February

Deloitte Canada Countdown IFRS transition newsletters

16 Feb 2008

Deloitte Canada has released its first issue of a new Countdown IFRS transition newsletter, to provide a snapshot of where we are now as far as IFRS is concerned – both in Canada and in Deloitte.

This issue includes a convergence timeline for a calendar year entity and links to various Deloitte IFRS convergence activities. Future issues will focus on updates on IFRS convergence in Canada, related Deloitte activities, technical briefings, and tips and tools to assist Canadian companies and others in the IFRS transition. Click to download: You also can find information about financial reporting in Canada on our Canada Page.

 

SEC proposes all-electronic disclosure for foreign issuers

16 Feb 2008

The US Securities and Exchange Commission has voted to propose amendments to modernise its disclosure requirements for foreign companies, including eliminating all requirements for paper submissions.

The SEC is also proposing to accelerate the reporting deadline for annual reports filed on Form 20-F by foreign private issuers from six months to 90 days after the issuer's financial year-end in the case of large accelerated filers and accelerated filers, and to 120 days after year-end for all other, issuers, after a two-year transition period. Click for Press Release (PDF 48k).

 

Notes from Standards Advisory Council meeting

16 Feb 2008

The International Accounting Standards Board met with the Standards Advisory Council on 14 and 15 February 2008 in London.

Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting. The IASB Board will hold its February 2008 meeting at the IASB's offices, 30 Cannon Street, London on Tuesday to Thursday 19-21 February 2008. The meeting is open to public observation and will be webcast. Here's the Agenda.

Notes from the Standards Advisory Council Meeting
14-15 February 2008, London

peg.gif Open discussion with IASCF Trustees Chairman

Gerrit Zalm, the Chairman of the IASC Foundation addressed the Standards Advisory Council during the closing session of their February 2008 meeting. In his first appearance before the SAC as Chairman, he called the task of the IASB a 'romantic project' – a project of high ideals that was now achieving reality. The achievements of the IASB brought with them severe challenges, ones that had to be addressed in the Strategy Review.

He noted that relations with the European Parliament had been poor, but that efforts at the Trustee, Board and Staff level had contributed, and continue to contribute, to improving relations, better communication and a better mutual understanding of each others' positions and priorities. The removal of the EU 'carve-out' in IAS 39 was high on his wish-list and there are on-going efforts at several levels within the EU to achieve this.

Sustainable funding was a primary concern-as noted yesterday at the session devoted to the Strategy Review-both to the Trustees and the SAC. Private sector funding was open to criticism as it could be perceived as buying influence. A levy system was already in operation in Italy and the UK and this was seen as the best alternative; but it was for each jurisdiction to decide how best to raise the finds, which entities to levy, etc. As such, a final agreement on levies is still 'on the horizon'.

Finally, he noted that the integrity and authority of the IASB was a paramount concern of the Trustees. The success of the private-sector IASB was testament to the wisdom of keeping standard-setting out of the hands of government. However, the IASB had to acknowledge that it was, in effect, setting law in many jurisdictions and that law-makers in those jurisdictions have a legitimate interest in the work and decision-making process of the IASB. The challenge for the Trustees will be to maintain the delicate balance between private-sector neutrality and independence and the interests of governments.

In an open session with the SAC, Mr Zalm heard many suggestions and opinions about how the Trustees, SAC and IASB could respond to these and other challenges. Against the background of the Strategy Review, it was noted by SAC members that the success of the IASB was about to face a significant challenge: how would the United States react to the transition to IFRS? The FASB derived its authority from the US Securities and Exchange Commission's devolution of its standard-setting powers to the FASB. The presence of the SEC would be a significant challenge for the Trustees as they maintained the 'delicate balance' mentioned by Mr Zalm between competing IFRS constituents.

All of this suggests that much is riding on the composition of the proposed Monitoring Group and its ability to represent the integrity, neutrality and authority of the IASCF and IASB.

peg.gif Discussions about Four IASB Agenda Projects

The SAC held a series of discussions with IASB and FASB staff on three projects nearing the issue of a discussion paper. FASB staff discussed the FASB Preliminary Views document Financial Instruments with the Characteristics of Equity and introduced the proposed questions to be included in the IASB's wrap-around Invitation to Comment. An IASB member noted that this topic was inextricably linked with other IASB projects, including parts of the Conceptual Framework, financial instruments, insurance, and liabilities (IAS 37).

The IASB staff presented an overview of a forthcoming discussion papers Reducing Complexity in Reporting Financial Instruments and Post-employment Benefits.

All three of these papers are expected in the first half of 2008 and this meeting was the last opportunity for the SAC to offer advice on the questions to be included in the various Invitations to Comment.

Regarding the proposed IFRS for Small and Medium-sized Entities, the IASB staff reviewed the project activities since issuance of the Exposure Draft in February 2007. Staff also presented a preliminary list of the most significant issues that have been raised in the letters of comment. These topics formed the basis of a lengthy SAC discussion.

peg.gif 2008 Constitution Review

Two proposals – creation of an IASCF monitoring group and enlarging the IASB from 14 to 16 members – will be 'fast-tracked', with a comment document to be issued in the second quarter of 2008. See our News Story of 15 Feb 2008.

This summary is based on notes taken by observers at the IASB meeting and should not be regarded as an official or final summary.

 

Heads Up on fair value measurements

16 Feb 2008

Deloitte & Touche LLP (United States) has published the 15 February 2008 edition of the Heads Up Newsletter that summarises the FASB's recent issuance of two Staff Positions on Statement 157 Fair Value Measurements:

  • FAS 157-2, which partially defers Statement 157's effective date, and
  • FAS 157-1, which excludes FASB Statement No. 13 Accounting for Leases, as well as other accounting pronouncements that address fair value measurements on lease classification or measurement under Statement 13, from Statement 157's scope.
The IASB is working on a Fair Value Measurement Project. In November 2006, the IASB issued a wrap-around Discussion Paper inviting comments on FAS 157. The Board plans to hold public roundtables on the issues in the second quarter of 2008.
Click to view the Heads Up newsletter (PDF 119k).

 

SEC financial reporting advisory panel makes 12 proposals

16 Feb 2008

The SEC's Advisory Committee on Improvements to Financial reporting has issued a Progress Report to the Commission.

The report outlines the Committee's 12 developed proposals, conceptual approaches, and currently identified matters for future consideration. Deloitte & Touche LLP (USA) has published a Heads Up Newsletter (PDF 142k) discussing the report.

The SEC Advisory Committee's 12 proposals are:

  1. GAAP should be based on business activities, rather than industries. As such, the SEC should recommend that any new projects undertaken jointly or separately by the FASB be scoped on the basis of business activities rather than industries. Any new projects should include the elimination of existing industry-specific guidance in relevant areas as a specific objective of those projects, unless, in rare circumstances, retaining industry guidance can be justified on the basis of cost-benefit considerations.
  2. GAAP should be based on a presumption that formally promulgated alternative accounting policies should not exist. The SEC should recommend that any new projects undertaken jointly or separately by the FASB not provide additional optionality, unless, in rare circumstances, it can be justified. Any new projects should include the elimination of existing alternative accounting policies in relevant areas as a specific objective of those projects, unless, in rare circumstances, the optionality can be justified.
  3. Additional investor representation on standards-setting bodies is central to improving financial reporting. Only if investor perspectives are properly considered by all parties will the output of the financial reporting process meet the needs of those for whom it is primarily intended to serve.
  4. The SEC should assist the FAF with enhancing its governance of the FASB, including supporting the FAF's changes outlined in its Request for Comments on Proposed Changes to Oversight, Structure and Operations of the FAF, FASB and GASB, with minor modifications regarding composition of the FAF and the FASB.
  5. The SEC should encourage the FASB to further improve its standards-setting process and timeliness, as follows:
    • Create a formal Agenda Advisory Group that includes strong representation from investors, the SEC, the PCAOB, and other constituents, such as preparers or auditors.
    • Refine procedures for issuing new standards by: (1) implementing investor pre-reviews designed to assess perceived benefits to investors, (2) enhancing cost-benefit analyses, and (3) requiring improved field visits and field tests
    • Improve review processes for new standards by conducting post-adoption reviews of every significant new standard, generally within one to two years of its effective date, to address interpretive questions and reduce the diversity of practice in applying the standard, if needed.
    • Improve processes to keep existing standards current and to reflect changes in the business environment by conducting periodic assessments of existing standards.
  6. The number of parties that either formally or informally interprets GAAP and the volume of interpretative implementation guidance should continue to be reduced.
  7. The FASB or the SEC, as appropriate, should issue guidance reinforcing the concept of materiality.
  8. The FASB or the SEC, as appropriate, should issue guidance on how to correct an error consistent with the principles outlined in the report – generally fewer restatements of prior period financial statements.
  9. The FASB or the SEC, as appropriate, should develop and issue guidance on applying materiality to errors identified in prior interim periods and how to correct these errors.
  10. The SEC should adopt a judgment framework for accounting judgments. The PCAOB should also adopt a similar framework with respect to auditing judgments.... The proposed framework applicable to accounting-related judgments would include the choice and application of accounting principles, as well as the estimates and evaluation of evidence related to the application of an accounting principle.
  11. The SEC should, over the long-term, mandate the filing of XBRL-tagged financial statements after the satisfaction of certain preconditions.
  12. The SEC should issue a new comprehensive interpretive release regarding the use of corporate websites for disclosures of corporate information. The guidance should address issues such as liability for information presented in a summary format, treatment of hyperlinked information from within or outside a company's website, treatment of non-GAAP disclosures and GAAP reconciliations, and clarification of the public availability of information disclosed on a reporting company's website.

Fast-track for proposed IASCF monitoring group, enlarged IASB

15 Feb 2008

Our News Story of 11 February 2008 reported on two proposed changes to the IASCF/IASB structure that will be considered as part of the 2008 Constitution Review, which is scheduled to start later this year.

The proposals are:
  1. Creation of a 'monitoring group' of representatives of official organisations, including securities regulators, that would approve Trustee appointments and review Trustee oversight activities, including the adequacy of the annual funding arrangements as well as the overall budget.
  2. Expansion of the IASB to 16 members from the present 14. While maintaining the existing Constitutional criteria for selecting members of the IASB, the Trustees will consider whether the Constitution should also explicitly ensure a minimum geographical balance. The balance they are currently considering is 4 members from Europe, 4 from the North America, 4 from Asia-Oceania, and the remaining 4 from any area.
At yesterday's meeting of the Standards Advisory Council, IASCF Trustee Antonio Vegezzi and IASCF Director of Operations Thomas Seidenstein reported that the Trustees intend to fast-track their consideration of these two issues. Accordingly, they expect to publish formal proposals for public comment some time during the second quarter of 2008. They also reported that the remainder of the Constitution Review will get under way in third quarter 2008 and is expected to take about two years.
Click to view IASCF Constitution Review 2008-2010.

 

IAS Plus Newsletter on puttable financial instruments

15 Feb 2008

Deloitte's IFRS Global Office has published a special edition IAS Plus Newsletter on Amendments to IAS 32 and IAS 1 on puttable financial instruments and obligations arising on liquidation.

Our news story of 14 February 2008 (below) announced these revisions.
Click to view IAS Plus Newsletter on Amendments to IAS 32 and IAS 1 (PDF 101k). You will find all Past IAS Plus Newsletters Here.

 

IVSC announces interim board of trustees

15 Feb 2008

The International Valuation Standards Committee (IVSC) has announced its interim board of trustees that will oversee the restructuring of the IVSC.

The restructuring was announced in November 2007 (see the IAS Plus News Story of 29 Nov 2007). The restructuring will transform IVSC into an independent standard setting organisation that will develop International Valuation Standards acceptable to the international capital markets. Former IASC Foundation Trustee Jens Roder and former IASC Chairman Michael Sharpe are among the seven interim IVSC trustees. Here is the Press Release on IVSC Interim Trustees (PDF 82k).

 

IFRS concept paper from Canadian securities regulators

15 Feb 2008

The Canadian Securities Administrators (CSA) – the consortium of the provincial securities regulators in Canada – has invited public comment on CSA Concept Paper 52-402. The Concept Paper discusses securities regulation issues relating to Canada's upcoming adoption of IFRSs.

The Accounting Standards Board (AcSB) of Canada proposes to that all Canadian publicly accountable enterprises must adopt Canadian IFRS equivalents by 1 January 2011. As CSA rules refer to Canadian generally accepted accounting principles established by the AcSB, the CSA is considering the need for amendments to those rules and is seeking feedback on three main issues:
  • Use of IFRSs by domestic issuers before 1 January 2011. CSA members are leaning toward allowing the use of IFRSs starting in 2009, two years ahead of the AcSB's mandatory changeover.
  • Use of US GAAP by domestic issuers. Currently, Canadian companies that are registered with the US SEC are allowed to use US GAAP rather than Canadian GAAP. The CSA members have tentatively concluded not to allow a domestic issuer to use US GAAP starting in 2009 except existing US GAAP users could continue doing so for up to five years (that is, through 2013).
  • Reference to IFRSs instead of Canadian GAAP in CSA securities rules. The AcSB's current plan is to import IFRSs into Canadian GAAP and to continue using the term 'Canadian GAAP'. The CSA members do not agree with that terminology and believe that the auditor's report should refer to IFRSs as adopted by the IASB rather than to Canadian GAAP. CSA acknowledges that changes to some laws may be required.
Comments on the Concept Paper should be sent by 13 April 2008. Click to:

Canadian standards board confirms 2011 transition to IFRSs

15 Feb 2008

The Canadian Accounting Standards Board (AcSB) has confirmed that use of International Financial Reporting Standards (IFRSs) will be required in 2011 for publicly accountable profit-oriented enterprises.

IFRSs will replace Canada's current national GAAP for those enterprises. These include listed companies and other profit-oriented enterprises that are responsible to large or diverse groups of stakeholders. The official changeover date is for interim and annual financial statements relating to financial years beginning on or after 1 January 2011. Private companies (non-publicly accountable enterprises), and not-for-profit organisations are not required, but are permitted, to adopt IFRSs in 2011. Click for AcSB Press Release (PDF 50k).

 

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