reported on her experiences and the challenges of implementing IFRSs in the Australian subsidiary of a US listed, US GAAP parent. She gave a clear and concise report of the real-life challenge of implementing IFRSs; handling IFRS and A-IFRS differences (for Australian reporting purposes) and IFRS/US GAAP differences (for parent company reporting). As ALCOA is a SEC registrant, she had to engage IFRS transition accountants as her auditors were barred from providing advice under Sarbanes-Oxley. She noted that differences of opinion and interpretation of IFRS among the audit networks had cost the profession some credibility, but noted that everyone was learning 'on the job.' Her advice to those still facing transition: start early, invest the resources necessary and do not underestimate the time it will require. She also noted that in adopting IFRSs Australia had initially removed certain options from IFRSs and added new requirements. However, both her company and other Australian companies found that 'modifying IFRSs adds unnecessary complexity', and Australia has now decided to reinstate the options and remove the added requirements.

Manuel Sanchez-y-Madrid (Mexico) spoke of the challenges facing the adoption of global standards in Latin and South America. He noted that while there are active capital markets in the region, they listed companies are generally small and that IFRS presents a major challenge to both the preparers and professional accountants. In general, there is a lack of resources and capacity, both at the operational and financial level. He suggested that the most efficient way to implement global standards in the region would be through a joint effort involving all stakeholders: IFAC and the local accounting bodies, governments, donor agencies, universities, etc.

Dr Nordin Zain (Executive Director, Malaysian Accounting Standards Board) noted similar concerns in south-east Asia. He suggested that the challenge was strategic not technical. He said that the emerging economies in the region have little or no choice but to adopt global standards if they were to qualify for regional development funding, foreign direct investment programmes and membership of regional and global trade bodies.


SEC enables full-text search of filings

15 Nov 2006

The United States Securities and Exchange Commission has announced that investors are now able to search the contents of the disclosure documents filed electronically with the SEC using a new full-text search tool on the Commission's Website.

The newly searchable information includes registration statements, annual and quarterly reports, and other filings by companies and mutual funds filed during the past four years on the Commission's EDGAR database. Here is the Link to the Main Search Page. If you search for IFRS, for example, you will get over 8,000 hits. Click for Press Release (PDF 34k).

Notes from the XVII World Congress of Accountants

14 Nov 2006

The World Congress of Accountants began yesterday in Istanbul, Turkey, and runs through 16 November 2006. There are 5,000 delegates from over 120 countries.

There are nearly 50 plenary and technical sessions. IAS Plus will include selected notes from each day of the Congress – generally those sessions related to financial reporting in the context of International Financial Reporting Standards. If you happen to be attending the Congress, please stop by and say hello at the Deloitte booth in the exhibition area.

Notes from the XVII World Congress of Accountants

Istanbul, Turkey, 13 November 2006

 Opening Ceremonies

The Seventeenth World Congress of Accountants was inaugurated this afternoon at a special plenary session at the Istanbul Convention and Exhibition Centre. Speeches of welcome were delivered by the Chairman of the Congress, Prof Dr Recep Pekdemir; the President of the Union of Chambers of Certified Public Accountants of Turkey (TURMOB), Mr Mehmet Timur; and the President of the Expert Accountants' Association of Turkey, Dr Masum Turker.

The outgoing President of the International Federation of Accountants, Graham Ward, reviewed his term of office and noted that the accountancy profession had used the opportunity of profound scrutiny following the financial scandals such as Enron and Parmalat to examine itself and undertake fundamental reforms that placed the worldwide profession on a solid foundation to be part of the solution to restoring public trust in financial markets. He stated that where there was a sound, vibrant, and independent accounting profession there was almost certainly an 'investment climate of trust'. He rounded out his address by reviewing the various measures that IFAC has put in place to ensure that the standards it promulgates (including International Standards on Auditing, standards for ethics in accounting firms, and education standards) were developed in as transparent an environment as possible.

The Congress has honoured by two senior members of the Turkish government: the Finance Minister and the Prime Minister, Recep Tayyip Erdogan. The Prime Minister noted that the upgrading of Turkey's financial systems and strengthening its financial infrastructure – including financial reporting – is a vital part of the country's ambition to join the European Union.

The working sessions of the Congress begin on 14 November, with a plenary session on the role of the accounting profession in generating economic growth in developing nations and three sets of topical workshops. IASB Chairman Sir David Tweedie will speak the 15 November plenary session on capital market stability worldwide and the accounting profession.

IAS Plus Newsletters for October 2006

13 Nov 2006

The October 2006 IAS Plus Quarterly Newsletter has been published.

The newsletter reports on the 3rd quarter 2006 activities of the IASB, the IFRIC, and the IASC Foundation, and also on worldwide issues and events relating to international financial reporting. The Asia-Pacific edition has the same 28-page news content as the Global Edition plus 8 more pages of accounting standards updates for the Asia-Pacific region. You will find all Past IAS Plus Issues Here.

ICAEW study on measurement in financial statements

11 Nov 2006

The Institute of Chartered Accountants in England and Wales has published a study on Measurement in Financial Reporting).

The report examines various measurement bases used in financial reporting currently and concludes that there is not one basis that is the best for all items in all circumstances. The report states:

'Making the case for change' puts the onus on showing that there is a problem that needs to be solved. In the context of financial reporting measurement this may be the case where:

  • people are confronted with a measurement problem and do not know how to deal with it;
  • worthwhile information that could be provided is not being provided;
  • information that is being provided is not worthwhile or even has negative effects - for example, because it is misleading.

It should not be assumed that every case of inconsistency in measurement is a problem that needs to be remedied. This report puts forward the following working hypotheses: that it may be appropriate in making decisions on measurement requirements:

  • to adopt a mixed approach to measurement for different items in accounts; and
  • to distinguish between different types of entity in accordance with their industry, ownership and governance structure, and size.

'Evaluation of options' should include the option to do nothing. Once the costs of potential changes (including the costs of making the change) have been taken into account and their likely benefits considered, it may become clear that the most sensible policy is to leave things as they are.

Click for Full Report (PDF 287k).

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.